Hungry Viking Pty Ltd v Hinchinbrook Shire Council
[2013] QCAT 157
| CITATION: | Hungry Viking Pty Ltd v Hinchinbrook Shire Council [2013] QCAT 157 |
| PARTIES: | Hungry Viking Pty Ltd atf The Wrench Trust t/as Pepper for Passion @ TYTO (Applicant) |
| v | |
| Hinchinbrook Shire Council (Respondent) |
| APPLICATION NUMBER: | RSL067-11 |
| MATTER TYPE: | Retail shop leases matters |
| HEARING DATE: | 13 July 2012, 4 & 5 October 2012 |
| HEARD AT: | Townsville |
| DECISION OF: | Ms Patricia Hanly, Presiding Member Ms Sandra Kairl, Member Mr Donald McBryde, Member |
| DELIVERED ON: | 20 March 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The application is dismissed. 2. By consent of the parties, judgment is entered for the Hinchinbrook Shire Council against Hungry Viking Pty Ltd atf The Wrench Trust t/as Pepper for Passion @ TYTO on the counter-application in the sum of $15,203.00 3. The parties have 14 days to file and serve written submissions on the question of costs. |
| CATCHWORDS: | Misrepresentation, failure to deliver premises at commencement of lease Retail Shop Leases Act 1994, s 43 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Hungry Viking Pty Ltd atf The Wrench Trust t/as Pepper for Passion @ TYTO represented by Ms C McKinnon of Counsel, instructed by Boulton Cleary & Kern Lawyers |
| RESPONDENT: | Hinchinbrook Shire Council represented by Mr C J Crawford of Counsel instructed by Barry Nilsson Lawyers |
REASONS FOR DECISION
Pepper for Passion @ TYTO was a restaurant which operated from July 2010 until 15 April 2011 in the TYTO Precinct on the outskirts of Ingham. Mr Craig Lyons and Mrs Karen Lyons operated the business from 31 May 2010 until 30 March 2011. Hungry Vikings Pty Ltd atf the Wench Trust operated the business from 31 March 2011 until 25 October 2011. Mr Lyons was the sole director of Hungry Vikings.
The TYTO Precinct lay within the TYTO Wetlands, an area of tropical wetlands situated within the Hinchinbrook Shire. The development of the precinct was undertaken by the Hinchinbrook Shire Council. It was a staged development, intended to provide community facilities[1] with the wetlands as an attractive and prominent feature.
[1] Regional gallery, library, restaurant, information centre and conference centre.
The Wetlands Information Centre was constructed in 2006/2007. Stage 1 of the subsequent development involved, amongst other things, construction of a café/restaurant, and an elevated walkway to connect the restaurant to the Information Centre. A small conference centre was included in this stage of the development. It was also intended that a pedestrian promenade be constructed to link the precinct to the Ingham CDB, approximately 1 km away.
Construction of Stage 1 was completed in about December 2009.
Initially Council invited tenders to fit out and operate the restaurant. No tenders were received. Council then decided to offer a lease of a partially fitted out restaurant, with significantly discounted rental for 12 months, whilst works were continuing in the precinct.
The offer document[2] contained statements about the promotion by Council of the restaurant; the responsibility of the Council for management and booking of the conference centre; and the promotion and marketing by Council of the restaurant to hirers of the conference centre as an option for the hirers to consider in relation to their function.
[2] Exhibit RWC1 - statement of RW Clark dated November 2011.
Hungry Vikings submitted a tender for the restaurant. The tender stated, amongst other things, that the billabong needed to be aerated and reticulated to avoid challenges from mosquitoes, which would adversely affect the restaurant trade.[3] It also stated that the opening date would be set after all works were complete; the restaurant was fully stocked; and staff were trained.
[3] Exhibit RWC2 - statement of RW Clark dated November 2011.
After discussions between the parties, a lease was signed by Hungry Vikings on 31 March 2010. The commencement date of the lease was 1 April 2010. Council signed the lease on 14 April 2010.
The premises were not ready for occupation on 1 April 2010 as there were still issues being finalised in relation to the construction and fit-out, and relevant certification could not be obtained to allow the restaurant to open to the public.
A private function was held in the restaurant on 26 June 2010, for which special dispensation was granted.
