Oates and Anor and 595-599 Beaufort Street Mt Lawley Joint Venture

[2005] WASAT 45

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

ACT:   COMMERCIAL TENCANCY (RETAIL SHOPS) AGREEMENTS ACT 1985

CITATION:   OATES & ANOR and 595-599 BEAUFORT STREET MT LAWLEY JOINT VENTURE [2005] WASAT 45

MEMBER:   MR T J CAREY (MEMBER)

HEARD:   14 MARCH 2005

DELIVERED          :   5 APRIL 2005

FILE NO/S:   CC 125 of 2005

BETWEEN:   CAROL OATES

GEORGE OATES
Applicant

AND

595-599 BEAUFORT STREET MT LAWLEY JOINT VENTURE
Respondent

Catchwords:

Landlord and Tenant - Retail and Commercial Tenancies Legislation - Jurisdiction

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985, s 3(1), s 14, s 16(1)

Corporations Act 2001 (Cth)
Petroleum Retail Marketing Franchise Act 1980 (Cth)

State Administration Tribunal Act 2004, s 32, s 39(1)

Result:

Application dismissed for lack of jurisdiction

Category:    B

Representation:

Counsel:

Applicant:     Self Represented, assisted by Mr P Doyle

Respondent:     Ms K Newton

Solicitors:

Applicant:    

Respondent:     Deacons

Case(s) referred to in decision(s):

Nil

Case(s) also cited:

Nil

MR T J CAREY

REASONS FOR DECISION

Introduction

1. The applicants were at material times the lessees of commercial premises described in the lease document as Shop 3, Chelmsford Road, Mount Lawley ("premises").  The applicants conducted a laundromat business from the premises.

2. Pursuant to a lease apparently dated 1 November 1999 (the copy lease provided by the applicants is undated) ("lease"), Ada Esther Mann was the lessor of the premises and a Mr and Ms Biagioni were lessees.  Pursuant to a deed of assignment of lease (the copy provided again being undated), the lease was assigned to the applicants with effect on 13 September 2002.  It appears that the respondent acquired title as proprietor of the premises in August 2003.  Very shortly after the change of ownership, the applicants were advised of the new owner's proposal for redevelopment of the shopping complex of which the premises form part, which would involve periods when vacation of the premises was required.  Negotiations followed, culminating in the signing of a "deed of agreement" between the applicants and respondent, in the applicants' case on 19 July 2004 ("deed").

3. The applicants complain that the redevelopment occurred over a longer period and involved a greater degree of dislocation of their business than had been contemplated.  They claim that some of the structural work differed from specifications, washing machines were not reinstalled in new positions as required under the deed in a satisfactory manner or at all, and other required rectification works were not performed.  According to the applicants, the net result was that they were forced to close the Mt Lawley business and move elsewhere.

4. The applicants claim compensation over and above compensation amounts paid by the lessor under the deed "for loss of business, for loss of value of business, damage to equipment, relocation costs, negligence in completion of specified tasks during development, additional labour required to service commercial contracts and a claim against future earnings of the premises".  According to a schedule of outstanding claims filed with the application, the total amount claimed is $374,155.31, including claims for the purchase price of the Mt Lawley business and a claim for loss of earnings for the duration of the lease.

5. Although the application seeks an order for "compensation in accordance with s 14 of the Act", "Act" being a reference to the Commercial Tenancy (Retail Shops) Agreements Act 1985 (which nomenclature I also use in these reasons), it seems apparent on reading the papers filed by the applicants that the true basis for their claim lies in the terms of the deed.  Apart from specific clauses for particular heads of loss, cl 18 of the deed provides for compensation "… for any loss of business, functionality or inconvenience incurred by any alteration to the premises in terms of area, useable area, layout, design or any other way".  The applicants, through their representative at the hearing, Mr Doyle, accepted at the hearing that this was the case.  However, it is not necessary for present purposes to finally determine that issue.

Jurisdictional issue

1. On 17 February 2005, a senior member of the Tribunal adjourned the matter for hearing of the jurisdictional question whether the lease is a retail shop lease under the Act, and made directions for the filing of material and submissions relevant to that question.  The parties complied with the directions.

