Daggar & Anor v Lawrence & Ors [2019] QCAT 314

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Daggar & Anor v Lawrence & Ors [2019] QCAT 314 PARTIES: JOANNE DAGGAR and MARIE MACKENZIE (applicants) v BARRY LAWRENCE, JANICE LAWRENCE and WAVE REALTY PTY LTD (respondents) APPLICATION NO/S: RSL085-18 MATTER TYPE: Retail shop leases matter DELIVERED ON: 11 October 2019 HEARING DATE: 8 August 2019 HEARD AT: Brisbane DECISION OF: Member McDonnell, Presiding Member Norling Member McBryde ORDERS: The application is dismissed. CATCHWORDS: LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OTHER MATTERS – retail shop lease dispute – whether lessee entitled to compensation for false and misleading statements or representations Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3 Retail Shop Leases Act 1994 (Qld), s 3, s 5A, s 21B, s 21F, s 22A, s 22D, s 22E, s 42, s 43AA, s 83, s 103, Schedule Dictionary Retail Shop Leases Regulation 2006 (Qld), s 3, s 4, s 7, s 8 Hennessy v Miltcoe Pty Ltd [2006] QRSLT 15 Jordan v Eskbay Pty Ltd [2000] QRSLT 2 -- 1 of 17 -- 2 APPEARANCES & REPRESENTATION: Applicants: Self-represented Respondents: Mr and Mrs Lawrence – Self-represented Wave Realty Pty Ltd – A Coory, of Wave Realty Pty Ltd REASONS FOR DECISION Introduction Ms Daggar and Ms Mackenzie operated a shop at 150-152 Hornibrook Esplanade, Clontarf from 1 March 2015 to 31 March 2019. The premises were owned by Mr and Mrs Lawrence from the time they were first leased to the applicants until some date in 2017. Wave Realty Pty Ltd (‘Wave’) was the duly authorised leasing agent. The applicants claim they were induced to enter a lease of the premises by misrepresentations by the lessor, Mrs Lawrence, and by Ms Coory of Wave Realty Pty Ltd and suffered loss and damage as a result of this. The applicants filed a notice of dispute under the Retail Shop Leases Act 1994 (Qld) (‘the Act’) alleging numerous breaches of the Act by the respondents and seeking reimbursement of various costs and losses incurred. As a result of prehearing steps, the application is to be determined by the Tribunal on the sole basis of: (a) A claim under s 43AA of the Act for false or misleading statement or misrepresentation; and (b) The claim being for the refund of all lease payments made by Joanne Daggar and Marie Mackenzie to Barry Lawrence and Janice Lawrence in relation to the premises at 150 Hornibrook Avenue (shop A – amended at the hearing) for the period between 1 March 2015 to 31 March 2019. The Tribunal does not have the power to adjust the rental payments between the parties.1 Mindful of the objects of the Act, in particular to have the tribunal deal with matters in a way that is accessible, fair, just, economical, informal and quick,2 the Tribunal has proceeded to determine this matter on the basis that paragraph 3(b) above is a claim for reasonable compensation under s 43AA of the Act. Further, while Wave is a party to the proceedings, it is not a party to the retail shop leases and accordingly is not liable to pay compensation under s 43AA.3 Jurisdiction The parties agreed on little in the course of the proceedings. In particular, there was disagreement about what leases had been entered into for shop A. 1 The Act, s 103(b)(i). 2 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3(b). 3 See Jordan v Eskbay Pty Ltd [2000] RSLT 2, considering a similar provision. -- 2 of 17 -- 3 The applicants claimed that on 28 January 2015 they signed a lease for the period 1 March 2015 to 1 March 2018. They do not have a copy of this lease. Further, they said that when the lessors were wishing to sell the site the applicants were asked, in August 2016, to sign a lease backdated to 1 April 2016 for the period 1 April 2016 to 1 April 2019. This is the lease which is Exhibit 2. The applicants deny ever signing a one year lease for the premises and deny signing the lease which is Exhibit 1. The respondents said that the parties entered into a 1 year lease from 1 March 2015 to 1 March 2016 and that this is Exhibit 1. The lessees signed the lease on 28 January 2015 and the lessors signed the lease on 19 February 2015. Further, they said that a second lease was signed in April 2016 for the period from 1 April 2016 to 1 April 2019, being Exhibit 2. They deny that the initial lease was for a period of three years. What the parties say about the leases will be discussed later in these reasons. For the present purposes it is sufficient that the parties agreed that the applicants were in occupation of the premises from 1 March 2015 to 31 March 2019, paid rent during this period and the premises were operated as a cafe. The lease is a retail shop lease.4 The premises were used wholly or predominantly for the conduct of a business mentioned in the Schedule to the Retail Shop Leases Regulation 2006. The Act gives the Tribunal jurisdiction to hear ‘retail tenancy disputes’5 subject to certain exceptions which do not apply here.6 In the present circumstances the Tribunal may make the orders it considers to be just to resolve the dispute.7 The object of the Act is ‘to promote efficiency and equity in the conduct of certain retail businesses in Queensland.’8 The applicants’ allegations The applicants base their claim for compensation on claimed loss and damage flowing from their having entered into the lease of the premises on the basis of certain false or misleading statements or misrepresentations made by the lessor or the lessor's leasing agent. The applicants alleged the following misrepresentations were made by or on behalf of the lessors: (a) That the premises were capable of obtaining a food business licence from the Council; (b) That the premises were capable of being a café and could produce a high income; (c) That there was a high level of foot traffic past the premises; (d) That they would make a fortune and could have 2 days off during the week; 4 The Act, s 5A. 5 The Act, Definition in Schedule Dictionary. 