Strathfield Group Limited v Overton
[2012] QCAT 37
•13 January 2012
| CITATION: | Strathfield Group Limited v Overton and Anor [2012] QCAT 37 | |
| PARTIES: | Strathfield Group Limited | |
| v | ||
| Mr David Overton Mrs Glenys Overton | ||
| APPLICATION NUMBER: | RSL071-10 |
| MATTER TYPE: | Retail shop leases matters |
| HEARING DATE: | 30 March 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Mr J Allen, Member |
| DELIVERED ON: | 13 January 2012 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | The Tribunal has jurisdiction to determine the application apart from the claim for unconscionable conduct. |
| CATCHWORDS: | Jurisdiction of Tribunal – Whether issue decided by Supreme Court – Unconscionable Conduct Retail Shop Leases Act 1994, ss 46A, 83, 103 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Strathfield Group Limited represented by Mr Angel, of Counsel instructed by Somerset Ryckmans solicitors |
| RESPONDENT: | Mr and Mrs Overton represented by Mr de Jersey, of Counsel instructed by Hopgood and Ganim solicitors |
REASONS FOR DECISION
Introduction
Strathfield was the tenant of the Overtons in respect of premises at Morayfield. The original lease was entered on 5 July 2000 and commenced on 5 August 2000 with a five year term. As a result of an amendment to the lease executed on 30 May 2005 the lease was due to expire on 4 August 2010. Strathfield did not pay the rent for June 2010 in the amount of $8,015 when required under the lease, on the 5th day of the month, and it was served with a notice to remedy breach[1] on 2 July 2010. An amount of $8,015 was paid by Strathfield to the Overtons on 8 July 2010.
[1] Section 124 of the Property Law Act 1974.
The Overtons terminated the lease and retook possession of the premises on 19 July 2010 on the basis of a claimed failure to remedy the breach. Correspondence was sent to Strathfield by the Overtons on 19 July 2010 confirming the Overtons’ actions and requiring payment of various sums totalling $53,503.00, including make good expenses of $36,481.00 and unpaid rent. Payment of that amount was required by the Overtons before Strathfield would be allowed to remove its fixtures, fittings and stock in trade.
Strathfield’s solicitors advised the Overtons in reply that the decision to re-enter into possession of the premises and to lock out Strathfield constituted a repudiation of the lease entitling Strathfield to treat the lease as being at an end and to seek damages. It was noted that the June rent had been paid and it had been accepted by the Overtons. It was stated that the lease of the premises is due to run out at the end of the month and that Strathfield had secured new premises and that Strathfield was in the process of transferring stock and property to the new premises. A request was made to re-enter the premises to continue the orderly transfer process of its stock and property. If an appropriate response was not received the Overtons were advised that Strathfield would approach the Tribunal for urgent relief.
The Overtons replied on 20 July 2010 that their position was as stated in their letter of 19 July 2010 and that Strathfield should advise if they have evidence that the June rent had been paid. In reply, on 20 July 2010, Strathfield’s solicitors advised that the June rent was paid on 8 July 2010, while noting that the Overtons claimed that they are entitled to apply this payment to the July rent. Strathfield offered to pay the July rent if the Overtons would allow them to re-enter the premises and not interfere with their quite (sic) enjoyment of the premises.
This was rejected by the Overtons and Strathfield’s solicitors advised that they would make an urgent application to QCAT. They also gave notice that not all of the property on the premises was owned by Strathfield and requested access to remove those items. The Overtons advised that they had granted access to staff to remove personal tools of trade but in regard to other items they stated they would retain possession pending the order of the Tribunal.
Strathfield’s solicitors made application to the Supreme Court of Queensland on 22 July 2010 for the following order:
That upon the applicant making payment today of the sum of $8,015.00 into the trust account of Cronin litigation lawyers (the Queensland agents for the applicant’s solicitors) or alternatively by way of payment to court;
1. The Applicant by itself, its servants, officers or agents, be entitled to immediate access to the property located at 125 Morayfield Road, Morayfield in the State of Queensland (“the premises”) for the purpose of removing goods and chattels which are the property of the Applicant and/or leased by the Applicant and/or its servants and/or agents and/or property held on consignment by the Applicant of and including the property referred to in para 12 of the affidavit of Ms Zoe Bojanac sworn 22 July 2010.