2. Sub-section 3(1) of the Act includes the following key definitions‑

3. "retail shop" means —

   (a)any premises situated in a retail shopping centre that are used wholly or predominantly for the carrying on of a business; and

   (b)any premises not situated in a retail shopping centre that are used wholly or predominantly for the carrying on of —

   (i)a business involving the sale of goods by retail; or

   (ii)a specified business,

   but does not include premises used wholly or partly for the carrying on of a business involving the retail sale of petrol or diesel to be used to propel vehicles on public roads, other than premises used for that purpose by a tenant under a lease from a landlord who is not a party to a franchise agreement within the meaning of that expression in the Petroleum Retail Marketing Franchise Act 1980 of the Parliament of the Commonwealth;

4. "retail shop lease" means a lease that provides for the occupation of a retail shop other than where —

   (a)the total retail floor area to which that lease applies (including, in the case of a building with 2 or more floor levels, the area of every floor level or part thereof to which that lease applies) exceeds 1 000 square metres; or

   (b)the lease is held by a corporation (within the meaning of the Corporations Act 2001 of the Commonwealth) that would not be eligible to be incorporated as a proprietary company, or that is held by a subsidiary of such a corporation;

5. "retail shopping centre" means a cluster of premises —

   (a)5 or more of which are used wholly or predominantly for the carrying on of —

   (i)a business involving the sale of goods by retail; or

   (ii)a specified business;

   and

   (b)all of which —

   (i)have, or upon being leased would have, a common head lessor; or

   (ii)comprise lots on a single strata plan under the Strata Titles Act 1985,

   whether the premises are in a single storey building or a multi‑level building.

6. The correct basis for the Tribunal's jurisdiction, if it exists, in relation to the issues that the applicants seek to agitate appears to lie in s 16(1) of the Act, which provides for the reference of questions arising under the lease.

7. Without determining the matter finally, as noted above, I think it unlikely that any of the heads of compensation claimed by the applicants falls within any of the deemed provisions (a)‑(e) in s 14 of the Act. Rather, the applicants are seeking compensation in connection with the redevelopment of the centre including the premises, which is the subject of the deed, not the lease. However, this is not to say that the Tribunal can have no jurisdiction to determine those claims on a reference under s 16(1); clearly it might, by reason of the expansive definition of "a question arising under a retail shop lease" in s 3(3)(e) of the Act.

Evidence

1. The applicants tendered (exhibit 1) a letter dated 8 March 2005 from Rich & Company, a real estate agents firm, whom Ms Oates described in oral evidence as the managing agents of the shopping complex at the time of the assignment to the applicants.  Ms Oates was cross-examined by counsel for the respondent, Ms Newton, regarding the role of Rich & Company at various points in time, the position held by the signatory to the letter (P V Smith) and the nature of the request made by her for such a letter.  Although Ms Newton did not challenge the tender of the letter, she submitted that the letter should not be given much weight in light of the alternative open to the applicants to call the author of the letter as a witness to give evidence and produce copies of relevant leases.

2. As Ms Newton rightly conceded, the Tribunal is not bound by the rules of evidence, and may inform itself on any matter as it sees fit: s 32 State Administrative Tribunal Act 2004.  I accept Ms Oates' evidence that Rich & Company were the managing agents at the time the applicants acquired their assignment of the lease, and I am satisfied that exhibit 1 accurately sets out the tenancy situation at the time of which it speaks, namely, the time of the assignment.  The letter is similar but not identical to a letter dated 21 February 2005 filed previously by the applicants which set out the tenancy position at an unstated time, but which, according to Ms Oates' evidence (which I accept) was as at the date of the original lease.  That earlier letter enclosed a copy plan of the shopping complex in question and I will return to this shortly.