The restaurant opened to the public on 9 July 2010. It closed permanently on 15 April 2011.
Hungry Vikings claims compensation from Council. Its claim is based upon alleged misrepresentation by Council in relation to promotion and marketing, and in relation to the wetlands insect population. It also claims compensation because the Council failed to deliver the premises for occupation at the commencement of the lease.
The Tribunal derives jurisdiction for this matter under the Retail Shop Leases Act 1994 and the Queensland Civil and Administrative Tribunal Act 2009.
Failure to deliver the premises on 1 April 2010
It is not contested that the premises were not ready for occupation on 1 April 2010. Not only were the construction and fit-out not completed, but the premises were also not clean.
During a meeting held on 9 November 2009, Mr Lyons told Mr Clark, Chief Executive Officer of the Council, that it would take him six weeks to open once the premises were fitted out and ready for occupation.[4] In his oral evidence Mr Lyons stated that ’that would be starting from scratch‘ and that ’coming up to April (he had) already had plenty of time to research supplies, goods, what (he) would need, had plans in place, draft menus … so would not need 6 weeks and (he) didn’t’.
[4] Paragraph 16 of Mr Lyons’ statement – Exhibit 2.
After the lease was signed by both parties, a copy was sent to Mr Lyons. He received it sometime in May 2010. In an email dated 5 May 2010 to Mr Lyons, Mr Clark noted that there were still matters to be attended to at the premises, and he asked Mr Lyons what his anticipated start date was.[5]
[5] Exhibit CAL14 to Mr Lyons’ statement.
Mr Lyons responded that he was looking at early June.[6] On 17 June 2010 an advertisement was placed in the Herbert River Express for staff to work at the restaurant.[7]
[6] Exhibit RWCS1 to third statement of Mr Clark – Exhibit 8.
[7] Exhibit RWC19 to first statement of Mr Clark – Exhibit 6.
In his evidence, Mr Lyons stated that he did not wish to purchase equipment, set up accounts with his suppliers and engage staff until he had a signed lease. The Tribunal accepts this evidence.
The Tribunal further accepts that even after the lease was signed, Mr Lyons would not have been able to engage staff until he knew that the premises were suitable for occupation. However, based on his statement to Mr Clark in November 2009, the earliest that he could have been operational, after receiving the signed lease in early May 2010, would have been mid June 2010. If, as stated in his evidence in the hearing, the period could have been shortened, then at best he could have been operational by the beginning of June.
The period from mid June 2010 to the opening on 9 July 2010 is 24 days. If one were to take the period from the beginning of June 2010, then it is 39 days. In either event, it is immaterial, for the reasons that follow.
The evidence as to the trading results for the restaurant is that it made a small loss between July 2010 and December 2010.
The business name extract for “Pepper for Passion @ TYTO” confirms that Mr and Mrs Lyons carried on the business from 31 May 2010 to 30 March 2011, and that Hungry Vikings carried on the business from 31 March 2011 to 25 October 2011.[8] Mr Lyons stated that the business name extract is true and correct.
[8]The extract is admissible as prima facie evidence of the information contained in the document: see s 28 of the Business Names (Commonwealth Powers) Act 2011.
It was submitted on behalf of the Council that Hungry Vikings did not suffer any loss as a result of the delayed hand-over of the premises because the restaurant business was being carried on by Mr and Mrs Lyons for that period.
The Tribunal finds that Hungry Vikings did not suffer any loss for either the 24 days or the 39 days that the restaurant was unable to operate because of the Council’s delay in handing over the premises because Hungry Vikings was not carrying on the business at the relevant time.
In any event, because the business operated at a loss for the first six months of operation, even if Hungry Vikings had been carrying on the business at the relevant time, the Tribunal would not have found that the Council was liable to compensate it, as no loss had been suffered.
Alleged misrepresentation in relation to the “promotion” issue
In the offer document the Council represented that it would promote the café and restaurant in any material relating to the TYTO precinct and would promote and market the café to hirers of the Convention Centre as an option to consider when deciding on catering and other services for their function.
The Council did not promise that it would market the restaurant generally. There was no marketing agreement entered into between Council and Hungry Vikings. There was no marketing agreement entered into between Council and Mr and/or Mrs Lyons. The lease does not provide for Council to market the restaurant.
