To v Choi
[2013] QCATA 27
| CITATION: | To v Choi [2013] QCATA 27 |
| PARTIES: | Mee Wah To (Applicant/Appellant) |
| v | |
| Eugene Choi (Respondent) |
| APPLICATION NUMBER: | APL412-11 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Hon James Thomas AM QC, Judicial Member |
| DELIVERED ON: | 11 February 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | The appeal is dismissed. |
| CATCHWORDS: | APPEAL – Retail Shop Leases Act1994 dispute – claim for damages for mesne profits, compensation and other claims – damages awarded for breach of covenant of quiet enjoyment – whether such claim properly litigated – whether reasons adequate – reference to causes of action in pleading – whether landlord denied natural justice – whether Appeal Tribunal may uphold judgment on basis different from that stated by original Tribunal – whether fresh appeal needs to be brought by respondent who seeks variation of basis of judgment it seeks to uphold – where conduct of case shows issue adequately litigated Retail Shop Leases Act 1994, ss 63,64,83,103 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (‘QCAT Act’).
REASONS FOR DECISION
This is an appeal against the decision of a three Member QCAT Tribunal concerning a retail shop lease dispute between a landlord and a tenant.
The appellant landlord is Ms Mee Wah To and the respondent tenant is Ms Eugene Choi. It will be convenient to refer to the parties as “the landlord” and “the tenant” respectively.
The leased premises comprise part of a small shopping centre owned by the landlord at Lisson Grove. The main issue in litigation was whether the lease was in respect of 148 square metres as specified in the written lease, or whether it related only to an area of 44 square metres (an existing shop surrounded by other areas owned by the landlord) as alleged by the landlord. The area over which the landlord denied that the tenant was entitled to possession included a residential unit, garage and areas around the shop described as new enclosed area, shop extension and new store. Without those areas the shop was an ‘island’, and the landlord contended that access to the shop was dependant on the landlord’s permission and license.
The litigation commenced in QCAT, and was then referred to the Supreme Court on application by the landlord for rectification of the lease. On 24 January 2011, Fryberg J referred it back to QCAT for determination. QCAT jurisdiction therefore arose both originally and under s 64(1)(a)(iii) of the Retail Shop Leases Act 1994 (‘RSL Act’).
The Tribunal, in a carefully reasoned judgment, found in favour of the tenant and declared the lease to be as contained in the written instrument. It ordered the landlord to deliver up possession of the balance of the 148 square metres demised premises over which it had denied the right of possession to the tenant. It further ordered the landlord to pay the tenant $10,000.00 by way of compensation for a failure to allow quiet possession of the whole of the demised area. It further ordered the landlord to repay a specific sum of $495.00 with interest.
The only part of the order against which this appeal has been brought is the order for payment of $10,000.00 by way of compensation.
Jurisdiction
The primary Tribunal’s jurisdiction to determine this dispute arose under ss 64 and 83 of the RSL Act.
The appellant contends that the present appeal is a strict appeal on a question of law only under s 146 of the QCAT Act, as distinct from an appeal in the nature of a rehearing under s 147. I am prepared to proceed on the basis contended.
Grounds of appeal
The appellant landlord raised four main complaints.
1.Denial of procedural fairness in that:
(i)The tenant did not specifically seek compensation for a failure to allow quiet possession of the whole of the demised area;
(ii)The Tribunal did not inform the parties of its intention to make the decision; and
(iii)The Tribunal did not ask the parties to address whether the Tribunal should make the decision.
2.The absence of any evidence that:
(i) The [tenant] was not allowed quiet possession of the whole of the demised area;
(ii) The Tribunal made the decision in the absence of any evidence that the development of the tenant’s business was handicapped;
(iii) The Tribunal made the decision in the absence of any evidence that the [landlord] was culpable for any loss of quiet enjoyment by the [tenant] in circumstances where part of the demised area was occupied by a third party and with the tenant’s consent.
3.The Tribunal ignored the evidence that the [tenant] had possession of the whole of the demised area since she withdrew her consent for a third party to occupy part of the demised area.
4.The Tribunal provided inadequate reasons for the decision.
Discussion
Having made extensive findings of the circumstances surrounding the making of the agreement for lease, its preparation, and the conduct of the parties thereafter, the Tribunal rejected the landlord’s claim for declaratory relief which was in effect a substitute for the rectification claim she desired to bring. It then dealt with the monetary claims that the tenants had brought.
The Tribunal’s reasons concerning the assessment of damages or compensation are contained in the following passage:
(a)Mesne profits
Ms Choi seeks an order that Ms To pay mesne profits or rent for the period in which Unit 1 and the garage was, as we find, wrongly denied to them. She calculates rent at $26.22 per day and seeks interest on any amount awarded.
