Boniface Pty Ltd v Premier Pacific (Holdings) Pty Ltd and Ors [2012] QCAT 434

CITATION: Boniface Pty Ltd v Premier Pacific (Holdings) Pty Ltd and Ors [2012] QCAT 434 PARTIES: Boniface Pty Ltd (Applicant) v Premier Pacific (Holdings) Pty Ltd Premier Pacific (Holdings) Pty Ltd, PA Lucas Receivers and Managers Appointed Jonathan King Harold Shand GMJ Finance Pty Ltd and directors LJ Hooker, Surfers Paradise and principals (Respondents) APPLICATION NUMBER: RSL036-12 MATTER TYPE: Retail shop lease matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Jeremy Gordon, Member DELIVERED ON: 13 September 2012 DELIVERED AT: Brisbane ORDERS MADE: [1] Except for Premier Pacific (Holdings) Pty Ltd the notice of dispute is struck out as against all Respondents and they are removed as parties. [2] If LJ Hooker wish to pursue a claim for costs they shall file in QCAT and send to Boniface a statement and supporting documentation showing how the claim for $2,200 costs is made up by 28 September 2012. [3] If Boniface wish to make submissions as to why it should not be ordered to pay the costs of LJ Hooker it must do so by 9 October 2012. CATCHWORDS: APPLICATIONS FOR CLAIMS TO BE STRUCK OUT – application for costs Queensland Civil and Administrative Tribunal Act 2009, ss 42, 47(2), 100, 107(1) -- 1 of 9 -- 2 Retail Shop Leases Act 1994, ss 22, 43, 43A, 83, 103 Corporations Act 2001 (Cth), ss 419(1), 419A APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION The applications [1] A number of the respondents apply for the notice of dispute to be struck out and that they be removed as parties on the grounds that the claim is frivolous, vexatious or misconceived. The notice of dispute [2] This has been lodged by a lessee Boniface Pty Ltd (“Boniface”), relying on QCAT’s jurisdiction to deal with such disputes under the Retail Shop Leases Act 1994. [3] Boniface claims that it has suffered losses arising from delays in completing the redevelopment of the shopping centre at Middle Park Shopping Village (the “Centre”). [4] Boniface had been trading from the Centre for some time. The Centre’s owners wished to redevelop the Centre so Boniface was asked and it agreed, to relocate temporarily to a much smaller shop for a period of time, free of rent and utilities until its new shop was ready. In accordance with this agreement Boniface occupied that temporary shop from March 2009. [5] The original plan was that Boniface’s new shop was to be practically completed on or before 29 November 2009. An Agreement to Lease was entered into to that effect. This was dated 1 July 2009 and made between the owner Premier Pacific (Holdings) Pty Ltd and Boniface. [6] Due to the owner’s financial difficulties, there were delays in completing the redevelopment and Boniface is still unable to move into the new shop. Boniface is still in the temporary premises. [7] Boniface brought a claim for its losses to 30 June 2011 (and for other orders) in QCAT under notice of dispute number RSL064-10. This was brought only against the owner Premier Pacific (Holdings) Pty Ltd. [8] That claim went to a final hearing, and QCAT gave its decision in it on -- 2 of 9 -- 3 16 November 20111. QCAT found that by reason of the delays in completing the development and being unable to trade in the new premises from November 2009, Boniface had suffered significant trading loss. [9] QCAT ordered the owner to pay Boniface the sum of $121,453 as reasonable compensation for its trading loss over the period November 2009 to 30 June 2011. By consent, it was ordered that the occupation of the temporary premises rent and utilities free was to continue until formal handover of the new shop. [10] In this notice of dispute, Boniface now claims for its losses from 1 July 2011 to 30 June 2012 and other damages. It is brought against a number of parties: the owner, the owner’s receivers and managers, two of its directors, its mortgagees and its real estate agents. [11] More precisely, the claim is made as follows: (a) Loss of trading profits 2011/2012 $65,000 (b) Established legal costs $50,000 (c) Civic Video Franchise fees $124,121 (d) Compensation for loss of lease $191,250 (e) Storage of stock and fittings $8,000 (f) Compensation for benefits lost with lease $35,000 (g) Destruction of business $200,000 (h) Legal costs incurred in case brought by Franchisor Civic Video [12] Items (b), (c) and (h) relate to a claim brought by Boniface’s franchisor, Civic Video. The franchise was terminated by Civic Video and Civic Video is suing Boniface in proceedings in the New South Wales District Court, claiming $124,121 in damages. [13] Item (g) is a claim brought apparently because Boniface is “on the verge of failing” because of financial difficulties arising from these events. [14] Items (d) and (f) are not further explained in the claim. QCAT’s jurisdiction over this claim and orders which can be made [15] In this