6 The Act, s103. 7 The Act, s 83. 8 The Act, s 3. -- 3 of 17 -- 4 (e) That the lessors had good friends in the Council, so the applicants could just put in a coffee machine and it would be alright; (f) That the premises were opposite the beach was an incredible opportunity; (g) That the premises were compliant with the Council by-laws; (h) That the plumbing and potable water were adequate for the proposed use; (i) That the electrical circuits were suitable for the proposed use; (j) That a food business licence had been held for some years in respect of the premises previously; (k) The existence or otherwise of the required Council approvals that they needed to run the business; (l) That the applicants did not need to listen to the Council in relation to the requirement for a food business licence and/or a development approval to operate the business; and (m) That no disclosure statement was given to them and they were not given the opportunity to obtain legal and/or financial advice prior to entry into the leases. In material before the Tribunal9 Ms Daggar said that: (a) The respondents failed to disclose the costs associated with the change of use and the expense of fitting out a commercial kitchen and that if the lessees had been made aware of the Council’s requirements for a commercial kitchen necessary to obtain a food business licence for the premises they would not have entered into the lease; and (b) The lessees were emotionally driven by the potential to be their own boss earning thousands from local traffic as intimated by the agent. The applicants said that as a result of these representations they were induced to enter into the lease and that having entered the lease in reliance upon these representations they have suffered loss. They said they have lost everything; that the compliance issues were insurmountable and there was not the foot traffic represented. The applicants’ evidence Ms Mackenzie gave oral evidence that she attended the initial meeting with Ms Daggar but cannot recall who else was there and cannot recall any misleading statements. Ms Mackenzie works full time at Queensland Health and due to her working hours had difficulty attending meetings with Ms Daggar and the respondents about the business and the premises. She said that she and Ms Daggar agreed that she would continue to work for Queensland Health and that if the business went well she would work in the café. Further, she indicated that it had not been a longstanding ambition for the applicants to have a business. Ms Mackenzie gave evidence that the 9 Applicants’ submissions dated 5 June 2019. -- 4 of 17 -- 5 lessees had never run a business and that they did not know what they were doing. Her recollection of events was poor. The Tribunal accepts that Ms Mackenzie was not in attendance at any other meetings and can give no evidence in relation to any representations made. Ms Daggar said that she and Ms Mackenzie lived in residential premises also located at 152 Hornibrook Esplanade. She said that the applicants were new to the area and did not fully understand the laws around commercial lease obligations, that they were ‘emotionally driven and excited about this potential to be our own boss earning thousands from local traffic as intimated by the agent’.10 Prior to the applicants’ lease the premises were operated as a quilting shop. She said that in December 2014, when that lease was approaching its end, Wave approached Ms Mackenzie with Wave’s idea of Ms Daggar and Ms Mackenzie turning the empty shop into a café. She denies approaching Wave with a view to operating a business from the premises. Ms Daggar and Ms Mackenzie had never operated a business before. Ms Daggar said that the applicants had no experience, no equipment and no financial stability.11 She and Ms Mackenzie worked for Queensland Health. Ms Mackenzie held a grade three basic food certificate in cookery but would not be working in the business. Ms Daggar left her permanent employment with Queensland Health to work in the café while Ms Mackenzie continued in her employment with Queensland Health. Ms Daggar referred to the casual conversations between the parties in which: …the Lawrences along with Wave Realty stated on many occasions that we would do really well and on the weekends we would do extra well. They believed that we would make enough to have a couple of days off each week and this was based on their experience, knowledge of the area and foot traffic. We had no knowledge of the area, nor did we have experience.12 The applicants’ timeline reveals that the lessees were provided with the keys to the premises in February 2015 to enable them to set up the premises, that the first month’s rent in advance was paid on 1 March 2015 and that: (a) In January 2015 the lessees: (i) Were told by the respondents that it was the lessees’ responsibility to ensure the building was suitable to operate a café; (ii) Contacted the Council to discuss the planning requirements for their proposed use and were told by the Council that the premises were not zoned for a food outlet; and (iii) Made the respondents aware of the issues with the zoning of the site for the purposes of the proposed use and were told by the respondents that they were wrong; (b) The Council told the lessees in February 2015, when discussing obtaining a food business licence for the premises, that they could not operate the premises as a 10 Applicants’ statement 5 June 2019. 11 See attachment to applicants’ Timeline. 