Blueberries Hair Design v Goldpalm Pty Ltd [1996] RSLT 14

___________________________________________________________________________ [1996] RSLT 14 RETAIL SHOP LEASES ACT 1994 In the matter of Dispute No 47 of 1996 GILLIAN NARELLE POPE (T/A BLUEBERRIES HAIR DESIGN) - Claimant -and- GOLDPALM PTY LIMITED - Respondent DECISION Given on 13 November, 1996 in Brisbane ____________________________________________________________________________ __ -- 1 of 5 -- Pope-v-Goldpalm 2 Decision This is a claim by a tenant against her landlord for the alleged breach of a term of an agreement for lease giving the claimant the sole right to conduct certain classes of business in a shopping centre. The several issues which arise are:- "1.(a)Whether the agreement for lease is binding on the parties; (b) whether the exclusivity clause as altered in manuscript is part of the agreement for lease. 2.If the exclusivity clause is binding, whether there has been a breach by the respondent. 3.Subject to a breach being proved, the compensation to which the claimant is entitled." The question of the Tribunal's jurisdiction has not been raised. It is sufficient to state that the Tribunal regards this matter as a "retail tenancy dispute" in that it is a dispute under or about a retail shop lease, or about the use or occupation of a leased shop under a retail shop lease. 1. Is there a binding lease including the exclusivity clause as altered: The history of this matter is that an agreement for lease was prepared by the respondent's solicitors and submitted to the claimant's solicitor. That agreement for lease contained the following clauses:- "3.01Permissible Use: The lessee shall use the demised premises for the purposes of hairdressing, beauty salon and nail technician, and not for any other purpose... 3.22Exclusive Use: It is agreed by and between the parties hereto that the usage referred to in clause 3.01 shall be exclusive to the lessee within the centre during the term of this lease." This exclusivity clause was altered by the claimant's solicitor, who added: "The lessor agrees not to allow any other lessee of the centre to perform any of the services usually performed by the lessee herein, whether as ancillary to any other use or in any other manner whatsoever." This alteration was discussed between the solicitors for the claimant and those for the respondent. The agreement for lease was executed by the claimant and returned by her solicitor to the respondent's solicitor. It was then executed for and on behalf of the respondent and a copy was returned to the claimant. A Mr Harburg, who appears to be the Executive Director of the respondent, states that the alteration was not drawn to his attention by his solicitor and he did not know that it had been made. -- 2 of 5 -- Pope-v-Goldpalm 3 Decision After receiving directions on the law from the Chairman, the Tribunal has decided that the parties are bound by this agreement for lease containing the altered exclusive use clause. The fact that it was not initialled by or on behalf of the respondent would only be relevant if a dispute arose as to whether the clause was in its altered form when the whole agreement for lease was executed by the respondent. Further, on the Chairman's directions as to the law, the Tribunal finds that this agreement for lease has given rise to an equitable lease, even though a formal lease has not been prepared. The agreement for lease is for a period of five years and contains in section 17 an option for renewal. The operative part of that option is in these terms:- "If the lessee shall desire to take a lease of the demised premises for a further period of five years from the expiration of this lease and shall give to the lessor not less than three months previous notice in writing of such desire, then, provided the lessee is not then in default under the provisions of this lease, whether expressed or implied, the lessor will grant to the lessee a further lease of the demised premises for such further term at a rental...." It has been contended that a lease under this option would not contain an exclusivity clause. We take the view that clause 3.22 applies to any extended term, as it is implied that the new lease will be on the same terms and conditions as the existing lease, except for the renewal option. 2. Has there been a breach of the exclusivity clause: In March 1996 the lessor granted a lease to Ms Denise Lynds of Shop 10. This lease contains the following clause:- "3.01Permissible Use: The lessee shall use the demised premises for the purpose of natural health and beauty centre and not for any other purpose without the consent in writing of the lessor first had and obtained..." This lease is for three years from 1 February 1996 and contains an option of a further term of three years. Ms Lynds conducts a businesses called "Lyndale Natural Health and Beauty." She specialises in what is called relaxation and therapeutic massage, and conducts "aromatherapy" consultations and provides depilatory waxing treatment and tinting of eyelashes, eyebrows, etc. The respondent has called evidence from a Mr Jon Le Court, who states that the words "beauty salon" used in conjunction with hairdressing means no more than hairdressing in the retail trade. He has stated that the term "beauty salon" when used on its own or in conjunction with the word "hairdresser" or "hairdressing" connotes activities such as cutting hair, tinting and perming hair, manicures, eyebrow