Bundara Investments Pty Ltd as trustee for the Hills Family Trust trading as Seashells Fish Bar v Short
[2011] QCAT 738
•16 December 2011
| CITATION: | Bundara Investments Pty Ltd as trustee for The Hills Family Trust trading as Seashells Fish Bar v Short [2011] QCAT 738 |
| PARTIES: | Bundara Investments Pty Ltd as trustee for The Hills Family Trust trading as Seashells Fish Bar (Applicant) |
| v | |
| Mr Mark Short & Mr Stanley Short (Respondent) |
| APPLICATION NUMBER: | RSL079-10 |
| MATTER TYPE: | Retail shop leases matters |
| HEARING DATE: | 20 May 2011 |
| HEARD AT: | Townsville |
| DECISION OF: | Ms Keta Roseby, Presiding Member Ms Sandra Kairl, Member Mr Don McBryde, Member |
| DELIVERED ON: | 16 December 2011 |
| DELIVERED AT: | Townsville |
ORDERS MADE: | 1. The Applicant’s application is dismissed. 2. The Applicant ordered to pay to the Respondent $5,753.91 rent arrears and $4,178.76 in legal fees being the loss suffered by the Respondent due to the Applicant’s default. 3. No orders as to costs. |
| CATCHWORDS : | Retail shop premises – where applicant tenant alleges landlord failed to fulfil obligations under the lease and thereby wrongfully evicted – where tenant made complaints to landlord in respect of items allegedly requiring repair or maintenance and tenant subsequently withheld rent – whether withholding of rent a breach of lease – whether tenant entitled to compensation for alleged breaches of lease by landlord – whether landlord entitled to lost rental following termination of lease Retail Shop Leases Act 1994 (Qld) s 43 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Bundara Investments Pty Ltd as trustee for The Hills Family Trust trading as Seashells Fish Bar represented by Mr John Byrne of Byrnes - Business Lawyers |
| RESPONDENT: | Mr Mark Short and Mr Stanley Short represented by Mr Michael Clive of Crosby Brosnan & Creen |
REASONS FOR DECISION
This is a dispute, between Seashells (the tenant) and the Shorts (the landlord), about a tenancy for retail shop premises at 39A Gregory Street, North Ward in Townsville. The Shorts terminated Seashells’ tenancy in circumstances where Mr & Mrs Hills (the representatives for Seashells) say that they were wrongfully evicted and the Shorts had not fulfilled obligations under the lease. The case involves a claim by Seashells under the lease and damages, together with a counter-claim by the Shorts for rental.
Background
The Shorts entered into a commercial tenancy agreement with Seashells on 11 March 2008 for a period of three years commencing 11 January 2008 for the retail shop premises at 39A Gregory Street, North Ward, Townsville.
The lease was amended, on or about 5 August 2008, by exchange of correspondence and by the addition of certain special conditions annexed to the lease. The lease and the variation of lease will collectively be referred to as the Lease.
From those premises, the business of a fish and chip shop was operated by Mrs Pam Hills and Mr Mervyn Hills.
Seashells carried out works to the courtyard outside the building, in the period following the variation of lease. This included the construction of a servery window, sail shades, furniture and large gates.
During the course of the tenancy, Seashells made numerous complaints to and requests of the Shorts (including the landlord’s agent) in respect of items Seashells says were the responsibility of the Shorts and required repair or maintenance. Specifically, Seashells requested that:
[a] the lights under the footpath ceiling be reinstated;
[b]the grease trap at the rear of the premises be rectified by replacement of the section where a hole had broken into it;
[c]leaks where rain water was coming into the premises be rectified.
Seashells says that the Shorts did not carry out the repair or maintenance work which they were obliged to do and says that it made enquiries and obtained quotes for these works from refrigeration mechanics and electricians and other tradesmen to carry out the works. Seashells also withheld rent against these alleged repair and maintenance obligations of the landlord.
The Shorts subsequently served notices of breach on Seashells in respect of the rent withheld.
Seashells did not remedy the breach alleged by the Shorts and served the Shorts with notices of dispute in response to the notices to remedy breach. There is dispute as to whether or not the Shorts responded to the notices of dispute.