12 Exhibit 5. -- 5 of 17 -- 6 café. Accordingly, prior to commencement of the lease the lessees changed the ethos of the business to shop; (c) They opened in February 2015 and were allowed to make coffee only, but by March 2015 were baking without informing the Council; (d) In March 2015 faults began to show with the electrical wiring with the safety ‘tripping’ regularly. The applicants said they were told the issue arose due to it being an old building; (e) In March 2015 the lessees identified problems with the water pressure to the coffee machine; (f) In May 2015 Mrs Lawrence suggested that rent be paid in arrears and this was agreed; and (g) By September 2015 a food business licence had been obtained from the Council but it was restricted due to the building not being suitable for food premises. In relation to the leases for the premises, Ms Daggar said: (a) She did not recall saying to Mrs Lawrence that she wanted a 5 year lease of the premises and said she never had a conversation with the respondents about a one year lease. She said she was told by Mrs Coory that Mr and Mrs Lawrence were doing the applicants a favour giving them a 3 year lease rather than a ‘five year normal commercial lease’; (b) On 28 January 2015 the applicants signed a three year lease for the premises for the period 1 March 2015 to 1 March 2018 but that due to a problem with Wave’s photocopier they did not receive a copy of this lease at the time of signing but were told they would be provided a copy later. She said they never received a copy of this lease; (c) That the document that is Exhibit 1 in these proceedings was not signed by the lessees and she denied ever signing a one year lease for the premises. While she acknowledged the signature in Exhibit 1 was hers she said that the document is a fraudulent document. The applicants allege that the original lease signed by the applicants was witnessed by Rikki Macleod of Wave13, not Anya Coory. Exhibit 1 before the Tribunal is witnessed by Ms Coory; (d) That, in August 2016, because Mr and Mrs Lawrence were wishing to sell the property, in order to make the property more attractive to the purchaser, the lessees were asked by the lessors to sign a new, backdated lease. She said they signed a backdated lease in August 2016 for the period 1 April 2016 to 1 April 2019. This is the document Exhibit 2 before the Tribunal; (e) In oral evidence that Ms McLeod, an employee of Wave, ‘crossed through’ the 3 year lease of 1 March 2015. However, in the letter dated 19 October 201814 Ms Daggar said that Miss Macleod said in relation to the applicants not 13 Exhibit 5. 14 Exhibit 5. -- 6 of 17 -- 7 obtaining a copy of the first lease ‘oh that’s right I was supposed to bring you a copy, ahh well that’s obsolete now and will be discarded.’ Ms Daggar said no disclosure statements were provided by the lessors or by the lessees and that the lessees did not provide to the lessors either a legal advice report or a financial advice report. Ms Daggar said that the lessees did not obtain legal or financial advice prior to entering the lease, although she acknowledged that Ms Coory told her the lessees needed to get an accountant. She said they were uninformed about the legal ramifications of signing a commercial lease. Only Ms Daggar worked in the shop. She denied saying to any of the respondents that the applicants would work in the shop together. Ms Daggar said that they were unable to use to the old kitchen area for a food preparation area as there was no plumbing, no sinks and no ventilation. She did not explain the reason for the decision to locate the kitchen to an area where the ceiling required repair. As to the concerns about water supply Ms Daggar said that there was insufficient supply for the equipment associated with a commercial kitchen, that the water was not hot enough, and that the pressure was insufficient to allow proper operation of the coffee machine.15 Ms Daggar said that as the electricity supply was inadequate for their purposes, they paid to upgrade it but that it continued to trip daily due to overload. In oral evidence Ms Daggar said that seven and a half months into the tenancy they were in trouble financially, that there was no business, no foot traffic and that they would not get a food business licence without repairing the ceiling. Business declined over the four years it operated. The partnership returns16 indicate the business made a loss for the first 3 years of operation and made a small profit in the 2018 financial year. The lessees wrote to the lessors on 1 December 201517 indicating that, despite steps taken by them to develop the business, due to the level of rent, the level of foot traffic and the limited numbers of impulse coffee purchases they were seeking a reduction in rent. The lessees indicated their commitment to the business, saying that their desire was to be there for another five years. In this letter they indicated income from the business had reached $700/750 per week. In cross examination it became apparent that this figure was in fact total turnover. Despite the grim picture and the state of the applicants’ knowledge by this time, on 30 June 2017 the lessees signed a lease with the new owner of the building for the period 1 July 2017 to 1 March 2018 for a further area (shop B) to extend the shop. Ms Daggar explained that this was the area vacated by Wave and that the applicants’ 15 See document attached to applicants’ Timeline 16 Exhibit 3. 