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N.Q. Seafood Distributors Pty Ltd as Trustee v Shopping Centres Australasia Property Group Re Ltd[2020] QCAT 467

N.Q. Seafood Distributors Pty Ltd as Trustee v Shopping Centres Australasia Property Group Re Ltd[2020] QCAT 467

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

N.Q. Seafood Distributors Pty Ltd as Trustee v Shopping Centres Australasia Property Group Re Ltd [2020] QCAT 467

PARTIES:

N.Q. SEAFOOD DISTRIBUTORS PTY LTD AS TRUSTEE

(appellant)

v

SHOPPING CENTRES AUSTRALASIA PROPERTY GROUP RE LTD

(respondent)

APPLICATION NO/S:

RSL115-18

MATTER TYPE:

Retail shop leases matter

DELIVERED ON:

27 November 2020

HEARING DATE:

21 February 2019; 22 February 2019

HEARD AT:

Mackay

DECISION OF:

Member Holzberger

Member Kairl

Member McBryde

ORDERS:

  1. 1.
    The application is dismissed.
  2. 2.
    The counter application is allowed.
  3. 3.
    SHOPPING CENTRES AUSTRALASIA PROPERTY GROUP RE LTD must file in the Tribunal two (2) copies and serve on N.Q. SEAFOOD DISTRIBUTORS PTY LTD AS TRUSTEE one (1) copy of written submissions in relation to damages and costs by 4:00pm on 21 December 2020.
  4. 4.
    N.Q. SEAFOOD DISTRIBUTORS PTY LTD AS TRUSTEE must file in the Tribunal two (2) copies and serve on SHOPPING CENTRES AUSTRALASIA PROPERTY GROUP RE LTD one (1) copy of written submissions in relation to damages and costs by 4:00pm on 25 January 2021.

CATCHWORDS:

RETAIL SHOP LEASES – part destruction of Centre – failure to reinstate – construction of temporary hoardings – where sales downturn due to tenant poor business decisions – where failure to reinstate amounts to failure to provide quiet enjoyment and gives rise to compensation – whether lease wrongfully repudiated.

Retail Shop Leases Act 1994, s 43

Christodoulou & Nobilio v ISPT Pty Ltd [2013] QCAT 206

Pincott and Pincott v Metro Maroochydore Pty Ltd [2007] RSLT 002

Vardenega & Ors v Catoria Investments & Trading Pty Ltd [1992] QRSLT 2

APPEARANCES &

REPRESENTATION:

Applicant:

T DeWaard of counsel, instructed by Macrossan & Amiet Solicitors

Respondent:

J K Ratanatray, solicitor, JKR Lawyers

REASONS FOR DECISION

  1. [1]
    N.Q. Seafood Distributors Pty Ltd (NQ) filed anoticeof dispute under the Retail Shop Leases Act 1994 (the Act) on 26 March 2018 in respect of premises described as shop 31 Whitsunday Shopping Centre, Cannonvale (the premises) which it leased from Shopping Centres Australasia Property Group Re Ltd (SCA) pursuant to a lease dated 13 June 2013 (the lease).
  1. [2]
    NQ and SCA failed to resolve the dispute at mediation and it was referred to the Tribunal for determination.
  1. [3]
    NQ claim compensation pursuant to s 43 of the Act for restriction or alteration of traffic flow past the premises.[1]
  1. [4]
    Prior to hearing the notice was amended to add a claim in the alternative for damages for breach of the express or implied term of the lease to provide NQ with quiet enjoyment of the premises.
  1. [5]
    On 11 September 2018 SCA filed a counter application for damages for arrears of rent, fail to make good and damages for NQ’s wrongful reputation of the lease.
  1. [6]
    In a joint statement of agreed facts handed up at the commencement of the hearing, the claims for arrears and failure to make good were abandoned but the claim for damages for wrongful repudiation was preserved.
  1. [7]
    The hearing took place in Mackay on 21 and 22 February 2019. NQ was represented by Mr DeWaard of Counsel and SCA by its solicitor, Mr Ratanatray.

