Bongain Pty Ltd v Benowa Gardens Pty Ltd [2023] QCAT 57

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Bongain Pty Ltd v Benowa Gardens Pty Ltd [2023] QCAT 57 PARTIES: BONGAIN PTY LTD TRADING AS CARGO BOUTIQUE (applicant) v BENOWA GARDENS PTY LTD AS TRUSTEE FOR BENOWA GARDENS TRUST (respondent) APPLICATION NO/S: RSL001-23 MATTER TYPE: Retail shop leases matter DELIVERED ON: 13 February 2023 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member King-Scott ORDERS: Application dismissed. CATCHWORDS: ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – application for an interim order or injunction following referral of discrimination complaint pursuant to s 58 or s 59 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) LANDLORD AND TENANT - RETAIL AND COMMERCIAL TENANCIES LEGISLATION – JURISDICTION, POWERS AND APPEALS OF COURTS AND TRIBUNALS - Retail shop lease – whether option validly exercised - entitlement to interim relief where no proceedings before the tribunal Property Law Act 1974 (Qld) Queensland Civil and Administrative Tribunal Act 2009(Qld) Retail Shop Leases Act 1994 (Qld) Chas Straker Pty Ltd as trustee for Dianne Crea Family Trust and Anor v Orsay Holdings Pty Ltd [2011] QCAT 676. -- 1 of 7 -- 2 Pierre’s Café Bistro Restaurant Pty Ltd v Myer Ltd [2022] QCAT 398 RDF v State of Queensland (Education Queensland) [2018] QCAT 254 APPEARANCES & REPRESENTATION: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) REASONS FOR DECISION [1] The applicant trades as Cargo Boutique (Cargo) and operates a dress shop (the premises) in a shopping centre known as Benowa Gardens Shopping Centre. A dispute has arisen between the parties as to whether an option for a further term of the lease has been validly exercised. [2] Cargo seeks an interim injunction against the Respondent (Benowa Gardens) to restrain it from: (a) re-letting, or otherwise parting with possession of the premises; (b) disposing of, or otherwise parting with chattels in its possession belonging to or used by Cargo. (c) from disposing of, or otherwise parting with stock in its possession belonging to or used by Cargo. [3] Benowa Gardens raises certain jurisdictional issues which it submits precludes Cargo from seeking the relief it seeks. [4] According to Benowa Gardens the following background facts are not in dispute: (a) in or about February 2021, Cargo as lessee and the Respondent's predecessor in title, IJ Financial Services Limited A.C.N. 162 530 449 (IJFS), as lessor executed a lease (the Lease) in respect of premises described as Shop 014A (b) the premises at the Benowa Gardens Shopping Centre are situated at 203 Ashmore Road, Benowa in the State of Queensland, being land more particularly described as Lot 822 on RP 839746 in Title Reference number 18605003 (the Centre);1 (c) the Lease was a retail shop lease for the purposes of the Retail Shop Leases Act 1994 (Qld) (RSLA) under which the permitted use is "Retail sale of women's apparel and associated accessories";2 (d) the Lease was for an initial term of three years3, commencing on 1 January 2021 and expiring on 31 December 2022, and contained an option for: a further term of 1 year (the Option);4 1 Cargo's Submissions, paras 1 and 2. A copy of the Lease is Annexure 1 to the Application. 2 Cargo's Submissions, para 1 and 7. 3 According to the lease the term was for two years. Item 11 of the Lease Application for interim order filed 3 January 2023. 4 Cargo's Submissions, paras 3 and 4 (but note that paragraph 4 therein misidentifies the option exercise period stated in the Lease: see clause 2.2 in the variation table therein). -- 2 of 7 -- 3 (e) Benowa Gardens purchased the Centre from IJFS on 1 February 2022, and a notice of attornment was given to the Cargo on that date advising of the sale;5 (f) on 11 November 2022, Benowa Gardens served upon Cargo a notice to vacate the Premises on 31 December 2022, being the expiry date of its Lease;6 and (g) a dispute has subsequently arisen as to whether Cargo validly exercised its option under the Lease under a 'Notice to take Option to take up "First Option Period" of 12 months' which Cargo claims was served upon Benowa Gardens on 28 September 2022 (the Purported Notice of Exercise of Option)7 but which Benowa Gardens denies ever having been served, whether as alleged or at all.8 [5] According to the Lease the term was for 2 years and not 3 years as stated in the above undisputed facts. Jurisdiction [6] The Tribunal has jurisdiction under s59 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (the QCAT Act) “to grant an injunction, including an interim injunction, in a proceeding if it is just and convenient to do so". [7] Benowa Gardens submits that the jurisdiction under s59 of the QCAT Act is not enlivened in the present circumstances and accordingly this Tribunal has no jurisdiction to make the orders sought. [8] The basis for its submission are: (a) No primary relief has been sought and there is no substantive application before the Tribunal; (b) No notice of dispute has been lodged by Cargo with the small business commissioner as required by s.55 of the Retail Shop Leases Act 1994. [9] The tribunal derives its jurisdiction to determine retail tenancy disputes from the Retail Shop Leases Act 1994. [10] A party to a retail tenancy dispute may lodge a notice of dispute with the small business commissioner.9 The commissioner then arranges for a mediation to occur. If the mediation does not resolve the dispute, the mediator must then refer the dispute to the Tribunal. 