The Shorts subsequently evicted Seashells by changing the locks and refusing Seashells entry on 8 March 2010.
Seashells gave notice to the Shorts that it regarded the eviction as improper but that, in order to mitigate its loss, it would remove its goods and clean the premises.
Seashells sold its equipment through second hand dealers. Seashells said that the gates it had installed were removed by someone other than themselves, that the gates were missing at the time it was removing its goods and that Seashells thereby lost the opportunity to sell the gates.
The Shorts advised that they subsequently leased the premises to Gavin James Cook with that lease commencing on 1 September 2010.
Seashells is claiming, in its application, that:
[a]the Shorts wrongfully evicted Seashells from the premises and claims the sum of $350,000.00 as compensation for loss of its business;
[b]the Shorts breached clause 8.3 of the Lease and that the Shorts have “not done everything reasonable to ensure the services operate efficiently”. Seashells submitted that, although the remainder of clause 8.3 removes liability from the landlord if they do not, the landlord is “still required to act reasonably”. Compensation pursuant to s43(1)(d) of the Retail Shop Leases Act (the Act) is claimed;
[c]in failing to repair and maintain the lights, the grease trap and the leaks in the premises, as alleged by Seashells, the Shorts failed to repair and maintain the premises in accordance with an implied covenant in clause 6.1 of the Lease that all other repairs and maintenance, over and above those stated in clause 6.1 as being the responsibility of the tenant, are the responsibility of the landlord and that the landlord is thereby in breach of the Lease. Compensation pursuant to s43(1)(d) of the Act is claimed;
[d]a reduction in the rent is required, pursuant to clause 11.1 of the Lease by reason of Seashells having to close the shop as a result of the Shorts allowing rain into the premises. Compensation pursuant to s43(1)(d) of the Act is also claimed; and
[e]damages be awarded for the alleged removal of the gates by the Shorts.
The Shorts are claiming, in their counter-application, that pursuant to clause 9.2(5) of the Lease, they are entitled to the following from Seashells:
[a] $5,753.91 being the arrears of rent;
[b]$20,822.93 being lost rental until the premises were leased to another tenant;
[c] $4,178.76 in legal fees incurred as a result of Seashells’ breach;
[d] legal fees incurred in these proceedings.
Issues for Determination
In order to determine whether Seashells is entitled to any relief, the Tribunal must determine the following:
[a]Whether Seashells was wrongfully evicted. If so, then compensation will follow. The question hinges on:
i.Whether the withholding of rent by Seashells was a breach of the Lease;
ii.Whether the Shorts were entitled to re-enter and take possession of the premises in accordance with the terms of the Lease.
[b] Whether Seashells is entitled to any compensation because of alleged breaches of the Lease by the Shorts and, specifically:
i Whether the Shorts have an implied covenant, in clause 6.1 of the Lease, to effect structural repairs and maintenance to the premises and, if so:
a. Did the Shorts breach the Lease in failing to fix the lights and, if so, the quantum of any damage sustained by Seashells;
b. Whether the grease trap had any structural defect and, if it did, did the Shorts breach the Lease in failing to fix the defect and, if so, the quantum of any damage sustained by Seashells;
c. Whether the premises leaked and, if so, did the Shorts breach the Lease in failing to fix the leak and, if so, the quantum of any damage sustained by Seashells;
ii Whether the Shorts allowed rain into the premises and, if so, whether this resulted in Seashells having to close the shop and, if so, whether a reduction in the rent is required pursuant to clause 11.1 of the Lease or other compensation;
iii.Whether the Shorts have done everything reasonable to ensure the services operated efficiently pursuant to clause 8.3 of the Lease and, if not, the quantum of any damage sustained by Seashells.
[c]Whether the gates were removed by the Shorts and, if so, the value of the gates.
In order to determine whether the Shorts are entitled to any relief, we then need to determine whether Seashells is liable for lost rental from the date the Lease was terminated to the date the premises were leased to another tenant.
