Scuderi v Perez[2018] QCAT 45

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).

REASONS FOR DECISION

1. [1]
   Carmelo Peter Scuderi & Caterina Scuderi ATF The C & C Group Trust and Adrian Perez both signed an Offer to Lease a commercial premises at Ashgrove on 8 March 2016.^[1]
2. [2]
   Under the lease proposal, Mr Perez paid the first month’s instalment of rent in the sum of $5,958.34 on 14 March 2016.^[2]
3. [3]
   A formal lease for the premises was signed by Mr Perez on 24 April 2016^[3] and returned to the representatives for Mr and Ms Scuderi on 5 May 2016 with the lease disclosure statement and the legal advice report, also signed.^[4]
4. [4]
   Mr Scuderi says he undertook fitout works after 5 May 2016 for Mr Perez.^[5]  However, the invoice he supplied to support this claim of costs of $35,011.50 is dated 20 February 2017.^[6]
5. [5]
   On 10 May 2016, the then legal representative for Mr Perez advised that Mr Perez would be attending to the provision of the financial advice report, security and the certificate of currency of insurance (documents required under the terms of the lease) shortly.^[7]  These documents were never provided.
6. [6]
   The lease was signed by the Scuderis on 1 June 2016.^[8]
7. [7]
   Some time after this, the parties fell into disagreement.  The lawyers for Mr Perez advised the solicitor for Mr and Ms Scuderi that they had stopped acting for Mr Perez on 23 May 2016.
8. [8]
   Mr Perez informed the lawyers for Mr and Ms Scuderi on 7 June 2016 that he no longer wanted to go ahead with the lease.^[9]
9. [9]
   Despite being advised the solicitor was no longer acting for Mr Perez, on 10 June 2016 the solicitor for Mr and Ms Scuderi sent a further letter to Mr Perez through this previous solicitor outlining the issues regarding non-compliance in failing to provide the documents or pay the cash bond required.
10. [10]
    As the legal representatives were no longer acting for Mr Perez and had informed the solicitor for Mr and Ms Scuderi of this, this demand of 10 June 2016 seems to be of little effect.  
11. [11]
    However, Mr Perez confirmed in a telephone call to the solicitor for Mr and Ms Scuderi on 21 June 2016 that he was not going ahead with the lease,^[10] later alleging bullying.^[11]
12. [12]
    A notice of breach letter was issued on 13 July 2016 and again on 22 July 2016, accompanied by a Notice to Remedy Breach of a Covenant.^[12]
13. [13]
    On 22 July 2016, Mr and Ms Scuderi filed an Application for an order to resolve a retail tenancy dispute under the Retail Shop Leases Act 1994 (Qld) (RSL Act).
14. [14]
    A mediation conference was held on 12 September 2016 and was attended by both parties but failed to resolve the issues.
15. [15]
    Mr Perez took no further part in the proceedings before this Tribunal other than to file short submissions on 17 August 2017, in substance indicating he would not deal in any form with Mr Scuderi.
16. [16]
    In April 2017, Mr and Ms Scuderi entered a new lease for the premises with a strong commercial tenant.^[13]
17. [17]
    On 1 August 2017, the Tribunal directed that Mr and Ms Scuderi file all material upon which they sought to rely for an on the papers hearing of their application.  Such material was to include the exact terms of the order sought by them.
18. [18]
    These directions were complied with and a terms of order was filed as an attachment on 18 August 2017.^[14]  The calculations to support the claims were also provided.^[15]
19. [19]
    The draft order seeks an order for compensation under sections 22D and 22E of the RSL Act for Mr Perez’s failure to provide the documents required under the lease.
20. [20]
    These reasons and the order of this Tribunal address individually the terms of the orders sought by Mr and Ms Scuderi based on the material supplied and the calculations to support the orders sought by them.

