Boldmount Pty Ltd v Firestar Convenience Retail Developments Pty Ltd
[2018] QCAT 91
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Boldmount Pty Ltd v Firestar Convenience Retail Developments Pty Ltd[2018] QCAT 91
- Add to List
Boldmount Pty Ltd v Firestar Convenience Retail Developments Pty Ltd[2018] QCAT 91
Boldmount Pty Ltd v Firestar Convenience Retail Developments Pty Ltd[2018] QCAT 91
CITATION: | Boldmount Pty Ltd t/as Foodworld Carrara v Firestar Convenience Retail Developments Pty Ltd [2018] QCAT 91 |
PARTIES: | Boldmount Pty Ltd (Applicant) v Firestar Convenience Retail Developments Pty Ltd (Respondent) |
APPLICATION NUMBER: | RSL133-16 |
MATTER TYPE: | Retail shop leases matters |
HEARING DATE: | 13 June 2017 and On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Senior Member Howard, Presiding Member Member McBryde Member Thorpe |
DELIVERED ON: | 16 February 2018 |
DELIVERED AT: | Brisbane |
ORDERS MADE: |
|
CATCHWORDS: | LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OTHER MATTERS – where claim for compensation – where preliminary issue raised about whether claim made under original lease or new lease – whether deed of variation operated an extension of existing lease or a surrender and new grant – where deed of variation provided for extended term Retail Shop Leases Act 1994 (Qld), s 16, s 17 Baker v Merckel [1960] 1 ALL ER 668 CPT Custodian Pty Ltd v Ironbarkhills Pty Ltd & Ors [2011] QDC 4 O F Gamble Pty Ltd v Whitemore Pty Ltd (1989) 2 WAR 327 Savile Settled Estates, In re; Savile v Savile (1931) All ER Rep 557 Richmond Football Club Limited v Verraty Pty Ltd [2011] VCAT 2104 |
APPEARANCES: |
|
APPLICANT: | Represented by Mr Alistair Grist, Director and Mr Gary Grist, Director |
RESPONDENT: | Represented by Mr Dwayne Williams, Solicitor of MBA Lawyers |
REASONS FOR DECISION
- [1]Boldmount Pty Ltd t/as Foodworld Carrara (Boldmount) lodged a notice of dispute under the Retail Shop Leases Act 1994 (Qld) (RSL Act) claiming compensation from Firestar Convenience Retail Development Pty Ltd (Firestar) arising out of the redevelopment of Boonooroo Park Shopping Centre in 2016.
- [2]Stage one of the redevelopment commenced on about 15 January 2016. Boldmount alleges that during the initial phase, construction fencing was erected; car parks were reduced from 52 to some 12-16; and signage relating to its business was dismantled resulting in reduced visibility of its business. Stage 1 concerned the placement of underground fuel tanks and construction of a new entry and carpark for the installation of a service station.
- [3]Boldmount alleges that stage two, from 25 March 2016, involved refurbishment of the existing centre. They say it had not been completed when they vacated the leased premises on about 25 November 2016. Boldmount says that during stage two, fencing was moved but the visibility of its business was still obscured and vehicles were prevented from entering at various points. On 30 June 2016, the new service station began trading.
- [4]The hearing of Boldmount’s claim for compensation was listed before us. At the commencement of the hearing, Firestar submitted that a preliminary issue should be determined before the compensation claim proceeded.
- [5]In particular, Firestar submits that a deed of variation executed by the parties and dated 22 January 2016 constitutes the surrender of the existing lease and the formation of a new lease between the parties at common law, rather than an extension of the original lease. It says that if this is accepted, it has a significant impact on the proceedings because it makes the comparative trading figures relied upon by Boldmount under the earlier lease irrelevant. It suggests that if it is correct about the preliminary point, clarification would be required in respect of Boldmount’s claim.
Background and the execution of the deed of variation
- [6]For context, it is useful to observe some background.
- [7]Boldmount had sought to exercise its five-year option under an existing lease. Firestar denied that Boldmount was entitled to exercise the option, because it was a pre-condition of the lease that the option could only be exercised by the tenant if ‘at all times up to the date of the end of the lease complied punctually with its obligations under the lease’.[1]
- [8]Firestar alleged that Boldmount had failed to pay the annual rent in equal monthly instalments in advance on the first day of each month as required by Clause 3.1. Firestar said rent had generally been paid on a date other than on the first of the month. Therefore, it declined to recognise the exercise of the option, stating that the current lease would end on 31 December 2015.
