Fitzpatrick v Young

[2010] QCAT 327

CITATION: Fitzpatrick v Young [2010] QCAT 327

PARTIES:	Nicole Fitzpatrick as Trustee for The Fitzpatrick Discretionary Trust
v
Francis Joseph Young and Josephine Grace Young

APPLICATION NUMBER:   RET019-09   

MATTER TYPE: Retail shop leases matters

HEARING DATE:     On the papers

HEARD AT:  Brisbane

DECISION OF: A Forbes

DELIVERED ON: Decision on the papers

DELIVERED AT:      Brisbane

ORDERS MADE:

1.    The Applicant’s application for substantive relief is dismissed.

2.    Each party is at liberty to make written submissions on the issue of costs, including submissions as the form of the desired order, the amount claimed, and the method of calculating the claim. Any such submissions are to be delivered to the registrar and served on the other party within 14 days of receipt of this order.

3.    The issue of costs is adjourned to be dealt with on the papers, in accordance with order 2.

CATCHWORDS :  Retail shop lease dispute - claim that tenant entered assignment of balance of term relying on a misrepresentation by estate agent: Retail Shop Leases Act 1994 s43(2)(a) and claim that lessor failed to provide a disclosure statement – failure to prove agency under sec 43(2)(a) – no compensation available under sec 43(2)(a) for assignee as distinct from original tenant: Logan City Shopping Centre Pty Ltd v. Retail Shop Leases Tribunal & Anor [2006] QSC 172 – no compensation for failure to provide potential assignee with disclosure statement: Retail Shop Leases Act 1994 s 21 – QCAT Act 2009 s47(1)(b) dismissing or striking out a proceeding.

APPEARANCES and REPRESENTATION (if any):

Decision was on the papers.

REASONS FOR DECISION

1. The Applicant tenant (“the Applicant”) leases premises from the Respondent (“the Landlord”) at Lot 6/1916 Gold Coast Highway, Miami, where he retails mobile phones, digital cameras, and other electronic equipment. Originally he held a two-year residue of a three-year lease, as assignee under a deed executed in November 2006.  Subsequently he exercised an option to renew the lease for three years from August 2008.

1. On 10 November 2009 the Applicant, by a Notice of Dispute, sought relief under the Retail Shop Leases Act 1994. (“the Act”). The grounds of his claim are that the area of his shop is substantially less than was represented to him by a leasing agent, and that this amounts to a material misrepresentation within the meaning of section 43(2)(a) of the Act, resulting in a substantial loss of turnover: He seeks an order that his rent be reduced proportionately. In February 2010 he amended his claim to seek compensation in the order of $121,000, and the cost of fitting out alternative premises, if the tribunal terminates the lease.

1. Mr Robert Fitzpatrick has replaced the original Trustee as Applicant, and Mr Francis Young has died since the assignment of the lease.  His survivor is represented by Mr Emil Young.

1. The dispute has been transferred to this tribunal (“QCAT”) by the Queensland Civil and Administrative Act 2009 (“the QCAT Act”).  The parties have attended mediation and a compulsory conference, but no resolution has been reached.

1. The Landlord now applies to have this matter struck out on the grounds (i) that it discloses no proper cause of action and (ii) that the additional heads of damage are vexatious claims: QCAT Act s 47. Each party has filed statements relating to the substantive claims and to the application to strike out the amended Notice of Dispute.

1. On 24 June 2010 a senior member of QCAT directed that the application to strike out be dealt with on the papers.

Background

The Applicant’s Position

1. The Applicant tenant says that in 2006, wishing to move his business from an earlier address, he sought the help of several estate agents to find suitable premises with a floor area of not less than 130 square metres.  In July 2006 an agent named Larden told him that suitable premises (the premises now occupied) were available for two years of an original three-year lease.  Larden gave the Applicant a copy of a disclosure statement dated 29 July 2005; apparently the Landlord gave the original document to the previous tenant at the commencement of his term.  That document describes the “area of the shop (if constructed and surveyed)” as 137.57m2[1]. The Applicant claims that he had no reason to believe that this information was inaccurate.

[1]               Robert Fitzpatrick, Statement 21 June 2010: attachment “B”

1. At the same time (July 2006) Larden gave the Applicant a copy of the lease, which identified the premises as Lot 6 on RP107963 County Ward Parish Gilston Title Reference 14035095 and as “the whole of the land.”  However, no plan was attached to the lease and the Applicant says there was nothing to indicate to him that anything other than the shop building was the subject of the lease.

1. The Applicant took the balance of the existing lease by Deed of Assignment dated 2 November 2006, and the Landlord consented to the assignment on the same day.

10. The Applicant says that he found it difficult to fit his furniture and stock into the subject premises, but at first thought that this was due to the larger size of his previous premises and the irregular shape of the new shop.  (It is wedge-shaped, facing the corner of two streets, and the balance of the land is an open area adjacent to Mountain View Avenue.[2])  But in November 2007 the Applicant obtained a surveyor’s report, which revealed that although the area of Lot 6 is indeed 137m2, the area of the shop is only 94m2.

