Victoria Louise Black t/as Noir furniture v Victina International Projects Pty Ltd
[2013] QCAT 116
| CITATION: | Victoria Louise Black t/as Noir furniture v Victina International Projects Pty Ltd [2013] QCAT 116 |
| PARTIES: | Victoria Louise Black t/as Noir furniture (Applicant) |
| v | |
| Victina International Projects Pty Ltd (Respondent) |
| APPLICATION NUMBER: | RSL016-12 |
| MATTER TYPE: | Retail shop leases matters |
| HEARING DATE: | 21 February 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Susan Gardiner, Member Don McBryde, Member Sandra Kairl, Member |
| DELIVERED ON: | 14 March 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | Victina International pay $25,444.00 to Ms Black within 14 days. |
| CATCHWORDS: | RETAIL SHOP LEASE – where lease validly terminated after disclosure statement given under 7 days before possession given – where lessor demanded payment of guarantee after valid termination of lease – where lessor did not return guarantee money or unused rent – where lessor aware of basis of termination soon after event – where interest and costs awarded to tenant Retail Shop Leases Act 1994, s 11, s 22 Queensland Civil and Administrative Tribunal Act 2009, s13, s 14, s 100, s 102 Ralacom v Paradise Island Apartments (No. 2) [2012] QCAT 334, followed |
APPEARANCES and REPRESENTATION:
| APPLICANT: | Mr Edwards, Solicitor |
| RESPONDENT: | Mr Wang for Victina International Projects Pty Ltd |
REASONS FOR DECISION
Ms Victoria Black leased a shop at West End from Victina International Projects Pty Ltd to start a home wares business. The lease dated 1 July 2011 was provided unsigned to the solicitor for Ms Black by the solicitor for Victina International on 1 July 2011. With it, the solicitor for Victina International also provided the disclosure statement required under s 22 of the Retail Shop Leases Act 1994.
Ms Black thought she had negotiated the first month rent free but in the last minute negotiations between Ms Wang on behalf of the company and Ms Black, this rent free period was denied. Ms Black decided to go ahead with the lease anyway and signed the lease on 6 July 2011. The lease date was never changed and Ms Black therefore agreed to pay rent from 1 July 2011.
Previously on 15 and 16 June 2011, Ms Black provided to the real estate agent acting for Victina International, a Bank Guarantee in favour of Victina International for the sum of $12,000 and two cheques. The first was for $2,300 and combined with the guarantee provided security for three months rent. The second cheque was for $9533.32 representing the equivalent of rent for a further two months.
Understandably, as she had now payed rent for the premises, Ms Black was keen to take possession. Ms Black’s solicitor wrote to the solicitor acting for Victina International on 4 July 2011 agreeing to sign the lease “as is” and asking for immediate possession of the shop
Victina International’s solicitor replied mid-morning on 6 July on behalf of Victina International advising in an email that:
1. There is no rent free period;
2. Once you have provided signed documents and the bond and the first
month’s rent has been paid then your client can take possession;
Ms Black saw her solicitor the same morning and signed the lease. Her solicitor delivered the signed lease, her disclosure statement and Victina International’s disclosure statement to the solicitor for Victina International later that morning.
After delivery of the documents, Ms Black contacted the real estate agent and obtained the keys to the shop.
Ms Black then took possession of the shop on the afternoon of 6 July 2011 with the handing over of the keys to her by the agent for Victina International.
Ms Michelle Wang signed the lease on 11 July 2011 as Director of Victina International.
[10] Ms Black served a notice of termination of the lease on Victina International at its address for service on 23 November 2011. The notice gave the termination date as 31 December 2011 and Ms Black vacated the premises on 30 December, returning the keys to the registered office on 31 December 2011.
[11] After the termination, Victina International demanded the guarantee money from the bank and a bank cheque for $12,000 dated 10 January 2012 was paid to the company.
[12] Ms Black argues her termination was valid under s 22(3) of the Retail Shop Leases Act 1994. She says that by her taking possession of the shop on 6 July (with no conditions of any sort) the “at least 7days” notice required to be given under s 22(1) of the Act has not been complied with. This strict requirement means that her termination under s 22(3) is valid.
[13] As a valid termination, Ms Black argues that Victina International had no right to demand the guarantee be honoured and should also repay one month’s rent paid at the beginning of the lease and not used because of the termination.
[14] Ms Black now claims $14,300 plus interest and her costs of the action.