Chronology

  1. [8]
    It is not contested that:
  1. (a)
    On 19 December 2013 NQ, through its sole director, Paul Kirk contracted to purchase the business known as Buck’s Seafood (the business) conducted from the premises from “Buck” and Sally Little for a price of $750,000 on a walk in walk out basis;[2]
  1. (b)
    The contract included provision for assignment of the existing lease of the premises between the Littles and the then landlord (the lease);
  1. (c)
    After obtaining the landlord’s consent to assignment of the lease settlement of the sale took place on 17 February 2014 and NQ commenced trading that day;
  1. (d)
    On 3 April 2016 part of the WhitsundayShopping Centre was destroyed by fire. The destroyed part was a separate building on the western side of the centre which was adjacent to the premises and at the time contained 10 shops including Target Country and branches of Suncorp Bank, CBA, Westpac and ANZ;
  1. (e)
    Demolition works of the western building were carried out between 4 April 2016 and 17 June 2016;[3]
  1. (f)
    As a result of the fire the business was closed for seven days and lost stock because of the power outage caused by the fire;
  1. (g)
    On or about 7 April 2014, according to Mr Kirk, SCA caused a large corrugated iron fence around the fire affected part of the Centre;
  1. (h)
    The tenants of the destroyed section of the Centre either terminated their leases (including Target Country) or relocated to the eastern side of the Centre;
  1. (i)
    On 21 December 2016 Centre management issued a memo (SCA refers to it as a notice) to the effect that SCA did not intend to reinstate the destroyed section of the Centre;
  1. (j)
    NQ ceased trading from the premises on 27 March 2017; and
  1. (k)
    On 4 October 2017 SCA accepted what it described as NQ’s reputation of the lease and terminated it.

The Centre

  1. [9]
    A plan of Whitsunday Shopping Centre is contained in exhibit 14. It consists of several separate buildings connected by a common carpark.
  1. [10]
    The plan was drawn after the fire but indicates 53 tenancies prior to it. The major tenants were, it is agreed, Coles supermarket and Target Country. The retail component of the Centre is contained in two buildings, one at the western end of the Centre containing Target Country and a number of other separate tenancies (the western building) and the other at the eastern end containing Coles and a larger number of smaller tenancies (the eastern building). The eastern building and the western building are separated by a passageway (the passageway) accessible to pedestrian traffic from either end to access either building (the western entrance).
  1. [11]
    Pedestrian access to the eastern end of the Centre is available from the carpark or adjourning streets adjacent to the pharmacy leading directly to Coles (the eastern entrance).
  1. [12]
    Buck’s Seafood is the western most tenancy of the eastern buildingand it sits adjacent to the western building.
  1. [13]
    Costumers using the western entrance from either end of the passageway had to either pass Buck’s Seafood or come very close to it. The plan indicates that Buck’s was an outside tenancy visible and accessible from the carpark directly.
  1. [14]
    Both Mr Sharma and Ms Manning, respectively the Chief Operating Officer and Operations Manager of SCA described the fire as “devastating”[4] and clearly that was the case. In written submissions Mr Ratanatray said the western building had approximately 3415 square metres of gross leasable floor area and the gross leasable floor area for the whole Centre was 7838 square metres.[5] No objection was taken in submissions in reply and those areas are at least proportionate to those depicted in exhibit 14. In round terms 43.5 percent of the Centre was destroyed.

