Food Focus Australia Pty Ltd v Crocs Kitchen Pty Ltd
[2017] QCAT 53
•21 February 2017
CITATION: | Food Focus Australia Pty Ltd v Crocs Kitchen Pty Ltd [2017] QCAT 53 |
PARTIES: | Food Focus Australia Pty Ltd t/as Nightquarter |
| v | |
| Crocs Kitchen Pty Ltd (Respondent) | |
APPLICATION NUMBER: | MCDO1518-16 |
| MATTER TYPE: | Other minor civil dispute matters |
HEARING DATE: | 17 January 2017 |
HEARD AT: | Brisbane |
DECISION OF: | Adjudicator Bertelsen |
DELIVERED ON: | 21 February 2017 |
DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The respondent pay to the applicant the sum of $5,034.70. |
CATCHWORDS: | Stallholder agreement – website projections prior to entry into stallholder agreement – market gate numbers less than projected – no breach of stallholder agreement as subsequently entered into |
APPEARANCES: | |
APPLICANT: | Ian Van der Woude, Director |
RESPONDENT: | Neil Menzies, Director |
REASONS FOR DECISION
Application
The applicant, Food Focus Australia Pty Ltd t/as Nightquarter (‘Food Focus’) claims $4,922.20 as monies owing for rental and incidental expenses under a stallholder agreement in the period March to July 2016.
Background and evidence
Food Focus initially intended setting up a container based night market at Town Centre Drive, Helensvale to operate on a regular basis on Friday and Saturday nights between 4:00pm and 10:00pm. In anticipation of commencing the operation of the night market, the parties entered into a stallholder agreement incorporating stallholder terms and conditions on 15 July 2015. It was for a period of 12 months from commencement of operation of the market.
Crocs Kitchen Pty Ltd’s (‘Crocs’) business was the sale of game meats – crocodile, emu and kangaroo. The lead up to the agreement as well as the actual opening of the market, according to Mr Menzies for Crocs, included an extensive promotion of the market, in particular projected gate numbers. Those projections were, he said, 8,000 to 10,000 people per night, and came directly from Food Focus’ website. He said the website had since been wiped clean of representations about gate numbers. Mr Van de Woude for Food Focus denied any such representation stating that promotional material was limited to such things as description of the market and plans of the site. The market opened in November 2015.
Mr Menzies argued that he had long term experience in the market industry and that to know what the business break-even point might be, one had to know the projected gate numbers; that Crocs needed a break-even point of 5,000 people; that gate projections are an industry standard and a standard commercial analysis; that Crocs would not have entered into any agreement if gate projections had not been provided; that other markets do.
Mr Van de Woude stated there was nothing in the stallholder agreement about projected gate figures; that projections as to numbers were not included for obvious reasons. What those obvious reasons were was not made clear to the Tribunal.
When asked by the Tribunal that if the stall had operated successfully, would the sums claimed as rent and incidental expenses have been correct, Mr Menzies answered yes.
Mr Menzies claimed a failure to deliver marketing plans. Mr Van de Woude said there was nothing in the stallholder agreement about marketing plans. Mr Menzies said there was a verbal representation as to what Food Focus was going to do to stimulate new business. He said he was informed that by February 2016, Food Focus would be running music groups such as Cat Empire; that Food Focus did not have the budget to fulfil its obligations which should have included television advertising which never eventuated.
Mr Van de Woude said Food Focus ran a fairly extensive marketing and advertising campaign. That included social media, articles in the Gold Coast Bulletin, features on local TV, extensive radio advertising and local community involvement including local publications. He said Food Focus also ran theme nights such as Waitangi Day and a Food & Wine festival; that some big acts had appeared such as Cat Empire and Ministry of Sound. Mr Van de Woude said such activities generated numbers.
Mr Menzies retorted that up until the time Crocs left in June 2016, the only event that had been run was Cat Empire one Sunday night and that it drew under 2,000 people through the gate. He asserted the social media element had become negative due to artists not being paid and food poisoning issues.
Mr Menzies complained that there was no signage directing patrons to his operation area; that by 8:00pm at night there was nobody in his area; that a majority of stallholders in his area stopped trading by 8:00pm or 8:30pm. He said there was also a removal of services such as appropriate waste water dumping in the very first month of operation; that at one stage Food Focus provided Pallecans, one tonne fluid pallets with a hole on the top into which waste water could be dumped; that these were removed and a non-compliant wash up area was installed for some two weeks, followed by three tubs and a wash up area for about 80 food vendors.