and eyelash work and facial waxing. He compares this with beautician and -- 3 of 5 -- Pope-v-Goldpalm 4 Decision beauty therapist which, he says, connotes such activities as massage, makeup, facials, skin treatment, manicures, pedicures, bleaching, tinting, depilation and waxing, including face, arm, underarm and leg waxing. On the strength of this evidence, the respondent contends that the permissible use of the demised premises is very limited. A Mr Caruana was also called by the respondent. He is a man very experienced in leasing premises for the retail trade. His evidence indicates that he does not give the term "beauty salon" when used in conjunction with hairdressing the very limited meaning sought to be given by Mr Le Court. Our decision is that the meaning of the phrases "beauty salon" and "beauty centre" are very similar. This similarity is not removed by "beauty salon" being used in conjunction with "hairdressing," or "beauty centre" being used as part of the phrase, "natural health and beauty centre." The services offered by each are only distinguishable by the methods and materials used. A hairdresser and beauty salon uses traditional methods in providing services, whereas a natural health and beauty centre uses so-called natural methods and materials, e.g. oils instead of substances containing chemicals. The respondent's Counsel has contended that using premises for the purposes of natural health and beauty centre may contain or cover some aspect of the use by the claimant of the premises for hairdressing and a beauty salon. He says that the difference between the two is substantial, and that any overlap merely relates to incidental matters. He refers us to the decision of the Court of Appeal in Stuart-v-Diplock (1989) 43 CHT 343. That decision is clear authority for the position where businesses which are not the same overlap in their trade to some extent, in which case there is no breach of exclusivity. This rule does not apply where the businesses are substantially the same. Further, the argument does not take into account the words added to the exclusivity clause in handwriting and forming, on our finding, part of the agreement between the parties. Finally, the evidence that beauty salon customers are destination shoppers and not impulse or convenience driven is not supported by the evidence. Ms Pope has built up her business from impulse or convenience customers. The Amount of Compensation On the evidence, including what Ms Lynds told Mr Calabro, we accept that Ms Lynds does not now and does not intend to do hairdressing. We further accept that, although there is some overlapping of "beauty" services, there is a substantial difference between the claimant's business and Ms Lynds'. Persons who seek aromatherapy and natural health treatment would not become customers of the claimant. The claimant has calculated her loss on the basis of losing one half of an increased business or the profit she would have made on one person working on the beauty salon side at her business and being -- 4 of 5 -- Pope-v-Goldpalm 5 Decision fully employed. On our findings there is no factual basis to support this calculation. There is no evidence to show how many of the clients which would have come to the claimant's business now go to Ms Lynds. Projection for the future provision as to who was to perform the services and the like are not put forward. Mr Calabro has approached the question from a different angle. He has obtained figures from Ms Lynds as to her takings. He has extracted leg waxing as something which would have been done exclusively by the claimant and calculated her loss on the amount of leg waxing done or likely to be done by Ms Lynds over the near future. He has no pattern on which to work as both claimant's and Ms Lynds' business are new businesses. He has made assumptions as to the cost of providing services which are in some important respects incorrect. In particular he has assumed that Ms Pope would have to take a long time off to obtain beauty consultant training, when this would be done in the evenings. He has not investigated the availability and cost of employing part time beauty therapists, although there is evidence that part time hairdressers are available and employed by the claimant. He has only allowed for a full time employee. The onus is on the claimant and failure to produce evidence must result in her claim being reduced. We have adopted an approach which may be oversimplistic but which is the best we can do on the material available to us. We rely mainly on Mr Calabro's figures but we make some changes. We accept that the claimant will suffer smaller losses over the winter months for leg waxing. We take the cost of employing a beautician including wages, leave pay, etc at $20,800 per annum. We divide the year into periods of 24 weeks when we accept the loss at $750 per week at 28 weeks at $400 per week. In trades as uncertain as hairdressing and beauty treatment we do not think we should compensate for loss beyond 4 years, ie the mean between the length of the Claimants lease and Ms Lynds lease. We discount for present payment. Our calculation is therefore 24 weeks x $750$18 000 28 weeks x $400$11 200 $29 200 Less wages $20 800$20 800 $ 8 400 per year For 4 years$33 600 On a gross profit margin of 80% this reduce to $26 800. Allowing for compound interest we reduce this to $20 700. We order the Respondant to pay to the claimant $20 700. P Loewenthal Chairman -- 5 of 5 --