The Federal Court of Australia has granted a declaration against Leelee Pty Ltd, landlord of Adelaide International Food Plaza, that it engaged in unconscionable conduct towards one of its tenants.
This is the first such declaration under section 51AC of the Trade Practices Act 1974, which deals with unconscionable conduct in commercial transactions.
It also granted a declaration against Mr Pua Hor Ong, director of Leelee, that he aided or abetted or was knowingly concerned in the contravention. The Court also granted injunctions against the company and its director in relation to their future dealings with tenants at the food plaza.
The Court declared that Leelee engaged in unconscionable conduct by:
- consenting to, or giving approval for, another tenant to infringe on the exclusive menu entitlements conferred by Leelee on one of its tenants; and
- specifying the price at which its tenant sold their dishes in a manner which unfairly discriminated against, or inhibited, the tenant's ability to determine the prices at which its dishes were sold in competition with another tenant.
The Court granted injunctions, for three years, restraining Leelee and Mr Ong from:
- consenting to, or giving approval for, tenants to infringe on exclusive entitlements conferred by Leelee on any other tenants;
- specifying the prices at which tenants sell their goods and services in a way that unfairly discriminates against, or inhibits, any tenants ability to determine their own prices; and
- discriminating, during the course of negotiating a lease, against any prospective tenant on the ground the prospective tenant has entered into an agreement, arrangement or understanding to purchase the plant, equipment or goodwill of an existing tenant;
requiring Leelee and Mr Ong to disclose to tenants:
- all information that relates to the fulfilment or non-fulfilment of any conditions precedent to which periodical reviews and rent increases are subject; and
- the time period of the rent review and the basis of calculation of any rent increase where the conditions have been fulfilled.
Leelee and Mr Ong were ordered to pay a contribution towards the ACCC's costs of the proceedings. All of the orders were made by consent from the respondents.
"This case is the first step in creating law in this particularly difficult area", ACCC Chairman, Professor Allan Fels, said today. "I welcome the Court's acknowledgment that this conduct was in breach of the unconscionable conduct provisions of the Act".