Foy v Kleinberg and Eagle Pty Ltd

[2021] QCAT 76

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Foy & Anor v Kleinberg and Eagle Pty Ltd  [2021] QCAT 76

PARTIES:

MARCUS DEAN FOY

(first applicant)

JESSICA KARLA MARIE KOPP

(second applicant)

v

KLEINBERG AND EAGLE PTY LTD

(respondent)

APPLICATION NO/S:

RSL111-19

MATTER TYPE:

Retail shop leases matter

DELIVERED ON:

23 February 2021

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Howe

ORDERS:

1.   The Tribunal declares that the lease which commenced on 13 February 2017 terminated on or about 25 April 2019.

2.   The Tribunal finds there are no monies owed the respondent by the applicants under the lease.

3.   The respondent must repay the bond of $6,000 held by it under the lease to the applicants within 14 days of this order.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – DEFAULT JUDGMENT – JUDGMENT IN DEFAULT OF OTHER REQUIRED STEP – where respondent failed to file material despite Tribunal directions to do so – where the failure continued despite warnings – where the matter was directed to be decided on the material filed

LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – where a retail shop lease was entered into – where the lessor failed to maintain the premises – where the parties disagreed about the lessees’ responsibility to contribute to outgoings – where the lessor served a Form 7 Notice to Remedy Breach of Covenant – where the lessees accepted the service of the Form 7 and other actions by the lessor as repudiation of the lease

Property Law Act 1974 (Qld) s 124

APPEARANCES & REPRESENTATION:

Applicants:

Self-represented

Respondent:

No appearance

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)

REASONS FOR DECISION

1. The applicant lessees entered into a retail shop lease with the respondent lessor in early 2017. Their business was a pizza shop and they provided indoor and outdoor dining.

2. The parties executed a written lease. The rent was $550 per week and the lease commenced on 13 February 2017 for five years fixed term.

3. The parties fell into dispute over a number of issues which culminated in the respondent serving the applicants with a s 124 Property Law Act 1974 (Qld) Form 7 Notice to Remedy Breach on 2 April 2019. After that the applicants decided to leave the shop and vacated the premises.

4. On 30 April 2019 the applicants commenced retail shop lease dispute proceedings in the Tribunal now seeking termination of the lease and an order absolving them of any ongoing obligations in respect of the lease. They also seek an order granting Ergon Energy access to do a final meter reading for the shop and they want to recover their bond of $6,000.

5. The Tribunal made directions requiring the parties to file material. The respondent was directed to file a response and statements of evidence but did not do so despite being granted extensions of time in that regard. The applicants complied with directions to file material.

6. The Tribunal directed the respondent to file a response and supporting material and in default of compliance ordered the dispute be determined on the papers filed by the applicants without an oral hearing.

7. The respondent still failed to comply with the directions and the Tribunal ordered the matter be determined on the material filed by the applicants.

8. That material as best able to be understood is to the following effect.

9. As stated, the applicants entered the shop on or about 13 February 2017 and vacated in April 2019. The precise date when they left is not clear, but it was not long after the respondent served them with the Form 7 Notice to Remedy Breach dated 2 April 2019.

10. The applicants generally complain that the respondent disturbed their quiet enjoyment of the demised premises throughout the term of their tenancy.

11. The respondent was asked to make certain essential repairs to the demised premises but did not do so. The repairs included a faulty waste water pump and grease trap and  a leaking roof. The applicants were forced to have the pump and blocked sinks repaired themselves at a cost of $1,056. They say that was not their responsibility under the lease but the respondent refused to do the work. These were essential facilities required for their business to operate.

12. Despite forwarding emails with photographs and video of the leaking roof and water entering the shop the respondent refused to remedy the problem. The roof leaked in any wet weather event. Eventually the respondent did do something to stop water entry but used unqualified and unauthorised people and the leaks continued throughout the applicants’ tenancy.

13. Water leaked in from above the indoor dining area, the toilet hallway, the female toilet and near the back door exit. In heavy rain the applicants found it necessary to close off parts of the shop which meant their business was affected.

14. There were cracked floor tiles in the shop when the applicants first entered the premises and that only worsened during their occupation. The respondent was told about the problem but refused to fix the tiles.

15. Sometimes the respondent did purport to do repairs, but that was done without notice to the applicants and again it affected their business. The repair work was not performed in workmanlike manner and the workers were inappropriately clad. It is not clear on the applicants’ material how often this occurred. The applicants say they had many complaints from customers about noise made by the respondent’s agents and servants attempting to effect repairs.