3. Exhibit 1 includes a table of the businesses conducted from the shopping complex, to which the letter itself referred as "the complex at Chelmsford Road, Mount Lawley".  The table is reproduced here:

595 Beaufort Street	Aussie Motors	Car Sales
599 Beaufort Street	Fridge & Washer City
Shop 1 Chelmsford Road	Katie Café & Noodle House	Restaurant & Takeaway
Shop 3 Chelmsford Road	Laundro Bar
Shop 5 Chelmsford Road	Oriental Secrets	Restaurant & Takeaway
Shop 5a Chelmsford Road	Audio Sonic	Retail & Repairs Car Audio

1. The copy of the sketch plan of the complex enclosed with the earlier letter identified each shop or business premises with names of some of the occupiers consistent with the covering letter.  The plan itself is a reproduction of a plan attached to the original lease.  Relevantly for present purposes, the sketch plan enclosed with the earlier letter contained the notation, next to the continuous plan of the building containing all the other premises, "AUSSIE MOTORS".

2. The applicants filed with their application a number of photographs, including photographs showing the development of the shops abutting Chelmsford Road.

3. In an affidavit of Lloyd Richard Clark filed by the respondent, the deponent swears that he is managing director of Match Projects, the manager of the redevelopment project, and that on 11 August 2003, the respondent purchased "the property at 595-599 Beaufort Street, Mount Lawley (the 'site')".  Mr Clark's affidavit makes reference to the tenants who were in occupation of the "site" as at two dates - 11 August 2003, when the respondent purchased the site (when four tenants including the applicants were said to be in occupation), and 26 July 2004, when the respondent handed over possession to the builder for the redevelopment (when only the laundrobar and Oriental Secrets were said to be in occupation).  It is not clear whether the omission of Aussie Motors from the list of tenants for both dates was on the basis that Aussie Motors was not in occupation of 595 Beaufort Street as at the two dates mentioned, or the alternative basis that the deponent was giving his evidence with an eye to the definition of "retail shopping centre" and reflected the view that the Aussie Motors premises did not form part of the same cluster as the other premises (although this would be in conflict with the deponent's own definition of "site").  The matter is if no moment given my finding that Aussie Motors was in occupation at the assignment date, which for reasons explained below was the significant date for the purposes of my decision.

4. The respondent tendered (exhibit A) a copy of a survey plan of the entirety of the land under consideration prepared for the purposes of the redevelopment project.  Ms Newton indicated, and I accept, that the survey plan showed the position at a date later than the applicants' assignment of lease.  The survey plan shows a division between lots numbered 53 and 54, with one continuous building housing a number of named businesses on lot 53, substantially similar to those referred to in the above table for 599 Beaufort Street and the Chelmsford Road addresses, the only variation being the shop furthest from Beaufort Street formerly occupied by Audio Sonic is shown as being "vacant".  In relation to the adjoining lot 54, the survey plan does not nominate any business in occupation but shows the existence of a brick and iron building and a patio along one boundary line, with the remainder of the lot (perhaps 85 per cent of the total) notated "bitumen".  The applicants tendered (exhibits 2 and 3) title searches to the two lots, which confirm the separate identity of each lot with its own title.  In each case, the registered proprietor is shown as Top Nominees Pty Ltd in 3/8ths share and the identical list of remaining parties for the remaining 5/8ths, each of the remaining parties holding a 1/8th share.  It appears these parties are collectively described as "595‑599 Beaufort Street Mt Lawley Joint Venture" for convenience.

5. The other evidence to which I have had regard is the correspondence filed by the applicants in compliance with the senior member's direction.  Amongst that material is a copy of a letter from Lease Equity Pty Ltd to the applicants dated 13 August 2003 advising that Lease Equity had been appointed by the owners as the new property managers of 595‑599 Beaufort Street and Chelmsford Road Mt Lawley and various letters from Match Projects dated between April 2004 and September 2004 (both months inclusive) regarding the redevelopment, deed of agreement and the applicants' compensation claims.  All of this correspondence is headed "595 ‑599 Beaufort Street, Mt Lawley".  A copy of the deed of agreement has also been supplied.  The deed recites that it relates "to the proposed development at 595‑599 Beaufort Street, Mount Lawley" and is signed by the applicants and two authorised signatories for the respondent.  There are no documents produced showing the full nature and extent of the redevelopment, and in particular to confirm or contradict the impression that 595 Beaufort Street (lot 54) was to be included.