17 Exhibit 4. -- 7 of 17 -- 8 intention was to boost their shop business. In reliance upon the failure of the lessors to provide a disclosure statement in respect of shop B the lessees terminated this lease on 12 January 2018.18 The matters of the electricity and water supply were raised by the applicants in their letter of 12 January 2018 to the new owner of the building terminating the shop B lease. They stated then that the fact that the water supply and electricity were not suitable to operate the business was not disclosed.19 This is different to representations being made that they were adequate. She acknowledged that after vacating shop B the applicants were offered a rent reduction for shop A by the new owner of the building, but they refused it as they considered it an insult. The lessees said they have lost everything. They say they traded to the end of the lease because they did not realise until September 2017, when they obtained legal advice for the first time, that they should have been provided with a disclosure statement by the lessor and that the lessor should have required that the lessees provide a disclosure statement, legal advice report and financial advice report. When asked why they traded to the end of their leases Ms Daggar said they made a decision to see it through, that they kept their promises, that they were angry that they had wasted years fighting a losing battle in the premises and did not want to be failures. She observed that at the end of the lease they did not owe anyone money. The alleged representations were said by Ms Daggar to have been made by Mrs Lawrence or Ms Coory constantly over the course of a couple of conversations, generally around January 2015. She said that Mr Lawrence did not make any representations. Ms Daggar said the only witness to any of the conversations was a friend of Ms Coory’s who was in attendance at one of the meetings but that she does not know the name of Ms Coory’s friend, and that there were no other witnesses. She said that the lessees relied upon the representations to enter into the lease of the premises. Ms Daggar gave evidence that she has no notes of the meetings or the representations made. Ms Daggar is under the misapprehension that it is the lessors’ responsibility to ensure that the proposed business was lawful in the premises and to seek any requisite planning approval20 although she accepts that it is the lessees’ responsibility to obtain the food business licence.21 Further, Ms Daggar said that they have since determined that it would cost about $40,000 to fit out the premises with a commercial kitchen required to obtain a food business licence and that the development approval, which might not be approved, would take 3-6 months to be processed. 18 Letter from the applicants dated 12 January 2018. 19 Letter from the applicants dated 12 January 2018 terminating shop B lease. 20 See applicants’ submissions dated 5 June 2019 and the applicants’ letter to the new owner and Wave dated 12 January 2018. 21 Applicants’ statement 5 June 2019. -- 8 of 17 -- 9 She indicated that she understood that it was not the case that the premises could not lawfully operate as a coffee shop but that there were costs of which she and Ms Mackenzie were unaware when they signed the lease that were involved in being able to operate the premises as a coffee shop and that if they had known these costs they would not have signed the lease. She further claims that she was not warned of the penalties for operating the premises without a food business licence and believes she should have been told by the lessors to obtain legal advice and a financial plan. In response to questions regarding the contents of the lease Ms Daggar acknowledged that the lease made it clear that it was the lessees’ responsibility to obtain both the food business licence and any necessary development approval and that they knew this but were told by Mrs Lawrence and the agent that these approvals were not required. When taken specifically to clause 24.3 which provides that the lessee acknowledges that the lessor has given no warranty regarding the suitability of the premises for the permitted use she told the Tribunal that she did not look at this before signing; that she did not know to read the lease before signing it. The respondents’ response and evidence The respondents deny making any of the representations alleged. Mr Lawrence, in his statement of 10 May 2019, indicated that he thought the lessees had obtained a food business licence before they opened for business. Ms Daggar does not allege any representations were made by Mr Lawrence and he was not required for cross examination. Miss Rikki Macleod, an employee of Wave, gave evidence that she attended the first meeting in about November/December 2014 while the previous tenant was still in occupation. She recalled that the lessees sought a 5 year lease but that due to their inexperience Mr and Mrs Lawrence proposed a 1 year lease. She recalled no false or misleading statements being made. Miss Macleod said it is not her practice to give out information regarding zoning to prospective tenants and that she did not give any advice or information about zoning of the site to the tenants. She said that she was in the office at the time of the signing of this first lease by the applicants but does not recall who else was there. She said the lease Exhibit 1 is the lease that was signed by the parties and that she wrote the date only on the signing page of this document. Miss Macleod indicated that it was her practice to always provide a copy of the signed lease to the parties as soon as it is signed. Exhibit 1 is a lease for one year commencing on 1 March 2015 and expiring on 1 March 2016. Miss Macleod gave evidence that Exhibit 2 is the second lease between the parties for the premises and that all parties were in the room at the same time for the signing of this lease and that is was not backdated. She signed this lease for Wave on behalf of the lessors. Exhibit 2 is a lease commencing 1 April 2016 and expiring on 1 April 2019. Over the 18 months from signing the lease until Mr and Mrs Lawrence sold the site she recalls the applicants saying the business was going well. The applicants