Lloyd ATF E&J Lloyd Family Trust v Soloman
[2024] QCAT 577
•6 December 2024
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Lloyd ATF E&J Lloyd Family Trust v Soloman [2024] QCAT 577
PARTIES:
JONATHON LLOYD AND EMMA LLOYD ATF E& J LLOYD FAMILY TRUST (applicants)
v
STEPHEN ROBERT SOLOMAN (respondent)
SUSAN LEIGH SOLOMAN (respondent)
APPLICATION NO/S:
RSL035-23
MATTER TYPE:
Retail shop leases matter
DELIVERED ON:
6 December 2024
HEARING DATE:
On the papers
DECISION OF:
Member Taylor (Presiding)
Member JudgeMember McBryde
ORDERS:
1. The applicants’ claim for an order for compensation reliant on s 43 and/or s 43AA of the Retail Shop Leases Act 1994 (Qld) is dismissed.
CATCHWORDS:
LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OBLIGATIONS, PROHIBITED TERMS AND PROTECTION FOR LESSEES – ALTERATIONS OR INTERFERENCE TO PREMISES – where the applicants as lessees complained of water ingress into the premises – where the water ingress caused damage inside the premises such that it was said to be unable to be used as a shop – where the applicants seek compensation from the respondents as lessors reliant on s 43 and s 43AA of the Retail Shop Leases Act 1994 (Qld) – where the applicants’ evidence to support such a claim is devoid of necessary detail to show the requisite causal connection between the asserted disruption and the asserted loss – where the applicants’ evidence is otherwise of no probative value in justifying the asserted loss
Retail Shop Leases Act 1994 (Qld) s 5A, s5B, s 5C, s 5D, s 42, s 43, s 43AA, s 44, Schedule
Retail Shop Leases Regulation 2006 (Qld) s 9, Schedule
Chappel v Hart (1998) 195 CLR 232
Gold Ribbon (Accountants) Pty Ltd (in liq) v Sheers & Ors [2006] QCA 335
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)
REASONS FOR DECISION
THE TRIBUNAL
Overview
The applicants commenced a new ‘beauty therapist’ business, opening on 19 August 2021 in a retail shop premise which they leased from the respondents. The lease was originally only up to 14 January 2022. In early November 2021 they signed a second lease which extended their entitlement to run the business from that shop until 6 February 2023.
By late November 2021, the applicants were experiencing challenges in the conduct of their business as a result of water ingress into the shop such which is said to have caused damage to carpet and fitments. They say that ultimately, on 24 February 2022 they had to cease trading. Whilst the lease continued to run its course until 6 February 2023 they did not recommence trading.
The applicants seeks compensation from the respondents for losses they assert they suffered as a result of them having to close the business. The premise of their claim is that provided for under the Retail Shop Leases Act 1994 (Qld) (RSLA) s 43 (Business disturbance) and s 43AA (false and misleading statements), such which by virtue of s 42 of the Act implied as terms of the lease. The total compensation sought is expressed as $137,724.80 including GST, however they also express an unquantified claim for ‘interest’ and ‘income growth’.
As we discuss it in these reasons, the applicants’ claim is entirely misguided and without merit. They have not met the requirements for a compensation order and so fail in their efforts to have this Tribunal make any order for compensation to be paid to them by the respondents.
The outcome of this proceeding is that it is dismissed.
The Respondents did not file any substantive material
Despite the Tribunal file showing the respondents as having been represented by a law firm in this proceeding, save only for a ‘Response and/or Counter-application’ filed 15 August 2023 in which they sought an order that the applicants’ ‘Application (sic – be) dismissed’, they did not file any substantive material in terms of statements of submissions.
The last material showing on the file as having been filed for the respondents, the filing date being recorded as 22 January 2024, is an affidavit under the hand of a Mr Darrin Edwards, described therein as being a ‘solicitor’s managing clerk’ in the employ of Australian Property Lawyers. Therein he asserted that his firm is the solicitors for the respondents and that he has day to day carriage of the matter on behalf of the firm.
This document records the date sworn being 23 January 2023. That date is evidently incorrect and should have been entered as 23 January 2024. This is because Mr Edwards refers to facts and circumstances in various paragraphs throughout the affidavit in terms of dates during 2023. As is relevant to that which we mention next, therein Mr Edwards makes this statement in the concluding paragraphs of his affidavit, which we read as being as at 23 January 2024:
The Respondents are in the process of preparing their material in response to the Applicants (sic) material, which has been delayed by my having had time of (sic) work as a result of a heart health diagnosis and the inherent delays caused by the festive break and my employers (sic) offices being closed during the same.