10 [11] A party may apply directly to the Tribunal only if a mediation agreement is not complied with, the mediator refuses to refer it, or a court has ordered the dispute to be removed to the Tribunal.11 [12] There has been no referral and no basis for an exception from the requirements of the legislation to permit Cargo to apply directly to the Tribunal. 5 Cargo's Submissions, paras 21 and 22. See Respondent's Affidavit, paras 3 to 6, and Document 1 in the Exhibit thereto. 6 Cargo's Submissions, para 27. See Respondent's Affidavit, paras 8 to 9, and Document 3 in the Exhibit thereto. 7 Applicant's Submissions, para 6 and 25. 8 Applicant's Submissions, para 6 and 25. See Respondent's Affidavit, paras 11 to 14, and Documents 4 and 4A in the Exhibit thereto. 9 Retail Shop Leases Act 1994 s. 55 10 Ibid s. 63 (2) 11 Ibid s. 64 -- 3 of 7 -- 4 [13] Benowa Gardens relies upon the decision of Pierre’s Café Bistro Restaurant Pty Ltd v Myer Ltd12 a case not dissimilar to the circumstances of this matter. There Member Holzberger made the following observations: [17] Section 58(1) of the QCAT Act permits the tribunal to make interim orders “before making a final decision in a proceeding.” [18] Section 59(1) of the QCAT Act permits the tribunal to make an interim injunction “in a proceeding”. [19] Schedule 3 of the QCAT Act defines “proceedings” as “generally – means a proceeding before the Tribunal”. [20] There is no proceeding before the Tribunal. Were the tribunal to make an order sought it would not have effect as an interim injunction because no substantive proceeding exists to be determined. [14] Cargo filed a Form 41 application for an interim order claiming That the Respondent be injuncted from taking any steps adverse to the Applicant until the option lease dispute matter has been determined by QCAT. The interim application was made under s. 58 of the QCAT Act in Form 41 that complied with the Rules. [15] It seems to me that the filing of the interim application is a proceeding under the QCAT Act. The term ‘proceeding as defined in the Act generally – means a proceeding before the tribunal. Section 36 of the QCAT Act provides that A proceeding starts when the principal registrar accepts an application or referral whether or not on conditions. Cargo filed an application in the tribunal albeit an interim application. [16] However, that does not overcome the jurisdictional point that Cargo comply with the requirements of a mediation which is the foundation of jurisdiction for the Tribunal to hear the matter. Exercise of option [17] Benowa Gardens submits that if Cargo was to exercise the option it was required to do so no later than 30 June 2022. Cargo was notified to that effect by letter dated 15 February 2022.13 [18] There is no evidence other than the mere assertion, by Cargo, in its submissions, that the option was exercised. No documentary evidence is provided by Cargo. [19] Ms Demelza Amy Berry, the General manager of Pinnacle Sales and Management, Benowa Gardens’ leasing agent deposes to what appears to have been Cargo’s attempt to exercise the option. She refers to a series of events which cast considerable doubt on whether the option was exercised. [20] Cargo’s solicitor suggests that an email enclosing the Options Notice was sent to Ms Berry on 29 September 2022 but the email address did not exist. It should have been [email protected] but was allegedly sent to [email protected]. [21] When an issue had arisen as to the exercise of the option, Cargo’s solicitor, subsequently, sent an email to [email protected] addressed to Mr Rix 12 [2022] QCAT 398 13 Document 2 affidavit of Demelza Amy Berry filed 8 January 2023 -- 4 of 7 -- 5 evidencing a response email suggesting that another employee Mr Faulder of Pinnacle had confirmed receipt. [22] What is alleged to have occurred is that the solicitor had emailed the Mr Faulder with a one-line message stating “Test Message”, Mr Faulder then responded “Received, can you please let me know what this is regarding?” The solicitor then used that response as a confirmation. Ms Berry extracted a copy of the solicitor’s original email to Mr Faulder from Pinnacle's computer system and confirmed that nothing was attached to that email.14 [23] Further, the alleged Notice of Exercise of Option was not accompanied by "a written notice signed by the Tenant stating that the Tenant agrees to waive the Landlord's obligation to give a disclosure statement for the renewal of [the] Lease in accordance with section 21E of the Retail Shop Leases Act 1994 (Qld)" (the Waiver Notice). Ms Berry submits that delivery of the Waiver Notice was also a condition of any valid exercise of the Option as set out in clause 26(c) of the Lease. As stated above there were no attachments to the email. [24] It is very doubtful that Cargo can establish that the Option was validly exercised or exercised at all. [25] Cargo submits that even though it had exercised the right to remain a tenant for a further 12 months in writing to the Benowa Gardens on the 28 September 2022. Benowa Gardens has ignored this and now attempts to not recognise the valid lease that under the option will not expire until the 31 December 2023. [26] Cargo relies upon s.128 (4) of the Property Law Act 1974 and appears to submit that Benowa Gardens has in some way by an act or omission breached the terms of the lease thereby giving rise to the relief it now seeks