Unit 1 is not approved for occupation as a residence. Ms Choi could not have obtained rent for it. Nor could she have sub-let any part of the ground floor without the consent of Ms To, consent, which was unlikely to be given by her, and arguably, at least, unlikely to be enforced by a court. We do not propose to make an award for loss of potential rent.
However, Ms Choi was denied quiet enjoyment of the area to which she is entitled, and in consequence the development of her business was handicapped. We propose to award her compensation of $10,000 on that account.
Original claims for relief
The tenant’s original application in the QCAT proceedings included the following claims in the ‘relief sought’ section of the claim:
2. An injunction requiring the respondent to forthwith do all such things as are necessary to deliver up to the claimant possession of the whole of the said 148 square metres.
3.An injunction restraining the respondent, her servants and agents from thereafter interfering with claimant’s exclusive possession and quiet enjoyment of the whole of the said 148m2.
4.An order that the respondent pay to the claimant:
4.1Mesne profits or rent from 1 October 2009 until the date she provides possession of the said 148m2 to the claimant, at the rate of 37.69 per day;
4.2Compensation in the nature of interest on the amount awarded under 4.1 at the rate of 10% per annum…
Further, the ‘points of claim’ portion of the notice of dispute includes the following:
11. At all times since the commencement date of the lease on 1 October 2009, the claimant has been entitled to exclusive possession of the whole of the premises, comprising the area of 148m2 shown on the plan annexed to the lease.
12.In the premises:
12.1By the lease, premises comprised an area of 148m2; and
12.2The respondent is liable to pay to the claimant mesne profits or rent in respect of the 37% of the premises occupied by her tenant without the consent of the claimant, from 1 October 2010 until possession is given to the claimant.
13.The amount of the mesne profits or rent referred to in 12.2 is $37.69 per day calculated as follows:
13.1Rental under the lease: $37,180.00 inc GST per annum
13.237% of that amount per annum: $13,756.60
13.3Daily rate (1/365 of $13,756.60): $37.69
Denial of natural justice
The main question here is whether the compensation claim was sufficiently pleaded or litigated before its determination.
I do not think there is any merit in grounds 1(ii) or 1(iii) which complain of lack of opportunity to address on this issue. Obviously the central issue in the litigation was determination of the true area that the parties had agreed to lease, about which the parties had been in ongoing dispute. But the monetary claims, including the reimbursement of particular payments were always in issue, and there does not appear to have been any request for an order for division of issues or for piecemeal determination of the case. The parties presented their evidence in relation to the monetary claims and the tenant’s case included a report from an expert (Mr Webster) quantifying the rental value of the disputed area. Evidence was also presented on claims made by the landlord for legal fees, and on recovery of $495.00 paid by the tenant under the duress of an incorrect notice of breach of covenant.
Plainly both parties had full opportunity to address on all issues including the claim for compensation for wrongful denial of possession. In such circumstances the receipt by the unsuccessful party of an undesired or unexpected result is hardly a deprivation of natural justice. There is no merit in this ground.
I will return later to the landlord’s argument on the pleading point, and whether the judgment based on denial of quiet enjoyment of the relevant area is sustainable.
Absence of evidence
Counsel’s submissions on this appeal are carefully confined to the allegation of total absence of evidence on the points raised in the notice of appeal. If made out, those submissions would disclose an error of law.[1]
[1] Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 355.
The issues, the subject of these submissions, included reference to evidence tending to suggest that an agent of the landlord had given the tenant permission to use the laundry, of alleged consent of the tenant to the residential unit being occupied by Mr George Miu for part of the period, and of acceptance by the tenant of the exclusion for which the landlord contended.
It is enough to say that there is evidence supporting each and every of the findings made by the Tribunal, and they were not falsified by the arguments mentioned in the previous paragraph. I am prepared to say further that I agree with the Tribunal’s findings in these areas.
There is also evidence from which the Tribunal could conclude that the tenant’s conduct of her business (convenience store and take away Chinese food) was handicapped by the landlord’s denial of possession of the whole of the leased area.
As to paragraph [3] of the points mentioned in paragraph [9] above, I do not understand this point to have been pressed in the appellant’s submissions.
Were the reasons inadequate?
In its determination of the principal point (determination of the area that the parties agreed to lease) the Tribunal gave fulsome reasons. The basis of the litigation was whether the tenant had a right to possession of the disputed areas which had been denied to her. That she was entitled to quiet possession of such areas if they were within the lease is indisputable.