Withholding of Rent and Termination
Clause 9.1 of the Lease states that:
“The tenant defaults under this Tenancy if:
a. The Rent or any money payable by the Tenant is unpaid for 14 days;”
Clause 9.2 goes on to say:
“If the Tenant defaults and does not remedy the default when the Landlord requires it to do so, the Landlord may do any one or more of the following:
b. re-enter and take possession of the Premises;
ii....
c. recover from the Tenant any loss suffered by the Landlord due to the Tenant’s default.”
There is no dispute that Seashells withheld rent. In its pleadings, Seashells stated that it “did not fall into arrears” with respect to rental but that it “rightfully withheld certain payments” to the Shorts against repair and maintenance work which the Shorts were obliged, but failed, to do. In submissions from Seashells, the Tribunal was asked to find that, in the absence of a specific clause prohibiting the withholding of rent against repair or maintenance obligations of the landlord (or otherwise), the tenant was at liberty to do so and, in doing so, would not be in breach of the Lease. Seashells also says that it made enquiries and obtained quotes for these works from refrigeration mechanics and electricians and other tradesmen to carry out the works.
In response, the Shorts point out that “some months no rent was paid at all and other months a portion of the rent was paid”[1] and suggested that the real issue was that Seashells was in financial difficulty.
[1] Exhibit 6, page 2, paragraph 2.
On the evidence, the only quote Seashells obtained was to fix the lighting (which belonged to the premises next door and discussed below). In any event, Seashells did not proceed with the quote obtained and no electrical work was carried out on its behalf.
In cross examination of Mrs Hills, she admitted that the withholding of rent was to attract the attention of the Shorts, as opposed to withholding rent for expenses incurred. Once she had achieved that, a better option for Seashells would have been to obtain quotes in respect of all items allegedly requiring repair or maintenance and perhaps proceeding to have the work completed. It is also a pity that, for whatever reason, the without prejudice discussion proposed by Seashells’ solicitor and agreed to by the Shorts’ solicitor in February 2010, did not proceed.
There were a number of Notices to Remedy Breach served on Seashells and some of the payments requested were paid. It appears to us that the non-payment or retention of rent was somewhat ad hoc and did not align with any quotes obtained for works allegedly the responsibility of the Shorts. Further, Seashells had not paid for any repairs and maintenance that were the responsibility of the Shorts with the money that had allegedly been retained for this purpose.
Whilst the Tribunal can appreciate that Seashells might want to get the attention of the Shorts and whilst there is no such specific prohibiting clause, Clause 9.1 clearly states that rent which is unpaid for a period of 14 days is a default under the tenancy. It follows that, in the absence of a specific provision allowing for the withholding of rent in particular circumstances, the withholding of rent for a period of 14 days or more will result in the tenant being in default under the tenancy.
The Tribunal therefore finds that the withholding of rent, resulting in rent having been unpaid for 14 days, was a breach of the Lease and that Seashells was in default under the tenancy. Accordingly, the Tribunal also finds that the Shorts were entitled to re-enter and take possession of the premises in accordance with the terms of the Lease and Seashells was not wrongfully evicted.
On the basis that the actions of the Shorts in this regard were in accordance with the terms of the Lease, the Tribunal will not deal further with the compensation claimed in respect of this issue other than to say that, even if the Tribunal had found in favour of Seashells on this issue, which it has not, there was insufficient evidence provided to the Tribunal as to the alleged loss suffered by Seashells, that is, the value of the tenant’s business, in any event.
Clause 6.1 of the Lease
Seashells has claimed compensation for the Shorts’ refusal to carry out the following works:
[a] reinstatement of lights under the footpath ceiling;
[b]rectification of the grease trap at the rear of the premises by replacement of the section where a hole had allegedly broken into it and permitted foul odours to enter the premises;
[c]rectification of leaks where rain water was coming in and allegedly flooding the premises.
The compensation is claimed under section 43(1)(d) of the Act “as the lessor [landlord] has not rectified as soon as practicable breakdowns of plant and equipment in the lessor’s care and maintenance” by reason of a breach of an alleged implied covenant in clause 6.1 of the Lease.
Clause 6.1 of the Lease states that:
“The Tenant must:
a. keep the Premises in good repair and condition except for fair wear and tear, inevitable accident and inherent structural defects; and
b. fix any damage caused by the Tenant or the Tenant’s Employees.”
