Harbour Day Spa Pty Ltd v Tree Harmony (Australia) Pty Ltd
[2013] QCAT 692
a
| CITATION: | Harbour Day Spa Pty Ltd v Tree Harmony (Australia) Pty Ltd [2013] QCAT 692 |
| PARTIES: | Harbour Day Spa Pty Ltd (Applicant) |
| v | |
| Tree Harmony (Australia) Pty Ltd (Respondent) |
| APPLICATION NUMBER: | RSL109-12 |
| MATTER TYPE: | Retail shop leases matters |
| HEARING DATE: | 9 October 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Dr Forbes, Member Member McBryde Member Judge |
| DELIVERED ON: | 24 December 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | The proceedings instituted by Notice of Dispute RSL109-12 are dismissed. |
| CATCHWORDS: | RETAIL SHOP LEASE – claim for water damage, abatement of rent and loss of profits – whether abatement should be allowed – whether storm damage – interpretation of lease – whether compensation available under Retail Shop Leases Act 1994 – whether applicant has shown loss or damage in excess of insurance indemnity Body Corporate and Community Management Act 1997 Hirlmont Pty Ltd v Dybka & Anor (1998) Q ConvR 54-517; [1998] QCA 305 Fox v Wood (1981) 148 CLR 438 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Represented by Ms Leanne Morris, director |
| RESPONDENT: | Represented by Mr S Fisher of counsel, instructed by Ray White Commercial Broadbeach, agents for the Respondent |
REASONS FOR DECISION
The applicant (Harbour Day) is tenant, and the respondent (Three Harmony) is landlord of premises at Queensland Avenue, Broadbeach. The premises are located in the Phoenician Resort Apartments (Phoenician), a commercial/residential complex subject to the Body Corporate and Community Management Act 1997. Harbour Day is assignee of a lease[1] granted to Hiplodge Pty Ltd, which commenced on 23 November 1998; it expires on 22 November 2013.
[1] Exhibit 7.
On or about 24 January 2012 Harbours Day’s premises were damaged and parts were temporarily rendered unusable by entry of water from above. The problem was promptly reported to Three Harmony, which, in turn, referred it to Phoenician. The damage was eventually repaired in mid-August 2012.
By Notice of Dispute under the Retail Shop Leases Act 1994 (RLSA) Harbour Day claimed an estimated $80,000 for financial losses (January-August 2012) and an unspecified amount for rebate of rent. Those particulars, such as they are, appear in a letter from Harbour Day’s solicitors to Mint Property, dated 10 September 2012, annexed to the initiating process.
That annexure bases the claim for rent rebate on Clause 11 of the lease, which materially reads:
ABATEMENT OF RENT ...: In case of ... damage to the said premises by fire, flood, storm, tempest .. and without any neglect or default on the part of the lessee whereby the said premises shall be rendered wholly or partially unfit for occupation or use by the lessee ... payment of the rent ... or a proportionate part thereof according to the extent of the damage ... shall be suspended until the said premises have been ... put in a proper condition for use by the lessee ...
But Clause 11 has nothing to do with loss of profits, and, so far as can be ascertained, the damage was caused by faulty water proofing on the roof of the Phoenician building.[2] At all events, Harbour Day adduced no evidence that the cause fell within the terms of Clause 11: ‘... flood, storm, tempest ... inevitable accident or Act of God’. Damage due to a leaky roof is not, ipso facto, storm damage.[3]
[2]Exhibit 10: statement of Tony Yan 30 August 2013.
[3]Hirlmont Pty Ltd v Dybka & Anor (1998) Q ConvR 54-517; [1998] QCA 305 at [15], [23].
However, pursuant to section 29 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act)[4] the Tribunal invited Harbour Day to consider, as an alternative basis of claim, section 43 of the RLSA which provides in part:
The lessor is liable to pay to the lessee reasonable compensation for loss or damage suffered by the lessee because the lessor, or a person acting under the lessor’s authority - ... (d) does not have rectified as soon as is practicable ... (ii) any defect in the retail shopping centre or leased building containing the leased shop.[5]
[4]QCAT Act s 29(1): The tribunal must take all reasonable steps to – (a) ensure each party ... understands ... (ii) the nature of assertions made in the proceeding and the legal implications of the assertions ...”.
[5]RLSA s 43(1)(d)(ii), emphases added.
In the best traditions of the Bar, counsel for Three Harmony raised no objection to that procedure.
But in the event, for reasons that will appear, it is unnecessary to consider whether Three Harmony could be liable, under section 43, for failing to insist on earlier remedial action by Phoenician.
Is there proof of actionable loss or damage?