claim Boniface relies on the unfulfilled contractual obligation in the Agreement for Lease dated 1 July 2009, in particular Clause 4.1 which states: … the Lessor will grant (or will procure the person then registered or entitled to be registered as proprietor of the Land to grant) and the Lessee will accept the Lease for the Term commencing on and from the Lease Commencement Date. 1 Boniface Pty Ltd v Premier Pacific(Holdings) Pty Ltd (receivers and managers appointed) [2011] QCAT 629. -- 3 of 9 -- 4 [16] QCAT has jurisdiction to hear retail tenancy disputes under section 103 of the Retail Shop Leases Act 1994. Retail tenancy disputes are defined in the Schedule to the Act as: Any dispute under or about a retail shop lease, or about the use and occupation of a leased shop under a retail shop lease, regardless of when the lease was entered into. [17] “Lease” is widely defined as including an agreement to give a right to occupy premises for valuable consideration. [18] Accordingly QCAT has jurisdiction to here the dispute about the Agreement for lease dated 1 July 2009 since it is a “lease” within the Act. [19] By section 43 of the Act QCAT can order a lessor to pay compensation to a lessee for various things there set out, including (as relied on in this case) restricting the lessee’s access to the leased shop and also where the leased shop if not available to the lessee on the date given in the statutory disclosure statement. [20] By section 22 of the Act QCAT can order a lessor to pay compensation for loss and damage for an incomplete disclosure statement or one that is false or misleading in a material particular. [21] Lessor is defined in the Schedule as including the person who will be entitled to receive the rent under an agreement to grant a lease. This is the owner Premier Pacific (Holdings) Pty Ltd. Hence QCAT can make orders against that company. Joinder of other parties [22] In this claim Boniface are asking QCAT to make orders against the other parties which they have joined as respondents. QCAT’s jurisdiction to make orders against other parties under the Retail Shop Leases Act 1994 is limited. [23] Under section 43A an order can be made against someone who is not a lessor. Under that section a “disclosing person” is liable to pay compensation for loss or damage suffered because of a false or misleading statement or representation in a statutory disclosure statement made under sections 22A, 22B or 22C of the Act. Section 22A refers to a disclosure statement made by a prospective lessee, so this does not apply to this case. The other sections refer to disclosure statements made by assignors and prospective assignees, and a lessor in the case of a prospective assignment of a lease respectively. They do not apply either because there was no prospective assignment of a lease. [24] It follows that in this claim QCAT can only made orders against the lessor (as defined) that is the owner Premier Pacific (Holdings) Pty Ltd. -- 4 of 9 -- 5 [25] By section 42 of the QCAT Act, the Tribunal may make an order joining a party to a proceeding if it considers that: (a) the person should be bound by or have the benefit of a decision of the tribunal in the proceeding; or (b) the person’s interests may be affected by the proceeding; or (c) for another reason, it is desirable that the person be joined as a party to the proceeding. [26] The same principles apply as set out in section 42 to a situation where an applicant has joined a number of respondents, and QCAT is considering whether those respondents should be removed from the proceedings. [27] In its submissions, Boniface has explained why it has added the respondents. It says that it is asking QCAT to determine who is responsible for the events which have occurred and for its continuing losses. It also says that the respondents have “refused to acknowledge the ruling and orders from QCAT”. [28] In so far as Boniface would like QCAT to investigate who is responsible for the events and loss, this is not QCAT’s role. That role is clearly limited by the Retail Shop Leases Act 1994 as being to determine disputes between lessor and lessee. [29] However, the provisions of section 42 make it necessary to consider each joined respondent in turn and whether it is right for that respondent to continue to be a party to this claim. [30] One reason why, under section 42, it might be important to maintain a joined respondent as a party to this claim is if that party might be liable to Boniface in respect of the events which have occurred. If so, they could be sued by Boniface in separate proceedings. QCAT’s findings of fact in this claim would bind a court hearing those proceedings, and therefore that party’s interests could be substantially affected by QCAT’s findings. [31] Another reason to maintain a joined respondent as a party to this claim is for QCAT more readily to give effect to