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[2013] QCA 232
General information, not legal advice.
Court of Appeal (Qld)
2013-08-23
Holmes JA and Atkinson and Philip McMurdo, JJ, Separate reasons for judgment of each member of the Court, each, concurring as to the orders made
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Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: Orsay Holdings Pty Ltd v Mecanovic & Ors [2013] QCA 232
PARTIES: ORSAY HOLDINGS PTY LTD trading as WHALE BAY MARINA ACN 002 616 382 (applicant) v NADA MECANOVIC & ZVONKO MECANOVIC (first respondents) DIANNE MAREE CREA & DOMINIC CREA (second respondents) CHAS STRAKER PTY LTD ACN 100 943 600 as trustee for the DIANNE CREA FAMILY TRUST & NADMEC NOMINEES PTY LTD ACN 114 366 415 as trustee for the N & Z MECANOVIC FAMILY TRUST trading as THE DECK RESTAURANT (third respondents)
FILE NO/S: Appeal No 1173 of 2013 / QCAT No 187 of 2012
DIVISION: Court of Appeal
PROCEEDING: Application for Leave Queensland Civil and Administrative Tribunal Act
ORIGINATING COURT: Queensland Civil and Administrative Tribunal at Brisbane
DELIVERED ON: 23 August 2013
DELIVERED AT: Brisbane
HEARING DATE: 5 August 2013
JUDGES: Holmes JA and Atkinson and Philip McMurdo JJ / Separate reasons for judgment of each member of the Court, each concurring as to the orders made
ORDERS: ****1.****The application for extension of time to apply for leave to appeal is granted. / ****2.****The application for leave to appeal is refused. / **3.**The applicant is to pay the respondents their costs (if any) of these applications.
CATCHWORDS: LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – JURISDICTION, POWERS AND APPEALS OF COURTS AND TRIBUNALS – JURISDICTION GENERALLY – where tenant brought action against landlord for damages for breach of the covenant for quiet enjoyment – where tenant alternatively sought compensation under s 43 of the Retail Shop Leases Act 1994 (Qld) – where damages and compensation sought for periods before and after the expiry of the lease – where landlord argued QCAT did not have jurisdiction to award compensation under s 43 after expiry of the lease – where lease remained a “retail shop lease” after its expiry – where tenant’s claim for damages for breach of covenant was a “retail tenancy dispute” – whether QCAT has jurisdiction to award compensation under s 43 after expiry of the lease – whether QCAT has jurisdiction to award damages for breach of covenant for quiet enjoyment after the expiry of the lease / LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – JURISDICTION, POWERS AND APPEALS OF COURTS AND TRIBUNALS – APPEALS – where tenant brought action against landlord in QCAT for breach of covenant for quiet enjoyment – where tenant was successful – where landlord appealed unsuccessfully to the QCAT appeal tribunal – where landlord applies for leave to appeal from the decision of the appeal tribunal – where landlord argued appeal tribunal overlooked legal principle – where legal principle had been considered in original QCAT decision – whether question of law or fact – whether application for leave to appeal should be granted / Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 10, s 150(3), 151(2) / Retail Shop Leases Act 1994 (Qld), s 42, s 43, s 83 / Budd-Scott v Daniell [1902] 2 KB 351, applied / Southwark London Borough Council v Tanner [2001] 1 AC 1; [1999] UKHL 40, applied
COUNSEL: G D Beacham for the applicant / The first respondents appeared on their own behalf / The second respondents appeared on their own behalf / The third respondents appeared on their own behalf
SOLICITORS: CSG Law for the applicant / The first respondents appeared on their own behalf / The second respondents appeared on their own behalf / The third respondents appeared on their own behalf
HOLMES JA: I agree with the reasons of Philip McMurdo J and the orders he proposes.
ATKINSON J: I agree with the reasons for judgment of Philip McMurdo J and the orders proposed by his Honour.
PHILIP McMURDO J: The applicant wishes to appeal against a decision of the appeal tribunal of the Queensland Civil and Administrative Tribunal. According to s 150(3) of the Queensland Civil and Administrative Tribunal Act 2009 (“the QCAT Act”), an appeal may be made to this court against such a decision only on a question of law and with the court’s leave. The applicant must also obtain an extension of time in which to make this application, because it was filed two days outside the period of 28 days prescribed by s 151(2) of the QCAT Act. The delay is explained and time should be extended. But in my conclusion, the application for leave to appeal should be refused, because the suggested error was one of fact, not of law.
