Zheng v Teki[2023] QCAT 32

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   This matter concerns commercial and residential premises at 144 Lascelles Street, Brighton, which has come before me as a proceeding under the Retail Shop Leases Act 1994 (Qld) (RSLA).
2. [2]
   Mr Zheng originally had five heads of claim.  There was a hearing on 10 November 2022 in which hearing I expressed reservations about whether Mr Zheng could bring the claims in the circumstances of the case, and at the end of the hearing I gave both parties an opportunity to make submissions about this before I reached my final decision.
3. [3]
   In his submissions Mr Zheng has withdrawn all claims except claim 3 and 4.
4. [4]
   Claim 3 is for compensation of $9,306 relying on alleged disrepair of a part of the premises that was used residentially by Mr Zheng and his family.
5. [5]
   Claim 4 is for compensation of $7,579 arising from alleged substantial business disruption because of a ‘for sale’ sign erected by or on behalf of the lessor.
6. [6]
   A preliminary issue arises in both these claims.  In the RSLA jurisdiction there is an issue whether Mr Zheng had a right to occupy the premises, and whether the premises were a retail shop as defined in the RSLA bearing in mind that a substantial part of the premises was used for residential purposes only.  My conclusion is that Mr Zheng has no right to occupy the premises sufficient to bring him within the RSLA, so the tribunal has no jurisdiction to hear and determine either claim 3 or 4 under that Act.
7. [7]
   Claim 3 can also be considered from a different angle.  It concerns the part of the premises used residentially by Mr Zheng and his family.  In his submissions Mr Zheng says he has a claim in this respect anyway even if not covered by the RSLA.  I need to consider whether this is possible.  The only way it is possible is if claim 3 can be treated as one under the Residential Tenancies and Rooming Accommodation Act 2008 (Qld).  I shall consider this.
8. [8]
   What happened was that Elwyn Teki and Trudy Anne Teki (the lessors) granted a 5 year lease of the premises commencing 1 October 2016.  The lessee was Cuisine Garden Pty Ltd.  The lease was registered on the property title at the Land Title’s Office.  Had the lease continued to term it would have expired on 30 September 2021.
9. [9]
   The leased premises were made up of a single story building with a concreted yard.  According to the plan attached to the notice of dispute filed in the tribunal, the front part of the premises (facing the road) comprised a shop, office space and commercial kitchen and three car park spaces in the front yard for use by customers.  Mr Zheng’s business, Lascelles Café and Takeaway, operated from that part of the premises.  At the rear of the building the plan shows three bedrooms, a multi-purpose room, meals room, domestic kitchen and a bathroom.  Mr Zheng and his family lived there as their sole residence.  There was further parking in the yard at the rear of the premises accessible from the front yard. 
10. [10]
    Mr Teki told me that the whole premises were let as retail and no consent was given to any residential use.  This tends to be confirmed by the permitted use of ‘Takeaway Convenience Store’ in the schedule to the lease. 
11. [11]
    By section 5A(1) of the RSLA a retail shop lease is a lease of a retail shop.  By the schedule in the RSLA a lease is an agreement under which a person gives or agrees to give to someone else for valuable consideration a right to occupy premises.  Retail shop is defined in section 5B of the RSLA as either premises situated in a retail shopping centre or premises used wholly or predominantly for the carrying on of a retail business.  Bearing in mind the residential part of the leased premises was substantial, there is clearly an issue whether the premises were used wholly or predominantly for the carrying on of a retail business and therefore whether the lease was a retail shop lease.  If not, then the RSLA could not apply and the tribunal could not hear the matter anyway.  However, on my findings it is unnecessary to resolve this question.
12. [12]
    On 2 December 2018 Cuisine Garden Pty Ltd was deregistered.  At the hearing Mr Zheng told me that he organised the deregistration and it was not due to insolvency - he found that operating the business through the company was too expensive so he decided instead to operate as a sole trader.  There are provisions of the lease covering insolvency but in the circumstances they would not have been engaged.
13. [13]
    There was no assignment of the leasehold interest to another party or surrender of the lease prior to the deregistration.  This means that the company was the lessee right up to the time of deregistration.  In those circumstances the effect of the deregistration was governed by section 601AD(2) of the Corporations Act 2000 (Cth) and the leasehold interest being property as defined in the dictionary to that Act, vested in the Australian Securities and Investments Commission.  No action by ASIC has been taken with respect to the lease.
14. [14]
    Crucially, neither lessor was aware of the deregistration of the company.  There was no discussion between them and Mr Zheng about it.  Everything apparently continued as it had done before, with the rent being paid, the premises being occupied by Mr Zheng’s business and the residential part of the premises housing Mr Zheng’s family.
15. [15]
    Eventually the lessors wished to sell the premises, and it was at that time that they discovered that for many months the company had not existed as a legal entity.  They had given no consent to anyone to occupy the premises other than the company.
16. [16]
    Since in this proceeding, Mr Zheng claimed personally to have become tenant of the premises, he was permitted to make submissions after the hearing about how that happened.
17. [17]
    The submissions from Mr Zheng about this are that:

    1. (a)
       He was the only previous shareholder of the company and so on the deregistration of the company he became a tenant.
    2. (b)
       He operated the business from the premises and paid the rent until the expiry of the lease.  The landlord never questioned his position as a tenant.
    3. (c)
       No written agreement was required.
18. [18]
    None of these submissions work for the following reasons. 
19. [19]
    As for (a), any such change of lessee would require a legal or equitable assignment of the leasehold interest, and this did not happen.  Even if it had happened, in the usual way, the lease required the lessor’s consent to such an assignment,^[1] and there was no such consent so any such assignment would not have been effective.
20. [20]
    As for (b), it seems to be suggested that a retail shop tenancy in Mr Zheng’s favour arose by implication because he operated the business from the premises and paid the rent.  But it was not apparent that the company had ceased to do these things.  The lessors were not aware the company had been deregistered, and they reasonably believed that the company was still in occupation under the lease and that nothing had changed.  In those circumstances, there is no room to imply a retail shop tenancy in Mr Zheng’s favour because allowing the business to continue at the premises, and continuing to receive rent, is explained by the lessors’ belief that this was still being done by or on behalf of the company. 
21. [21]
    In submissions in reply after the hearing, Mr Zheng said that the lessors accepted rent after discovering that the company had been deregistered.^[2]  This was not however, the evidence given at the hearing and it is far too late to introduce such new evidence in submissions in reply when the lessors are unable to tell the tribunal whether this is correct or provide an explanation if it is correct.
22. [22]
    As for (c), this is true but does not affect the matter.
23. [23]
    Mr Zheng also submitted that the tribunal had already decided that he was the correct applicant.  He refers to the tribunal’s directions of 24 August 2020 requiring him to show cause why the proceeding should not be dismissed on the basis that the lessee was Cuisine Garden Pty Ltd and that company no longer exists.  It is true that the tribunal did not dismiss the proceeding at that time, but no determination as to whether Mr Zheng was the correct applicant was made.  That issue has been left to me to decide.
24. [24]
    Mr Zheng also submits that even if he was not personally the tenant, claims 3 and 4 should be heard and decided by the tribunal anyway because they do not rely on there being a lease.  He says there was ‘illegal action’ and he asks for compensation.  This does not work for claim 4 (compensation for business disruption because of the ‘for sale’ sign).  The tribunal would have no jurisdiction to hear and determine claim 4 outside the RSLA and since Mr Zheng is not a tenant under that Act it must be dismissed for want of jurisdiction.
25. [25]
    With respect to claim 3 which is for compensation for disrepair of the residential part, depending on the circumstances it is possible that the tribunal could hear and determine this claim outside the RSLA and I consider this now.

Claim 3 regarded as a residential tenancy claim

26. [26]
    A large part of the premises were used for residential purposes.  If there is an agreement under which a person gives another person a right to occupy residential premises as a residence then this would, under the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (RTRAA), be a residential tenancy agreement.^[3]
27. [27]
    The parties disagree as to whether Mr Zheng and his family had been given a right to occupy the residential part of the premises as a residence.
28. [28]
    It is certainly the case that the company was not permitted to occupy the residential part of the premises as a residence.  Clause 4.1(1) of the lease required the company to use the premises for the permitted use of Takeaway Convenience Store and for no other purpose.
29. [29]
    There is nothing to show from the evidence submitted that the lessor expressly agreed with Mr Zheng personally that he and his family could occupy the residential part of the premises as a residence.
30. [30]
    But it is at least arguable that there was an implied agreement to this effect.  It is a fact that Mr Zheng and his family did occupy the residential part of the premises as their sole residence for 3 years, without any objection from the lessors.  It is difficult to explain such occupation as being occupation by the company because of the residential prohibition in the lease.  It is true that no separate rent was paid to occupy the residential part of the premises as a residence, but it does not appear that the RTRAA requires rent to be payable for there to be a residential tenancy agreement.
31. [31]
    If there was an implied agreement to the effect suggested above, then the provisions of the RTRAA would apply to the residential part of the premises.^[4]  If so this would mean that Mr Zheng could bring a claim for compensation for disrepair of the residential part of the premises under the RTRAA.  There are however strict time limits to bring such a claim and that is clearly a difficulty here.^[5]
32. [32]
    But the real and obvious difficulty here is that before the tribunal has any jurisdiction to hear such a claim under the RTRAA, it is necessary for the tenant to ask the Residential Tenancies Authority on the approved form (Form 16) to try to resolve the dispute.^[6]  That this step must be taken in order for the tribunal to have jurisdiction is clear from the words of section 416(1):

The lessor or tenant under a residential tenancy agreement .. may apply under this Act to a tribunal about an issue only if the applicant has first made a dispute resolution request about the issue 

33. [33]
    It has been emphasised many times in this tribunal that failure to make the dispute resolution request means that the tribunal has no jurisdiction to deal with a claim for compensation in residential tenancy matters.^[7]
34. [34]
    Mr Zheng told me in the hearing, and he has stated in his written evidence, that he did ask the RTA about the disrepair but was told that they could not help because the occupation was under a retail shop lease.^[8]  There was no dispute resolution request complying with the RTRAA.

Conclusion

35. [35]
    All claims other than 3 and 4 have been withdrawn.  The tribunal does not have jurisdiction to hear either claim 3 or 4 under the Retail Shop Leases Act 1994 (Qld) because Mr Zheng did not have a right to occupy the premises under a retail shop lease within the meaning of those words in that Act.  Although claim 3 is about the residential part of the premises and it is arguable that Mr Zheng had an implied residential tenancy agreement, and therefore had rights under the Residential Tenancies and Rooming Accommodation Act 2008 (Qld), the tribunal has no jurisdiction to hear such a claim because there was no dispute resolution request.