Kashiwagi v Punjabi By Nature International Pty Ltd; Kashiwagi v Verma
[2011] QCAT 707
•9 May 2011
| CITATION: | Kashiwagi v Punjabi By Nature International Pty Ltd; Kashiwagi v Verma [2011] QCAT 707 |
| PARTIES: | Kazuyo Kashiwagi v Punjabi By Nature International Pty Ltd |
| APPLICATION NUMBER: | RSL017-10 |
| PARTIES: | Kazuyo Kashiwagi v Premis Verma |
| APPLICATION NUMBER: | MCDO1337-11 |
| MATTER TYPE: | Retail shop leases matters |
| HEARING DATE: | 5 April 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Ms Anne Forbes, Member Mr Michael Conrad, Member Ms Sandra Kairl, Member |
| DELIVERED ON: | 9 May 2011 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Premish Verma shall pay to Kasuyo Kashiwagi in discharge of his outstanding debt to her the sum of $10,166 in monthly instalments of $500, the first such instalment to be paid within 30 days of these orders. 2. Any balance outstanding 30 days after the date of these orders shall be subject to interest at the rate of 15% per annum. 3. The Respondent Punjabi By Nature International Pty Ltd shall pay compensation to Kasuyo Kashiwagi in the amount of $14,500 as follows: (a) In monthly instalments of $1,000, the first such instalment to be paid within 30 days of these orders; (b) Any balance outstanding 30 days after the date of these orders shall be subject to interest at the rate of 15% per annum. |
| CATCHWORDS: | Lease under Retail Shop Leases Act1994 includes a licence or non-exclusive use – licence entitling licensee to share restaurant kitchen with licensor/tenant – tenant denies licensee use of kitchen – licence agreement repudiated – compensation – associated loan agreement between licensee and tenant not a retail tenancy dispute – not “under or about the use or occupation of a leased shop” – dealt with as a minor civil dispute and consolidated with the retail tenancy dispute Retail Shop Leases Act1994, s 43 (1)(a), Schedule, Dictionary, section 5 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Daryl O’Brien appeared as a friend for the Applicant |
| RESPONDENT: | Premis Verma as director appeared for the Respondent |
REASONS FOR DECISION
Ms Kasuyo Kashiwagi was the licensee of a part of retail premises leased by Punjabi. She claims compensation under the terms of the licence and the Retail Shop Leases Act1994 [“the RSLA”] for Punjabi’s alleged repudiation of the licence by denying her proper use of the premises and then giving her a notice of termination without cause.
The parties appeared at the hearing without legal representation. Ms Kashiwagi was represented by Mr Daryl O’Brien and Punjabi appeared by its sole director Mr Premis Verma.
Ms Kashiwagi claims from Mr Verma or Punjabi:
a)Repayment (with interest at 20%) of the balance of an interest free $10,000 loan due for repayment on 9 March 2010.
Ms Kashiwagi claims from Punjabi:
b)Compensation for the premises not being available for trading on the promised date, in the amount of $1,975;
c)Repayment of part of an advance payment of the rent/licence fee after she quit the premises: $8,447 together with interest at 20%;
d) Compensation for the wasted shop fit out: $26,480;
e)Compensation for loss of expected profit for the first year of the licence, $44,417;
f)Compensation for lost opportunity for the second and third years, to be calculated; and
g) Costs in the amount of $4,659.
Mr Verma listed his own outlays on Punjabi’s business in the premises but made no counterclaim.
Background
In December 2008 Mr Verma offered Ms Kashiwagi a licence over a portion of premises Punjabi was considering leasing. He proposed to open a restaurant selling Indian food; Ms Kashiwagi was interested in establishing a small business selling Japanese artefacts, promoting Japanese tea and performing tea ceremonies. Eventually she hoped to offer more substantial Japanese foods.
From the outset, communication between Ms Kashiwagi and Mr Verma was conducted by email. There were no challenges to the chain of correspondence included by the parties in their material.
Ms Kashiwagi agreed to lend Mr Verma $10,000 to start his business. On 9 March 2009 they signed informal documents evidencing a loan of $10,000 interest free to be repaid on 9 March 2010. Mr Verma signed a receipt as director of Punjabi in these words: “I Premish Verma … have borrowed a sum of Au$10,000 interest free from Kazuyo Kashiwagi for a period one year, this money will be used as working capital for my Restaurant.”
On 14 May 2009 Mr Verma accepted $20,020 on behalf of Punjabi from Ms Kashiwagi for her first year’s licence fee from 14 May 2009, including outgoings and GST.