2. Such further or other relief as appropriate.
3. The Respondent pay the Applicant’s costs of and incidental to the application.
That application was dismissed by the Honourable Byrne J on 22 July 2010.
Following this, the Overtons advised Strathfield’s solicitors on 23 July 2010 that the lessor would remove the goods into storage in order to commence the substantial make good works. Strathfield was advised that if they wished to retake possession of the goods they could do so on payment of the amount of $53,503.50 mentioned above and legal costs of $3,300.00. Strathfield’s solicitors replied quoting section 45 of the Retail Shop Leases Act 1994 that the Overtons had no right to deal with the goods and chattels on the premises. By separate correspondence they advised the details of third parties whose goods were held at the premises or who had security interests over goods. The Overtons, on 23 July 2010, denied that the lease was subject to the Retail Shop Leases Act 1994. They stated that even if it did apply, section 45 required that before the lessee could deal with goods by way of security, that an agreement was entered between the lessor and the security holder[2].
[2] Section 45(2) of the Retail Shop Leases Act 1994.
Strathfield’s solicitors then filed a notice of dispute on 29 July 2010 with the Tribunal seeking a speedy and commercial resolution of the dispute by way of immediate release of Strathfield’s goods and chattels and/or by way of compensation payable to them. As is required[3] the matter was first subject to mediation and then referred to the Tribunal when it was not able to be resolved. The Overtons had agreed to release the goods and chattels in the premises the property of Strathfield and the third parties into the custody of Strathfield on 25 August 2010.
[3] Sections 55 and 63 of the Retail Shop Leases Act 1994.
Strathfield’s points of claim allege that it suffered loss and damage due to the Overtons’ breaches of and repudiation of the lease. Further that the Overtons engaged in conduct which was unconscionable[4] in accordance with the Retail Shop Leases Act 1994 (the Act) and under common law principles and as a result Strathfield suffered loss and damage.
[4] Section 46A of the Retail Shop Leases Act 1994.
[10] The quantum of Strathfield’s claim[5] is as follows:
[5] Exhibit 3.
Revenue lost due to locked-out period 19/7/2010-23/7/201 5 days
Average daily revenue $1,556.44 $ 7,782.20
Employment cost paid
For Morayfield employees during LOP $ 2,262.20
Relocation and other incidental costs $ 3,995.83
Capitalised assets $ 44,412.51
Opportunity cost on stock acquired for new premises
Stock transferred to new premises $ 69,398.10
Stock purchased from third parties $ 46,472.00
Total stock to start trading for new premises $115,870.10
Realisation margin if spent on other stores 34.3% $ 39,697.10
Depreciation of old premises $ 217.23
Discount on stock sold from old premises sold
below RRP $ 44,198.00
Revenue lost on first weeks trading $ 7,422.01
Promotional cost expended for new premises $ 2,241.42
Total $152,228.42
Jurisdiction
[11] The Overtons’ points of defence raised the question of whether the Tribunal has jurisdiction in respect of the claim on the following grounds:
On 22 July 2010 Strathfield applied to the Supreme Court of Queensland seeking the relief mentioned above.
After a hearing on 22 July 2010 the Supreme Court proceedings were dismissed.
The relief sought by Strathfield in these proceedings arises from allegations to the effect that:
(a)The Overtons’ termination of the lease between Strathfield and the Overtons dated 5 July 2000; and
(b)The Overtons’ notice to remedy breach of covenant dated 21 June 2010 issued prior to the termination of the lease,
are invalid.
The decision in the Supreme Court proceedings finally determined Strathfield’s right to access the goods remaining in the premises subject to the lease.
Further, the Overtons say that the decision in the Supreme Court proceedings by necessity determined that the lease had been validly terminated.
In the premises, pursuant to section 103(1)(a)(iii) of the Retail Shop Leases Act 1994 the Tribunal has no jurisdiction to hear the current dispute.
[12] The following submissions were made in the Overtons’ points of defence in regard to the issue of unconscionable conduct:
Section 46A commenced on 24 June 2001;
As a consequence of section 13(6) of the Act, Part 6, Division 8A (of which s 46A is a part) does not apply to the lease.
