Broben & Anor v Hatfield [2016] QCAT 341

CITATION: Broben & Anor v Hatfield [2016] QCAT 341 PARTIES: Paul Anthony Broben & Jason Warren Boland As Trustee (Applicant) v Darren Hatfield (Respondent) APPLICATION NUMBER: RSL061-15 MATTER TYPE: Retail shop leases matters HEARING DATE: 28 July 2016 HEARD AT: Southport DECISION OF: Member Steven Holzberger Member McBryde Member Kairl DELIVERED ON: 19 September 2016 DELIVERED AT: Brisbane ORDERS MADE: 1. Darren Hatfield must pay to Paul Anthony Broben & Jason Warren Boland As Trustees the sum of $5,268.75 by 4:00 pm on 30 October 2016. 2. The application and counter-application are dismissed. CATCHWORDS: RETAIL SHOP LEASE-ABANDONMENT OF PREMISES - whether Lessee’s conduct amounted to wrongful repudiation of lease under lease or at common law Property Law Act 1974 (Qld) ss 124, 130 Retail Shop Leases Act 1994 (Qld) s 64 The Progressive Mailing House Pty Ltd v Tabali (1985) 157 CLR 17 Walsh Investments Pty Ltd & Ors v SCK Properties Pty Ltd & Ors [2016] QDC 77 -- 1 of 7 -- 2 APPEARANCES: APPLICANT: Paul Anthony Broben and Jason Warren Boland as Trustees RESPONDENT: Darren Hatfield REPRESENTATIVES: APPLICANT: Represented by Janine Broben RESPONDENT: Represented by Darren Hatfield REASONS FOR DECISION [1] From the 1 November 2007 until 8 October 2014, Mr Hatfield was the tenant of a property situated at 3 Sportsman Avenue, Mermaid Beach. For the whole of that time, the premises were owned by Mr Broben and Mr Boland as trustees (‘the Trust’) and were used by Mr Hatfield to conduct his business of the sale of aquarium fish and aquarium products. [2] Initially he occupied the premises pursuant to a three-year lease commencing on 1 November 2007. On its expiry on the 31 October 2010 he continued to occupy the premises as a monthly tenant until a new lease commencing on 1 December 2011 and terminating on 30 November 2014 was put into place at his request. [3] The Trust retained L J Hooker Surfers Paradise as managing agents for the property at least for the time which is relevant to these proceedings. The terms of that appointment and the duties of the agent were not disclosed but it appears from the evidence that most if not all of Mr Hatfield’s queries and issues were directed to that agent. It is the evidence of Ms Janine Broben, who was granted leave to appear as the Trust’s representative, that many of those queries or issues were not passed on to the Trust. As a consequence, communication between the parties was poor. [4] There was throughout Mr Hatfield’s occupation of the property a large fig tree growing at the rear of the property. The tree was a source of ongoing aggravation for Mr Hatfield and according to his evidence the neighbours of the property. Among other things, it was home to a large colony of bats but more significantly shed large quantities of fruit and foliage, apparently blocking gutters and drains of the premises. [5] It was contended by Mr Hatfield that the trimming of the fig tree was the responsibility of the Trust and in her evidence, Ms Broben conceded as much. The Trust had at least once during the term of the tenancy at its expense trimmed the fig tree. We are not convinced that the obligation to -- 2 of 7 -- 3 trim the tree is not part of the tenants’ general obligations to maintain the premises under clause 5 of the lease but it is not necessary to consider this further as nothing turns on it. [6] Periodically throughout the tenancy, water has leaked through the roof of the premises during periods of heavy or ongoing rain. [7] There is very little evidence by either party and none by qualified third parties of the actual cause of the water leaks although both appear to accept that the blockages caused by the fig tree are at least in part responsible for the leaks. [8] Nevertheless, it is accepted that ongoing water issues have disrupted Mr Hatfield’s business on occasion and no doubt, he has suffered some loss as a consequence. [9] Mr Hatfield had throughout the tenancy made numerous complaints to L J Hooker Surfers Paradise about the water leaks. He felt that the Trust’s responses to those complaints were in general untimely and inadequate. He acknowledges that he was less persistent in seeking a solution to the water problem during the lengthy dry periods of the tenancy. He attributes his negotiation of a new lease in 2011 without conditions requiring the problem