Mackay & Anor t/as Wallaville Hotel v Lane - [2018] QCATA 45

CITATION:

Mackay & Anor t/as Wallaville Hotel v Lane [2018] QCATA 45

PARTIES:	ROBERT MACKAY NOLA OFFORD (Applicant/Appellant)
v
BRENDON JOHN LANE (Respondent)
APPLICATION NUMBER:		APL351-16

MATTER TYPE:

Application and Appeals

HEARING DATE:

30 January 2018

HEARD AT:

Brisbane

DECISION OF:

Justice Carmody

DELIVERED ON:

29 March 2018

DELIVERED AT:

Brisbane

ORDERS MADE:

THE APPEAL TRIBUNAL ORDERS THAT:

1. Leave to appeal is granted and the appeal is allowed.

2. The tribunal’s decision in MCD28/16 is set aside.

3. The respondent is ordered to pay the applicants $14,924.99.

CATCHWORDS:

APPEAL – LEAVE TO APPEAL – MINOR CIVIL DISPUTE – where the applicants’ claim was struck out for inadequate proof – whether the tribunal failed to sufficiently explain its decision – whether the tribunal mischaracterised a lump sum rental instalment payment as a security bond for a lease – whether the tribunal erred in rejecting the applicants’ documents as proof of their claim – whether the matter should be remitted to the tribunal for reconsideration in accordance with the law and uncontroverted facts – where the decision is set aside and orders for payment substituted by the appeal tribunal under s 146(a) and (d)

APPEARANCES and REPRESENTATION (if any):

APPLICANT: Robert Mackay and Nola Offord (self-represented)
RESPONDENT: No appearance for the respondent