The Respondents seek an extension of 14 days within which time (sic – to file) their material in response to the Applicants (sic) material.
We infer that this affidavit and the extension of time purportedly requested by virtue of it was in terms of the Direction of this Tribunal given 11 July 2023 requiring the respondents to filed statements of evidence by 1 November 2023.
By a Direction given 22 January 2024 in this proceeding, the time for compliance with same was extended to 19 February 2024. By a further direction given 24 April 2024 in a compulsory conference, the time for compliance with same was again extended, on that occasion to 8 May 2024.
Following an application for miscellaneous matters filed by the applicants on 21 May 2024, such being granted, further directions were given on 26 August 2024, namely:
(a)This proceeding would be determined on the papers; and
(b)To that end each party must file and serve any final submissions in wishes to make based on the evidence already filed, to be done by 16 September 2024; and
(c)Regardless whether that last direction is complied with the matter would be decided on the filed material.
The Tribunal file records the respondents having failed to comply with any of these directions. This is so notwithstanding the content of Mr Edwards’ affidavit indicating the preparation of that material was underway and expected to be filed shortly thereafter. Accordingly, the only material before us was the respondent’s response and/or counterapplication form, and the substantive material filed by the applicants, namely a statement of Emma Lloyd filed 18 Sep 2023 (Lloyd Statement), and submissions by Emma Lloyd also filed 18 September 2023 (Lloyd Submissions). We have drawn the following facts and circumstances from that material.
Relevant Facts and Circumstances
On 5 July 2021, the parties entered into a retail shop tenancy agreement (the First Lease) for what is described in the lease document as being ‘Shop 2 – 73 Cressbrook Street, Toogoolawah’ (the Shop). The lease document records the period of the lease as being 9 July 2021 to 14 January 2022, and the use of the Shop as being ‘Beauty Therapist’.[1]
[1]Lloyd Statement para 2 - Annexure A1a.
On 19 August 2021, the applicant commenced trading from the Shop as ‘M&Co Beauty’.[2] As we read and understood the applicants’ material, M&Co Beauty was a new business at that time.[3]
[2]Ibid para 3.
[3]Lloyd Submissions 3rd last paragraph on pg 2.
On 2 November 2021, the parties entered into a second retail shop tenancy agreement for the same Shop, the same use, and the same terms, all as per the First Lease, but on this occasion the lease document recorded the period of the lease as being 15 January 2022 to 6 February 2023 (the Second Lease).[4]
[4]Lloyd Statement para 2 - Annexure A1b.
On 26 November 2021, the applicants first notified the respondents’ agent, whom we infer is the managing agent for the premises, of water ingress to the premises. This was followed by a series of further contacts by the applicant’s Ms Lloyd to the agent on 30 November, 2 December 2021, and 14 January 2022 in regard to water damage and wet carpets in the premises.[5]
[5]Ibid para’s 4 to 7.
On 24 February 2022, the applicants ceased trading at the Shop.[6] As we understand the applicants’ material, this is because they assert the damage from the water ingress, including mould growth, had become so bad the Shop was purportedly unusable.[7] What then followed was a series of further communications between the applicants’ Ms Lloyd and the respondents’ agent.
[6]Ibid para 9.
[7]Lloyd Submissions para 4. See also Lloyd Statement para 10.
On 10 March 2022, a meeting occurred at the Shop, attended by the applicants’ Ms Lloyd, the respondents and their agent, and persons said to be the respondents’ builder and plumber. Ms Lloyd says that, during that meeting:[8]
(a)she was informed that repairs to the Shop would take 6 to 8 weeks and that she could expect to be back in business by the middle of May 2022
(b)she requested the agent to discuss with the respondents whether they were willing to offer her any compensation as per the RSLA s 43 and s 43AA.
[8]Lloyd Statement para 14.
After having followed up that request, on 28 March 2022 the applicants’ Ms Lloyd received a response from the respondents’ agent informing her:[9]
(a)she will not be required to pay rent whilst she is unable to use the Shop;[10]
(b)The respondent were not willing to offer any compensation.
[9]Ibid para 18.
[10]Such is consistent with clause 16 of the terms of the lease.
