Christodoulou & Nobilio v ISPT Pty Ltd [2013] QCAT 206

CITATION: Christodoulou & Nobilio v ISPT Pty Ltd A.C.N. 064 041 283 [2013] QCAT 206 PARTIES: Angela Christodoulou and Ermanno Nobilio trading as Essensuals Gift & Homewares (Applicants) v ISPT Pty Ltd A.C.N. 064 041 283 (Respondent) APPLICATION NUMBER: RSL033-11 MATTER TYPE: Retail Shop Lease matters HEARING DATE: 23, 24, 25, 26 July and 21 November 2012 HEARD AT: Brisbane DECISION OF: Ms Michelle Howard, Member Mr Donald McBryde, Member Mr Neil Judge, Member DELIVERED ON: 4 April 2013 DELIVERED AT: Brisbane ORDERS MADE: 1. That ISPT pay compensation of $186,503 to the applicants within 28 days; 2. That submissions in support of any application for costs be filed and served by 24 April 2013; 3. That any submissions in response to any application for costs be filed and served by 22 May 2013; 4. That any application for costs be determined on the papers without an oral hearing, not before 27 May 2013. CATCHWORDS: RETAIL SHOP LEASE MATTERS – COMPENSATION – LIABILITY – where claim for compensation for breach or express and implied terms of lease, covenant against non- derogation – whether foot traffic decreased – whether flow of potential customers past shop substantially altered – whether significant disruption to lessee’s trading in leased shop – whether circumstances can be viewed overall -- 1 of 44 -- 2 RETAIL SHOP LEASE MATTERS – COMPENSATION – CAUSATION – whether loss caused by actions of lessor – whether other factors relevant RETAIL SHOP LEASE MATTERS – COMPENSATION – QUANTUM – methodology of calculation Retail Shop Leases Act 1994 ss 19, 20, 42, 43, 43(1)(b)(ii), 43(1)(c) Queensland Civil and Administrative Tribunal Act 2009 March v Stramare (1991) 171 CLR 506 Chappel v Hart [1998] HCA 55 Hawthorne v Thiess Contractors Pty Ltd [2002] 2 Qd R 157 Gold Ribbon (Accountants) Pty Ltd (I liq) v Sheers & Ors [2006] QCA 335 Susanna and John Pty Ltd v Trident Ashgrove JV Pty Ltd [2011] QCAT 101 Vardenega & Ors v Catoria Investments & Trading Pty Ltd [1992] QRSLT 2 Pincott and Pincott v Metro Maroochydore Pty Ltd [2007] RSLT 002 APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr SRJ Bullow of Counsel instructed by PHV Law for the applicants RESPONDENT: Ms K Downes, SC and Mr S Walls of Counsel instructed by Holding Redlich for the respondent REASONS FOR DECISION The Background to the Claim [1] The Wintergarden Shopping Centre in Brisbane CBD recently underwent a major redevelopment. The Wintergarden Centre is a major shopping complex which has street frontage on the Queen Street Mall, Edward -- 2 of 44 -- 3 Street and Elizabeth Street, and is directly linked to a major hotel, the Hilton Hotel, which is in part directly above it. It was marketed as Brisbane’s centre of fashion and style.1 The Centre has won a number of awards over the years, both for marketing and for the Centre itself.2 [2] Ms Christodoulou and Mr Nobilio operated a retail shop under the trading name of Essensuals Gift and Homewares in the Wintergarden Centre from 1995 until 31 March 2010. The final 5 year lease did not contain an option to renew. The range of items sold varied from time to time, but Essensuals sold items including fashion jewellery, handbags, candles, giftware and small items of furniture, including coffee tables. [3] ISPT Pty Ltd purchased the Wintergarden Centre in February 2003.3 Some time in 2007, initial approval and funding was obtained from the fund manager for ISPT to formulate a redevelopment plan for the Wintergarden.4 Although the initial presentation to the Board did not occur until September 2008,5 from the time of the initial approval and funding, ISPT proceeded on the basis that the redevelopment would go ahead.6 [4] Events confirm ISPT’s commitment to redevelopment. In January 2008, tenants of the Wintergarden attended a ‘development information night’.7 A powerpoint presentation was apparently given at the information night by persons, including Sean McGarrity, Development Manager, from ISPT and Melinda Boyle from Jones Lang Lasalle (JLL).8 JLL managed the Wintergarden on behalf of ISPT,9 although from 2008, Savills and JLL both attended to some short-term leasing.10 [5] The presentation slides refer to ISPT having invested in major research which led to the redevelopment proposal, for which a redevelopment application will be lodged ‘within the week’. Further, it refers to the ‘main works’ as being expected to commence in early 2009, and ‘some preparatory works in 2008.’ The development was planned in stages. [6] Despite the advice given to tenants about proposed commencement in 2009, the works were apparently originally intended to commence no earlier than 31 August 2008, but the date was extended due to planning approval delays.11 On 27 May 2008, Mr Nobilio met with Ms Boyle. He was advised that ISPT would not be renewing any lease agreements for 1 Exhibit 33, Melinda Boyle, Attachment 7. 2 Exhibit 33, Melinda Boyle, Attachment 10. Inspection dates relevant to the judging of awards for the Centre are not disclosed in the material before the Tribunal so as to allow consideration of them vis-à-vis the events later discussed in these reasons. 3 Exhibit 36 Sean McGarrity, paragraph 3. 4 Transcript Sean McGarrity.462. 5 Exhibit 36 Sean McGarrity, paragraph 4; Transcript Sean McGarrity 462-463. 6 Transcript Sean McGarrity, 463. 7 Exhibit 3 Ermanno Nobilio, Attachment EN 8; Exh 33 Melinda Boyle, clause 107.. 8 Exhibit 33 Melinda Boyle, Attachment MEB 45. 9 Exhibit 33 Melinda Boyle, paragraph 2. 10 Exhibit 34, Melinda Boyle, paragraph 7. 11 Exhibit 33 Melinda Boyle, paragraphs107-108. -- 3 of 44 -- 4 existing tenants within the Centre. 12 This is not denied by ISPT.13 Concluding that they could not sell or operate the business during the redevelopment and that it would be catastrophic for their business, Mr Nobilio and Ms Christodoulou proposed a negotiation to reach a commercial outcome acceptable to both parties.14 ISPT did not respond to these suggestions, despite indications from their lawyers in September 2008, that they may be prepared to have discussions.15 [7] In August 2008, the applicants were advised that redevelopment of Stage 1 was expected to commence on 1 February 2009.16 As events transpired, Stage 1 commenced in January 2010. The shops in Stage 1 were, with one exception which is not of consequence, vacated by 31 December 2009. The redevelopment works included the structural demolition of the level 1 and level 2 slabs adjacent to the Queen Street Mall and construction of a new slab to align to the Queen Street Mall; realignment of internal malls; removal of the Elizabeth Street car park entrance ramps and Queen Street viaduct; strengthening of the structure; and upgrade of the services infrastructure.17 [8] Essensuals was at all times located in tenancy Q210 on level 2. The tenancy was in that part of the Centre to be redeveloped in Stage 2. For Q210 and many other tenancies, the redevelopment involved the extensive demolition in stages of the structural components (floors and malls) of the premises in which they traded. [9] The applicants say, among other things, that throughout the period leading to and during the redevelopment until their lease ended on 31 March 2010, key tenancies were left vacant after leases concluded, the tenant mix changed, and areas were from time to time hoarded off; investigative and preparatory works were done; two kiosks were constructed; maintenance was minimised resulting in water leaks, the external awning fronting the Mall falling into disrepair and inadequate air- conditioning; car-parks were used for construction workers and not available for customers; lift services were not operational at times during works; the Centre Information Centre was closed in early 2010; Stage 1 of the redevelopment commenced in January 2010 and half of the Centre closed; and noise dust and vibration emanated from the various preparatory, construction and Stage 1 works. The applicants take a scatter-gun approach to identifying numerous alternative bases for it. 12 Exhibit 3 Ermanno Nobilio, paragraph 14 and EN 9. 13 Ms Boyle confirms the meeting occurred and does not deny this allegation in Exhibit 33 Melinda Boyle, paragraphs 114-116. In Exhibit 33, paragraphs 91, 102; Exhibit 34, paragraph 7; and Exhibit 35, she provided some additional information about the vacation and releasing of premises, referring only to arrangements for short-term leases. 14 Exhibit 3, Ermanno Nobilio, paragraph 14 and EN9, EN12 and EN 13. 15 Exhibit 3, Ermanno Nobilio, EN 14. 16 Exhibit 3, Ermanno Nobilio, Attachment EN10. 17 Exhibit 36, Sean McGarrity, paragraphs9-16, especially 14. -- 4 of 44 -- 5 [10] At the commencement of Stage 1, some shops were relocated from the Stage 1 area under existing leases. Some tenants negotiated short-term leases and licences in that part of the Centre which was to be redeveloped in Stage 2, during Stage 1 construction. Other retailers left the Wintergarden Centre. [11] All of these events, the applicants say, gave the impression over an extended period that the Centre was in decline and was not fully functioning. Rather, they say it appeared to be progressively closing down and becoming a construction site. [12] They say that these events resulted in breaches of express and implied terms of the lease. Essentially, their case is that these combined events, among other things, denied them quiet enjoyment of the leased premises,18 were in contravention of the landlord’s obligations to maintain the structure of the premises and the landlord’s property in it;19 and the landlord’s responsibility to ensure as far as possible the efficient functioning of mechanical services including air-conditioning;20 significantly reduced foot traffic in the Centre and near Essensuals; and substantially disrupted their trading. [13] Terms are implied into every retail shop lease by sections 42 and 43 of the Retail Shop Leases Act 1994 (the RSL Act). They provide for compensation to be payable to a lessee by a lessor for the lessee’s loss in specified circumstances.21 These include when the lessor takes action which substantially restricts or alters either, access by customers to the leased shop, or ‘the flow of potential customers past the shop’: RSL Act s43(1)(b). They also include when the lessor causes significant disruption to the lessee’s trading in the leased shop or not taking all reasonable steps to prevent or stop significant disruption within the lessor’s control: s43(1)(c). [14] Parties may not contract out of the RSL Act provisions22 and any inconsistent provision in a lease is void to the extent of the inconsistency.23 [15] Further the applicants contend that ISPT’s actions were contrary to the implied covenant not to derogate from the lease. [16] The applicants claim that they should be compensated for their resulting loss. The amount and period of the claim changed several times, but the final figure claimed was $317,087.10 for losses during the period 1 December 2008 until 31 March 2010. In the alternative, they claim damages for unconscionable conduct. 18 Clause 35. 19 Clause 34. 20 Clause 36. 21 RSL Act s 18, 42, 43, 44. 22 RSL Act s 19. 23 RSL Act s 20. -- 5 of 44 -- 6 [17] Essensuals Turnover for various financial years was as follows: (a) For 2004/05, $955,700; (b) For 2005/06, $874,846; (c) For 2006/07, $ 881,536; (d) For 2007/08, $828,867 (e) For 2008/09, $650,819; (f) For 2009/10 (when lease ended and trading ceased 31 March 2010), $ 322,235.24 [18] ISPT denies the claims and denies any breaches of any of the various express and implied lease terms relied upon as well as the implied covenant not to derogate from the lease. It says that the lease specifically entitled it to do repairs and maintenance and any building works to extend or change the Centre on giving 3 months notice and causing as little disruption as it reasonably could to the tenant’s use of the premises.25Also, it relies upon a release from liability contained in the lease, for loss suffered by the tenant, unless caused by ISPT’s negligent act or omission. 26 As a result of the inclusion of these provisions of the lease, it also says that it has not breached the implied term not to derogate from the terms of the lease as alleged. [19] It says that if the claim is nevertheless allowed that the damages for the period 1 December 2008 to 31 March 2010 are $106,065. It says, and we accept, that there is no evidence of unconscionable conduct. [20] For reasons to be explained, we conclude that the implied terms in s 43(1)(b) and (c) have been breached and the applicants are entitled to be compensated in the amount of $186,503. We do not need to consider whether there may also have been discrete breaches of other express or implied terms of the lease or any breach of the implied term not to derogate from the lease, since the applicants are only entitled to recover once for their loss. [21] We observe an interesting construction issue regarding the landlord’s entitlement to do building work pursuant to clause 42. Building work is not defined in the lease. There is also an express obligation on the landlord under clause 34 of the lease to maintain the structure of the premises. A construction which allows the 2 clauses to stand would generally be preferred. The building works in this instance involved demolition of major structural components of the Centre, namely the floors and malls on and in which tenancies including the applicants shop were located. This would 24 Exhibits 25 and 26, in round figures as set out in Exhibit 32, Annexure 2.. 25 Clause 42. 