[15] Victina International argues that the lease did not come into existence until it was signed by Ms Wang on 11 July and that the real estate agent had no authority to hand over the keys.
[16] The Retail Shop Leases Act 1994 is against Victina International on both of these points. The date of the lease is 1 July 2011 and Ms Black was paying rent from that date. However, even if that is not the correct date, Ms Black took possession on 6 July 2011 with the handing over of documents as demanded by the Solicitor for Victina International and the provision of keys by the real estate agent for Victina International. There were no conditions attached.
[17] As an arm’s length party, Ms Black is entitled to assume that both of these professionals would have been aware of the requirements of the Retail Shop Leases Act 1994 and she is entitled to rely on their representations as acting for Victina International – they were after all, both engaged to give Victina International professional advice in this area.
[18] Section 11 of the Retail Shop Leases Act 1994 specifies when a lease starts. It is the earlier of either the date the lease becomes binding on the parties or the date the lessee entered possession of the shop.
[19] On these facts, it is arguable that the lease became binding on 1 July 2011 but even if we are wrong about that, the handing over of possession without any conditions or waivers on 6 July 2011 commences the lease on that date.
[20] On either of these dates, the required 7 days delivery time for the disclosure statement under s 22 of the Act had not passed.
[21] Section 22(1) is clear in its intention on a plain reading of the section. A lessor must give a prospective lessee of a retail shop the disclosure statement at least 7 days prior to the entering of a lease. There is no discretion apparent in the wording.
[22] As s 22(1) has not been complied with by Victina International, it appears that Ms Black has every right to terminate the lease under s 22(3) within 6 months of entering the lease because s 22(2) allows the termination if the requirements of the “at least 7 days” is not complied with by Victina International.
[23] We are satisfied that Ms Black’s termination under s 22 of the Retail Shop Leases Act 1994 is valid.
[24] As the termination is found to be valid, Victina International had no right to demand the payment of the guarantee or to keep the overpayment of rent made by Ms Black
Other matters
[25] Ms Black also seeks the return of the funds under the guarantee wrongly demanded and retained by Victina International, the repayment of the rent wrongly held, interest on these funds and her costs in bringing these proceedings.
[26] Ms Black argues that the return of all the funds is a debt owing to her by Victina International with interest paid.
[27] It is clear that right from the beginning of the argument in correspondence between the solicitors, Ms Black has argued exactly what she has said to us in the hearing and in her filed material. This reasoning has not changed at any point.
[28] On the material before us, as early as 24 October 2011, Mr Edwards on behalf of Ms Black raised the failure to comply with s 22(1) as an automatic right to terminate within the 6 months in an email to Mr Varitimos.
[29] Mr Varitimos requested an explanation of this point in a letter dated 24 October 2011 and Mr Edwards supplied these details in a return letter dated 25 October 2011. It is exactly the same argument now as it was then. Victina International had notice of the ground of the termination from that date.
[30] Another detailed explanation of the circumstances of the authorisation to take possession was given to Mr Varitimos in a further letter from Mr Edwards dated 28 October 2011, reciting the facts and the law as we have found them to be. Mr Varitimos could not have been under any misapprehension of the arguments mounted by Mr Edwards.
[31] Victina International chose to ignore the arguments of Mr Edwards. On 30 November 2011, Mr Varitimos wrote to Mr Edwards stating that Victina International did not accept the termination.
[32] On 9 December 2011, Mr Edwards again recited the facts as he saw them and included for Mr Varitimos a copy of the email of 6 July 2011 setting the conditions for possession. The negotiations ended at this point.
[33] The Notice of Dispute was filed in QCAT on 10 February 2012. On 9 August 2012, Mr Wang emailed Ms Black advising her (amongst other things) that if she persisted with the application, he intended to “keep going regardless win or lose”.
Return of Funds and Interest
[34] This Tribunal has determined that Victina International had no right to demand the payment of the guarantee or to keep the overpayment of rent. Ms Black is entitled to the $14,300 she seeks. These funds can be characterised now as a liquidated demand by Ms Black for monies had and received by Victina International. As such, this claim could be brought within the Minor Civil Disputes jurisdiction of QCAT,[1] and this Tribunal could transfer this matter to that jurisdiction to be heard.
[1] Queensland Civil and Administrative Tribunal Act 2009 s 13.