The parties signed a licence agreement for Ms Kashiwagi’s non-exclusive use of the leased premises on 7 May 2009. It recites a commencement date of 19 April 2009, but this date is modified by the term of the lease between Punjabi and the landlord, which recites a commencement date of 14 May 2009. Relevant terms of the agreement are:
The licence fee is to be $18,200 per annum, with GST;
The licensee is to have access to the premises only during her trading hours;
Ms Kashiwagi must obtain all required food licences and appoint a food safety supervisor;
The premises licensed consist of shared use of the kitchen, the “alfresco area” and toilet[1];
[1]The shared kitchen facilities include a gas stove, water tap, sink, a shelf of the refrigerator, freezer and oven and use of part of a bench.
Punjabi may terminate the licence in the event that the Licensee’s breach of a term is not remedied within 10 days of written notice;
Punjabi may terminate the licence without breach on three months’ written notice;
Punjabi acknowledges that it has received the first year’s licence fee in advance, and it is refundable on default of Punjabi;
Communication between the parties must be in writing; and
If the RSLA applies, the terms of the agreement are subject to the Act.
The premises are rectangular, divided approximately in the middle. The kitchen is at the rear of the premises and the shared alfresco area at the front.
Before the parties could complete their fit out a grease trap had to be installed under the alfresco area. Ms Kashiwagi was not able to commence trading until 19 June 2009.
From the outset, the Respondent kept the kitchen locked and denied Ms Kashiwagi entry and use of it. According to Ms Kashiwagi, the Respondent gave her no written or verbal reasons for that conduct. The kitchen remained inaccessible to Ms Kashiwagi until she left.
The Matter of a Food Licence
The permitted use of the licensed premises is defined in the lease as “Japanese tea house and arts and crafts.” On 8 March 2009 Ms Kashiwagi advised Mr Verma that her proposed café menu would be “Drink Japanese teas, Chai Food Japanese sweets, Sushi.” On 3 April 2009 she told him: “my Japanese café will be starting from just teas. (And might not apply food licence)”.
On 12 June 2009 Ms Kashiwagi told Mr Verma in an email that she had consulted a food licence manual and did not need a licence to sell products such as teas, soft drinks, biscuits and cakes.
On 13 June 2009, shortly before commencing to trade, Ms Kashiwagi added in an email that she had “checked out licence – No problem…will serve tea and sweets – my purpose is promote Japanese tea-will get advice re dish washing for non food licence shop.”
On 7 August 2009, Mr O’Brien, with consent of the landlord installed a small sink and bench at the rear of the licensed area so that Ms Kashiwagi could wash her crockery.
On 2 September 2009 Ms Kashiwagi reminded Mr Verma that the kitchen was shared space and that she needed a key, because she had arranged a kitchen inspection by a Council officer to determine whether she could run a food business. She added: “I don’t want conflict with you. Want to avoid infliction [sic]…food supervision my obligation. I am Japanese who follow any regulation.” The email ends with this comment: “Kicked out with 3 months notice. Please respond.”
On 11 September an environmental health officer of the Brisbane City Council inspected the licensed premises and certified that:
“there were no activities that required a food business license being conducted at that time, selling tea only in disposable cups … I explained the limited types of food that could be handled without a license, such as beverages confectionary and low risk cakes.”
On 11 September 2009 Punjabi’s solicitor sent Ms Kashiwagi a letter advising that his client was invoking clause 5(1)(c) of the licence to terminate her tenure on three months’ notice and that the licence would expire on 16 December 2009. The letter alleges several breaches of the licence, namely that Ms Kashiwagi has not obtained the necessary food business licence or nominated a food supervisor for kitchen use. Council has told that Mr Verma that he should not permit her to use the kitchen without a licence or supervisor. Other complaints are that Ms Kashiwagi operates outside her permitted trading hours several minutes each day; she has erected blinds over the door separating the alfresco area; and has installed a kitchen without Punjabi’s consent.
Ms Kashiwagi’s solicitor responded saying that Ms Kashiwagi needed the use of the kitchen only for preparing Japanese teas, and that no food licence or supervisor was needed for that purpose. He referred Punjabi’s solicitor to the provisions of the Food Act2006. Ms Kashiwagi accepted the Respondent’s repudiation of the licence, as from 20 November 2009, removed her fit out and vacated the premises on that day.
