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  4. SK Investments (Qld) Pty Ltd t/as F45 Training Cairns v Magenta Enterprises Pty Ltd - [2024] QCAT 200

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SK Investments (Qld) Pty Ltd t/as F45 Training Cairns v Magenta Enterprises Pty Ltd[2024] QCAT 200

SK Investments (Qld) Pty Ltd t/as F45 Training Cairns v Magenta Enterprises Pty Ltd[2024] QCAT 200

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

SK Investments (Qld) Pty Ltd t/as F45 Training Cairns v Magenta Enterprises Pty Ltd ; Magenta Enterprises Pty Ltd v SK Investments (Qld) Pty Ltd t/as F45 Training Cairns and Anor [2024] QCAT 200

PARTIES:

SK Investments (Qld) Pty Ltd t/as F45 Training Cairns

(applicant)

v

Magenta Enterprises Pty Ltd

(respondent)

and

Magenta Enterprises Pty Ltd

(cross- applicant)

v

SK Investments (Qld) Pty Ltd t/as F45 Training Cairns

(first cross-respondent)

Kelly bell

(second cross-respondent)

APPLICATION NO/S:

RSL 051-22

MATTER TYPE:

Retail shop leases matter

DELIVERED ON:

14 May 2024

HEARING DATE:

19 October 2023

Written submissions 9 November, 30 November, and 7 December 2023

HEARD AT:

Cairns

DECISION OF:

Member Taylor (Presiding);

Member Judge; Member McBryde

ORDERS:

  1. Within this proceeding it shall be recorded that the respondent is also a cross-applicant, and that the applicant is one of two cross-respondents, the other cross-respondent being Kelly Bell.
  2. The respondent is to pay to the applicant the sum of $14,892.43 in satisfaction of the return of the security bond under the lease agreement between the parties.
  3. The balance of the security bond in the sum of $2,243.45 held by the respondent is to be released to the respondent in satisfaction of its claims against the cross-respondents.
  4. The balance of the respondent’s claims against the cross-respondents is dismissed.
  5. The parties shall bear their own costs of this proceeding.

CATCHWORDS:

LANDLORD AND TENANT – LEASES AND TENANCY AGREEMENTS – COVENANTS – AS TO REPAIR – where a retail shop lease had come to an end with the effluxion of time – where the terms of the lease required the tenant to make good the premises at the end of the lease – where the tenant failed to make good the premises – where the landlord made good the premises after cessation of the lease period – where the landlord claimed the cost of making good the premises – where the landlord claimed the loss of rent and outgoings during the period in which it undertook the works to make good the premises – where the landlord also claimed legal costs it incurred in dealing with the tenant in terms of the requirement to make good the premises – and other damages – where the lessor’s claim was pressed  as a claim in damages for breach of the lease, as compared to a claim in debt under the lease – where the provisions of s 112 of the Property Law Act 1974 (Qld) apply to limit the damages to diminution in value as compared to the actual cost of the remedial work

Civil Proceedings Act 2011 (Qld) s 58

Property Law Act 1974 (Qld) s 112

Queensland Civil and Administrative Tribunal Act 2009 (Qld)  s 28, s 100, s 102

Retail Shop Leases Act 1994 (Qld) s 5A, s 5B, s 5C, s 5D, s 63, s 103, Schedule

Retail Shop Leases Regulation 2006 (Qld) s 9, Schedule

Baume v Commonwealth (1906) 4 CLR 97

Hamilton v Martell Securities Ltd [1984] 2 WLR 699

Hanson v Newman [1934] 1 Ch 298

Jervis v Harris [1996] 1 All ER 303

Jones v Herxheimer [1950] 2 KB 106

Midcoast Petroleum Pty Ltd v Keldros Pty Ltd [2019] NSWSC 970

New South Wales v Stevens (2012) 82 NSWLR 106

Penfold v Firkin & Balvius [2023] QCATA 1

Robinson v Harman (1848) 154 ER 363

Smiley v Townsend [1950] 2 KB 311

The Commonwealth v Brisbane Milling Co Ltd (1916) 21 CLR 559

APPEARANCES & REPRESENTATION:

 

Applicant / Cross-respondents:

Ms K. Bell – Director of SK Investments Pty Ltd

Respondent / Cross-applicant:

Mr S. Dyer – General Manager of Magenta Enterprises Pty Ltd

REASONS FOR DECISION

THE TRIBUNAL

Overview

  1. [1]
    The applicant seeks relief in this Tribunal for the return of $ 17,135.88 it paid as a security bond under a retail shop lease it held until 31 December 2021 when the lease ended.
  2. [2]
    The respondent defends that claim in its entirety, asserting a counter-claim against both the applicant and its sole director as guarantor under the lease for $56,712.65 in making good the premises. The relief it sought from this Tribunal was that the amount of the security bond be released to it and in addition the cross-respondents pay $39,576.77 plus interest and costs. That claim is said to be the damages it suffered as a consequence of having to make good the premises to the standard required by the terms of the lease following the applicant’s failure to have done so and so breach of the lease.
  3. [3]
    For the reasons given herein, no party succeeds in its entirety save only for the second co-respondent. The claim pressed against her has been dismissed on the basis that, to the extent she could be held liable as guarantor, her liability will be satisfied by the orders we have made for payment of part of the security bond amount to the respondent.
  4. [4]
    That partial success, or more accurately the partial failure of the respondent to defend the claim against it fully and press the remainder of its counter-claim, arises solely out of the manner in which the respondent framed, pressed, and presented its defence and claim in this proceeding. Whilst expressed premised on provisions of the lease that could give rise to a claim in debt, it was in effect a claim in damages, such which enlivened the limiting provisions of s 112 of the Property Law Act 1974 (Qld). This required it to have presented evidence of the diminution in value of the premises as a result of the applicant’s failure to have made-good. It did not present any such evidence. Thus, save only to the extent we were satisfied that a small part of the make-good works, namely remedial work in terms of electrical works which the applicant left in an unsafe condition, the respondent was entitled to nothing more than nominal damages.
  5. [5]
    For these reasons, orders were made providing for the release to the respondent of part of the amount of the security deposit held, the balance to be returned to the applicant, and the remainder of the respondent’s counter-application being dismissed. Corresponding orders were made relevant to the remainder of the issues arising from the respondent’s counter-application in terms of interest and costs.

A Preliminary Issue

  1. [6]
    When the Tribunal was constituted as us sitting to hear this proceeding, the record showed the proceeding solely as ‘SK Investments (Qld) Pty Ltd t/as F45 Training Cairns Northern Beaches v Magenta Enterprises Pty Ltd.’ However, the material filed by the parties, and that which was pressed in the hearing before us, necessitated a change to that. This was because of an issue identified on our review of the documentation before us.
  2. [7]
    The first issue concerned the naming of Ms Bell as a party. In its ‘Response and/or Counterapplication’ document filed 26 August 2022, the respondent named the applicant and a Ms Kelly Bell as respondents to its counter-application. Ms Bell is the Director of the applicant and was said to be the named guarantor on the lease.
  3. [8]
    Ms Bell did not file any response to this counter-application; however it was confirmed by her on enquiry from us at the start of the hearing that she was defending the claim against her on the same basis as her company was defending the claim against it. For this reason, whilst the proceeding had not been named as including a counter-application and thus respondents thereto, it seemed to us that for completeness and certainty such should be recorded and so named. Accordingly an order was made to that effect.
  4. [9]
    The second issue also arose from the manner in which the respondent had expressed its ‘Response and/or Counterapplication’ wherein it named itself as 'Magenta Enterprises Pty Ltd (ABN 37 009 827 230) ATF The Thompson Family Superannuation Trust’. This is only partially consistent with the manner in which the applicant named the respondent in its original ‘Notice of Dispute’ filed 8 April 2022, such being without reference to the respondent as a Trustee although it did include that ABN. It thus gave rise to the question as to who the proper respondent and cross-applicant was – namely was it the company in its own right or as trustee?
  5. [10]
    In order to address this issue it was necessary to look further into that ABN.. In that regard there was also a contradiction within the respondent’s material it subsequently filed in accordance with our directions given at the conclusion of the hearing. Therein it stated a different ABN on covering e-mails, namely 24 010 295 243, but whilst also naming itself under the description ‘Respondent / Cross-Applicant’ in the documents which those e-mails covered as being only ‘Magenta Enterprises Pty Ltd’.[1] Moreover, it also stated in the first of its submissions that the lessor to the lease in issue was ‘Magenta Enterprises Pty Ltd’, thus in both instances notably not in its capacity as Trustee.
  6. [11]
    This issue was not raised during the hearing nor otherwise canvassed with the parties, it being identified only on our review of the written closing submissions and all other documentation filed, such being done in our deliberations in reaching a decision on the substantive issues and giving of these reasons. That being so, rather than delay the resolution of this proceeding any further by returning to the parties to discuss and clarify this issue, we approached it in a manner this Tribunal is permitted to do under s 28(3)(c) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (the QCAT Act), namely, to inform itself in any way it considers appropriate. In that regard we looked into those two ABN’s further by conducting our own publicly available searches of the ABN Look Up Register. Those searches provided the following results:
    1. For ABN 37 009 827 230 – The relevant entity was shown as ‘Magenta Enterprises Pty Ltd’, its ACN being 009 827 730 such being consistent with the ABN and so indicating the ABN belonging to the company in its own capacity, not as Trustee, but critically that the ABN had been cancelled from 30 June 2017.[2]
    2. For ABN 24 010 295 243 – The relevant entity was shown as ‘The Trustee for Thompson Family Superannuation Fund’, with that ABN being active from 14 June 2000,[3] however without any reference to or otherwise being able to identify the name of that Trustee.
  7. [12]
    Thus, there was a significant inconsistency within the material, namely that the ABN purported to be attributed to the respondent was not current, and the identity of the respondent as a Trustee or not.
  8. [13]
    This was complicated by the fact that neither party put into evidence documentation that recorded the assignment of the lease originally entered into from the original lessor to the respondent when the latter purchased the property, such we expect would have shown with clarity the name of the respondent as a Trustee if that was the case. However, it was common ground that this assignment occurred and as such it was not an issue in the proceeding that required the production of such evidence. Yet the absence of that document gave rise to the challenge in identifying the proper respondent and cross-applicant. This is because, notwithstanding the manner in which the respondent named itself in its Response and/or Counter-application as being a Trustee, to the extent the proceeding was commenced by the applicant and then initially responded to by the respondent, with them both having cited the ABN 37 009 827 230, it seems to us that on the balance of probabilities this is the ABN that was stated in the assignment documentation and accordingly it was the company in its own right that became the lessor, not in its capacity as a Trustee.
  9. [14]
    For this reason, whilst the respondent seemingly sought to defend the claim against it and press its counter-application against the applicant, in both instances in its capacity as a Trustee, in the absence of clarity in the material filed and in particular given the respondent’s written submission to which we referred in paragraph [10] herein, in our opinion the proper course was for this proceeding to continue and be decided with the respondent and cross-applicant being named solely as Magenta Enterprises Pty Ltd, i.e. not in the capacity of a Trustee. It will be a matter for the respondent to address further if this results in an issue for it in terms of the decision we have reached and the corresponding orders that have been made.