The Tribunal’s reasons need to be considered in the light of remarks made by McPherson and Davies JJA in Cypressvale Pty Ltd v Retail Shop Leases Tribunal[2] in relation to the Retail Shop Leases Tribunal:
[A] Tribunal is not intended to confine itself to acting only on evidence admissible in a Court of Law … The Tribunal obviously has some judicial attributes; but it is plainly not intended simply to mimic a court of law, or to conduct its proceedings in the manner of a court, or even to decide disputed questions in precisely the same way as a court. The “adequacy” or otherwise of its reasons must be viewed in the light of these considerations.[3]
[2] [1996] 2 Qd R 462.
[3] Ibid 485.
The basis of the determination that the tenant was denied quiet enjoyment is made plain by the reasons. It was not suggested that the landlord resorted to physical violence or the erection of barriers, but rather that the landlord’s actions and statements reasonably inhibited the tenant from making use of the disputed area. The tenant understandably avoided confrontation and further hostile action from the landlord. Continuing demands were made on the landlord’s behalf, including her solicitor's letter of the will of 8 April 2010 denying her use of the disputed areas.
The inferences of inhibition in running the tenant’s business, of commercial value of the relevant premises were open, and the finding that the business was ‘handicapped’ were all open and adequately explained.
The original claim was for $20,000.00. Mr Webster’s report would have justified an award in the area of $15,000.00. The Tribunal was faced with a commercial handicap which had continued for a period of about two years up to the date of judgment, caused by the deliberate acts of the landlord who stood behind the acts of her dishonest agent. In the circumstances, the assessment of $10,000.00 seems to be conservative, and to be justified by the facts found.
It could not be held that the Tribunal’s reasons were so lacking that it failed in its duty, or that error of law was committed. There is no merit in this ground of appeal.
The pleading point
It is obvious from the claims quoted in paragraphs [12] and [13] above that the tenant put in issue her entitlement to damages or compensation for the acts of the landlord in failing to give the possession of the areas to which she was entitled.
The RSL Act gives the Tribunal wide powers in the resolution of such disputes. Section 83 of the RSL Act gives the power to make orders (including declaratory orders) that it ‘considers to be just to resolve a retail tenancy dispute’. There is also specific power to make ‘an order requiring a party to the dispute to pay an amount (including an amount of compensation) to a specified person (a payment order)’.[4] It is unnecessary to determine whether this relates only to a determination of statutory ‘compensation’ under division 7 of Part 6 (s 43), or whether it confers a wider discretion. There is no doubt about the Tribunal’s power to award damages in such proceedings. The appellant's complaint is that they were not claimed with sufficient particularity. For the purposes of the present discussion it is enough to note that the Tribunal’s powers are broadly expressed, and there is a clear intent to have such disputes decided without undue technicality.
[4] RSL Act s 83(2)(b).
The legal labels that were attached in the present Notice of Dispute included claims for an injunction and mesne profits. The claim expressly alleged an entitlement to ‘quiet enjoyment of the whole of the said 148 square metres’.
In my view, the parties effectively litigated the issue of the tenant’s entitlement to quiet enjoyment of the disputed area, and it was clear that she was claiming damages or compensation for those acts. It may be noted by way of comparison that since the passage of Lord Cairns’ Act in 1858, Courts have had the jurisdiction to award damages either in addition to or in substitution for an injunction. There was in the present case no doubt that the central issue was the breach of the lease by the landlord through failure to give the tenant the possession to which she was entitled. The main arguments on this appeal concern the proper label that ought to have been affixed to the litigation.
Such labels are often convenient signposts to the parties, but they are not an essential part of a pleading, which depends upon the material facts alleged and in issue. There is no doubt that on the conduct of this case a moderate global recompense to the tenant of $10,000.00 was reasonably open, whether the cause of action was identified as damages for breach of the agreement for lease, breach of the obligation to give quiet enjoyment of the leased premises, damages for trespass, mesne profits, or damages in lieu of the requested injunction against interfering with the tenant’s quiet enjoyment.
In the event the Tribunal chose to regard the landlord’s act as a breach of the quiet enjoyment obligation, which it plainly was. On the evidence in this case, subject to the pleading point, a similar award could have been made under all or any of the causes of action mentioned in the previous paragraph.
The point taken by the appellant is that this particular route to judgment was not specifically pleaded. However the appellant’s submissions fail to suggest any different course that the litigation could have taken, or any evidence that the landlord would wish to have called if any such amendments had been sought.