Neither Clause 11 of the lease, nor section 43 of the RSLA entitles Harbour Day to an award unless it adduces acceptable evidence of loss or damage flowing from a breach of legal duty on Three Harmony’s part.
Harbour Day’s initial demands for compensation may have been ambit claims. Financial losses were estimated at $80,000, and it was alleged that 50% of the rented space was unusable.[6] In due course repairs were effected for $32,444.[7]
[6]Letter Reichman Lawyers to Mint Property, 10 September 2012.
[7]Quotation R & S Builders 7 June 2012.
By 18 February 2013 Harbour Day was claiming reimbursement of rent in the amount of $45,089,[8] subsequently modified to $39,424.38.[9] Ms Morris (principal witness for Harbour Day) was closely cross-examined about the extent of floor space lost to water damage. Eventually she conceded that it was significantly less than the 50% originally claimed. Asked whether it was really about 17%, her answer was unresponsive.
[8]Letter Leanne Morris to “Whom it may concern”, received by QCAT on 20 February 2013.
[9]Directions, 2 July 2013, where other losses are mentioned.
Ms Morris admitted that she received considerable rent concessions from Three Harmony, saving her some $15,000. For quite some time before the event in question, the business was in some degree of financial difficulty. On 18 January 2012 – about a week before the damage occurred, Harbour Day’s accountant, seeking further rent concessions, wrote: ‘the business is continuing to struggle in the current market’.[10]
[10]OGR Accountants to lessor, Exhibit 4. See also the Notice of Dispute, 28 September 2012 Part C Item 3: “We had been having difficult times with the downturn in tourism and had been trying to negotiate with the landlord for most of 2011.”
In a document dated 18 February 2013, addressed to “Whom it may Concern” Harbour Day claimed a rent rebate of $45,089, but no calculations are supplied. In like vein, a letter from Harbour Day’s solicitors airily declares that ‘[o]ur client estimates [loss of profit] at some $80,000, based on comparative trading figures for the previous period’.[11]
[11]Letter Reichman Lawyers to Mint Property, 10 September 2012.
However, just a few days before the hearing it transpired that Harbour Day received substantial insurance indemnities for repairs as well as loss of profits.[12] Tina Bayar, loss adjuster, states (and Ms Morris now admits) that Harbour Day was paid $10,820 for loss of gross profits, $15,143 for loss of rent on a sub-lease to a hairdresser, and $872 for preparation by an accountant of its insurance claim. Substantial rent concessions have already been noted.
[12]Statement of Tina Bayar, 1 October 2013, Exhibit 6.
Ms Morris also conceded that Harbour Day’s insurers paid it an additional amount of $5,280 for estimated loss of gross profits when the business was closed for a week for repainting.[13]
[13]Leanne Morris - response to a question by Mr Judge, 9 October 2013.
All in all, we consider that the insurers and Three Harmony treated the applicant considerately, indeed generously. Crucially, there is simply no evidence that the insurance moneys, together with rent concessions, fell short of full and fair recompense for any loss and damage suffered by Harbour Day on and after the ingress of water on 24 January 2012. The business was admittedly ‘struggling’ before that time, and admittedly[14] it failed to mitigate its losses by using ‘dehumidifying’ equipment that it was legally bound to maintain.
[14]Ms Morris, cross-examination.
It is matter of surprise and disappointment that, notwithstanding the indemnities and concessions it received, Harbour Day proceeded to a trial, revealing only at the eleventh hour the indemnities described by Tina Bayar, and admitted under cross-examination by Ms Morris. Once the indemnities were paid, any right to recover those amounts at law passed to the insurers, by subrogation.[15] The common law frowns on “double dipping”.[16]
[15]According to which an insurer “inherits”, so speak, any cause of action that was available to its indemnified client: Meagher, Gummow and Lehane Equity Doctrines and Remedies 2nd edn paragraph 949; Barclay v Penberthy (2012) 246 CLR 258 at 312; Werden v Legal Services Board [2012] VSCA 278 at [9]; Registrar-General of New South Wales v LawCover [2013] NSWSC 1471.
[16]Fox v Wood (1981) 148 CLR 438; Guy v Commonwealth of Australia [2013] ACTSC 128 at [86]; Thiess Pty Ltd & Anor v Arup Pty Ltd & Ors [2013] QCA 65; Nguyen v Brisbane City Council [2013] QLC 3 at [113].
Harbour Day has signally failed to adduce any acceptable evidence of loss or damage that exceeds amounts paid by insurers and foregone by Three Harmony. If there were any such evidence it might have come from the accountant who prepared the applicant’s insurance claim[17], but that has not occurred. Absent proof of quantum, the action must be dismissed.
[17]See paragraph [14], above.
ORDER
The proceedings instituted by Notice of Dispute RSL 109-12 are dismissed.
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