Jurisdiction

21. [21]
    Mr and Ms Scuderi make a number of claims for compensation based they submit on sections 22D and 22E of the RSL Act.  They also claim for rent not paid under the lease, interest and other outgoings.
22. [22]
    Section 22D of the RSL Act required Mr Perez to provide a financial advice report and a legal advice report.  These documents were not provided. 
23. [23]
    The effect of failure to comply with this section is found in section 22E of the RSL Act, which provides that a retail tenancy dispute exists between the parties and an application may be made to this Tribunal for the provision of these documents.  Mr and Ms Scuderi have not applied for such an order.
24. [24]
    They have applied for monetary compensation for a number of issues arising from a breach of the terms of lease itself.
25. [25]
    QCAT’s current jurisdiction to hear retail tenancy disputes arises under section 103 of the RSL Act.  This section was amended in 2016, commencing on 25 November 2016.
26. [26]
    Prior to that date, section 103(1)(b)(i) specifically excluded disputes about arrears of rent under a retail shop lease.  However, these arrears were recoverable in other jurisdictions, some of which were in QCAT – for example as a minor civil dispute.
27. [27]
    The 2016 amendment does not now exclude disputes about arrears of rent under a retail shop lease.  However, the provisions of the Retail Shop Leases Amendment Act 2016 (Qld) are silent on any transitional arrangements for this amendment and whether, for example, it was intended to have any effect on leases entered into prior to the changes.
28. [28]
    A formal lease was finally signed by all parties on 1 June 2016.  The application for an order to resolve a retail tenancy dispute under the RSL Act was filed in QCAT on 22 July 2016 and its hearing on the papers conducted on 15 November 2017.
29. [29]
    A preliminary issue for the Tribunal was the jurisdiction to hear this matter, allowing for the changes to the legislation and in the absence of any guidance from the 2016 amending Act.
30. [30]
    There is consistent authority identifying that the general rule of statutory interpretation that statutes are not to be given retrospective operation does not apply to statutes that are concerned with procedure only.^[16]
31. [31]
    In the leading High Court authority of Maxwell v Murphy,^[17] the distinction is described as the distinction between statutes which create or modify or abolish substantive rights or liabilities on the one hand and statutes that deal with the pursuits of remedies on the other.^[18] This distinction has been followed in many authorities since.^[19]
32. [32]
    This Tribunal is satisfied that the amendment made in 2016 to section 103 of the RSL Act is properly characterised as procedural.  The addition of the recovery of rent under the RSL Act does not create or modify a right or recovery.  This right already existed in other jurisdictions.  It now also exists under this legislation in QCAT – a more effective way of the disputes being addressed, by consolidating all disputes in one application.
33. [33]
    Having been satisfied the amendments made in 2016 are characterised as procedural, this Tribunal proceeded to determine this application on the current law at the time of the QCAT hearing. 

Claims

34. [34]
    Mr and Ms Scuderi claim monetary amounts for compensation for breach of the lease under the following headings:

    1. Arrears of rent;
    2. Partial loss of rent;
    3. Interest on arrears of rent;
    4. Landlord’s fitout costs;
    5. Agents commission to re-let premises;
    6. Grease trap costs; and
    7. Costs generally.
35. [35]
    Each of these claims will now be addressed.

Arrears of rent

36. [36]
    Mr and Ms Scuderi claim arrears of rent and loss of bargain for the period 23 May 2016 to 10 May 2017 totalling $69,290.75.
37. [37]
    Clause 2.1 of the lease obliges the tenant to pay rent from the date of commencement of the lease.  The amount under the lease is $5,958.33 per calendar month. 
38. [38]
    Paragraph 8 of the lease proposal allows for the following:

    1. a rent free period of 3 months from possession; and
    2. a rent free fitout period.
39. [39]
    Mr Perez paid one month’s rent in the sum of $5,958.34 on 14 March 2016 in advance of signing the acceptance of lease proposal, to be credited as first month’s rent after the rent-free period. 
40. [40]
    After the dispute arose between the parties, Mr Perez failed to make any further payments.  
41. [41]
    Clause 2.1(e) of the lease allows the landlord to claim rent for the rent-free period as a liquidated claim upon a breach by the tenant.
42. [42]
    However, the full amount of Mr and Ms Scuderi’s claim must be reduced by rent paid as the first month’s rent after the rent-free period.
43. [43]
    Deducting this amount, the claim is allowed at $63,332.41

Partial loss of rent

44. [44]
    A new lease of the premises was entered into by Mr and Ms Scuderi with a strong commercial tenant on 9 May 2017 to commence 10 May 2017.
45. [45]
    Under that lease, a rent-free period was granted to the new tenant.  Mr and Ms Scuderi are now claiming rent from Mr Perez for the rent-free period under new lease.  A rent free period was included under the terms of Mr Perez’s lease. 
46. [46]
    In the Tribunal’s view, the terms of the new lease negotiated with the new tenant have nothing to do with Mr Perez and represent a form of “double dipping” by Mr and Ms Scuderi.
47. [47]
    This claim cannot be sustained against Mr Perez and is disallowed.