did not tell her the business was failing. In her experience she would expect to hear from a tenant who was experiencing financial difficulties, perhaps to break the lease or to find a new tenant. She recalled that towards the end of the second lease the lessees were offered a rent reduction which they declined. -- 9 of 17 -- 10 Ms Coory the owner/principle of Wave Realty Pty Ltd gave evidence. She said she was approached by Ms Daggar, who had heard from the then tenant that they were vacating the premises, with a view to the applicants entering a lease for the premises when the then current tenant vacated. She recalled Ms Daggar telling her, with some excitement, about the decorations proposed for their new business. She acknowledged that this was the first commercial lease she had prepared, as her background is in residential leasing, and agreed that the work undertaken by her was substandard. She was not aware of the requirement for disclosure statements to be provided by each of the lessee and the lessor so no disclosure statements were provided by either party and no waiver notice under s 21B(2)(i) of the Act was given by the lessees. Nor was she aware of the requirement for the lessees to provide to the lessors a financial advice report and a legal advice report. Accordingly, she did not require that lessees give the lessors either of these reports. Ms Coory denied making representations that the premises were fit for use as a coffee shop, saying that she understood it to be the tenants’ responsibility to ensure the premises may be used for the intended use, not that of the landlord or agent. She said that the applicants signed a 1 year lease for the premises on 28 January 2015 on the basis that this was a trial period and they would not be held to the lease if the business did not work out and they were unable to continue.22 This recollection was supported by a note from Miss Macleod to Ms Coory of January 2015. In response to the suggestion that this January 2015 summary of offer signed by Miss Macleod for Ms Coory’s attention23 was a concocted document Ms Coory explained that this was printed out from her system for these proceedings after Wave moved to its Scarborough premises and so printed out on the letterhead current at the time of printing rather than the letterhead applicable at January 2015. Miss Macleod was not cross examined by the applicants in relation to this document in which Miss Macleod outlined some key terms for Ms Coory, including that their intention to operate a coffee shop, subject to Council approvals, and that a one year lease with an option to renew was proposed as this was the applicants’ first business. During the lease term Ms Coory said that the applicants raised no complaints and they progressed to a three year lease from 1 April 2016. She explained the gap in the time between the cessation of the first lease and the commencement of the second lease for shop A was a rent free period. She said Ms Daggar signed a lease on 30 June 2017 to take the shop next door (shop B) to extend their growing business. Her evidence was that Ms Daggar later indicated she was struggling with the extension and decided to close it. Upon the termination of the lease for shop B a new tenant was found at a reduced rent and the new owner of the building offered the applicants a reduced rent for their premises, which they refused. When asked about the email from Wave to Ms Daggar dated 8 February 2018 asking if the lessees wished to renew their lease,24 Ms Coory indicated that this was a 22 Mrs Coory’s statement 29 August 2018 23 Attached to Mr and Mrs Lawrence’s statement of 31 July 2019. 24 Exhibit 6. -- 10 of 17 -- 11 computer generated email which she thought might be in respect of the lease for shop B. She said this issued in error as the lease for these premises had been terminated by the lessees in January 2018. Ms Coory said she observed that the shop hours were erratic, with the shop closing generally in the early afternoon. Mrs Coory produced the tenant ledger for 152 Hornibrook Esplanade showing that the applicants rented residential premises there from September 2013. Mrs Lawrence said that at her first meeting with Ms Daggar, while the previous tenant was still in occupation, due to the inexperience of the lessees the lessors offered the lessees a 1 year lease. She said that while this was not what the lessees wanted, the lessors stood firm and a lease in these terms was signed by the parties. She told Ms Daggar that during the first year if things did not work out to contact her and so long as rent was paid to the last day of trading they would be allowed to walk away. Mrs Lawrence recalls that the applicants were confident they would make the business work, with Ms Daggar saying that in 5 years they would be rich.25 Her evidence was that a one year lease was signed by the applicants on 28 January 2015 and then by her, witnessed by Ms Coory, on 19 February 2015 and that this is the lease that is Exhibit 1. Mrs Lawrence was not aware of the requirements for disclosure statements to be provided by the parties or for the lessees to provide to the lessors a financial advice report and a legal advice report. She said that ordinarily a solicitor handled these types of matters for she and her husband. Mrs Lawrence said that the lessees did not want to incur the expense of a solicitor being involved in the matter, so due to her own serious health issues she had Wave look after the leasing of the shop for the lessors. She obtained a copy of the signed lease. Mrs Lawrence said that there were discussions with Ms Daggar regarding the premises and the lease but that Ms Mackenzie did not attend these chats as she was at work. Mrs Lawrence said: (a) She did not tell the applicants to run the café