REASONS FOR DECISION

The applicants seek leave to appeal the tribunal’s decision in MCD28/16[1] dismissing their claim for outstanding lease amounts from one of their joint lessees of a rural hotel pending the exercise of an option to buy.
[1]Heard on 1 September 2016 with related matters in MCD89/16 and MCD84/16.
The respondent was personally served with a copy of the lease on 22 May 2014 and notices to remedy unpaid rental arears of $4,645.54 and $6,695.65 in unpaid rates on 13 and 15 April 2016 respectively.
The applicants concede that they initially miscalculated the amount of rental arrears owing for May but have now corrected that and assert that payment for the amount due is still outstanding.
At T1-68:20 the tribunal struck out (or more correctly, dismissed) the “whole lot” for “reasons already given” expressing the opinion that the “matters should be looked at by a court not in QCAT”.
Also the tribunal did not regard the documents before it – rates notices, electricity bills and bank statements – as sufficient proof of liability or quantum.
The applicants complain, in effect, that the tribunal decision does not fairly and equitably resolve the dispute contrary to s 13(1) QCAT Act.
The respondent failed to comply with all procedural directions to date and despite notice did not attend the hearing.
Leave to appeal principles
The applicants require leave to appeal. Leave to appeal performs a gatekeeping function to restrict the appeal tribunal’s load to cases meriting dedication of its finite resources.
For a grant of leave the applicants need to have a reasonably arguable case of material error in the sense of the law being misunderstood, misstated or misapplied or that a finding of fact is unsupported by either evidence or reason. They also must demonstrate that they will suffer substantial injustice if it is not corrected.
The applicants rely on misinterpretation errors and a manifest failure to properly understand the nature or circumstances of their assertions or adequately consider relevant documents and submissions.
Resolving a dispute without full consideration of all relevant issues is legally unreasonable, and, in the QCAT context, contrary to the duty in s 28(2) and (3)(e) to “act fairly and according to the substantial merits of the case” and “with all relevant facts”.
The context
In 2014 the applicants agreed to sell the freehold of the Wallaville Hotel via Bundaberg to three purchasers including the respondent for $530,000 on written terms and a $50,000 deposit. The property was sold subject to a two year commercial lease from 1 June 2014 at rental of $98,000 for 2014-2015 and $48,000 for 2015-2016. The contract of sale provided for completion 30 days after the contract date. However, the contract document was never signed and the agreement fell over during the term of the lease.
Under special condition 2.1 of the sale contract the $50,000 deposit payable under cl 3.1 of the standard terms was deemed paid if the buyers did not breach an essential term of the lease and paid the $98,000 rent due under the lease by 1 December 2014 but was not refundable on termination under cl 3.5.
The lease imposes a liability to pay rent (cl 3.1) and “operating expenses” defined in cl 5.1 as meaning:
(1)the total costs incurred by the landlord in the operation and maintenance of the building or the land including:
(a)rates, taxes and other charges payable to any government or other authority …
The applicant relies on this clause for the rates and electricity claim.
The disputed amounts are:
·    balance of rent from December 2014             $4,645.54
·    rent for May (¼ of month)  $1,100.00
·    rates owing at 6/5/16  $6,851.94
·    electricity account as at 6/5/16   $2,327.51
$14,924.99
Payment of rent and operating expenses was an essential term of the lease.[2] The tenant defaults under the lease if the rent or any money payable is not paid when due.[3]
[2]Lease Schedule cl 14.3.
[3]Lease Schedule cl 14.1.
The rent covenants of the lease provided for payment by monthly instalments of $34,000 on 1 June 2014 and $24,000 on 1 December 2014 and $4,000 each other intervening and subsequent month.
The applicants were entitled[4] to remedy any tenant default and recover costs of doing so as a liquidated debt plus interest at a daily rate of 2% above bank rate.
[4]Lease Schedule cl 14.3.
The tribunal finding
At T1-61:40 to T1-62:35 there is a discussion between the tribunal and parties about whether the $50,000 paid under cl 3.1 was really a deposit or bond.
The applicants contend that properly construed, the $50,000 was part payment of the respondent’s total first year rental liability of $98,000 which was paid up front to help meet their mortgage obligations so the contract for the sale of the hotel could proceed without the mortgagee’s objection.[5]
[5]Lease Schedule cl 13.1.
When asked by the tribunal to point to where it says the “bond” was “non-refundable” in the contract documents the applicants replied, “you’ll have to check. It’ll be there somewhere”.[6]
[6]T1-62:35-45.
The tribunal objected saying “No, you’ve got to show me. It’s not for me to look for it”.[7]
[7]T1-62:40.
The tribunal told the applicants that “you’ve received that money (the $50,000), in any event … so you’ve got your consideration. You can’t just keep the deposit.” The tribunal referred to the lease as “a blank … document” and the contract as “just annexed and it’s not signed …”[8] and concluded “… (t)here’s no proper contract here for selling it; just an intention”.[9]
[8]T1-63:5.
[9]T1-68:25.
The tribunal appears to have formed the view that because the lease does not “refer to the contract” it was just an “option to buy” that was “never exercised” so “the bond” should go back to the respondent or whoever paid it.[10]
[10]T1-62:10-30.
In other words the $50,000 lump sum rental prepayment was a security “bond” for the lease that any disputed expenses should be deducted from rather than a security deposit for the purchase price of the hotel forfeited for default. Since the applicants were paid more money than what they are claiming for rent and other expenses they should have just set one off against the other.
The characterisation of the initial $50,000 payment as a bond rather than prepaid “rent” or down payment is sufficiently doubtful to justify leave.
Morals aside the basic problem with the tribunal’s decision is that it is not a reasonably fair and equitable resolution of the dispute. The applicants claimed a contract debt or liquidated demand under a registered lease of the premises subject to the covenants and conditions contained in the attached schedule executed and accepted by the lessees on 22 May 2014.
Two of those conditions were for the payment of rent monthly in advance (without deduction) and the total costs the landlord incurred in the operation and maintenance and the hotel. [11]
[11]Lease schedule cl 3, 5.1(1)(a)
The claimed breach and loss was substantiated by reasonably credible unchallenged business records. A respondent to a minor debt claim cannot make a counter-application in the same proceeding in any event.[12]
[12]QCAT Rules rr 48(3), 49(1).
Moreover, the tribunal failed to adequately explain the reasons for its decision to strike out the applicants’ claim. This is an error of law vitiating the decision.
Leave to appeal is granted. The appeal is allowed and the tribunal’s dismissal of the claim is set aside.
The next question is whether the matter should be remitted to the tribunal for reconsideration in accordance with the law and these reasons.
There doesn’t seem to be any point. The respondent appeared at the hearing but not on the leave to appeal hearing despite notice. There is prima facie proof of the respondent’s liability and quantum. No additional facts need to be investigated or discretion exercised.
The appeal tribunal should, therefore, substitute its own decision and order payment to the applicants by the respondent of $14,924.99.[13]
[13]Under QCAT Act s 146(a)-(d).