Absent Part 6, Division 8A of the Act, the Tribunal does not have the jurisdiction to make any order in respect of any alleged claim of unconscionability;In the premises, the Tribunal has no jurisdiction to consider the dispute in so far as it relates to any claim relating to alleged unconscionable conduct.
[13] The Tribunal made directions that the issue of jurisdiction be determined as a preliminary application and submissions were made by both parties in writing and at the hearing on 30 March 2011.
Strathfield’s submissions on jurisdiction
[14] Strathfield submitted that the Supreme Court proceedings were for the release of the goods and chattels in the premises on terms. That they were necessarily interlocutory in nature rather than final. Had the relief been granted on condition that Strathfield pay $8,015.00 (one months rent) either into its solicitors trust account or into court, the entitlement of the Overtons would not have been determined and would have had to be determined subsequently. That Mr Overton had claimed to the court Strathfield was obliged to pay the Overtons about $36,481 in make good expenses as well as the rent. That Byrne J stated: “Well there is a problem, though in seeking to invoke the courts equitable jurisdiction if in respect of the transaction which gives rise to the claim there is a liability to pay a sum of money and you are not proposing to pay it.”
[15] His Honour (Byrne J) told Strathfield’s counsel that, in contested interlocutory proceedings, the court would consider not exercising its jurisdiction in Strathfield’s favour unless it paid into court the amount the Overtons claimed were owed to them. His Honour was then told Strathfield would only pay into court the amount of $8,015 representing one months disputed rent, and not the amount of $36,481 claimed for make good expenses. On hearing this, his Honour declined to enter into consideration of the merits of the application and dismissed it.
[16] It was noted that Mr Overton had applied for an order that Strathfield pay the rent and Byrne J had stated that:
“I can’t do that, that’s an application for final judgment in proceedings that haven’t been issued… So if there is no proposal to pay any part of the outstanding obligation in respect of the costs of the remedial work, that’s a basis I can refuse Mr Howes application but that’s no reason for me to start making orders requiring them to do anything.”
[17] It was submitted that the only thing the court decided was not to exercise its jurisdiction, because Strathfield failed to satisfy what the court found to be a threshold requirement for the exercise of its jurisdiction, namely that Strathfield pay into court the amount claimed by the Overtons to be payable to them. So the court did not decide any issue and if it did it was only on an interlocutory basis and section 103 must refer to a final determination. Submissions were made as to what constitutes a final determination. That is the judgment or order as made finally determines the rights of the parties[6]. The existence of a right to make another application of the same kind, such as an application to set aside a default judgment, is decisive of whether the order is interlocutory or not.
[6] Licul v Corney (1976) 180 CLR 213 at 215.
[18] It was submitted that the order made on 22 July 2010 did not finally determine the rights of the parties and it remained open for Strathfield to make another application of the same kind. It was also submitted that the retail tenancy dispute before the Tribunal is based on multiple issues in dispute between the parties and it is fanciful that all these issues were determined by the Supreme Court.
[19] In regard to the unconscionable conduct claim Strathfield accepts that the unconscionable conduct provisions do not apply to conduct prior to the commencement of the section[7] and that the provisions in regard to unconscionable conduct do not apply to a retail shop lease entered prior to the commencement of the division in which they are contained[8], which is 24 June 2001. It is submitted that the original lease commenced on 5 August 2000 and ended on 4 August 2005. In May 2005 a registrable instrument amending the lease was entered into and the term of the lease was changed so that it ended on 4 August 2010.
[7] Section 46A(4) of the Retail Shop Leases Act 1994.
[8] Section 13(6) of the Retail Shop Leases Act 1994.
[20] It was submitted that the amendment to the lease made in May 2005 satisfies the definition of lease[9] in the Act. This is because it is an agreement by the Overtons to give to Strathfield for valuable consideration the exclusive right to occupy the premises from 5 August 2005 to the end of 4 August 2010. Reference is made to section 11 of the Act in regard to when a lease is entered that is on the earlier of:
(a)the date the lease becomes binding on the lessor and the lessee; and
(b)the date the lessee entered into possession of the leased shop.