without the requisite Council approvals; (b) That at the first meeting she had with Ms Daggar she gave Ms Daggar a copy of a letter from the Council dated 28 January 2002 detailing the penalty for not having a food service licence. This letter refers to the renewal of the food premises registration and licence for a business at the premises; (c) She was not a party to any discussion with the applicants about rezoning; (d) She was assured by Ms Daggar that they had a food service licence so was surprised when Ms Daggar called her in August 2016 admitting that she did not have the licence; 25 Mrs Lawrence’s statement dated 10 May 2019, addressing the Financial Declaration Assessment. -- 11 of 17 -- 12 (e) She denied knowing any person who works at the Council, or any councillor, and denied stating that she did; and (f) She made no representations about the nature and amount of business that would be generated, nor did she offer her opinion about these matters.26 Mrs Lawrence recalled a conversation with Ms Daggar regarding the suitability of the premises to obtain a food business licence. Mrs Lawrence recalls that she said the kitchen in the premises would be nearly compliant but that Ms Daggar told her she wanted to relocate the kitchen to the area previously occupied by the storeroom. Mrs Lawrence said she told Ms Daggar that this would be expensive, and required the ceiling in that area be repaired, and that Ms Daggar was dismissive of this concern saying ‘I can afford it I’ve sold my car.’27 Mrs Lawrence believed that the applicants had $14,000 cash available to them following the sale of their motor vehicle. Mrs Lawrence said she was told by the applicants that both Ms Daggar and Ms Mackenzie would be working in the shop and that Ms Mackenzie had a food handling certificate. She said that the hours of operation of the shop were erratic. As to the electricity Mrs Lawrence said the premises were rewired in 2007. Following a complaint by the applicants, she arranged for another electrician to look at the wiring. He told her that there was no wiring connection between the two shops and that the electricity was ‘tripping’ due to the applicants’ equipment.28 Mrs Lawrence said that the two shops on the land share a water meter and the four flats on the land share another water meter and that there is normal water pressure and a large hot water system.29 Further she stated that at no time in the period 1 March 2015 to 1 September 2016, when Mr and Mrs Lawrence sold the building, was she approached by either of the applicants regarding the failure of the business; rather she said that all indications from Ms Daggar were very positive about the future.30 The law Section 43AA relevantly provides: The lessor is liable to pay to the lessee reasonable compensation for loss or damage suffered by the lessee because: (a) The lessee entered into the lease, including a renewal or assignment of the lease, on the basis of a false or misleading statement or misrepresentation made by the lessor or any person acting under the lessor’s authority; The common law regarding misrepresentation is well settled. The applicants must prove, on the balance of probabilities: 26 Mrs Lawrence’s statement dated 10 May 2019. 27 Mrs Lawrence’s statement dated 10 May 2019, addressing the Notice of Dispute. 28 Mrs Lawrence’s statement dated 10 May 2019, addressing Ms Daggar’s letter of 12 January 2019. 29 Ibid. 30 Mr and Mrs Lawrence’s statement 31 July 2019. -- 12 of 17 -- 13 (a) That one or more representations were made, as alleged, by or on behalf of the lessor; (b) That the lessees reasonably relied upon the truth and accuracy of the representation/s; (c) That the lessees were thereby induced to enter the subject lease; (d) That the representation/s were false or misleading; (e) That the lessee sustained consequential loss or damage; and (f) The nature and quantum of that loss or damage.31 Consideration Ms Daggar’s evidence was inconsistent in a number of respects; she claimed there were misrepresentations by the respondents about the lawful use of the premises but then acknowledged that the issue was actually that the respondents did not tell them of the time and money involved in obtaining the approvals to operate lawfully. Ms Daggar sought to downplay the applicants’ familiarity with the area and the premises saying they were new to the area and to Australia. The tenant ledger indicates they rented at the location from September 2013, so would have been familiar with the area at the time of signing the lease for the premises. She was also inconsistent in relation to her explanation of what occurred to the first lease when the second lease for the premises was signed. Items in the Timeline undermine Ms Daggar’s allegations concerning the representations and when they were made. The Tribunal finds that Ms Daggar was an unreliable witness. The Tribunal places no weight on the evidence of Ms Mackenzie as she only attended the first meeting and could not recall any misleading statements being made. Thus Ms Mackenzie was unable to support Ms Daggar’s evidence. Miss Macleod presented as an honest and reliable witness with a good recall of events. Her oral evidence was supported by contemporaneous documents. Ms Coory explained the heading on the note by Miss Macleod. Her evidence supported that given by Mrs Lawrence and Ms Coory. The Tribunal accepts Miss Macleod’s evidence. Mr Lawrence was not cross examined and his statement covered the same matters as Mrs Lawrence’s. Other than corroborating Mrs Lawrence’s evidence, it is not necessary for the Tribunal to place any further reliance upon Mr Lawrence’s evidence. Mrs Lawrence was consistent across her oral and written evidence and presented clear, reliable and logical evidence and the Tribunal accepts