Healthy Foodz Pty Ltd v Cooper Concepts Pty Ltd - [2023] QCAT 200

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Healthy Foodz Pty Ltd v Cooper Concepts Pty Ltd [2023] QCAT 200

PARTIES:

HEALTHY FOODZ PTY LTD T/AS HEALTHY FOODZ

(applicant)

v

COOPER CONCEPTS PTY LTD

(respondent)

APPLICATION NO/S:

RSL159-19

MATTER TYPE:

Retail shop leases matter

DELIVERED ON:

6 June 2023

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Deane Presiding
Member Judge
Member McBryde

ORDERS:

1. Healthy Foodz Pty Ltd t/as Healthy Foodz is not required to pay $9,680 (incl GST) to Cooper Concepts Pty Ltd for rent for the months of June, July, August and September 2019.

2. Cooper Concepts Pty Ltd must pay Healthy Foodz Pty Ltd t/as Healthy Foodz costs in the sum of $345.80 by 4.00pm on 30 June 2023.

CATCHWORDS:

LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OBLIGATIONS, PROHIBITED TERMS AND PROTECTIONS FOR LESSEES – OTHER MATTERS – where lessor did not attend to rectification of lighting issues on common property – where lessee’s trade adversely affected – claim for reasonable compensation

District Court of Queensland Act 1967 (Qld), s 68(2)

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 102
Retail Shop Leases Act 1994 (Qld), s 5A, s 5B, s 5C, s 15, s 42, s 43, s 44, s 55, s 56, s 63, s 83, s 103, schedule

Retail Shop Leases Regulation 2016 (Qld), s 8, schedule 1

APPEARANCES & REPRESENTATION:

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

REASONS FOR DECISION

Healthy Foodz, as lessee, entered into a written lease with Cooper Concepts, as lessor, with a commencement date of 1 April 2019. The permitted use of the premises was a ‘health food bar’. Healthy Foodz claims that its business was adversely affected by the failure of the lessor to properly maintain and repair lighting on the common property.
Healthy Foodz lodged a Notice of dispute with the chief executive under the Retail Shop Leases Act 1994 (Qld) (‘the RSL Act’) on 11 September 2019 as the RSL Act then provided.[1] The Notice of dispute sought orders against the lessor cancelling the agreement effective immediately, ‘full refund of bond’ and ‘full refund of rent paid (1 month)’.
[1]Retail Shop Leases Act 1994 (Qld), s 55 (‘the RSL Act’).
The chief executive as the RSL Act then provided nominated a mediator[2] and the mediation was conducted on 28 November 2019. The following day the mediator referred the dispute to the Tribunal as the parties could not reach a mediated solution to the dispute.[3]
[2]Ibid, s 56.
[3]Ibid, s 63.
The Tribunal has jurisdiction to hear certain retail tenancy disputes where the amount, value or damages in dispute does not exceed the monetary limit of the District Court of Queensland.[4] The monetary limit under the RSL Act is $750,000.[5] On the evidence before us none of the exclusions in section 103(1) of the RSL Act apply.
[4]Ibid, s 103.
[5]District Court of Queensland Act 1967 (Qld), s 68(2).
The RSL Act provides that the Tribunal may make orders including declaratory orders it considers to be just to resolve a retail tenancy dispute including an order requiring a party to the dispute to pay an amount to a specified person[6] and an order that a party to the dispute is not required to pay an amount to a specified person.[7]
[6]RSL Act, s 83(1), s 83(2)(b).
[7]Ibid, s 83(2)(c).
A retail tenancy dispute is defined as ‘any dispute under or about a retail shop lease, or about the use and occupation of a leased shop under a retail shop lease’.[8] A ‘retail shop lease’ is defined as a ‘lease of a retail shop’ subject to exceptions, none of which appear to apply.[9] A ‘retail shop’ means premises situated in a retail shopping centre or used wholly or predominantly for the carrying on of a retail business.[10]
[8]RSL Act, schedule (definition ‘retail tenancy dispute’).
[9]Ibid, s 5A.
[10]Ibid, s 5B.
Retail business is defined to mean a business prescribed by regulation.[11] Health food bar is not prescribed. However, café, restaurant, snack food bar and takeaway are each prescribed as a retail business.[12] We are satisfied that the business is a retail business, the lease between Heathy Foodz and Cooper Concept is a retail shop lease and that the dispute is a retail tenancy dispute as it is a dispute under or about a retail shop lease.
[11]Ibid, s 5C.
[12]Retail Shop Leases Regulation 2016 (Qld), s 8, schedule 1.
The Healthy Foodz’s statement of evidence[13] sought orders that:
(a)the lease be terminated;
(b)the security deposit and the first month’s rent paid be refunded and the equipment hire costs owed by the lessee for the shop in the sum of $7,984.67 be paid.
[13]Dated 18 February 2021, filed 25 February 2021.
Healthy Foodz, which was self-represented, does not specifically point to provisions of the lease nor the RSL Act, which it claims the lessor breached entitling it to the orders ought.
Cooper Concept’s repeated failure to comply with Tribunal directions resulted in its response and/or counter application filed 28 January 2020 being struck out and the matter being listed for a final decision in favour of Healthy Foodz with the assessment of damages to be undertaken on the papers on a date to be fixed.[14]
[14]Decision/Directions dated 25 October 2021.
We now proceed to determine this matter. The delay in determining this matter is regrettable and relates, at least in part, to resourcing issues.
Although there are no contrary contentions before us from Cooper Concepts, Healthy Foodz is required to satisfy us that it is entitled to the orders sought. The relevant standard of proof is on the balance of probabilities.
Relevantly, the terms of the two year lease were that:
(a)the lessee was to pay rent of $2,420 (incl GST) per month for the first year and rent adjusted by 3% for the second year;
(b)the lessee was to pay a security deposit equalling one month’s rent to secure the lessee’s performance of its obligations under the lease, which included but was not confined to the obligation to pay rent;
(c)rent was to be paid in monthly instalments in advance on or before the first day of the month;[15]
(d)rent was to be paid without deduction or setoff.[16]
[15]Lease, cl 3.1.
[16]Ibid, cl 3.3.
The undisputed evidence is, and we accept, that:
(a)Healthy Foodz paid the security deposit and paid one month’s rent in advance and took possession of the shop on or about 1 April 2019 and commenced to clean the premises and set up the business.
(b)a representative of Healthy Foodz notified the lessor’s agent in early April, after taking possession, and again in May 2019 that the exterior lighting immediately outside the premises on the common property walkway was not working and the relevant advertising lighting pylon was also not working and sought the lessor’s rectification.
(c)the lessor’s agent informed the lessee that these lighting issues would be rectified prior to it commencing to trade.
(d)in May 2019 the lessor’s agent informed Healthy Foodz that quotes had been obtained and referred to the lessor for instructions.
(e)the lessee intended to open for breakfast, lunch and dinner from 1 June 2019 and was concerned about the lack of external lighting but eventually started to trade in mid-June 2019 and took steps to attract attention to the business being open.
(f)a representative of Healthy Foodz contacted the lessor’s representative to request the lighting issues be rectified by email dated 8 August 2019 and noted that it had not been invoiced for rent by the lessor’s agent and did not propose to pay further rent until the issue was rectified.
(g)as the lessor failed to respond to the request to rectify the lighting issues, on or about 8 September 2019 the lessee vacated the premises because it was suffering financial hardship.
(h)on 11 September 2019 the lessee lodged a Notice of dispute and paid a filing fee of $345.80.
(i)the lighting issues were subsequently rectified on a date prior to 18 February 2021.[17]
[17]Heathy Foodz’s statement of evidence dated 18 February 2021, filed 25 February 2021.
We accept, having regard to the rent free period and the amount paid, that Healthy Foodz had paid rent up to and including 31 May 2019.
