The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court, Perth, against the owners of Farrington Fayre Shopping Centre at Leeming, Perth in Western Australia.
Certain directors and the Asset Manager representing the owners have also been joined in the proceedings. The ACCC alleges that the owners dealt with certain tenants in an unconscionable manner in contravention of section 51AA of the Trade Practices Act. Section 51AA of the Act prohibits unconscionable conduct in commercial transactions.
The ACCC believes that the term unconscionable conduct covers cases where: a party to a transaction suffered from a special disability, or was placed in some special situation of disadvantage, in dealing with the other party; and the other party was in a superior bargaining position; and the weaker party's disability was sufficiently evident that the stronger party knew, or ought to have known, about it; and the stronger party took unfair advantage of its superior position or bargaining power.
The ACCC alleges that in 1996 and early 1997 the owners implemented a strategy whereby they refused to grant renewals, variations or extensions of leases to three tenants unless those tenants withdrew from legal proceedings before the WA Commercial Tenancy Tribunal against the owners and/or agree not to pursue legal rights against the owners. The ACCC believes that these tenants were at a special disadvantage when bargaining with the owners because of their financial dependence upon renewal, variation or extension of their leases.
The ACCC alleges that it was unconscionable for the owners to take advantage of their superior bargaining position to have legal proceedings withdrawn and/or rights to future proceedings waived. The ACCC is seeking orders against the owners and their representative which include: declarations that tenants were subject to unconscionable conduct in contravention of the Act; injunctions preventing the repetition of similar conduct; the publishing of public apologies; and the institution of corporate compliance programs to minimise the possibility of such conduct recurring.
Also, the owners, certain directors and the owner's representative may be liable for damages flowing from the alleged conduct, should the Commission take representative action on behalf of the tenants or should tenants take damages actions. A directions hearing is scheduled for 15 April 1998.