Ms Kashiwagi’s Case
In evidence Ms Kashiwagi declared emphatically that she had not breached the licence terms in any particular. Her intention, which she made clear to the landlord, was to promote Japanese teas, the traditional Japanese tea ceremony, and the sale of Japanese crafts, and that in the early stage of her business she would confine her activities to those for which no food licence was required. She said that at no time during her brief occupancy of the premises did she conduct any business for which a food business licence or supervisor was required by law.
She denied that she had traded outside permitted trading hours. She maintained that the blinds were installed with Mr Verma’s co-operation in order to prevent Indian food odours mingling with the delicate flavours of Japanese teas. The “mini sink” and small bench were installed with the landlord’s permission after she had been denied entry to the kitchen.
She had sought a refund of the unused portion of her rent and of her loan to Mr Verma. She had offered to receive the money in instalments, but received no meaningful response from him. She acknowledged that she had received a cheque for $1,000 from Punjabi as part refund of the $10,000 debt in August 2010.
She spent $26,000 on her fit out, much of which has no significant value now. It cost her $2,800 to remove it when she left. The sink and the plumbing cost her $2,000. She claims that her business was beginning to prosper after five months’ trading and that the Respondent’s repudiation of the agreement has cost her the opportunity to earn income.
Ms Kashiwagi asks the Tribunal to find the Respondent’s actions were unconscionable within sections 46A and 46B of the RSLA.
The Case for the Respondent
Mr Verma contends that Ms Kashiwagi’s email of 8 March 2009 indicated her intention to use the kitchen for an activity which required a food licence, and that he feared that Punjabi’s food licence and business would be prejudiced if she had carried out that plan without obtaining a licence.
Mr Verma says that clause 5.1(c) of the agreement gave Punjabi the right to terminate the licence on three months’ notice, and that he did so with the company’s financial interests in mind. If Ms Kashiwagi spent $26,000 on her fit out (which he does not admit), that was done without the landlord’s consent. In particular, she installed a “complete kitchen” without Punjabi’s permission, and removed it entirely when she left.
Mr Verma acknowledges that Pujabi owes Ms Kashiwagi a refund for her rent payment in advance, but denies any liability for compensation. He admits that he is liable to repay $9,000, the balance of the loan. He claims that he is unable to repay it as a lump sum but is prepared to do so by instalments.
Legislation
A lease is widely defined in the Schedule Dictionary of the RSLA as “an agreement under which a person gives or agrees to give to someone else for valuable consideration a right to occupy premises whether or not the right is…an exclusive right to occupy the premises; or for a term or by way of a periodic tenancy or tenancy at will.” Accordingly, the licence agreement, is governed by the RSLA.
Section 48 of the Food Act2006 lists food businesses for which a licence is not required, including those selling “unpackaged snack food” defined relevantly as biscuits or cakes, confectionary, dried fruit, potato chips or nuts.
Consideration and Findings
The $10,000 loan
Mr Verma admits the loan, insists that it was a loan to him personally and acknowledges that the tribunal should make appropriate orders. (He did not explain why he has not repaid the debt.) At the end of the hearing the evidence was insufficient to persuade the tribunal that the dispute regarding the loan was “under or about a retail shop lease” as required by the RSLA.[2] Consequently directions were made that the claim for the outstanding debt be transferred to the Minor Civil Dispute list and consolidated with the other claims. Evidence at the hearing and material filed is evidence on the matter of the debt. The parties were given leave to augment their evidence on this claim but declined to do so.
[2] Schedule dictionary, section 5, definition of retail tenancy dispute.
The loan was due for repayment in March 2010 free of interest. We consider that the debt should bear interest after that date. $1,000 was repaid in August 2010. We award interest at 10% per annum as follows:
5 months’ interest on $10,000 [9 March to 9 August 2010] = $416.66
plus 10 months’ interest on the remaining $9,000 = $750
equals $1,166
$1166.66 + $9,000 = $10,166 (rounded off)
The Retail Tenancy Claims
The Licence obliged the Applicant to obtain and maintain “any required food business licences”: clause 4.7 (emphasis added). Mr Verma insists that Ms Kashiwagi expressed an intention on 8 April 2009 to conduct a licensable food business. However, we find that her subsequent emails to him on 12 and 13 June, immediately before the business opened, clearly inform him that, having made independent enquiries, she planned to restrict her menu in the early stage to items defined as snack foods that did not require a food licence.
Mr Verma gave no evidence that he had established, or even suspected that she was in breach of the Food Act2006, before he denied her access to the kitchen. We find that her business did not require her to hold a licence and that she was therefore entitled to use the kitchen. We were impressed by Ms Kashiwagi’s declaration: “I am Japanese and follow regulation.”