Healthy Foodz provided photographic evidence of the walkway outside the premises. It shows that external lights were working outside the adjoining tenancy but not outside the premises the subject of this dispute. The lessee’s representative gives evidence that at the time Heathy Foodz commenced to trade it was quite dark outside its premises by 5pm and prospective customers thought the business was closed. She gives evidence, and we accept, that on occasions she opened the door to attract attention to the business being open but as the door opened outwards onto the walkway and was a clear glass door with black frame it was a health and safety issue to passing foot traffic and that some persons were abusive towards her because of the lack of lighting, which caused her significant distress.
We accept that during the period June to early September 2019, when the lessee vacated, without external lighting on the walkway outside the premises, it is likely to have been quite dark by about 5pm and that it is more likely than not, that prospective customers would assume that the shop was not open and therefore evening sales would, more likely than not, be adversely affected.
There is no financial performance evidence before us e.g. as to sales and expenses. We accept that as this was a new business in these premises there would be no comparative sales and expenses evidence, with which to compare the trading results. However, there is also no evidence before us of the difference, if any, between day-time trading results and evening trading results, the latter of which were more likely to be directly impacted by the lighting issues.
There is no evidence before us from any expert, such as a forensic accountant or advertising expert, that gives an opinion as to the losses sustained as a result of the lighting issues as distinct from other trading issues, which might face new businesses, including losses arising due to the time reasonably required for customer attraction and therefore revenue and losses arising due to less than optimal start-up capital.
As we understand the lessee’s evidence, it was unable to sustain the business at the premises and unable to set up and fit out another premises and therefore in addition to the amounts paid under the lease it has incurred equipment hire for a minimum 12 month term in the amount of $7,987.67, which equipment was unable to be used by it after it vacated the premises.
Compensation provisions are implied in certain retail shop leases including the lease the subject of this dispute.[18]
[18]RSL Act, s 15, s 42.
Section 43 of the RSL Act provides:
(1)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—
(a)      substantially restricts the lessee’s access to the leased shop; or
(b)      takes action (other than action under a lawful requirement) that substantially restricts, or alters—
(i)access by customers to the leased shop; or
(ii)the flow of potential customers past the shop; or
(c)      causes significant disruption to the lessee’s trading in the leased shop or does not take all reasonable steps to prevent or stop significant disruption within the lessor’s control; or
(d)      does not have rectified as soon as is practicable—
(i)any breakdown of plant or equipment under the lessor’s care or maintenance; or
(ii)any defect in the retail shopping centre or leased building containing the leased shop, other than a defect due to a condition that would have been reasonably apparent to the lessee when the lessee entered into the lease or, for a lessee by way of assignment of the lease, when the lessee accepted the assignment; or
(e)      neglects to clean, maintain or repaint the retail shopping centre or leased building containing the leased shop or the part of the centre or building that, under the lease, is the lessor’s responsibility; or
(f)      causes the lessee to vacate the leased shop before the end of the lease or renewal of it because of the extension, refurbishment or demolition of the retail shopping centre or leased building containing the shop.
(2)The lessee must give the lessor written notice of the loss or damage mentioned in subsection (1) as soon as practicable after it is suffered.
(3)If the lessee fails to give the lessor the notice, the failure does not affect any right of the lessee to compensation but must be considered when deciding the amount of compensation payable under section 44.
The RSL Act provides that if the parties cannot agree on the amount of compensation payable the amount is to be decided by way of dispute resolution.[19] ‘Dispute resolution process’ is defined to include a hearing by the Tribunal of a retail tenancy dispute.[20]
[19]Ibid, s 44(1).
[20]Ibid, Schedule.
We accept the lessee’s undisputed evidence that the failure of the lessor to rectify the lighting issues, for which it was responsible, as soon as practicable and in any event prior to its anticipated trade commencement date of 1 June 2019 has caused the lessee loss for which it ought to be compensated under section 43(1)(d) of the RSL Act.
The lessee is essentially claiming that reasonable compensation is equivalent to it being relieved of all obligations under the two year lease plus compensation for the loss associated with the equipment hire. There is limited evidence before us as to how the amount for equipment is calculated.
Given the state of the evidence, we are not satisfied, on the balance of probability, that the lessor’s failure to rectify the lighting issues was a breach of an obligation of such significance that it entitled the lessee to terminate the lease and claim damages. Section 43 of the RSL Act does not expressly provide for a right to terminate for such breach, it provides a right to reasonable compensation for loss.
Doing the best we can, on the basis of the limited evidence before us, we find that Healthy Foodz ought to be compensated by being relieved of the obligation to pay rent for the months of June, July, August and September 2019. This reflects the period of time when it intended to trade but its trade was either delayed or disrupted by the lighting issues. We calculate that the lessee is relieved of the obligation to pay rent to the lessor for four months, in the sum of $9,680 (incl GST).
There is insufficient evidence before us to find that Heathy Foodz is entitled to a refund of the security deposit or a refund of the one month’s rent paid, which was always intended to be paid for the period prior to commencement of trade. There is also insufficient evidence before us to find that Healthy Foodz is entitled to compensation in respect of the equipment hire.
We find that Cooper Concepts ought to pay Healthy Foodz the filing fee in the sum of $345.80. Cooper Concepts’ repeated non-compliance with the Tribunal’s orders unnecessarily disadvantaged Healthy Foodz. This is a factor in favour of an award of costs.[21]
[21]QCAT Act, s 102(3)(a).