her evidence. To the extent there were documents in evidence Mrs Lawrence’s evidence was supported by those documents. Mrs Lawrence was weak in respect of her knowledge of the Act and council’s planning laws. 31 Hennessy v Miltcoe Pty Ltd [2006] RSLT 15. -- 13 of 17 -- 14 Mrs Coory presented as an honest witness. With the benefit of hindsight she recognized the shortcomings of her working knowledge of the Act. The Tribunal accepts Ms Coory’s evidence. Disclosure statements It is Ms Daggar’s contention that if the lessors, themselves or by their agent, had required that the lessees provide to the lessors the disclosure statement, the legal advice report and the financial advice report that the lessees’ lack of business prowess and financial backing would have been discovered prior to signing the lease, they would have been deemed high risk and they would not have been allowed to sign the lease at all. It is unclear from her evidence who would have prevented the lessees from signing the lease. Put another way, Ms Daggar claims that the lessees would have been saved from themselves if the parties had been required by the respondents to comply with the various requirements of ss 21B, 22A and 22D of the Act and that it was the lessors’ responsibility to require the parties, and in particular the lessees, to do these things. It is undisputed that prior to entering the first lease, or any subsequent lease, for shop A: (a) The lessor did not provide to the lessees a disclosure statement or otherwise satisfy the requirements of s 21B of the Act; (b) The lessee did not provide to the lessor a disclosure statement under s 22A of the Act; and (c) The lessees did not give to the lessor a financial advice report and a legal advice report under s 22D of the Act. Further, it is common ground in relation to any lease for shop A that: (a) The lessee did not terminate the retail shop lease under s 21F of the Act for failure to comply with s 21B of the Act; and (b) The lessor did not apply to QCAT under s 22E of the Act for an order that the lessees provide the disclosure statement, the financial advice report or the legal advice report. It was not the respondents’ responsibility to require that all disclosure statements be provided. Nor was it the respondents’ responsibility to require that the applicants provide the legal and financial advice report. Each party to the leases had obligations under the Act that they did not satisfy. Rights flowed from this, but these rights were not exercised by the parties. Failure to provide the disclosure statement or to require the applicants to provide a disclosure statement does not constitute a representation by the lessors. The Tribunal finds that had the lessors provided the disclosure statement to the lessees, the prescribed particulars required to be addressed in that disclosure statement32 32 Retail Shop Leases Regulation 2006 (Qld), s 3. -- 14 of 17 -- 15 would not have addressed any of the matters in respect of which the lessees say misrepresentations were made. The Tribunal finds that even if the parties had complied with the requirements of ss 21B, 22A and 22D of the Act, the lessees would not have been dissuaded from entering the lease. It is unclear the basis upon which the applicants say they were not given the opportunity to obtain legal or financial advice. In any event, this does not constitute a misrepresentation by the respondents. The leases The first lease for shop A was signed by the lessees on 28 January 2015 and by the lessors on 19 February 2015. Any representations made after the date the lease was signed are not relevant. In light of the Tribunal’s findings set out below in relation to the allegations of misrepresentation, it is not necessary for findings to be made in relation to the terms of each of the leases. The allegations of misrepresentation The applicants admit they were naïve and inexperienced. In their submission of 5 June 2019 the applicants observed that they had no real understanding of what they were getting themselves into and that they made an uninformed choice. The Tribunal accepts this concession; the applicants admitted they did not obtain legal or financial advice in relation to the lease or the business, they entered the lease without a business plan, and had no business experience. Mrs Daggar said she did not read the lease. The applicants believed the respondents should have stopped them from entering into the lease due to the applicants’ inexperience. The respondents indicated that they had no interest in securing tenants who would fail. In an endeavour to assist the applicants the lessors proposed a one year lease. Ms Daggar’s evidence was that the respondents failed to tell the applicants of the requirement to obtain approvals from the Council but that the applicants determined this requirement themselves prior to signing the lease.33 On the applicants’ own material34 they admit that they made enquires of the Council prior to entering the first lease for shop A and were informed by the Council that a food business licence and a change of use were required to operate the café. The applicants said having determined that a change of use application was required to be made to the Council that they decided not to proceed with the café. Ms Daggar said they advised Ms Coory and Mrs Lawrence of this Council requirement and were told by them that this information was wrong. She says that both Ms Coory and Mrs Lawrence told them that they were allowed to run a café at the premises and to go ahead. The evidence of Ms Daggar was that as a result of this information from the Council the applicants changed the ethos of the premises to ‘shop’ and not ‘café’.35 33 See statement attached to applicants’ timeline. 34 See applicants’ timeline and Exhibit 5. 