Kahler Investments Pty Ltd v Phan

[2018] QCAT 246

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Kahler Investments Pty Ltd v Phan [2018] QCAT 246

PARTIES:

KAHLER INVESTMENTS PTY LTD
(applicant)

v

TRUONG NHUT PHAN

(respondent)

APPLICATION NO:

RSL045-17

MATTER TYPE:

Retail shop leases matter

DELIVERED ON:

19 July 2018

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

ORDERS:

1.   Truong Nhut Phan must pay to Kahler Investments the amount of $8,139.70 within twenty eight (28) days of the date of this decision.

2.   Truong Nhut Phan must pay to Kahler Investments costs in the amount of $315.78 within twenty eight (28) days of the date of this decision.

CATCHWORDS:

LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES – OTHER MATTERS – where retail shop lease entered into – where claim for compensation by landlord – where tenant vacated property – where landlord claims cost of repairs to property – where landlord claims legal fees – where party fails to comply with tribunal directions without reasonable excuse – where party acts in a way that unnecessarily disadvantages another party – where applicant entitled to a final decision in the proceeding

Queensland Civil and Administrative Tribunal Act 2009 (Qld),) s 48(1)(a), s 48(2)(b)(i), s 102(3)
Retail Shop Leases Act 1994 (Qld),) s 5A, s 5B, s 5C, s 55, s 63(2), s 83(1), s 83(2)(b), s 103(1), Schedule
Retail Shop Leases Regulation 2006 (Qld), s 9s9(1), Schedule

Savile Settled Estates, In re; Savile v Savile (1931) 2 Ch 210

REPRESENTATION:

Applicant:

Self-represented

Respondent:

Self-represented

APPEARANCES:

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. Kahler Investments Pty Ltd leased premises in Gladstone to Mr Phan. Following the expiration of the lease and Mr Phan vacating the premises, Kahler Investments says that the property was not left in a state of good repair and condition. Kahler Investments seeks to recover from Mr Phan the costs it has incurred in restoring the premises to an appropriate condition.

   The Retail Shop Leases Act 1994 (Qld) (the RSL Act)

2. The Tribunal has, subject to some stated exceptions, jurisdiction to hear retail tenancy disputes.[1] ‘Retail tenancy dispute’ is defined and means any dispute under or about a retail shop lease, or about the use or occupation of a leased shop under a retail shop lease, regardless of when the lease was entered into.[2]

   [1]RSL Act 1994, s 103(1).

   [2]Ibid, Schedule.

3. ‘Retail shop lease’ is defined and, with certain stated exceptions, means a lease of a retail shop.[3] ‘Lease’ is defined.[4] ‘Retail shop’ is defined and means premises situated in a retail shopping centre or that are used wholly or predominantly for the carrying on of 1 or more retail businesses.[5] ‘Retail business’ means a business prescribed by regulation as such.[6]

   [3]Ibid. 

   [4]Ibid.

   [5]Ibid.

   [6]Ibid.

4. With some stated exceptions, the Tribunal may make orders, including declaratory orders, the Tribunal considers to be just to resolve a retail tenancy dispute.[7] The Tribunal may, among other things, order the payment of an amount by a party to a dispute to a specified person.[8]

   [7]Ibid, s 83(1).

   [8]Ibid, s 83(2)(b).

   The dispute

5. The parties entered into a lease of the subject premises in Gladstone. The original lease was for a period of 3 years expiring in 2007 with an option to renew for a further 3 year period.[9] The lease was subsequently amended to extend the term, ultimately expiring on 31 October 2016[10] after which date Mr Phan gave vacant possession.

   [9]Lease dated 9 September 2004.

   [10]Amendment dated 22 August 2013.

6. A Notice of Dispute was lodged by Kahler Investments on 14 February 2017 in accordance with s 55 of the RSL Act. Mr Phan failed to attend the mediation. The Notice of Dispute was subsequently referred to the Tribunal as required by s 63(2) of the RSL Act.

7. The Notice of Dispute sets out the basis of the claim by Kahler Investments. When Mr Phan gave vacant possession, the premises were not left in a state of good repair and condition. The Notice of Dispute sets out the amount claimed by Kahler Investments as a result of Mr Phan’s breaches of the lease. 

8. Numerous directions have been made by the Tribunal in the proceeding. Mr Phan has not complied with those directions. Mr Phan’s continued failure to comply with Tribunal directions resulted in directions that if Mr Phan did not file a response to the Notice of Dispute, Kahler Investments would be entitled to a final decision in the proceeding. No response has been filed by Mr Phan. Mr Phan’s persistent failure to comply with Tribunal directions has unnecessarily disadvantaged the applicant who is being prevented from progressing the matter to a final resolution. Kahler Investments is entitled to a final decision in the proceeding.[11]

   [11]QCAT Act, s 48(1)(a), s 48(2)(b)(i).)

   Consideration

9. The premises, the subject of the lease, were used by Mr Phan as an Asian groceries store. On the evidence before the Tribunal it is unclear whether the premises are situated in a retail shopping centre. Irrespective, I am satisfied that the premises were used wholly or predominantly for the carrying on of a retail business. I am satisfied therefore that the premises were a retail shop.[12] I am satisfied that the subject lease was a retail shop lease. I am satisfied that the lease expired on 31 October 2016 and that vacant possession of the premises was subsequently given by Mr Phan.[13] It is noted that the lease appears to have been amended on 2 occasions in 2010 and 2013 with the effect of extending the term. Amendment of a lease so that it will operate for a term extending beyond the original term operates in law as a surrender of the old lease and a grant of a new one.[14] The lease was most recently amended in August 2013 however nothing turns on this point in determining the matter.   