In Strathfield’s submission, notionally, one must add at the end of the section the words “pursuant to the retail shop lease”. Strathfield makes this submission because if, for example, there had been the original lease (from 5 August 2000 to the end of 4 August 2000) and then a separate lease document for the term of 5 August 2005 to 4 August 2010, without a break in possession, the second retail shop lease could not be said to have commenced on 5 August 2000, the commencing date of the first lease. Accordingly, the amended lease commenced on 5 August 2005 and thus section 46A applies to conduct engaged in connection with it.
[9] Schedule Dictionary of the Retail Shop Leases Act 1994.
[21] It is then alleged that the Overtons procured the stamping and registration of the lease by fraud as the amendment to the lease was not probably witnessed[10]. This is said to have the affect of vitiating the indefeasibility of the lease in favour of the Overtons[11]. In which case the indefeasibility granted by registration of the amendment to the lease has been vitiated and the original lease expired at the end of 4 August 2005. After that date, Strathfield held over as a monthly tenant under clause 18.08 of the lease “on the terms covenant and conditions of the lease so far as they applied to a monthly tenancy”. Section 46A would apply to conduct in connection with a monthly tenancy that commenced on 5 August 2005.
[10] Section 162 of the Land Titles Act 1994.
[11] Section 184(3) of the Land Titles Act 1994.
[22] It was submitted at the hearing in regard to the Overtons’ claim that the issue was dealt with by the Supreme Court that the term “issue” has a technical meaning. This is in accordance with a decision[12] of Fryberg J in which he stated
“It refers to a point which the parties have chosen to litigate, as demonstrated by the pleading. It is difficult to see how something can be an issue between parties before each has filed a pleading.”
It is noted that this was in regard to s 97(1) of the Retail Shop Leases Act 1994 which governs the jurisdiction of mediators.
[12] Mee Wah To v Choi [2011] QSC 2 at para 30.
[23] A list of the issues in Strathfield’s points of claim and the Overtons’ denial of these in their points of defence was then cited. Strathfield claims that none of these issues have been decided by the Supreme Court so section 103 does not apply. That if any issue was decided it was whether between 19 July and 22 July the Overtons were entitled to retain Strathfield’s goods and Strathfield did not get access to its goods until 25 August. The entitlement of the Overtons to the amount they claim was not decided. In terms of section 103 decided by a court must mean finally decided by a court and not on an interlocutory basis, otherwise there would be no Tribunal jurisdiction if there was an interlocutory determination. Here nothing was decided by the court. On its face, the application to the Supreme Court was interlocutory; it is premised on payment to instructing solicitors or into court. All indications are that there is a substantial liability for damages which has accrued to Strathfield. The Supreme Court dismissed the application where there was a claim by the landlord for money and the court would not exercise jurisdiction in equity unless the tenant would pay the amount claimed into court. There was no issue determined by the Court so the jurisdiction challenge must fail.
[24] In regard to the question of whether the unconscionable conduct provision under s 46A applies, it was submitted at the hearing that the critical point is whether the document is a lease pursuant to the definition of lease in the dictionary to the Act. Is it an agreement to give someone a right to occupy premises? In absence of this document the lease would have terminated on 4 August 2005.
[25] Submissions were also made in regard to the execution of the lease by the Overtons in terms of the fact that in the material provided by the Overtons’ one copy of the amendment to the lease was not witnessed. As a result of these submissions Mr Overton provided oral testimony at the hearing which is set out below.
Overtons’ submissions on jurisdiction
[26] The Overtons submitted that the essence of the claim is that they were not entitled to forfeit the lease and in breach of the lease re-entered the premises and between 19 July 2010 and 25 August 2010 wrongfully refused to release Strathfield’s stock causing it to suffer loss and damage. That this claim should be dismissed because Strathfield applied unsuccessfully to the Supreme Court on 22 July 2010 for an order that it was entitled to re-enter and recover the goods. The Court vindicated the Overtons’ right to possession of Strathfield’s goods pursuant to clause 18.07 of the lease because Strathfield refused to pay into court security for make good works. Strathfield cannot sustain a tenable claim (in this Tribunal or elsewhere) for damages for detention of goods.
[27] The Overtons accepted that the Supreme Court application was interlocutory, not final because Strathfield could have made another application for access to the premises for the purpose of removing its stock. But it did not make another application for access to remove its stock.