Mr Van de Woude said on suggestion from a stallholder waste canisters were installed; that such was never an obligation and that unfortunately as they were misused they were removed. He said the wash up facility was compliant and signed off by Council. He said that as a market operation there was no obligation to provide a facility for a final wash up and sanitation of stakeholders kitchen equipment; that most markets did not have any such facility at all. He said the facility provided for an initial clean of kitchen equipment; that it was never intended to be anything more. He stated there was nothing in the stallholder agreement about wash up facilities or water containers; that clause 3.19 of the stallholder agreement stated ‘The stallholder is responsible for the removal of waste water generated from activities in the stall, and must use the general waste and disposal facility at the market…’ which Mr Van de Woude said was ‘the one where we have the sinks available to pour the water down’.
Mr Menzies said a market license dictates that there must be per stallholder 20 litre drums of water for wash up and rinse and 20 litres for hand washing, together with catch buckets with a 40 litre capacity. He asserted that Food Focus had failed in its obligation to provide a place to put waste water as it was obliged to do under the stallholder agreement.
Mr Van de Woude said there was a requirement for each stallholder to have a Gold Coast City Council temporary food permit; that there was no requirement to provide water or receptacles; that, in any event, Food Focus did provide a facility where a first stage clean could be done. He said a facility to dump waste water was provided.
Mr Menzies went on to assert that Crocs was forced to pay for extra days trading on Sundays; that the stallholder agreement stated that Crocs need only trade ‘on the agreed extra days’; that Mr Van de Woude said if Crocs did not trade on a Sunday it would be charged arbitrarily, that there was no choice. Mr Menzies said Sunday trade was only ever able to generate gate figures of 2,000 odd people, not 8,000 – 10,000 people; that the same rent as Friday and Saturday rent was being demanded. He said Sunday trade was uneconomical, illogical and since ceased.
Mr Van de Woude stated Mr Menzies initial expression of interest indicated he would be interested in Sunday trade; that there were a number of Sunday events with a bit of a mixed response.
Mr Menzies said Mr Van de Woude had unlawfully retained some of Crocs’ equipment when Mr Menzies left the stallholder site. These included bain-maries, a six burner barbeque, commercial deep fryers, stainless steel benches; that Mr Van de Woude seemed to think he had some sort of lien on that property; that there was no lien and that he considered the retention of property a criminal offence. Mr Van de Woude said he had:
… no interest in his property at all save to the extent that Mr Menzies came in to do a runner and was hoping to get out of paying any overdue rent. I’m happy to give it back. All we really want is to get the monies owed to us paid.
Mr Van de Woude went on to say, ‘We’re happy to give it back if we can get the bill paid’. Mr Menzies said Mr Van de Woude was attempting to use property retention as leverage to obtain a benefit he was not entitled to.
Mr Menzies said he was evicted on Friday 10 June 2016 and that the last day of stall operation was Friday 3 June 2016; that the market closed at 7:00pm on Friday, 3 June 2016 due to rain and was fully closed on Saturday, 4 June 2016. Mr Van de Woude said some stallholders closed early on 3 June 2016 and agreed that the market was totally closed on 4 June 2016.
Mr Van de Woude said that on Friday 10 June 2016 he observed Crocs clearing out its stall; that Crocs was trying to do a runner mid-morning. Mr Menzies said Crocs was already in unresolved dispute; that he found Crocs’ equipment chained; that only one item was able to be retrieved, a fridge that was able to be moved.
Mr Menzies produced a Statutory Declaration by a Juno Chi-Ling Chen who stated he was volunteering for Crocs; that on the afternoon of Friday 10 June 2016 he witnessed Crocs’ property ‘had been chained by Nightquater management’.
Mr Chen stated:
That same afternoon Ian Van der Wood [sic] did order and ban from site permanently the site of Crocs Kitchen Pty Ltd, including Director Neil Menzies, Chef Chris Loch and myself. Ian Van de Wood refused to release any of Crocs Kitchen Pty Ltd property during that process and escorted us from site.
Mr Menzies asserted that Mr Van de Woude’s words were ‘leave the site and never come back’. Mr Van de Woude replied that his words were ‘you need to sort out the bill’.
