Dennis Abel and Jacqueline Abel v Fairchild Pty Ltd [1998] RSLT 32

[1998] RSLT 32 RETAIL SHOP LEASES ACT 1994 In the matter of Dispute No.104 of 1997 DENNIS JOHN ABEL and JACQUELINE ABEL - Claimants - and - FAIRCHILD PTY LIMITED - Respondent DECISION Given on 18 May, 1998, in Brisbane -- 1 of 4 -- Abel-v-Fairchild Decision - Page 2 This claim arises out of a lease entered into or executed in February 1993 between Gallabay Pty Ltd and Davina Louise Hassett over certain premises for a period of five years commencing on 1 January 1993 and terminating on 31 December 1997. The respondents became lessors by acquiring the freehold, and the claimants became the lessees in terms of the Deed of Assignment of Lease date 3 May 1994 by Hassett to certain persons as assignee. It was alleged by the claimants that they are the only persons entitled in terms of that assignment, and this has not been disputed. Both the original lease and the assignment were prior to the coming into force of the Retail Shop Leases Act of 1994 and are therefore governed by earlier legislation. The original rental was $23,920.00 for the first year, payable in equal monthly calendar instalments. Thereafter it was reviewed annually. Under that legislation several methods of rent increase could be applied in the alternative or cumulatively, and this has been done in the lease. The dates of rent review were 1 January in the years 1994, 1995, 1996 and 1997. In 1994 and 1996 the amount of the rent was to be fixed by a valuer, whereas in 1995 and 1997 provision was for a minimum increase of 7.5%. No material has been put before us indicating whether rentals for 1994 and 1996 were fixed by agreement or by valuer, and the method adopted by the respondent has not been challenged. We therefore accept that this method is in accordance with the provisions of the lease. In addition to the payment of rent, the lease provided for the payment of operating expenses in Clause 5. It provided for the payment of a proportion of the operating expenses of the complex in which the demised premises were situated. Provision was made for payment of estimated expenses in advance and reconciliation subsequently in terms of Clauses 5 and 3, and 5.4. Reconciliation and payment of operating expenses could only be calculated after the period of the lease to which they applied, as they could only then be ascertained and distributed. During the course of the lease, disputes arose as to whether the claimants were in arrears with rental. At some stage the respondent, relying on its belief that the claimants were in arrears, cancelled the lease and placed the tenant on a monthly basis. The relief sought by the claimants can be divided into two categories, that is, a claim for compensation for breach of the lease by the respondent, and a claim for the refund of alleged overpayments of rental and operating expenses by the claimants to the respondent. We deal with these separately. The claim for compensation appears to be based on the respondent (a) not having agreed to a reduction of rental during the rental period (See Clause 27 of -- 2 of 4 -- Abel-v-Fairchild Decision - Page 3 the statement of Jacqueline Abel); (b) the respondent's refusal to enter into a new lease at a lower rental (See Clause 26 of Mrs Abel's statement); and (3) because of the respondent's election to convert the lease to a monthly tenancy. It appears to us that the rental being paid by the claimants during the course of the lease was uneconomical, particularly bearing in mind vacancies in the complex and general decline in trade. We believe the claimants were paying an uneconomic rental, but we have no power to vary rentals entered into between parties. Refusal to enter into a fresh lease is also not a basis for compensation, and we therefore come to the conclusion that the claimant has not made out a claim under this heading. The claim for overpayment of rental falls under two sub-headings. Firstly, the claimants say that adding up all payments due under the lease for the period of occupation they have paid more than provided for under the lease. Secondly, that they paid a sum for operating expenses for the period when Mrs Hassett was still in occupation of the premises and before their lease commenced. With regard to the first of these claims, we have examined and analysed the respective figures set out by the claimant and the respondent. We accept that the respondent's figures, although varying only slightly from the claimants', are the more accurate, being supported by proper records. There is a serious flaw in the claimant's calculations as no provision has been made for increased rental over the later periods of the lease. This Tribunal has no power to order payment of arrears of rental. The Chairman has nevertheless ruled that the present claim, although involving examination of rental obligations and payments, is within the jurisdiction of the Tribunal as it is a claim for money had and received in which it is necessary for the Tribunal to examine rentals. In spite of having jurisdiction, the Tribunal holds that the claimants have not proved their case. With regard to the second leg, the Deed of Assignment between Hassett and the claimants contains the following provision: That the assignee will during the term of the said lease and any extension or renewal thereof pay the rent preserved by the said lease at the times and in the manner therein provided and other wise carry out, observe and perform all the covenants, conditions and agreements and stipulations of whatever kind and whether positive or negative (including personal covenants and covenants which might involve the expenditure of money) which are required by the said lease to be carried out and observed, performed and fulfilled by the lessee. The liability to pay arises when those costs are fixed and advised. They were -- 3 of 4 -- Abel-v-Fairchild Decision - Page 4 fixed and advised for the period before the claimants became tenants at a time when the claimants were the tenants, and after the assignment. They were therefore under an obligation to pay them. We therefore find that the claimants have failed in all of their claims. Proceedings have been taken in the Magistrates Court at Southport by the respondents against the claimants for payment of monies being rentals alleged to be owing. The Magistrate referred or transferred those proceedings to this Tribunal. As the only outstanding issues involve the payment of rental in which this Tribunal has no jurisdiction, we order that the matter be returned to the Magistrate to be dealt with by him according to law. P V Loewenthal, Chairman. -- 4 of 4 --