16. The parties fell into major dispute over the payment of outgoings. The respondent failed to provide copies of relevant invoices justifying expenses claimed from the applicants despite repeated requests from the applicants.

17. An early item of dispute over cost concerned the initial electricity charges. The respondent claimed an amount of $775.69 for power usage from the applicants effectively covering their first eight days’ occupation after entry. This arose because the pizza shop premises were not separately metered. The applicants only paid $86.97 for the power for that period as per their calculation of the pro rata cost for eight days but the respondent continued thereafter to claim that the balance remained due.

18. Outgoings remained an ongoing issue between lessor and lessees however. By end of 2018 the respondent claimed an amount of $5,561.65 was outstanding for rent and outgoings. It is not clear from the material filed by the applicants what amount was claimed by the respondent for outgoings and what for unpaid rent but the applicants paid what they calculated was due all up, namely an amount of $2,483.17.

19. Given the ongoing issues about outgoings the applicants engaged an accountant to review outgoings and the accountant confirmed the applicants’ calculations about what were outgoings and what was due the respondent. That is made clear in an email from the accountant to the respondent dated 19 March 2019. In that email the accountant states that in her opinion the applicants’ calculations were correct and even generously in favour of the respondent given in her opinion some expenses were not the applicants’ responsibility under the lease.

20. The accountant went on to ask the respondent for supporting evidence for its claims, but instead the respondent served the applicants with a s 124 Property Law Act 1974 (Qld) Form 7 Notice to Remedy Breach on 2 April 2019 claiming a new increased amount outstanding of $14,237.19 as at 1 April 2019.

21. There is no supporting evidence supporting that claim. I do not accept that that amount was due and owing to the respondent when the Form 7 was served on the applicants.

22. Certainly the applicants reject the respondent’s claim to that amount or any amount being due the respondent when the Form 7 was served. They say they paid all monies outstanding when they paid the amount of $2,483.17 abovementioned. I accept their evidence about that.

23. The applicants go further and point out that they have spent money repairing things that were not their responsibility for which they have never been reimbursed by the respondent.

24. There was the cost of replacing the water pump. The applicants have provided a copy of an invoice to them for that from Beach to Basin Plumbing Pty Ltd dated 28 August 2018 in the sum of $1,056. The invoice notes that the charge was for replacement of the waste water pump which had failed because water had entered the electrics. I find that was a lessor cost to bear, a capital item, not a running or maintenance cost for the lessees.

25. Accordingly I determine that the respondent’s service of the Form 7 Notice to Remedy Breach claiming payment of an amount of $14,237.19 as at 1 April 2019, given the history of the disputes between the parties, amounted to the respondent repudiating the respondent’s obligations under the lease as lessor and showed clear intention by the respondent not to be bound by the terms of the lease.

26. It is not clear when the applicants closed their business and removed their equipment and vacated the shop. The Form 7 was issued on 1 April 2019 and on 11 April 2019 the respondent wrote to the applicants advising the applicants they would be locked out of the premises on 15 April 2019 if the monies claimed under the Form 7 were not paid.

27. The applicants attempted to return keys on 25 April 2019 on two occasions but there was no representative for the respondent available to hand keys to. On 30 April 2019 the applicants commenced proceedings in the Tribunal seeking termination of the lease and return of their deposit.

28. I find that by 25 April 2019 the applicants made clear to the respondent that they accepted the repudiation of the lease by the respondent and the applicants terminated the lease in consequence of the respondent’s breach.

29. In respect of monies payable to the respondent by the applicants, I have accepted that shortly before the respondent issued the Form 7 there were no monies outstanding under the lease to the respondent, either for rent or outgoings.

30. The respondent claimed that the applicants were responsible to repair the damaged floor tiles in the shop but the applicants have produced a copy of a quotation from SSS Tiling & Waterproofing for the repair of tiles and the quotation describes the cause of broken and defective tiles as due to faulty workmanship and the use of wrong products, not user damage.

31. I determine that any damage done the tiles cannot be sheeted home to the applicants.

32. The bond of $6,000 should therefore be returned to the applicants.

33. It has been some time since the applicants left the premises. The respondent informed the applicants Ergon Energy would not be refused access to read the meter. I determine no direction about that is appropriate now for such access.