The chronology of events as explained by the applicants in their material is devoid of any detail as to what happened from then until the end of the lease period. All it informs us is that the next event was that which occurred on 6 February 2023, this being the end of the Second Lease, when Ms Lloyd once again requested compensation be paid. On this occasion that request was by way of a email sent to the respondents’ agent containing the following statement:[11]
We are wanting to request again compensation from the owners for loss of income in our beauty sales at 73B Cressbrook St, Toogoolawah.
As per Retail Shop Leases Act, Div 7 – Implied provisions for compensation LINK HERE – it states compensation is payable by the lessor. Our business has been financially impacted for almost 12 months now and we’re at the point of taking this matter further if the owners aren’t willing to discuss or offer anything.
We are going to give the owners 7 days to advise of they are willing to discuss this matter, even if it means we need to organise mediation to come to an agreement. Otherwise we will be lodging a dispute through QCAT and will be taking this matter further.
[11]Ibid para 19 – Annexure A 13.
On 27 March 2023, the applicant filed an application with the Queensland Small Business Commissioner. Ultimately that led to a mediation being arranged for 29 June 2023, however the respondents did not participate.
On 3 July 2023, the appointed mediator referred the dispute to this Tribunal under s 63 of the RSLA, with the applicants subsequently paying the requisite fee to this Tribunal on 7 July 2023 and in turn the referral effectively becoming the applicants’ application and claim in this proceeding.
On 11 July 2023, this Tribunal in turn gave directions for filing of relevant material in this proceeding, such containing the directions which we referred to in paragraph [9] herein. One of those directions also required the respondents to file and served any response to the Notice of Dispute contained in that referral.
On 11 August 2023, the respondents filed their ‘Response and/or Counterapplication’. Therein they sought an order that the application be dismissed, the premise for that being expressed as follows:
The Applicant has been requested to provide details of the claim and the alleged losses and has failed to do so.
What then followed is that which we noted in paragraphs [9] to [12] herein, with the matter ultimately in turn coming before us for determination on the papers.
The Issues
On our reading of the material before us, in the absence of anything substantive from the respondents, the relevant facts and circumstances as we have laid them out herein are not disputed. The sole issue in this proceeding is whether the applicants are entitled to the compensation they seek. The decision on that issue turns solely on the provisions of s 43 and s 43AA of the RSLA, such effectively being terms of the lease.
The Relevant Law
Retail Shop Leases Act 1994 (Qld)
This Tribunal is given jurisdiction under s 103 of the RSLA, subject to limited exceptions, to hear and determine retail tenancy disputes. Those exceptions in essence go to the nature of the dispute, none of which applied in this proceeding. Thus we merely needed to be satisfied that this dispute was a retail tenancy dispute.
Whilst not raised as an issue before us, it remained necessary for us to be satisfied, as a threshold issue, that the jurisdictional basis upon which we were to proceed had been satisfied. To address that aspect, it was necessary to consider relevant terms as they are defined in the RSLA, namely:
(a)A ‘retail tenancy dispute’ 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.[12]
(b)A ‘retail shop lease’ is, subject to certain exceptions which do not apply here, a lease of a retail shop.[13]
(c)A ‘retail shop’ is premises that are situated in a retail shopping centre; or used wholly or predominantly for the carrying on of a retail business.[14]
(d)A ‘retail business’ is a business prescribed by regulation as a retail business,[15] namely being a business mentioned in the Schedule to the regulations or its whole or predominant activity is, or is a combination of, the sale, hire or supply of goods and services mentioned in the Schedule, save only for wholesale sale of goods; with the business, goods or services defined in the Schedule to the regulations relevantly including ‘beauty products, beauty salon’[16]
(e)A ‘retail shopping centre’ is, as relevant to this proceeding, a cluster of premises having all of the following attributes – five or more of the premises are used wholly or predominantly for carrying on retail businesses; all the premises - are owned by the 1 person; or are located in one building; and the cluster of premises is promoted, or generally regarded, as constituting a shopping centre, shopping mall, shopping court, or shopping arcade.[17]
(f)A ‘lease’ for the purposes of the RSLA is 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 – (a) an exclusive right to occupy the premises; or (b) for a term or by way of a period tenancy or tenancy at will.[18]
[12]RSLA Schedule.
[13]RSLA s 5A.
[14]RSLA s 5B.
[15]RSLA s 5C.
[16]Retail Shop Leases Regulation 2006 (Qld) s 9 and Schedule.
[17]RSLA s 5D.
[18]RSLA Schedule.
