Romano v Capitol Bikes Pty Ltd
[2018] QCAT 108
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- Unreported Judgment
- Romano v Capitol Bikes Pty Ltd[2018] QCAT 108
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Romano v Capitol Bikes Pty Ltd[2018] QCAT 108
Romano v Capitol Bikes Pty Ltd[2018] QCAT 108
CITATION: | Romano v Capitol Bikes Pty Ltd & Anor [2018] QCAT 108 |
PARTIES: | Yvonne Elizabeth Romano (Applicant) v Capitol Bikes Pty Ltd (First Respondent) Michael Rene Shaw (Second Respondent) |
APPLICATION NUMBER: | RSL015-17 |
MATTER TYPE: | Retail shop leases matters |
HEARING DATE: | 20 November 2017 |
HEARD AT: | Brisbane |
DECISION OF: | Member Holzberger Member Judge Member McBryde |
DELIVERED ON: | 9 April 2018 |
DELIVERED AT: | Brisbane |
ORDERS MADE: |
|
CATCHWORDS: | RETAIL SHOP LEASES JURISDICTION – whether claim against guarantors is a retail tenancy dispute for the purposes of the Retail Shop Leases Act 1994 (Qld) – Mitigation of damages – calculation of compensation Retail Shop Leases Act 1994 (Qld), s 3, s 4, s 83, s 97, s 103 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3, s 4 Real Management Solutions Pty Ltd v Brisbane City Council [2016] QCAT 370 |
APPEARANCES: | |
APPLICANT: | Self-represented |
RESPONDENT: | No appearance |
REASONS FOR DECISION
- [1]In September 2014 the applicant, Ms Romano as lessor, entered into a lease of premises (“lease”) described as shop 1, 1379/1381 Logan Road, Mount Gravatt (“the premises”) with Capitol Bikes Pty Ltd (“Capitol”) as lessee and Mr Shaw as guarantor of the lessee’s obligations.
- [2]On or about 22 June 2016, Ms Romano, through her solicitors, gave both respondents notice of termination of the lease. Capitol failed to remedy those breaches. Ms Romano filed a notice of dispute on 25 November 2016 and seeks an order from the Tribunal that Capitol and Mr Shaw as guarantor pay her an amount of $135,687.27 inclusive of interests and costs as compensation.
- [3]Ms Romano represented her-self at the hearing. She relies on the contents of her statement dated and filed on 23 June 2017 together with two letters by her addressed to the Tribunal dated 23 and 26 June 2017.
- [4]Ms Romano gave evidence at the hearing confirming the contents of the documents she relied on and gave further evidence in relation to her attempts to mitigate her damages.
- [5]Capitol and Mr Shaw did not appear at the hearing. Neither has filed in the Tribunal any response to the dispute notice or any witness statement or other materials.
Service
- [6]The Tribunal forwarded a copy of the notice of dispute to both respondents by post on 12 January 2017. In the case of Capitol, the letter was addressed to its registered office and in the case of Mr Shaw to his last known residential address.
- [7]Ms Romano’s solicitors forwarded copies of the material relied on by her to the same addresses on or about 23 June 2017.
- [8]We are satisfied that service has been effected.
Jurisdiction
- [9]The Retail Shop Leases Act 1994 (QLD) (RSLA) gives QCAT jurisdiction to hear “retail tenancy disputes”.[1]
- [10]A retail tenancy dispute:
“means any dispute under or about a retail shop lease, or about the use or occupation of a leased shop under a retail shop lease, regardless of when the lease was entered into.”[2]
- [11]A retail shop lease:
“means an agreement under which a person gives or agrees to give to someone else for valuable consideration a right to occupy premises.”[3]
- [12]In Real Management Solutions Pty Ltd v Brisbane City Council,[4] the Tribunal determined that a claim against guarantors was a retail tenancy dispute.
- [13]The Tribunal considered that the definition of retail tenancy dispute:
- Was not confined to a dispute “under” a lease but may be “about” a lease, although the connection between the lease and the dispute must be a close one;
- Was not limited by reference to a description of who may be a party to such lease or dispute (e.g. a lessor, or lessee).
- [14]The obligations of the guarantor were contained in the lease document itself and were closely connected in that they arose only in circumstances where a breach of the terms of the lease had been committed by the lessee.
- [15]The Tribunal considered that hearing a claim against guarantors in the Tribunal was consistent with the objects of the RSLA to provide low cost resolution of tenancy disputes.[5] It also considered that such hearing was “entirely harmonious with the objects of the QCAT Act and the requirement for the Tribunal to deal with matter in a way that is accessible, fair, just, economical, informal and quick”.[6]
- [16]We agree with the decision in Real Management Solutions Pty Ltd v Brisbane City Council and are satisfied that the claim against Mr Shaw is a retail tenancy dispute and accordingly the Tribunal has jurisdiction to hear it.
- [17]The claim against Capitol is clearly a retail tenancy dispute.
Finding of fact
- [18]Mr Romano’s written and oral evidence is uncontested. In any event we found her to be an impressive witness.
- [19]We find:
- On or about 2 September 2014, Ms Romano as lessor, entered into a written lease with Capitol as lessee and Mr Shaw as guarantor in respect of the premises;
- In breach of the lease, Capitol Bikes:
- On or about 3 June 2016;
- Abandoned the premises;
- Ceased operating its business from the premises; and
- Failed to keep its busy open during core trading hours.
- Failed to provide when it was due replacement tenants security of $18,910.84.