26 Clause 48. -- 6 of 44 -- 7 not appear to be consistent with an obligation to maintain the structure of the premises. If it was necessary to decide this point, we would conclude that building works in clause 42, do not include demolition of major structural components. That said, we do not need to decide this point, in light of our findings that the implied terms have been breached and loss is recoverable thereunder. The evidence relied upon by the parties [22] Both parties provide extensive, voluminous and complicated material. ISPT provides a large volume of supporting documentation with the various statements of Ms Boyle and Mr McGarrity. Some of the supporting documents are inconsistent with their own statements, for example about the extent of the preparatory works performed in the Centre. We also formed the view, for reasons to be discussed, that in some instances the evidence presented by them, because it was selective, tended to give a misleading impression of the events that transpired. [23] Ms Melinda Boyle’s evidence was that she was Centre Manager throughout the period,27 but ultimately conceded that she would not necessarily know of complaints to Ms Gaske.28 A variety of file memos attached to Ms Boyle’s statement were prepared by ‘Jodie Gaske, Centre Manager’.29 We conclude that Ms Jodie Gaske was represented to the applicants as the Centre Manager, not Ms Boyle. Therefore, we do not accept that lack of complaint to Ms Boyle is indicative of whether complaints were made by the applicants. [24] We have taken these matters into account in according weight to the evidence of Ms Boyle and Mr McGarrity, making findings and drawing inferences. In submissions, ISPT contend that the apparent issue about who was Centre Manager is a red herring and maintained that Ms Boyle was able to speak to all issues and complaints. We do not accept this is so. [25] That said, we also concluded that the applicants were not always reliable witnesses as to dates of events (perhaps unsurprisingly because they were often relying on memory as to dates30 without the benefit of Centre records about when events occurred), and had a tendency to overstatement. However, as discussed in these reasons, we concluded that they were essentially truthful witnesses. We have taken into account in making findings their tendencies to overstatement and, and although with some reservations (in light of Ms Boyle in some instances providing evidence about dates from recollection rather than after recourse to 27 Exhibit 33 Melinda Boyle, paragraph 3. 28 Transcript 442, lines 24-47. 29 For example see Exhibit 33 Melinda Boyle, Attachments 22, 26 and 30. 30 Although they made some notes, the extent of the note-taking is not apparent: Transcript 153, lines 20-44. -- 7 of 44 -- 8 records),31 their unreliability about dates in respect of events for which it not apparent they had records. However, where their evidence about dates is not contradicted or we have found ISPT’s evidence does not assist, we have accepted it. [26] For completeness we note ISPT’s criticisms of the applicants for presenting some statements in similar terms, reading one another’s statements and, in Mr Nobilio’s case, for deposing to some things he did not observe himself.32 However, their statements were prepared through lawyers. We formed our views regarding truthfulness based on the whole of their evidence. A further difficulty with ISPT’s submission is that, at least in part, it is its own documents which tend to support various aspects of the applicants’ claims. [27] Supporting lay witnesses for the applicants included an employee, Ms Rutkowski, a former customer, Ms Forwood (who works with Mr Nobilio) and a former tenant in the Centre who leased the premises immediately next door to Essensuals, Mr Gobbett, were not cross-examined. Each of them confirms some aspect/s of the applicants’ case, although again, each appears to be less than reliable about dates. Some other details each gave also differ in some minor respects from the applicants’ evidence. Given they gave evidence from memory, this is hardly surprising. It might have been of greater concern if these witnesses gave evidence about dates and other matters which precisely coincided with the applicants’ version in all respects. They each, other than Mr Gobbett, have some ongoing relationship with one or both of the applicants. However, ISPT decided not to test them. Their evidence is accepted as it discussed in these reasons. [28] There was also voluminous and complicated expert evidence presented by both parties. Mr Ian Shimmin, who has qualifications in economic geography and urban planning, and experience as an economic advisor in the retail, shopping centre and entertainment industries, reported about foot data and analysed factors which he says affected Essensuals’ business.33 [29] His lengthy report contained a variety of statistical and opinion-based analyses, calculations, and many, many graphs, figures and charts. Somewhat unsatisfactorily, the complete foot traffic data was not available from any other source (although Ms Boyle attaches some at Exhibit 33). 31 Ms Boyle had access to Centre records to check dates of events she refers to in her statements, but in Exhibit 35 she states that she had earlier provided information (including information given in Exhibit 34 to clarify earlier given information which is in Exhibit 33) from recollection only and that after searching records was able to provide correct information, in this instance about short-term tenancy related issues: Exhibit 35, paragraphs 2, 5, 6, 10, 14, 17, 21, 26, 27. 32 Respondent’s Submissions filed 8 August 2012, paragraphs especially 22, 27, 28. 33 Exhibits 28, 29 and 30 are reports of Mr Shimmin, although 29 only corrects errors in Exhibit 28. For ease of reference in these reasons, when we refer to Exhibit 28, we refer to it as corrected by Exhibit 29. -- 8 of 44 -- 9 Mr Shimmin considered the available data was unreliable, especially as it relates to level 2 counters, and so he re-estimated it in unexplained and undisclosed ways based on what he considers was reliable trend data from other months.34 [30] Some of his opinion-based comments were not supported by data or research, and he qualified his report on the basis of unavailable information. Indeed, his report reveals for example that although he purports to comment upon the effect of competitive developments in the CBD, he did not have relevant information about those developments or of Brisbane specific survey material. His report relies upon undisclosed survey data available to his firm. For these reasons, and others later discussed, we do not accept some of his opinions. [31] Mr Don Gilbert, who has qualifications in commerce/economics and property valuation and experience in retail and land valuation and accounting, opines that there is a direct correlation between foot traffic and the applicants downturn in turnover, sales and trade. He also provides complicated graphs in support of his contention. He does not, otherwise analyse whether there were other factors which caused the downturn in foot traffic and whether ISPT was responsible for them. [32] The experts agreed the starting point for all calculations is the financial statements prepared by Mr Bruce Auld of Bentleys, accountants.35 The applicants initially relied upon a methodology which involved applying ABS industry-wide growth rate as proposed by Mr Gilbert’s to calculate their loss. At the stage of final submissions, this was abandoned and a new calculation submitted, based on a methodology using actual sales and actual gross profit, as later discussed. Mr Michael, a forensic accountant, proposes a methodology to calculate loss based on actual sales and trends in sales, although on a different basis. Ultimately, we accept his basic methodology, but using some different benchmarks in accordance with our findings. Access to the Essensuals tenancy [33] Essensuals was located towards the Queen Street end of the Wintergarden on level 2, the same level as what was referred to at hearing as the Medicare corridor. That is, Essensuals was located towards the Queen Street end of the Centre and the Medicare corridor was located towards the Elizabeth Street on level 2, but they were located along the same internal mall. RM Williams, another tenant, was positioned on the entrance closest to the Queen Street Mall along the same internal mall. [34] There were pedestrian entrances to level 2 of the Wintergarden Centre from the Queen Street Mall. The closest pedestrian access to Essensuals 34 Exhibit 28, Ian Shimmin, paragraph 8. 35 Exhibit 16, Expert Conclave Joint Report. -- 9 of 44 -- 10 from the Mall was at the entrance on which RM Williams store was located. Another entrance was located on Queen Street closest to a tenancy then occupied by Mathers Shoes. A food court was located on level 1 adjacent to the Elizabeth Street entrance, and accessible from Queen Street via escalator located close to the Mathers entrance. There was not an entrance from Elizabeth Street to the Medicare corridor. [35] Three lifts fronting the Queen Mall which travel to the Hilton Hotel, also service the Wintergarden Centre. The 3 Hilton lifts on the Queen Street Mall provided direct access to level 2. There were also 2 internal lifts linking a carpark located on levels 4 and 5 with the 3 levels of shops. Internal Lift 1 was in the immediate vicinity of Essensuals. Critical issues [36] Essensuals is entitled to compensation from ISPT under s43(1)(b) and/or (c) if: (i) (a) access by customers to the shop or the flow of potential customers past the shop was substantially restricted or altered; and (b) this occurred because of action taken by ISPT or its agent/s; or (ii) ISPT caused significant disruption to Essensauls trading in the leased premises or ISPT did not take all reasonable steps to prevent or stop significant disruption within ISPT’s control; and (iii) Essensuals suffered loss because of the actions of ISPT or its agents. [37] If causation is established, quantum of the loss must then be calculated. Was there a substantial alteration/reduction in the flow of potential customers past Essensuals? [38] A foot traffic counter located at RM Williams was the closest counter to Essensuals. 36 [39] The foot traffic data provided was not without complexity and shortcomings. Ms Boyle provides some foot traffic data.37 However, some of the data aggregates the count for all level 2 counters and dates from January 2009, (although a percentage variance from 2008 is provided calculated from undisclosed figures).38 Other data breaking down the results of the individual counters on level 2, is for 2008 and later and so does not provide a comparison with earlier years. 36 Exhibit 28, Ian Shimmin, Figure 3.1. 37 Exhibit 33, Melinda Boyle, paragraphs 127-131 and Attachments 48-50. 38 Exhibit 33, Melinda Boyle, Attachment 48. -- 10 of 44 -- 11 [40] The only available data which shows a breakdown of the foot traffic data through the various counters for earlier periods is provided by Mr Shimmin.39 The data he provides spans from January 2006 until after March 2010. However, as discussed earlier, he has manipulated it in unexplained and undisclosed ways, because he considered it unreliable, especially for level 2 counters.40 Trends in foot traffic from the ISPT Data [41] Despite its shortcomings, the ISPT data suggests that throughout 2009, level 2 overall experienced a not insignificant downtown in foot traffic when compared to 2008.41 Then in 2010, percentage decreases when compared to 2009, were considerably greater again and by March 2010, a reduction of some 66% is recorded. In numerical terms, in February 2009, the foot count was 257,599 (a 17.48% decrease on February 2008), whereas in February 2010, the foot count was 88,592 (a 65.61% reduction on the February 2009 period). [42] In particular, foot traffic overall decreased very markedly on the RM Williams foot counter between January 2008 and March 2010.42 For example, in February 2008 foot traffic was 77,703; in February 2009, it was 64,715 and in February 2010, 32,953; in May 2008, it was 81,176 but in May 2009, was 66,933; in December 2008 97,755, whereas in December 2009, 77,152. There were 2 months when the trend was reversed, but only showing a small increase over the same month in the previous year. Mr Shimmin’s analysis of the data he provided [43] Mr Shimmin says that over the period 2006 to 2010, foot traffic was declining in relative and absolute terms on level 2 of the Centre, although most markedly in 2010.43 There was only a small decline of 8854 in 2007/2008; then a more significant decrease in 2008/2009 of 477,113; and then an even more significant decrease in 2009/2010 of 1,147,065. Put another way, foot traffic for level 2 as a percentage of the overall Centre foot traffic was 41.3% in 2006/2007, and 38.3% in 2007/2008. Yet by 2008/2009 it was 34.1% and by 2009/2010 was 27.3%.44 [44] As discussed earlier, the RM Williams foot traffic counter is clearly the closest to Essensuals. Mr Shimmin acknowledges elsewhere that the RM 39 Exhibit 28, Ian Shimmin, Appendix B. 40 Exhibit 28, Ian Shimmin, paragraph 8. 41 Exhibit 33, Melinda Boyle, Attachment 48. In most months the decline was between 17.68% and 11.55% when compared to the same month in 2008. In most months, there was a decrease of between 15 and 16 %. There are two exceptional months, March 2009, when the Overview suggests their was an increase of 6.74% and September 2009, which records an increase in foot traffic of 3.33% over September 2008. 42 Exhibit 33, Melinda Boyle, Attachment 50. 43 Exhibit 28, Ian Shimmin, paragraph 46. 44 Exhibit 28, Ian Shimmin, Table 3.3. -- 11 of 44 -- 12 Williams counter is the counter of most significance to Essensuals following the vacation of Medicare.45 It is apparent from the data that foot traffic through the RM Williams counter decreased significantly. Despite that, Mr Shimmin opines that for the 2009 and 2010 years, the combined RM Williams and Mathers counters on level 2 experienced an increase of 6%.46 The Mathers counter was at the other Queen Street entrance to level 2. Ms Boyle appeared to acknowledge that many people used the Mathers entrance to take an escalator to the food court on level 1.47 [45] By combining the foot traffic counts from the two counters, Mr Shimmin artificially inflates the data about foot traffic in the vicinity of Essensuals during this period. We do not accept that there is a basis to do so. [46] Mr Shimmin specifically notes a significant decrease of some 18% in level 2 foot traffic following the hoarding up of the Medicare corridor in April 2009, for the following 8 months of the year.48 [47] The words ‘substantial’ and ‘significant’ in the RSL Act connote something which is not trivial or fanciful.49 [48] The decrease in foot traffic in 2006/2007 was small. We are satisfied however that it decreased markedly from about mid-2008 onwards. (This is significant because as we shall later discuss, this coincides with a marked downturn in Essensuals turnover in the 2008/2009 year). Specifically, there was a further marked drop in foot traffic from April 2009. Foot traffic considerably decreased at the RM Williams counter when viewed overall throughout the claim period of 1 December 2008 to 31 March 2010. [49] We find that the decrease revealed in both level 2 traffic, and in particular, the RM Williams counter traffic from mid-2008 is not trivial, and is substantial. Did ISPT or its agent/s cause the restriction or alteration in foot traffic? [50] While section 43(1)(b) does not require the tribunal to assign a definite cause, the applicants must reasonably satisfy us that ISPT took action that substantially restricted or altered access by customers to Essensuals or the flow of potential customers past Essensuals. 