On our reading of the lease document, be it either the First Lease or the Second Lease, these provisions were all satisfied. This is save only for the issue of the Shop being part of a ‘retail shopping centre’, which whilst not clear on the material provided that it is part of such a centre the inference can be drawn that it is a requisite centre, such drawn from the nature of the document used to record the First Lease and the Second Lease being an REIQ Retail Shop Tenancy Agreement standard form document and the absence of any challenge to the fact that the lease is a retail shop lease. Thus it may correctly be said the Lease is a retail shop lease and in turn this proceeding is a retail tenancy dispute that this Tribunal is seized of jurisdiction to decide.
That being so, there are two provisions of the RSLA which loom large in this proceeding, namely s 43 and s 43AA. These are as Ms Lloyd has referred to them in her communications we referenced above, both of which are implied terms of the lease.[19] For ease of reference we extract them here to the extent relevant to the facts and circumstances as they are before us:
[19]RSLA s 42.
43 When compensation is payable by lessor—business disturbance
(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) …; or
(b) …; 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) …; 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) …; or
(f) ….
(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.
43AA When compensation is payable by lessor—false or misleading statements etc.
The lessor is liable to pay to the lessee reasonable compensation for loss or damage suffered by the lessee because—
(a) the lessee entered into the lease, including a renewal or assignment of the lease, on the basis of a false or misleading statement or misrepresentation made by the lessor or any person acting under the lessor’s authority;
or
(b) …
Under s 44 of the RSLA, if the parties to the lease cannot agree on the amount of compensation payment, the amount is to be decided by way of the dispute resolution process laid down in the Act. That is the process described under Part 8 of the Act, such which has been engaged in and has led the parties to this proceeding.
The Evidence and the Submissions
The applicants frame their case reliant on those two sections of the Act. As Ms Lloyd expressed it in her submissions:[20]
In November 2021 problems began with water issues and damages in the shop. I notified the real estate several times and sent through images of the wet floors, carpets and mats as well as the mould starting to grow on the carpet in December 2021.
Stephen and Susan Soloman failed to rectify the issues or repair the damages. It continued to be a problem throughout January 2022 with further mould growing. In February 2022 the problem became so bad that I was forced to vacate the premises and the shop was unusable.
My dispute and claim against the respondents Stephen and Susan Soloman is in main reference to the Retail Shop Leases Act 1994 – Division 7, 43 When compensation is payable by lessor – business disturbance and 43AA When compensation is payable by lessor – false or misleading statements etc. Stephen and Susan Soloman knowingly entered into another Retail Shop Tenancy Agreement in January 2022, at this point they were aware of the problems and damages occurring at 73B Cressbrook Street and I had been informed these issues would be repaired.
[20]Lloyd Submission – paragraphs 3 to 5 on pg 1.
In her submissions, Ms Lloyd also makes this statement:[21]
Throughout this process I have been willing to mediate and settle this dispute. It is not a matter of providing just a ‘decline’ in the business income; my business was forced to close completely and all income was lost. As this was the case, I was under the assumption that this dispute could be easily resolved through meaningful communications. However, even though I had provided the defendants with substantial information and POS reporting, Stephen and Susan Solomon still failed to give any response at all on their perspective with this issue.
[21]Ibid – last paragraph on pg 1.
In what appears to us to be the premise for that submission, in her statement Ms Lloyd provided details of the nature and effect of the water ingress to the Shop and her communications with the respondent’s agent, both in descriptive text and with the provision of copies of various e-mails, as well as describing her actions in seeking assistance from the Queensland Small Business Commissioner which led to the mediation being arranged but ultimately not conducted, and in turn to this Tribunal.
Within the bundle of document provided relevant to that last point,[22] Ms Lloyd includes a series of e-mails between herself and Mr Edwards of Australian Property Lawyers for the respondents, such occurring in the period commencing 29 March 2023 up to 12 May 2023. The content of them is substantial and for present purposes we have extracted only a few passages from them which, as relevant to the issue to be decided by us, gives the context of those communications. They are as follows.
[22]Lloyd Statement para 20 – Annexure 14.
(a)29 March 2023 – Mr Edwards to Ms Lloyd
It is probably important for us to highlight that our role in this matter, as instructed by our client, is to consider your claim and advise our clients appropriately. …
To assist us, it would be useful if you could set out the details of the compensation that you have sought or are seeking, by reference to any relevant items and their respective values, supported by appropriate documents such as receipts and like natured documentation. Until such time as we receive the full details of your claim and the compensation sought, it is with respect, almost impossible to decipher what your claim is and or what value that claim attracts.