its orders. By section 83 of the Retail Shop Leases Act 1994, QCAT could make an order requiring a party to the dispute to do or not to do anything (an “enforcement order”). Such an order can only be made against a party to the dispute, and it is possible to envisage situations where it might be desirable to maintain a respondent as a party for the purpose of facilitating enforcement of such an order. Claim against the receivers personally [32] The effect of the notice of dispute in naming “Premier Pacific (Holdings) Pty Ltd, PA Lucas Receivers and Managers Appointed” is to attempt to sue the receivers and managers personally. The receivers and managers are Peter Anthony Lucas and Glenn Michael Shannon who were appointed on 11 April 2011. -- 5 of 9 -- 6 [33] Mr Lucas and Mr Shannon apply for the claim to be dismissed or struck out because they are not a party to the dispute and a compensation order can only be made against the lessor, and they are not the lessor. [34] In its submissions in response, Boniface state that Mr Lucas and Mr Shannon are being remunerated for their services and have made decisions in relation to the management and leasing of the Centre, and have negotiated leases. [35] It would appear that the receivers were appointed by a secured party pursuant to Part 5.2 of the Corporations Act 2001 (Cth). Upon their appointment they would have entered into possession and taken control of all the property of Premier Pacific (Holdings) Pty Ltd. This property would have included the Centre of which the company was the registered proprietor. From the date of the appointment the receivers would act as agent for the company under the terms of the security interest. [36] Receivers do not become personally liable for contracts made by the company prior to their appointment, such as the Agreement for Lease dated 1 July 2009, unless they personally adopt them. There is nothing in this case to suggest that this has happened, and it would be very unlikely to have happened because there would be no reason for the receivers to take on personal liability for that agreement. [37] Receivers may take on personal liability for certain types of debts and contracts as set out in sections 419(1) and 419A of the Corporations Act 2001. The Agreement for Lease is not one of them. [38] There is no reason to suggest that the receivers have acted in this case otherwise than in an entirely professional manner. In case RSL064-10 the company was sued; the receivers were not sued personally. It would appear that the receivers dealt with that claim as agents for the company and this included consenting to part of the order on behalf of the company. [39] There is nothing to suggest that it is necessary for the receivers personally to remain as a party for reasons of enforcement of QCAT’s orders, and they are not personally liable. Therefore it is clear the claim against the receivers personally should be struck out and that they should be removed as parties. Claim against the directors [40] The notice of dispute also named Mr Jonathan King and Mr Harold Shand as directors of Premier Pacific (Holdings) Pty Ltd. [41] They now apply to have the claim against them struck out because they have no personal liability in the matter. [42] In its submissions in response, Boniface state that Mr King is currently a director of Premier Pacific (Holdings) Pty Ltd and has been responsible for -- 6 of 9 -- 7 lease negotiations from the outset, while Mr Shannon was a director during the negotiations for the lease and has not offered any explanation or defence to the claim for damages. [43] There is nothing to suggest that it is necessary for the directors personally to remain as a party for reasons of enforcement of QCAT’s orders, and there is nothing in the submissions from Boniface to show that they are personally liable. Therefore it is clear the claim against the directors should be struck out and that they should be removed as parties. Claim against the mortgagees [44] GMJ Finance Pty Ltd and directors have also been named as respondents in the notice of dispute. Mr James Gorman is a sole director and shareholder of GMJ Finance and regards himself as being a party to the claim. GMJ is the mortgagee of Premier Pacific (Holdings) Pty Ltd. There is no application by GMJ or by Mr Gorman on the file seeking to have the claim against them struck out, although such an application was said to be intended in submissions in support of an application to be legally represented. [45] In its submissions in response to the strike out applications, Boniface has also sought to justify the claim against GMJ and Mr Gorman. These submissions state that GMJ is financial creditor and major shareholder of the lessor and that its director Mr Gorman has issued instructions about the conduct of the Centre, and that an explanation is sought from Mr Gorman about direct conflicts