50 [51] The applicants’ claim raises many issues. They submit that the circumstances should be looked at globally, and that on that basis, events outside of the claim period are relevant to establish the events which 45 Exhibit 28, Ian Shimmin, paragraph 147. 46 Exhibit 28, Ian Shimmin, paragraphs Table 3.7, 55, 73. 47 Transcript 440, lines 20-40. 48 Exhibit 28, Ian Shimmin, paragraph 151 and Table 5.4. 49 Susanna and John Pty Ltd v Trident Ashgrove JV Pty Ltd [2011] QCAT 101, [39]. 50 As discussed in Susanna and John Pty Ltd v Trident Ashgrove JV Pty Ltd [2011] QCAT 101, [40]. -- 12 of 44 -- 13 occurred and the effect they had on Essensuals. The important matters are discussed below. We do not address issues raised about tenant mix (as the Lessor Disclosure Statement specifically provides that there is no assurance given about tenant mix not being altered),51 allegations regarding storage areas or allegations about signage. [52] As a preliminary matter, the applicants say that they made regular complaints to the Centre Manager, Ms Jodie Gaske, during the years of the events under consideration in the proceedings. Documents provided by ISPT and the applicants confirm numerous complaints, although not to the full extent contended. Core-hole drilling [53] Core-hole drilling was undertaken in business hours in 2008 on behalf of ISPT in preparation for the redevelopment. Ms Christodoulou says it took place between about September 2008 and December 2008.52 The notice to tenants advising that the testing was to commence on about 29 September 2008 for about three weeks, acknowledged that noise and vibration may occur at times.53 [54] The person/s who conducted the core-drilling did not give evidence. According to Mr Arthur Austin from the company engaged, records suggest that 17 locations were tested throughout the Wintergarden and that three to four holes was drilled at each location.54 He says he ascertained the testing method from records, and suggests that noise ‘would’ be created for about 30 seconds per hole to create each 3 to 4 holes drilled at each of the 17 locations, and generate some dust in the immediate vicinity of the drilling and vibration for the duration of the noisy drilling. Mr Nobilio explained that dust travels through the air.55 The rest of the process, Mr Austin says is ‘essentially’ a silent one. [55] He says that photographs taken suggest that the drilling occurred over 6 days, 24, 25 and 28 November 2008 and 1, 2 and 3 December 2008. [56] Ms Christodoulou says that shortly after drilling commenced above Essensuals tenancy, water leaked into Essensuals premises.56 She called Ms Gaske, who sent the Centre Operations Manager, Alan Hughes, to investigate. He and Mr Nobilio went to level 3 where they observed the water-cooled drilling machine. She says, as does Ms Rutkowski, that the testing was extremely loud and caused customers to leave the store and hindered trading. 51 Exhibit 33, Melinda Boyle, Attachment 5. 52 Exhibit 9 Angela Christodoulou, paragraph 42. 53 Exhibit 3 Ermanno Nobilio, Attachment EN 11. 54 Exhibit 15 Arthur Austin. 55 Exhibit 4, Ermanno Nobilio, paragraph 47, although he was not referring to core-hole drilling. 56 Exhibit 9, Angela Christodoulou, paragraph 42. -- 13 of 44 -- 14 [57] Ms Boyle says that she did not receive any complaints from the applicants or other tenants about noise and vibrations resulting from the testing.57 Despite this, correspondence attached to her statement from Mr Nobilio dated 2 December 2008 addressed to Ms Jodie Gaske, Centre Manager, includes complaints about the ‘excessive noise and vibration’ caused by the drilling.58 [58] Ms Gaske authored various internal memoranda attached to Ms Boyle’s statement regarding concerns raised by the applicants in which she referred to herself as Centre Manager. 59 Also attached are numerous pieces of correspondence from the applicants to Ms Gaske as Centre Manager, 60and from other tenants to Ms Gaske as Centre Manager.61 Ms Christodoulou’s evidence was that she often telephoned about issues and when she did, she spoke with Ms Gaske.62 [59] It is apparent from the contemporaneous emails and file notes attached to Ms Boyle’s affidavit, that Ms Gaske attended at the applicants’ tenancy on occasions following issues being raised, or arranged for the attendance of another JLL staff member. The records do not suggest that Ms Boyle did so. Eventually at hearing Ms Boyle confirmed that she could not comment upon whether the applicants complained to Ms Gaske about noise, dust and vibration.63 [60] We are satisfied that Ms Gaske was represented to the applicants as Centre Manager. We concluded having regard to these matters and from cross-examination of Ms Boyle, that while Ms Boyle was the Centre Manager for Redevelopment, the Centre Manager dealing with day-to-day issues with whom the applicants spoke about their concerns and issues was Ms Jodie Gaske. We do not accept that Ms Boyle knew of all contacts between Ms Gaske and the applicants. We accept their uncontradicted evidence about contacts and complaints made. We place little weight on Ms Boyle’s evidence about whether she personally received complaints from the applicants, or other tenants, about this and other issues raised by the applicants. [61] That said, the applicants have in their witness statements expressed the level of disruption caused by the core-hole testing in rather emphatic, and we consider somewhat overstated terms, for example, ‘vibration from the 57 Exhibit 33 Melinda Boyle, paragraph 113. 58 Exhibit 33 Melinda Boyle, Attachment MEB 24. 59 For example, Exhibit 33 Melinda Boyle, Attachments MEB 22, 26, 30 and 36. She had earlier described herself as Assistant Centre Manager, see Attachments MEB 33 and 34. 60 For example, Exhibit 33 Melinda Boyle, Attachments MEB 21, 29. For completeness, we note Attachment MEB 47 which is a letter from the applicants to Ms Boyle as Centre Manager. 61 For example, Exhibit 33 Melinda Boyle, Attachments MEB 43. 62 Transcript 133, lines 10-27. Sometimes but not always, Mr Nobilio followed this up with an email or letter: Transcript 133, lines 10-27. 63 Transcript 442, lines 24 to 47. -- 14 of 44 -- 15 drill was so intrusive that all of our customers ran out from the store’64 and that the drilling ‘substantially hindered the applicants’ ability to trade for the entire duration of the drilling.’65 We are satisfied that the overstatement has resulted from frustration born of the circumstances outlined herein, rather than an intention to mislead. [62] We accept Mr Austin’s expert evidence about how the process is generally done and the number of sites drilled. As he was not present, he is unable to say when and how the process actually proceeded at the Wintergarden. We accept the applicants’ uncontradicted evidence that the drilling commenced in late September (which is supported by Wintergarden’s correspondence to tenants) and concluded on about 3 December, 2008. [63] We are satisfied on the evidence that core-hole drilling caused some very loud noise and vibration for brief periods on some days between late September and 3 December 2008, causing some customers to leave Essensuals. Further, we draw the reasonable inference that during the process, other than during the brief periods of drilling, that noise was created by the persons engaged in the associated tasks and the manipulation of the equipment as well as movement of equipment and personnel around the Centre between the testing sites. [64] We accept that some dust was generated in the Centre as a result of the process in the vicinity of the testing sites, and we infer that it subsequently moved through the air in the Centre. We further accept that drilling on 2 December resulted in a water leak into the Essensuals’ tenancy. [65] Mr Shimmin calculates the total drilling time of about 30 minutes, concluding that the impact was likely to be minimal on foot traffic.66 However, we are satisfied that it must be viewed in the overall context of events. [66] Viewed in context of the overall relevant events, we are satisfied that the core-hole drilling did have an effect on the attractiveness of the Centre to potential customers, and therefore although not quantified discretely, on foot traffic. Maintenance related issues [67] Mr Nobilio and Ms Christodoulou contend that ISPT failed to properly maintain the Centre in the lead-up to the redevelopment giving the impression of a Centre in decline. Awning 64 Exhibit 9, Angela Christodoulou paragraph 42d. 65 Exhibit 9, Angela Christodoulou paragraph 42c. 66 Exhibit 28, Ian Shimmin, paragraphs 184-186. -- 15 of 44 -- 16 [68] In late 2008, Mr Nobilio reported to Centre Management, through Ms Jodie Gaske, that the glass-panelled awning covering Wing 1 of the Centre was poorly maintained.67 Photographs he provides reveal one glass panel missing (he says it had been removed some weeks previously), and he says, that the glazing had failed. He considered this portrayed an image of disrepair. [69] Ms Boyle says that in about March 2008, ISPT engaged an engineer to inspect the glass panels as several of them were cracked. She says the cost of replacing the panels was significant and that ISPT made a commercial decision not to replace them as ‘The awning was to be removed as part of Stage 1 of the redevelopment anyway.’68 She says the panels were subsequently removed ‘over a period of time as and when they needed to be removed.’ She denies that the state of the awning from time to time impacted on foot traffic because, she says, it had no impact on sightliness. [70] Mr McGarrity acknowledged in oral evidence that if the awning was not repaired under the operating budget, it became a capital redevelopment expense.69 Further, he refers to the redevelopment concept as having ‘an iconic façade treatment’ to enhance the external appearance and become a Brisbane landmark and ‘major differentiator.’70 In doing so, he acknowledges that an impressive façade is important to the image of a shopping centre. [71] We have no evidence about when the awning was removed in Stage 1, although glass panels were removed at various times between August 2008 and 23 February 2010.71 [72] We are satisfied on the evidence that the awning panels were not replaced and the awning not repaired from March 2008 onwards because of the impending redevelopment. Further, we draw the reasonable inference, on the basis of Mr McGarrity’s evidence, that façade is important to enhance external appearance of an up-market shopping centre. [73] Mr Shimmin opines that the awning cannot be usefully considered against data to gauge impact on foot traffic and Essensuals business.72 However, we are satisfied that it must be viewed in the overall context of events. [74] Viewed in context of the overall events, we are satisfied that the lack of maintenance of the awning contributed to an impression of a Centre in decline. This affected its attractiveness as a shopping destination, although not quantified discretely, and therefore on foot traffic. 67 Exhibit 3, Ermanno Nobilio, paragraph 26 and Attachment 16. 68 Exhibit 33, Melinda Boyle, paragraphs 63-65. 69 Transcript 467, lines 1-10. 70 Exhibit 36, Sean McGarrity paragraphs 5, and 9(l). 71 Exhibit 33, Melinda Boyle, Attachment 32. 72 Exhibit 28, Ian Shimmin, paragraphs 191-196. -- 16 of 44 -- 17 Water leaks [75] In addition to the leak caused by the core-hole drilling which is acknowledged by ISPT, leaks are alleged on 17 August 2008; 8, 18, 19 and 20 September 2008 ; 18 November 2008; 3 March 2009; and 20 May 2009. It is alleged that they caused damage to ceilings, walls, light fittings, computer and office and other electrical equipment and appliances; joinery; business records, carpet and stock and personal effects.73 The applicants say that ISPT was notified in a timely way of the leaks.74 The applicants allege that on 19 November 2008, the leakage was not only water but leakage from raw sewage with an associated pungent odour. [76] Ms Boyle responds that ISPT always acted in a timely manner regarding complaints of water damage to inspect and rectify damage. Acknowledging a leak from the level 3 toilets, she says there was no evidence that raw sewage leaked into Essensuals tenancy. 75 To make this statement she relies on Ms Gaske’s notes that the Operations Manager told her that he did not consider the water had an odour. She also says that not all incidents were reported, apparently on the basis that they are not all referred to in Jodie Gaske’s notes and email. Ms Boyle also clarified her earlier witness statement to say that maintenance was not neglected.76 [77] Mr McGarrity acknowledged that major capital expenditure, such as air- conditioning and lift works due, often gets rolled into a development, indicating that if the life-cycle of the item had passed but a redevelopment was only a couple of years out, that they would probably be done as part of the development.77 [78] We accept the applicants’ evidence of multiple incidents of water leaks and consequent damage which we accept were reported to Ms Gaske. We accept that ISPT took steps to rectify damage caused. [79] Putting aside the core-hole drilling incident, ISPT does not say that any investigation was made into the cause or that for example, it attempted to rectify the plant equipment or structure to ensure that storm water could not again enter Essensuals tenancy. Given Mr McGarrity’s acknowledgement about delaying expenditure pending redevelopment, we draw the inference that maintenance and repairs of items likely to involve capital expense, including repairs to stop storm water ingress were kept to a minimum pending the redevelopment. [80] Mr Shimmin opines that the periods of water damage cannot be usefully considered against data to gauge impact on foot traffic and Essensuals 73 Exhibit 3, Ermanno Nobilio, paragraph 20-23. 74 Exhibit 4, Ermanno Nobilio, paragraph 116. 75 Exhibit 33, Melinda Boyle, paragraphs 45-62 and Exhibit 34, Melinda Boyle, paragraph 3. 76 Exhibit 34, Melinda Boyle, paragraph 8. 