[28] That the Tribunal does not have jurisdiction in respect of an issue which has been decided by the Supreme Court[13]. The Supreme Court held the Overtons were entitled to possession of the stock pursuant to clauses 9.06 and 18.07 of the lease. If Strathfield’s loss and damage was caused by other than the dispossession of its stock during the period when the Supreme Court held the Overtons were entitled to possession of the stock then these submissions on jurisdiction would be without substance. But Strathfield’s points of claim do not put its claim other than on that basis.
[13] Section 103(1)(a)(ii) of the Retail Shop Leases Act 1994.
[29] It is submitted that the claim in regard to unconscionable conduct has no substance because it is made either pursuant to s 46A of the Retail Shop Leases Act 1994 which does not apply to the lease as it was enacted after the lease was entered[14], or “under common law principles” which are outside the Tribunal’s jurisdiction[15]. It is submitted that the lease was amended and no new lease was entered. It is noted that Strathfield cites no authority to support its submission that an amendment of a lease is, for the purposes of construing section 46A of the Act, a new lease and that none can be found by the Overtons.
[14] Section 13(6) of the Retail Shop Leases Act 1994.
[15] Section 103 of the Retail Shop Leases Act 1994.
[30] In regard to the question of fraud in the witnessing of the amendment of the lease it is submitted that both of the Overtons’ signatures were witnessed. Strathfield does not contend that it was defrauded when it agreed to the amendment. There is no logic to the case that the Commissioner of Duties was defrauded and the lease was entered by the parties and stamped accordingly.
[31] In submissions at the hearing it was noted that make good expenses were not being claimed and there would be no counterclaim. That the application turned on clause 18.07 of the lease which regulates the conduct of the parties after the landlord re-enters possession. That the Supreme Court application was refused because Strathfield did not provide all monies to the Overtons. While it is accepted that the Supreme Court application was interlocutory and another application could have been made, Strathfield had to secure its obligations under the lease. The Supreme Court determined that the Overtons were entitled to demand the payment of the $36,481. Reference was made to Strathfield’s particulars of the claim[16] and it was noted that Strathfield did not intend to renew the lease and some of the claim relates to expenses which would have been incurred when Strathfield moved out.
[16] Exhibit 3.
[32] The ultimate submission is none of the loss claimed was caused by the Overtons. The issue which was determined by Byrne J was the right to possession at the time of the hearing. That if the day after Byrne J had dismissed the application, Strathfield had offered to pay money into solicitor’s trust account then they would not have suffered loss.
[33] Mr Overton filed an affidavit[17] in regard to the matters raised by Strathfield in regard to the order for payment of the rent requested by the Overtons and the execution of the lease amendment. Mr Overton stated that while he had asked his Honour Byrne J to make an order that the rent be paid he had made no formal application to the court, either before or during the hearing for orders to that effect. In regard to the execution of the lease Mr Overton stated that the copy of the amendment to the lease, which was annexed to his earlier affidavit, was one he held and that exhibited to this affidavit is a copy of the registered lease.
[17] Exhibit 2.
[34] Mr Overton gave oral evidence at the hearing and confirmed that to the best of his knowledge the signatures of him and his wife were witnessed by one of his employees, a Mrs Drew. He could not explain why only one copy of the amendment to the lease was witnessed.
Discussion
[35] Is Strathfield’s application about an issue which was decided by the Supreme Court decision of Byrne J on 22 July 2010? Byrne J had dismissed an application by Strathfield to enable re-entry to the premises for the purpose of removing goods and chattels the property of Strathfield and others. The application by Strathfield to the Tribunal asked for the immediate release of Strathfield’s goods and chattels. On its face it would appear that the applications are about the same issue, the possession of goods and chattels and that there is an argument for deciding that the Tribunal does not have jurisdiction as the issue has been decided by the court[18].
[18] Section 103(1)(a)(iii) of the Retail Shop Lease Act 1994.
[36] The question is what was decided by the court. All parties agree that Byrne J dismissed the application because Strathfield would not pay the amount claimed by the Overtons for make good expenses into a solicitor’s trust account or the court. That is the court would not exercise its equitable jurisdiction unless the amount claimed was secured. The Tribunal notes from the Supreme Court transcript that Mr Overton would have been satisfied if the amount requested had been paid to a solicitor’s trust account or into court. He therefore accepted that the entitlement to payment of the make good expenses was contested. The Supreme Court even refused a request by Mr Overton to order Strathfield to pay the July rent because no application was before the Court.