From October 2006 until May 2011, the applicant and the respondents were respectively the landlord and tenants of premises at the Urangan Boat Harbour, from which the respondents operated a restaurant. Until 30 June 2009, they occupied under a lease for a term of three years, ending on that date. Their option to renew the lease was not exercised. The respondents held over and to the extent that they paid rent, it was billed and paid on a monthly basis. Eventually the applicant took possession of the premises for arrears of rent.
The respondents then commenced proceedings against the applicant in QCAT, making three distinct claims. The first was for what they said was the unconscionable or misleading conduct of the applicant, in respect of the outgoings to be paid by them under their lease. That claim was dismissed by QCAT and it is unnecessary to consider it further.
Secondly, they claimed damages for conversion of certain plant and equipment which had been in the premises when the applicant re-took possession of them. That claim was successful and compensation was awarded in an amount of $57,073.19, which was equivalent to the amount of the rent which they owed to the applicant. The determination of that claim was challenged by the applicant in the appeal tribunal, but unsuccessfully. At first, the applicant sought to challenge that decision of the appeal tribunal, but abandoned that argument at the hearing in this court.
Their third claim was for damages for breach of the covenant for quiet enjoyment or alternatively, for compensation under s 43 of the Retail Shop Leases Act 1994 (Qld) (“the RSL Act”). Their complaint was that the applicant moored a large vessel immediately in front of their restaurant, blocking water views and causing a significant fall in its trade. That conduct extended from about mid 2008 until May 2011, so that it occurred partly within the term of the respondents’ three year lease and partly after its expiry.
“42****Compensation provisions implied in particular leases
(1)A retail shop lease is taken to include sections 43, 43A and 44.
(2)However, subsection (1) does not apply to a lease for—
(a)a periodic tenancy; or
(b)a tenancy at will, other than a tenancy at will created by the lessee holding over under the lease or with the lessor’s consent.”
Section 43 provides, in part, as follows:
“43****When compensation is payable by lessor
(1)The lessor is liable to pay to the lessee reasonable compensation for loss or damage suffered by the lessee because the lessor, or a person acting under the lessor’s authority—
…
(c)causes significant disruption to the lessee’s trading in the leased shop or does not take all reasonable steps to prevent or stop significant disruption within the lessor’s control; …”
“[7]At the hearing of this appeal, on 15 November, it was submitted for the first time that QCAT had no jurisdiction to deal with the appeal. It was said that the tenants had a periodic tenancy from 1 July 2009 up to their lock out on 30 May 2011, and that no compensation was payable - see s 42(2), above.
[8]That submission is not accepted. The landlord’s solicitors wrote letters ‘without prejudice’ on 18 June 2009, 25 May 2011, and 26 May 2011 on the basis that the lease was continuing. Those letters are now part of the evidence here. No other lease was entered into during that period. They indicate that the tenants had a tenancy at will, created by their holding over with the lessor’s consent. See also clause 16.8 of the lease, ‘Holding Over’. QCAT has jurisdiction.”
“16.8Holding Over
If the Tenant with the consent of the Landlord remains in occupation of the Leased Premises after the expiration of the term of this Lease then:
(1)the Tenant will be tenant from month to month from the Landlord of the Leased Premises on the terms of this Lease so far as they are applicable to a monthly tenancy;
(2)the monthly tenancy may be determined by either party in the manner prescribed by Div. 4 of Part VIII of the Property Law Act 1974;
(3)the rent payable for the monthly tenancy will be the amount of rent payable monthly pursuant to this Lease immediately before the expiration of the term and will be payable in advance; and
(4)if not sooner terminated, the monthly tenancy will determine three (3) months after the expiration of the term of this Lease unless the consent of Queensland Transport and the Minister for Natural Resources and Mines has been obtained in respect of any continuation thereof.”
Therefore, there was a monthly tenancy, not a tenancy at will, at least for the three months commencing on 1 July 2009. From then on, the rent was billed (and for a time paid) on a monthly basis, so that by implication the monthly tenancy continued.1 Therefore, this was a periodic tenancy from 1 July 2009, so that s 43 provided a right to compensation only for the conduct prior to then.
Secondly, the appeal tribunal also misunderstood the letters from the applicant’s solicitors to which it referred. It is unnecessary to set them out here. On no view do they evidence a tenancy at will, as distinct from a periodic tenancy.