Seashells says that that clause requires the tenant (Seashells) to keep the property in good repair except for fair wear and tear, inevitable accident and structural defects. Seashells alleges that the implied covenant is that all other repairs and maintenance are the landlord’s (the Shorts’) obligation.
The Shorts say that the Lease does not contain any covenants imposing any repair or maintenance obligations on them.
In the event that there were an implied covenant, as alleged, in order to succeed, Seashells would have to establish firstly, a breach of the Lease and, secondly, damage as a result. However, for the reasons discussed below, Seashells has failed to establish either.
Accordingly, on this basis, it is not necessary for the Tribunal to determine the question of law with respect to the alleged implied covenant.
Lights
Mr Mark Short gave evidence that the lights are not actually connected to the electricity for the tenant’s premises and are wired into the circuits for the premises next door; that is, these lights belong to the tenant next door and the electricity for these lights is paid for by the tenant next door.
No evidence was offered in terms of the financial impact this issue had on Seashells’ business and the quantum of any such damage.
Grease trap
Mr Mark Short gave the following evidence:
[a]that Seashells was required to have the grease trap serviced every 12 weeks by Tropical Waste Services[2];
[b]that the Townsville City Council inspected the grease trap on 8 May 2008 and directed Seashells to clean it immediately as the discharge was in breach of compliance with sewer admission limits[3];
[c]that in August 2009, as a result of a (then) recent inspection of the grease trap at the premises, Townsville City Council increased the service frequency of the grease trap to every 4 weeks[4];
[d]that between 1 July 2009 and 8 March 2010 Seashells only had the grease trap serviced by Tropical Waste Services on two occasions[5];
[e]that the grease trap did not require rectification and that he contacted Townsville Water[6] and was advised that “none of our records indicate that any of the compliance inspectors have reported any significant structural damage to the grease trap at any inspection”.
[2]Pursuant to the tenant’s approval from the Townsville City Council to discharge trade waste: Exhibit 5, Appendix 15 & 16.
[3] Exhibit 5, Appendix 17.
[4] Exhibit 5, Appendix 18.
[5] Exhibit 5, Appendix 19 & 20.
[6] Exhibit 5, Appendix 14.
Mr Mark Short suggested that any foul odour emitted from the grease trap was as a result of Seashells’ failure to service the grease trap as required[7] and we tend to agree.
[7] Exhibit 5, Appendix 17 & 18.
Again, no evidence was offered in terms of the financial impact this issue had on Seashells’ business and the quantum of any such damage.
Leaks
Seashells alleged that rain water was coming into the premises in the following ways:
[a]via the roof in the rear most area above the cold room / freezer and the rear most area generally;
[b] through the exhaust flue above the oil fryer;
[c] down the wall into the electrical power point in the servery.
Via the roof
Mr Mark Short gave evidence that the premises did not leak and provided the Tribunal with a plumber’s report prepared by Mr Jacob Giles[8] (which had earlier been provided to Seashells). Mr Short’s evidence was that he’d hired Mr Giles on New Year’s Eve 2009, a day that it rained 206.8mm, to “find and fix the leak in the roof which the tenants were complaining about”.[9] Relevantly, the report states that the “Wall of the freezer is wet with condensation running to the floor”, “Freezer door seal is perished at lower corner allowing for heavy condensation with the cold air escaping”, “Door of chiller room does not seal properly 3mm gap allowing cold air to escape with condensation occurring”. In conclusion, Mr Giles said: “During this time of the year with high humidity, I consider condensation to be the cause of the wet floor and recommend the freezer and the chiller room doors be repaired.” Mr Giles gave evidence at the hearing in these terms and was available for cross examination.
[8] Exhibit 5, Appendix 6.
[9] Exhibit 5, page 8, paragraph (l).
Mr Giles stated that he was a boilermaker, drainer and plumber with 14 years experience. He told the Tribunal that he had inspected the roof of the premises a total of three times and at no time did the roof show signs of ingress of water.
