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Unreported Judgment

XAA and XAB v MSJ McFarland and CM Johnson-McFarland atf RBJ Collective Trust & Anor[2023] QCAT 173Member Lumb
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XAA and XAB v MSJ McFarland and CM Johnson-McFarland atf RBJ Collective Trust & Anor[2023] QCAT 173

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:	XAA and XAB v MSJ McFarland and CM Johnson-McFarland atf RBJ Collective Trust & Anor [2023] QCAT 173
PARTIES:	XAA and XAB (applicant) v MSJ MCFARLAND AND CM JOHNSON-MCFARLAND ATF RBJ COLLECTIVE TRUST & HUNA GROUP PTY LTD ATF JOHNSON FAMILY TRUST (respondent)
APPLICATION NO/S:	RSL109-22
MATTER TYPE:	Retail shop leases matter
DELIVERED ON:	26 May 2023
HEARING DATE:	On the papers
DECISION OF:	Member Lumb
ORDERS:	The Application for interim order filed on 15 March 2023 is dismissed. It is directed that a directions hearing be held on a date and at a time to be advised.
CATCHWORDS:	LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OTHER MATTERS – where separate premises leased in the same complex pursuant to separate tenancy agreements – where lessor served notices to remedy breach on tenant – where lessee alleged unpaid rent and obligation to repaint premises – where tenant challenges lessor’s entitlement to rely on alleged breaches – where tenant seeks interim orders in relation to notices to remedy – where term of tenancy agreements due to expire Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 58, s 59 Retail Shop Leases Act 1994 (Qld), s 5A, s 5B, s 5C, s 46, s 63, s 103 Retail Shop Leases Regulation 2016 (Qld), s 8 Duncan Properties Pty Ltd v Hunter [1991] 1 Qd R 101, 103 Ecobikes Australasia Limited v ABC Pty Ltd [2014] QCAT 679 Gillam v Wheatley [2021] QCAT 274 JV Pub Group Pty Ltd v Red Carpet Real Estate Pty Ltd & Ors [2014] QSC 232 Mackfitness 1 Pty Ltd v Salty & Anor [2021] QCAT 318 RA Quality Meats Pty Ltd t/as RA Quality Meats v Nambour Property Investments Pty Ltd [2021] QCAT 281 Topbeach Pty Ltd v Seafarer Investments Pty Ltd [2010] QSC 459
APPEARANCES & REPRESENTATION:	This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
Applicant:	Self-represented
Respondent:	Self-represented

REASONS FOR DECISION

Introduction

[1]
Two individuals (collectively ‘the Applicant’),^[1] were the tenant under two separate tenancy agreements, namely:
1. (a)
  a Retail Shop Tenancy Agreement (the retail tenancy agreement) in respect of ‘Shop Number 5’ (Shop 5) at 255 South Street, Cleveland in the State of Queensland (255 South Street) for a term commencing on 1 July 2021 and expiring on 30 June 2023 (the lease period);
2. (b)
  a Commercial Tenancy Agreement (the commercial tenancy agreement) in respect of Units 1 and 1A at 255 South Street for the lease period.
[2]
The Respondent is the ‘Lessor’ to the retail tenancy agreement.
[3]
Ms Johnson-McFarland and Mr McFarland as trustee for RBJ Collective Trust are named as the ‘Lessor’ to the commercial tenancy agreement. It is unclear why Huna Group Pty Ltd as trustee for Johnson Family Trust is not also named as the Lessor in that agreement.
[4]
A dispute between the Applicant and the Respondent arose in 2022, and on or about 4 August 2022 the Applicant lodged a Notice of application for mediation with the Queensland Small Business Commissioner (the Commissioner).
[5]
A mediation conference between the Applicant and the Respondent was held on 23 September 2022 but no agreement could be reached.
[6]
By a Notice of mediation outcome dated 7 October 2022, issued by the mediator nominated by the Commissioner, the dispute between the parties was referred to the Tribunal pursuant to s 63 of the Retail Shop Leases Act 1994 (Qld) (the RSLA).
[7]
On 15 March 2023, the Applicant filed an Application for interim order (the Application). By the Application, the Applicant sought two orders, namely:
1. (a)
  an ‘interim and final order’ to dismiss the ‘breach notices’ (which is a reference to various notices to remedy breach of covenant (notices to remedy) issued by the Respondent) (the first order);
2. (b)
  an interim order to ‘pause the clause to renew the lease’ and the requirement for a decision in writing by the Applicant by 1 April 2023, until one month after a final decision is reached by the Tribunal (the second order). This is evidently a reference to the option for renewal contained in the agreements.
[8]
Before considering the merits of the Application, it is necessary to determine whether the Tribunal has jurisdiction to hear and determine the dispute.