to be rectified to that compliancy. [10] A significant rain event occurred at Mermaid Beach in late June 2014 resulting in water leaking through the roof into the premises. The leak was sufficiently serious to cause damage to stock which was on the premises at that time. [11] That event appears to have been the last straw for Mr Hatfield. He concluded that ‘the building was becoming unworkable and too dangerous to continue to operate my businesses.’1 [12] Having reached that conclusion it is Mr Hatfield’s evidence that: a) In June 2014 he advised the applicant that he would not be renewing his lease; b) In July 2014, at the premises, he meet with Phillip Dunn, who by this stage was the person he dealt with at L J Hooker Surface Paradise who after inspecting the premises told him ‘he could easily get me out of the lease’;2 c) He commenced trading from other premises on 14 September 2014; d) He vacated the premises on 30 September 2014 and attempted to return the keys to the premises to L J Hooker Surface Paradise on 1 October 2014; 1 Respondent’s statement, 29 January 2016, at [37]. 2 Ibid, at [39]. -- 3 of 7 -- 4 e) He was advised by Michelle Hanrahan of L J Hooker Surface Paradise that the lease ‘was up’ on 30 September 2014 and the rent for the month of September 2014 was outstanding; f) He paid the September 2014 rental and returned to the keys to L J Hooker on 7 October 2014 but was later advised by both Michelle Hanrahan and Phillip Dunn that he would have to pay the rent until the expiry date of the term. [13] If that evidence is accepted in full, Mr Hatfield has clearly committed a fundamental breach of his obligation under the lease by abandoning the premises before the expiry date unless: a) The Trust expressly or impliedly agreed to its early termination; or b) Mr Hatfield had validly terminated the lease. Was the lease terminated by agreement? [14] It is not suggested by Mr Hatfield that the Trustee expressly agreed to terminate the lease or did anything to indicate its acceptance of termination other than the statement attributed to Phillip Dunn at his meeting with Mr Hatfield. [15] It is almost inconceivable that Phillip Dunn would have authority to bind a principal in those circumstances and there is no evidence that he did, however, even accepting Mr Hatfield’s evidence of the conversation with him at best Phillip Dunn only ever said that Mr Hatfield could get out of the lease not that he had . Mr Hatfield does not suggest that Mr Dunn subsequently obtained the Trustee’s agreement to the termination or represented that he had. The lease was not terminated by agreement. Has the lease been validly terminated by Mr Hatfield? [16] There is no provision in the lease, which permits the tenant to terminate the lease as a consequence of a breach by the landlord. [17] Clause 12.2 of the lease permits the tenant to terminate in circumstances where the premises are partially or wholly unfit for use or the tenant cannot gain access but only on giving 30 days’ notice if the landlord fails to elect to reinstate within three months of the event causing that damage and fails to carry out the reinstatement work in a reasonable time. [18] Clearly this has not occurred. There is no evidence that the premises are or were wholly or partially unfit for use. Mr Hatfield continued to occupy them and trade from them until 30 September 2014. The water problems, which caused him to leave, had been ongoing throughout his occupancy and there is no evidence that the latest weather episode was significantly worse than those that preceded it. [19] There is no evidence to support an assertion that the lease is frustrated, fundamentally breached by the landlords’ failure to fix the water issues or that consideration is totally failed. -- 4 of 7 -- 5 [20] There is no evidence that Mr Hatfield purported to give notice of termination of the tenancy pursuant to s 130 of the Property Law Act 1974 (Qld) (‘Property Law Act’). [21] There were other remedies available to Mr Hatfield for the perceived breaches of the lease by the Trust but purporting to terminate the tenancy and abandon the premises was not one of them. By his own evidence, it is clear that he did abandon the premises. He made his intention to do so known both to Ms Broben and Mr Dunn, removed stock and some fixtures from the premises, commenced trading at other premises ,ceased to trade from