The Shorts noted that the “roof was easy to inspect as it has bare battens with no ceiling, similar to an outdoor carport.”[10]
[10] Exhibit 7, page 13, paragraph (ll).
The evidence of Mr Giles is consistent with evidence provided via affidavit by Mr Donald Thompson[11], a previous tenant of the premises. Mr Thompson states that he had experienced “some water on the cement floor near the freezer at the back area of the shop” and after checking the roof above for leaks he noticed water dripping from the side of the freezer. Mr Thompson says that he called a refrigeration mechanic[12] to check the freezer and was advised that the “dripping water was due to a combination of heavy rain and humidity causing condensation from areas of breakdown within the insulation.”
[11] Exhibit 5, Appendix 5.
[12]Letters from Mr Bob van Eerde, the refrigeration mechanic, were also put into evidence by the landlord: Exhibit 5, Appendix 8 & 9.
Mr Hills had made complaints about water coming through the insulation and causing it to break down. In response to this allegation, Mr Mark Short gave evidence that he attended at the property early the next day, following the complaint, saw water dripping at the end of the guttering and estimated that 1 – 2 litres of water had dripped on the floor near the drain. Mr Short continued by saying that he contacted a plumber and upon inspection, the plumber determined that “excess insulation was overlapping into the gutter and absorbing water”[13] and so the issue was resolved by trimming the overlapping insulation.
[13] Exhibit 5, page 30, paragraph TT.
Mr Mark Short went on to say that the “tenants were unable to pin-point the source of the leak because there was no leak”.[14] This is in comparison to Mr Hill’s statement that the “water had several points of entry through the roof”[15] although no detail was provided as to the precise location.
[14] Exhibit 5, page 8, paragraph (m).
[15] Exhibit 2, page 3.
In response to statements made by Mr Hills that “water gushed through the back area flooding the said area and the toilets with about 10cm of water making it impossible to go to the toilets”[16], Mr Mark Short gave evidence, supported by photographs, that “this area is not surrounded by four walls”[17] and that therefore it was not possible for water to be contained within this area.
[16] Exhibit 2, page 1.
[17] Exhibit 5, page 7, paragraph (h).
Seashells provided a statement by Ms Amanda Welk[18], a previous employee of Seashells. In her statement, Ms Welk commented that, following a storm, the “shop was full of water” and “the front of the shop near all the fryer’s all had just under ankle deep water.” In response, Mr Mark Short gave evidence that “it is impossible to have ankle deep water in this shop” and that “the entire shop has been designed so it can be hosed out and the water drains either onto the footpath and then into the gutter or into the drain in the cut-up room”[19]. This evidence was supported by photographs provided to the Tribunal.
[18] Exhibit 3.
[19] Exhibit 7, page 5, paragraph (h).
The Shorts also submitted a structural and water damage assessment[20] prepared by Mr Allan Hagstrom, a carpenter. Mr Hagstrom had been employed by Mr Cooke to fit out the shop from 2 August until 2 September 2010. Mr Hagstrom states: “I remember doing construction of a ceiling for this structure and it was raining quite heavily. I did not notice any water leaks or any evidence of previous water leaks from this roof, nor any break down in the insulation caused by water. This area was my workshop and remained dry throughout the job.”
[20] Exhibit7, Appendix 5.
We find it unusual that Seashells did not provide evidence to the Tribunal by way of photographs taken during the alleged flooding – particularly given the regularity with which it is alleged to have occurred, according to the evidence of Mr & Mrs Hills. Mr Hills states that this occurred up to “ten times a month in the standard wet season”[21]. In cross-examination, Mrs Hills told the Tribunal that photographs had been taken on her phone but that she had lost the photos.
[21] Exhibit 2, page 3.
We find it equally unusual that a tenant, faced with a situation such as that described by Seashells and having the impact alleged, would not make arrangements for a qualified tradesperson to attend at the premises to inspect the roof and possibly provide a quotation to fix the alleged leaks. At the hearing, Mrs Hills confirmed that no-one had looked at the roof on behalf of Seashells.