Clause 26.5 of the lease provides for the marketing of the business by Hungry Vikings in a manner consistent with the TYTO brand, in consultation with Council, and pursuant to any restrictions on the brand. Mrs Lyons’ evidence is that she conducted various promotional and advertising activities in relation to the business.[9]
[9] Paragraph 31 of Mrs Lyons’ statement – Exhibit 1.
Mrs Lyons also asserts that the Council, through its employees Mr Clark, Mr Hoban and Ms Olivero, agreed to erect signage within the TYTO precinct for the restaurant.[10] Mrs Lyons referred to an email dated 30 September 2010 which she received from Mr Clark in support of this assertion.[11]
[10] Paragraph of Mrs Lyons’ statement.
[11] Exhibit KML5 to Mrs Lyons’ statement.
It is clear from the third and final paragraphs of the email from Mr Clark that his discussion about the signage relates to Council’s approval of the location for the signage. There is nothing in that email which supports Mrs Lyons’ assertion that Council had agreed to prepare and erect signage specifically for “Pepper for Passion @ TYTO”. In fact. Clause 29 of the lease provides for the erection of signs, and Council’s consent, albeit if necessary with conditions.
The Tribunal is satisfied that Council did not represent that it would, and therefore was not required, to prepare and erect signage for “Pepper for Passion @ TYTO”.
Mr Clark[12] and Mr Hoban[13] have given evidence that it was always Council’s intention to promote and market the TYTO precinct, and the existence of a restaurant as part of the precinct.
[12] Paragraph 95 of Mr Clark’s first statement – Exhibit 6.
[13] Paragraph 19 of Mr Hoban’s first statement – Exhibit 4.
Mr Clark, Mr Hoban and Ms Domin all gave evidence that Council promoted the restaurant in its material relating to the TYTO precinct. Ms Domin added that ’much more marketing and promotion of the restaurant was provided by the Visitor Centre than of the other cafes/restaurants in Ingham.’[14]
[14] Paragraph 49 of Ms Domin’s statement – Exhibit 9.
Mr Clark gave evidence that Council promoted the existence of a restaurant, rather than specifically identifying the name of the restaurant. He made the point that otherwise every time the name of the restaurant or the operator of the restaurant changed it would be necessary to change Council’s promotional material.[15] This would obviously be a huge expense for Council, operating as it does within fiscal constraints of a local government authority.
[15] Paragraphs 128-133 of Mr Clark’s first statement – Exhibit 6.
The Tribunal accepts that the information in relation to the restaurant at the Visitor Centre was not on public display, but finds that it was readily available from, and given by, those staffing the Centre. The extracts from the TYTO Wetlands Information Centre Enquiries log reveal that enquiries were regularly made about the restaurant, including whether it was open or not (this in the context of closures necessitated by the Lyons having other commitments from time to time away from the restaurant).
There is no evidence that the Council failed to promote and market the restaurant to hirers of the Convention Centre. Mr Lyons’ evidence is that the restaurant ’catered only two‘ functions at the Convention Centre. However, the representation from Council in its offer document was merely that it would promote and market the restaurant to hirers of the Convention Centre as an option to consider when deciding on catering and other services for their function.
Council could not reasonably be expected to impose catering from the restaurant upon any potential hirers. Furthermore, that is not what the offer document stated. That some hirers, even if only two, did avail themselves of the opportunity to have the restaurant cater for their functions satisfies the Tribunal that the Council fulfilled its representation in this regard.
The Tribunal also notes that Mr Lyons did not provide any evidence of hirers to whom the Council failed to promote the restaurant.
The Tribunal is satisfied that the material provided by Council in its evidence demonstrates that Council promoted the café and restaurant in material relating to the TYTO precinct.
Alleged misrepresentation in relation to the “insect” issue
Mr and Mrs Lyons claim that the Council represented that the restaurant premises would not be affected by the wetlands’ insect population. They therefore claim that this was false and misleading, and that under s 43 of the Act they are entitled to be compensated for the detriment that was caused to their business by the influx of bugs into the restaurant during evening dining.
The Council denies that any such representation was made about insects.
Mr Clark’s evidence is that he spoke with Mr and Mrs Lyons during the meeting held on 9 November 2009 about mosquitoes. Mr Clark was not challenged on this point in cross-examination.