the premises on 30 September 2014 and handed back his keys to the premises on 8 October 2014. In so doing, he wrongfully repudiated the lease. [22] The abandonment of the premises is a breach of an essential term of the lease pursuant to clause 9. It is a wrongful repudiation of the lease at common law.3 [23] The Trust is entitled in those circumstances to accept the repudiation, terminate the lease at common law and re-enter the premises and then pursue its claim for damages at law. This is what it has done. There is no specific provision in the lease relating to re-entry and but in any event notice under s124(1) of the Property Law Act 1974 is not required.4 Applicant’s Damages [24] The Trust claim for damages has varied over the course of this matter but was define by Ms Broben at the commencement of the hearing as follows: a) Rent for the period 1 October 2014 to 30 November 2014 $6,112.08 b) Make good costs $1,735.00 c) Rubbish removal $ 400.00 d) Skip Hire $ 395.00 e) Electrician costs $ 360.00 f) Air conditioner maintenance $ 510.00 Subtotal $9,512.08 Less security bond forfeited $3,333.33 Total $6,178.75 [25] Ms Broben confirmed that the Trust had already forfeited the bank guarantee provided by Mr Hatfield pursuant to the lease in the sum of $3,333.33 and this amount could be offset against the damages claimed. 3 The Progressive Mailing House Pty Ltd v Tabali (1985) 157 CLR 17. 4 Wash Investments Pty Ltd & Ors v SCK Properties Pty Ltd & Ors [2016] QDC 77. -- 5 of 7 -- 6 She rounded the amount to $6,112.08 being the equivalent of the rent component. [26] It is clear from the evidence of both parties that the works undertaken by the Trust after its re-entry were completed over October and November 2014 and beyond the expiry date of the term. It is not suggested that the premises could reasonably have been expected to be relet by the Trust during the remainder of the term. [27] The Trust produced invoices to support all of the damages claimed. Where the Trust effected works on its own other than those required to make good the premises the cost of the make good works were separated out in covering correspondence or in separate invoices. We are satisfied that the amounts claimed have been correctly calculated. [28] In those circumstances, we allow the claims contained in paragraph [24](a)-(e). [29] We are not prepared to allow the claim for air-conditioning costs. The evidence by both parties is too vague to determine which of those costs is the responsibility of Mr Hatfield and which is the responsibility of the Trust. In addition we are not satisfied that the Trust can claim the costs of servicing the Delonghi air-conditioning unit which on the evidence was abandoned by Mr Hatfield but has been forfeited by the Trust pursuant to the terms of the lease. [30] Mr Hatfield’s claim for return of the security bond, rental for his new premises and relocation costs must fail because he has not validly terminated the lease. [31] His claim for reimbursement for replacement of air-conditioning units in 2009 is out of time,5 but in any event is unsupported by the evidence. [32] We accept that some of Mr Hatfield’s stock was damaged in June 2014 but he has not provided any evidence of the actual damage suffered by him. His evidence is that the cost of the stock damaged was recovered by selling at a reduced price. We are unable to assess damage. [33] Mr Hatfield paid the sum of $400.00 for the cost of replacing a grill over a drain in the carpark of the premises. Ms Broben’s evidence is the Trust accepts that this is its responsibility and would have paid the amount to Mr Hatfield on production of an invoice. In those circumstances, we allow the sum of $400.00 to him. [34] Accordingly we assess the amount payable by Mr Hatfield to the Trust as follows: a) Rent for the period 1 October 2014 to 30 November 2014 $6,112.08 5 Retail Shop Leases Act 1994 (Qld) s 64. -- 6 of 7 -- 7 b) Make good costs $1,735.00 c) Rubbish removal $ 400.00 d) Skip Hire $ 395.00 e) Electrician costs $ 360.00 Subtotal $9,002.08 Less security bond forfeited $3,333.33 Total $5,668.75 Less offset claim allowed $ 400.00 Total $5,268.75 Orders [35] The Tribunal orders: 1. Darren Hatfield must pay to Paul Anthony Broben & Jason Warren Boland As Trustees the sum of $5,268.75 by 4:00 pm on 31 October 2016. 2. The application and counter-application are dismissed. -- 7 of 7 --