(b)3 April 2023 – Ms Lloyd to Mr Edwards
In regard to the compensation we are seeking from the owners, I will list some points below.
… [Details provided in explanatory form ] …
We do believe this issue can be easily resolved through further communication or mediation & we look forward to your response.
(c)3 April 2023 – Mr Edwards to Ms Lloyd
In order to properly consider the matters raised by you, you will need to provide us with the appropriate supporting documents … Each head of damage you have claimed, (sic) must be proven and that’s usually done by way of documentation supporting the relevant claim. If no documents can be produced supporting the claim it ordinarily fails.
We would suggest that you consult with a lawyer or your accountant who will likely be in a position to assist you with the process of preparing your case. The documentation will be required of you wish to hold a mediation or we end up in Court. So in our view, the quicker you can get your documentation in order, the quicker we can turn our minds to the veracity of your claim.
(d)4 April 2023 – Ms Lloyd to Mr Edwards
In my previous email, I attached my reporting for Oct 2021 as this was the most summarised report showing total figures. I can produce all individual receipts if required however I have also reached out to my accountant.
…
As for my lawyer, I am attempting to keep costs down for myself and your client by not having them intervene in this mediation as I feel further communication could easily resolve this issue. However, should I need to get them involved further in this matter, their fees will be an extra cost that I will be adding to my claim against your clients.
(e)13 April 2023 – Mr Edwards to Ms Lloyd
We refer to your e-mail below of April 4, 2023.
Has your accountant provide you with further information to support your claim?
Do you have any further material that you wish us to consider? …
Again, we would urge you to get independent legal advice about what material will need to be produced in support of your claim. It is simply not a matter of you making an allegation about a particular loss without being in a position to produce “evidence” which properly supports that claim. At this stage, your material goes no where (sic) near supporting a claim for compensation in the quantum you have identified.
(f)20 April 2024 – Ms Lloyd to Mr Edwards
Darrin, I refer to your e-mail me to personally dated 13/04/2023 …
With respect, I believe I have produced to you more than required at this stage to state my claim but we have still had no response from yourself or your clients on even where you stand with this matter.
(g)20 April 2024 – Mr Edwards to Ms Lloyd
Throughout the course of this matter we have indicated that our clients preference is to engage in meaningful communications to bring an end to the dispute. To that end, we have requested that you provide us with copies of documentation to support your claim for compensation. This has been met with you providing some material, which does support a small claim for compensation but certainly nowhere near the suggested compensation of $70,000.00 - $90,000.00
The onus is on you to prove your claim. If you cannot provide the necessary documents and information to support your claim it will fail. We have urged you to obtain legal and accounting advice but you have declined to do so.
It is regretful that you feel that you have provided sufficient information to support your claim for compensation, when in truth you have not. What you have provided are a range of values based on your own opinion as opposed to those supported by coherent documentation.
(h)12 May 2023 – Mr Edwards to Ms Lloyd
We will not advice our clients to participate in a mediation without having been able to advise them on the merits of your claim, which we cannot do without all of your supporting documents.
… We have said time and time again that you need to provide sufficient information as to your losses, which you have estimated at $90,000 … so that our clients can consider the bona fides of the claim, and yet you resist providing sufficient information for that purpose.
Until such times as the information is provided, we cannot advise our clients to participate in a mediation. Any proceedings brought, (sic) will need to be properly supported, if they are not they will likely be struck out.
Again, we would urge you to get legal advice – the ramifications of not having the information to support your claim, (sic) can be very substantial.
It is apparent that things moved on for the applicants since that exchange ended, with Ms Lloyd compiling what she seems to have thought was the necessary information and documentation.
In various paragraphs of her statement filed in this proceeding Ms Lloyd details the compensation she is seeking. She states therein the total is $137,965.60 including GST. However on our reading and calculation the total is slightly less at $137,724.80 including GST.[23] We have condensed that into the following Table for the purposes of these reasons.
[23]We have not reconciled the difference. Nothing turns on it.