under the Act. It does not identify the act or omission unless the breach is the fact that Benowa Gardens does not recognise the exercise of the option. [27] Cargo further submits that Benowa Gardens has attempted to contract out of the legislation by inserting a variation at page 5 of 54 of the Schedule of the Lease where item 24 speaks against the legislation that requires a maximum of 6 months’ notice and a minimum of 2 months' notice be provided by the parties to the lease. [28] Item 24 amended the terms of the lease by varying the option exercise period from 2 to 6 months’ notice to 12 to 6 months’ notice prior to the expiration of the lease. Those amendments are contained in the lease that that Cargo executed at its commencement. [29] It is difficult to determine the relevance of these submissions. Should an injunction be granted? [30] Section 59 of the QCAT Act provides: (1) The tribunal may, by order, grant an injunction, including an interim injunction, in a proceeding if it is just and convenient to do so. (2) The tribunal may make an order granting an interim injunction whether or not it has given any person whose interests may be affected by the order an opportunity to be heard. 14 See affidavit of Demelza Amy Berry filed 8 January 2023 -- 5 of 7 -- 6 (3) The tribunal may act under subsection (1) on the application of a party to the proceeding or on its own initiative. (4) The tribunal’s power to act under subsection (1) is exercisable only by a legally qualified member. (5) The tribunal’s power under subsection (1) is in addition to, and does not limit, any power of the tribunal under an enabling Act to make an order in the nature of an injunction. (6) In making an order under subsection (1), the tribunal— (a) may require an undertaking, including an undertaking as to costs or damages, it considers appropriate; or (b) may provide for the lifting of the order if stated conditions are met. (7) The tribunal may assess damages for subsection (6)(a). (8) The tribunal’s power to assess damages under subsection (7) is exercisable only by a legally qualified member. [31] Benowa Gardens submits that the Tribunal ought not to be satisfied that "it is just and convenient" to grant the interim injunction sought. It submits the relevant approach to applications under s59 was expressed in RDF v State of Queensland (Education Queensland)15 as follows: [67] The Tribunal's power to grant an injunction under s 59 of the QCAT Act is comparable to the power at common law exercised by the courts. Accordingly, the Tribunal applies common law principles relevant in determining whether it would be 'just and convenient' to grant an injunction. [68] The usual approach is to consider whether or not there is a serious question to be tried and whether the balance of convenience favours the granting of the interlocutory relief sought. These requirements are not entirely separate and must be considered together. [32] Benowa Gardens also relies upon the decision of Chas Straker Pty Ltd as trustee for Dianne Crea Family Trust and Anor v Orsay Holdings Pty Ltd16 in the course of refusing an application for an interim order in circumstances where the Applicant lessees were in breach of the lease for failure to pay rental arrears and where they were not in a position to give an undertaking as to damages, Judge Kingham, Deputy President stated: [9] The Tribunal may grant an injunction if [it] is just and convenient to do so. In so doing, it may require an undertaking as to damages. In this case, I am not persuaded that it would be just and convenient to grant one, particularly given [the Lessees] are not in a position to give an undertaking as to damages. [10] The usual test applied by the courts when considering whether or not to grant an injunction is to determine whether there is a question to be tried, and then to determine the matter on the balance of convenience. [11] There may well be a serious question to be tried on [the Lessees'] claim, but that is not affected by whether or not the injunction is granted.... 15 (2018] QCAT 254 at [67]-[68] 16 [2011) QCAT 676. -- 6 of 7 -- 7 [12] The balance of convenience does not favour [the Lessees]. The Tribunal cannot make an order preventing [the Lessor] from exercising all and any rights under the lease. The evidence before this Tribunal suggests that [the Lessees] are likely to fall into breach again; ... [The Lessees] could not, therefore, provide a meaningful undertaking as to damages. [13] If an injunction is granted, [the Lessor] would be prevent from exercising their rights under the lease and would be exposed to ongoing loss. On the other hand, if it is not granted, [the Lessee's] claim, in damages, against [the Lessor] will not be adversely affected." [33] Cargo is significantly in arrears in rent and had been for most of 2022 year. As of 31 December 2022, it was $23,134.72 in arrears. [34] In my opinion, Cargo’s prospects of success are not great. There are a number of impediments to a successful claim, which I have referred to above. Cargo has not offered any undertaking as to damages. However, in view of its financial position and the extent of rent arrears I would have some concern as to it ability to meet any undertaking. The balance of convenience does not favour the grant of an injunction. Damages would be an adequate remedy for Cargo should it be successful in its claim. [35] I refuse to grant the relief sought and dismiss the application. -- 7 of 7 --