The Shorts’ material included statements from Tammy Maloney[22] and Sasha Dzwonczyk[23] - two employees of Mrs Hills, Donald Thompson[24] - a previous tenant, Jill Kirkham[25] - the manager of the previous tenant and Gavin Cooke[26] - the present tenant all stating that there were no issues with flooding. Of particular note is that Mr Cooke has experienced significant inclement weather conditions during his tenancy and still has not had any problems with flooding.
[22] Exhibit 7, Appendix 1.
[23] Exhibit 7, Appendix 2.
[24] Exhibit 7, Appendix 3.
[25] Exhibit 7, Appendix 4.
[26] Exhibit 5, Appendix 21 & 22.
The Shorts provided a reasonable explanation for excess water in the premises by way of condensation from the freezer and the freezer door defrosting cycle.
Mr Mark Short gave evidence that Seashells could have managed the condensation issue and referred to methods adopted by previous and present tenants[27]. The statement provided by the current tenant, Mr Cooke[28] confirms that there has been “no leaks or flooding inside or outside the shop” and that the “only water in the back area is from spray in the gap between the shop and the back area roof and mesh gates during heavy rain, but this is not a problem.” Mr Cook notes that there was no flooding even after Cyclone Yasi and said that the “only other water in the back area is from condensation from the side of the freezer and the defrost on the door. This can be managed by placing non-slip mats at the base of the freezer.”
[27] Exhibit 5, Appendix 5 & 22.
[28] Exhibit 5, Appendix 22.
The Shorts make the point that, had the roof been leaking, then a bucket could have been used to contain the water. This is consistent with the inability of Seashells to identify the location of the alleged roof leak/s and one reason why the water was more likely as a result of condensation from the freezer.
Again, no evidence was offered in terms of the financial impact this issue had on Seashells’ business and the quantum of any such damage.
Through the exhaust flue
In response, Mr Mark Short gave evidence that when he was first advised of this leak, he attended at the premises the next day, prior to the shop opening and inspected the area around the flue. Mr Short says he then used silicone around the flue to fix the problem. Mr Short’s evidence was that it had previously been explained to Seashells that high winds could cause rain water to be blown into the flue – however the amount would be “very minimal”[29]. Mr Short says that he attended to this promptly and that no further complaints were made in respect of this issue.
[29] Exhibit 5, page 29, paragraph (i).
Down the wall into the electrical power point
In response, Mr Mark Short gave evidence that any water in this area of the premises was as a result of open louvers above the power point during times of heavy rain and that when he suggested to Mrs Hills to close the louvers to prevent the rain coming in; she replied that it was “too hot”[30]. Mr Short advised that he then suggested that Mrs Hills install a water-proof power point.
[30] Exhibit 5, page 31, paragraph EEE.
There was a great deal of evidence in respect of these issues and, after considering all of that evidence, we prefer and accept the evidence of Mr Mark Short and Mr Giles and find that the Shorts did not breach the Lease in respect of the items alleged by Seashells.
Whilst the Tribunal is open to the evidence of Seashells that some leaks may have occurred, in the absence of any evidence from qualified trade’s people we prefer and accept the evidence of the Shorts and their plumber, Mr Giles.
Rent Reduction
There has also been a claim made to reduce the rent due to water ingress issues. In this regard, because of our findings above, in respect of the alleged leaks, there is no evidence to persuade us that Seashells needed to close the shop.
In addition to the leaks referred to above, Seashells asserts that on 31st December 2009 and as a result of the Shorts allowing rain into the premises, Seashells had to close the shop. Seashells alleges that access to the rear half of the premises was not possible due to rain water in the premises and that the area was a severe slip, fall and electrical hazard.
Seashells contended that a 50% reduction in the rent, under clause 11.1 of the Lease, was reasonable for as long as the problem existed.
Clause 11.1 of the Lease states:
“If the Premises are damaged or destroyed and as a result the Tenant cannot use or gain access to the Premises then from the date that the Tenant notifies the Landlord of the damage or destruction the Landlord:
a. must reduce the Rent and any other money owing to the Landlord by a reasonable amount depending on the type and extent of damage or destruction; and
b. cannot enforce clause 6.1 against the Tenant;
until the Premises are fit for use or accessible.”