Relevant Facts and Circumstances

  1. [15]
    In September 2016, the applicant entered into a lease of premises, namely three shops in a shopping centre at Smithfield, a northern suburb of Cairns. The lessor at that time was Richardson Plant Hire Pty Ltd ATF. That lease was originally to expire on 31 August 2021, but was subsequently extended to 31 December 2021(the Lease).[4]
  2. [16]
    Under the terms of the Lease the applicant provided a cash security bond of $17,135.88. (the Security Bond).
  3. [17]
    It is common ground that on 21 March 2019 the respondent acquired those premises from Richardson Plant Hire Pty Ltd and so, pursuant to the terms of an assignment, became the lessor under the Lease, and in turn the holder of the Security Bond.[5]
  4. [18]
    Towards the end of the lease period the applicant requested the respondent’s consent to hold over the lease expiry until 1 March 2022.[6] That request was denied on 9 November 2021 and simultaneously the respondent, via letter from its solicitors to the applicant’s solicitor, issued to the applicant a list of its ‘expectations’ in terms of the conclusion of the lease, such described under the heading ‘Make Good’.[7] (the Make Good List). At the end of that letter the following statement was made:

Once the Premises have been yielded, our client will conduct an exit inspection and deal with the balance requirements of the Lease including dealing with any “security” held.

  1. [19]
    On 17 December 2021, the applicant ceased trading and began the process of making good the premises as it says it was required to under clauses 12.1 and 12.2 of the Lease for the purposes of handing back the premises to the respondent.[8]
  2. [20]
    On 22 December 2021, the following communications were sent between the parties:[9]
    1. Respondent’s solicitor to applicant’s solicitor via e-mail at 7:46 am:

I am instructed your client has now ceased trading and commenced its make good works as required by the lease. …

Notwithstanding this, my client has instructed I specifically draw your client’s attention to the following primary concerns:

1. Powerpoints / Wires

It would not be an exaggeration to say the number of power points (and corresponding cables) within the walls/roof of the Premises installed by your client is substantial (potentially dozens on account of the nature of your client’s business ….)

My client requires urgent confirmation that all cables have been:

a. Terminated and junctioned at the switch box;

b. Following terminated (sic), been removed entirely from the walls as required by Clause 12.2 of the Lease; and

c. The above works were conducted by a qualified contractor (in this case a licensed electrician) with a minimum of $10M public liability insurance (I note this was a requirement of your client’s alterations to the Premises per Clause 5.2.1(c) of the Lease and it is my client’s expectation that a similarly qualified person has attended to their removal).

If the above has not been attended to there is a very real risk that there are live wires in the walls/roof and, (sic) if these live wires are touched or damaged they could very easily electrocute someone or start a fire in the building.

If my client does not have confirmation that, at the very least, Item a and c above have been attended to by 5:00 pm today, it may be compelled to switch off electricity to the Premises at the main board to ensure the risks noted above have been neutralised.

As for Items (sic) b, until this is satisfied your client will not have met its make good obligations.

2. …

  1. Between the applicant’s Ms Bell and the respondent’s Mr Dyer via SMS text at 10:07 am:
    1. From Ms Bell

Good morning Sam, can you please unlock our electrical box as per the make good clause. Regards Kelly

  1. From Mr Dyer

Hi Kelly

The centre Electrical (sic) box is only accessible by an approved electrician. There is no reason for you to access the main electrical box.

If you are referring to your tenancy switchboard, I would not have keys to these (sic) as they would have been there when you moved in.

  1. From Ms Bell

Thank you

  1. Applicant’s Ms Bell to her solicitor at 2:48 pm via e-mail, subsequently forwarded to the respondent’s solicitor as noted in the next sub-paragraph herein:

We are almost finished with our make good and the place looks great!

Confirming our electrician has actioned the nine additional power points.

…

  1. Applicant’s Ms Bell to the respondent’s solicitor, CC’d to her solicitor, at 5:35 pm, and later forwarded by the respondent’s solicitor to the respondent’s Mr Dyer at 6:44 pm:[10]

As per my e-mail to Graham below, confirming the extra power points have been Terminated (sic) and junctioned at the switch box. Sam was present this afternoon when our electrician completed the works at approximately 1 pm.

Your client at 5:25 pm this afternoon has turned off power to our tenancy while we were clearly still working in our tenancy. We are requesting that this be switched back on immediately as we have trades attending in the morning to complete our make good works.

  1. Respondent’s Mr Dyer to the applicant’s Ms Bell, CC’d to the applicant’s solicitor, at 5:40 pm via e-mail:

…

During an inspection (through the windows) of your shop yesterday to see the progress of the make good, I became aware that all power and data points have been removed from the shop, although the wires to the data/power points have not been removed from the walls. We can confirm this by seeing the cables through the roof and then running down the walls (inspected through the ceiling of adjacent tenancies). A licensed electrician would have not removed these power points from the walls without first turning the power off within your tenancy switchboard.

I reference to (sic) your text message to myself earlier today asking for access to your switchboard. Given you were asking for access to this, it can be assumed that no licenced electrician has been involved at this stage. If a licensed electrician conducted this work, as requested earlier today by Rhys Larsen from WGC Solicitors, please provide a copy of their tax invoice specifically stating the works completed.

This afternoon, [at] approximately 1:45 pm Misi [11]informed me on site that the power has been turned off to the power points in question. Myself and my licenced electrician could see through the windows to the switchboard and we could see the breaker for the power points in question had been turned off. It is also noted that in order to gain access to the switchboard the lock was removed and broken into.

Up until this point, the cables in the walls were still live. This poses a severe electrical risk (electrocution, fire and possible death of someone if they were to come into contact with the live wires).

It is also noted that there are to this very point still live cables within the walls, this has been confirmed through electrical testing equipment. These cables are in the adjoining wall between your tenancy and tenancies 1 & 2.

In accordance with Electrical Standards and Legislations, turning a breaker off is not sufficient to remove the risk of electrical shock. The breaker needs to be isolated, locked, and tagged appropriately.

…

It is unclear as to how the power points have been safely disconnected, its (sic)  clear you did not have access to the switchboard until this afternoon. If the power points have simply been “pushed” into the wall and then plastered over, the walls will need to be re-cut, outlets removed, re-plastered (not bogged), sanded and then painted. If the power cables have connectors and or junction boxes put onto them, they will not be able to be removed from the wall without removing these first. The cables and outlets must be removed completely from the tenancy and we will require evidence of this.

The power to your shop will stay off until we receive written confirmation that the power circuits have been removed and safely terminated by a licenced electrician. Simply turning the relevant breakers (RCD) off is not sufficient, particularly as you have refused to have the RCD testing conducted previously …. As we do not know if these RCD’s are operational, it is unsafe to rely on them.

…

As previously mentioned on several occasions, power points and all electrical wiring you installed must be removed from the tenancy completely. There are (sic) a large amount of wiring within the roof, including 240 volt electrical cabling and Ethernet cabling – all need to be removed. …

Can you please advise when this serious safety issue has been rectified, so that we can turn the power back on as soon as possible. (sic) We do not want to limit your abilities to utilise power, however, as I’m sure you can appreciate we can not (sic) allow a dangerous electrical issue (to – sic) continue when we are aware of it; we had provided you the opportunity to have this rectified prior to 5 pm today and unfortunately this has not been completed.

  1. [21]
    In his statement to this Tribunal, Mr Dyer states that he does not recall having seen any further response from the applicant or Ms Bell to this last e-mail.[12]
  2. [22]
    On 4 January 2022, the applicant returned the keys of the premises to the respondent’s solicitor.[13]
  3. [23]
    On 5 January 2022, the respondent’s Mr Dyer conducted an inspection of the premises. From that inspection he produced a report (the Exit Inspection Report). Therein he asserts having identified a substantial number of items of work requiring attendance, inter-alia including dirty walls, damaged ceiling tiles, dented and scratched skirting boards, unsatisfactory plasterboard repairs, damaged cabinetry works and plumbing fixtures, damages doors and incorrectly reinstalled closers, sealed off plumbing inspection openings, blue outdoor matting remaining in place, in excess of 175 holes in the floors with some attempts made to fill some holes, cracked flooring, ground off dyna-bolts left in the floor, and a leaking air-conditioning system (the Incomplete Make Good Works). In addition there was also the issues with the electrical installation to which reference has already been made in the earlier paragraphs herein (the Electrical Make Good Works).[14]
  4. [24]
    Then in the period 6 to 13 January 2022 works were undertaken by or on behalf of the respondent to make good the premises (the Make Good Works)[15]
  5. [25]
    On 2 March 2022, the respondent via its solicitors to the applicant’s solicitors sent a letter wherein:[16]
    1. a copy of the Exit Inspection Report together with accompanying photos was provided;
    2. that report was summarised in the letter by way of the following statements made:

… we note there has been a fundamental failure by your client to attend to the required make good works to the point where our client has been forced to undertake its own works to :

2.1 Remove defective make-good works attended to by your client and re-attend to these works in the manner required by the Lease (and general health/safety standards due to unqualified and dangerous nature of the attempted works); and

2.2 Complete outstanding works required by the Lease that were not attended to by your client.

Due to the extent of the works required, the breaking down of our respective client’s professional relationship and other matters which are not fit to be raised in this letter, it is our client’s view that, whilst your client’s failure to attend to the make-good is a breach of the Lease, it is not a breach capable of remedy.

  1. The following demand was then made (the Demand):

Given the above and the subsequent lost opportunity to have the Premises rented out to another Tenant on account of the time required to attend to works, we are instructed to demand payment, within fourteen (14) days from the date of this letter, of $44,622.68 + GST ($49,084.95 inclusive of GST) whish we suggest be made in the following manner:-

3.1 Provide authorisation to our client (via the writer) to immediately release the Cash Security Bond of $17,135.88 currently held by our client as security of the Lease.

3.2 Pay the balance of $31,949.07 to our Trust Account:

[Trust account details given]

If the above payment is not made by your client on or before close of business on Wednesday, 16 March 2022 we anticipate (sic) will provide instructions to commence an application in the Queensland Civil and Administrative Tribunal without further notice.

