Blue Moon Grill Pty Ltd v Yorkey's Knob Boating Club Inc [2005] RSLT 1

Blue Moon Grill-v- Yorkey’s Knob Boating Club Inc - Dispute 09/05 Decision 1 12 April, 2005. [2005] RSLT 1 THE RETAIL SHOP LEASES ACT In the matter of Dispute No 09/05 BLUE MOON GRILL PTY LIMITED - Claimant - and – YORKEY’S KNOB BOATING CLUB INC - Respondent DECISION Given in Cairns on 12 April, 2005 -- 1 of 5 -- Blue Moon Grill-v- Yorkey’s Knob Boating Club Inc - Dispute 09/05 Decision 2 12 April, 2005. The Claimant was licensed by the Respondent to provide catering services within the Respondent’s premises for a three-year term with the possibility of renewal on certain conditions. The Claimant lodged a Notice of Dispute in the Tribunal on 20 January 2005, complaining that the Respondent has terminated its licence for an alleged failure to comply with a Notice to Remedy a breach, and that the Respondent is refusing to renew the licence. On 28 January 2005, the Respondent commenced action in the Supreme Court for a declaration that the licence ended on 20 January 2005. The Claimant, as defendant in the Supreme Court action, filed a Notice of Intention to Defend and, more recently, a Defence and Counter-Claim seeking a declaration that the licence was wrongly terminated and seeking specific performance, namely the grant of a new licence term. On 2 March 2005, and more formally on 4 April 2005, the Claimant amended its Notice of Dispute to claim that the Respondent has wrongfully repudiated the licence, has failed to honour an agreement to give the Claimant an option for a renewed three year term, has unlawfully charged key money, and has engaged in unconscionable conduct within the meaning of ss 46A and 46B of the Retail Shop Leases Act (“the Act”). There are also several minor claims, including allegations that the Respondent failed to provide a lessor’s disclosure statement and failed to carry out repairs to the premises. The Respondent contends that the Tribunal has no jurisdiction; at a directions hearing earlier this year, the parties were directed to provide written submissions on that question. Each party has produced comprehensive submissions and these were amplified before me this morning. The licence agreement which expired in January 2005 is contained in a document entitled “Food Service Agreement between Yorkey’s Knob Boating Club Inc and Blue Moon Grill Pty Limited”. The Claimant tendered an unstamped copy of same, on which the only date is “1999”. That agreement was amended by deed on 13 August 2004. -- 2 of 5 -- Blue Moon Grill-v- Yorkey’s Knob Boating Club Inc - Dispute 09/05 Decision 3 12 April, 2005. The Claimant contends that the terms of the amended licence are reproduced in another licence for three years, timed to commence on expiry of the existing concession. According to the Claimant the alleged new licence is contained in a written offer by the solicitor for the respondent made on 30 November 2004, (Exhibit JCT8 to the affidavit of John Turner), and a letter accepting same from an officer of the Claimant dated 3 December, 2004. Counsel for the Claimant also relies on Exhibit JCT4 to Turner’s affidavit, namely a letter from the Respondent’s solicitor to the Claimant dated 17 August 2004, which reads in part: “Your financiers will be aware that the difference between a lease and a licence is that a lease grants exclusive occupancy, whereas a licence grants occupancy but not exclusive occupancy,” The Claimant submits that this amounts to a representation by the Respondent as to the precise nature of the alleged new agreement. The 1999 document (the original agreement) is variously described as a “Food Services Agreement” or “Catering Service Agreement.” Clause 3 thereof sets out the term of the agreement. It is strangely worded, but in essence it provides for a minimum of three years subject to annual reviews by the Respondent. It appears that a second three- year term, on similar conditions, was granted in 2002, and it expired, according to Deed of Amendment, on 20 January 2005. By then the parties were negotiating about a further extension of the agreement. Exhibit JCT8 is a letter from the Respondent’s solicitor to the Claimant dated 30 November 2004. It refers to a recent meeting between the parties at which, as it appears, certain arrangements for operation of the catering service were discussed. That letter refers to a licence for three years with a three-year option. It sets out a new rate for rent and incorporates the general terms and conditions of the then current Food Catering Agreement, as amended. It also contains other terms that need not concern us now. It makes no reference to the letter of 17 August 2004, (wherein the Respondent’s solicitor’s understanding of the use of the word “occupancy” is explained.) There is no evidence before me to explain the context of the letter of 17 August. -- 3 of 5 -- Blue Moon Grill-v- Yorkey’s Knob Boating Club Inc - Dispute 09/05 Decision 4 12 April, 2005. The terms accepted by Mr Turner on behalf of the Claimant on 3 December 2004 were those contained in the Respondent’s letter of 30 November 2004. It is my view, and I so find, that the agreement made on 3 December 2004 did not incorporate the contents of the letter of 17 August 2004. I turn to the relevant terms of the original agreement. The recitals declare that the Respondent wishes to obtain, and the Claimant is prepared to provide catering services for the Respondent. To that end the Claimant was licensed to use the Respondent’s food service area, except at times when the Respondent club was using it for other purposes: clause 5. The Claimant’s responsibilities and rights were set out in clauses 8, 9 and 34. They indicate clearly that the Respondent intended to maintain close control of the Claimant’s activities, even in the food service area. The Claimant was to be supervised in its planning of menus and food presentation. There was an extensive list of events, which, if they occurred would constitute default by the Claimant; for example, failing to provide the required standard of food or hygiene or to comply with the Respondent club’s rules. I accept the submission of the Respondent that the licence given by clause 5(a) was not the essential feature of the agreement but, rather, a necessary incident of the main purpose, namely, the provision of a food service as recited in the agreement. The basis of the Respondent’s objection to jurisdiction is that the Tribunal has no jurisdiction to deal with issues of repudiation or unconscionable conduct unless and until the Supreme Court finds that a “lease” now exists. In other words, as I understand the argument, the Respondent says that, because it has purported to cancel the licence, there is no subject matter upon which the Tribunal can adjudicate. I reject that submission. It ignores section 64(2)(b) of the Act, which provides that a Notice of Dispute may be lodged up to 4 months after a “lease” (including an licence to occupy: s 5) has ended. However, another submission of the Respondent has more substance, and, as I hold, determines the question of jurisdiction in this case. Clause 36 of the agreement that expired on 20 January 2005, -- 4 of 5 -- Blue Moon Grill-v- Yorkey’s Knob Boating Club Inc - Dispute 09/05 Decision 5 12 April, 2005. described as a “Food Services Agreement”, explicitly provides that no tenancy, estate or interest in the food service area is conferred on the Claimant. It follows, in my view, that the Claimant has no right, exclusive or non-exclusive, to occupy the premises, but merely a right to use the area for the limited purpose of catering. While the Act, for its own purposes, assimilates certain licences to a lease, that definition only applies where there is a right to occupy. Furthermore, I do not consider that the Claimant’s business satisfied the definition of “retail shop” in section 5 of the Act. It is neither “premises … situated in a retail shopping centre”, nor “premises … used wholly or predominantly for the carrying on” of a retail business” It was, instead, a contract for a catering service conducted in part of a licensed club. Not being a “retail shop”, the business, however else it is characterised, is incapable of being the subject of a retail shop lease. Accordingly the subject agreement, whether or not it was renewed as the Claimant alleges, was not and is not one within the jurisdiction of this Tribunal. I order: 1. That the Dispute be transferred to the Supreme Court in Cairns, and direct the Registrar of the Tribunal to make all necessary arrangements for that purpose. A Forbes Chairman. -- 5 of 5 --