[35] Practically, it is more convenient for the parties for this Tribunal to now deal with the return of the monies than to transfer the matter to another jurisdiction within QCAT. On the facts as we have found them, Victina International must repay the monies to Ms Black.
[36] The further application that Ms Black makes is that she should also be awarded interest on those funds.
[37] The QCAT Act allows the awarding of interest in minor civil matters where the claim involves the recovery of a liquidated demand of money (as is the case here).[2] This is at the discretion of the Tribunal. The Tribunal can set the rate and the period for interest to be paid. [3]
[2] Ibid s 14.
[3] Ibid s 14(3).
[38] Ms Black had clearly informed Victina International why she terminated the lease. Despite the opportunity to take legal advice on this issue or even to read the Retail Shop Leases Act 1994 itself, Victina International chose to demand the payment of the guarantee. This Tribunal considers it is appropriate for Victina International to pay interest from the date it received the guarantee money – 12 January 2012. It is reasonable to calculate the interest payment from that date on both the guarantee and the unreturned rent.
[39] The rate for this interest will be set at the a reasonable bank rate for the 2012 year – in this case determined by this Tribunal to be 5% per annum.
[40] Interest calculated on $14,300 at 5% for 14 months and rounded down is set at $834.00.
Costs
[41] Ms Black also seeks her costs. She has been wholly successful with her application.
[42] The starting point concerning costs in QCAT is that each party must bear its own.[4] This presumption may be displaced if the Tribunal considers it in the interests of justice to order a party to pay all or part of the costs of another party.[5] The phrase ‘in the interests of justice’ is not defined in the Act but is to be construed according to its ordinary and plain meaning, which confers a broad discretionary power on the decision-maker.[6]
[4] Ibid s 100.
[5] Ibid s 102(1).
[6] Ralacom v Paradise Island Apartments (No. 2) [2012] QCAT 334 at [29].
[43] In determining whether it is in the interests of justice to award costs against another party the Tribunal may have regard to the nature and complexity of the dispute; the relative strengths of the claims made by each of the parties; and, whether a party has acted in a way that unnecessarily disadvantages another party.[7]
[7] Queensland Civil and Administrative Tribunal Act 2009 s 102(3).
[44] The question is whether in the circumstances of this matter “the interests of justice” point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s 100.[8]
[8] Refer to footnote 6.
[45] Victina International was well aware of the legal argument consistently advanced by Ms Black from a very early point. The argument was first raised in late October 2011 and further explained in detail in December 2011. After the notice of dispute was filed, as late as August 2012, Mr Wang was advising that he would not negotiate on the matter and that he intended to keep going.
[46] Mediation was set in this matter as is required by the Retail Shop Leases Act 1994 early in the QCAT process (March 2012). No representative from Victina International attended the mediation and no evidence was provided to show why this attendance did not occur. Ms Black had no alternative other than to proceed to a hearing to obtain a final determination.
[47] It appears that at every turn, despite the advice and continued clear argument from the solicitor for Ms Black and despite an opportunity for mediation (not attended by Victina International), Mr Wang was determined to have the matter decided by QCAT. It did not seem to matter what alternative negotiation was available to him and that he had legal advice available to him.
[48] This is considered by this Tribunal to be an unreasonable position in the circumstances of this matter. It ought to have been clear to Victina International that Ms Black had a strong argument and that a negotiated settlement at the very least was reasonable in the circumstances – or the return of the funds demanded under the guarantee and the unused rent.
[49] Instead Ms Black has been held out of these funds for over 12 months and is liable now to pay legal fees from a relatively small amount to be returned to her.
[50] Mr Edwards quantifies the costs in a short form bill at $14,728.94. This represents the whole action commencing from when communication started with Victina International. In our view, costs should be paid from when Victina International forced Ms Black to commence QCAT proceedings on 10 February 2012. Prior to this, the parties were in negotiations.
[51] The bill in short form does not list a chronology of events and costs. The Tribunal acknowledges that most of the costs of the action were incurred once the notice of dispute was filed, culminating in the hearing preparation.
[52] Considering this and allowing for the period of negotiation, this Tribunal will award Ms Black a global amount of her costs set at 70% of her total bill. Rounded down, costs are set at $10,310.00
[53] The total of the sum to be paid by Victina International to Ms Black within 14 days is $25,444.00 ($14,300 +$834.00 interest +$10,310.00 costs) and orders will be made in those terms.
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