- [9]By about 5 or 6 January 2016, the parties had nevertheless reached agreement that they would enter into the deed of variation which provided amongst other things, as follows:
- Clause 2.1: Extension of the lease for a further one-year period commencing from 1 January 2016 and terminating 31 December 2016;
- Clause 2.3: Provision for annual rental increase by fixed review on 1 July 2016;
- Clause 2.4: Provision for two options, each of three years, from 1 January 2017 and 1 January 2020;
- Clause 2.5: Provision for rent during the first and second renewal terms;
- Clause 2.7: Provision for a gross rent concession during the period 1 January 2016 to 30 June 2016 of 50% in consideration of the development, construction and refurbishment works to be undertaken by the landlord at the complex;
- Clause 2.8: Provision for the tenant to trade under the name of an established brand which has at least 50 stores in Queensland;
- Clause 2.11: The variation for Clause 2.11 was as follows:
2.11 Insert new Clause 16.1A:
“16.1 Landlord’s Planned Works
- (a)The Tenant acknowledges that the Landlord intends to construct a service station in the Complex, some adjoining tenancies will be demolished and the Complex will otherwise undergo major refurbishment and renovation (“Landlord’s Planned Works”).
- (b)The Tenant acknowledges and agrees that it will have no claims or rights of action against the Landlord in respect of the likely disruption and inconvenience of the Landlord’s Planned Works.
- (c)The Tenant agrees to allow the Landlord and its agents access to the Premises when required for the purposes of completing the Landlord’s Planned Works. Such access may be required by the Landlord and its agents with little or no notice to the Tenant.
- (d)The Tenant also agrees to fully cooperate with the Landlord during the Landlord’s Planned Works and any and all future works to the Complex.
- (e)The Landlord will use its best endeavours to minimise disruption of the Tenant’s business during the completion of the Landlord’s Planned Works and any future works to the Complex.”
- Clause 4: Settlement of certain QCAT and Supreme Court proceedings;
- Clause 4.4: The tenant released the landlord from all actions, claims or proceedings that the tenant may have against the landlord under or in respect of the lease relating to any act or omission of the landlord on or before 1 January 2016.
Firestar’s submissions
- [10]Firestar acknowledged at the oral hearing that both parties have, until recent weeks, treated the document signed in early January 2016 as a deed of variation of the existing lease. However, it now contends that, having regard to decisions in Richmond Football Club Limited v Verraty Pty Ltd,[2] and CPT Custodian Pty Ltd v Ironbarkhills Pty Ltd & Ors,[3] that, by operation of law, the deed of variation constitutes the surrender of the existing lease and the formation of a new lease between the parties.
- [11]Firestar further informed the Tribunal that this same point was in issue in certain Magistrates Court proceedings relating to guarantor’s obligations for rent arrears. It further advised that it had made application for summary judgment, and that the Magistrate required submissions in respect of the issue. Firestar says that the issue is relevant in those proceedings because the old lease had an additional guarantor who did not sign the deed of variation.
- [12]Firestar submits that the extension of the term of the lease provided for in the deed of variation alone is sufficient to constitute a surrender and new lease. However, it submits that there are a variety of other clauses which also differ from the terms of the existing lease as outlined in the summary above.
- [13]Firestar submits that the Tribunal must determine as a question of construction whether that document operates as a variation of the existing lease or a surrender and new lease.
- [14]Firestar ultimately intends to submit in the compensation proceedings that, although Boldmount had been a tenant in the premises since 1993, it is in no different position to a new tenant as from 1 January 2016 as a result of the surrender and new lease.
Boldmount’s submissions
- [15]Boldmount’s submissions were limited. It submits that it had been in business on the same premises since 1993. It asserts that the family worked the business and the only reason for the variation was that Firestar did not accept that it was entitled to exercise its option.
The effect of Clause 2.11(b) of the deed of variation
- [16]As set out above, Clause 2.11(b) is an acknowledgement by the tenant and agreement that it will have no further claims or right of action against the landlord in respect of the likely disruption and inconvenience of the landlord’s planned works.
- [17]However, the RSL Act provides in s 15 that a duty or entitlement conferred by that Act on a lessor or lessee under a retail shop lease is taken to be included in the lease. Contracting out is prohibited and a provision of a retail shop lease or other agreement that purports to exclude the application of a provision of the Act is void.[4] To the extent of any inconsistency between provisions of a retail shop lease and the RSL Act, the provision of the lease is void.[5]
- [18]Part 6 Division 7 of the RSL Act provides that provisions about compensation for lessees by lessors in specified circumstances are to be implied into most retail shop leases.
- [19]At the oral hearing on 13 June 2017, Firestar conceded that Clause 2.11(b) is void pursuant to the RSL Act, (but intends to make submissions in due course that it is relevant to the ‘reasonableness’ of the compensation claim made).