Cause of business failure

  1. [15]
    SCA asserts that the failure of the business was not caused by the fire or any consequential action or inactions on its part,[6] but rather by Mr Kirk’s business decisions and shortcomings. It relies primarily on the evidence of Teresa Manning, the Operations Manager or Centre Manager of the Whitsunday Shopping Centre.
  1. [16]
    Referring to sale figures received by NQ to Centre management (which will be referred to in more detail later in these reasons) Ms Manning opined that the negative sales growth of 15.2 percent experienced by NQ between February 2015 and January 2016 was primarilydue to, among other things, ending its wholesale relationship with Buck Little, providing inferior product, lack of business knowledge and poor attitude, lack of attention and promotion and reducing product offering, trading hours and employees.[7]
  1. [17]
    We have some difficulty with Ms Manning’s evidence. She is entitled to form an opinion based on her own observations and the sale figures provided to her but it can hardlybesaid to bean expert opinion. Her experienceas aCentreManager mayallow her to spot abusiness havingproblems but itdoesnot qualifyher to analysethe causes.
  1. [18]
    She is really not in a position to determine whether Mr Kirk’s reduction of hours and staff are partial causes of the failure or reasonable responses to adverse trading conditions, nor to assess the extent or effectiveness of NQ’s advertising.
  1. [19]
    The only one of the matters raised by Ms Manning where it can be demonstrated that Mr Kirk’s decision making impacted on sales (and that is based on Mr Kirk’s evidence) related to the sale of fresh seafood.
  1. [20]
    NQ ceased to supply fresh seafood to resorts and associated business in January 2016 because yielded insufficient income to justify its continuation and it was “a time consuming aspect of the business and it was not very profitable.”[8]
  1. [21]
    In cross-examination Mr Kirk confirmed he was aware of the expiry of Buck Little’s restraint in February 2016 and that he expected competition from him after that date. That in fact occurred.
  1. [22]
    He also said in cross-examination that he ceased selling fresh seafood from the shop possibly in July 2016, resumed sales in August/September 2016 and stopped again in October 2016 with the exception of prawns which he sold until Christmas because the business continued to decline. “I decided to stop selling the fresh fish as it would not sell and go bad and was turning into a waste of money for the business.”[9]
  1. [23]
    In re-examination Mr Kirk said he had tried selling cheaper lines without success. There was much wastage as the fish had only a two day shelf life after it was filleted and losses were huge.
  1. [24]
    Mr Kirk confirmed that in partnership he opened a new business called “Whitsunday Butchers and Seafood” in June 2016 at Whitsunday Plaza, a shopping Centre 3kms or five minutes’ drive from Buck’s Seafood. He also confirmed that he referred Buck’s costumers looking to buy fresh seafood to that business. The seafood component of the business was restricted in the lease to “fresh seafood”.[10]
  1. [25]
    We are of the view that this is a commercial response to declining demand for fresh seafood at Buck’s seafood rather than the cause for it.
  1. [26]
    The extent of lost sales, and the cost of those sales from discounting the sale of fresh seafood is not in evidence.
  1. [27]
    We are also concerned that Ms Manning’s evidence and the evidence of Mr Sharma appears to make no concession that the fire was detrimental to trade for any tenant after the completion of the demolition.
  1. [28]
    It is uncontroversial that immediately following the fire Target Country, Suncorp, ANZ and NAB and four other tenants terminated their leases and left the Centre and Westpac and CBA moved to the eastern end of the Centre.
  1. [29]
    It was also put to Ms Manning in cross-examination and she agreed that the News Agencies, Thai restaurant (which were located near Buck’s Seafood) The Orange Quote Café and Hamburger Hut had closed and left the Centre and that the Post Officer and Cradle Craft tenancies whilst still an occupation were moving.
  1. [30]
    It’s simply beggars belief that the destruction of more than 40 percent of the Centre adjacent to Buck’s Seafood, the consequent departure of a major tenant and three banks could haveno effect on NQSeafoodbusiness. Wedo not accept Ms Manning’s unqualified opinion based on selective and incomplete information.

Sales Figures

  1. [31]
    On 7 March 2019, SCA filed in the Tribunal a document titled “Comparative Sales Analysis”. Directions were made at the hearing for delivery of sales figures on the basis of an undertaking by NQ protecting the privacy of other tenants.
  1. [32]
    The document contains the monthly sales figures supplied bytenants of the Centre for each of the years 2012 to 2017 and compares them with the same month one year earlier. Each year runs from 1 February until 31 January in the following year. So for example the year ending January 2017 runs from February 2016 to January 2017. It also shows a percentage increases or decreases in sales for each month and the year in total.
  1. [33]
    After NQ took possession on 17 February2014, Buck’s Seafood experienced negative sales growth of 1.6 percent for the year ending 30 January 2015 followed by negative growth of 15.2 percent for the year ending January 2016 and negative growth of 26.9 percent for the year ending January 2017.
  1. [34]
    In written submissions Mr DeWaard points out that the 1.6 percent negative growth in 2015 compares favourably with the 19 percent negative growth attributed to the majors and the Centre. Presumably the opening of Woolworths at Airlie Beach had something to do with this.[11]
  1. [35]
    For the year ending January 2016 (where NQ had negative sales growth of 15.2 percent) the speciality tenancies as a whole suffered negative growths of 4 percent while the Centre as a whole experienced 1.8 percent growth.
  1. [36]
    For the year ended January 2017 (the year of the fire) in which NQ had negative growth of 26.9 percent, the numbers are skewed by the loss of some of the tenants in the destroyed section of the Centre however in our view it is apparent that a number of tenants in various categories experienced consistent negative sales growth over this period.
  1. [37]
    Mr Kirk said in evidence “after the fire we gradually continued to lose business and our monthly turnover continued to decline significantly as there was no reason to come down the western end of the Centre.[12]

Sales Analysis

  1. [38]
    Ms Manning’s evidence is “by May/June 2016 being one to two months after the fire the applicant’s sales normalised to pre-fire levels.”[13]
  1. [39]
    Presumably on the basis of the comparative sales analysis.
  1. [40]
    The sales analysis shows that NQ experienced negative sales gross of 19.2 percent in May, 3.1 percent in June, 9.4 percent in July, 19.8 percent in August, 11 percent in September, 24.8 percent in October, 58 percent in November, 54 percent in December and 67 percent in January.
  1. [41]
    Mr Kirk responded to Ms Manning’s evidence saying “sales had normalised to pre fire levels because the community rallied and he benefited from the workers carrying out the demolition.”[14] Although elsewhere he described that trade as “nothing significant”.[15]
  1. [42]
    The choice of the word “normalised” is unfortunate and inaccurate in our view. The June result (itself a negative) sits amid results ranging from bad to terrible. The comparative sales analysis also indicates that Coles turns over roughly double the total turnover of all specialty tenants suggests that sales have normalised for Coles rather than the specialty tenants.
  1. [43]
    On balance we accept that the fire and the loss of tenants including Target Country and three banks is the primary reason for the decline in NQ’s trade and the decisions made by Mr Kirk after that time were reasonable albeit unsuccessful response to that.
  1. [44]
    In saying that the fire itself is not sufficient for NQ’s claim for success. It must be demonstrated that SCA’s actions or inaction in response must breach its expressed or implied obligation to provide quiet enjoyment or trigger the statutory right to compensation.
  1. [45]
    It is submitted on behalf of NQ that SCA has done two things which both breach its obligation to provide quiet enjoyment and triggers the statutory right to compensation namely:
  1. (a)
    It erected the wall or hoarding around the destroyed section of the centre; and/or
  1. (b)
    It decided not to rebuild the western side of the centre.
  1. [46]
    In respect of the first of these, the erection of the wall, the evidence does not support a finding that the erection of the wall caused or significantly contributed to a substantial interference with NQ’s business or substantially altered the flow of potential customers past the premises. That had in our view already occurred with the destruction of the western building by fire.
  1. [47]
    Mr DeWaard submits that the wall contributed to the lack of traffic and blocked the visibility of the premises.[16]
  1. [48]
    In Mr Kirk’s statement of evidence (exhibit 2) he refers to photographs depicting the wall and says, “It can be seen from these photos the effect that the barricaded corrugated fence had on the entry to the Whitsunday Shopping Centre.”[17] We do not believe that the photographs alone are of assistance in that regard.
  1. [49]
    There is also a brief reference to there being no lighting[18] but he conceded in cross-examination that lighting was installed about three weeks after the fence was constructed. He maintained however that lighting was inadequate.
  1. [50]
    In his further statement of evidence (exhibit 30 which is largely in response to Ms Manning evidence), he does not respond to the assertion that the hoarding had no effect on the premises.
  1. [51]
    In cross-examination he said that after the fire he was getting no costumers from Shute Harbour Road. He agreed that there was no physical impediment stopping traffic passing his premises. It must be said that the evidence relating to traffic flow in the Centre both before and after the fire was unsatisfactory.
  1. [52]
    In re-examination he said that after the fire it was the eastern entrance which was being used. No evidence was called contesting that.
  1. [53]
    Mr Kirk’s first reference to interference with sightlines comes in cross-examination when he conceded visibility was unaffected except for the area west of Hungry Jacks. Mr Kirk said his premises could not be seen from Banjos.
  1. [54]
    Michelle Cooper, an employee of Mr Kirk, does not refer to the hoarding in her statement of evidence.[19] She responds to Ms Manning’s assertion but makes no reference to the altered traffic flow or interference with the line of sight.
  1. [55]
    There is no evidence comparing any lines of sight issues before this area with those which apparently rose after the erecting of the fence.
  1. [56]
    The evidence does not support a finding that the erection of the wall or hoarding caused was significantly contributed to a substantial interference with NQ’s business.
  1. [57]
    It remains then to consider whether SCA’s decision not to rebuild the centre breaches its obligation to provide quiet enjoyment or triggers the statutory right to compensation.

Quiet enjoyment

  1. [58]
    Clause 11.2 of the lease provides:

Subject to the landlord’s rights under this lease, while the tenant complies with all its obligations under this lease, the tenant may occupy and use the shop without the landlords interreference or interruption.

  1. [59]
    It is settled law that there is an implied covenant law not to take any action which derogates from the grant.[20]
  1. [60]
    In Aussie Traveller v Marklea Pty Ltd,[21] McPherson JA explained the distinction between the two. The covenant for quiet enjoyment is directed to acts of the lessor on the lease premises while the obligation not to derogate from the grant is directed at acts of the lessor on other land retained by the lessor. He doubted whether the distinction was of “much practical significance”, the question being whether the lessor’s acts interfere with the lessor’s occupation regardless of where those acts occur.
  1. [61]
    The accepted test for breach of covenant for quiet enjoyment is articulated in Hawkesbury Nominees Pty Ltd v Battik Pty Ltd[22] as follows:

Therefore, the relevant principle in relation to breach of the covenant for quiet enjoyment is that there will be a breach of the covenant where the ordinary and lawful enjoyment of the demise premises is substantially interfered with by the acts of the lessor or those lawfully claiming under him, whether or not title to the land or the possession of the land is otherwise affected.[23]

  1. [62]
    In Browne v Flower, Parker J articulated the test as “unfit or materially less fit for the particular purpose for which the grant or denies was made.”[24]
  1. [63]
    It is not necessary to establish that the lessor’s acts have resulted in “practical frustration” of the purpose of the lease or enter the premises completely unfit for purpose.
  1. [64]
    Mr Sidharth Sharma, the Chief Operating Officer of SCA gave uncontested evidence relating to SCA’s decision not to rebuild.
  1. [65]
    The demolition and reinstatement of the western building was estimated to take about eight months[25] and cost between $9,608,254 and $11,060,000.[26]
  1. [66]
    All tenants of the western building had relocated or terminated their leases.

It therefore became unfeasible to rebuild the part of the shopping centre destroyed by the fire event in circumstances where there would be no tenants to occupy the vacant premises or space.[27]

  1. [67]
    If the failure to rebuild is a breach of SCA’s obligation to provide quiet enjoyment at the very best, it is a breach incapable of remedy in the short term and quite possibly ever. Not only must SCA rebuild the building it must re-tenant it with at least comparable tenants to those who had departed to cure the interference to N.Q Seafood’s business.
  1. [68]
    Using the same test as is proposed by NQ, a decision to rebuild would also likely breach the quiet enjoyment obligation if the construction process caused, as may be expected, further disruption to the business.
  1. [69]
    Accepting for the moment that there has been a substantial interference with the business, it is the destruction of the western building rather than the decision not to rebuild which has caused that substantial interference.
  1. [70]
    Mr DeWaard submits that it is not relevant whether or not the lease requires reinstatement. We disagree. Clause 9 of the lease deals in some detail with the rights and obligations of the parties in the event of destruction of the centre or part of it, including the tenants’ rights to terminate.
  1. [71]
    Clause 9.3 provides “the landlord is not obliged to rebuild or restore either the shop or the centre”.
  1. [72]
    We do not accept that a decision not to reinstate, despite being specifically authorised by the lease, could be seen as a breach of SCA’s express or implied covenants to provide quiet enjoyment.

Compensation for failure to reinstate

  1. [73]
    Section 43 of the Act was amended with effect from 25 November 2016 to impose an obligation on the lessee to give written notice of loss or damage suffered as soon as predictable after it is suffered.[28]
  1. [74]
    Whether that notice was given is included as a matter in issue in the parties’ joint statement of agreed facts document.
  1. [75]
    Mr DeWaard submits,[29] that the amendment came into effect after the fire and does not retrospective effect. NQ’s claim for compensation for the destruction of the western building but rather the construction of the wall or hoarding which took place immediately following the fire but continued beyond 25 November 2016 and the failure to rebuild the western building was triggered by SCA’s decision in that regard communicated on 21 December 2016. It is arguable in both cases that section 43 does apply.
  1. [76]
    It is not necessary to determine that point in these reasons. Section 42(3) provides that a failure to deliver a notice under section 42(2) does not affect the lessee’s right to compensation but must be considered in deciding the amount of compensation. If necessary, the parties can make further submissions in that regard.
  1. [77]
    Section 43(1) of the Act provides:
  1. (1)
    The lessor is liable to pay to the lessee reasonable compensation for loss or damage suffered by the lessee because the lessor, or a person acting under the lessor’s authority –
  1. (a)
    substantially restricts the lessee’s access to the leased shop; or
  1. (b)
    takes action (other than action under a lawful requirement) that substantially restricts, or alters –
  1. (i)
    access by customers to the leased shop; or
  1. (ii)
    the flow of potential customers past the shop; or
  1. (c)
    causes significant disruption to the lessee’s trading in the leased shop or does not take all reasonable steps to prevent or stop significant disruption within the lessor’s control; or
  1. (d)
    does not have rectified as soon as is practicable –
  1. (i)
    any breakdown of plant or equipment under the lessor’s care or maintenance; or
  1. (ii)
    any defect in the retail shopping centre or leased building containing the leased shop, other than a defect due to a condition that would have been reasonably apparent to the lessee when the lessee entered into the lease or, for a lessee by way of assignment of the lease, when the lessee accepted the assignment; or
  1. (e)
    neglects to clean, maintain or repaint the retail shopping centre or leased building containing the leased shop or the part of the centre or building that, under the lease, is the lessor’s responsibility; or
  1. (f)
    causes the lessee to vacate the leased shop before the end of the lease or renewal of it because of the extension, refurbishment or demolition of the retail shopping centre or leased building containing the shop.
  1. [78]
    As we understand NQ’s claim for compensation, it is asserted that SCA’s liable to pay compensation to NQ because it substantially altered the flow of potential customers past the premises by not reinstating the western building.
  1. [79]
    In Christodoulou & Nobilio v ISPT Pty Ltd,[30] the Tribunal considered a claim for compensation for altered traffic flow by a tenant during the substantial and long running re-development of the Wintergarden Centre in Brisbane.
  1. [80]
    Referring to earlier decisions of the Tribunal[31] the landlords submitted that there was no duty to ensure that all or most of the shops in the Centre were occupied, that decision to let or not being a commercial decision rather than a legal obligation.
  1. [81]
    While the Tribunal accepted that “as a general principle” in this case the landlord had made a decision not to renew or grant any new long term leases, nor to seek to replace key or anchor tenants and that decision had led to a decrease in the quality and quantity of tenants over a protracted period. That in turn had altered unfavourably for the tenant, the volume of foot traffic and compensation was payable accordingly.
  1. [82]
    It is not suggested (the quiet enjoyment issue having been decided) that SCA in making its decision not to rebuild has breached any of its express or implied obligations under the lease or acted unreasonable or capriciously. It is not reasonable for the destruction of the western building which no doubt had significant commercial consequence for it, including the making of the decision whether to rebuild or not.
  1. [83]
    Section 43 does not, however require any fault or wrongdoing on the part of the lessor. A decision made by a lessor which has the effect of altering traffic flow to the detriment of a lessee may give rise to a claim for compensation even if the need for a decision arises through no fault of the lessor and the decision is the only practical commercial response it could make. The potential claim is a factor in the commercial decision itself.
  1. [84]
    That said, section 43(1)(b) does require that the substantial restriction to access or traffic flow arises from some “action” on the part of the lessor.
  1. [85]
    We have found that the destruction of the western building has restricted traffic flow past the business but that has not arisen from any action on SCA’s part.
  1. [86]
    The decision not to rebuild, which is made some months later, does not restrict the access or traffic flow that exists at that point of time. On the other hand, a decision to rebuild could well have restricted traffic flow.
  1. [87]
    The circumstances here are significantly different from those in Christodoulou. In that case the action taken by the lessor was to renovate the centre and to facilitate that renovation determine to alter the traffic flow by making certain decisions about releasing premises within the centre.
  1. [88]
    No such decision was made here. Mr Sharma’s evidence is that the major tenant of the western building chose not to reoccupy, and other tenants chose to relocate. While SCA could have rebuilt it, it could not force its tenants to reoccupy. It may not have been possible to restore traffic flow.
  1. [89]
    We are not satisfied in those circumstance that section 43(10(b) gives NQ any right to compensation.
  1. [90]
    Although it has not been argued, we are of the view that section 43(1)(c), which requires the lessor to take all reasonable steps to prevent or stop significant distribution within the lessor’s control similarly does not apply. The retention of the tenants who previously occupied the western building is not within the lessor’s control. To rebuild without those tenants would not prevent the distribution and in the circumstances is not reasonable.

Repudiation

  1. [91]
    It is not in dispute that NQ vacated the premises on or about 27 March 2017.
  1. [92]
    Mr Ratanatray’s primary submission in relation to that is in so doing NQ communicated, by its actions in vacating, that it had elected to terminate the lease pursuant to clause 9.2(a) of the lease which provides:

If the landlord gives the tenant a notice that it considers that the damage makes repair of the shop or the centre impractical or undesirable, the landlord or tenant may terminate this lease by giving 14 days’ notice to the other.

  1. [93]
    Mr DeWaard submits simply that the election in clause 9.2(a) is not enlivened because no notice has ever been given to NQ.[32]
  1. [94]
    Ms Manning’s evidence is that she gave notice under clause 9.2(a) on 21 December 2016. Neither she nor Mr Kirk say how that notice was given and whether it complied with the notice requirements of clause 9.6 of the lease.
  1. [95]
    There is no evidence of Ms Manning’s authority to give the notice either from her or from Mr Sharma.
  1. [96]
    The document is titled “tenant memo”. There is no reference to “notice”, “clause 9” or the lease generally. It does not specify that SCA considered it impractical or undesirable to re-build although that is the clear implication.
  1. [97]
    While a notice under clause 9 does not require disclosure of any alternative proposal to rebuilding the tenant memo includes a draft plan and a statement that SCA would be “speaking with council and authorities about our plan”.
  1. [98]
    There is no evidence that SCA gave any indication that the memo was intended to act as a notice under clause 9.2.
  1. [99]
    It does not in our view operate as a notice pursuant to clause 9.2, but in any event it is not asserted by either party that NQ gave notice to terminate pursuant to clause 9.2(a).
  1. [100]
    It is common ground that NQ ceased to trade on 27 March 2017. On Mr Kirk’s own evidence there was no concluded agreement for termination or surrender of the lease.[33]
  1. [101]
    In doing so NQ has repudiated the lease. That repudiation was accepted by SCA on 4 October 2017.[34]
  1. [102]
    SCA has done NQ no favours by failure to deliver the notice pursuant to clause 9.2 even though it had clearly decided not to reinstate. In failing to deliver that notice or to itself terminate the lease NQ has been denied the opportunity to terminate pursuant to clause 9.2.
  1. [103]
    We are however at a loss to understand why NQ elected to simply vacate without requesting a notice or concluding its negotiations for surrender of the lease.
  1. [104]
    NQ’s application is dismissed. SCA’s counterapplication is allowed.
  1. [105]
    Mr Sharma’s evidence is that as a consequence SCA suffered loss and damage being rent and charges to the date of expiry of the lease namely 30 June 2018 in the sum of $64,902.48.
  1. [106]
    Mr Sharma does not say that the premises remained vacant until that date although that is implied. It is not alleged by NQ in evidence that the premises were relet during that time or that SCA has failed to mitigate its damages.
  1. [107]
    It seems unlikely to us in circumstances where had proper notices been given, NQ could have terminated the lease pursuant to clause 9.2 that damages should be calculated to the expiry date of the lease.
  1. [108]
    The party’s submissions are limited to the issue of liability and it was indicated at the hearing that opportunity would be given for the parties to make submissions as to damages and costs. We make directions accordingly.

Footnotes

[1]Notice of dispute, Annexure A, para 22.

[2]Paul Kirk’s first witness statement, para 2.

[3]Statement of Sharma, para 13.

[4]Statement of Sharma, para 9; statement of Manning, para 52.

[5]Respondent’s written submissions, para 34.

[6]Response, para 22; Respondent’s written submissions, para 30.

[7]Statement of Manning, paras 10 and 43.

[8]Statement of Paul Kirk, paras 22 to 24.

[9]Statement of Paul Kirk, dated 1 November 2018, para 51.

[10]Statement of Kirk, exhibit 5, item 9, p 6.

[11]Statement of Ms Manning, para 34(j).

[12]First statement of Mr Kirk, para 50.

[13]Statement of Ms Manning, para 64.

[14]First statement of Mr Kirk, exhibit 2, para 41.

[15]First statement of Mr Kirk, exhibit 2, para 42.

[16]Applicant’s submissions, paras 52 & 55.

[17]Exhibit 2, para 44, attachment PDK – 15.

[18]Exhibit 2, para 46.

[19]Exhibit 6.

[20]O'Keefe v Williams [1910] HCA 40; Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185.

[21][1997] QCA 2.

[22][2000] FCA 185.

[23]Ibid [37].

[24][1911] 1 Ch 219 at [226].

[25]Affidavit of Sidharth Sharma, paras 29 and 114.

[26]Affidavit of Sidharth Sharma, paras 32, 36 and 115.

[27]Affidavit of Sidharth Sharma, para 116.

[28]Retail Shop Leases Act 1994, section 42(b).

[29]Applicant’s submissions, para59.

[30][2013] QCAT 206.

[31]Vardenega & Ors v Catoria Investments & Trading Pty Ltd [1992] QRSLT 2 at p 2; Pincott and Pincott v Metro Maroochydore Pty Ltd [2007] RSLT 002.

[32]Applicant’s submissions, para 69.

[33]Statement of Paul Kirk, dated 1 November 2018, paras 67-77.

[34]Affidavit of Sidharth Sharma, dated 4 February 2019, para 106.

Close

Editorial Notes

  • Published Case Name:

    N.Q. Seafood Distributors Pty Ltd as Trustee v Shopping Centres Australasia Property Group Re Ltd

  • Shortened Case Name:

    N.Q. Seafood Distributors Pty Ltd as Trustee v Shopping Centres Australasia Property Group Re Ltd

  • MNC:

    [2020] QCAT 467

  • Court:

    QCAT

  • Judge(s):

    Member Holzberger, Member Kairl, Member McBryde

  • Date:

    27 Nov 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Aussie Traveller Pty Ltd v Marklea Pty Ltd[1998] 1 Qd R 1; [1997] QCA 2
1 citation
Jump To
Cite 1 - [1997] QCA 2
Brown v Flower [1911] 1 Ch 219
1 citation
Jump To
Cite 1 - [1911] 1 Ch 219
Christodoulou & Nobilio v ISPT Pty Ltd A.C.N. 064 041 283 [2013] QCAT 206
2 citations
Jump To
Cite 1 - [2013] QCAT 206
Cite 2 - [2013] QCAT 206
Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185
2 citations
Jump To
Cite 1 - [2000] FCA 185
Cite 2 - [2000] FCA 185
O'Keefe v Williams [1910] HCA 40
1 citation
Jump To
Cite 1 - [1910] HCA 40
Pincott and Pincott v Metro Maroochydore Pty Ltd [2007] RSLT 2
2 citations
Jump To
Cite 1 - [2007] RSLT 2
Cite 2 - [2007] RSLT 2
Vardenega & Ors v Catoria Investments & Trading Pty Ltd [1992] QRSLT 2
2 citations
Jump To
Cite 1 - [1992] QRSLT 2
Cite 2 - [1992] QRSLT 2

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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