  1. [26]
    That Demand was not satisfied.
  2. [27]
    What then followed was that on 8 April 2022 the applicant effectively commenced this proceeding by filing a 'Notice of Dispute’ under the Retail Shop Leases Act 1994 (Qld) (RSLA) wherein:
    1. in the Annexure thereto, inter-alia it made these assertions as the main points of the dispute:[17]

Though the lease expired on 31 December 2021, the Landlord has refused to return the security bond to the Tenant. The Landlord’s refusal in this regard stems from its assertion that the Tenant has not made good the Leased Premises in accordance with the terms of the Lease.

The Tenant refutes the Landlord’s assertions in this regard and notes as follows:

  • …
  • Prior to the expiry date the Tenant was entitled to quiet enjoyment of the Leased Premises without interruption from the Landlord (clause 4.1.5). In contravention of clause 7.1.1 of the Lease the Landlord did not afford the Tenant quiet enjoyment of the Leased Premises. The Landlord, without consent or lawful authority, had the electricity to the Leased Premises disconnected on 23 December 2021. As a result the Tenant was not able to complete its cleaning and make good of the Leased Premises (which it had organised and paid for and was set to complete in accordance with the terms of the Lease).
  • …
  • The Tenant was well advanced with its make good and cleaning operations of the Leased Premises … and had made arrangements with various contractors and tradespersons to ensure that these works would be completed to the standard required by the Lease by 31/12/2021. The Landlord’s conduct in breach of the Lease denied the Tenant the opportunity to complete its works and make a successful claim for a full refund of its bond.
    1. It stated the remedy it sought to resolve the dispute was:

An order for the return of the Tenant’s Bond.

  1. [28]
    We were informed in the hearing that the dispute was subsequently addressed by way of mediation between the parties in August 2022, but that a resolution in whole or in part was not reached.
  2. [29]
    As we understand it, as a result the dispute was then effectively referred to this Tribunal in the manner provided for under s 63 of the RSLA, thus formally commencing this proceeding as a claim by the applicant, with the respondent subsequently filing on 26 August 2022 its ‘Response and Counter-application’, it being against both the applicant and Ms Bell as the named guarantor under the Lease. Notwithstanding that the respondent’s Demand of 2 March 2022 was for payment of $49,084.95 incl GST, in its counter-application the respondent claimed a total of $56,712.65 , seeking the following relief:
    1. The Security Bond, being $17,135.88, be released to the respondent;
    2. The applicant and Ms Bell pay to the respondent an additional $39,576.77 plus interest; and
    3. The applicant and Ms Bell pay to the respondent its costs, in an unstated amount, of this proceeding.
  3. [30]
    That claim was expressed as including the following elements:
    1. $35,587.76 in making good the premises;
    2. $308 in making good external paintwork after the alleged removal by the applicant of two For Lease signs placed by the respondent in November 2021;
    3. $5,308.49 in legal costs incurred;
    4. $14,799.31 in lost rent and outgoings for two months as a result of the lost opportunity to relet the premises due to the need remedial work to be performed; and
    5. $709.09 as a cost of electricity incurred in the period 1 January to 14 February 2022.
  4. [31]
    The reason the quantum of its claim is higher than the quantum of its Demand was not explained by the respondent, but in our view given the outcome of this proceeding in terms of the quantum to which we have found the respondent is entitled, nothing arises from this difference and thus we have not considered it further.
  5. [32]
    Neither the applicant nor Ms Bell filed any response to the counter-application, however Ms Bell, in her own capacity and as director of the applicant, informed us during the hearing that the respondent’s claim against her company and herself is defended in its entirety. Our understanding as to the premise of that defence is the applicant’s asserted claim for the release of the Security Bond in its entirety on the basis that the applicant made good the premises, or was otherwise prevented from doing so by the respondent’s actions in turning off the power.
  6. [33]
    It is against this background of relevant facts and circumstances that the hearing before us was conducted. At the conclusion of the hearing we gave directions for the filing of written closing submissions, with relevant rights of reply, in particularly requesting the parties to address us on the relevance (if any) of s 112 of the Property Law Act 1974 (Qld) (PLA). Those written submissions were received in accordance with the timeline directed.[18]
  7. [34]
    Regrettably, due to a variety of reasons, we were substantially delayed in attending to the completion of our deliberations in this proceeding so as to reach our decision and provide our reasons for same. We extend our sincere apologies to the parties in this regard.

The Issues

  1. [35]
    Whilst much of the parties’ respective material, and the argument presented before us, dealt with the issue of whether the respondent had denied the applicant some entitlement under the Lease by turning off the power before the Lease came to an end, such being argued by the applicant as a failure to afford it quiet enjoyment, as we saw the issues for determination in this proceeding such was not an issue that required detailed consideration by us, the only issues for determination being as follows:
    1. Is the respondent entitled to recover from the applicant that which it asserts it lost in making good the premises on cessation of the lease ?
    2. If yes, what is the quantum of that recovery?
  2. [36]
    In order to address those questions it was necessary to consider not only the relevant terms of the Lease, but also the application of s 112 of the PLA.
  3. [37]
    Whilst it was common ground that the Lease was a retail shop lease and in turn the RSLA applied, and we saw no reason to doubt that common ground as being correct, as has been observed by the Appeal Tribunal there is a fundamental obligation on any court or tribunal to satisfy itself as to jurisdiction to quell controversies that come before it.[19] Accordingly it was also necessary to briefly address the issue of jurisdiction under that legislation.

The Relevant Law

Retail Shop Leases Act 1994 (Qld)

  1. [38]
    This Tribunal is given jurisdiction under s 103 of the RSLA, subject to limited exceptions, to hear and determine retail tenancy disputes. Those exceptions in essence go to the nature of the dispute, none of which applied in this proceeding. Thus we merely needed to be satisfied that this dispute was a retail tenancy dispute.
  2. [39]
    To address that aspect, it was  necessary to consider relevant terms as they are defined in the RSLA, namely:
    1. A ‘retail tenancy dispute’ means 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.[20]
    2. A ‘retail shop lease’ is, subject to certain exceptions which do not apply here, a lease of a retail shop.[21]
    3. A ‘retail shop’ is premises that are situated in a retail shopping centre; or used wholly or predominantly for the carrying on of a retail business.[22]
    4. A ‘retail business’ is a business prescribed by regulation as a retail business,[23] namely being a business mentioned in the Schedule to the regulations or its whole or predominant activity is, or is a combination of, the sale, hire or supply of goods and services mentioned in the Schedule, save only for wholesale sale of goods; with the business, goods or services defined in the Schedule to the regulations relevantly as including ‘Miscellaneous trading – exercise equipment’[24]
    5. A ‘retail shopping centre’ is, as relevant to this proceeding, a cluster of premises having all of the following attributes (relevantly) – five or more of the premises are used wholly or predominantly for carrying on retail businesses; all the premises - are owned by the 1 person; or are located in one building; and the cluster of premises is promoted, or generally regarded, as constituting a shopping centre, shopping mall, shopping court, or shopping arcade.[25]
    6. A ‘lease’ for the purposes of the RSLA is an agreement under which a person gives or agrees to give to someone else for valuable consideration a right to occupy premises whether or not the right is – (a) an exclusive right to occupy the premises; or (b) for a term or by way of a period tenancy or tenancy at will.[26]
  3. [40]
    On our reading of the Lease, these provisions were all satisfied such that it may correctly be said the Lease is a retail shop lease and in turn this proceeding is a retail tenancy dispute that this Tribunal is seized of jurisdiction to decide.[27]

The Terms of the Lease

  1. [41]
    In pressing its claim, the applicant relied solely on one provision of the Lease dealing with the Security Deposit. In pressing its counterclaim, the respondent relied on a number of terms of the Lease dealing with the applicant’s obligations to make good the premises on cessation of the Lease. We have extracted here those provisions to the extent relied on by the parties.[28] As we discuss it further later in these reasons, on our reading of the Lease in its entirety there was another provision which we considered relevant to the issues arising in this proceeding, namely clause 11, and as such we also extract that here to the extent relevant.

1.1 Definitions

‘Appurtenances’ means all mechanical ventilation, stop-cocks, alarm systems, lavatories, grease traps, water apparatus, gas fittings, electrical fittings and apparatus and other services at the Building or the Premises, as the context requires.

2. RENTAL AND OTHER CHARGES

2.11 Security bond/bank guarantee

2.11.1 On executing this Lease, the Lessee must pay the sum of three (3) months of Rental and Outgoings excluding GST as a security bond in earnest of performance of the Lessee’s obligations.

…

2.11.5 If at the end of this Lease the Lessee is not indebted or otherwise liable to the Lessor for a breach of this Lease, the Lessor will refund to the Lessee the Security Bond ….

5. MAINTENANCE AND REPAIR OF PREMISES

5.1 Obligation to clear, repair and maintain

5.1.1 …

5.1.2 The Lessee must maintain the Premises and all Services in good condition as at the Commencement Date except for:

  1. fair wear and tear, subject to the express obligations of the Lessee is this clause 5.1, and then only if the Lessee has taken all reasonable measures to ensure that any damage attributed to fair wear and tear will not contribute to any further damage to the Premises;
  1. …

5.1.3 Without limiting the generality of sub-clause 5.1.2, the Lessee must:

  1. maintain the doors, locks, windows and fittings of the Premises in good condition and efficient working order as at the Commencement Date;

…

  1. maintain the Appurtenances in good condition and efficient working order.

…

11. DEFAULT OF LESSEE

11.1 Lessor may rectify

If the Lessee fails to perform any of its obligations under this Lease, the Lessor may ( as the agent of the Lessee) do all such things and incur such expenses as are necessary to perform those obligations. Those expenses constitute a liquidated debt due and owing by the Lessee to the Lessor and payable on the demand of the Lessor.

…

11.2 Overdue payments

11.2.1 If the Lessee fails to pay any money payable on demand within 14 days of the Lessor’s demand … the Lessee must pay to the Lessor interest accruing daily at the Default Rate:

  1. on the money owing from the payment due date until the money is paid; and
  1. upon any judgment the Lessor obtains against the Lessee from the date of the judgment until the debt is satisfied.

…

11.2.4 Without prejudice to any other remedy, the Lessor may sue the Lessee for any money owing by the Lessee under this Lease. …

11.3 Definition of default

11.3.1 The Lessee will be in default of this Lease, if:

…

(c) the Lessee fails to comply with a terms of this Lease.

12. END OF LEASE

12.1 The Lessee must at the end of the Lease peacefully yield up the Premises in the condition required by clause 5.1 (Obligation to clean, repair and maintain) and subclause 12.2, and return to the Lessor all keys and security devices relating to the Premises.

12.2 The Lessee must during the last 14 days of the Term remove the fittings, floor coverings it has installed (if any), any grease traps or exhausts it has installed, additions, signage and other branding it has erected or affixed to the Premises during the Term or purchased with the consent of the Lessor from a previous lessee, and the Lessee must make good any damage caused in the removal and if required by the Lessor will re-alter any alterations made by the Lessee so that the premises (sic) are converted back to their original layout. The Lessor may at its option cause that fixtures, fittings (sic) floor coverings, signs and notices or contents to be removed and to be stored in a public warehouse or elsewhere at the risk of the Lessee and any damage to be made good and any alterations to be re-altered and may recover the costs of removal storage making good and/or re-alterations from the Lessee as a liquidated debt payable on demand.

12.3 At the end of the Lease, the Lessor may elect to either:

  1. deem any fittings, additions or signage not removed from the Premises under clause 12.2 as abandoned and those fittings, additions or signage will become the property of the Lessor; or
  1. remove any fittings, additions or signage not removed from the Premises under sub-clause 12.2 with any costs associated with the removal of the fittings, additions or signage to be at the Lessee’s sole cost.

12.4 Any fittings or fixtures not removed by the Lessee under this clause 12 will be deemed abandoned by the Lessee and will become the property of the Lessor. Nothing contained in this clause relieves the Lessee from, and save where the Lessor agrees in writing to the contrary the Lessee will be liable to the Lessor for, the cost and expense of and associated with any removal by the Lessor or fixtures and fittings not removed by the Lessee from the Premises and the cost and expense of and associated with the making good of any damage to the Premises caused by that removal by the Lessor.

12.5 The Lessee must immediately, prior to vacating the Premises, paint the interior parts of the Premises which have been previously painted, with two costs of first quality paint in a workmanlike manner and in the colour as directed by the Lessor.

12.6 The ending of this Lease does not affect any of the Lessor’s rights against the Lessee on account of any antecedent breach by the Lessee of a term of this Lease.

19. GUARANTEE AND INDEMNITY

19.1 In consideration of the Lessor, at the request of the Guarantor, entering into this Lease with the Lessee, the Guarantor covenants with the Lessor that:

  1. the Guarantor is jointly and severally liable with the Lessee for the punctual payment of the Rental and other money payable by the Lessee, and the performance of each of the Lessee’s obligations under this Lease;
  1. the Guarantor indemnifies the Lessor against all losses and expenses that the Lessor may incur due to the non-observance by the Lessee of a term of this Lease. …

Property Law Act 1974 (Qld)

  1. [42]
    Neither party raised this legislation as part of their respective cases, however as noted earlier herein we drew the parties attention to s 112(1) within it, such falling within Part 8 ‘Leases and tenancies’, and in particular Division 1 therein being ‘Rights, powers and obligations’, requesting each party to make submissions on its relevance (if any) in the proceeding. That section is extracted here in full:

112  Provisions as to covenants to repair

  1. Damages for a breach of a covenant, obligation or agreement to keep or put premises in repair during the currency of a lease, or to leave or put premises in repair at the termination of a lease, whether such covenant, obligation or agreement is expressed or implied, and whether general or specific, shall in no case exceed the amount (if any) by which the value of the reversion (whether immediate or not) in the premises is diminished owing to the breach of such covenant, obligation, or agreement, and in particular no damage shall be recovered for a breach of any such covenant, obligation, or agreement to leave or put premises in repair at the termination of a lease, if it is shown that the premises, in whatever state of repair they might be, would at or shortly after the termination of the lease have been or be pulled down, or such structural alterations made to the premises as would render valueless the repairs covered by the covenant, obligation, or agreement.
  1. …

The Evidence and the Submissions

  1. [43]
    The evidence put before us in the hearing was relatively sparse. We have already referred to the main points earlier herein under the heading ‘Relevant Facts and Circumstances’. Such should be read as relevant evidence together with that to which we refer in the following paragraphs under this heading along with relevant submissions from the parties. All this together forms the basis of the subsequent discussion herein on our deliberation of the issues in the contest waged before us.
  2. [44]
    In advance of that discussion, it must be noted that the applicant’s case was succinct. It asserted that it had made good the premises, alternatively to the extent it was argued by the respondent that it had not done so, the applicant said this was because it was denied the opportunity to do so by the actions of the respondent turning off the power before the end of the lease period. That is in effect its defence, and the defence of Ms Bell as guarantor, to the respondent’s counterclaim as well as being the substance of why it says it should have the Security Bond returned to it.
  3. [45]
    In contrast, the respondent’s case was somewhat convoluted as a claim seemingly advanced as one in debt given the provisions of the Lease on which it relied as a foundation for its claim, but yet it was one expressed as a claim in damages, such being as a result of what it says it was required to do and otherwise lost consequent upon the applicant’s failure to have ‘made good’ the premises in accordance with the terms of the Lease.
  4. [46]
    That being said, in terms of whether the premises were made good or not because the applicant was, as it asserts, denied the opportunity to do so, it seemed to us proper to start the discussion with the electrical issue, it being the reason the respondent asserted an entitlement to turn off the electricity to the premises prior to the end of the Lease.

The Electrical Make Good Works

  1. [47]
    In the respondent’s Make Good List as we referred to it in paragraph [18] herein, the following appeared as one of the respondent’s ‘expectations’ of what was required to make good the premises:[29]

Any additional electrical and or data wiring to be removed by the Centre’s approved Electrician, wiring to be removed from the switchboard to the applicable appliance and or electrical fixture. Junction box at the end of the cables is not acceptable.

  1. [48]
    What followed the provision of this list is that which we have identified in paragraph [20] herein, such which gave rise to the respondent’s decision and action in turning off the power for what was said to be safety reasons. The respondent gave evidence about these events.
  2. [49]
    Mr Dyer, the respondent’s General Manager, gave a statement which was filed in this proceeding and which he confirmed under oath in the hearing as being true and correct. Therein he describes that which he observed, and was engaged in, relevant to this issue during the relevant period of time, and his discussions and/or involvement with the respondent’s electrician, a Mr Maloney, on 21 and 22 December 2021. Therein he  noted a statement he says was made to him Mr Maloney at around 5:15 pm on 22 December 2021, namely:[30]

Nothing has been done and there are still live wires going to this tenancy.

  1. [50]
    Later in his statement he also made these comments:[31]

In the period of 6 to 13 January 2022, I had Mr Maloney inspect the premises on several site visits to identify and locate the cables throughout the walls. It was determined through tracing the cables from the switchboard to the ceiling and back down through the walls that live power points had been pushed into the wall and patched over, a metal “wall patch kit” was used to patch over the hole where the power point was previously located.

Mr Maloney and I cut holes into the plasterboard sheets at various locations in order to follow the power cables. Live exposed wires were identified. In addition, data cables were also located within the wall and patched over in the same nature as the power points. Various photos of this process are attached. See images 43-49 on pages 59-65 of “Attachment 3 – Images”.

Due to the severity of this issue, Mr Maloney said words to the effect that:

We should remove the remaining plasterboard walls so that he might have the ability to fully inspect the internal walls and avoid any further electrical risk given what had been encountered to date.

When we opened the walls, we identified that there were exposed cable ends that were still connected to the power.

  1. [51]
    Ms Bell was afforded the opportunity to cross-examine Mr Dyer. There was nothing in that cross-examination which addressed this issue.
  2. [52]
    The respondent also called Mr Maloney as a witness; he also having given a written statement filed in this proceeding. He appeared by phone and confirmed under oath that his written statement was true and correct. Therein he explained in detail his involvement with this issue following contact he received from Mr Dyer about what Mr Maloney described as concerns Mr Dyer held  about ‘power points being pushed into the walls’. Mr Maloney described his recollection of the events and circumstances in the following manner:[32]

Whilst I don’t recall the precise date, within a day or two of the conversation I would have attended at Smithfield Shopping Village. On this occasion we did not go into the Premises because they were still cleaning and stripping inside. What we did was:

a. We went into the adjoining tenancy and used a proximity tester, which detects voltage. A proximity tester will identify if there is a circuit connected or voltage present but that may still pick up voltage that is currently off but not disconnected (this is called induced voltage). It is necessary to touch a cable or wire for the proximity tester to trigger …

b. When I identified there was electricity running into the walls and we couldn’t identify a junction, I turned the power off and put a danger tag on it.

…

My next attendance at the Premises I can recall, is when I had access to the inside of the Premises. The cables that were running into the ceiling, which are held off the ceiling tiles, based on suspended wires, were still running to the wall. We couldn’t move the power cables but could see them still going into the wall with no external junction and at that point I recommended that we cut open the wall to see what was going on.

When we cut open the wall, we found power points that were still connected to the electrical cables but pushed into the wall and the hold that would have been left plastered over. We effectively tried to follow the cable to where we could locate an end and identified some were disconnected with just connectors and pushed back in.

I also observed that the framing in the tenancy was a metal frame and this was also a problem from my perspective.

By the end of it, Sam and I would have stripped approximately 2 or 3 walls pretty well entirely chasing cables to find junctions and remove them from the intertenancy wall. I also removed all the cables including by tracing them to the switchboard and removed from the switchboard as they were still attached. …

  1. [53]
    Mr Maloney then continued, expressing these views:[33]

… I can recall that were serious issues with the manner that the premises had its power points hidden …

My main concern, the back of the power point could come into contact and therefore energise the metal frame and so too with leaving a cable with connectors live in the wall without there being clear identification that there is an energised (sic) hidden in the wall.

If one of the non-secured cables or power points came into contact with metal framing that had the potential for the frame to become live and someone receiving an electric shock, causing a fire, surges, damage electrical equipment. The consequences could be fatal and would affect adjoining tenancies and other businesses.

Furthermore, of an incoming tenant was undertaking works and the cables were left in the walls, if they located any loose cables and could not identify, like we could not, where they would junction, they would need (sic) undertake much of the same work before they could be sure the electrical cables and therefore the Premises were safe.

  1. [54]
    Mr Maloney then, in summary, described the work he did, namely, to disconnect and remove all existing power circuits, disconnect and remove all unused existing circuits from the electrical sub-board, and test all remaining circuits to reinstate the power supply for the builders to conduct repair works to the premises.[34] In terms of that work he stated he charged the respondent $1,870 incl GST for such work, providing a copy of his invoice in that regard.[35]
  2. [55]
    Similar to the evidence from Mr Dyer, Ms Bell was afforded the opportunity to cross-examine Mr Maloney, an opportunity she accepted on that occasion addressing this issue. Much of it was dedicated to her efforts to effectively challenge Mr Maloney on the accuracy of the proximity testing results and his opinions given consequent upon those results. Mr Maloney did not however resile from what he had said in his statement and stood firm in his assertions. At the conclusion of the cross-examination, Ms Bell put the proposition to Mr Maloney that ‘pushing GPO’s into the wall instead of removal is standard practice’ to which Mr Maloney responded with the comment ‘No – you don’t leave them in – you remove them and the cables.’
  3. [56]
    The third witness for the respondent that also gave evidence about this issue, and other Make Good Works was Mr Donald, a builder. He also gave a written statement which was filed in this proceeding, he also confirming it under oath in the hearing as being true and correct. His evidence was that he attended the premises on 13 January 2022 at the request of Mr Dyer, at which time be observed various items requiring attendance, inter-alia including:

a. Plasterboard walls with holes where the Electrician had located electrical cables;

b. Electrical mounting brackets were attached to the metal studs, indicating where power outlets were mounted previously.

c.  …

  1. [57]
    His list included many other items which also appear in the respondent’s Exit Inspection Report and which form part of the Incomplete Make Good Works as we referred to those terms in paragraph [23] herein. He then went on to describe the works he undertook to effectively, as we understand his evidence, attend to the Incomplete Make Good Works, i.e. excluding the electrical work done by Mr Maloney, and certain works we understand were provided by Mr Dyer directly, concluding his statement with reference to his charge for this work, namely $12,023 including GST, exhibiting a copy of his invoice relative thereto. Whilst that invoice described the work said to have been performed, it did not provide any breakdown of the amount charged for the items of the work, the charge therein being solely a lump sum.
  2. [58]
    Ms Bell cross-examined Mr Donald. That cross-examination was minimal, it not touching on the works associated with the Electrical Make-Good Works or the cost of the work, it dealing with only one point concerning the asserted Incomplete Make Good Works, namely cracked concrete floors.
  3. [59]
    The applicant also gave evidence about this issue, albeit limited only to evidence of Ms Bell. The applicant did not call as a witness, nor otherwise provide a separate statement by an electrician, in any meaningful effort to challenge the respondent’s case against it.
  4. [60]
    In her written statement, which she confirmed under oath, Ms Bell referred to the communications on 22 December 2021 we identified in paragraphs [20](a), [20](c), and [20](d) herein, and also made these comments:[36]

Confirmation was sent back to the solicitors confirming our electrical work had been completed by our licenced electrician Ben Johnson and that we will be compliant with our make good clause as per our lease agreement.

Our Electrician is a family friend or my (recently deceased) father and has done work for all our studio’s over the years. He had already attended the site identified the circuit that the TV’s were on and isolated it and tested for dead I (sic) disconnected that circuit from behind the first GPO and taped the ends then reenergised the circuit and retested the remaining circuits to ensure they were dead for removal and patching and painting of the walls.

  1. [61]
    Attached to Ms Bell’s statement is what she asserted to be an e-mail from a Mr Ben Johnson to a Mr Prentice on 31 January 2022, subsequently forwarded to Ms Bell on 26 March 2022, wherein the author of that e-mail describes electrical work carried out but without any reference to its location, although in the context of the purpose for which it was provided as part of her statement the inference can be drawn it was the leased premises in issue. What is readily apparent on reading of it, the comment by Ms Bell to which we have just referred was extracted verbatim from that e-mail. That is, Ms Bell’s comment is not something she is saying from her own first-hand knowledge.
  2. [62]
    Ms Bell was also cross-examined on this issue. She could not elaborate any further on the electrical work said to have been performed for the applicant as part of its make good works, but simply reiterated that which was in her statement as to the work said to have been done by Mr Johnson. When she was then challenged on the issue of the work being left in an unsafe condition and the manner in which the power points had been left pushed into the wall, she admitted that the points had been pushed in but asserted that they were ‘dead’ and so the work was ‘safe’.

The Incomplete Make Good Works

  1. [63]
    In our opinion it is convenient to group the remainder of the issues raised in the balance of the respondent’s claim under this one heading. It can be dealt with succinctly for the reasons given in the following paragraphs.
  2. [64]
    Whilst the balance of the respondent’s claim is, in comparison to the Electrical Make Good Works claim, extensive in its content and subject matter, and it took up much of the content of the evidence presented both in-chief and via cross-examination, in our opinion it is not necessary to descend into a detailed discussion of it other than one.
  3. [65]
    That one is an admission made by Ms Bell under cross-examination that not all the make good work was performed and completed by the applicant. She asserted this was because the electricity had been turned off, and but for that fact the applicant would have completed the work. In that regard the applicant’s evidence is not just sparse, it is effectively non-existent. At its highest, the applicant’s evidence is the bare assertion made by Ms Bell, namely:
    1. The comment she made in her statement;[37] and

… If the Landlord did not cut the power to the premises on the, (sic) we would have been able to complete our make good on the premises.

  1. The last bullet point stated in the Annexure to the Notice of Dispute which we extracted in paragraph [19](a) herein.
  1. [66]
    As to the balance of the make good work which was expressed in the Make Good List given by the respondent to the applicant, and then later after cessation of the Lease and the return of the premises to the respondent that the respondent actioned, such which in turn formed the basis of its claim against the applicant and Ms Bell, we consider it unnecessary to discuss in any detail the evidence about, the reason being as we explained it in our discussion under the next heading herein. However for the sake of completeness we note here that to which we referred earlier concerning the evidence of Mr Donald for the respondent.

Discussion on the Contest between the Parties

The Electrical Make Good Works

  1. [67]
    Firstly, it must be recalled that this Tribunal is not bound by the rules of evidence, or any practices or procedures applying to courts of record, other than to the extent the Tribunal adopts the rules, practices or procedures.[38]
  2. [68]
    In that regard, the question of admissibility of the e-mail, and the comments by Ms Bell that she made in her statement based on the e-mail, said to have been authored by Mr Ben Johnson as evidence of what electrical make good work was done by the applicant, does not arise. However, in our opinion the content of both is pure hearsay, and in that regard adopting the practice and procedure of a court proceeding in regard to hearsay we do not give them any weight. The applicant could readily have called Mr Johnson to give evidence in the hearing of what he did in the course of the asserted electrical make-good works and in turn directly answer the issues raised by the respondent via Mr Dyer’s and Mr Maloney’s evidence. But it did not. Thus we are left to consider the issue based solely on the evidence of Mr Dyer and Mr Maloney.
  3. [69]
    That evidence, as we have noted it in paragraphs [49] to [55] herein is compelling. We give it substantial weight.
  4. [70]
    The cross-examination by Ms Bell of Mr Dyer and Mr Maloney, and her evidence in chief as well as the evidence she gave under cross-examination, did not assist the applicant in persuading us otherwise. Whilst her evidence was that the relevant circuits were ‘dead’ and ‘safe’, that effectively being the applicant’s case in response to the claim against it, we disagree. Such was contradicted by the extremely specific and well described evidence of Mr Maloney. In addition, the photos to which Mr Dyer referred and included in his evidence were telling in terms of the unsafe condition the applicant left the work in. In turn this gave substance and meaning to the views Mr Maloney expressed in conclusion as we noted them in paragraph [53] herein.
  5. [71]
    In our opinion the electrical installation falls within the ambit of :
    1. ‘fixtures, fittings’ as those terms are used in clause 12.2 of the Lease;
    2. further or alternatively, within the ambit of an ‘alteration’ to the extent the applicant installed the additional electrical cabling and power points that were required to be removed as part of a re-alteration back to the original layout of the premises, and in turn incorporated into clause 12.2 of the Lease; or
  6. [72]
    in the further alternative within the definition of ‘Appurtenances’ as that term is used in clause 5.1.3(e) and in turn incorporated into clause 12.1 of the Lease. That being so, and on the strength of the respondent’s evidence it means we can readily find as a fact that the part of the Electrical Make Good Work performed by the applicant was entirely unsatisfactory, as such it means the applicant did not comply with the provisions of the Lease in that regard, and in turn necessitated the work to be done as the respondent then performed it.

The Balance of the Respondent’s claim for the Incomplete Make Good Works

  1. [73]
    As we observed in paragraph [66] herein, we considered it to be unnecessary to engage in a detailed discussion on this issue in terms of deliberating whether it was done or even whether it was necessary to do. This is because, as we explain in our discussion which follows under the next heading, the manner in which the respondent pressed its claim in this regard was flawed, such that it was not entitled to the quantum of the relief it sought beyond merely nominal damages save only for a small quantum in terms of the Electrical Make Good Works. Accordingly any detailed discussion on the various and substantive items of the Make Good Work, and thus any findings of fact arising from what would otherwise have been required, was simply unnecessary. It served no purpose given the findings of fact that we made in respondent’s favour and against the applicant on the evidence as presented and discussed. But moreover, as we discuss further in detail later herein given the manner in which the law applies in terms of s 112 of the PLA and the manner in which the respondent framed and pressed its case, such provided the foundation for nothing more than the award of nominal damages, once again save only for a small quantum relative to the Electrical Make-good Works.

Could the work have been completed within the lease period had the power been turned back on?

  1. [74]
    For completeness, in deference to the applicant’s argument presented on this issue, we touch on it briefly here. Put simply, we did not accept that argument.
  2. [75]
    As we noted it in paragraph [65] herein, the applicant’s evidence of this asserted fact was effectively non-existent. What was telling against the applicant’s assertions was the entire absence of any independent evidence of the fact that it could have been done in its entirety had the power been connected, and moreover that it could not have been done because of the absence of power being connected.
  3. [76]
    But moreover, the finding of fact we made as to the applicant’s failure to have properly carried out the requisite electrical make-good work, and ultimately the work that was required to be done by the respondent, of itself demonstrated that the work which was ultimately required to have been performed to correct the incorrect work could not have been completed within the remainder of the lease period even if the power had been turned on.

Concluding comments on the Contest in terms of the Evidence and the Submissions

  1. [77]
    In our opinion, the only finding open to be made on the entirety of the evidence was that the applicant did not complete, and could not have completed, its make-good work in satisfaction of clause 12 of the Lease. It was therefore in breach of the Lease.
  2. [78]
    The issue that then arose was the extent to which the respondent was entitled to recover that which it claimed in terms of having been required to perform the Make Good Work’, such including not just the costs of the electrical work but the associated builder’s work in terms of plasterboard and painting remediation, as well as all other work it asserts it carried out to deal with the balance of the Make Good Work. As we understood the respondent’s case, it made the claim against the  applicant pursuant to the provisions of sub-clauses 12.2 to 12.4, it arguing such imposed a liability on the applicant for such. However, it must be observed that the respondent also expressed its case as a claim for ‘damages’, such which incorporated not only what it asserts were its ‘costs’ of performing the work, but a claimed loss of rental and outgoings as a loss of opportunity claim, and legal costs incurred, all said to be as a result of the breach.[39]
  3. [79]
    Ordinarily, in the consideration of a claim for damages for breach, such would  entail a consideration of the work performed and in turn findings needing to be made as to whether such was necessary, and then, if found to have been necessary, a consideration of the quantum claimed for such work. It would also entail a consideration of the balance of the damages claimed. However, for the reasons we have earlier alerted to herein, and that which follow here in detail, such was in our opinion not necessary and accordingly we did not descend into it.
  4. [80]
    Whether or not the work was ultimately necessary and the costs for same reasonably incurred was not an issue we needed to make any decisions about. Nor was it necessary to consider the balance of the damages claimed. This was because of the manner in which the respondent framed and run its case in terms of the provisions of the Lease upon which it relied as a foundation for its claim against the applicant and Ms Bell, but more particularly the relevance and application of s 112 of the PLA.

Is the Respondent entitled to the Relief it seeks ?

The framing of the respondent’s case

  1. [81]
    As noted earlier herein, the respondent premised its case on the operation of clause 12 of the Lease, the relevant parts of which we extracted in paragraph [41] herein and to which we have referred further in paragraphs [71] and [72] herein. It is that clause which imposed the obligation on the applicant to perform what the respondent described as the expected make good works. In turn it is also a clause which gave rise to an entitlement for the respondent to recover from the applicant, as a ‘debt’, costs of performing the requisite make good works. Such is the asserted entitlement the respondent pressed in this proceeding by way of its counter-application, as not only a claim but effectively a defence to the applicant’s claim against it.
  2. [82]
    It must however be read and understood in its proper context. Critically, this provision of the Lease required the respondent, as lessor, to have first exercised an ‘option’ to perform such works, as described in clause 12.2, or make an ‘election’, as described in clause 12.3. Each of these provide for a choice to be made by the respondent as lessor, that choice dictating the process to be engaged in by the parties in terms of the Make Good Work.
  3. [83]
    However, in the circumstances as we have described them earlier in these reasons based on the evidence before us, the respondent did not exercise the option open to it under clause 12.2, nor did it elect to proceed as open to it under clause 12.3, in terms of it effectively taking care of the Make Good Work. Rather, it expressly required the applicant to perform what it expected to be performed as the requisite make good works, such as described in the Make Good List to which we referred in paragraph [18] herein.
  4. [84]
    Once it did so, it required the applicant to perform its obligations under clause 12.1, the first limb of clause 12.2, as well as that under clause 12.5. But, as we have found, the applicant did not do this, such being that which the respondent asserted and is purportedly reflected in the Exit Inspection Report as we referred to it in paragraph [23] herein. As we have also found, whilst not making any definitive finding on all the items listed in that Exit Inspection Report, something as we have discussed we considered unnecessary to do given our findings on that part of the Electrical Make Good Works which were performed by the applicant being unsatisfactory, the admission made by Ms Bell that not all other Make Good Works were complete, and our finding that the works could not have been completed by the end of the Lease period. Accordingly, in turn it was our finding that the applicant was in breach of the Lease.
  5. [85]
    Such also was the apparent position of the respondent given the manner in which it expressed its claim against the applicant as founded in ‘breaches’,[40] and the opinion of its solicitor when the Demand, to which we referred in paragraph [25] herein, was sent on 2 March 2022.
  6. [86]
    But curiously, the respondent’s stated view in that letter of 2 March 2022 was that the breach was not capable of remedy and so the respondent made the Demand for payment. In the respondent’s case, as it was presented before us, it is unexplained why it was said that the breach was not capable of remedy and thus it pressed a claim in damages, those damages said to include inter-alia the cost to it of undertaking the requisite Make-Good Works that it essentially stated could not be done given its assertion that the breach, that being a failure to have performed these works, was not capable of being remedied. In that regard it must not be overlooked that clause 12.6 of the Lease expressly preserved the respondent’s rights against the applicant for antecedent breaches. Thus, on the premise of the applicant breach of clause 12.1 it remained open for the respondent to press a claim against the applicant for such a breach and it is possible that is what is was intending as it presented its Respondent and Counter-application.
  7. [87]
    However, it also enlivened the application and operation of clause 11 of the Lease provisions, in particular sub-clause 11.1 which empowered the respondent, as agent of the applicant, to do all things and incur such expenses as necessary to perform the requisite obligations not performed by the applicant as lessee. In turn, similar to the provisions of clause 12, the expenses incurred constitute a ‘debt’ due and owing by the applicant to the respondent such which is payable on demand. It also in turn enlivens sub-sub-clauses 11.2.1 and 11.2.4. But, similar to the absence of any exercise of option or election by the respondent under clause 12 as we have already discussed, to invoke the operation of clause 11.1, the respondent would have been required to proceed ‘as agent’ for the applicant. Not only did the respondent not assert that it was doing so, and in turn present its claim reliant on the operation of clause 11 in that regard, there was no evidence before us to even suggest that this was the capacity the respondent was acting in when it proceeded to have the Make Good Work performed from which any such inference could be drawn.[41]
  8. [88]
    That being said, it seemed to us that the asserted liquidated debt payable on demand was then the subject of the Demand made on 2 March 2022, but which was not satisfied in satisfaction of the express provisions of either clause 11 or clause 12..
  9. [89]
    In turn, the respondent then presented its claim by way of its Counter-application identifying that which it said was a cost incurred in ‘making good the Premises’ of $35,587.76, whilst also pressing a claim for other asserted losses; namely
    1. costs of making good paintwork following the removal of For Lease Signs allegedly by the applicant in the sum of $308.00;
    2. legal costs  said to be incurred “in respect of the Tenant’s breaches during the course of the Lease” in the sum of $5,308.49;
    3. the loss of opportunity to earn rent and outgoings for 2 months in the sum of $14,799.31, said to be as a direct result of the time taken to perform the Make-Good Works; and
    4. costs of electricity from 1 January to 14 February 2022 in the sum of $709.09, but without any explanation as to the reason for an entitlement to claim and be paid such, although we infer from the context it is the cost of electricity incurred during the performance of the Make-Good Works.
  10. [90]
    It also claimed interest at the default rate under the Lease from the date on which the Demand was required to have been satisfied, such which is an entitlement arising under clause 11, in particular subclause 11.2.1.
  11. [91]
    All that being said, in our opinion, the respondent’s claim as thus pressed is misconceived, or at the very least confused and confusing. It went well beyond merely a claim in debt, whether such arises under clause 12 as relied on by the respondent, or clause 11 in the manner as we have described it herein consequent upon the initial breach by the applicant, namely the failure to have satisfied clause 12 of the Lease, with the respondent ultimately pressing its claim as one in damages for breach, such including what was said to be the unpaid debt that was the subject of the Letter of Demand. Such is as it presented its claim in conclusion of the hearing by way of its written submissions. As stated therein:[42]

The Lessor seeks damages of $56,712.65 ….

  1. [92]
    In doing so, the respondent opened the claim it pressed to be addressed in terms of the provisions of s 112 of the PLA, an issue to which we return shortly in these reasons.
  2. [93]
    But before doing so, related to this issue is a short observation we make here for completeness relative to a submission the applicant made in terms of its entitlement to return of the Security Bond in reliance on sub-clause 2.11.5, noting the extent to which that sub-clause refers to the existence of ‘a breach of this Lease’. The applicant submitted:[43]

… we are entitled to a refund of the security bond … as there was no breach of lease issued during or at the end of our tenancy. This is a factual statement supported by the absence of any formal breach notice …

  1. [94]
    With respect to the author of that submission, it demonstrates a fundamental misunderstanding of the relevant provisions of the Lease. For the purposes of sub-clause 2.11.5 there is no requirement for the respondent to have issued a formal breach notice other than in the circumstances the respondent was to have proceeded under sub-clause 11.5.10 therein, which it did not. All that is required for the purposes of sub-clause 2.11.5 is that there be a breach, something which we have found occurred.
  2. [95]
    All that being said, in our opinion the substance of the respondent’s claim, namely damages for a breach of a covenant to keep or put premises in repair,[44] brings into play the application of s 112(1) of the PLA which works against the respondent in terms of the damages claim it pressed. As that section provides for, there is an express limitation imposed by the statute to the quantum of damages that the respondent may recover in such circumstances, such being that in no case may the damages exceed the amount by which the value of the reversion of the premises exceed the diminished value of those premises owing to the said breach.[45]
  3. [96]
    However, the respondent has not pressed its claim with reference to this limitation. Critically there is no evidence before us as to what the diminished value is as a consequence of the applicant’s breach.
  4. [97]
    As we noted it earlier herein, whilst neither party raised this provision as part of their respective cases, at the conclusion of the hearing we alerted the parties to it and requested submissions from them as to its relevance (if any). Each party made such submissions, albeit sparse in detail.
  5. [98]
    The respondent’s submission was effectively as follows:[46]

… the onus in respect of this argument is placed on the Lessee.

There is no direct evidence as to the value of the Premises in the state left by the Lessee. Such places the Tribunal in a difficult position with which to reliably estimate the diminishment of value at the time of reversion of the Premises to the Lessor.

Nevertheless, the Lessor makes the following submission:

  1. the Premises, and likely adjoining tenancies, were rendered unsafe by the actions of the Lessee in relation to the electrical fittings;
  1. the steps taken by the Lessor were entirely reasonable in such circumstances, being on the recommendation of a licenced electrician;
  1. such a safety defect should be given a serious diminution in value of commercial premises;
  1. the annual rent from the first term was $59,559.50; and
  1. the total claim by the Lessor is the sum of $56,712.65.

Further, the Lessor has not sought compensation for every item of damage caused by the Lessee. For example:

  1. the Lessor has not replaced the exterior frames near the door entrances and the doors itself despite the damage; nor
  1. cracking to the concrete slab.

In those circumstances, it is submitted there is no relevant restriction on the Lessor’s recover (sic) by section 112(1) of the Property Law Act 1974 (Qld) based upon diminution in value of the Premises.

  1. [99]
    The applicant’s submission did not address the application of this provision and merely expressed its case in closing as follows:[47]

We seek a fair and just resolution that reflects the actual circumstances and compliance with the lease terms and the Property Law Act Section 112.

Discussion on the application of s 112 (1) of the Property Law Act

  1. [100]
    It has been observed that in the circumstances where a lease provides for repairs to be carried out by the lessee, in default of which the lessor is entitled to enter the property and carry out the repairs at the lessee’s expense, the claim by the lessor to recover moneys expended in making good the want of repair arising out of the lessee’s breach of the repair convenient is a claim for a debt and not a claim for damages for breach of covenant, and accordingly this provision would not have application.[48] One might consider this is the present circumstances given the provisions of clause 11 of the Lease, although in that regard we once again note that this is not the manner in which the respondent framed or pressed its case.
  2. [101]
    In our opinion such would be relevant to a breach of clause 5.1 of the Lease read in conjunction with clause 11.1. But, again we note, that is not the claim the respondent pressed. Its claim was a breach of clause 12.1, albeit a clause which dictates compliance with the provisions of clause 5.1, and in turn what is said to be a claim in damages for the applicant’s failure to have made good the premises on termination of the Lease. It is for this reason that in our opinion s 112(1) of the PLA has application.
  3. [102]
    This section was introduced into the PLA consistent with the report of the Queensland Law Reform Commission in 1970, which is described as being in terms of a “general revision and restatement of the property law in this State …”. The following notes appear therein as clause 31 of that report:[49]
  1. Provision as to covenants to repair:

A lessee who, during the currency of the lease, is liable for breach of a covenant to repair, may be required to pay damages measured by reference to the resulting diminution in the value of the reversion; if the lease has expired, the damages are measured by reference to the cost of the repairs …

Clause 31, which is founded on s 18 of the English Landlord and Tenant Act 1927, places an upper limit on the amount recoverable and in effect provides that these shall in no case exceed the value of the reversion (i.e. the difference between the value of the reversion with the repairs and its value without).

… an upper limit on the amount of damages recover.

  1. [103]
    It is also noted therein to be premised in part on s 133A of the NSW Conveyancing Act 1919.
  2. [104]
    As it was observed by Ward CJ in Eq in Midcoast Petroleum Pty Ltd v Keldros Pty Ltd, relatively recently when compared to the historical age of the source of this provision in the PLA, in reference to that equivalent provision in New South Wales legislation:[50]

It is noted that if the lessor has repairs actually carried out that is strong evidence that the cost of the works is the proper amount of damages but that, otherwise, the lessor should prove the actual diminution in value of the premises to achieve more than nominal damages.

  1. [105]
    Whilst the proper measure of damages therefore is the difference in the value of the reversion at the termination of the Lease, between the premises in their then state of disrepair and the state they would have been in if the covenants had been observed,[51] it has been held that there could be a case in which it is in fact obvious that the value of the reversion has been damaged to the precise extent of the cost of effecting the repair in question by the tenant’s failure to do some necessary repair.[52]
  2. [106]
    All that being so, in assessing the relevant damages to which the respondent is entitled consequent upon the applicant’s breach, what this Tribunal has to do is to ascertain the actual value of the property at the date the respondent took back possession of the premises and the value the premises would have had had there not been any breach of the covenants under clause 12 of the Lease. It is this difference which is the quantum of damages.[53] For us to be able to do that, evidence must be led before us.
  3. [107]
    In that regard we make the following comment on the respondent’s submissions to which we referred earlier in terms of s 112(1). With respect to the author of those submissions:
    1. as to the onus resting with the applicant, such is fundamentally wrong at law. In that regard it is apposite to once again note the observation by Ward CJ in Eq in Midcoast Petroleum Pty Ltd v Keldros Pty Ltd to which we referred earlier. The respondent is the moving party for a claim in damages. The onus to have dealt with and satisfied the provisions of s 112(1) thus rested on the respondent; and
    2. as to there being no restriction imposed on the respondent under s 112(1) for the reasons asserted, there is simply no substance to that argument.
  4. [108]
    As we have noted, there was an  absence of evidence of the relevant difference to which we have just referred. All we were provided with is what is said to be evidence of actual costs incurred in carrying out the said work. But, in that regard, noting the observation of the Courts to which we have referred in paragraphs [104] and [105] herein, on the basis of that evidence we could readily accept that the Electrical Make Good Works performed by the respondent was an essential aspect of the repair work which of itself would have directly affected the value of the premises. As per the evidence of Mr Maloney, the work was essential in nature and to have not performed it would have left the premises in an unsafe condition such that any incoming tenant would have necessarily been required to perform such work, which we accepted in turn would have adversely impacted the value of the premises by at least the cost of performing that work.
  5. [109]
    But what is that cost ? The evidence in terms of the electrical work is clear. It was $1,870 include GST as we noted it in paragraph [54] herein. However it is not so clear when it comes to the builder’s work in connection with that electrical work, namely the making good of the plasterboard where cut and otherwise removed as raised in the evidence of Mr Maloney and Mr Dyer, but as address in terms of cost in the evidence of Mr Donald. As we noted it in paragraph [57] herein, Mr Donald did not separate the costs of this work from the overall costs of the remedial work he performed. Thus we had no way of knowing with certainty the builder’s costs associated solely with the Electrical Make Good Works as Mr Maloney performed them. Nor was there any evidence from the respondent, either by way of that which Mr Dyer or Mr Donald gave evidence about, to assist us in determining the monetary damage suffered as a result of the Incomplete Make Good Works being required to be performed. In our opinion the respondent did not demonstrate, as it did with the Electrical Make Good Works, that such work was otherwise essential. At best it may be that the existence of such merely gave rise to a diminution in value, such which could not be equated to the actual cost of performing the said works. Thus, it gave rise to the dilemma – to what extent (if any) was the respondent entitled to an award of damage for that which it suffered as a consequence of the applicant’s breach in terms of the remainder of the Make Good Works.
  6. [110]
    Whilst it is trite law that where a party suffers a loss by reason of a breach of contract, that party is, as far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed,[54] that effective rule is subject to an exception. Breaches of contract, which is the case here as a breach of the Lease, can be actionable on proof of the breach alone, even if no loss is proved, but if no loss is proven, only nominal damages are recoverable.[55]
  7. [111]
    Nominal damages are not always minimal, but are usually small,[56] the quantum of which is in the discretion of the trier of fact and law.[57] Whilst unattractive to a plaintiff, which in this instance as relevant to the counter-application is the respondent, such an award affirms there has been ‘an infraction of a legal right’ and as such the award is recognised as ‘vindictory’ (sic) rather that ‘compensatory’.[58] As McColl JA, with whom Ward JA, and with whom Sackville AJA also agreed but expressing separate detailed reasons, observed in New South Wales v Stevens as to the purpose of nominal damages:[59]

They are awarded because the plaintiff has established the liability issue, being the breach of contract … but has not established that any damages flowed from that breach.

  1. [112]
    For all these reasons, save only to the extent as we have discussed we accepted that to the extent of the electrical component of the Electrical Make Good Works the respondent satisfied us that the actual cost of that work may readily be accepted as at least part of the diminished value. But,  in the absence of the respondent meeting its onus and presenting evidence of the diminution in value of the premises arising from the remainder of the Make-Good Works, the respondent was left entitled to nothing more than nominal damages for the cost of such items of work.

What is the quantum of damage?

  1. [113]
    The question then is – what is the quantum of same?
  2. [114]
    That can be answered readily by turning once again to the reasoning of McColl JA in New South Wales v Stevens in which the manner in which this issue has been addressed various Courts and by academic writers over many years was discussed.[60] As observed therein, the fine line to be drawn is one between what is vindicatory vs compensatory, even where a discretion is to be exercised in determining the quantum of damages awarded. A quantum of some substance, albeit small in contrast to what may be claimed, even if determined on the exercise of a discretion against the evidence presented can be said to be compensatory and thus not nominal. As McColl JA with whom the other Justices of the Court agreed on that occasion, the sum of $100 was a reasonable quantum when it came to the question of what was ‘nominal’.
  3. [115]
    Accordingly, in our opinion, on the evidence as presented in terms of the respondent’s case as pressed, at best we considered the respondent was entitled to recovery of the $1,970 is damages, calculated as follows:
    1. Cost of the electrical component of the Electrical Make Good Works - $1,870; and
    2. Nominal damages for the remainder of the entirety of the Make Good Works, including the building work in connection with that electrical component - $100.
  4. [116]
    As to the respondent’s claim for damages for loss of rent during the period in which the Make Good Works was performed, there was an absence of any evidence from the respondent that it had lost the opportunity to re-let the premises during the period in which it performed the Make Good Works. Thus, there was simply no basis for an award of damages in this regard, even nominal.
  5. [117]
    As to its claim for additional electricity costs incurred, as we understood it that is for the costs of electricity during the period in which the Make Good Works was performed, thus it falls within the ambit of the claim for damages for performance of such works which we have already addressed and for which we decided the respondent was entitled to nominal damages of $100.
  6. [118]
    As to its claim for the recovery of legal costs said to have been incurred, we did not accept that this was a ‘damage’ arising from the breach of the Lease by the applicant. At best it was a cost to the respondent of being in the business of the Lessor and thus necessitating steps to be taken, at its election via its solicitor and so the incurring of legal costs, in terms of administering the Lease terms. For this reason we did not find any entitlement afforded the respondent for payment of such from the applicant.

The respondent’s claim for interest

  1. [119]
    Finally, as to its claim for interest on the amount claimed, we have found that the respondent is entitled to be paid $1,970 against that which formed part of the Demand. The respondent pressed a claim for interest on any such amount found payable, said to be pursuant to clause 11.2.1 of the Lease terms, such to be applied from the date on which the Demand was required to be satisfied, that being 16 March 2023, until the date of judgment.
  2. [120]
    We do not  agree that such is appropriate. This is because, as we have discussed earlier in these reasons, the respondent’s claim as pressed before us is one in damages, not the claim for payment of a debt under the Lease, whether it be under clause 11 or clause 12. That is, the claim pressed is not under the Lease and as such the lease provisions for the payment of interest on default have no application.
  3. [121]
    At best, the respondent is entitled to interest on the amount we have found as being payable to it as that provided for under s 58 of the Civil Proceedings Act 2011 (Qld), such being payable from the date the cost was incurred. We are also of the view that such should be limited only to the cost incurred for the Electrical Make Good Works, namely the $1,870 charged by Mr Maloney, and not to the nominal damages we have allowed the respondent such, in effect, incorporating nominally an interest component.
  4. [122]
    On that basis, we considered that the relevant date from which the calculation of interest should be made is the date payment to Mr Maloney was due as shown in his invoice for the $1,870, namely 18 February 2022,[61] up to the date of our decision in this proceeding.
  5. [123]
    That calculation was readily done by us using the Court’s Interest Calculator found on the Queensland Court’s website,[62] such which gave quantum of interest as being $273.45
  6. [124]
    As to the respondent’s claim for an order for payment of interest until satisfaction of the judgment, that is for the period following the giving of our decision up to the date of payment, given the outcome of this proceeding results in the respondent having to make a payment to the applicant of the remainder of the Security Bond amount, there is no basis for any such order.

Costs

  1. [125]
    The first of the three remaining issue was as to costs, it being recalled that the respondent sought its costs of this proceeding against the applicant and Ms Bell.
  2. [126]
    Under s 100 of the QCAT Act, other than as provided under that Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding. The relevant enabling Act here is the RSLA, such which does not provide otherwise. Thus the starting position is that each party bears their own costs. There is however a discretion afforded the Tribunal under s 102 of the QCAT to depart from that position.
  3. [127]
    Notwithstanding the finding of nominal damages, the respondent was in effect successful against the applicant. But equally, as a consequence of the finding of nominal damages as a direct result of the respondent’s failure to provide requisite and relevant evidence, the applicant has been partially successful. There is however nothing arising from those relative successes, or in turn the corresponding failures, which dictated an exercise of that discretion. The respondent did not make any submission to the contrary.
  4. [128]
    Moreover, the fact is that each party was self-represented, and it did not appear on any of the material filed that they sought to engage, and in turn name as their representatives in this proceeding, solicitors. As such there was nothing to indicate that they have incurred legal costs in the conduct of this proceeding.
  5. [129]
    For these reasons, the appropriate order was that each party bears their own costs of the proceeding.