- On or about 6 June 2016, the lessor served a form 7 notice to remedy breach of covenant on Capitol and Mr Shaw.
- Capitol failed to remedy the breaches and Ms Romano validly terminated the lease by serving on Capitol and Mr Shaw a notice of termination on or about 16 June 2016;
- In further breach of the lease, Capitol:
- Failed to leave the premises in good repairing condition;
- Failed to re-estate the air conditioning system and lighting that had been in place at the commencement of the lease;
- Failed to return all keys, security passes and other access devices; and
- Removed parts of the fitout of the premises.
Compensation
- [20]The major component of Ms Romano’s claim is the loss of rent from the date of termination of the lease on 16 June 2016 until the expiry of the term on 1 September 2019.
- [21]Ms Romano prepared and included in her witness statement, a table calculating her loss at $91,979.04.[7] The calculation includes a credit for $18,113.32 which was applied to rental from the bank guarantee provided by Capitol pursuant to the terms of the lease. We accept that the calculation is mathematically correct.
- [22]The concern we had in relation to that part of the claim on the basis of her written statement alone was that by accepting a significantly less rental for that period she had not demonstrated that she had mitigated her loss.
- [23]Prior to terminating the lease, Ms Romano had at the request of Capitol, consented to an assignment of the lease on the same terms including the rental amount by Capitol to Trek Bicycle Corporation (Australia) Pty Ltd (“Trek”).
- [24]That proposed assignment fell through on 3 June 2016 immediately before Capitol Bikes abandoned the premises. Ms Romano negotiated and entered with Trek a new five year lease for the premises commencing on 1 August 2016 at a rental approximately $2,000.00 per month less than the amount paid by Capitol Bikes.
- [25]In oral evidence Ms Romano said she did not anticipate securing a tenant willing and able to pay the higher rental easily. The area of the premises is approximately three hundred square meters. There are, she said very few tenants interested in a space that large. Subdivision of the premises is difficult because the building is heritage listed.
- [26]Another slightly larger premises in the same building has been vacant since November 2016. The letting agent has had only three enquiries about it in that time.
- [27]Ms Romano feared that these premises would suffer a similar fate and could sit vacant for months or years. She was also of the view that a significant rent free period would be necessary to attract a tenant. Trek would commence paying rent, albiet a lesser rent, immediately.
- [28]Ms Romano has owned the building since 1992 and in our view knows the commercial rental market in the local area well. We accept that she has acted reasonably in entering the lease with Trek and has mitigated the loss suffered by doing so. We allow the sum of $91,979.04.
- [29]In respect of the reinstatement costs referred to in paragraph 19 of these reasons Ms Romano has provided copies of invoices she has paid for the necessary works. We accept that she has acted reasonably and allow the invoiced amounts totalling $3,993.43.
- [30]Ms Romano also claims for legal fees incurred by her in respect of the proposed assignment of lease to Trek, the notice to remedy breach and termination of the lease and the lease to Trek.
- [31]We accept that she is entitled to recover her reasonable costs including legal fees pursuant to clause 5.1(c) of the lease. Legal fees totalling $30,487.36 with an offset of $8,259.16 being part of Capitol Bikes’ bank guarantee are particularised in itemised invoices from her lawyers in her witness statement.
- [32]It is Ms Romano’s oral evidence that she has perused those invoices and is satisfied that the work particularised in them was carried out at her instruction and has been charged in accordance with her costs agreement with them. In those circumstances we allow $22,228.20.
- [33]While no claim for legal costs in these proceedings has been included in the Notice of Dispute Ms Romano says she has paid or will have to pay her lawyers costs approximating $9,000.00. In the absence of a costs provision in the RSLA each party must bear its own cost of the proceeding unless the tribunal considers the interests of justice require it to make an order. We are not satisfied that such an order should be made here.
- [34]We accept that interest is payable on the outstanding amounts in accordance with clause 11.5 of the lease. We accept Ms Romano’s calculation of interest in the sum of $2,403.50 to 23 June 2017.[8]
- [35]She has claimed an additional amount for interest from 23 June until the date of the hearing. The amount claimed by her for that period is $10,345.41. We have adjusted that amount to exclude interest on the costs she claims in respect of these proceedings. We allow the amount of $9,953.49.[9]
- [36]Accordingly, we allow compensation payable by Capitol to Ms Romano as follows:
- Compensation for loss of rent - $91,979.04;
- Restatement costs - $3,993.43;
- Legal costs - $22,228.20;
- Interest - $12,356.99;
- Total - $130,557.66.
- [37]In respect of the claim against Mr Shaw, we are satisfied that Mr Shaw has guaranteed the prompt performance by Capitol of its obligations under the lease and has failed to pay the various amounts claimed by Ms Romano.
Order
- [38]We order as follows:
- Capitol Bikes Pty Ltd and Michael Rene Shaw must pay Yvonne Elizabeth Romano the sum of $130,557.66 by 4.00pm on 7 May 2018.
Footnotes
[1]RSLA, s 103(1).
[2]RSLA, Schedule dictionary.
[3]RSLA, Schedule dictionary.
[4][2016] QCAT 370.
[5]RSLA, s 4(6).
[6]Real Management Solutions Pty Ltd v Brisbane City Council [2016] QCAT 370, paragraph 44, QCAT Act, s 3(b).
[7]Witness statement, pages 173, 174.
[8]Witness statement, paragraph 27.
[9]Witness statement, paragraph 28.