In short it is difficult to see any genuine element of surprise in the relevant assessment of damages on the case that was litigated. The basis of the assessment was breach of a covenant for quiet enjoyment of the demised premises in litigation in which the tenant expressly alleged entitlement to exclusive possession of the whole of the premises (clause 11 of the claim), and expressly claimed that the landlord should be restrained from ‘interfering with claimant’s exclusive possession and quiet enjoyment of the whole of the said 148 m2’ (clause 3 of the relief sought). The landlord’s express denials of interference with the tenant’s possession were litigated and rejected by the Tribunal. No basis has been suggested on which matters could have taken a different course if the process of formal amendment had been gone through.
If it were necessary to do so I would even at this stage grant leave to the respondent tenant to make all necessary amendments to exhibit B of its notice of dispute to include an alternative claim of damages for breach of covenant, allow the appeal, substitute the same judgment and make no order for costs. But I do not consider it necessary to do this, because it was reasonably open to the Tribunal to have made the same order based on the express claim for mesne profits, or, as it was referred to in argument, mesne rent.
The Tribunal mentioned certain problems it saw in allowing the claim for mesne rent, and stated ‘we do not propose to make an award for loss of potential rent,’[5] and proceeded to make an award for denial by the landlord of the tenant’s quiet enjoyment rights.
[5] See above paragraph.
The problems mentioned by the Tribunal did not necessarily preclude the making of a valid award for mesne rent. Such an award was not limited to what the tenant could personally have obtained by leasing the premises to a third party. In my view such an award could and should have been made on the basis of the rental value of that part of the demised area from which she had been excluded. The area relied on was described as the garage and Unit 1. This area obviously had both residential and commercial value, and the best evidence of its net market rental value was that of Mr Webster, whose evidence justifies allowance of an award substantially greater than $10,000.00. The Tribunal, therefore, in my view did not need to find an alternative basis such as breach of quiet enjoyment to justify its award.
I do not understand counsel for the landlord on this appeal to contend that the Tribunal would have erred if it had upheld the tenant’s claim for mesne rent. Certainly no submissions were made to refute the tenant’s entitlement to an award on that basis, other than the pleading point. The concern here of the landlord's counsel is that the tenant has not filed a notice of cross-appeal. He therefore submits that it is not open to the tenant to contend that the Tribunal ought to have given the same judgment on a different basis. He contends that the tenant ought not be allowed to argue this alternative basis for upholding the order appealed from.
I disagree. This is not a situation where a party seeks to take advantage of a point not raised or argued below. The claim for mesne rent was always a part of the tenant’s specific pleaded case. There are many situations where Appeal Courts and Tribunals uphold a judgment for reasons that vary from those of the original Court or Tribunal, and the main inhibitor against so doing is surprise. There is no element of that in this point.
As to whether a cross appeal is necessary before taking such a factor into consideration, there is no provision in the QCAT Act, or elsewhere, in cases of this kind, that permit the filing of cross appeals. Counsel for the tenant acknowledged this, but submitted that the tenant should have filed her own appeal to set aside the Tribunal’s judgment, and then sought substitution of the same judgment after recognising that the cause of action on which it was based was mesne profits.
Such procedural requirements would run counter to the objects for which QCAT was established, particularly ss 3(b) and 4(c) to of the Act.[6] They would introduce undue technicality and expense into the appeal system. The criteria which regulate points that may fairly be made on appeals under the QCAT Act depend essentially on fair notice and the avoidance of surprise, rather than on special additional proceedings and fulsome pleading. Fair notice of issues is of course necessary, but a degree of informality must necessarily be tolerated if QCAT is to perform its intended role.
[6]Section 3(b) states ‘to have the tribunal deal with matters in a way that is accessible, fair, just, economical, informal and quick; …’; s 4(c) states: ‘ensure proceedings are conducted in an informal way that minimises costs to parties, and is as quick as is consistent with achieving justice; …’.
In my view it is in this instance open to the tenant to contend that the judgment appealed from may be properly upheld on a basis different from that stated by the primary Tribunal. I accept her contention that the challenged judgment for $10,000.00 is sustainable as an assessment of mesne profits.
If it were necessary to do so I would dismiss the landlord's appeal and grant leave to the respondent tenant to file a notice of appeal out of time, abridge the time for the service of all necessary documents, allow the tenant’s appeal, and vary the original order by ordering that the words ‘by way of compensation for her failure to allow quiet possession of the whole of the demised area’ be replaced by ‘by way of mesne profits’ in paragraph [6] of the orders of the Tribunal in RSL047-10 dated 13 October 2011. But such a procedure would in my view be otiose and unnecessary.
I am primarily of the view that having regard to the way in which the case was litigated it was open to the Tribunal to award $10,000.00 as damages for breach of the obligation to deliver possession, or as damages for breach of the quiet enjoyment obligation. On that footing, the only necessary order is “appeal dismissed”. That is the order that will be made.
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