Kele Property Group (Qld) Pty Ltd v Maramex Pty Ltd

[2018] QCAT 465

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Kele Property Group (Qld) Pty Ltd v Maramex Pty Ltd & Anor [2018] QCAT 465

PARTIES:

KELE PROPERTY GROUP (QLD) PTY LTD

(applicant)

v

MARAMEX PTY LTD

(first respondent)

McGEES PROPERTY

(second respondent)

APPLICATION NO/S:

RSL012-18

MATTER TYPE:

Retail shop leases matters

DELIVERED ON:

17 July 2018

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Cranwell
Member Judge

Member McBryde

ORDERS:

1.   It is declared that the determination of current market rent by Greg Clarke of McGees Property dated 31 August 2017 does not comply with the Retail Shop Leases Act 1994 (Qld) and is not a valid determination.

2.   The determination of current market rent is set aside.

3.   A further determination of current market rent is to be undertaken in compliance with the Retail Shop Leases Act 1994 (Qld) by a different specialist retail valuer.

CATCHWORDS:

LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OTHER MATTERS – where applicant exercised option to renew lease – where specialist retail valuer was appointed to determine the current market rent – whether the determination complied with the Retail Shop Leases Act 1994 (Qld)

Retail Shop Leases Act 1994 (Qld), s 5A, s 28, s 28A,
s 29, s 83, s 103

REPRESENTATION:

Applicant:

Colwell Wright Solicitors

First Respondent:

Self-represented

Second 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. Kele Property Group Pty Ltd (‘KPG’) is the owner of leased premises in the Emporium building in Fortitude Valley. Maramex Pty Ltd (‘Maramex’) is the tenant of the leased premises. It is not in dispute that the lease is a ‘retail shop lease’ as defined in s 5A of the Retail Shop Leases Act 1994 (Qld) (‘the Act’).

2. The lease was for an initial term of 7 years, which expired on 31 October 2017. The lease provided for an option for a further term of 7 years, and that option was exercised by Maramex on 6 April 2017.

3. KPG and Maramex could not agree on the current market rent for the first year of the option term. On 20 July 2017, Greg Clark of McGees Property (‘McGees’) was appointed as a ‘specialist retail valuer’ by the chief executive pursuant to s 28 of the Act.

4. McGees sent a letter to KPG and Maramex on 1 August 2017, proposing a schedule of events as follows:

   18 August 2017 – Both parties to have made either verbal or written submissions to me, as considered appropriate to support their respective positions.

   25 August 2017 – Premises inspected after consideration of above submissions.

   25 August 2017 – Comparable market rent evidence supplied by both parties, as well as my own independently obtained evidence, inspected and analysed.

   31 August 2017 – Written Determination made in accordance with the Lease and Act.

5. KPG and Maramex each accepted McGees’ appointment on the terms set out in the letter.

6. KPG provided written submissions to McGees on 18 August 2017, and provided a copy to Maramex.

7. Maramex also provided written submissions to McGees on 18 August 2017, but did not provide a copy to KPG.

8. McGees proceeded to make a written determination on 31 August 2017.

9. Section 103(2)(a) of the Act provides that the Tribunal has jurisdiction to hear a retail tenancy dispute about ‘the procedure for the determination of rent payable under a retail shop lease, but not the actual amount of the rent’.

10. Section 28A of the Act provides:

    Parties’ submissions to specialist retail valuer

    (1) This section applies if the current market rent under a retail shop lease is to be determined by a specialist retail valuer under section 28.

    (2)     The valuer must advise the lessor and lessee that the lessor and lessee may give the valuer a submission about the current market rent of the leased shop by a stated date decided by the valuer (the submission date).

    (3) The submission date must be not less than 14 days after the valuer is agreed to or appointed under section 28.

    (4)     If the lessor or lessee does not give a submission to the valuer by the submission date, the lessor or lessee is taken to have not made a submission for the purposes of this section or section 29(1)(c)(ii).

    (5)     A lessor or lessee who gives a submission to the valuer must also give a copy of it to the other party by the submission date.

    (6)     A lessor or lessee who receives a copy of a submission may give the valuer a written response to it.

    (7)     The response must be given by a stated date decided by the valuer (the response date) that is reasonable in the circumstances.

    (8)     If the lessor or lessee does not give a response to the valuer by the response date, the lessor or lessee is taken to have not made a response for the purposes of this section or section 29(1)(c)(ii).

11. It is apparent that Maramex did not comply with s 28A(5), in that it did not give a copy of its submission to KPG. Further, McGees did not set a response date in its proposed schedule of events pursuant to s 28A(7), which would have set a date by which KPG could have responded to the submission by Maramex.

12. Maramex has submitted that the parties agreed to depart from the procedure set out in s 28A. However, the Act does not afford the parties the ability to agree to depart from it.

13. Section 29(1)(c)(ii) requires that the specialist market valuer must have regard to ‘submissions and responses from the lessor and lessee about the market rent of the shop’. In circumstances where no response date was set, thereby precluding any opportunity for the lessor (or lessee) to provide a response which the specialist market valuer would then be required to have regard to, the Tribunal finds that McGees has not made the determination in compliance with the Act.

14. Section 83(2) of the Act sets out orders which the Tribunal may make, including the following at paragraph (j):

    if QCAT finds that, in making a determination of current market rent, a specialist retail valuer did not comply with section 29—an order that the determination be set aside and a further determination, in compliance with the section, be made.

15. KPG have requested that any further determination be conducted by a different specialist valuer. The Tribunal considers this to be appropriate in the circumstances.

16. KPG have also requested an order that McGees refund its fee. The letter from McGees dated 1 August 2017, the terms of which were agreed to by KPG, includes the following statement:

    In consideration of my accepting this appointment and agreeing to undertake the Determination, you agree to indemnify and keep me indemnified from and against all liability, costs, expenses and damages paid or incurred by me in connection with any claim brought by you, or on your behalf in respect of the Determination and/or services provided in connection therewith.

    This indemnity shall not apply in the case of fraud or wilful misconduct on my part, but shall otherwise apply to all other conduct whether or not is (sic) constitutes a breach of contract, negligence and/or breach of any other standard prescribed by Statute.

17. The Tribunal is not satisfied that the conduct of McGees can be categorised as ‘fraud or wilful misconduct’. KPG is therefore precluded from obtaining a refund.

18. Accordingly, the appropriate orders are:

    (a)It is declared that the determination of current market rent by Greg Clarke of McGees Property dated 31 August 2017 does not comply with the Retail Shop Leases Act 1994 (Qld) and is not a valid determination.

    (b)The determination of current market rent is set aside.

    (c)A further determination of current market rent is to be undertaken in compliance with the Retail Shop Leases Act 1994 (Qld) by a different specialist retail valuer.