Interest on arrears of rent

48. [48]
    Under clause 11.5 of lease, interest is paid after rent becomes payable.  The default rate in lease 12%.  Mr and Ms Scuderi claim interest on the period from 23 May 2016 to 10 May 2017.
49. [49]
    This claim does not allow for rent paid by the tenant in line with the findings above.   Mr and Ms Scuderi are entitled to claim for the period minus interest on the one month paid by Mr Perez, a deduction of $715.00 from the amount claimed of $6,326.69.
50. [50]
    The claim allowed is therefore $5,611.69.

Landlord’s fitout costs

51. [51]
    The lease proposal requires Mr and Ms Scuderi to paint all walls and supply a ceiling compliant with Brisbane City Council Health Regulations for a food outlet, lighting, water in and out of the tenancy and an electrical switchboard.
52. [52]
    The Disclosure Statement provided by the Scuderis in Part 3, clause 8.1 reiterates their responsibilities and records that the expected contribution by Mr Perez is nil.
53. [53]
    A new lease of premises was entered into with a strong commercial tenant on 9 May 2017, also a food outlet.  The regulations required by the Brisbane City Council are mandatory under both leases.  Mr and Ms Scuderi are therefore required to undertake compliance with these regulations whichever tenant occupies the premises.  Given that the Scuderis were going to pay for this compliance under the failed lease anyway, the Tribunal is at a loss to understand why these costs are now claimed against Mr Perez.
54. [54]
    This claim is disallowed.

Agents commission to re-let premises

55. [55]
    Mr and Ms Scuderi claim the costs of re-letting the premises to a commercially stronger tenant.
56. [56]
    Whatever the length of a lease, at its conclusion a landlord must re-let the premises in the normal course of business.  The agent’s commission to re-let premises is part of that normal commercial business process. 
57. [57]
    The Tribunal is further at a loss to understand why these costs should now be paid by Mr Perez.  This is a cost the Tribunal considers as a normal part of the re-letting process – no matter what the circumstances of the conclusion of any prior lease.
58. [58]
    This claim is disallowed.

Grease trap costs

59. [59]
    Under the tenancy agreement with Mr Perez, there was to be a shared grease trap.
60. [60]
    In the new commercial tenancy, the new tenant has negotiated a separate new 3,000 litre grease trap as part of the lease agreed to by Mr and Ms Scuderi in an arm’s length negotiation.
61. [61]
    The overall terms of this lease are more advantageous to the Scuderis – a commercially strong tenant, a potentially longer lease (an extra 5 year term option), and a slightly higher annual rent.^[20]
62. [62]
    As the grease trap costs completely relates to the new tenancy, the tribunal is again at a loss to understand why these costs should now be paid by Mr Perez.
63. [63]
    This claim is disallowed.

Costs

64. [64]
    Mr and Ms Scuderi seek their reasonable costs in enforcing compliance by Mr Perez.
65. [65]
    The starting point concerning costs in QCAT is that each party must bear its own.^[21]  This presumption may, however, be displaced if the Tribunal considers it in the interests of justice to order a party to pay all or part of the costs of another party.^[22]  The phrase “in the interests of justice” is not defined in the QCAT Act but is to be construed according to its ordinary and plain meaning, which confers a broad discretionary power on the decision-maker.^[23]
66. [66]
    In determining whether it is in the interests of justice to award costs against another party the Tribunal may have regard to the nature and complexity of the dispute; the relative strengths of the claims made by each of the parties; and, whether a party has acted in a way that unnecessarily disadvantages another party.^[24]
67. [67]
    Mr Perez filed no formal material in matter and engaged only in the mediation preceding QCAT‘s determination process.  Mr Perez sent one email only, advising he was not involving himself in the proceedings.
68. [68]
    Mr and Ms Scuderi claimed six heads of compensation in the action.  Only two were successful and then, not wholly so. 
69. [69]
    On balance, the Tribunal is not satisfied the strong legislative imperative contained in s 100 should be displaced.
70. [70]
    The costs application is dismissed.

Amount of Award

71. [71]
    In conclusion, orders will be made in to reflect the following claims allowed:

Arrears of rent   $63,332.41

Interest on arrears of rent  $  5,611.69

Total     $68,944.10