77 Transcript 466, lines 10 to 30. -- 17 of 44 -- 18 business.78 However, we are satisfied that it must be viewed in the overall context of events. [81] We are satisfied that viewed in the context of the overall events that this did have an effect, although not quantified discretely, on foot traffic. It contributed to decreasing the attractiveness of the Centre as a place to browse and shop for those customers who encountered the effects of it. Air-conditioning [82] The applicants say that from about the summer of 2005-2006, the air- conditioning was inadequate to service their tenancy, which regularly experienced temperatures of 40 degrees.79 They say that this generally occurred in December/January each year thereafter, being the hottest part of the year, and also the busiest. They claim that customers often left Essensuals due to oppressive heat. Ms Rutkowski makes similar comments. Ms Forwood recalls leaving the shop because of oppressive heat. Mr Gobbett speaks of similar problems in his leased premises. [83] ISPT acknowledges some issues with the air-conditioning. Ms Boyle explains that numerous units serviced the various tenancies and common areas.80 That is, the air-conditioning for the Centre was segmented. She says that ISPT took all reasonable steps to ensure the air-conditioning was functioning appropriately, but acknowledges that on very hot days it was stretched to its limit. She acknowledges 10 oral complaints from the applicants between December 2005 and February 2010.81 [84] She says whenever complaints were received, JLL ‘would’ check the temperature in the tenancy and if outside of ‘reasonable range’ provide free-standing fans. She says that ‘on those occasions’, ISPT took steps to have technicians inspect the air-conditioning and arrange for portable fans and air-conditioners within the Centre and tenancies. She acknowledges an occasion in December 2007 when sourcing a part from Germany took 2 weeks. We infer that some of the air-conditioning was not working during that period, including for Essensuals’ tenancy. [85] Ms Boyle acknowledges that from about 2005, there were complaints by the applicants about the air-conditioning. She does not reveal how many complaints were also received from other tenants. However, her evidence reveals that portable fans and air-conditioners were placed in the Centre and other tenancies, not only the applicants’ tenancy. Mr Gobbett had similar problems. It is reasonable to infer that other tenants in the Centre experienced similar problems. [86] Ms Boyle clarified that maintenance was not neglected and that during the period concerned ISPT expended capital on a variety of things including 78 Exhibit 28, Ian Shimmin, paragraphs 191-196. 79 Exhibit 3, Ermanno Nobilio, paragraph 10. 80 Transcript 434, lines 33-40. 81 Exhibit 33, Melinda Boyle, paragraphs 30-33. -- 18 of 44 -- 19 lift upgrades, new chillers and new air-conditioning units and the refurbishing of the food court ‘in 2007’. 82 However, it is not apparent which of these events she says occurred in 2007 (and as will be discussed, on either version of events, some of them occurred in other years for example the lift upgrades were commenced in 2008). Nor is it apparent, having regard to the segmented operation of the air- conditioning that the air-conditioning units and chillers which were replaced were for the tenancy or area occupied by the applicants. [87] ISPT’s chronology83 (filed as part of its submissions) places reliance on a statement made by Ms Christodoulou that the air-conditioner was replaced in 2007.84 Ms Christodoulou’s statement appears to contain a typographical error, as it is at odds with the evidence otherwise provided about the air-conditioning. If it not a typographical error, then Ms Christodoulou in any event says that problems arose again within a short period. The weight of the evidence suggests that there was no replacement of the air-conditioner for the Essensuals tenancy in 2007. [88] On either version, it is uncontroversial that from time to time after about December 2005, in hot weather, the air-conditioning system in the Centre was unable to maintain the desired temperature. On each occasion, arrangements were made for repair to reinstate adequate functioning. We are satisfied that Essensuals and some areas in the Centre were uncomfortably hot for the duration of time it took to have this done, source parts, and undertake necessary repairs, for up to several weeks in 2007. [89] Again, we note Mr McGarrity’s evidence that major capital expenditure may be delayed despite the end of life-cycle of items such as air- conditioning, and that replacement might be done as part of planned redevelopment.85 As we discuss later, we are satisfied that from early in 2007, ISPT was committed to redevelopment. Other items such as the awning were not maintained because of the pending redevelopment. It is reasonable to infer, and we draw the inference, that the air-conditioning system for the Essensuals vicinity was not upgraded or replaced, notwithstanding ongoing issues, for similar reasons. That is, it was to be replaced as part of the redevelopment. [90] Mr Shimmin opines that complaints related to air-conditioning inadequacies cannot be usefully considered against data to gauge impact on foot traffic and Essensuals business.86 However, we are satisfied that it must be viewed in the overall context of events. [91] Viewed in context of the overall relevant events, we are satisfied that it did have an effect, although not quantified discretely, contributing to 82 Exhibit 34, Melinda Boyle, paragraphs 8, 20. 83 Respondent’s Chronology, page 9. 84 Exhibit 9, Angela Christodoulou, paragraph 99a. 85 Transcript 466, lines 10 to 30. 86 Exhibit 28, Ian Shimmin, paragraphs 191-196. -- 19 of 44 -- 20 decreasing the attractiveness of the Centre as a place for customers to browse and shop. We accept that it therefore affected foot traffic. Dust, noise, vibration and cleaning [92] The applicants complain that dust, noise and vibration produced as a consequence of the redevelopment, the associated preparatory activities and the other issues raised in their claim (for example, building kiosks), was a significant issue during the period leading to redevelopment and after the commencement of Stage 1 in January 2010. [93] The applicants say it led to an increased need for staff to dust their stock and shelves. They say the dusty environment discouraged customers. Ms Rutkowski’s statements support this. They point to significant increases in spending by ISPT in cleaning from the 2007-2008 year and in each year thereafter until the end of the period of the claim.87 Ms Christodoulou says that cleaning by cleaners engaged for the Centre became constant.88 [94] The applicants also say that this coincided with a large numbers of construction workers in the Centre presumably in preparation for the commencement of the redevelopment who carried dust throughout the Centre. [95] Ms Boyle says that redevelopment works did not commence until January 2010 and in this way, limits her comments to Stage 1 of the redevelopment. For the reasons explained later, although we accept that ‘Stage 1’ itself did not commence until January 2010, we do not accept that redevelopment works did not commence at an earlier time. Further, she says that once Stage 1 commenced Speedline acoustic hoarding was erected and sealed to avoid dust and noise escaping, pointing out that the applicants’ tenancy was on the far side of the Centre away from Stage 1.89 [96] She says that part of her role was to ensure that the works did not adversely affect customers and tenants. She says she does not recall receiving complaints from the applicants or other tenants about dust. That said, she acknowledges some complaints about noise from the Stage 1 works. [97] Ms Boyle did concede that if there was dust on the shelving, it would be an issue and would need to be cleaned; and that in a gift shop people 87 Exhibit 33, Melinda Boyle, paragraph 24 and attachment MEB 6. The cleaning costs for various financial years were as follows: 2004, $408,990; 2005, $412,821; 2006, $435,493; 2007, $450,517 but then in 2008 $546,817; 2009, $579,944 and 2010, $645,947. 88 Transcript 161, lines 7-15. 89 Exhibit 33, Melinda Boyle, paragraphs 117- 126; Exhibit 34, Melinda Boyle, paragraphs 9-10. -- 20 of 44 -- 21 need time to browse and make a selection; and that vibration would adversely impact on persons remaining in and browsing in a gift shop.90 [98] As discussed later in these reasons, we are satisfied that a variety of preparatory works were done. Some of these coincided with the construction of the Easyway Teas kiosk. There is no evidence of hoarding, or in the case of the kiosks, sealed hoarding, in place during this work. We are reasonably satisfied that, as the applicants say, that noise and dust was generated from them and travelled throughout the Centre. Consistently with this, ISPT’s cleaning costs increased significantly during the 2008-2010 financial years. We draw the inference from the significant increase that there was a significantly increased need for cleaning. [99] We find that from the time the preparatory works and investigations commenced dust, noise and vibration was regularly generated during the period that those various works were undertaken, this includes the core- hole drilling from September to December 2008 and other works as later discussed commencing from April 2009. The construction of the kiosks also generated dust noise and vibration during the periods they were constructed. Stage 1 then commenced in January 2010. [100] Mr Shimmin’s opinions about noise and dust appear to relate only to Stage 1. He opines that noise and dust, if there was any associated with the redevelopment, may have decreased its attractiveness and therefore foot traffic, but in his analysis this is indistinguishable from the impacts of the vacation of tenants.91 [101] We infer from his comments that during any period that construction works were underway which created dust and noise, that may have resulted in the Centre being less attractive to potential customers. It is reasonable to infer, and we do draw the inference that although ISPT spent more on cleaning to endeavour to counter dust, that an increased level of dust was nevertheless in the air within the Centre. The dust and noise therefore contributed to decreasing foot traffic during the various periods when works were underway, as identified in these reasons, in the lead up to Stage 1. Ms Boyle conceded that dust and noise would present issues for cleaning and customer’s making selections in a gift shop like Essensuals. We accept this is so. Also, despite the speedline acoustic hoarding erected in Stage 1, Ms Boyle acknowledges complaints about noise. We accept that noise travelled throughout the Centre during Stage 1. [102] In submissions, the applicants also contend that there is evidence, primarily from Mr McGarrity in cross-examination,92 that noise and dust was generated by the de-fitting of tenants in the lead-up to the 90 Transcript, 443-444. 91 Exhibit 28, Ian Shimmin, paragraph 163. 92 Transcript, 468-469. -- 21 of 44 -- 22 commencement of Stage 1. ISPT argues that this is a different case than it came prepared to answer. [103] The applicants make broad allegations about the effect of the redevelopment works, the preparation for them (in which they include the vacation of tenancies) and the construction of kiosks. However, their own evidence-in chief does not specifically address noise and dust caused by other tenants in defitting,93 as opposed to dust and noise generated by ISPT and so was not addressed by ISPT’s evidence in chief. On this basis, for reasons of natural justice, we consider that the applicants are not entitled to rely upon this additional ground in support of their case. Other Pre-Stage 1 preparations, vacation of tenancies, hoarding off, short-term leases Medicare [104] Ms Boyle says that Medicare gave notice on 12 March 2007 that it would not be seeking to renew its lease94 and vacated G226 on 31 May 2007. Ms Boyle says that after it vacated, until about March 2009 (almost 2 years) it arranged for various short-term tenancies and pop-up sales to occupy that space. Three short-term tenants occupied G226 for periods of approximately 4 weeks, 6 weeks and 6 months.95 It was vacant from late August 2007 until September 2008, and again from late September 2008 until 1 July 2010. [105] Mr Shimmin calculates that the vacation of Medicare in May 2007, corresponded with what he describes as a small 3.8% decrease in foot traffic at the RM Williams entrance closest to Essensuals. He opines that this decline is too small to attribute to Medicare solely, but does not suggest an explanation. He considers the lack of cashed up persons with Medicare refunds impacted on Essensuals.96 He does not refer to research to suggest that people with health care-related refunds are more susceptible to impulse buying than others. Also, he acknowledges that he did not have information about origins of trade for Essensuals.97 Therefore, we do not find his evidence about this useful. The other tenants in the Medicare Corridor [106] Ms Boyle says Australia Post’s lease expired on 31 January 2009, and there was no request to consider renewal.98 This is hardly surprising. We accept the applicants’ uncontradicted assertions that they were told that 93 That said, Mr Nobilio in cross-examination was asked about dust from defitting and in this context gave some evidence about it: Transcript pages 92-94. 94 Exhibit 33 Melinda Boyle, paragraphs 92 and Attachment MEB 42. 95 Exhibit 33 Melinda Boyle, paragraphs 90-91 but later corrected in Exhibit 35, paragraphs 2, 2-4 and Attachment 2SMEB. 96 Exhibit 28, Ian Shimmin, paragraph 153. 97 Exhibit 28, Ian Shimmin, paragraph 13. 