with the builder. [46] There is nothing in the claim itself, nor in the submissions from Boniface which demonstrate that GMJ Finance or Mr Gorman could be liable to Boniface in respect of the events which have happened. Their continuance as parties is not necessary or desirable under section 42 of the QCAT Act. [47] By section 47 of the QCAT Act the Tribunal can act on its own initiative to strike out a claim which is frivolous, vexatious or misconceived, or lacking in substance (no application is necessary). It is clear that this power should be exercised in this case so as to strike out the claim against GMJ Finance and Mr Gorman and to remove them as parties. Claim against the real estate agents [48] The notice of dispute also named “LJ Hooker, Surfers Paradise and Principals”. The effect of this is to attempt to bring the claim against those who trade under the business name LJ Hooker, Surfers Paradise and also to bring a claim against the principals of that business, presumably the LJ Hooker franchisors. [49] LJ Hooker apply to be removed as respondents on the grounds that they are not a party to the retail tenancy dispute and because a compensation order can only be made against the lessor. They point out that in so far as -- 7 of 9 -- 8 they may have made statements or disclosures to Boniface they were made only as agents for the lessors as Boniface were aware. [50] In its submissions in response Boniface state that LJ Hooker has acted on numerous occasions as representatives of the lessor and of the receivers and has been engaged to manage the premises, and has been responsible for negotiations and processing of the lease. There is no suggestion that LJ Hooker made any contract or lease personally. [51] Agents may only be personally liable to a third party (Boniface) in a case where the agency is not disclosed at all, or sometimes if the existence of an agency is disclosed but the name of the principal is kept hidden. None of these possibilities apply in this case. [52] There is nothing to suggest that it is necessary for LJ Hooker to remain as parties for reasons of enforcement of QCAT’s orders, and since they are not personally liable, it is clear the claim against them should be struck out and that they should be removed as parties. Costs [53] LJ Hooker claim its legal costs in the sum of $2,200 arising from these proceedings, but is the only party to do so at this stage. [54] Boniface simply sued everybody in this claim who appeared from its position to be morally responsible for its losses, and did so seemingly without any regard to well known and well established legal principles. Even on receipt of submissions from the parties, Boniface persisted in its contention that the parties ought to remain in the claim, on grounds which had no substance whatsoever. Because of this, legal costs have been expended by some of those parties and their time has been wasted. This is to be deprecated. [55] In QCAT the starting point for costs is as provided by section 100 of the Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act): Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding. [56] This is, however, subject to any other provision. Section 47(2)(c) of the QCAT Act provides that upon striking out part of a proceeding the tribunal may: make a costs order against the party who brought the proceeding or part before the tribunal to compensate another party for any reasonable costs, expenses, loss, inconvenience and embarrassment resulting from the proceeding or part. [57] Under this provision, QCAT may award costs if it is right to do so. The costs which may be awarded are not limited to legal costs but may include non- legal expenses, and amounts to compensate for inconvenience and embarrassment if it is appropriate to make such an award. Further, the -- 8 of 9 -- 9 costs which may be awarded are not limited to the costs arising from the application to strike out (if such an application were made) but can cover the costs of the whole proceedings. [58] The “scattergun” approach to litigation as used here by Boniface should be discouraged as being wasteful of costs and resources, and likely to obscure the real issues in a claim. There is therefore a prima facie case for Boniface to pay LJ Hooker’s costs of the proceedings. [59] However, there is nothing from LJ Hooker to show how the $2,200 which they claim is made up. It is unclear whether they spent this money on legal costs and what those costs were for. By section 107(1) of the QCAT Act if the Tribunal makes a costs order it should fix the costs if possible. This can only be done with more information about this claim from LJ Hooker. Orders are made to enable this to be done. [60] Boniface have not made any submissions about costs and so will be given an opportunity to make submissions as to why it should not be ordered to pay the costs of LJ Hooker. -- 9 of 9 --