[2]               Sketch map attached to report of Treasure & Associates 22 November 2007: attachment “G” to

Notice of Dispute.

1. On 7 January 2008 the Applicant told Landlord’s representative about this finding, and asked that the annual rent be reduced by 31.2% (representing the difference between 137m2 and 94m2). Later that month, and before receiving any response to that request, the Applicant exercised an option to renew the lease, which was not due to expire until more than seven months later, namely on 25 August 2008.  Subsequently the Landlord refused to reduce the rent.  On 31 July 2008 (a delay probably due to the intervening death of Francis Young) the Landlord offered terms for renewal of the lease, which the Applicant accepted on 13 August 2008. In November 2008 the parties executed a Deed of Extension of Lease, extending the Applicant’s rent bond guarantee and evidencing his agreement to take the premises for a further term. 

12. The Applicant claims a substantial loss, in that he is unable to display his stock as he would in a shop of 137m2.  He also complains that the Landlord did not provide a lessor disclosure statement as required by section 22C(1) of the Act.

13. In February 2010 the Applicant quantified his alleged loss as a diminution in turnover of $121,797.00, and a further $40,000 for fit-out costs of relocation.

The Landlord’s Position

1. The Landlord denies that he authorised Larden to make any representation about the premises on his behalf, and denies that Larden was his agent at any material time.  The Landlord says that in fact Larden was retained by the original tenant to find an assignee to replace him as lessee.  The Landlord’s position is that, if the Applicant was misinformed about the area of the shop, the misrepresentation was not made by him, or by any person authorised to make it on his behalf.  He also submits that the subject lease does not set out the area of Lot 6 or of any part of the land.

15. The Landlord further contends that the Applicant has not adduced any evidence of enquiries made by or for him before he took the assignment.  The Landlord submits that a prudent prospective tenant would have sought, at the minimum, a title search, a copy of the registered plan, official confirmation that the permitted use was lawful, and made appropriate measurements of the floor area.

16. The Landlord submits that the Applicant entered a new term on 26 August 2008 without any protest or reservation of rights, thereby electing to take the premises as described in the lease and waiving from that date any claim based on an alleged deficiency in size of the shop.

Findings

17. The Tenant bases his claim on section 43(2)(a) of the Act in that he “entered into the lease...on the basis of a false or misleading statement or misrepresentation made by the lessor or any person acting under the lessor’s authority.” He also says that the landlord did not give him a lessor disclosure notice.

1. I shall deal first, with the complaint about the disclosure notice.  Section 22C of the Act defines the lessor’s and prospective assignee’s duties towards each other.  In summary, and omitting provisions now immaterial, each is required to provide the other with a disclosure statement before the assignment is entered into.  If the lessor fails to comply, a retail dispute is deemed to exist, but it affords an assignee only a limited right to relief.  He may apply for the document to be provided to him, but is not eligible for compensation for loss and damage on that ground: s 22(4).

19. Nor, as an assignee as distinct from an original tenant, is he entitled to compensation under s 43(2)(a): Logan City Shopping Centre Pty Ltd v. Retail Shop Leases Tribunal & Anor [2006] QSC 172, a decision by which I am bound.

20. Further, the evidence before the tribunal does not disclose any renewal, either in the deed of 13 August 2008, or elsewhere, of the January 2008 demand for a reduction in rent, until the present Notice of Dispute was lodged on 10 November 2009. On the contrary, the Applicant entered a new term on 26 August 2008 without any protest or reservation of rights.

21. Nor does it provide any support for the proposition, crucial as it is to the Applicant’s case, that Larden was at any material time the agent of the Landlord, as distinct from the agent of the outgoing tenant and intending assignor, or for that matter, the Applicant, and that suffices to dispose of the Applicant’s claims. 

22. The tribunal may dismiss or strike out a proceeding inter alia if it considers that it is frivolous, vexatious or misconceived or lacking in substance: section 47(1) and (2). The power to act is exercisable by a legally qualified member of the tribunal: section 47(4)(b). I find that the Applicant’s claim for compensation is lacking in substance, because, as found above, he has failed to prove that the alleged misrepresentation, if made, was made by or on behalf of the Landlord.

Costs

23. The Landlord makes an application for costs. The Applicant has not addressed that matter in any detail. Therefore I shall give the parties a further opportunity to deal with the matter of costs, having regard to Part 6 Division 6 of the QCAT Act.

Orders

1. The Applicant’s application for substantive relief is dismissed.

1. Each party is at liberty to make written submissions on the issue of costs, including submissions as the form of the desired order, the amount claimed, and the method of calculating the claim. Any such submissions are to be delivered to the registrar and served on the other party within 14 days of receipt of this order.

1. The issue of costs is adjourned to be dealt with on the papers, in accordance with order 2.