98 Exhibit 33 Melinda Boyle, paragraph 92.. -- 22 of 44 -- 23 no leases would be renewed as early as May 2008. It is reasonable to infer that Australia Post’s representatives were also informed by ISPT that no leases were to be renewed, but in any event, we conclude that they, like all tenants of the Centre had been advised well before then that the Centre was shortly to be completely redeveloped, including their premises being fully demolished. [107] She says HCF’s lease expired in January 2009, and it vacated. She says its representatives told her they wanted to move closer to pedestrian street access.99 That aside, we draw the inference that its representatives had been told that no leases would be renewed, as the applicants were in May 2008. In any event, it is also reasonable to infer that they would not wish to renew in circumstances when their tenancy was to be demolished in the short-term as part of the planned redevelopment. [108] Medibank Private also vacated at the end of its tenancy in February 2009. Once again, Ms Boyle says its representatives did not seek to renew.100 We draw a similar inference regarding the knowledge of its representatives that ISPT would not renew and their awareness of the impending redevelopment. [109] It is uncontroversial that the Medicare corridor was completely empty of tenants by April 2009. At this stage, ISPT then blocked off the Medicare corridor from April to December 2009 and erected hoarding to prevent entry to that end of the corridor, 101 in which Essensuals was a tenant at the other Queen Street end of the same internal mall. [110] Ms Boyle says the hoarding was not associated with the redevelopment and was not unsightly.102 Whereas the redevelopment as such had not begun, we are satisfied that the closure of the corridor and erection of hoarding was part of the broader preparations for the redevelopment. [111] Mr Shimmin acknowledges the vacation of the Medicare corridor in 2009 by the ‘key’ and ‘destinational’ tenants which had significant drawing power for foot traffic, culminated in closure of the Medicare corridor from April 2009 until the commencement of Stage 1. An 18 % overall reduction in footfall ensued, but 21% at the RM Williams counter. He acknowledges that pop-up tenants which occupied the Medicare tenancies at various times would not have had the same drawing power as the key service providers who vacated.103 He suggests that the hoarding of the Medicare corridor was preferable to vacant tenancies, and that it had no effect over and above the vacation of the key tenants from the area.104 Other tenancies 99 Exhibit 33, Melinda Boyle, paragraph 93. 100 Exhibit 33, Melinda Boyle, paragraph 94. 101 Exhibit 33, Melinda Boyle, paragraphs 95-96. 102 Exhibit 33, Melinda Boyle, paragraph 96. 103 Exhibit 28, Ian Shimmin, paragraph 153. 104 Exhibit 28, Ian Shimmin, paragraph 153. -- 23 of 44 -- 24 [112] The applicants say that various other tenants vacated their premises and were not replaced.105 [113] Ms Boyle disputes any ‘wholesale’ vacation by tenants.106 Once again, we were presented with a complicated array of material. Ms Boyle provided evidence about tenancies and vacancies from time to time, including a schedule of tenancies (which contained some apparent anomalies107 and discrepancies, which she later acknowledge108) at 1 January over the years 2004 to 2010 109 and a further schedule about when tenancies on the Edward Street side of the Centre were vacated in 2009.110 [114] The schedule of tenancies as at 1 January in the specified years indicates vacant tenancies from time to time and some tenancies which were not tenanted in January 2007 or any year thereafter at 1 January,111 in addition to E148 which she says was vacant from February 2009,112 and Q276 which was vacant and hoarded up for the last 6-7 months of 2009.113 She refers to Q277, which was vacated by Olive Home in December 2008, but says it was tenanted in 2009, by a homewares retailer and later a shoe retailer, and only vacant during changeover.114 [115] Two later written statements of Ms Boyle, purport to clarify the evidence discussed above, 115 and subsequently to correct it again, in part, in yet another schedule.116 She says that JLL was proactive in ‘ensuring’ there were ‘no’ vacancies in the Centre,117although it is apparent that there were numerous vacancies. It emerges that over the 2008-2010 years, some short-term tenants occupied numerous different tenancies from time 105 For example see Exhibit 3, Ermanno Nobilio. 106 Exhibit 33, Melinda Boyle, paragraphs 98-105. 107 For example, it suggests that Australia Post moved from Q228 to Q226 between 1 January 2008 and 1 January 2009, but this is inconsistent with other evidence of both parties. We conclude that this is a typographical error. Further, the table is inconsistently presented in some columns. 108 Exhibit 35, Melinda Boyle, paragraphs 2, and 5. 109 Exhibit 33, Melinda Boyle, paragraph 7 and Attachment MEB 2. 110 Exhibit 33, Melinda Boyle, paragraph 104 and Attachment MEB 44. 111 For example, from this schedule, it is apparent that although E121 was tenanted at 1 January 2008, it was untenanted by 1 January 2009 and was also vacant at 1 January 2010. Q 244 was tenanted at 1 January 2006, but not at 1 January 2007, or 1 January in any year thereafter. Q 274 was vacant at 1 January 2008, 2009, and 2010. Q266 was vacant at 1 January 2009 and 2010. Q310 occupied by Kerrie Craig until sometime after 1 January 2006 was not tenanted at 1 January 2007, 2008, 2009 or 2010. Similarly, G332, G346, G348, G350 and G352 were vacated after 1 January 2006, and not tenanted at 1 January 2007, or in any year thereafter.G01, was tenanted at 1 January 2008, but not at 1 January 2009 or 2010.G02A, G03, G04 and G05, were tenanted at 1 January 2004, but it seems not at 1 January in any year thereafter. 112 Exhibit 33, Melinda Boyle, paragraphs 7, 103, 104, 105 and Attachments MEB 2and MEB 44; 113 Exhibit 33, Melinda Boyle, paragraph 103, 105. 114 Exhibit 33, Melinda Boyle, paragraph 102. 115 Exhibit 34, Melinda Boyle, paragraph 7. 116 Exhibit 35. 117 Exhibit 34, Melinda Boyle, paragraph 7. -- 24 of 44 -- 25 to time, in effect moving around within the Centre.118 Also, numerous short-term licence agreements were entered into and periods of vacancy occurred between tenancies.119 [116] The final schedule provided to correct the information earlier given does not contain reference to all of the tenancies referred to in the earlier schedule setting out the position at 1 January in each year which were vacant at least at 1 January in the years identified by us.120 [117] In the end we are left with a confusing array of evidence about tenancies and vacancies. However, we are satisfied on the balance of probabilities that from 2007 onwards, there were an increasing number of vacant tenancies, that short-term tenants themselves sometimes had multiple tenancies over a short period of time, and that some tenancies were vacant between periods of short-term leases and licences. [118] To further complicate matters, in her written statement, Ms Boyle had asserted that JLL had responsibility for leasing.121 However, in cross- examination she asserted that she could not recall if an attempt was made to replace vacated tenancies with long-term quality tenants, saying that JLL was not involved in the day-to-day leasing of the Centre tenancies. 122 [119] We do not accept her oral evidence that she could not recall. It is not disputed by Ms Boyle that she told Mr Nobilio in May 2008 that no leases were to be renewed. Therefore, we are satisfied that she was aware that long-term tenants were not to be sought when tenants vacated from not later than May 2008. That said, the evidence concerning the short-term leasing arrangements for Q226 (after it was vacated by Medicare in May 2007) suggest that those arrangements were in place at that earlier time. Otherwise, it might reasonably be expected that a long-term tenant would have been sought. This is in keeping with Mr McGarrity’s evidence that, from 2007 it was intended to proceed with redevelopment. We draw the inference that a decision, not to seek long-term tenants when leases expired with a view to progressing the redevelopment, had been made by March 2007 when Medicare notified of its intention to vacate and that Ms Boyle was aware of it. 118 Exhibit 35, Melinda Boyle, paragraphs 6-8 Be Boutique moved from Q212 to Q246 and then Q230C during the period 15 July 2008 to 12 February 2010 although the tenancies were not over a continuous period. Q212 was occupied by Living Silk from 17 May 2009 to 31 July 2010; Exhibit 35, paragraphs 17-20 Lulemon occupied E140 and Q256 for different period between 30 March 2009 and 21 December 2010. 119 See previous footnote, and Exhibit 35, Paragraphs 10-11, 14-16, 21-22, 24-26. 27-30. 120 For example, Exhibit 33 MEB 2 refers in addition to those tenancies referred to in Exhibit 35 2SMEB to E110, E130, Q244, Q310, G342, G346, G348,G350, G352, QSM10, G01, G02A, G03, G04, G05. However, 2SMEB also refers to some tenancies not recorded in MEB2, including K03, K04, K05, and Q242A.. 121 Exhibit 33, Melinda Boyle, paragraph 3. 122 Transcript 440, lines 25 to 41. -- 25 of 44 -- 26 [120] To the extent that Ms Boyle’s evidence seeks to give an impression, that ISPT through JLL continued to operate the Centre as usual after March 2007, we reject it. We find that the decision to redevelop influenced ISPT’s other decisions about the running of the Centre as are discussed in these reasons. In particular for present purposes, it influenced it to decide not to renew leases of tenants and not to seek long-term tenants when leases expired leading to increasing numbers of empty tenancies and short-term tenancies in the Centre from 2007. [121] Mr Shimmin considers that other tenancy vacations in 2009, but prior to December 2009 ‘associated with Stage 1’ (of which he identifies 3), had no effect on Essensuals.123 It is implicit in his comments that in some circumstances, it is reasonable to conclude that vacation of tenants and vacant tenancies will have an effect. In particular, his comments confirm that departures of key or destinational tenants, were responsible for a significant decrease in foot traffic. 124 [122] Also, we have identified various other vacancies, and increasing numbers of vacancies from about 2007 which Mr Shimmin does not discuss. The effect of an increasing number of vacancies by key tenants and other tenants over a number of years prior to Stage 1 is not considered by Mr Shimmin. [123] It is reasonable to infer that potential customers were cognisant of progressive changes within the Centre. As tenants progressively vacated, or moved to short-term premises potential customers could no longer have been confident that a shop or service they wished to frequent had a continuing tenancy in the Centre. It is reasonable to conclude that this influenced customer behaviour and altered the flow of potential customers to the Centre. [124] ISPT rely upon statements in 2 Retail Shop Lease Tribunal decisions in claims based on reduction in foot traffic to submit that vacant tenancies cannot be relied upon. In Vardenega & Ors v Catoria Investments & Trading Pty Ltd125 the Tribunal considered that there was no duty to ensure that all or most of the shops in a centre are occupied, saying that the decision to extend a particular tenant, to relet to someone else are commercial decisions rather than legal obligation. This decision was applied in Pincott and Pincott v Metro Maroochydore Pty Ltd126 which said, without more, that it considered Vardenga correctly stated the law. [125] Vardenega does not consider any earlier decisions of courts and tribunals to support the conclusion. It was not made against a background of vacancies to effect a major redevelopment of a Centre, merely a Centre which was increasingly less busy. Pincott was made in a case concerning 123 Exhibit 28, Ian Shimmin, paragraph 156-157. 124 Exhibit 28, Ian Shimmin, paragraph 153. 125 [1992] QRSLT 2 (7 April 1992). 126 [2007] RSLT 002. -- 26 of 44 -- 27 the announcement by the landlord of an intention to redevelop which was alleged to have reduced foot traffic. [126] As a general principle, absent any binding contractual terms between a particular landlord and tenant to the contrary, it is no doubt the case that decisions about letting are commercial decisions. In our view, this is not the end of the consideration in the context of a s 43 claim relating to reduced flow of potential customers past a shop. The question is not whether the landlord was obliged to relet to any of the other tenants. The Tribunal must consider whether on the particular facts a landlord’s actions resulted in a decrease in foot traffic past the shop. In most cases, the fact that a landlord made a commercial decision not to relet to a particular tenant or tenants is unlikely to be of consequence. [127] However, in this case, in deciding not to renew or grant any long-term tenancies from 2007 onwards and not to seek to replace key or anchor tenants, did ISPT’s actions substantially alter the flow of customers past the leased shop? On the facts of this case, we conclude that ISPT’s decisions about leasing which led to increasing numbers of vacant tenancies from 2007, and decreasing numbers of long-term, including key and destinational tenants, over a protracted period, in combination with the other factors identified, contributed to the decrease in the volume of foot traffic in the Centre. Car Parking and Lifts [128] Mr Nobilio says that disruption to the flow of customers was occasioned through access to car parks being restricted, due to Lift 1 being non- operational (originally he said it had broken down, but at hearing it was conceded that it had not) for the period 22 September 2008 to 31 October 2008 and, subsequently, closure of some car parks closest to the lifts on level 4 of the car park in about April 2009 to make way for installation of a site office for the redevelopment.127 Mr Nobilio produces a photograph, unfortunately undated, of some cordoned off car parks.128 [129] Ms Boyle says the closure of Lift 1 was for an upgrade of the lift.129 Mr McGarrity says that from 11 January 2010, construction workers began to occupy an area previously used for about 20 car parks away from the lifts on level 4 of the car park.130 He says some 89 car parks on that level remained for public use by monthly ticket holders, and that parking bays on that level would not usually be used by casual patrons. He denies occupation of car parks from April 2009.131He produces an unsigned copy of a Parking Licence Agreement nominating 11 January 2010 as the commencement date, and identifying the proposed car parks to be 127 Exhibit 3, Ermanno Nobilio, paragraph 5g and 24, 32. 128 Exhibit 3, Ermanno Nobilio, paragraph 32 and Attachment EN 20. 129 Exhibit 33, Melinda Boyle, paragraphs 35-40 and Attachment 15. 130 Exhibit 36, Sean McGarrity, paragraphs 20-23. 