Jurisdiction

[9]
The issue of jurisdiction is complicated by the fact that the dispute involves two separate agreements in respect of two separate premises (albeit in the same complex).
[10]
Under the retail tenancy agreement, the permitted use of Shop 5 was as a ‘Snack Bar/Café’.
[11]
The Tribunal has jurisdiction to hear ‘retail tenancy disputes’. Section 103 of the RSLA provides:

(1)
QCAT has jurisdiction to hear retail tenancy disputes, other than a retail tenancy dispute—

(a)
about an issue between the parties that—

(i)
is the subject of arbitration; or

(ii)
has been the subject of an interim or final award in an arbitration proceeding; or

(iii)
is before, or has been decided by, a court; or

(b)
about—

(i)
the amount of rent payable under a retail shop lease; or

(ii)
the amount of a lessor’s outgoings under a retail shop lease; or

(c)
if the amount, value or damages in dispute is more than the monetary limit within the meaning of the District Court of Queensland Act 1967, section 68; or

(d)
under a retail shop lease for the carrying on of the business of a service station, if the Competition and Consumer (Industry Codes—Oilcode) Regulation 2006 (Cwlth) applies to the carrying on of the business under a fuel re-selling agreement within the meaning of that regulation.

(2)
However, QCAT has jurisdiction to hear a retail tenancy dispute about—

(a)
the procedure for the determination of rent payable under a retail shop lease, but not the actual amount of the rent; or

(b)
the basis on which the lessor’s outgoings are payable by, and the procedure for charging the lessor’s outgoings to, a lessee under a retail shop lease, but not the actual amount of the outgoings; or

(c)
whether an item, or part of an item, of the lessor’s outgoings for the retail shopping centre or leased building in which a leased shop is situated was reasonably incurred in, or directly attributable to, the operations, maintenance or repair of the centre or building.

(3)
For subsection (1)(a)(i), a retail tenancy dispute is only the subject of arbitration if the arbitration proceeding has started.

[12]
The phrase ‘retail tenancy dispute’ is defined in the RSLA to mean:

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.

[13]
‘Leased shop’ is defined to mean:

the retail shop leased, or to be leased, under a retail shop lease.

[14]
‘Retail shop lease’ is defined by reference to s 5A of the RSLA. Subsection 5A(1) provides that:

A retail shop lease is a lease of a retail shop.

A number of exceptions to what constitutes a ‘retail shop lease’ are contained in subsections 5A(2) and (3). None is relevant here.

[15]
‘Retail shop’ is defined by reference to s 5B of the RSLA. Section 5B provides:

Retail shop means premises that are —

(a)
situated in a retail shopping centre; or

(b)
used wholly or predominantly for the carrying on of a retail business.

[16]
‘Retail business’ is defined by reference to s 5C of the RSLA. Section 5C provides:

Retail business means a business prescribed by regulation as a retail business.

[17]
The regulation referred to in s 5C is the Retail Shop Leases Regulation 2016 (Qld) (the Regulation).
[18]
Section 8 of the Regulation provides:

(1)
For section 5C of the Act, a business is a retail business if —

(a)
it is a business mentioned in schedule 1; or

(b)
its whole or predominant activity is, or is a combination of, the sale, hire or supply of goods or services mentioned in schedule 1.

(2)
The wholesale sale of goods is not a retail business.

[19]
The businesses mentioned in schedule 1 to the Regulation include both ‘café’ and ‘snack bar’.
[20]
In my view:
1. (a)
  Shop 5 was a ‘retail shop’ within the meaning of the RSLA;
2. (b)
  the retail tenancy agreement was a lease of a retail shop within the meaning of the RSLA;
3. (c)
  the dispute in this proceeding (insofar as the retail tenancy agreement is concerned) is a dispute under or about a retail shop lease or about the use or occupation of a leased shop under a retail shop lease and, therefore, is a ‘retail tenancy dispute’ within the meaning of the RSLA; and
4. (d)
  the Tribunal has jurisdiction to hear the retail tenancy agreement dispute pursuant to s 103 of the RSLA.
[21]
With respect to the commercial tenancy agreement, it appears that the Commissioner proceeded on the basis that the type of business carried on at the ‘leased premises’ (identified as both sets of premises) was as a ‘Café’. The permitted use for Units 1 and 1A under that agreement is stated to be ‘Office/Warehouse’. Such a business is not mentioned in schedule 1 to the Regulation. In my view, Units 1 and 1A were not used wholly or predominantly for the carrying on of a retail business.
[22]
The Applicant’s submissions and material do not address the issue of whether Units 1 and 1A were situated in a ‘retail shopping centre’ for the purposes of the RSLA or whether the Tribunal has jurisdiction to deal with the dispute under legislation other than the RSLA (insofar as the commercial tenancy agreement is concerned). In my view, this is an issue that needs to be resolved before the matter proceeds to a final hearing and determination. For the purposes of this Application, I am not in a position to make a decision on this issue, and I am not prepared to assume that the Tribunal has jurisdiction to deal with the dispute insofar as the commercial tenancy agreement is concerned.

Merits of the Application

The relevant provisions

[23]
An interim order may be made by the Tribunal under s 58 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (the QCAT Act). That provision provides:

(1)
Before making a final decision in a proceeding, the tribunal may make an interim order it considers appropriate in the interests of justice, including, for example—

(a)
to protect a party’s position for the duration of the proceeding; or

(b)
to require or permit something to be done to secure the effectiveness of the exercise of the tribunal’s jurisdiction for the proceeding.

Note—

See also section 22(3) for the tribunal’s power to stay the operation of a reviewable decision while it is being reviewed by the tribunal.

(2)
The tribunal may make an interim order on the application of a party to the proceeding or on its own initiative.

(3)
In making an interim order, the tribunal—

(a)
may require an undertaking, including an undertaking as to costs or damages, it considers appropriate; or

(b)
may provide for the lifting of the order if stated conditions are met.

(4)
The tribunal may assess damages for subsection(3)(a).

(5)
The tribunal’s power to assess damages under subsection (4) is exercisable only by a legally qualified member.

(6)
In this section—

interim order means an order that has effect for the duration of a proceeding or a shorter period.

[24]
The Tribunal may also, by order, grant an injunction, including an interim injunction, in a proceeding if it is just and convenient to do so (s 59(1) of the QCAT Act).
[25]
An applicant seeking interim injunctive relief must establish the following:^[2]
1. (a)
  there is a serious question to be tried;
2. (b)
  there is a matter of urgency;
3. (c)
  damages will not be an adequate remedy; and
4. (d)
  the balance of convenience favours granting an injunction.
[26]
The Applicant’s complaints which form the basis of the dispute with the Respondent are set out in some detail in a letter from the Applicant’s solicitors to the Respondent’s solicitors dated 24 June 2022. The matters of complaint (at least insofar as the retail tenancy agreement is concerned) involve the following:
1. (a)
  misleading and deceptive conduct or unconscionable conduct in relation to the Respondent’s alleged failure to provide exclusive use of car parks numbered ‘1, 1, 1A and 5’ contrary to oral representations made by Mr McFarland (on behalf of the Respondent) during the course of the lease negotiations;
2. (b)
  a contention that the Applicant was not in breach of the retail tenancy agreement by failing to pay rent on the first day of each month because the Applicant allegedly relied upon oral statements made by the commercial agent for the Respondent (the Agent) that there would not be an issue if the rent was paid by the 14^th day of each month which was confirmed by the ‘custom’ of the Agent in accepting late payments of rent;
3. (c)
  that the Respondent’s complaint about the colour of each building painted by the Applicant (half aqua and half white) is contrary to the fact that Mr McFarland allegedly approved the use of this colour scheme in a meeting at the premises on 23 April 2021 together with subsequent discussions and email correspondence which confirmed same;
4. (d)
  miscellaneous complaints by the Applicant that the Respondent (or the Agent) failed to ‘fix a number of structural, capital and inherent defects and/or services in respect of the property, including issues regarding air-conditioning, plumbing, gardening and electrical services’.
[27]
In the submissions filed by the Applicant in support of the Application, the Applicant submits, amongst other matters, that the Respondent has not responded to their solicitors’ letter and has not withdrawn any of the ‘breach notices’, that is the notices to remedy. The first of these notices was a separate notice sent in respect of each of the respective premises requiring remedy of an alleged breach being a failure to pay rent ($1,798.50 in relation to Shop 5) and a requirement to return ‘the building’ to the original colour or the colour allegedly agreed to (‘dark grey’) by engaging professional painters.
[28]
In the Respondent’s submissions filed on 27 March 2023, the Respondent contests the Applicant’s contentions. The Respondent maintains that the conversation was always that the buildings would be ‘grey’. The Respondent has annexed to its material what purports to be an email between the Applicant and the Agent in which reference is made to the painting of the building in ‘dark grey’. The Respondent also disputes the alleged arrangement in relation to the payment of rent. In this respect, although it is not entirely clear, it appears to be suggested that the Applicant was withholding rent because of an alleged failure on the part of the Respondent to carry out some external works. Further, the Respondent contends that 13 work orders were performed during the lease of the premises and that all works/capital works have been carried out as efficiently as possible.
[29]
In my view, there is plainly a factual dispute between the parties as to the circumstances underlying the notices to remedy which raise serious questions to be tried. However, the question is whether the Applicant has demonstrated that the orders sought should be made. I consider it convenient to commence with the second order.

The second order

[30]
It is unclear what the Applicant is specifically seeking in referring to ‘pause the clause to renew the lease’. The Applicant seems to be seeking an interim order preserving the right to exercise the option to renew until after there has been a final decision in this matter.
[31]
The term of the retail tenancy agreement is due to expire on 30 June 2023.
[32]
Pursuant to clause 11.3 of the retail tenancy agreement, a notice of exercise of option was required to be served not later than three months before the end of the term. It is evident from the terms of the orders sought that the Applicant was not intending to comply with that time requirement, and there is presently no evidence that a notice of exercise of option has been served to date. I also refer to the factual matters in paragraph 39 below.
[33]
The Applicant has submitted that the ‘owners and/or property managers did not submit the request to renew within the legislatively required timeframe’. This appears to be a reference to s 46(2) of the RSLA which provides:

At least 2 months, but not longer than 6 months, before the option date, the lessor must give the lessee written notice of the option date.

[34]
However, there are no consequences prescribed in the RSLA that affect the operation between the parties of the option to renew a lease where a lessor fails to comply this provision.^[3]
[35]
Further, at common law, if a party fails to exercise its option by the required date, the option lapses.^[4] I am not satisfied that the Tribunal has the power to make the order sought. In any event, even if the Tribunal did have such power, I consider that the Applicant has failed to demonstrate that it would be appropriate to make any such order. The Applicant’s own material makes clear that the Applicant was aware of the time requirement for exercise of the option to renew. The Applicant has elected to allow the time for exercising the option to pass and to endeavour to secure from the Tribunal some type of relief, on an interim basis, that would preserve any right to renew until a future time (in circumstances where it may not choose to do so^[5]).
[36]
The Applicant has failed to establish that the second order should be made.

The first order

[37]
In support of the first order, the Applicant seeks to rely upon s 124 of the Property Law Act 1974 (Qld) (the PLA). That section provides:

(1)
A right of re-entry or forfeiture under any proviso or stipulation in a lease, for a breach of any covenant, obligation, condition or agreement (express or implied) in the lease, shall not be enforceable by action or otherwise unless and until the lessor serves on the lessee a notice—

(a)
specifying the particular breach complained of; and

(b)
if the breach is capable of remedy, requiring the lessee to remedy the breach; and

and the lessee fails within a reasonable time after service of the notice to remedy the breach, if it is capable of remedy, and, where compensation in money is required, to pay reasonable compensation to the satisfaction of the lessor for the breach.

(2)
Where a lessor is proceeding by action or otherwise to enforce such a right of re-entry or forfeiture, or has re-entered without action the lessee may, in the lessor’s action (if any) or in proceedings instituted by the lessee, apply to the court for relief, and the court, having regard to the proceedings and conduct of the parties under subsection(1), and to all the other circumstances, may grant or refuse relief, as it thinks fit, and in case of relief may grant the same on such terms (if any) as to costs, expenses, damages, compensation, penalty or otherwise, including the granting of an injunction to restrain any like breach in the future, as the court in the circumstances of each case thinks fit.

(3)
The making of an application under this section shall not of itself be construed as an admission on the part of the lessee—

(a)
that any such notice as is mentioned in subsection (1) has been served by the lessor; or

(b)
that any such breach as is mentioned in subsection (1) has occurred or that any right of or cause for re-entry or forfeiture has accrued or arisen;

and the court may, if it thinks fit, grant relief without making a finding that, or arriving at a final determination whether, any such notice has been served, or any such breach has occurred, or that any such right has accrued or cause arisen.

(4)
This section applies although the proviso or stipulation under which the right of re-entry or forfeiture accrues is inserted in the lease under the directions of any Act of Parliament.

(5)
For the purposes of this section a lease limited to continue as long only as the lessee abstains from committing a breach of covenant or obligation shall be and take effect as a lease to continue for any longer term for which it could subsist, but determinable by a proviso for re-entry on such a breach.

(6)
This section does not extend—

(a)
to any lease or tenancy for a term of 1 year or less; or

(b)
to a covenant, condition, or agreement against the assigning, underletting, parting with the possession or disposing of the land leased where the breach occurred before the commencement of this Act; or

(i)
agricultural or pastoral land; or

(ii)
mines or minerals; or

(iii)
a house used or intended to be used as licensed premises under the Liquor Act 1992; or

(iv)
a house let as a dwelling house; or

(v)
any property with respect to which the personal qualifications of the tenant are of importance for the preservation of the value or character of the property, or on the ground of neighbourhood to the lessor or to any person holding under the lessor; or

(d)
in case of a mining lease—to a covenant, condition, or agreement for allowing the lessor to have access to or inspect books, accounts, records, weighing-machines, or other things, or to enter or inspect the mine or the workings of the mine; or

(e)
to a condition for forfeiture on the taking in execution of the lessee’s interest in any lease (other than a lease mentioned in paragraph(c)) after the expiration of 1 year from the date of taking in execution, provided the lessee’s interest be not sold within such 1 year.

(6A) But if the lessee’s interest be sold within such 1 year this section shall extend and be applicable to such condition for forfeiture.

(7)
The rights and powers conferred by this section are in addition to and not in derogation of any right to relief or power to grant relief had apart from this section.

(8)
The notice mentioned in this section shall be in the approved form.

(9)
This section applies to leases made either before or after the commencement of this Act, and shall have effect despite any stipulation to the contrary.

[38]
However, as was said by Member Deane in Gillam v Wheatley:^[6]

The Tribunal is a creature of statute and must finds its power either in the QCAT Act or an enabling Act. The PLA is not an enabling Act. The PLA does not confer power on the Tribunal. The PLA defines ‘court’ for the purposes of section 124 as the Supreme Court. The Tribunal has no power to make such an order under s 124 of the PLA.

(citation omitted)

[39]
In any event, I consider that in light of the disputed factual issues, it would not be appropriate to make an interim order that would have the effect of ‘dismissing’ the notices to remedy.
[40]
Further, I consider that the Applicant has failed to establish that the circumstances warrant the grant of an order of the nature sought. Insofar as the Applicant seeks a ‘final’ order, there is no basis for the making of such an order in circumstances where there is plainly a significant dispute between the parties in relation to the grounds raised by the Applicant. Insofar as an interim order is sought, I consider that the following matters weigh against the grant of the first order. First, as noted above, the term of the residential tenancy agreement is due to expire on 30 June 2023 and, seemingly, the option to renew has not been exercised. Further, in the Applicant’s written submissions, the Applicant also requests that an interim order be made ‘releasing’ the Applicant from the agreement if the Applicant ‘chooses to do so’ (with no further ‘obligations and or expenses’ on its part). Additionally, in the Applicant’s submissions (at page 4) it is stated that the Applicant seeks as a ‘first option’ (as part of the ultimate ‘Resolution’), a final order that allows the Applicant to ‘withdraw from this business completely’ (and that the Respondent pay it compensation for same). Other items of compensation are also sought. In all the circumstances, I consider the Applicant has failed to demonstrate that damages would not be an adequate remedy if an interim order is not made.

Orders

[41]
For the above reasons, the Application for interim order filed on 15 March 2023 is dismissed.
[42]
Further, it is directed that a directions hearing be held on a date and at a time to be advised.

Footnotes

[1]The names of the Applicant are the subject of a non-publication order of the Tribunal.

[2]RA Quality Meats Pty Ltd t/as RA Quality Meats v Nambour Property Investments Pty Ltd [2021] QCAT 281, [35] (and the case cited therein) (Senior Member Brown).

[3]JV Pub Group Pty Ltd v Red Carpet Real Estate Pty Ltd & Ors (JV Pub Group) [2014] QSC 232, [10] (Mullins J as she then was) citing Topbeach Pty Ltd v Seafarer Investments Pty Ltd [2010] QSC 459, p 7 (Margaret Wilson J).

[4]Ecobikes Australasia Limited v ABC Pty Ltd [2014] QCAT 679, [9] (Acting Senior Member Howard (as she then was)), citing Duncan Properties Pty Ltd v Hunter [1991] 1 Qd R 101, 103 and JV Pub Group, [20].

[5]In this regard, I refer to the matters addressed in paragraph 40 below.

[6][2021] QCAT 274, [25]. See also Mackfitness 1 Pty Ltd v Salty & Anor [2021] QCAT 318, [74].

Editorial Notes

Published Case Name:
XAA and XAB v MSJ McFarland and CM Johnson-McFarland atf RBJ Collective Trust & Anor
Shortened Case Name:
XAA and XAB v MSJ McFarland and CM Johnson-McFarland atf RBJ Collective Trust & Anor
MNC:
[2023] QCAT 173
Court:
QCAT
Judge(s):
Member Lumb
Date:
26 May 2023

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Cases Cited List of Cases Cited by this judgment

Case Name	Full Citation	Frequency
Duncan Properties Pty Ltd v Hunter	[1991] 1 Qd R 101; [1990] QSC 172	2 citations Jump To Cite 1 - [1991] 1 Qd R 101 Cite 2 - [1991] 1 Qd R 101
Ecobikes Australasia Limited v ABC Pty Ltd	[2014] QCAT 679	2 citations Jump To Cite 1 - [2014] QCAT 679 Cite 2 - [2014] QCAT 679
Gillam v Wheatley	[2021] QCAT 274	2 citations Jump To Cite 1 - [2021] QCAT 274 Cite 2 - [2021] QCAT 274
JV Pub Group Pty Ltd v Red Carpet Real Estate Pty Ltd	[2014] QSC 232	3 citations Jump To Cite 1 - [2014] QSC 232 Cite 2 - [2014] QSC 232 Cite 3 - [2014] QSC 232
Mackfitness 1 Pty Ltd v Salty	[2021] QCAT 318	2 citations Jump To Cite 1 - [2021] QCAT 318 Cite 2 - [2021] QCAT 318
RA Quality Meats Pty Ltd t/as RA Quality Meats v Nambour Property Investments Pty Ltd	[2021] QCAT 281	2 citations Jump To Cite 1 - [2021] QCAT 281 Cite 2 - [2021] QCAT 281
Topbeach Pty Ltd v Seafarer Investments Pty Ltd	[2010] QSC 459	2 citations Jump To Cite 1 - [2010] QSC 459 Cite 2 - [2010] QSC 459

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XAA and XAB v MSJ McFarland and CM Johnson-McFarland atf RBJ Collective Trust & Anor[2023] QCAT 173