Mr Menzies also produced a statement by his co-director, Dean Irving, who said he studied Nightquarter’s web promotion and vendor invitation. He said Food Focus published in July 2015 gate projections of 8,000 to 10,000 people per night. He said he felt their projections were realistic with a competent marketing plan and the music acts they claimed to have booked; that since the second week of trading in December 2015, Nightquarter had failed to deliver even half the projected gate numbers; that Nightquarter had since denied making projections and removed that information from its online material. He said if aware of Nightquarter’s inability to deliver gate numbers, then Crocs would have accepted offers at other night markets at which it was already involved.
On 7 June 2016, Crocs gave to Food Focus a Notice of Breach of Contract stating that Food Focus’ offer in the first instance included information published on its website as part of its market promotion projecting operational attendance figures of 8,000 to 10,000 visitors per night; that in reliance on that information the offer was accepted and a contract entered into on good faith; that the numbers were never delivered; that there was no prospect of change.
The notice demanded specific performance of the contract in relation to gate numbers; that the breach of contract be correct within 48 hours otherwise it was reasonable to expect the contract to be cancelled and for Crocs to be returned to its original position including reimbursement of losses.
Conclusions
Food Focus in mid-2015 was in the course of attracting stallholders to its soon to be opened night market at Helensvale. The Tribunal finds on the evidence of the respondent, that Food Focus’ website did contain projections of gate numbers in the order of 8,000 to 10,000 people per night. However, such were only ever projections, nothing more, an estimate of numbers hoped to be achieved when the night market opened in what was, it seems, already a highly competitive market. To that extent, the numbers were aspirational and, as it transpired, optimistic. Here the projections were made to Mr Menzies a person experienced in the industry, and considered by Mr Irving who thought the projections were realistic.
It was argued that reliance was placed on the projected gate numbers; that Crocs would never have entered into the stallholder agreement if gate numbers were going to be substantially lower than the 8,000 to 10,000, Crocs on its own evidence requiring a gate of 5,000 to break even.
Clause 8.5 of the stallholder agreement states:
The stallholder warrants that they have undertaken their own independent investigations and research into the feasibility and risks of running a stall at the market and have not relied on any representations made by the principal (either orally or in writing).
That clause, rather than being in conflict with website projections accords with same i.e. Food Focus’ website did not amount to, and should not have been construed as representations to be relied upon, but rather stating to Crocs that it has entered into a stallholder agreement having undertaken its own investigations and research.
It does seem that gate numbers were never as high as envisaged. That may have been unfortunate, but not a basis for repudiation of the stallholder agreement.
It was argued by Mr Menzies that the totality of website representations and the stallholder agreement formed the contract as a whole as between the parties. Website projections never amounted to what could be construed as oral terms of an otherwise written agreement.
There were no terms and conditions in the stallholder agreement addressing marketing plans. That was for Food Focus to put in place. Mr Irving felt that Food Focus’ projections were realistic with a competent marketing plan.
There was a complaint about lack of signage. It was never incumbent on Food Focus to provide signage under the stallholder agreement.
Evidence regarding waste water and washing up facilities was inconclusive. There was no evidence of any legislative breach, rather only assertions about compliance and non-compliance. Clause 319 of the stallholder agreement did however state ‘The stallholder is responsible for the removal of waste generated from the activities in the stall and must use the general waste and disposal facility at the market’. That appears to be what happened.
There was some suggestion that Crocs was effectively coerced into Sunday trade. There was no necessity for Crocs to trade on a Sunday except by agreement. The fact that Crocs did is not now a basis to allege breach of the stallholder agreement.
There was no basis for retention of the respondent’s equipment on site at the time Crocs vacated their physical premises at the market. There was never any lien. Food Focus made admissions that equipment held on site was available for collection.
Crocs notice to terminate is based on gate number projections not being achieved. That may have been unfortunate, but was never part of the stallholder agreement.
When asked by the Tribunal that if the stall had operated successfully, would the sums claimed as rent and incidental expenses have been correct, Mr Menzies answered yes. That the Crocs stall did not operate successfully or as successfully as envisaged is not the fault of Food Focus, but rather an unfortunate outcome consequent on the market not having been as successful, at least in the initial stages as envisaged.
Food Focus has mitigated its loss, its claim extending to July 2016 when a new stallholder was sourced.
In the circumstances, the Tribunal finds that there is a liability for Crocs to pay for its stall through to July 2016 as claimed. The Tribunal order shall be that the respondent pay to the applicant the sum of $4,922.20 together with the filing fee of $112.50, a total of $5,034.70.
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