The conversation about mosquitoes took place because in the special conditions attached to the tender submitted to Council by Mr and Mrs Lyons, they identified ’a gamut of challenges‘ that would arise in relation to the billabong, and nominated mosquitoes, amongst other things, as one of those challenges.[16]
[16] Exhibit RWC2 to Mr Clark’s first statement – Exhibit 6.
Mr Lyons stated that when they gave mosquitoes as an example, within the list of challenges, they did not intend that reference to mosquitoes to be limiting. He said that the letters “e.g” were placed next to mosquitoes because they were an example of “what sort of bugs we were to encounter”.
The Tribunal does not accept this evidence. An examination of the relevant part of the special conditions reveals that “Billabong” is listed as one of several ’important requirements and observations‘ of Mr and Mrs Lyons. The explanation of the observation and requirement in relation to the billabong was that unless the water within it was aerated and reticulated the gamut of challenges which would arise and adversely the restaurant trade included mosquitoes, illness, bad odour/stench, a lack of desire to utilise the outdoor verandah seating and the venue as a whole; and unsightliness.
In that context, and within that framework, the Tribunal’s view is that the possibility of mosquitoes emanating from the billabong was what Mr and Mrs Lyons were concerned about.
Mr Clark states that he spoke with Mr Tanase in relation to mosquitoes.[17] Mr Tanase was Council’s Manager of Environmental Health Services.
[17] Paragraph 68 of Mr Clark’s first statement – Exhibit 6.
Mr Tanase gave evidence in the hearing that he is responsible for the mosquito control program in the Hinchinbrook Shire. Given this role, the Tribunal accepts Mr Clark’s evidence that he consulted Mr Tanase after having had the conversation with the Lyons about mosquitoes, because it was a mosquito problem that was raised.
The Tribunal further accepts that the Council advised Mr and Mrs Lyons that the mosquitoes would not be a problem because the water in the wetlands was deep water, and therefore not conducive to the breeding of mosquitoes. Mosquitoes tend to breed in more shallow water, and if any larvae were present, the fish in the wetlands water would eat them.
As it transpired, mosquitoes were not a problem for the restaurant.
Dealing with the bugs, the Tribunal notes that after the influx of bugs into the restaurant premises in late September 2010, Mr Clark made arrangements for the white lights in the restaurant to be changed to yellow lights in an effort to minimise the effect of the bugs. In email correspondence[18] after this, Mrs Lyons applauded Mr Clark for his ’pro-active approach‘ and ’great attitude these last 6 months‘. The Tribunal does not consider that these are statements that would have been made if Mr or Mrs Lyons were of the view that the Council had misrepresented that insects would not be a problem to the restaurant.
[18]Emails from Mrs Lyons of 16.11.10 [Exhibit RC1 to Mr Clark’s second statement – Exhibit 7] and 20.12.10 [Exhibit RWC59 to Mr Clark’s first statement – Exhibit 6].
Further, neither Mr nor Mrs Lyons gave evidence that they complained to Mr Clark that he had represented to them that insects would not be a problem. It was also not put to Mr Clark in cross-examination that any such complaint had been made.
When Mr Lyons sent his original letter of demand for $102 498.77 to Council on 10 February 2011 he did not include any claim against Council on the basis of a misrepresentation about insects. The language used in his letter of demand cannot be described as conciliatory, with references to the Council’s ’inaction‘ and ’broken promises‘, and an assertion that the Lyons had been ’constantly led along by Council’.
The Tribunal does not accept Mr Lyons’ evidence that he omitted any reference to Mr Clark’s alleged misrepresentation because he did not want to upset the Council. The Tribunal is satisfied that no reference is made in the letter of 10 February 2011 because no representation was made by Mr Clark, or any other person, on behalf of Council that insects generally would not be a problem for the restaurant.
Quite apart from anything else, in the Tribunal’s view it would defy logic that an experienced Council officer, well used to the vagaries and the cyclical nature of the insect population in North Queensland, would make such a representation.
Orders of the Tribunal
The Tribunal orders that:
1. The application is dismissed.
2. By consent of the parties, judgment is entered for the Council against Hungry Vikings on the counter-application in the sum of $15,203.00
3. The parties have 14 days to file and serve written submissions on the question of costs.
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