Line Item
Para #
Description
Claimed amount (all include GST)
1
15
Wages for Georgia Shaw during training as new employee – April 2022
$888.42
2
16
Staff training expenses – pre-opening and ongoing
$4,384.80
3
22
Mediation fee
$175.00
4
23
QCAT fee
$379.50
5
24
Insurance costs whilst salon was closed, plus excess paid on damages claim
$936.74
6
25
Ongoing advertising fees under contract signed December 2021
$1,450.65
7
26
Accountant’s fees
$3,850.00
8
27
Credit allowed for given rent not paid 25 March 2022[24] to 6 February 2023
<$7,259.68>
9
28
Fit out expenses and rent during fit out period prior to commencing trade
$17,498.03
10
29
Loss of income 25 February 2022 to 6 March 2023
$58,074.53
11
Loss of income 6 February 2023 to 1 November 2023 when her salon reopened at a new location
$47,215.26
12
30
Purchase of new furniture in readiness to reopen once repairs had been completed
$2,289.54
13
31
Relocation expenses to move business to new premises
$7,284.23
14
32
Retraining expenses – Georgia Shaw
$557.78
TOTAL
$137,724.80
[24]This is the date Ms Lloyd noted in her statement. Our understanding is that given she closed her shop on 24 February 2022 and the arrangement was she wasn’t to pay rent whilst unable to trade thus the date should be in February not March, but we also understand from her material that the applicants had paid rent up to 25 March 2022 and there is nothing contained in the applicants material anywhere as to a claim for repayment of the rent paid from 24 February 2022 to 25 March 2022.
In purported support thereof, Ms Lloyd annexed to her statement what is said to be a report prepared by her Tax Agent, a Ms Jowett of First Class Tax, dated 17 September 2023.[25] Therein Ms Jowett refers to RSLA s 43AA and s 43, which we infer are references as being the foundation for what follows as the presentation of a calculated claim for compensation, as well as stating “In addition, the landlord breached its obligation to give ‘quite enjoyment. …”, and then concludes with this statement:
Attached are the financials and worksheets outlining the compensation claim and calculations substantiating the claim of $125,423.27 exclusive of GST as of today’s date. Noting we have not included interest or potential growth income. The salon has now been closed fully for more than 18 months.
[25]Lloyd Statement para 36 – Annexure 24.
In addition to this list, seemingly premised on that concluding comment by Ms Jowett, Ms Lloyd also states at paragraphs 34 and 35 of her statement that the applicants seek interest and what is described as ‘income growth’, neither of which are quantified but rather are expressed as ‘seeking advice / guidance from this Tribunal’ on the pursuit of same.
Discussion on the Applicants’ claim for compensation
It is convenient to deal firstly with that last point, namely the applicants having sought ‘advice’ and/or ‘guidance’ from this Tribunal in terms of their claim for interest and income growth. That request is entirely misguided. This Tribunal does not provide advice or guidance to a party as to the formulation of its claim. It was for the applicants to seek their own legal advice.
It is then convenient to turn to the claim reliant on s 43AA of the Act, it being that by entry into the Second Lease the respondents somehow gave a false or misleading statement that cause the applicants to enter into that second lease. This can similarly be disposed of with minimal discussion.
Put simply, there is no substance to it. This is because it is reliant on what is said to be the respondents’ entry into the Second Lease in January 2022, and a statement alleged to have been made prior to the effect that the water ingress and damage would be remedied. But this is inconsistent with the facts as the applicants have presented them to this Tribunal. On Ms Lloyd’s own statement and the documents she has included therein, as we noted it in paragraphs [15] and [16] herein, the Second Lease was entered into on 2 November 2021 such being prior to her having first notified the respondents’ agent of water ingress 24 days later. As such, no statement said to have the effect of causing the applicants to have entered into the Second Lease could have been made, nor could the Second Lease have been entered into by the respondents with knowledge of the water ingress subsequently first brought to their attention by Ms Lloyd. Accordingly the applicants must fail in their efforts to seek compensation reliant on this term implied into the lease.
Thus, that leaves only the claim for compensation reliant on s 43, but it is unclear to us as to which paragraph of s 43(1) the applicants are reliant on to press their case for compensation. On our reading of their material, it appears it could be s 43(1)(c) and/or s 43(1)(d)(ii). Regardless of whether it is one or both, in our opinion it is convenient to deal with them together because either way there are a number of issues arising from the applicants’ presentation of their case that result in this also failing.
Firstly, to the extent the water ingress is said to have caused ‘significant disruption', whilst it may be accepted generally that this was so, there is an absence of any evidence to show that:
(a)The applicants’ business still could not be conducted with some limitation. There is only the bare assertion by Ms Lloyd that she was forced to close. The applicants should have presented independent evidence of those facts.
