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[2010] QCAT 474
Queensland Civil and Administrative Tribunal
2010-08-30
Original judgment source is linked above.
claim for compensation under Retail Shop Leases Act 1994 -sections 43(1), 43(2)(a), 46A - claim of false or misleading statements or representations and unconscionable conduct - expert witness challenged on expertise and independence - voir dire held - applicant not discharging onus of proof of loss or damage-application dismissed.
(c) Section 46A of the Act: (unconscionable dealing).
Ms Binet, and her business partner and co-director Ms Ward, planned to sell a cooked meat product under the brand "Schnitzel." Towards the end of 2007 they inspected shop 15, with an area of 97m2, and access to an internal "food court" and a walkway adjacent to the car park. They were shown the premises by the Respondent's leasing agent, Jeffrey Litte. Shop 15 had then been vacant for about 2 years.
Here it is desirable to describe the layout of the relevant part of the north side of the Centre. Shop 10 (excised from Shop 15) has Shop 14 on its western side, and Shop 7, occupied by an Indian Restaurant ["Banjara"] on its eastern side. A public walkway, about 2.5 metres wide, runs along the front of Shop 7 and expands (near the eastern side wall of Shop 10) to a width of about 8m under a skillion roof projecting into the car park and passing the main entrance to the Centre. The Banjara restaurant has an exclusive 25m2 outside seating area, square in shape, and situated under the north-eastern corner of the skillion roof, about 2.9m from the front of Schnitzel's former shop.[3]
Schnitzel's former shop is 7.1m wide. Its outside seating area projects about 2.9 metres. The length of the seating area does not coincide with the width of the shop; it begins about half way (3.5m) from Shop 10's eastern wall, and along the front of vacant Shop 14. There is an Emergency Services/Police parking bay immediately outside Banjara.
On 26 October 2007 the Respondent gave the Applicant an Offer to Lease Shop 15, but the Applicant decided that a fitout of that area would be too expensive. So it declined the offer and asked for a smaller shop. The Respondent then offered a part of shop 15 fronting the parking area, with an area of 62m2, and a non-exclusive licence of 15m2 as an outside seating area.
An exchange of emails followed. The Applicant required the seating area to be "enclosed with ... pull down blinds so we could use [it] in ALL weather conditions ...".[4] On 4 December 2007 the Respondent offered to "install a pull down clear blind which will enable greater usage of the licensed area".[5] The Applicant accepted that offer requesting that "the Landlord will be responsible for installing the enclosure of the licensed area at the same time as the shop fitout."
"As per earlier discussions we are in process of establishing an outdoor area in front of the external tenancies ... Works ... will commence shortly, with the plans being now finalised and will include incorporating an outdoor area directly in front of your tenancy"[7]
On 18 April 2008 she wrote again to Banjara, referring to an "interim period whilst you are sharing the area with the adjoining tenancy ....".[8]
After some initial tension between the Applicant and Banjara, concerning the use of their respective seating areas, an accommodation was reached about June 2008. Ms Dixon (for the Respondent) assured Ms Binet and Banjara that the difficulty was merely a "short term arrangement."[9]
The Applicant's business traded very poorly from the start, and by the end of May 2008 Ms Binet became increasingly worried. The rent free period was due to end in mid June 2008, and creditors were demanding payment. Apparently in an outburst of frustration she suggested that the installation of drop-down blinds be cancelled, only to recant soon afterwards. In fact two blinds were installed in July or August 2008. They extended across the front of the covered area, close to the edge of the roof-line, but did not enclose the Applicant's seating area. Ms Dixon's evidence was that it was impossible, for structural reasons, to install the blinds in any other position.
At Ms Binet's request, Ms Dixon and Mr Juchi Chen, the Respondent's general manager, met her early in June 2008 to discuss her problems. He says, and she does not deny, that she was upset and tearful. Mr Chen says that he advised her, inter alia, to remain open during core trading hours. Later, he tried to assist her by extending the rent free period, and by halving the rent. Ms Dixon suggested that Ms Binet could place her tables and chairs outside her licensed area, away from her front window, in a position depicted in Exhibit 4, but Ms Binet did not do so.
From September 2008 to February 2009 neither the Applicant nor Banjara used the seating areas because, so they say, the Respondent did not clean or maintain them properly, and occasionally the roof leaked.