131 Exhibit 37, Sean McGarrity, paragraphs 5-6. -- 27 of 44 -- 28 covered by it.132 He does not say whether use of car parks was given to contractors outside of this, or whether the agreement was ultimately signed whether as produced or altered. [130] That said, we accept on the basis of the draft Licence Agreement that more likely than not, the 20 level 4 car parks Mr McGarrity refers to were used for the contractors workers from 11 January 2010. [131] However, for reasons discussed in the following paragraphs under the heading ‘other preparatory works’, we draw the inference that before formal engagement of the contractor, access to the Centre was given to proposed contractors and their agents in order for them to scope and quote for the proposed redevelopment works and develop a project plan, and in order to undertake preliminary works which were done from October 2009. We further draw the inference that to facilitate this process, car parks were made available for a period of some months before July 2009. Mr Nobilio says it occurred from April 2009. This seems likely given events as are later discussed. We are satisfied on the balance of probabilities that it did occur from April 2009. [132] In addition to the upgrade of the car park lift referred to earlier, Ms Boyle says that in October 2009, ISPT commenced lift upgrade works on the Hilton glass lifts,133 of which there are 3, which front the Queen Street Mall. This work was completed in about April 2011. She says this was necessary because the lifts had reached the end of their working life.134 [133] Mr Nobilio says that the Hilton lift ‘upgrade’ was actually part of the redevelopment because the lifts were ‘upgraded’ internally and externally to match the décor and design of the redevelopment.135 This is confirmed by the notice to tenants provided by Ms Boyle136 about lift and other building works to commence on about 15 October 2009, which states that these works are ‘preliminary to other work that ISPT intends to carry out at the Centre in 2010.’137 One lift was out of commission at any one time. [134] We are satisfied that the lift upgrades in 2008 and 2009-2011 were part of the redevelopment works. [135] Mr Shimmin opines that because of alternative access routes and because only one of the Hilton lifts was unavailable at any given time, that the period of works on Lift 1 to the carpark and the Hilton lifts had negligible affect on foot traffic in the vicinity of Essensuals.138 132 Exhibit 37, Sean McGarrity, paragraph 5- 6 and Attachment 5. 133 Exhibit 33, Melinda Boyle, paragraphs 41-44 and Attachment MEB 1. 134 Exhibit 33, Melinda Boyle, paragraph 42. 135 Exhibit 4 Ermanno Nobilio, paragraph 113. 136 Exhibit 33, Melinda Boyle, Attachment 16. 137 Exhibit 33, Melinda Boyle, Attachment 16. 138 Exhibit 28, Ian Shimmin, paragraphs 187-190. -- 28 of 44 -- 29 [136] Lift 1 was in the immediate vicinity of Essensuals providing access directly from the carpark to level 2. The Hilton lifts gave direct access to level 2. Viewed in context of the overall events, we are satisfied that the unavailability of lifts from time to time and associated upgrade construction works did have the effect of decreasing access and the attractiveness of the Centre as a destination for shoppers. [137] We are satisfied that it must be viewed in the overall context of events. Although not quantified discretely, these works contributed to decreased foot traffic for the period of the works. [138] Also, we infer that combined with tenancy vacancies and the other factors discussed, that the work on the Hilton lifts, which front the Queen Street mall, no doubt gave an increasing impression of a Centre which was under repair and not operating fully. [139] Mr Shimmin considers that the closure of 20 carparks in Stage 1 had little effect, assuming that 75% of customers came to the centre on foot and prior predominant occupancy of those parks by monthly pass holders.139 [140] However, car park closures occurred from April 2009, and in any event, we consider must be viewed in the overall context of events. Viewed in context, we are satisfied that the car park closures by or through ISPT or its agents did have an effect on accessibility and therefore attractiveness of the Centre as a place to browse and shop, and although not quantified discretely, by decreasing foot traffic from April 2009. Other preparatory works [141] Mr Nobilio, although a co-applicant, has also worked in the construction industry for 32 years as an architect, developer and manager. He has undertaken numerous major redevelopment projects. He holds qualifications as an architect, a project manager, and holds registration as a Master Project Director. His expertise was not challenged. [142] In his opinion, in circumstances of a major redevelopment such as the one undertaken in the Centre, as much would be done before construction began to minimise down time in trading (and hence maximise rents) and that unfettered access to car-parking and back of house (while trading continued) would be required by the company engaged to undertake the project.140 He opined that from at latest 2008, if not earlier the majority if not all decisions made for the Wintergarden would primarily be made with a view to progressing the redevelopment. As previously discussed, we have found that by March 2007, decisions about leasing were already being made for the purpose of progressing the redevelopment. 139 Exhibit 28, Ian Shimmin, paragraphs 197-201. 140 Exhibit 4, Ermanno Nobilio, paragraphs 11-17. -- 29 of 44 -- 30 [143] Ms Boyle and Mr McGarrity both say that the only preparatory construction work done before January 2010 was the core-hole drilling.141 Mr McGarrity says that at the time Stage 1 works commenced, ISPT and the contractor were still in the process of negotiating the construction contract for the redevelopment, and that works commenced on the basis of a letter of intent executed on 19 January 2010.142 He does not otherwise address the issues addressed by Mr Nobilio. [144] Mr McGarrity’s evidence tends to give the impression that no other preparatory works were undertaken because there was no formal contract in place. However, Ms Boyle’s evidence ostensibly given about the Hilton lifts upgrade, as Attachment 16 dated 15 July 2009 to her witness statement at Exhibit 33143 is inconsistent with this impression and supports Mr Nobilio’s stated views. Attachment 16 is a notice to tenants and states that the following works ‘preliminary to the other work that ISPT intends to carry out at the centre in 2010’ are to be done commencing about 15 October 2009: (a) Structural works within the basement area including: (i) New stiffening elements to the basement retaining walls (ii) Strengthening columns; (iii) Foundation works for new wall structure; (iv) New columns inclusive of footings (b) Reworking of hydraulic, mechanical, fire and electrical services in the basement area; (c) Minor demolition works within basement. (d) Reworking and upgrade of the 3 Queen Street mall lifts. [145] We accept that these preparatory works were done from mid-October, 2009. [146] However, the contractors for these preparatory works could not simply walk in on the nominated day and decide what to do. For notice to be given in July of these proposed works, contractors must have been given access to the Centre to prepare a scope and plan of works, do investigations for these purposes and quote/s for the work prior to July. Factoring in time for ISPT to consider quotes, make a decision to engage a particular contractor, and arrange with them dates on which the work 141 Exhibit 33, Melinda Boyle, paragraph 124-126; Exhibit 36, Sean McGarrity, paragraphs 18-19. 142 Exhibit 37, Sean McGarrity, paragraph 3, esp. (c). 143 Exhibit 33, Melinda Boyle. -- 30 of 44 -- 31 could be done, it seems likely that access was given for at least some months earlier than July 2009. [147] This finds some support in the planning documentation provided. Attachment SMS 1 to Exhibit 38, a statement of Mr McGarrity’s is a ‘Wintergarden/ Hilton Redevelopment Development Programme’ which plans steps over a period of years commencing from March 2009. [148] Further, given the size of the project, we do not accept that ISPT simply engaged a contractor in January 2010 for the Stage 1 and 2 works in the absence of prior discussions, quotes and investigations. We draw the reasonable inference that inspections carried out by the contractor engaged, at the very least for purposes of scoping of works, doing necessary investigations, quoting and project planning and that for these purposes the contractor was given considerable access to back of house, in addition to access to contractors to perform the preparatory works done from October 2009. Also, it is most improbable that one quote alone was obtained. We draw the inference that multiple potential contractors had access for the purpose of developing proposals and quotes. [149] In light of the notice given in July of the preparatory works, and Mr Nobilio’s evidence of carpark arrangements from April 2009, we find that extensive prior access was given from April 2009. On this basis we accept that from April 2009, there were construction workers representing potential contractors in the Centre performing tasks associated with investigations, quoting and scoping of works. Construction of kiosks and closure of the information booth [150] Two kiosks were constructed at different times. [151] The applicants allege that the first kiosk, subsequently tenanted by Mo’s Mobiles, was constructed in about January to February 2009 in the immediate vicinity of Essensuals. They say that construction caused disruption by way of dust, noise and vibration and disrupted access by customers to Essensuals. They also say that it restricted access and visibility of Essensuals.144 [152] Ms Boyle says the kiosk was constructed on 25 February 2008. She refers to the Lessor Disclosure Statement for the 2005-2010 lease including a floor plan which indicated a proposed kiosk on Level 2. She says that the kiosk did not obstruct or reduce visibility or access to Essensuals.145 [153] We accept the date of construction given by Ms Boyle as she had access to Centre records, whereas the applicants rely on memory. We also 144 Exh 3 Ermanno Nobilio, paragraph 29. 145 Exh 33 Melinda Boyle, paragraphs78-80. -- 31 of 44 -- 32 accept that during construction, dust, noise and vibration were created in the immediate vicinity of Essensuals. [154] Another kiosk was constructed in front of the two Queen Street Mall pedestrian entrances to the Wintergarden nearest to Essensuals. It was later occupied by Easyway Teas. The applicants say that the kiosk was constructed between about January 2010 and March 2010. They say the timing coincided with the commencement of Stage 1 of the redevelopment, and consequent closure of significant entry points into the Centre, as well as closure of the Information Booth for the Centre. They consider the closure of the Information Booth added to uncertainty for potential customers about whether the Centre was operating.146 [155] The applicants’ say that when it was done, the construction of the kiosk impinged on the sole entry into the Centre and was in the immediate vicinity of Essensuals. During construction, they say that unsightly hoarding was erected around the construction zone which significantly restricted the ability of potential customers to enter the Centre.147 [156] Ms Boyle says that the Easyway Teas kiosk was constructed over about 2-3 weeks in November 2009. She considers the construction works had ‘no significant impact upon customer foot traffic in that period of time.’148 Again, she says that the kiosk did not obstruct visibility or access to Essensuals. [157] She does not deny that the hoardings, which photographs149 reveal were significantly larger in dimensions than ultimately was the kiosk, were unsightly and significantly restricted the ability of customers to enter the Centre. [158] Again, on the balance of probabilities we accept that the records of JLL more likely than not correctly record the dates of construction and that it was constructed in November 2009. This means that at the time of construction, the entry way in which it was constructed was not the sole Queen Street entry. We draw the reasonable inference that dust noise and vibration was caused by the construction works. We are satisfied that the construction works, to some extent obstructed the Queen Street entry closest to Essensuals. [159] Mr Shimmin opines that the construction of and operation of Mo’s Kiosk had no effect on the business of Essensuals.150 Other than during construction as discussed above, we accept that the likely overall effect of operating Mo’s Kiosk was of no consequence to Essensuals business and foot traffic to the area. 146 Exhibit 3, Ermanno Nobilio paragraph 39. 147 Exh 3 Ermanno Nobilio, paragraphs 37-40. 148 Exh 33 Melinda Boyle, paragraphs 81-83. 149 Exh 4 Ermanno Nobilio, EN 25. 150 Exhibit 28, Ian Shimmin, paragraph 171-173. -- 32 of 44 -- 33 [160] He opines that the Easyway Teas kiosk appears, based on foot traffic to have impeded visibility of tenants at the entrance to the Mall, namely RM Williams and a menswear store, to a small extent. That said, he acknowledges, we consider, a significant, 29% decline in footfall traffic through the RM Williams entrance in the period immediately after the introduction of Easyway Teas.151 On this basis, he accepts it is ‘plausible’ that kiosk affected foot traffic to the area of the Centre in which Essensuals was located. It was constructed throughout November 2009. We accept that it had an immediate effect from November 2009, on foot traffic through the RM Williams counter by way of creating dust and noise, but also inhibiting and discouraging foot traffic through the RM Williams entrance. [161] We further find that that closure of the Information Booth did add to a general impression for customers that the Centre was not fully functioning and therefore contributed to the decreasing foot traffic. Stage 1 Vacations of tenancies, hoarding off, short-term leases [162] It is uncontroversial that by about 31 December 2009, all tenancies in Stage 1 of the redevelopment were vacated, with many vacating between Christmas 2009 and New Year’s Day 2010. Ms Boyle says that temporary hoarding was erected during this time to block off Stage 1 from the public. Permanent hoarding with acoustic qualities was subsequently erected in January 2010. It is common ground that some tenants from Stage 1 were relocated to premises in Stage 2 at the time Stage 1 was vacated. [163] Mr Shimmin acknowledges that the RM Williams counter during January and February 2010 showed a 35% decline (overall for level 2 the fall was 13%).152 [164] We are satisfied that the vacation of the Stage 1 tenancies, and commencement of Stage 1, resulted in immediate and significant decrease in foot traffic in the vicinity of Essensuals. In Summary [165] In summary, we are satisfied that the matters discussed, which occurred because of the actions of ISPT and its agents, led to an overall decrease in attractiveness of the Centre as a destination for shoppers. Foot traffic decreased significantly coinciding broadly with these events the effects of which became discernible over a period of time. Indeed, as the events escalated and overlapped, the decrease in foot traffic escalated. Consequently, we are satisfied that ISPT actions and omissions were the cause of a substantial alteration in the flow of potential customers passing Essensuals. 