35 Ms Daggar’s statement ‘Lessor Declaration’ -- 15 of 17 -- 16 During the course of the first year of operation the applicants began to sell baked items, deciding to operate the premises without the requisite Council approvals. Mrs Lawrence denied saying to the lessees to proceed to operate the cafe without obtaining the requisite approvals from the Council. The applicants observed that they still required a change of use at 19 October 201836 having obtained a conditional food business licence in September 2015. Despite this, they entered the new three year lease for shop A on either of 4 April 2016 or August 2016 and a lease for the extension of the use into shop B on 30 June 2017. The Tribunal finds that the respondents made no representations regarding the zoning of the property. As to the complaint that the respondents did not tell the applicants of the requirement to obtain Council approvals (including the time and cost associated with this) this does not constitute a representation. The Tribunal finds that the respondents made no representation regarding the Council’s requirements to operate the premises as a café (including for a food business licence, a development application and compliance with Council’s by-laws), did not tell the applicants that the Council’s information to them was wrong and did not say that the applicants need not observe the Council’s requirements. Further, the Tribunal finds that the applicants made their own enquiries regarding the Council’s requirements for the lawful operation of the premises and having determined the Council’s requirements changed the proposed use of the premises to avoid those requirements. Later, they proceeded to knowingly operate the premises without Council approvals. If the Tribunal is wrong and such representations were made, then the Tribunal is satisfied that there was no reliance upon such representations by the applicants and they did not induce the lessees to enter into the lease. The applicants ignored the Council requirements during their operation of the business. In full knowledge of the Council’s requirements they entered into a second lease for shop A and a lease for shop B. Given this, the Tribunal finds that the applicants would have entered the first lease for shop A regardless of the representations made concerning whether it was necessary to obtain various Council approvals to lawfully undertake the use. In the course of the evidence it became apparent that many of allegations related not to representations made by the respondents but to alleged failures by the respondents to advise the lessees of certain facts of which the lessees say the respondents should have been aware. Further, the applicants said that because they were naïve, the respondents were ‘morally’ obliged to tell them these facts. This was relevant to the allegations regarding the suitability of the electricity and water supplies and the cost of installing a commercial kitchen. The Tribunal finds that there were no representations made by the respondents in relation to the suitability of the supply of water and electricity to the premises for the use proposed or the cost of installing a commercial kitchen. The terms of the lease required that the lessees satisfy themselves of these matters. 36 Exhibit 5. -- 16 of 17 -- 17 The 28 January 2002 letter regarding the renewal of the food business licence for the premises does indicate that such a licence had been in effect for the premises at about that time. Mrs Lawrence said she provided the letter to Ms Daggar to show the penalty for failing to obtain the licence. Mrs Daggar denies having seen the letter other than in the preparation of these proceedings. The Tribunal finds that the applicants were told that a food business licence had been obtained for the premises in the past. This is not a misrepresentation. The Tribunal makes no finding in relation to the period of time the food business licence was previously held. The Tribunal does not accept that by providing this letter the respondents represented that a food business licence could be obtained for the premises as leased by the applicants. As to the allegations of misrepresentations in relation to the desirable location of the premises, the amount of foot traffic past the site and the income able to be generated by the proposed use, the Tribunal finds the respondents made no such representations. As to the allegation that respondents told the lessees they should operate the business and that as the lessors had good friends in the Council employees it would all be okay Ms Daggar’s evidence was that it was Ms Coory’s friend who had these connections. Both Mrs Coory, and Mrs Lawrence,37 denied having such connections. Mrs Lawrence denied saying she had any such connections. The Tribunal finds that the respondents did not make any such representations. If the Tribunal is wrong and such representations were made, the Tribunal finds that there was no reliance by the applicants upon the representations inducing the applicants to enter into the lease. As the Tribunal has observed, the applicants chose to operate the premises without the benefit of the requisite Council approvals and would have done so regardless of the representations made about this. Further, the applicants expanded the business and renewed the lease in the face of poor trading levels and fully knowing the costs involved in obtaining the Council approvals, demonstrating their commitment to operating the business in spite of the adverse trading conditions. The application is dismissed. It is unnecessary to consider quantum. There will be no orders as to costs. Orders The application is dismissed. 37 Mrs Lawrence’s statement dated 10 May 2019, addressing the Financial Declaration Assessment. -- 17 of 17 --