   [12]RSL Act, Schedule; RSL Regulation, s 9(1) and Schedule.

   [13]Statement of Mark Phillip Patton dated 16 November 2017.

   [14]Savile Settled Estates, In re; Savile v Savile (1931) 2 Ch 210.

10. Prior to Mr Phan vacating the premises, Kahler Investment’s property agent, Mr Mark Patton, met with Mr Phan at the premises. Mr Patton deposes to having discussed with Mr Phan the lessee’s obligations to make good the premises upon the expiration of the lease.[15] Mr Patton says that he provided to Mr Phan quotes in respect of the make good costs.

    [15]Ibid, [2].

11. Mr Patton deposes to having inspected the premises after Mr Phan gave vacant possession and observed them to be in a ‘dirty and unrepaired condition’.[16]

    [16]Ibid, [3].

12. Clause 12.1 of the lease provides:

    12.1        Tenant’s Obligations

    On termination the Tenant must:

    (1) vacate the Premises and give them back to the Landlord in good repair and condition;

    (2) remove all the Tenant’s Property from the Premises;

    (3) repair any damage caused by the removal of the Tenant’s Property and leave the Premises clean;

    (4) employ competent professional painters to paint the Premises in a proper and tradesmanlike manner in 2 coats of premium quality paint in colours acceptable to the Landlord;

    (5) replace floor coverings if reasonably required by the Landlord, other than floor-coverings installed at the sole cost of the Tenant; and

    (6) return any keys to the Landlord.

13. Kahler Investments says that Mr Phan has breached clause 12.1 of the lease and specifically sub-clauses (3), (4) and (5) by failing to meet his obligations under the lease to make good the premises. I am satisfied that there is, as between the parties, a retail tenancy dispute the Tribunal has jurisdiction to hear and decide.

14. There is, before the Tribunal, a statement by Ms Underhill, an employee of Kahler Investment’s property agent.[17] Attached to Ms Underhill’s statement are a number of photographs said to depict damage to the premises including damaged flooring, walls not repaired or repainted, damaged ceiling panels, shelving not removed by Mr Phan, a damaged drain and an ‘ill maintained’ kitchen.[18] Ms Underhill says that contractors were engaged to repair the flooring, repair and replace missing light fittings and to repair damaged walls and ceiling panels and to undertake repainting work.[19]

    [17]Statement of Zoe Underhill dated 26 November 2017.

    [18]Ibid.

    [19]Ibid, [6].

15. I am satisfied, on the uncontested evidence before the Tribunal, that Mr Phan failed to give the premises back to Kahler Investments in good repair and condition, failed to remove his property from the premises, failed to repaint the premises, failed to repair damage to the walls and ceiling, failed to replace or repair floor coverings, and failed to clean the premises. I am satisfied that Mr Phan thereby breached clauses 12.1(2), (3), (4) and (5) of the lease.

16. The costs incurred by Kahler Investments in making good the premises are said by Ms Underhill to be:

    (a)Repair and cleaning of vinyl flooring  $     799.70[20]

    (b)Electrical works  $     745.00[21]

    (c)Structural and repainting works  $  5,968.00[22]

    [20]Tax invoice, CMBM Facility Services dated 31 January 2017.

    [21]Tax invoice, Ray Martin Electrical dated 9 November 2016.

    [22]Tax invoice, Trevor Neilson Painters dated 23 November 2016.

17. In respect of the structural and repainting works, the invoice in evidence totals $9,426.00. The applicant says that the full amount of the invoice is not claimed as the owner was responsible for certain items of the invoiced work including the replacement of a vanity unit and ceiling tiles. Whilst the invoice does not itemise the work carried out in a detailed manner, I accept that the reduced amount claimed by the applicant, which is the uncontested evidence of the applicant, represents the painter’s costs of undertaking the works necessary to make good the premises and which were the responsibility of the lessee.

18. I am satisfied that the amounts claimed by Kahler Investments in respect of the make good costs arise out of Mr Phan’s breaches of the lease and are reasonable and I allow them in full.

19. Kahler Investments also claims legal fees and outlays it has incurred arising from the breach by Mr Phan of his obligations under the lease. By clause 13.2(3)(b) of the lease, the tenant is obliged to pay the landlord’s reasonable legal fees and outlays arising from any breach of the lease by the tenant. The solicitors for Kahler Investments wrote to Mr Phan on 3 November 2016 seeking payment of the make good costs and the landlord’s legal costs and outlays. The costs claimed total $627.00.[23] Having found that Mr Phan breached his obligations under the lease, the amount claimed for legal fees and outlays, which I consider to be reasonable, is allowed in full.

    [23]Tax invoice, VAJ Byrne & Co, Lawyers dated 17 January 2017.

20. There will be a final decision in the proceeding for Kahler Investments in the amount of $8,139.70.

21. In light of Mr Phan’s failure to comply with Tribunal directions, and in light of my finding that Mr Phan has acted in a way that has unnecessarily disadvantaged Kahler Investments, the applicant should be entitled to recover its costs limited to the filing fee on the Notice of Dispute.[24]

    [24]QCAT Act, s 102(3) and reasons [8].