The Shorts gave evidence that when the Lease first commenced, there was a 300mm gap between the roof of the main shop premises and the roof above the rear most area above the cold room / freezer and water would enter the rear most area of the premises through this gap when it rained. To prevent this occurring, the Shorts had flashing installed between the roof of the main shop premises and the roof of the rear most area of the premises above the cold room / freezer.
Mr Mark Short said that, subsequently, Seashells asked for the flashing to be removed except for the flashing above the door at the rear of the main shop premises as it was restricting air flow and led to the area becoming too hot. The Tribunal was taken to photographs showing the flashing and where it had, on the Shorts’ evidence, been removed at the request of Seashells.
In evidence before the Tribunal, Mrs Hills stated that the flashing made the shop very dark but that she didn’t ask Mr Mark Short to remove the flashing.
The Shorts suggested that if any water was in the back area of the shop, it had entered through this 300mm gap.
Mr Hills stated that “the business was closed on several occasions due to the slip and fall conditions that applied when raining as water was carried rite [sic] through to the kitchen area and the service area”[31]. In response, Mr Mark Short gave evidence that the premises were “closed on several occasions with a sign on the door saying shop closed due to lack of suitable staff”[32].
[31] Exhibit 2, page 2.
[32] Exhibit 5, page 9, paragraph (v).
Mr Mark Short gave evidence that he was telephoned by Carolyn Paine, who works in the premises next door, on New Year’s Eve to advise that Mrs Hills had just been in her shop complaining about water in the fish and chip shop. Mr Short’s evidence is that he asked Ms Paine to inspect the premises and that she reported back that she “saw water dripping down the side of a panel of the freezer”.[33] Mr Short then says that he arranged for a plumber to “inspect and repair the problem” however the plumber advised that it was condensation caused by high humidity.[34]
[33]Mr Short’s evidence is supported by letter from Ms Paine: Exhibit 5, Appendix 10.
[34] Exhibit 5, Appendix 6.
Further, Mr Mark Short gave evidence that the back area of the premises was a wet area and had been “purposely built so it can be hosed down”[35] for cleaning purposes. Mr Short also said that the “shop was shut only for a few hours and re-opened the next day as usual”[36].
[35] Exhibit 5, page 27, paragraph HH.
[36] Exhibit 5, page 9, paragraph (g).
On the evidence provided, the Tribunal is not satisfied to the requisite standard that the premises were not fit for use or inaccessible.
The Tribunal finds that the Shorts did not allow rain into the premises and that therefore, no rent reduction or other compensation is warranted.
Clause 8.3 of the Lease
Clause 8.3 of the Lease states that:
“The Landlord must do everything reasonable to ensure the Services operate efficiently during normal working hours but the Landlord is not liable if they do not.”
Clause 1.2 of the Lease states that “Services” means all utilities and services in the Premises.”
We agree with the submissions made by Seashells that the landlord must act reasonably and that, if they do not, then they may be liable. Expressed another way, to access the escape from liability, a landlord must do everything reasonable.
However, the way we interpret “Services” is the inclusion of things such as power, water, air-conditioning to the premises and the like and the claims made by Seashells do not appear to invoke that clause.
In any event, after hearing the evidence of Mr Mark Short at the hearing, the Tribunal is satisfied that the Shorts did do everything reasonable to ensure that any Services operated efficiently in accordance with clause 8.3.
On this basis, we do not propose to consider clause 8.3 further and we will not deal further with the issue as to the compensation claimed other than to say that, even if the Tribunal had found in favour of Seashells on this issue, which it has not, Seashells did not produce any satisfactory evidence to the Tribunal as to the alleged loss suffered by it, that is, loss of trade, in any event.
The Gates
In response to Seashells’ allegation that the gates were missing at the time it was removing its goods, the Shorts say that the gates were at the premises on 16 March 2010, as evidenced by the photograph taken by the Shorts on that date[37] and that they were still at the premises when Seashells vacated the premises on 19 March 2010. The Shorts say that, as the gates were left at the premises following Seashells’ vacation, they were entitled to treat them as having been abandoned under clause 10.2 of the Lease.
[37] Exhibit 5, Appendix 43.