Events at the oral hearing on 13 June 2017
- [20]At the oral hearing, the Tribunal sought submissions about whether it was appropriate for the Tribunal to separately determine the preliminary issue if the Magistrates Court was already seized of that same issue. We received no helpful submissions.
- [21]The Tribunal directed Firestar to file and serve a copy of the Magistrates Court decision and the reasons for it, or a transcript of the reasons, as may be the case, about this preliminary issue within seven days of receiving them.
- [22]We further directed the parties to file and serve their further written submissions about the preliminary issue following the filing of copies of the Magistrates Court decision and reasons. We also directed that, in the absence of a request from either party for further oral hearing of the threshold issue (or other order of the Tribunal itself), the preliminary issue be further heard and determined on the papers without an oral hearing.
- [23]Further, we directed that after the determination of the preliminary issue, a directions hearing be listed and directed filing of any further material by the parties in relation to the compensation claim itself.
- [24]There has been a regrettable delay in the matter returning to the Tribunal for determination on the papers of the preliminary issue. However, we now decide that issue.
Is the ‘variation’ document an extension of the existing lease or a surrender and new lease?
- [25]A Magistrate subsequently determined Firestar’s unsuccessful summary judgment application. In the course of the Magistrate’s reasons for the decision, the Magistrate appears to find that the existing lease expired on 31 December 2015, and that despite the parties intention to extend it, they could not do so, because once it expired it was replaced by a month to month tenancy, stating:
Between the Lease and the Deed, the identity of the landlord had changed and one of the guarantors had not signed the Deed. It must take effect then as a new lease on the same terms as the Lease.[6]
- [26]No doubt because of the nature of the summary judgment application, the reasons for decision on this point are brief. As that application was in any event unsuccessful, the decision on the summary judgment application was not a final decision and the principle of res judicata would not operate.
- [27]That said, we have concluded that by operation of law, the earlier lease was surrendered and that the Deed of Variation took effect as a new lease. We make no finding about whether there was at any stage a month to month tenancy. In any event, that is irrelevant in deciding the preliminary point, it seems to us.
- [28]
… an alteration of an existing lease, so that it will operate for a term extending beyond the original term, can operate in law only as a surrender of the old lease and a grant of the new one …
- [29]In Baker v Merckel,[9] the principle was applied. The Court held that the granting and obtaining of a right exercisable at the lessee’s option which became an enforceable part of the contract between the parties that extended the potential period of the term operated as a surrender of the original lease and the grant of a new lease. This was said to be the result, irrespective of the words used by the parties, to indicate their intention to achieve a result of a variation of an existing lease.
- [30]The issue was considered in O F Gamble Pty Ltd v Whitemore Pty Ltd.[10] Parties had, by deed of variation, purported to extend a lease for a term of 10 years. Subsequently, some four years later the parties to the grant of a further option of eight years commencing on a date at the conclusion of the 10 year period. It was held that a variation, which effected the extension of the term of a lease, operated as a surrender and fresh grant which effectively supplanted the existing lease with a new one.[11] In CPT Custodian Pty Ltd v Ironbarkhills Pty Ltd & Ors,[12] the District Court in Queensland held that the surrender principle operates in any circumstance that ‘alteration’ of the existing lease extends its term beyond the original term.[13] The Court also considered the effect of whether the Land Titles Act 1994 (Qld) had impacted upon the common law principle and confirmed that it had not.
- [31]In this instance, the lease between Boldmount and Firestar due to end on 31 December 2015 provided a further option of a five-year term. The deed of variation contained a purported extension of a further one-year, and two further three-year options. That is, the deed of variation extended beyond the original term. This alone was enough to effect a surrender of the 2015 lease and grant of a new lease.
- [32]Accordingly, irrespective of whether we are strictly bound by the decision of the Magistrate, our conclusion would be the same about the preliminary issue.
Orders and directions
- [33]Having reached this conclusion, we make a declaration that the deed of variation operates as a surrender and new lease.
- [34]The matter is listed for a directions hearing.
Footnotes
[1] Deed of Variation dated 22 January 2016, clause 22.1(2).
[2] [2011] VCAT 2104.
[3] [2011] QDC 4.
[4] RSL Act, s 16.
[5] Ibid, s 17.
[6] Reasons for Decision Southport Magistrates Court M203/17 dated 16 June 2017 (unpublished), [12] citing Savile Settled Estates, In re; Savile v Savile (1931) 2 Ch 210.
[7] (1931) All ER Rep 557.
[8] Ibid, per Maugham J.
[9] [1960] 1 All ER 668.
[10] (1989) 2 WAR 327.
[11] Ibid, 329 and 332-333.
[12] [2011] QDC 4.
[13] Ibid, [10]-[12].