Briridge Pty Ltd v Charter Hall Real Estate Management Services Pty Ltd [2014] QCAT 469

CITATION: Briridge Pty Ltd v Charter Hall [2014] QCAT 469 PARTIES: Briridge Pty Ltd t/as Civic Video Springfield (Applicant) v Charter Hall Real Estate Management Services Pty Ltd (Respondent) APPLICATION NUMBER: RSL042-13 / RSL043-13 MATTER TYPE: Retail shop leases matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Senior Member O’Callaghan Member McBryde Member Judge DELIVERED ON: 17 September 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. The applications are dismissed. 2. Any application and submissions in support for costs orders be filed within 14 days. CATCHWORDS: RETAIL SHOP LEASE DISPUTE – CLAIM FOR COMPENSATION – claim for audited accounts – whether tenant had suffered any loss as a result of landlords conduct – where no evidence provided by tenant Retail Shop Leases Act 1994 (Qld) 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 (Qld) (QCAT Act). REASONS FOR DECISION [1] In 2009 Briridge Pty Ltd (‘the applicant’) entered into a lease of premises in the Springfield Fair Shopping Centre. It operated a video shop out of the -- 1 of 9 -- 2 premises. The applicant vacated the premises in December 2013. The applicant claims to have suffered loss as a result of certain conduct on the part of Charter Hall as landlord and owner of the shopping centre. [2] The applicant has made two applications to the Tribunal seeking orders in relation to this conduct. [3] The matters were heard together as they involved the same parties and the same lease. [4] The hearing was conducted on the papers for reasons detailed below. [5] In RSL042-13 the applicant seeks compensation in the sum of $250,000 being loss it says it suffered because of a decline in business caused by the fact that: a) Charter Hall did not spend its advertising budget in the years 2009 to 2011; and b) Charter Hall made changes to the configuration of the car parking at the centre. [6] In RSL043-13 the applicant alleges that it has paid excess funds of $10,100 towards outgoings and seeks the return of these funds. It also seeks an independent audit of the statement of outgoings for the shopping centre. Background [7] It is necessary to refer to the history of how these applications have progressed in the Tribunal to appreciate why there was limited material available to be considered at the hearing and why the matter was heard on the papers. [8] Directions were issued in both matters following the filing of the notices of dispute. The directions required the applicant to file the material upon which it intended to rely by a certain date. [9] The applicant did not file material. Following interlocutory applications, further directions were issued in October 2013 requiring the applicant to file the material it intended to rely on including expert reports by 18 November 2013 and for Charter Hall to file its material by 19 December 2013. [10] The applicant did not file any material. A directions hearing was held in December 2013 and further orders were made requiring the filing of material and the matter was set down for an experts conclave in February 2014. [11] The only evidence filed by the applicant was two reports by Mr Russell White. Mr White had already been involved in the proceedings. In the notice of dispute Mr White (who was stated to carry on and operate under -- 2 of 9 -- 3 a business name ‘National Federation of Independent Business’) was nominated as the representative for the applicant. [12] Mr White appeared at directions hearings on behalf of the applicant and communicated with the registry on the applicant’s behalf. It is noted that in correspondence with the registry he referred to the applicant as ‘we’.1 [13] The first report dated 16 November 2013 dealt with changes to the car parking in the centre and the impact on the applicant. The document was headed ‘Springfield Fair Car Parking Changes – Mr Russell White – Community Planner’. An amended report under the same heading was filed on 18 December 2013. [14] The second report dated 19 December 2013 was provided under cover of a letter written on the letterhead of National Federation of Independent Business. It was headed ‘Civil Video Expert Witness Statement – Mr Russell White – Community Planner’. [15] Charter Hall provided a number of expert statements: a) John Norling – chartered accountant and retail consultant; b) Peter Haley – chartered accountant; c) Marc Mrisic – traffic engineer. [16] An experts conclave was held in February 2014. Mr White attended as the expert for the applicant. Mr Haley, Mr Norling and Mr Mrisic attended for Charter Hall. [17] The Tribunal Member who conducted the experts conclave issued directions following the conclave directing the applicant to file further experts reports from a chartered accountant, a traffic and transport engineer and an experienced retail consultant. Whilst the reasons for the issuing of these directions are not given one can assume that the ability of Mr White to give expert evidence on behalf of the applicant was called into question. [18] On the day after the due date for filing its experts reports the applicant filed one report being a report from a traffic consultant, Mr Chris Wright. [19] Charter Hall filed an application to strike out both applications based on the applicant’s failure to comply with Tribunal directions. [20] Mr White appeared at the hearing of that application on behalf of the applicant. I pointed out to Mr White at that hearing that he appeared to be acting in a number of capacities in the matter. He was purporting to be the applicants advocate, representative and expert. I advised that the applicant would need to make a decision about what role Mr White was to take in the proceedings. Mr White advised that he would not continue to 1 For example in emails to the Tribunal 19 November 2013. -- 3 of 9 -- 4 represent himself as ‘the applicant’s expert’ but would instead continue as the applicant’s representative and advocate. [21] In those circumstances Mr White withdrew from the record the two expert reports that he had provided earlier. [22] He advised that the applicant had decided not to engage a chartered account or retail specialist to provide expert reports. [23] In those circumstances I required Mr White to nominate what material the applicant was intending to rely on. Mr White confirmed that the only material that the applicant would be relying on were the notices of dispute and the traffic report of Mr Wright. [24] I refused the application to strike out the proceeding. Charter Hall’s counsel indicated that in circumstances where the applicant had put forward no evidence of any substance, to avoid incurring any further excessive costs they would consider not relying on their expert evidence (other than Mr Mrisic if necessary) so that the hearing could proceed on the papers. [25] Following the hearing on the strike out application Charter Hall formally advised the Tribunal that it would only rely on the application and the response documents. It opposed the Tribunal having regard to the report of Mr Wright however if the Tribunal admitted it as evidence then it said it should be given little weight and it would then rely on the report of Mr Mrisic. [26] Because of the limited material being relied on by the parties the hearing was able to be conducted on the papers. The Applications RSL042-13 [27] The applicant claims compensation of $250,000. In the notice of dispute it says that it relies on s 41 and s 43 of the Retail Shop Leases Act 1994 (Qld) (‘the Act’). [28] Section 41 of the Act relates to promotion and advertising by the lessor. It does not give any rights to the lessee. It provides that if a lessee is required to pay amounts for promotion and advertising (‘promotion amounts’) and under the lease these amounts are not treated as part of the lessors outgoings, then the lessor must only apply those promotion amounts for promotion advertising directly attributable to the shopping centre. [29] Section 43 of the Act provides that the lessor is liable to pay to the lessee reasonable compensation for loss or damage suffered by the lessee because the lessor engaged in certain conduct specified in the section. -- 4 of 9 -- 5 [30] The applicant does not articulate the basis of its claims however its claim appears to be under s 43(b), that it has suffered damage because the lessor took action ‘that substantially restricts or alters access by customers to the leased shop or the flow of potential customers past the shop’2 in that: a) The lessor did not spend all of the promotion amounts; and b) The lessor made changes to the car park. [31] In the notice of dispute, the applicant claims Charter Hall has:  Changed and reduced car parking numbers;  As at the date of the claim has notices from the Ipswich City Council to provide more spaces to meet planning approvals;  The changes to the car parks in the last four to five years have reduced the number car parks one of which was directly outside the video shop;  The changes in the car park have affected customer numbers by between 7 to 16 per cent; [32] It claims a loss of income in excess of $250,000. Its says that loss is evidenced by the fact that another video shop owned by the applicant in the same catchment area was more profitable or at least operated at less of a loss in the same period. [33] In its response Charter Hall: a) Denies any breaches of the Retail Shop Leases Act in relation to promotional funds. It says any unspent promotion funds were carried forward. It says it also contributes to the promotional fund although not required to do so. It says the promotion funds of the centre are audited. b) In relation to the car park changes it says:  It was brought to its attention in March 2013 that a number of the parking bays did not meet the most recent development application requirement which stipulated that a total of 279 car parks were required on site.  As a consequence there was some redevelopment of the car parks and the centre now has the required 279 car parks.  Car parking bays in front of the Civic Video shop have remained constant, other than a recent amendment in early 2013 to incorporate some bays designated for parents and disabled. This resulted in the reconfiguration of one bay near the shop.  The lessor is not responsible for any loss of profit. 2 Retail Shop Leases Act 1994 (Qld) s 43(b)(1) and (ii). -- 5 of 9 -- 6 The Evidence Changes to car parking: [34] The only evidence relied on by the applicant in its claim for compensation as regards the car parking is the report from Chris Wright the traffic consultant with TT & Consulting.3 [35] In his report Mr Wright notes that:  The applicant asserts that the primary reason for the closure of their video store in December 2013 was because of the lack of trade ‘caused by an inadequate parking facilities, mismanagement of the centre and lack of transparency in regards to charges arising from the Coles extension completed in 2008’.  He relies on onsite observations, tenant testimonials and documentation.  The Coles expansion led to an adjustment to car parking.  He ‘understands’ limited information was available to the applicant leading up to the lease renewal in 2008.  The disclosure plans given to the applicant represented more car parking in the vicinity of the shop then ultimately occurred.  The applicant alleges that some of the car spaces near the shop were used by a liquor store as a loading bay.  He saw a refuse bin being stored in a car park.  Although there has been a general downward trend in the level of trading in video stores ‘it is understood’ that the trading of the applicants store in Springfield Fair shopping centre ‘has decreased at a rate faster than the average trading of the Civic Video store’.  