Shortly before Easter 2009 the Applicant did not renew its equipment leasing contract, and the equipment was repossessed.
The Applicant never paid the full amount of rent for Shop 10, even at the reduced rate. On 31 March 2009 it received a Notice to Remedy Breach of Covenant, claiming $20,037.03 for rent and outgoings. On 15 April 2009 the Respondent re-entered the premises and the Applicant departed.
Ms Dixon, who is responsible for the day to day management of the Centre, was adamant that she had made no representation, oral or in writing, that the Respondent would provide the Applicant with a fully enclosed outside seating area. Further, she denied that such an arrangement was ever discussed. Ms Dixon says that Ms Binet and Ms Ward told her that they had ample experience in running cafes, that they made careful notes of the shop and its surrounds, and took measurements before the lease was signed. They gave Dixon the distinct impression that Schnitzel was to be primarily a takeaway and home delivery business, with just a small eating or waiting area.
Ms Dixon agrees that she told Ms Binet and Ms Ward during negotiations at the end of 2007 that she could not offer them an outside seating area exactly aligned with the front of Shop 10. She agrees that she told them that it would be possible to realign the Applicant's seating area if the plan to remove the Police parking bay came to pass. She denies that she showed them any plans or drawings of any refurbishment prior to execution of the lease, and asserts that she neither promised nor discussed any time frame for carrying out that plan.
Mr Chen, the Respondent's general manager, says that his letting agent informed him at the end of 2007 that the Applicant was a potential tenant with a new concept in home delivered and takeaway foods. He says that he had plans drawn up in March 2008 for refurbishment of the external seating area. But on making inquiries at government agencies he found that the work needed town planning approval, that it would unduly interfere with existing services, and would involve significant expense. As the relevant tenants were not paying rent regularly, he abandoned the plan.
Mr Chen says that he never discussed an all weather enclosed seating area with the Applicant, or represented that he would provide one. The area concerned is a walkway, though not formally designated as such, and the Applicant's lease prohibited obstruction of pedestrian traffic.
Both Mr Chen and Ms Dixon firmly rejected the suggestion that the maintenance and cleanliness of the Centre were wanting. They say that the anchor tenant, Woolworths, is quite demanding in that regard, and that the Respondent pays a cleaning company about $171,000 per annum for its services. The cleaners attend on a daily basis, and Ms Dixon states that she makes random checks of their work.
The Evidence of Ms Bundesen (for the Respondent)
lack of due diligence in assessing risks associated with the introduction of a new product; and
(c)...takes action that substantially restricts or alters... (i) ... access by customers to the leased shop: or... (ii) the flow of customers past the shop; or...
(d) causes significant disruption to the lessee's trading ... or does not take all reasonable steps to prevent ... significant disruption ... or
(e) does not have rectified as soon as practicable-(i) ... or (ii) any defect ..."
"A positive unqualified prediction ... may be misleading conduct in trade or commerce, if relevant circumstances show the need for some qualification to be attached to that statement, or the possibility of its non-fulfilment to be disclosed as the requirement of fair trading ... [T]he misleading or deceptive conduct may be found in the failure to qualify the statement or disclose the risk of non-fulfilment."[19]
Section 43(2) and enclosure of the seating area
1 Alleged misrepresentation by silence: The Applicant claims that it would not have entered the lease with the seating area located as depicted on Plan A if the Respondent had revealed that it could offer seating properly aligned with Shop 10.
Finding: The Applicant has adduced no acceptable evidence that the Respondent could have made such an offer, or that the Respondent's silence on in that regard matter caused any loss or damage to the Applicant.
Finding: The Applicant raised three alternative claims under this heading, each of them more confused than its predecessor. There is no evidence of bad faith on the part of the Respondent or any of its agents. On the contrary, the Respondent allowed the applicant to trade for one year, effectively without paying any rent or outgoings and forbore to issue a Notice of Breach until the Applicant had indicated that it was abandoning its efforts to trade. If such conduct were to be regarded as unconscionable, the lot of landlords confronted by unsuccessful traders would be perilous indeed. Furthermore, the Respondent increased the period of rent remission and halved the rent in an effort to assist the Applicant. But when Schnitzel closed its doors it had paid the Respondent little more than $9,000. The allegations of unconscionable conduct are rejected.