151 Exhibit 28, Ian Shimmin, paragraphs 174-175. 152 Exhibit 28, Ian Shimmin, paragraph 168. -- 33 of 44 -- 34 [166] We conclude that some of the events, such as the water leaks, air- conditioning failures and core-hole drilling also caused significant disruption to Essensuals trading in the leased premises from time to time for the duration of the events and for a period afterwards. However, in view of our findings to be discussed about the cause of loss resulting from the decreased foot traffic, we do not need to separately consider whether the applicants suffered loss as a result of these disruptions because of disruption to trading, as loss can only be recovered once. Did the applicants suffer loss as a result of the altered flow of potential customers past Essensuals’ tenancy? [167] Causation is the connection between any breach of the express or implied terms by ISPT and the loss occasioned to the applicants. If the link is not established on the evidence, the claim must fail. Causation is a question of fact. 153 [168] ISPT argues that liability must be established under s43 of the RSL Act, in the same manner as causation is established in contract cases. It submits that if on the evidence there are rival causes for a given result, causation should only be found established if the respondent’s actions can be regarded as equal or close to equal with other causes.154 If on the evidence, other causes are just as likely to have caused the loss or damage, then the applicants have not established that the loss would not have been suffered but for the respondent’s breach. The applicants contend a more relaxed test for causation, based on Pincott and Pincott v Metro Maroochydore Pty Ltd155 which relied upon an increased risk of loss approach articulated by the Queensland Court of Appeal156 following tort decisions,157 although Gold Ribbon was not itself a tort case. Turnover [169] In 2004/2005, Essensuals turnover was some $955,700. In the 2005/2006 and 2006/2007 financial years it was relatively stable, with a slight increase in the 2006/2007 year from about $874,846 to some $881,536. Then in the 2008 year, it declined relatively modestly (some 6%) to $828,867. A much more dramatic and significant decline occurred in 2008/2009 to about $650,819. Then for the 2009/2010 year, of which Essensuals traded for 9 months only, it experienced a further dramatic decline to $322,235. Expert Analysis 153 March v Stramare (1991) 171 CLR 506; Hawthorne v Thiess Contractors Pty Ltd [2002] 2 Qd R 157, 159. 154 Relaince was placed on Hawthorne v Thiess Contractors Pty Ltd [2002] 2 Qd R 157,160. 155 [2007] RSLT 002. 156 Gold Ribbon (Accountants) Pty Ltd (I liq) v Sheers & Ors [2006] QCA 335 per Keane JA. 157 Chappel v Hart [1998] HCA 55. -- 34 of 44 -- 35 [170] Both Mr Shimmin and Mr Gilbert analyse the relationship between turnover and foot traffic. [171] Mr Gilbert opines that the various steps taken by ISPT in the lead-up to the redevelopment served to fragment the Centre, and cut off the natural flow of custom and potential custom.158 Mr Gilbert says that there is a direct correlation between the acts and omissions the applicants allege by ISPT and their downturn in turnover, sales and trade.159 He does a series of graphs which he says link the two. He opines that the decrease in level 2 foot traffic of 64%, exceeds the drop in Essensuals turnover of 40%, until the last 3 months of trade.160 He suggests that the strong correlation between the decreased foot traffic and turnover demonstrates that it is the ‘causal nexus.’161 Mr Auld also asserts that financial loss was caused by ISPT actions 162 but as he does not provide a basis for his assertion, we give it no weight. [172] Mr Shimmin’s analysis is rather more complex and is accompanied by a wide variety of charts, graphs and figures. It incorporates consideration of Centre turnover as compared with Essensuals turnover, external factors including external market factors, internal Centre factors and store specific factors to draw conclusions. Mr Gilbert criticises Mr Shimmin’s report for using ‘data and assumptions and algorithms that are too removed’ from Essensuals business and the Centre.163 Mr Michael also suggests that the most accurate basis for estimating notional sales is actual sales prior to disruption.164 Centre turnover vis a vis Essensuals Turnover [173] Mr Shimmin asserts that turnover for the Centre grew between 2004/05 and 2007/2008,165while Essensuals turnover ‘declined relatively consistently’ during each year from 2004/2005.166 We do not accept this analysis. As identified above, there was a drop from 2004/2005, but relative stability in Essensuals turnover in 2005/2006 and 2006/2007, despite some month on month variances as compared to the same month in the previous year. Turnover in 2006/2007 was slightly higher than turnover in 2006. There were also some months in the 2006/2007 year when the variance as compared to 2006 was positive. Then in 2007/2008, there was a modest decline of 6% for the year overall. It is only in the 2008/2009 year, that a much more significant drop occurs of some 21.5% for the year. Then in 2009/2010, an even greater drop in turnover occurs. 158 Exhibit 18, Donald Gilbert, paragraph 91. 159 Exhibit 18, Donald Gilbert, paragraph 24 and graphs 1 to 8. 160 Exhibit 18, Donald Gilbert, paragraph 132. 161 Exhibit 18, Donald Gilbert, paragraph 132-133. 162 Exhibit 23, Bruce Auld, paragraph 6. 163 Exhibit 18, Donald Gilbert, paragraph 5. 164 Exhibit 32, Timothy Michael, paragraph 4.2.8. 165 Exhibit 28, Ian Shimmin, paragraph 58. 166 Exhibit 28, Ian Shimmin, paragraph 69 and Table 3.9. -- 35 of 44 -- 36 This timing has some significance in our view, having regard to events at the Centre in the lead-up to and preparation for the redevelopment. [174] Mr Shimmin does acknowledge that the alleged downwards trend in Essensuals’ turnover intensified from July 2008,167that is, during the 2008/2009 year. Importantly he acknowledges that Centre turnover also declined, although to a lesser degree than Essensuals decrease in that year, in the second half of 2008/09 (coinciding with what he identifies as the intensified downwards trend in Essensuals turnover) and then declined again much more significantly in 2009/2010. The latter he says is undoubtedly due to a large extent to the commencement of Stage 1. Mr Shimmin while later concluding that factors other than foot traffic caused Essenuals loss, opines that foot traffic and turnover for the Centre follow a similar trend.168 External factors The market [175] Mr Shimmin relies extensively on ABS data to consider changes in the ‘external retail environment.’ His report refers to the Consumer Price Index/Inflation (CPI), the Retail Price Index (RPI) and components of the latter, including the Footwear and Personal Accessories dataset. The ABS breaks down the RPI into a variety of subsets, including the Footwear and Personal Accessories dataset. He says that the subset is the closest available data for the type of retail business operated by Essensuals.169 [176] However, as is apparent from our earlier description of the business of Essensuals, it did not at any time sell footwear, and although it sold some personal accessories, this was not its core business. Accordingly, notwithstanding that the ABS may allocate every business to a sub- category,170 Mr Shimmin’s comments about allocation of a sub-set make it apparent that there is no readily applicable sub-set.171 Although discussing the calculation of notional sales rather than Mr Shimmin’s comments, Mr Michael considered ABS growth rates had little correlation with Essensuals sales.172 [177] Mr Shimmin accepts that the retail market generally experienced an upwards trend in sales during the period for which loss was claimed because of government stimulus packages (as discussed below, under the heading of the GFC).173 But, he considers that the finest level of 167 Exhibit 28, Ian Shimmin, paragraph 69. 168 Exhibit 28, Ian Shimmin, paragraph 62 169 Exhibit 28, Ian Shimmin, paragraph 87-90. 170 Exhibit 28, Ian Shimmin, paragraph 85. 171 Exhibit 28, Ian Shimmin, paragraphs 79-90. 172 Exhibit 32, Timothy Michael, paragraph 2.1.10 and Transcript 383. 173 Exhibit 28, Ian Shimmin, paragraphs 119-124 and Charts 4.6-4.8. -- 36 of 44 -- 37 relevant data is the Footwear and Personal Accessories dataset which trended down over the same period. On the basis of a regression analysis undertaken by him, he says this correlates well with Essensuals downwards trend in turnover, although he says Essensuals experienced higher peaks and lower troughs when compared to the ‘market’ experience at that time for ‘Footwear and Personal Accessories’.174 [178] That said, he also acknowledges a decline in Essensuals turnover from about March 2008, which increases significantly when compared to the subset market.175 Again this coincides roughly with the drop in Centre turnover from about mid-2008 as discussed earlier. [179] We do not consider that analysis based on that dataset which Mr Shimmin contends is particularly helpful as the subset does not correlate well with Essensuals business. However, we are satisfied that whether the RPI or the subset is used, Essensuals turnover performed worse than the market from about March 2008, coinciding in broad terms with the commencement of the Centre’s drop in turnover. The Global Financial Crisis (GFC) [180] Mr Shimmin suggests that despite the GFC affecting the market during the period from July 2008 to at least March 2010, the retail market generally in Australia actually received a boost in 2009 as a result of Government stimulus packages.176 Mr Gilbert agrees that the stimulus boosted retail sales generally.177 However, Mr Shimmin says that his analysis relating to the relevant subset data takes the GFC into account. [181] The effect of the GFC is factored into the ABS rates, including the subset market. The overall market fared considerably better through the GFC than the subset market, it seems Mr Gilbert and Mr Shimmin agree, because of Government stimulus packages. Despite this, , the Centre and Essensuals fared worse, at least from about mid-2008. Competitive developments [182] Mr Shimmin analyses competitive developments which he considers are relevant, calculating a 20% decline in market share for the Centre generally over the 2004-2009 period, despite a 23% discretionary retail market growth.178 Mr Gilbert suggests that Mr Shimmin’s analysis is flawed as it does not account for periods of positive growth at the Centre for some periods during the timeframes considered.179 174 Exhibit 28, Ian Shimmin, paragraphs 97, 110-114, 116 and Charts 4.1- 4.4. 175 Exhibit 28, Ian Shimmin, paragraphs 116-118, and Chart 4.5. 176 Exhibit 28, Ian Shimmin, paragraphs 119-124 and Charts 4.6-4.8. 177 Exhibit 18, Donald Gilbert, paragraph 148. 178 Exhibit 28, Ian Shimmin, paragraphs 125-130 and Table 4.7. 179 Exhibit 18, Donald Gilbert, paragraphs 149-150. -- 37 of 44 -- 38 [183] Mr Shimmin refers to the opening of other centres in the CBD and suburbs as being responsible for market share erosion greater than anticipated in light of the increase in discretionary growth.180 He concludes that this had a negative influence on the Centre’s turnover, as well as Essensuals. Some of competitive developments, namely the opening of Stage 1 of Queens Plaza, occurred in 2005 but the foot traffic data for level 2 is only provided from January 2006. [184] For several reasons, we consider that Mr Shimmin’s comments about competitive developments should be given little weight. Firstly, he identifies that he did not have relevant information including survey data relevant to the Brisbane CBD; and details of changes in the competitive environment within the Brisbane CBD and larger suburban centres.181 [185] Secondly, he did not consider the effect on competitiveness of the Centre of ISPT’s actions in doing those things identified in these reasons. Internal Centre factors [186] Mr Shimmin acknowledges internal Centre factors influencing turnover include the mix of tenants, foot traffic, and the level of maintenance and general standard of the Centre.182 In particular, he opines that passing foot traffic was a key driver of turnover for a small specialty store such as Essensuals.183 His comments regarding the effect of maintenance and general standard of presentation appear to be at odds with his own conclusions, earlier discounted by us, that the air-conditioning issues, water leaks, the awning, and lift works had negligible effect. [187] His acknowledgement of the importance of foot traffic as a key driver of turnover for Essensuals suggests that actions taken which decrease foot traffic would be expected to affect Essensuals’ performance significantly. Store Specific Factors [188] Mr Shimmin says store specific factors comprise changes made to Essensuals’ tenancy and operations including how well products matched market demand, the standard of visual marketing and level of service.184 He says that analysis shows a declining significance in December trade, and May (mother’s day) trade, which suggests either an increase in direct competition or failure in terms of stock, price, or marketing.185 The effect of on-going air-conditioning problems during the December trading period are not considered. 180 Exhibit 28, Ian Shimmin, paragraphs125-130. 181 Exhibit 28, Ian Shimmin, page 5, 1.4 paragraph 13. 182 Exhibit 28, Ian Shimmin, paragraph 228. 183 Exhibit 28, Ian Shimmin, paragraph 228. 184 Exhibit 28, Ian Shimmin, paragraph 229. 185 Exhibit 28, Ian Shimmin, paragraphs 233-234, 70-71. -- 38 of 44 -- 39 [189] Mr Michael suggests that the applicants’ inability to reduce staffing despite falling sales, calls their stewardship of the business into question.186 However, given that the shop was a gift shop and our findings about dust, we accept that there was an increased need to dust stock for which adequate staff members were required. Therefore, we accept that in the circumstances, reducing wages was not feasible. Impact analysis [190] Accompanied by yet another array of complex calculations, graphs and tables, Mr Shimmin then performs an ‘impact analysis’ to quantify the effect of each of the factors to which he refers on Essensuals’ turnover. 