(b)The water ingress was a matter that was within the respondents’ control. The presentation of the applicants case leaves that matter simply to be inferred. The inference is not easily drawn given that there is nothing more than the bare assertion supported by some photographs which show water logged carpet and other finishes, by Ms Lloyd that water was entering the Shop. The applicants should have presented once again independent evidence of this fact; and
(c)The respondents did not take all reasonable steps to prevent or stop it. Again it is left to an inference being drawn that the respondents did not do so. There was no independent evidence of what could and should have been done by the respondents and when it was reasonable for them to have done so.
Secondly to the extent it is asserted the respondents failed to rectify a defect in the building, similarly it was incumbent upon the applicants to have led evidence from an independent source, for example a building surveyor, as to the location and reason for the water ingress, and in turn the extent to which it was a matter within the respondents’ control as lessor such they could have readily have taken steps to remedy the issue, and what those steps could and should have been, and that it was readily able to be rectified but that the respondents failed to do so as soon as was practicable.
To the extent the applicants sought to proceed reliant on s 43 of the Act, it was not sufficient to merely assert the existence of what ingress and provide photos of the damage allegedly caused therefrom that led to the asserted disruption.
Thirdly, and more critically, the applicants have failed to establish a direct causal link between the losses they assert they have suffered and the alleged failures by the respondents to have acted to remedy the defect or prevent the disruption. Before the respondents could be held responsible for what is said to be loss suffered by the applicants in terms of each of the Line Items for which compensation is claimed, , as we have laid it out in Tabular form at paragraph [37] herein, the applicants must have proven that it was the respondents’ conduct which materially contributed to them suffering that loss.[26] At best, the applicants’ material might lead to a process of logical inference of a causal nexus between the alleged failure to have remedied the water ingress to the loss said to have been suffered,[27] such seemingly being the premise for the applicants pursuit of compensation. But such does not obviate the need for proof of a causal link.[28] Here, the requisite causal connection could only be shown to exist when the evidence shows the action taken by the applicants, and in turn the loss said to have been suffered, arose directly from the circumstance of the alleged disruption. But the applicants’ evidence does not reach that requisite level of probative value.
[26]Chappel v Hart (1998) 195 CLR 232,244 and 245,[27] per McHugh J.
[27]Gold Ribbon (Accountants) Pty Ltd (in liq) v Sheers & Ors [2006] QCA 335;[277] per Keane JA.
[28]Ibid, [278].
None of what is described in Line Items 1, 2, 6, 9, or 12, have any connection whatsoever to the alleged disruption. In our opinion, these are expenses that would have been incurred in any event. To the extent some may have been incurred directly as a result of the effect of the water ingress causing a disruption in trade, it does not directly follow that these expenses can be said to have arisen from the respondents having failed to take all reasonable steps to prevent or stop the disruption, or to have failed to rectify a defect in the building as soon as is practicable. It seems to us that the argument being made by the applicants is that these expenses they incurred were wasted as a result of the disruption to trade. We do not make any finding that this is so, but even if it could be said to be so it does not mean they are valid bases for a compensation order.
As to Line Item 11 and 13, it cannot have any connection because it is for a loss which is said to have arisen after the Second Lease was to have expired. The fact that the applicants relocated to a new location, something they would have had to do in any event if a third lease was not entered into with the respondents, nothing that the Second Lease did not contain any option for renewal, and the fact that they did not commence trading again until 1 November 2023 at a different location, are not in any way facts that have directly arisen as a consequence of the water ingress and the alleged failures by the respondents, if accepted that they were failures, to have taken all reasonable steps to prevent or stop the disruption, or to have failed to rectify a defect in the building as soon as is practicable.
As to Line Items 3, 4, and 7, these are costs which have arisen as a result of the dispute, such which arose out of the asserted disruption and so a connection in that regard, but not in our opinion a cost which is contemplated by s 43 and the implication of same as a term of the lease. These are costs incurred by the applicants as lessees engaged in a dispute resolution process in terms of their claim for compensation, not a loss suffered as a result of the event that led to that claim and in terms of the dispute over it.
As to Line Item 5, the on-going insurance costs would be a cost the applicants would have incurred in any event, and whilst the excess they had to pay on the claim made for damages is a result of the event which gave rise to the alleged disruption, it is not a cost they have incurred as a result of the respondents having failed to take all reasonable steps to prevent or stop the disruption of rectify the defect as soon as was practicable.
At best for the applicants, only Line Item 10 could come remotely close to having the requisite causal connection. But here, there are two issues we consider relevant.
Firstly, there was an express term of the lease which provided for not only abatement of rent on damages to the Shop, such which has properly been applied given the applicants were not required to pay rent whilst they could not trade, but provided a mechanism by which the Second Lease could have been terminated by either party when the damage to the Shop had not been remedied within a two (2) month period from when the event occurred. This is found in clause 16 of the lease terms.