Mr Verma claims to have been told by the Council that he should not permit Kashiwagi to use the kitchen without the necessary food licence.[4] He was not able to point to the occasion or the circumstance in which he was given this advice. However, the Environmental Health Officer dealing with the matter, in a letter of 10 February 2011 denies that she gave such advice. On the contrary, that officer says that she specifically told Mr Verma that his licensee’s activities did not require a food licence or safety supervisor. The officer was not called by Mr Verma for cross examination. We prefer the evidence of the officer on this point.
[4] Letter Hartnett Lawyers to Applicant 11.9.09.
We are not persuaded that Mr Verma’s reasons for locking the kitchen – “in the interests of the Company” – were justified. He simply seems to have been unable or unwilling to accept the evidence that a food business licence was not required for the level of activity engaged in by Ms Kashiwagi. We are satisfied that he had no rational basis for his stated belief, that protection of the Respondent’s business demanded that Ms Kashiwagi be denied use of the kitchen. Mr Verma must have known that, even with the simplest of menus, Ms Kashiwagi needed access to water and a bench for preparation.
Accordingly we find that Punjabi repudiated the licence from the date that Ms Kashiwagi began to trade. Furthermore, Punjabi “substantially restricted [her] access to the leased shop” within the meaning of section 43(1)(a) of the RSL Act. However, the company was within its rights to terminate the licence on three months’ written notice.
However, although we find that Punjabi repudiated Ms Kashiwagi’s licence we are not comfortably satisfied that its conduct was unconscionable within the meaning of section 46B of the Act. The licence stipulates that communication between the parties shall be in writing and in fact Mr Verma and Ms Kashiwagi communicated exclusively by email. English is not the first language of either of them. While Ms Kashiwagi’s understanding of spoken English appeared adequate, her Japanese accent is very marked and we had some difficulty understanding her. Her written English in the emails was stilted. When written exchanges did occur the reply was not always responsive. We consider it more likely that defective communication, rather than unconscionable dealing, destroyed the business relationship.
We allow the Applicant’s claim for the cost of the sink and associated plumbing that she ordered in lieu of access to the kitchen. Evidence of the fitout and the use of the component parts after removal was insufficiently quantified, but we allow the cost of its removal. We do not award compensation for the alleged delay in making the premises available. Each party knew, when they made their agreement, that grease trap plumbing had to be done before either of them could start to trade.
The Applicant claims a loss of anticipated profits for the first year of the licence and for “lost opportunity”. Compensation under the RSLA is awarded for actual rather than for prospective loss. The licence was a fragile agreement, terminable at any time, without cause, on three months’ written notice. We are unable to find that the Applicant has suffered loss in those respects.
Finally, there is no evidence that the Applicant was ever in breach of the licence agreement, or that her fitout lacked approval, as alleged by the Respondent. On the contrary, she submitted her plans for approval on 16 April 2009 and there is no evidence that approval was refused.
Compensation in the Retail Tenancy Claims
In summary, we allow only the following items of the claim:
(a)The “unused portion” of the licence fee/rent paid in advance. We calculate that portion from the agreed termination date (6 December 2009) and allow interest at 10% pa, as follows:
$8,447 + interest at 10% for 16 months = $8,447 + $1126.26 = $9,573.26
(b)Cost of installing a sink and associated plumbing: $2,000
(c)Cost of removing the fit out: $2,800
The total of items (a), (b) and (c) is $14,373.26, and as further reasonable compensation we round that figure to $14,500.
Before these proceedings began the Applicant offered to accept repayment of her loan to the Respondent by instalments. We consider it appropriate to structure our decision in the same manner. However in order to provide an incentive to the Respondent to pay that debt and the above compensation as quickly as possible we shall order that any moneys outstanding from time to time attract interest at the rate of 15%.
ORDERS
Premish Verma shall pay to Kasuyo Kashiwagi in discharge of his outstanding debt to her the sum of $10,166 in monthly instalments of $500, the first such instalment to be paid within 30 days of these orders.
Any balance outstanding 30 days after the date of these orders shall be subject to interest at the rate of 15% per annum.
The Respondent Punjabi By Nature International Pty Ltd shall pay compensation to Kasuyo Kashiwagi in the amount of $14,500 as follows:
(a)In monthly instalments of $1,000, the first such instalment to be paid within 30 days of these orders;
(b)Any balance outstanding 30 days after the date of these orders shall be subject to interest at the rate of 15% per annum.
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