Thirdly, the existence of the jurisdiction of QCAT did not turn upon whether this was a tenancy at will. Although the right to compensation under s 43 was excluded (for the period from 1 July 2009), QCAT had jurisdiction to determine this claim as one founded in the general law, for breach of the applicant’s obligation to provide quiet enjoyment of the premises. Ordinarily, a covenant for quiet enjoyment continues to apply after the expiry of the lease term, if the lessee holds over under a periodical tenancy.2
As was acknowledged by counsel for the applicant, after 1 July 2009 this remained a “retail shop lease” as defined in the RSL Act, and the claim for damages under the general law for an interference with the respondents’ quiet enjoyment of the premises raised a “retail tenancy dispute” as there defined. Therefore, QCAT had jurisdiction to resolve the dispute.3
In the decision of the original tribunal, the claim was treated as one for damages for interference with the right to quiet enjoyment. The tribunal did have jurisdiction to determine that claim for the period both before and after 1 July 2009.
But the legal basis for the claim is relevant, because the suggested error in the decisions of QCAT is in relation to a legal principle which applies to the general law claim, but not, it would seem, to a claim for compensation under s 43 of the RSL Act.
The principle is that because a covenant for quiet enjoyment is prospective in its operation, it is not breached by a use of other land by the landlord where that use is one which the parties must have contemplated would be made. In Southwark London Borough Council v Tanner, Lord Hoffmann said in this respect that:4
“The tenant takes the property not only in the physical condition in which he finds it but also subject to the uses which the parties must have contemplated would be made of the parts retained by the landlord.”
The applicant submits that this principle was overlooked, so that there was an error of law which affected the outcome because the mooring of this boat was a use of the jetty which the parties must have contemplated at the commencement of the lease. The reasons of the appeal tribunal do not refer to this point. But as I read the reasons of the original tribunal, the point was considered. And it was not considered by the appeal tribunal because the point was not taken before the appeal tribunal by the present applicant.
In the reasons of the original tribunal, the point was discussed as follows:
“[115]It further submits that the applicants knew or should have known that whale watch vessels operated from the harbour, and that many were moored at the end of the harbour where the restaurant was situated, and that the applicants cannot claim they were taken by surprise. This ignores the fact that there were no whale watch vessels moored immediately in front of the premises at the start of the lease. There was nothing in the existing state of affairs, nor in what they were told, to lead them to expect they would soon have a 24 metre tourist vessel almost entirely obstructing their view.”
The applicant’s written submissions to the appeal tribunal did not repeat that submission. The applicant sought to impugn this award of damages by other arguments. Therefore, the appeal tribunal did not have to consider whether the reasoning of the original tribunal on this point was incorrect and the fact that this point was not considered by the appeal tribunal does not indicate an error of law on its part.
The decision of the original tribunal on this point may have involved an error, but it was one of fact. Whether particular conduct constitutes a breach of the covenant of quiet enjoyment is a question of fact.5
Orders
I would order that:
the application for extension of time to apply for leave to appeal be granted;
the application for leave to appeal be refused;
the applicant pay to the respondents their costs (if any) of these applications.
Turner v York Motors Pty Ltd (1951) 85 CLR 55 at 72 (Dixon J), 81 (Williams J), 86 (Webb J); Andrew G. Lang, Leases and Tenancies in New South Wales (The Law Book Company, 1976) at [1404]. ↩
Andrew G. Lang, Leases and Tenancies in New South Wales (The Law Book Company, 1976) at [829] citing Lavender v Betts [1942] 2 All ER 72. ↩
RSL Act, s 83(1); QCAT Act, s 10(1)(b). ↩
[2001] 1 AC 1 at 11. ↩
Budd-Scott v Daniell [1902] 2 KB 351; Southwark London Borough Council v Tanner [2001] 1 AC 1 at 10. ↩
Orsay Holdings Pty Ltd
Mecanovic & Ors [2013] QCA 232
(1951) 85 CLR 55
This third claim was successful before both the original tribunal and the appeal tribunal of QCAT, the applicant being ordered to pay to the respondents $101,777.30 on this account. It is this part of the decision of the appeal tribunal which the applicant now seeks to challenge. It argues that there was an error of law which resulted in the respondents being awarded any compensation upon this claim.
Before going to that suggested error of law, it is necessary to discuss another of the applicant’s submissions, which is that the appeal tribunal (and the original tribunal) misunderstood the limits of its power, according to the RSL Act, to award damages or compensation. In particular, it is argued that the respondents had no entitlement to compensation under s 43, because this was a periodic tenancy. Section 42 of the RSL Act provides as follows: