Brodies Australia Pty Ltd v Oakden Investments Pty Ltd [2002] RSLT 13

1 [2002] RSLT 13 THE RETAIL SHOP LEASES ACT In the matter of Dispute 69/2001 BRODIES AUSTRALIA PTY LIMITED - Claimant and OAKDEN INVESTMENTS PTY LIMITED and PRODSERV PTY (Third Party) - Respondents DECISION Given in Brisbane on 21 May 2002 -- 1 of 5 -- Brodies-v-Oakden & Prodserv 2 Decision The original dispute between Brodies Australia Limited as claimant and Oakden Investment Pty Limited as respondent was commenced by a Notice of Dispute filed on 18 th June, 2001. In that notice, the claimant sought compensation under s.43 of the Retail Shop Leases Act 1994 ("the Act") in the following terms: "1. Lessor is failing to accurately comply with the Retail Shop Leases Act when estimating outgoings and providing budgets. 2. Lessor is inappropriately charging through the outgoings. 3. Lessor is failing to adequately supervise the contractors paid under outgoings. 4. Lessor is failing to maintain the property to an appropriate standard. 5. Lessee is seeking a refund of portions of the outgoings paid to the lessor. By a letter to the Registry dated 29th October 2001, the claimant stated (inter alia): "The Amended Notice of Dispute does not claim compensation under s.43 of the Act. Rather, this action is a request for refund of outgoings payments inappropriately charged by the lessor…. " The claimant conducted its case before the Tribunal basically as a claim for a refund of money overpaid by way of contribution to outgoings, relying upon the Tribunal's jurisdiction under s.109.3(c) of the Retail Shop Leases Act 1994 ("the Act"), under which a Retail Shop Lease Tribunal has jurisdiction to hear a retail tenancy dispute about whether an item or part of an item of the lessor's outgoings was reasonably incurred in or directly attributable to the operations, maintenance or repair of the centre or building. The claimant sought a refund of money paid to the respondent (by the claimant's franchisee), which the claimant alleged did not represent payment to the respondent of items claimed by it as reasonably incurred in or directly attributable to the operations, maintenance or repair of the centre or building. Because it was made to appear in the course of a directions hearing held on 14th November, 2001, that the premises were occupied by a franchisee of the claimant, namely, Prodserv Pty Ltd, the Chairman ordered, pursuant to s.70.A of the Act that Proserv Pty Ltd be included as a party to the dispute. The claim by Prodserv Pty Ltd as eventually filed was virtually identical with the claim made by the claimant and was made against the respondent. While it is obviously arguable that the claim by Prodserv Pty Ltd might have been made against the claimant for refund of monies paid pursuant to a licence agreement, that did not happen, and it is therefore necessary to consider the relationship, if any, between Prodserv Pty Ltd and the respondent. -- 2 of 5 -- Brodies-v-Oakden & Prodserv 3 Decision Joint submissions filed on behalf of the claimant and the third party, Prodserv Pty Ltd, argue that on the facts and for the reasons stated in those submissions, the relationship between Prodserv Pty Ltd and Oakden Investments Pty Ltd was that of lessee and lessor, the lease being a retail shop lease, with result that a retail tenancy dispute existed between Prodserv Pty Ltd and the respondent, without reference to the claimant. The term "lease" is defined in the Act to mean: "an agreement under which a person gives or agrees to give to someone else for valuable consideration a right to occupy premises, whether or not the right is - (a) an exclusive right to occupy the premises; (b) for a term or by way of a periodic tenancy or tenancy at will." In terms of the Act, the expression "agreement" includes an oral agreement. It is common ground that Prodserv Pty Ltd was in lawful occupation of the premises concerned. That is, it was there pursuant to an agreement under which it had been given the right to occupy premises. While it may be that the respondent was aware of the agreement between the claimant and Prodserv Pty Ltd (which the respondent denies) the agreement giving to Prodserv Pty Ltd a right to occupy the premises was a licence granted to Prodserv Pty Ltd by the claimant to occupy premises leased by the claimant from the respondent, that licence being part of a franchise agreement between the claimant as franchisor and Prodserv Pty Ltd as franchisee. There was never any direct relationship of lessor and lessee between Prodserv Pty Ltd as lessee and the respondent as lessor. It follows that Prodserv Pty Ltd, not being a party to a retail shop lease with the respondent, there is no dispute between those companies falling within the jurisdiction of a Retail Shop Lease Tribunal. The undisputed evidence is that Prodserv Pty Ltd paid the "outgoings" which were demanded by the respondent from the claimant in accordance with the lease to the claimant. Prodserv Pty Ltd made those payments pursuant to its agreement with the claimant. If the claimant establishes an entitlement pursuant to s.109.(3)(c) of the Act, then it seems that Prodserv Pty Ltd has a claim, possibly a retail tenancy dispute, against the claimant. It is not appropriate to go into the nature of that claim in this decision. The respondent's original submissions were to the effect that, because the payments had been made not by the claimants but by Prodserv Pty Ltd, the Tribunal should not order any refund to the claimant, even if the amounts or some part of the amounts claimed as outgoings were not reasonably incurred in or directly attributable to the operations, maintenance or repair of the centre. The Tribunal does not accept that argument. There was no direct relationship between Prodserv Pty Ltd and the respondent. The respondent -- 3 of 5 -- Brodies-v-Oakden & Prodserv 4 Decision demanded and accepted the payments of "outgoings" pursuant to the respondent's lease to the claimant. It is of no significance to the respondent that an entity other than the claimant made the payments. The claimant is the proper entity to make any claim against the respondent under the lease between those parties. The claimant deals with its claim in its submissions filed on 18 th February, 2002. It seeks payment to it by way of refund of outgoings charged for caretaking, cleaning, repairs and maintenance, and management fees. The Tribunal is not satisfied on the evidence that the sums paid as "outgoings" for caretaking, cleaning and repairs and maintenance were not reasonably incurred in or directly attributable to the maintenance and repair of the centre. It was not disputed that the amounts claimed by the respondent were in fact paid to independent contractors. What was disputed was the value of the work done by those contractors. The evidence adduced at the hearing shows quite clearly that work was done in caretaking and cleaning and work was done and expenses incurred by the respondent in repairs and maintenance. The evidence does not satisfy the Tribunal that the amounts claimed were excessive. The Tribunal finds, on the balance of probabilities, that those outgoings were reasonably incurred in or directly attributable to the maintenance or repair of the centre. However, the Tribunal holds that the sums claimed by the respondent for management fees are not reasonable and therefore were not reasonably incurred in or directly attributable to the operations, maintenance or repair of the centre. It is clear that the respondent did incur "outgoings" in the form of management fees. The claimant seeks a full refund of its proportion of the management fees (and, of course, the sums claimed for cleaning and repairs and maintenance and caretaking). It has not, in either evidence or submissions, suggested that there was no management, or suggested that any particular proportion of its share of management fees represents unreasonable "outgoings". Without any intention to create a precedent, the Tribunal takes the view that the work for which the management fees were paid was not entirely satisfactory. It follows that the amount claimed as an outgoing in respect of management fees was excessive. The Tribunal considers that a fair estimate of the amount overpaid is $500.00. Therefore, the Tribunal orders that the respondent by 31 May 2002 pay to the claimant the sum of $500.00, being the amount of the excess. Otherwise, the Tribunal dismisses the claims by the claimant and Prodserv Pty Ltd respectively and, there being no claim by Prodserv Pty Ltd against the claimant, makes no order as between those parties. -- 4 of 5 -- Brodies-v-Oakden & Prodserv 5 Decision A W Couper Chairman. -- 5 of 5 --