That is, it was open for the applicants to have terminated the Second Lease once the Shop was not made ready for reopening by May 2022. But they did not take that step. As we noted it in paragraph [20] herein, the applicants material is devoid of any detail as to what occurred from 28 March 2022 to 6 February 2023. There is nothing which informs us as to what the respondents did, or more importantly did not do, during to remedy the defect in the building and to prevent a continuation of water ingress, and in turn rectify internal damage. It might be that they promptly attempted to attend to the requisite work but were unable to remedy the issue. Alternatively they did remedy it but not to the applicants’ satisfaction such that the applicants refused to once again commence trading. We simply do not know, nor is there enough from which we can draw an inference as to the respondents’ actions.
But more importantly, it does not show us what the applicants did during that time. The material is entirely silent in that regard, glaringly so. In the absence of same, we draw the inference that they simply sat idle and did nothing until 6 February 2023 when the Second Lease expired and only then pushed forward with a claim for compensation, such including a claim for loss of income up to that point in time. As we see it, it was readily open on the terms of the lease for the applicants to have effectively taken steps to move their business to another location, something they would have had to do if the Second Lease was not extended or a third lease not entered into, and so start trading again well before 6 February 2023. They could thus have prevented, by their own action, their asserted loss of income. That being said, the submission made by Ms Lloyd as we noted it in paragraph [33] herein that her “business was forced to close completely and all income was lost” is simply without substance. That comment shows us that Ms Lloyd failed to understand the case she was wanting to run.
Secondly, and more importantly, the applicants have failed to provide adequate evidence to support their claim for loss of income over the remainder of the lease term. All that has been provided are some records of a noticeably short trading period for what was described by the applicants as being a ‘new business’, and then forecasts being made based on that noticeably short period by extrapolation over the remainder of the lease period. But, there has not been any consideration given to, nor explanation of, broader economic factors that could have adversely contributed to the forecasts, such in our opinion being of critical importance when dealing with a ‘new business’ not been achievable and in turn they being discounted as not a factor to be incorporated. Moreover there are simply overly broad and obscure % factors applied in the calculations by Ms Jowett in her report, such as ‘accounting and bookkeeping’ cost at 15% of sales, and ‘supplies and materials’ at 10% of revenue without any detail explanation and supporting material to show these being accurate.
In addition, the extrapolation of the sales figures over a twelve month period, taken from the initial start up trading period August 2021 to February 2022 such traversing the Christmas trading period, and once again in terms of a ‘new business’, is not in any way explained as to the basis for same being proper. Nor does it explain the extent to which vagaries of seasonal trade have been factored into or discounted out.
In all respects, the asserted ‘report’ by Ms Jowett was entirely unsatisfactory. She even went to the extreme of seemingly suggesting a legal premise for a claim for compensation, something beyond the ambit of a report on financial matters. That, together with the absence of the requisite detail we have just discussed, indicating to us that neither Ms Jowett nor Ms Lloyd comprehended what was actually required to press a claim for compensation.
In the exchange of e-mails between Ms Lloyd and Mr Edwards referred to in paragraph [35] herein, it is readily apparent that Mr Edwards was endeavouring to explain to Ms Lloyd the deficiencies in her case as she was presenting it. It also seems to us that Ms Lloyd did not understand then, nor did she understand later, what was required. She seemingly compiled the material she thought supported her claims.
To the extent the applicants are seemingly reliant on the report from Ms Jowett to show the loss they say that have suffered and so seek compensation for, it is inadequate. Such is also the case with the remainder of their evidence. Put simply, the evidence of the asserted loss has no probative value. It does not support their claim for compensation.
Conclusion
The applicants, in particular Ms Lloyd, embarked on a course which led them to this Tribunal. They did so either naively or ignorantly. Ms Lloyd was encouraged on many occasions by Mr Edwards to seek independent legal advice and proper accounting advice. Such is somewhat surprising given he was purportedly acting for the respondents, and had Ms Lloyd taken up that suggestion a case against his clients may have gotten some traction. But in the event the applicants chose to take the path they did, it being a perilous one for them in terms of the adverse position it left them in.
For all of the reasons we have discussed herein, the applicants have failed to make their case. Thus, even in the absence of any substantive material from the respondents, they cannot succeed in obtaining an order for compensation. Their proceeding must therefore be dismissed. An order was made to that effect.
0
2
2