Cronin v Fung [1996] RSLT 15

___________________________________________________________________________ [1996] RSLT 15 RETAIL SHOP LEASES ACT In the matter of Dispute No 50 of 1995 CRAIGE JOHNATHAN CRONIN - Claimant -and- SELINA FUNG - Respondent DECISION Given on 29 March 1996 in Brisbane _____________________________________________________________________________ -- 1 of 6 -- _ -- 2 of 6 -- Cronin-v-Fung 3 Decision This dispute was initiated by a Notice of Dispute dated 28th of August 1995 lodged by the claimant, Craige Johnathan Cronin as Lessee pursuant to a retail shop lease of premises at 6 Park Parade, Shorncliffe. The respondent to the complaint is Selina Fung, the lessor of the premises. The points of dispute as stated in Item 6 of that letter referred to the Lessee's disputed obligation pursuant to the lease to effect certain insurances in the name of the Lessor. There was no specific reference to any dispute concerning the Lessor's refusal or failure to consent to a sub-lease or sub-licence. The dispute was referred to mediation on the 4th of October 1995 and the result of the mediation hearing was that the dispute be referred to this Tribunal for determination. At a directions hearing on the 6th of November 1995 the Tribunal dismissed the Lessee's complaint regarding insurance but, in effect, allowed the Lessee to proceed with a claim based on Clause 2(b) of the lease, that is, alleged failure or refusal to consent to a sub-lease. On the 22nd of November 1995 the Lessee lodged in the registry of the Tribunal a statement of the Order he wishes the Tribunal to make. For convenience and clarity the Tribunal sets out the Lessee's statement of that Order which is in the following terms:- The Order I wish the Tribunal to make is: that the Lessor, Selina Fung, arbitrarily and unjustifiably withheld consent for the sub-leasing of the premises at 6 Park Parade, Shorncliffe, as contained in Clause 2(b) in the main body of the lease, consequently causing great financial hardship and personal distress, and she compelled by her subsequent actions the sale of the lease, resulting in loss of investment capital by the Lessee, Craige Cronin, and resulting in the imposition of debts, and the destruction of future financial plans upon the Lessee, Craige Cronin, and his partners Don Cameron and Karen Whitehead. The monetary compensation sought totals: $98,837.41. The claim went on to set out various figures showing how the total sum was arrived at. -- 3 of 6 -- Cronin-v-Fung 4 Decision The dispute was heard by the Tribunal on the 9th of February 1996. The complainant Lessee appeared on his own behalf; Mr M J Hogan of Counsel, with the consent of the Lessee, appeared as agent for the Lessor. At the start of the hearing Mr Cronin stated that because his former associates in his business, Mr Cameron and Ms Whitehead, were no longer concerned in the claim, the claim was reduced on his behalf to about $38,000. While it does appear from the evidence that Mr Cronin, and possibly his partners Mr Cameron and Ms Whitehead, lost a considerable sum of money through their unsuccessful business venture, Mr Cronin's claim against the Lessor Mrs Fung is misconceived in law. Whether or not the landlord arbitrarily or unjustifiably withheld her consent to the granting of an "access licence", referred to throughout the dispute as a sub-lease, the Lessee's remedy is not a claim in damages for breach of contract. A provision such as that appearing in paragraph (b) of Clause 2 of the lease of the premises at 6 Park Parade, Shorncliffe does not operate so as to prevent the Lessee from sub-letting the demised premises or part thereof without the Lessor's consent. What it does do is to render the Lessee's interest subject to forfeiture in the event of a sub-letting or "an assignment" without consent unless the Lessee can show that the Lessor arbitrarily or unjustifiably withheld consent when asked for it. A similar result flows from Section 121 of the Property Law Act of 1974. The position at law is set out clearly in the judgment of Thomas J. in Daventry Holdings Pty Ltd v. Bacalakis Hotels Pty Ltd [1986] 1 QdR p.406, at the foot of p.409, on p.410 and the top of p.411. Mr Cronin's remedy at law was to apply to a Court or to this Tribunal for a declaration that the Lessor had refused consent to the "sub-lease" arbitrarily or unjustifiably, or, in terms of the statute, unreasonably, and an order that the Lessor grant her consent. While the Lessee sought the declaration, he asked for a remedy in damages which the Tribunal can not award because that remedy is not available at Law. That is so even if by the conduct of her agent Hon Bun Fung, the Lessor had led the Lessee to believe that the particular "sub- letting" would receive her approval and Mr Cronin as Lessee had acted upon that representation. Had the Lessee acted in time, he might have applied to the Tribunal for a declaration that the Lessor's consent had been withheld improperly and an -- 4 of 6 -- Cronin-v-Fung 5 Decision Order that consent be given to the "sub-lease". Of course such an application would have been dealt with on its merits and might have succeeded or failed. On the evidence presented to the Tribunal on the hearing of the Lessees claim, it might well have failed, but it is not now necessary to decide the issue. Similarly, the Lessee, had he acted in good time, could have sought an Order dealing with optional extension of his lease; but he did not do so. Although the Retail Shop Leases Act 1994 ("the Act") pursuant to which this dispute came before the Tribunal is a remedial Act to be construed broadly and in accordance with its purposes, this Tribunal must (except as to procedural matters where the Act makes specific provisions) act in accordance with the principles of Common Law and has no jurisdiction to grant relief where to do so would be contrary to or not in accordance with those principles. The use of the word "just" in Section 83(1) of the Act relating to the Tribunal's orders does not relieve the Tribunal of the obligation to apply the Common Law. This is made clear by the detailed reasons for judgement of Judge McGuire in the District Court at Brisbane in the matter of Johnson Tiles Pty Ltd v. Chard Roberts Constructions Pty Ltd, reported in 15 Queensland Lawyer Reports at pages 93 et seq. and the authorities cited in those reasons. For those reasons, the Lessee's claim must fail as a matter of law. But even if that were not so, the claim could not succeed for the following reasons:- 1.The evidence as contained in the statements and as given from the witness box in cross examination, did not show that the Lessor had refused consent to the "sub-lease" at all, and certainly did not show that she had arbitrarily or unjustifiably withheld consent or had withheld consent unreasonably. It is not unjust, arbitrary or unreasonable to withhold consent to a sub- lease of part of leased premises where the head Lessee is in default under the head lease until that default has been made good. Similarly a Lessor may lawfully withhold consent where the Lessor has reason to doubt that the proposed sub-lessees would be suitable tenants. The evidence given in the course of the hearing would justify a doubt as to the suitability of the proposed sub-lessees. -- 5 of 6 -- Cronin-v-Fung 6 Decision 2.The evidence does not establish the amount of the loss claimed by the Lessee nor show how the claim was reduced from its original amount of $98,837.41 to the amount disputed at the hearing, namely "about $38,000." 3.The evidence does not show that any loss suffered by the Lessee flowed from the Lessor's actions. Rather, it appears that the Lessee was to an extent the author of his own misfortune. He made assumptions which appear to the Tribunal to have been unreasonable and he then acted upon those assumptions to his own detriment. For the reasons given, the Tribunal rejects the Lessee's claim and refuses to make the Orders sought by him. A.W. Couper Chairman -- 6 of 6 --