It is likely that the issues identified in his report are likely to have had a negative influence on the applicants trading. [36] I have given little weight to the report of Mr Wright for the following reasons:  He says he has relied on information the details of which have not been provided, for example: i) site visits – how many and when; ii) tenant testimonials - from which tenant? were they written/oral; 3 Report dated 28 March 2014. -- 6 of 9 -- 7 iii) documentation – there is limited details. He says the documentation includes ‘disclosure’ and ‘as existing plans’. He provides an extract of these plans in the body of the report but there are no details of the plans such as dates and sources.  He basis his report on a number of assumptions for which there is no evidence, for example: i) Regarding the renewal of the applicants lease. ‘It is understood that limited information regarding the changes due to the extension was made available to the proponent’. ii) Regarding the use of the car spaces for loading for the liquor store he asserts ‘this temporary informal loading however is alleged by the proponent to have occurred for the majority of the 2008 to 2013 tenancy during typical business hours, with an average frequency of four times a week’. ‘This impacts the tenancy specifically due to the fact that typically between 55 to 60 per cent of rentals occur between normal business hours’. These assertions are made without reference to any evidence at all.  The report also makes allegations regarding the measurement of the car spaces not conforming to Australian Standards. The author appropriately points out that ‘such instances of non-compliance’ (even if correct) ‘may not have directly impacted the tenancy’.  His finding as to the financial impact on the applicants business is made without reference to any data. It was based simply on what he had been told by the applicants. [37] Even if there was some evidence to support the assumptions upon which the report is based, Mr Wright’s findings are equivocal at best. ‘It is considered likely that the issues identified within this report are likely to have had a negative influence …’ [38] As such even if it is accepted that there was some adjustment to the car parks there is no cogent evidence to support a finding that such an adjustment led to a decline in the applicant’s business. It was not necessary for the Tribunal to consider the report of Mr Mrisic filed by Charter Hall. The promotion funds [39] The applicant provides no evidence in relation to the allegation that Charter Hall failed to comply with its obligation with respect to the use of promotion payments. -- 7 of 9 -- 8 [40] Even if it is the case that not all of the promotion funds were used in a particular year there is no obligation on the lessor to do so under s 41 of the Act as suggested by the applicant. [41] There is no accounting data provided by the applicant to support any claim for the loss of $250,000. The only evidence is a sheet attached to the notice of dispute. We do not know who prepared this or where is came from. It simply shows that there was a reduction in the profits of both of the applicant’s video stores but more of a reduction in the Springfield Fair shop. [42] The applicant was directed by the Tribunal to provide a forensic accounting report. He failed to do so. [43] The application is dismissed. RSL043-13 [44] In this application the applicant asks for orders that:  an independent audit be undertaken of outgoings for the centre for the last six years.  after the independent audit is undertaken that the money that has been charged to the applicant that was not due be repaid. It says the claims is made pursuant to s 37 of the Act. [45] No evidence has been filed by the applicant to support the claim. [46] Charter Hall in its response disputes that it has not complied with its obligations under the Act to provide audit statements. [47] Section 37 of the Retail Shop Leases Act provides relevantly that: (2) If under a retail shop lease, the lessee is required to pay all or part of the lessors outgoings for the retail shopping centre or leased building in which the leased shop is situated – … (c) The lessor must give the lessee an audited annual statement in the approved form of the outgoings within 3 months after the end of the period to which the outgoings relate. … (5) The audited annual statement must – (a) be prepared by a registered auditor in accordance with auditing standards generally accepted in the Australian accounting profession; and (b) contain the auditor’s opinion on whether the statement presents fairly the lessor’s outgoings for the accounting period to which it relates in accordance with the lessor’s financial records and this Act; and -- 8 of 9 -- 9 (c) compare the annual estimates of the lessor’s outgoings with the amount actually spent by the lessor for the outgoings during the period; and (d) compare the total amount actually spent by the lessor for outgoings during the period with the total amounts actually paid by lessees to the lessor during the period. [48] The respondent says:  That for the financial years ended June 2008 to June 2013 it obtained from Camphin Boston Chartered Accountants audited annual statements for the promotional income and expenditure for the centre;  That Camphin are registered as an auditor under the Corporations Act 2001 (Cth).  The statements were prepared in accordance with the Australian accounting standard.  The statements comply with the requirements of s 37 of the Retail Shop Leases Act in that they disclose and compare the total amount actually spent by Charter Hall for outgoings during the period with the total amounts actually paid by the tenants to the respondent during the period. [49] In the absence of any evidence from the applicant, the Tribunal has no reason to doubt the accuracy of the response filed by Charter Hall and as such finds that the application seeking the audit and recovery of any overspent funds should be rejected. [50] The application is dismissed. -- 9 of 9 --