[37] The Overtons argue that the Supreme Court held they were entitled to possession of the goods and chattels under the lease. There is no finding in the court’s transcript in that regard. Byrne J ascertained the claims of the Overtons and put it to Strathfield that if it wished him to exercise equitable jurisdiction then they would have to pay the monies requested by the Overtons into court or a solicitor’s trust account. When they were not prepared to make provision for the make good expenses he dismissed the application. That is, he refused to exercise an equitable jurisdiction to assist Strathfield. That is not the same thing as finding an entitlement for the Overtons to retain the goods. They did retain the goods but whether they were entitled to or not was a moot point.
[38] The Overtons submitted that Strathfield could have made a further application and it failed to. That is not the case. Strathfield, in accordance with the Act, submitted the matter for mediation[19] and it was then referred to the Tribunal by the mediator when a resolution could not be reached[20]. The application to the Tribunal is the application for final relief and the application to the Supreme Court was an interlocutory application and this has been accepted by the Overtons.
[19] Section 55 of the Retail Shop Lease Act 1994.
[20] Section 63 of the Retail Shop Lease Act 1994.
[39] The Tribunal is satisfied there is no issue in respect of the current application which has been decided by the Supreme Court decision of Byrne J of 22 July 2010 and that section 103 of the Retail Shop Leases Act 1994 does not limit the Tribunal’s jurisdiction to determine the application.
[40] In regard to the claim for unconscionable conduct this is made under s 46A of the Act and under common law principles. Section 46A of the Act commenced on 24 June 2001 and in accordance with s13(6) of the Act that section and its accompanying provisions apply only to a lease entered after commencement of the division. The original lease here commenced on 5 August 2000 and on its face the unconscionable conduct provisions do not apply.
[41] Strathfield argues that the amendment of the lease which was executed on 30 May 2005 constitutes a new lease which was to commence on 5 August 2005. The Overtons note that there is no precedent to support this contention.
[42] Strathfield noted that s 11 of the Act which controls when a lease is entered. That is either on the date the lease becomes binding or the date the lessee enters possession of the leased premises. Strathfield raised the issue of a renewed lease being deemed to commence before it was executed as the lessee will have continued in possession.
[43] This is not a case though of a fresh lease being entered upon renewal. The amendment to the lease changed the date of termination and the rent only. It is important that this agreement was executed on 30 May 2005, before the expiry of the lease and took effect immediately. It is not as suggested by Strathfield that a new term commenced on 5 August 2005.
[44] In accordance with the amendment to the lease the original term did not terminate on 4 August 2005 but terminated on 4 August 2010. There is no new lease and for that reason s 46A of the Act does not apply unless there is some issue with the agreement to amend the lease.
[45] Strathfield raised the question of the witnessing of the amendment being defective as a result of one agreement being witnessed and the other not. The Tribunal accepts Mr Overton’s evidence that the agreement to amend the lease which was stamped and registered was properly witnessed and that the copy he had was not witnessed. There is no defect in the agreement to amend the lease.
[46] The Tribunal finds that the unconscionable conduct provisions of the Retail Shop Leases Act 1994 do not apply here as the lease was entered on 4 August 2000 before the commencement of those provisions.
[47] As to a claim for unconscionable conduct in accordance with common law principles the Tribunal only has the jurisdiction given by the Retail Shop Leases Act 1994. This provides that if the Tribunal finds a party to the dispute engaged in unconscionable conduct certain orders can be made[21]. Section 46A of the Act provides that a lessor must not engage in unconscionable conduct. In deciding whether a party to a retail tenancy dispute has engaged in unconscionable conduct the Tribunal may have regard to the matters set out in the Act[22]. The jurisdiction in regard to unconscionable conduct therefore relies on the provisions of the Act in that regard applying and as determined above they do not apply to a lease which was entered before the commencement of the division.
[21] Section 83(3)(a) of the Retail Shop Leases Act 1994.
[22] Section 46B of the Retail Shop Leases Act 1994.
[48] The Tribunal is satisfied that it has no jurisdiction to determine an application in regard to unconscionable conduct.
Orders
The Tribunal has jurisdiction to determine the application apart from the claim for unconscionable conduct.
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