Finding: The potent and operative adjective in section 43(1) is "substantial". There is no evidence of any such interference. Accordingly these allegations are dismissed.
Finding: This claim was abandoned, and advisedly so.
It is not our task to decide which of several factors might have been causes of the demise of the Applicant's business venture. Our task is simply to deal with the Applicant's allegations on their legal merits, and to decide whether any act or omission by the Respondent entitles the Applicant to compensation under the Act. For the reasons we have given, we find no substance in any of the Applicant's claims.
However, we consider it just to declare that the Respondent terminated the lease on 15 April 2009, as the Respondent has expressed no interest in pursuing arrears of rent beyond that date.
We feel bound to add that this litigation has cost the parties dearly - particularly the shareholders of the Applicant, who lost considerable sums before litigation began.
And two issues remain to be decided, namely the Applicant's liability for arrears of rent and outgoings, and the costs of these proceedings.
This matter originated the former Retail Shop Leases Tribunal 12 months ago, before the present tribunal was constituted. Each tribunal was created to dispense speedy and affordable justice. Neither ideal has been achieved on this occasion. The case has been unduly complicated, not to say confused, by multiple amendments made to the Notice of Dispute and the addition of claims without substance. Swingeing claims of claims of unconscionable conduct should not be made unless compelling evidence exists. In too many cases s 46A of the Retail Shop Leases Act has been used as a mantra, makeweight or catch-all clause. A section 46A claim is a grave allegation, not one to be used for such purposes.
It is declared that the lease between the Applicant as lessee and the Respondent as lessor terminated on 15 April 2009.
[1] Schedule 1 to Lease: Variation to Terms, New Clause 28-Seating Licence.
[2] Statement of Claudine Binet, 5.8.09: Attachment CB 4.
[3] Exhibit 3: enlarged plan tendered by the Respondent and Statement of Subidra Keeffe: Attachments SK3 and SK4.
[4] Statement of Claudine Binet, 5.8.09: Attachment CB3: Email Schnitzel World to Litte 30.11. 2007
[5] Statement of Shae Dixon: Attachment SD1, page 10.
[6] Statement of Claudine Binet, 5.9.09:Attachment CB1.
[7] Statement of Subidra Keeffe filed 1.6.10: Attachment SK5
[9] Email Shae Dixon 20 March 2008; statement of Claudine Binet, Attachment CB9
[11] Clark v Ryan [1960] HCA 42; (1960) 103 CLR 486; Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705.
[12] Australian Securities and Investments Commission v Rich [2005] NSWSC 149; (2005) 190 FLR 242.
[13] Fortson Pty Ltd v Commonwealth Bank of Australia [2008] SASC 49; (2008) 100 SASR 162.
[14] Report Mr D Gilbert filed 18.1.2010 Attachment B (Invoices to Applicant - Inv 864 dated 11.7.09
$5897.83; Inv 867 dated 1.8.09 $3984.75; Inv 882 dated 23.10.09 $3483.33; Inv 886 dated 16.12.09 $7035.75; Inv 888 dated 11.1.10 $5371.67.
[18] Dawsons Ltd v Bonnin [1922] 2 AC 413 at 432; Yuting Liu & Anor v Village Centre Dispute 2007/0121, 12 March 2009.
[19] Wheeler Grace & Pierucci Pty Ltd v Wright [1989] ATPR 40-490 at 50-025
[20] Cf Trade Practices Act 1974 (Cth) s 51A.
[21] GO & MJT Nominees Pty Ltd v Hollywells Homewares Pty Ltd [2010] QSC 169 per Alan Wilson J.
[22] Watson v Foxman (1995) 49 NSWLR 315per McClelland CJ in Eq.
[23] Email Ms Binet to Applicant's solicitor 5 December 2007:CB 5
[24] Statement of Shae Dixon 1: Attachment page 42.
Schnitzel World Pty Ltd
Yung Chon Pty Ltd [2010] QCAT 474
(1960) 103 CLR 486
(2001) 52 NSWLR 705
(2005) 190 FLR 242
(2008) 100 SASR 162
(1995) 49 NSWLR 315