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Conduct rules made clearer

UNCONSCIONABLE conduct rules have been clarified with the Australian Competition and Consumer Commission winning its case against a WA landlord.

Owners of the Farrington Fayre shopping centre (now known as Leeming Shopping Centre) were found to have unfairly exploited a tenant’s weaker bargaining position.

Justice French found the conduct by the landlords CG Berbatis Holdings Pty Ltd, GPA Pty Ltd and P&G Investments Pty Ltd towards tenants Mr and Mrs Roberts, “… was grossly unfair exploitation of the particular vulnerability of the Roberts in relation to the sale of their business”.

The Roberts’ efforts to sell their business were hindered when their landlord refused to negotiate a new lease – which would have made the business more attractive to a purchaser – unless the couple agreed to drop unrelated legal proceedings before the WA Commercial Tenancy Tribunal.

Property Council of Australia WA policy officer Geoff Cooper said the amendments to the Trade Practices Act meant many shopping centre owners had to train staff on what constituted unconscionable conduct.

However, he said the new rules were not too restrictive for centre owners.

Minter Ellison property partner Max Cameron said the decision was “a significant step” towards providing the property industry with some guidelines of what types of behaviour would be regarded as “unconscionable”.

“Since amendments were made to the Trade Practices Act two years ago, no one has had a clear idea of what the courts would and would not accept,” Mr Cameron said.

“Although many more cases may have to be decided before landlords and tenants have the full picture, this decision is useful and instructive. The decision acknowledges that although landlords have no obligation to renew a tenant’s lease, the law will not permit them to use heavy-handed tactics to achieve a commercial objective,” he said.

Mr Cameron warned tenants or landlords not to “read too much” into the decision.

The ACCC first instituted legal proceedings against the owners of Farrington Fayre in April, 1998.

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