On the evidence presented to the Tribunal, we find that the gates were not removed by the Shorts prior to Seashells vacating the premises and that it was reasonable for the Shorts to treat the gates as having been abandoned by Seashells following its vacation of the premises.
One of the difficulties faced by the Tribunal is that it must determine the evidence it will accept from two very different versions of events. As a general observation, the Tribunal notes that the complaints made by Seashells lacked particulars and were often broad, sweeping statements about the issue being complained of. It is also noted that Mrs Hills generally gave her evidence before the Tribunal in a similar fashion. On the other hand, we found the evidence Mr Mark Short gave to the Tribunal to be more detailed and generally corroborated either by other witnesses or photographs.
Claim for lost rental
Seashells submitted to the Tribunal that the Shorts were not entitled to recover rent after evicting Seashells from the premises on the basis that the landlord cannot claim rent without occupation – occupation being the consideration for the lease.
The Tribunal considers that rental lost as a result of a tenant’s default is, on the face of it, a loss suffered by the landlord for which claim could be made under clause 9.2(5) of the Lease. Further, in order to succeed in a claim for lost rental the landlord must, amongst other things, attempt to mitigate its loss.
However, there is no need for the Tribunal to make a determination in this regard as there was insufficient evidence to convince the Tribunal to the requisite standard that the Shorts were able to lease the premises earlier than the date of the new tenancy because the Shorts took the opportunity to make alterations to the premises whilst untenanted. Further, there was no direct evidence from the Shorts as to the efforts it had made or steps it had taken to mitigate its loss during this interim period.
On this basis, the Tribunal finds that Seashells is not liable for lost rental from the date the Lease was terminated to the date the premises were leased to another tenant.
Costs
The Shorts have claimed two separate components in respect of legal fees:
[a]$4,178.76 in legal fees incurred prior to the commencement of these Tribunal proceedings and as a result of Seashells’ breach pursuant to the Lease;
[b]legal fees incurred in these proceedings (with such costs to be determined once these proceedings have been finalised).
Looking firstly at the legal fees incurred in these proceedings, the starting point concerning costs in the Tribunal is that each party must bear its own.[38] This presumption may, however, be displaced if the Tribunal considers it in the interests of justice to order a party to pay all or part of the costs of another party.[39] The phrase “in the interests of justice” is not defined in the QCAT Act but is to be construed according to its ordinary and plain meaning, which obviously confers a broad discretionary power on the decision-maker. In determining whether it is in the interests of justice to award costs against another party the Tribunal may have regard to the nature and complexity of the dispute; the relative strengths of the claims made by each of the parties; and, whether a party has acted in a way that unnecessarily disadvantages another party.[40]
[38] Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act) s 100.
[39]Ibid s 102(1).
[40] Ibid s 102(3).
Having regard to the discretionary power to award costs and after hearing both the evidence given by, and the submissions made for, both parties, we do not believe that the presumption has been displaced and, accordingly, the Tribunal is not satisfied that this is an appropriate matter in which to make an order for costs in respect of the legal costs incurred in these proceedings.
Turning then to the $4,178.76 in legal fees incurred prior to the commencement of these proceedings, we note the Shorts’ submission that, as the Lease is a contract between the parties, they are entitled to costs as a part of the damages for breach of the Lease under clause 9.2(5) of the Lease. The Tribunal agrees with the Shorts in this regard and orders that Seashells pay the sum claimed of $4,178.76 to the Shorts, being a loss suffered by the Shorts as a result of the breach by Seashells.
The Tribunal appreciates the situation that Seashells now finds itself in but, unfortunately, the withholding of rent without taking further steps to protect its interests has led to this result. The Shorts would have been aware that Seashells had purchased the business it was to operate from the premises and that eviction would likely lead to a loss of that business. However, faced with a tenant unlawfully withholding rent, there was little else the Shorts could do. Perhaps a different outcome could have been achieved had the without prejudice meeting proceeded.
The Tribunal therefore:
[a] dismisses Seashells’ application;
[b]orders Seashells to pay to the Shorts $5,753.91 rent arrears and $4,178.76 legal fees as claimed;
[c] makes no orders as to costs of the proceeding.
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