187 [191] He concludes that the results of the analysis suggest that Essensuals declining turnover was mainly due to competitive changes and undefined ‘internal business management issues’.188 For the reasons earlier articulated, we do not accept competitive developments were considered in a compelling manner. Further, we are not persuaded by his conclusions about internal business management issues because they rely largely upon statistical calculations, rather than a forensic analysis of the business and its practices. [192] Also, the analysis proceeds on the basis of assumptions about facts and earlier analyses, which we have discounted, for example, it applies the footwear and personal accessories subset189 It also applies market share erosion calculations which do not account for the erosion of market share attributable to the actions of ISPT as identified herein. Therefore, we give this analysis little weight. Our conclusions [193] The relevance of turnover in 2004/2005 is questionable. We have no meaningful or compelling material about foot traffic and other matters that may have influenced turnover in that year. We consider that it is ultimately irrelevant. We conclude that it is much more significant that Essensuals turnover was stable in 2005/2006 and 2006/2007. It then declined to a relatively small degree of 6% in 2007/2008. In 2008/2009, there is a much more significant decline coinciding with decline in Centre turnover, although the change in Centre turnover is less marked. The timing is significant as it coincides with a period when a variety of the events which led to diminution of foot traffic began to escalate. Both the Centre and Essensuals turnover experienced a dramatic drop in 2009/2010. [194] We reasonably infer that the variety of events which we have found occurred were progressively having an effect on the Centre and Essensuals. It can reasonably be inferred that prior to the commencement 186 Exhibit 32, Timothy Michael, 187 Exhibit 28, Ian Shimmin, paragraphs 243-261. 188 Exhibit 28, Ian Shimmin, paragraphs 261. 189 Exhibit 28, Ian Shimmin, paragraph 242. -- 39 of 44 -- 40 of Stage 1, some of them impacted Essensuals to a greater degree than the Centre generally because of their proximity to Essensuals and its susceptibility to changes in foot traffic, which we accept was a key driver of its turnover. [195] By the time of significant decline in turnover in 2008/2009, maintenance of plant and equipment had been minimised and long-term tenants, including key tenants, no longer being sought since early 2007 making the Centre progressively less attractive overall to potential customers. Short-term tenancies and vacancies became more common. The Lift 1 upgrade occurred very close to Essensuals tenancy, and therefore might reasonably have impacted more dramatically on Essensuals than the rest of the Centre. The core-hole drilling occurred between September and December 2008, again some of it very close to Essensuals and resulted in a water leak into its premises. From April 2009 car parks began to be made available to contractors and potential contractors, who had considerable access, for their staff to do investigations and quotes and in order to do preparatory and Hilton lift works from October 2009. [196] The Medicare corridor was progressively vacated. Medicare’s tenancy was taken by short-term tenants for only some 9 months of the 3 years before the redevelopment. Between early 2009 and April 2009 the rest of the corridor was progressively vacated. It was then, and remained, entirely vacant and hoarded up, until Stage 1 commenced. Again, it is reasonable to infer that progressive closure of tenancies in the Medicare corridor reasonably impacted more dramatically on Essensuals than tenants in other areas because of its proximity to Essensuals. [197] The Easyway Teas kiosk was constructed, and then operated from November 2009, until the end of the applicants lease. Its construction and operation resulted in a very significant drop in foot traffic through the closest entry to Essensuals. Stage 1 tenants vacated between Christmas 2009 and New Year’s Day and then Stage 1 commenced in early 2010. Dust and noise accompanied the various construction works. [198] In light of this analysis and the issues we have identified with Mr Shimmin’s report which affect the weight we give it, it follows that we are not satisfied on the balance of probabilities that the possible causes he advances were responsible for the applicant’s loss. We find that ISPT’s actions are the more, indeed, the most, probable cause of the applicants’ loss. Further, we find that Essensuals decrease in turnover from 1 December 2008 to March 2010 is attributable to the decrease in foot traffic caused by the actions of ISPT. We do not need to decide which legal test is applicable, as on either test, causation is established. What is the quantum of the applicants’ loss? [199] Reasonable compensation can be awarded for breach of an implied term of the RSL Act. Reasonable compensation would place the applicants in the position they would have been in but for the actions of ISPT. -- 40 of 44 -- 41 [200] There are numerous lengthy and complex reports in evidence from experts about how loss should be calculated. Mr Gilbert, among other things, included in his calculations increases in notional gross profit margin to take into account ABS and population growth rates. We prefer Mr Michael’s evidence and explanations that Mr Gilbert’s approach is conceptually flawed.190 In this regard, we consider that Mr Michael’s expertise as a forensic accountant191 entitles his evidence to greater weight, as Mr Gilbert has no formal training as an accountant. [201] In any event, after the evidence had concluded, the applicants made submissions based on different calculations which did not use Mr Gilbert’s methodology and were not contained in the evidence, although based on figures extracted from it. The applicants did not obtain a further report due to the cost of doing so. They asked the Tribunal to have regard to the disparity between their resources and those of ISPT. [202] ISPT obtained yet another report containing fresh calculations based on the truncated period of claim. Despite the applicants’ objections to its filing after the closure of the evidence, the Tribunal allowed it to be filed given the applicants late change to the period of the claim. [203] The applicants’ final calculations as set out in submissions claim loss of notional profit, based on actual sales and gross profit using the base year of 2007/2008. The calculation is done by subtracting the actual turnover for each month from December 2008, from the turnover in the corresponding month in the 2007/2008 year, and multiplying it by the gross profit margin, as calculated by Mr Auld, for the relevant year in which the loss falls. [204] Mr Auld calculates that gross profit margin was 47.5 % in 2006/2007, 60.31% in 2007/2008; 65.8% in 2008/2009, to 78.1% in 2009/2010 despite the fall in turnover.192 The calculation on this basis results in total lost profits of $317,087.10. [205] Mr Michaels calculates loss in essence, by deducting actual gross profit on sales made for the loss period from notional gross profit (that is, the gross profit which would have been made on sales but for the actions of ISPT, calculated by multiplying notional sales by notional gross profit margin).193 [206] It must be acknowledged that Mr Michael identified issues with financial documentation for Essensuals, including the level of stock recorded in the financial statements and the absence of stock take records.194 Also, an issue was made about stock which was deleted from the financial statements in the 2006/2007 year, and which apparently remains in 190 Exhibit 32, Timothy Michael, paragraph 4.3. 191 Exhibit 31, Timothy Michael, paragraph 1.3 and Annexure 1Curriculum Vitae. 192 Exhibit 24, Bruce Auld, Attachment BAR2. 193 Exhibit 32, Timothy Michael, paragraph 4.3.9 and Exhibit 38, Timothy Michael. 194 For example, see Exhibit 32, Timothy Michael, 4.3, esp. at 4.3.25 to 4.3.43. -- 41 of 44 -- 42 storage. However, the applicants do not seek an adjustment for this. Neither does Mr Michael suggest one is necessary. That said, as discussed earlier, at the expert conclave agreed that the figures to be applied in all calculations are those in the Bentleys financial statements. [207] Mr Michael had earlier suggested that 2007/2008 was the appropriate base year on which to calculate notional sales, but his final report adopts a different base year. In his final report, Mr Michael’s195opines that the revised compensation starting point necessitates revision of the benchmark sales and the trend of actual sales for the loss period. He suggests that actual sales figures for the 12 months prior to the loss period should be used as the benchmark for calculation of notional sales, because this represents the most recent full year financial performance prior to the time when disruption is alleged to have commenced. [208] He calculates the total year actual sales for the period he says is relevant, that is, December 2007 to November 2008 at $776,765. Monthly figures are also set out. He calculates the trend in growth for that period at - 8.20%. He then calculates notional sales for each month of the loss period by applying the annual average trend of -6.08% per annum to the same month of the benchmark year. [209] He opines that notional gross profit should not be calculated by applying actual gross profit. Instead he contends for application of a constant notional gross profit margin of 60.31%, which was the actual gross profit margin in 2007/2008, being the last full financial year before the disruptions are alleged to have commenced.196 This is unchanged from the recommendation made for the calculation of notional gross profit when the loss period claimed was different. [210] He does not explain why notional sales should be calculated using the monthly figures from the December 2007 to November 2008, but gross profit should be unchanged given the revised loss commencement date. Gross profit, on Mr Auld’s figures, increased. [211] He agrees that notional gross profit should be reduced by actual gross profit as disclosed in Essensuals’ financial statements. He calculates total loss at $106,065. [212] The problem with Mr Michael’s proposed manner of calculation is that although the loss period claimed did not commence until 1 December 2008, based on our findings the effects of ISPT’s actions which ultimately led to the reduced flow of traffic past Essensuals shop were gradually felt as they escalated. The first relevant action following the decision to redevelop which we have identified, was the decision not to seek long- term tenants when tenancies were vacated, from March 2007 onwards. 195 Exhibit 38, Timothy Michael.. 196 Exhibit 38, Timothy Michael, paragraph 4. -- 42 of 44 -- 43 [213] There were some vacations, following which premises were vacant or were filled by short-term tenants. The air-conditioning periodically failed, affecting the flow of customers past the shop, in particular, in the important December period as Mr Shimmin refers to it. Water leaks entered Essensuals tenancy at times. The awning was not maintained. Each of these things, together with the others earlier identified gradually made shopping at the Centre less and less attractive and affected foot traffic past Essensuals. [214] Based on our findings, it is difficult to conclude that Essensuals trade was affected from any one particular day. At first, there was no effect but as the events leading to loss escalated and overlapped, the effects became discernible. The applicants now say this was from 1 December 2008. We accept that from that date, the effects were apparent. [215] Determining loss can not be a precise science, as we cannot know precisely what would have happened if the decisions made by ISPT had not been made. Mr Michael says that 12 month period immediately prior to the loss period becomes the proper comparator period. However, we cannot agree in view of the gradually increasing effects. We conclude for this reason that the immediately prior period is unreliable as a predictor of how Essensuals would have traded but for ISPT’s actions. [216] In calculating reasonable compensation, we find that the full financial year before the loss period commenced is more likely than not to provide the proper comparator period and it is the appropriate benchmark for calculation of notional sales. We would also adopt the gross profit ratio from that year as the benchmark for calculating notional gross profit. [217] Mr Michaels calculations also factor in a downwards growth trend in sales. This trend is calculated from the actual sales figures in the years from 2004/2005 to 2007/2008. (His final report proposes a trend of -6.08%, by which he decreases the benchmark actual sales for each month in the loss period in 2008/2009, and then 2 times -6.08% for each month in the loss period in 2009/2010). [218] However, for reasons we have explained the 2004/2005 year is irrelevant. We are satisfied that there was relative stability, indeed a small increase in sales between 2005/2006 and 2006/2007, before a small drop in 2007/2008 which we have accepted as the benchmark year. In light of these findings, we do not accept that there is a negative trend from 2004/2005 as calculated by Mr Michael, and nor that it is appropriate to reduce the monthly notional sales during the loss period by a downwards trend in the manner contended for by Mr Michaels. [219] In summary then, we calculate notional sales for the loss period by calculating notional sales for each month of the loss period by adopting -- 43 of 44 -- 44 the sales in the same month in the 2007/2008 year, as calculated by Mr Michael.197 [220] We also accept that notional gross profit on those sales is 60.31%. We accept Mr Michaels’ calculation of actual gross profit for the loss period.198 [221] We then calculate the applicants’ loss as follows: [222] For the period 1/12/08 to 30/6/09 1/7/09 to 31/3/10 [223] Notional sales 483,531 633,306 [224] Notional gross profit (60.31%) 291,617 381,946 [225] Less actual profit (235,386) (251,674) [226] Loss for period 56,231 130,272 [227] The applicants’ total loss is therefore, $186,503. [228] ISPT should pay reasonable compensation to the applicants in this amount. We make orders accordingly. Directions regarding any costs application are also made. 197 Exhibit 32, Timothy Michael, paragraph 5.3.13, Table 10. That is, July $61,042; August $60,531; September $75,598; October $66,678; November $81,487; December $139,478; January $46,990; February $52,010; March $49,492; April $56,530; May $56,319; and June $82,712, totalling $828,867. 198 Exhibit 38, Timothy Michael, paragraph 5. -- 44 of 44 --