The parties' submissions

1. The respondent submits that the lease is not a retail shop lease because the leased premises were not a "retail shop" as that term is defined in the Act.

2. The respondent argues that the applicants' laundromat was not situated in a "retail shopping centre", so that alternative (a) in that definition is not applicable.  This was because the laundromat did not, at the time of the assignment of lease to the applicants or at any other relevant time, form part of a cluster of five or more premises of the type referred to in the definition of "retail shopping centre".  In relation to the status of the business conducted from lot 54, Ms Newton submitted that Aussie Motors was conducted from separate premises for the purposes of that definition.  She referred to the facts that the land is separately titled and that all of the premises on lot 53 are housed within a single building.

3. Further, according to the respondent, a laundromat business is neither "a business involving the sale of goods by retail" nor "a specified business", rendering alternative (b) under the "retail shop" definition inapplicable.  The applicants did not concede the respondent's argument in this regard, but did not advance any evidence or submission that contradicted the argument.  Their primary argument is that the laundromat was situated in a "retail shopping centre".

4. Mr Doyle, whom I permitted to appear for the applicants in accordance with s 39(1) State Administrative Tribunal Act 2004, submitted that the definition of "retail shopping centre" was satisfied as at the date of the assignment of lease because Aussie Motors was to be regarded as part of the one cluster of premises.  He relied upon the commonality of the head lessor of lots 53 and 54 as required by the definition and such other matters as the access that Aussie Motors has from Chelmsford Road (which abuts lot 53) as well as Beaufort Street.

Consideration

1. Having regard to the definition of "retail shopping centre", the jurisdictional issue becomes whether the applicants' premises formed part of a cluster of five or more premises used wholly or predominately for carrying on a retail sales business (there being no evidence of any "specified business" at the material time), all of which (relevantly) had a common head lessor.  In restating the definition, for reasons that will become clear, it is useful to highlight the words that complete it, "whether the premises are in a single storey building or a multi-level building".

2. The relevant time of inquiry as to whether a retail shopping centre existed might in particular cases be an important issue.  As Mr Doyle pointed out, the number of tenancies in a complex might rise and fall over time.  In the course of the hearing, I indicated my view that the relevant time was the time of the assignment of the lease to the applicants.  This indication allowed the applicants the opportunity to fashion their strongest case in favour of the Tribunal having jurisdiction, and thus in my view served the purposes of the Act, which is beneficial legislation bestowing rights on tenants of commercial leases.  It also enabled the respondent to squarely meet that case.

3. At the effective date of the assignment of lease (13 September 2002), the laundrobar was one of five premises in the single building situated on lot 53.  Only the other four premises were used for the carrying on of a business involving the sale of goods by retail; I am satisfied the laundrobar itself was not such a business.  In those circumstances, it is necessary for the applicants to argue, as they did, that the premises occupied by Aussie Motors was part of the cluster.

4. The survey plan (exhibit A) indicates that the premises occupied by Aussie Motors had the amenities usually associated with a used car yard, namely, an office that occupies a small area and the remainder bitumised for displaying vehicles.  Having regard to the closing words of the definition of "retail shopping centre" which are reproduced above, I find that Aussie Motors occupied its own premises, which were separate from the cluster of premises, situated in a single storey building, of which the laundrobar was part.  The consequence of this finding is that the applicants' tenancy does not satisfy the definition of a retail shop lease under the Act, and this Tribunal does not have jurisdiction to entertain the application.

5. I originally had some misgivings about the finding I have reached, in light of the amalgamation of lots 53 and 54 in the descriptions used by the respondent and its project manager, in correspondence and documents such as the deed of agreement, of the premises to be redeveloped.  However, when the position is analysed in light of the statutory provisions as at the date of the assignment, it allows of only one outcome.

Conclusion

1. For these reasons, I conclude that the Tribunal has no jurisdiction to deal with the application, which therefore must be dismissed.

Orders

1. The order of the SAT is that the application is dismissed for lack of jurisdiction.

   I certify that this and the preceding 9 pages comprise the reasons for decision of the State Administrative Tribunal.

_______________________

T Carey

Member