The claim under Guarantee against Ms Bell

  1. [130]
    The second of the three remaining issues was as to the respondent’s claim against Ms Bell under the guarantee. In our opinion there is no utility in addressing this claim in any detail, the necessity for it effectively not arising given the findings we have made as to the extent of liability arising for the applicant in the respondent’s favour, and the fact that such liability can readily be satisfied from the Security Bond held by the respondent.
  2. [131]
    For this reason there was no order made in terms of the guarantee other than to effectively dismiss that part of the counter-application.

Conclusion - What are the appropriate orders ?

  1. [132]
    All that being so, the last remaining issue was - what were the appropriate orders to be made in terms of the liability imposed on the applicant in favour of the respondent, and the return of the Security Bond as sought by the  applicant?
  2. [133]
    As will be recalled, under sub-clause 2.11.5 of the Lease, upon the end of the Lease the Security Bond was to be returned to the applicant if the applicant was not indebted or otherwise liable to the respondent. On one reading it might be thought that this means if there is any indebtedness or liability there is no requirement for the Security Bond to be returned, and in such instance the respondent could retain it. But this is not the position taken by the respondent, in our opinion rightfully so. On any reading of this provision it must be construed as the amount of the Security Bond to be returned is that which remains after accounting for the indebtedness or otherwise the liability.
  3. [134]
    To that end, we have found that the applicant is liable to the respondent in the sum of $1,970 plus interest in the sum of $273.45, thus giving an aggregate of $2,243.45. It will also be recalled that the quantum of the Security Bond was $17,135.88. Accordingly the relevant order in satisfaction of both the applicant’s claim and the respondent’s counter-application is that the respondent is to return to the applicant the sum of $14,892.43, with the sum of $2,243.45 being released from the Security Bond to the respondent.
  4. [135]
    As to the balance of the respondent’s counterclaim, it need only be dismissed.
  5. [136]
    Orders were made to that effect.

Footnotes

[1]This is as stated in a covering e-mail from the respondent in terms of its ‘Closing Statement’ such being dated 9 November 2023 at 9:31 am, and in its ‘Final Written Reply’ filed 7 December 2023.

[2]https://abr.business.gov.au/ABN/View?id=37009827230 accessed 2 May 2024.

[3]https://abr.business.gov.au/ABN/View?id=24010295243 accessed 2 May 2024.

[4]Ex 7.

[5]See Ex 6 para 4. See Ex 1 being the Annexure to the original Notice of Dispute issued by the applicant wherein it names the respondent as Landlord. A copy of the assignment document is not in evidence.

[6]See Ex 2 para 2 and Ex 6 para 19. There is inconsistency in the parties’ respective material as to when this request was made but nothing turns on that difference.

[7]See Ex 6 para 20 and Attachment 21 thereto. Once again there is some inconsistency in the parties’ material in this regard the applicant asserting that such occurred on 22 December 2021 (See Ex 2 para 4), which whilst said to have been included in the applicant’s evidence it was not, although as we understand it such is as appears at Attachment 22 to the statement of Mr Dyer for the respondent, namely Ex 6, with such document being an e-mail to which the list as appeared in the 9 November 2021 document being sent on a second occasion.

[8]Ex 2 para 3.

[9]Ex 6 para’s 26 to 32 – Attachments 22 to 25; Ex 2 para’s 4,5 & 8. Only those parts relevant to the ultimate decision reached by us are extracted here. Emphasis is as it appears in the original.

[10]As we read this e-mail, the reference therein to ‘Sam’ is to Mr Dyer, the respondent’s General Manager.

[11]By reference to the full exchange of the text message on 22 December 2021 which appears at Attachment 23 to the statement of Mr Dyer (Ex 6), as we understand it ‘Misi’ is Ms Bell’s husband.

[12]Ex 6 para 39.

[13]Ex 6 para 40.

[14]Ex 6 para’s 12 and 41. The full Exit Inspection Report appears as Attachment 2 with various photographs of the work in question appearing in Attachment 3 to Ex 2 being Mr Dyer’s statement.

[15]Ex 6 para’s 42 to 47.

[16]A copy of this letter appears as Annexure 5, pg 435 of the respondent’s Response and/or Counterapplication document.

[17]Ex 1. Emphasis is as it appears in the original.

[18]In Chambers those submissions were marked for identification in this proceeding as follows – The respondent’s closing Ex 8, the applicant’s closing including reply Ex 9, the respondent’s reply Ex 10.

[19]Penfold v Firkin & Balvius [2023] QCATA 1, [37].

[20]RSLA Schedule.

[21]RSLA s 5A.

[22]RSLA s 5B.

[23]RSLA s 5C.

[24]Retail Shop Leases Regulation 2006 (Qld) s 9 and Schedule.

[25]RSLA s 5D.

[26]RSLA Schedule.

[27]See Ex 7 – Reference Schedule to the lease document. Whilst the ‘Permitted Use’ as defined in the Reference Schedule is described as ‘Fitness Studio and Gym’, such which is not a term found in the Schedule to the Regulations, as we understand it that use is effectively the predominant activity which is at the very least the hire or supply of goods and services mentioned in the Schedule which includes, as noted, exercise equipment.

[28]In his Exit Inspection Report, Mr Dyer for the respondent referred to other clauses of the lease, eg parts of clause 4, which we have not extracted here. The clauses extracted are only those to which the parties expressly referred us to in their written closing submissions, namely Ex 8, 9 and 10.

[29]Ex 6 pg 112.

[30]   Ex 6 para’s 21 to 32.

[31]Ex 6 para’s 42 and 44 to 46.

[32]Ex 4 para’s 6 and 8 to 11.

[33]Ex 4 para’s 14 to 16.

[34]Ex 4 para 19.

[35]Ex 4 para 21.

[36]Ex 2.

[37]Ex 2 – second last paragraph.

[38]QCAT Act s 28(3)(b).

[39]See the respondent’s closing submissions – Ex 8 para 42.

[40]See Response and/or Counter-application para’s 7 and 10.

[41]We also pause here to observe that in our opinion it is doubtful that this clause survived the end of the lease period given the respondent’s refusal to effectively extend the lease period by way of a holding over, such which would have been required to have been done had the respondent effectively stepped into the shoes of the applicant as agent. That would of itself give rise to claims for further rent and outgoings to be paid by the applicant under the lease, such which may have equated to the claim in damages the respondent made for loss of opportunity to relet the premises, but it would not be a claim in damages for such loss but rather simply a claim in debt for money due under the Lease. However, all that being said, we do not make any definitive finding on that point.

[42]Ex 8 para 42.

[43]Applicant’s written closing submissions – Ex 9 para 1.

[44]Such being the requirement to have complied with clause 5.1 at the end of the Lease as provided for under subclause 12.1, or to leave or put the premises in repair at the termination of the Lease, which being a requirement to have complied with sub-clause 12.2, the failure of either or both being a breach of the lease.

[45]There is a second limb to s 112(1), namely in circumstances of demolition or structural alterations of the premises, to which we have not referred as it does not apply in the circumstances as they exist for the purposes of this proceeding.

[46]Ex 8 para’s 46 to 50. Footnotes omitted.

[47]Ex 9 – closing paragraph.

[48]Consider Hamilton v Martell Securities Ltd [1984] 2 WLR 699 at 710 and the discussion thereof in Jervis v Harris [1996] 1 All ER 303.

[49]Queensland Law Reform Commission Report – Q.L.R.C.1 – 26 February 1970. Citations omitted.

[50]Midcoast Petroleum Pty Ltd v Keldros Pty Ltd [2019] NSWSC 970, [279], such being in reference to s 133A(1) of the Conveyancing Act 1919 (NSW). Citations omitted.

[51]Smiley v Townsend [1950] 2 KB 311 per Denning LJ at 319-320.

[52]Jones v Herxheimer [1950] 2 KB 106 per Jenkins LJ at 116-117, [1950] 1 All ER 463.

[53]Hanson v Newman [1934] 1 Ch 298 per Lawrence LJ at 304-305. See also Jones v Herxheimer (supra).

[54]Robinson v Harman (1848) 154 ER 363, 365.

[55]See Heydon on Contracts J.D. Heydon at [26.30] – Lawbook Co. 2019 and  the extensive list of caselaw cited therein.

[56]Baume v Commonwealth (1906) 4 CLR 97, 116-117. Whilst this decision was discussed further by the High Court in The Commonwealth v Brisbane Milling Co Ltd (1916) 21 CLR 559, such criticism did not extend to this issue.

[57]New South Wales v Stevens (2012) 82 NSWLR 106,[46].

[58]Ibid at [26].

[59]Ibid.

[60]Ibid at [28] to [37].

[61]See Ex 4 -  in particular, exhibit CM-2 to Mr Maloney’s statement.

[62]https://www.courts.qld.gov.au/courts-calculator/calculator.

Close

Editorial Notes

  • Published Case Name:

    SK Investments (Qld) Pty Ltd t/as F45 Training Cairns v Magenta Enterprises Pty Ltd ; Magenta Enterprises Pty Ltd v SK Investments (Qld) Pty Ltd t/as F45 Training Cairns and Anor

  • Shortened Case Name:

    SK Investments (Qld) Pty Ltd t/as F45 Training Cairns v Magenta Enterprises Pty Ltd

  • MNC:

    [2024] QCAT 200

  • Court:

    QCAT

  • Judge(s):

    Taylor

  • Date:

    14 May 2024

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
Baume v Commonwealth (1906) 4 CLR 97
2 citations
Jump To
Cite 1 - (1906) 4 CLR 97
Cite 2 - (1906) 4 CLR 97
Commonwealth v Brisbane Milling Co. Ltd. (1916) 21 CLR 559
2 citations
Jump To
Cite 1 - (1916) 21 CLR 559
Cite 2 - (1916) 21 CLR 559
FL [2023] QCATA 1
2 citations
Jump To
Cite 1 - [2023] QCATA 1
Cite 2 - [2023] QCATA 1
Hamilton v Martell Securities Ltd [1984] 2 WLR 699
2 citations
Jump To
Cite 1 - [1984] 2 WLR 699
Cite 2 - [1984] 2 WLR 699
Hanson v Newman [1934] 1 Ch 298
2 citations
Jump To
Cite 1 - [1934] 1 Ch 298
Cite 2 - [1934] 1 Ch 298
Jervis v Harris [1996] 1 All ER 303
2 citations
Jump To
Cite 1 - [1996] 1 All ER 303
Cite 2 - [1996] 1 All ER 303
Jones v Herxeimer [1950] 2 KB 106
2 citations
Jump To
Cite 1 - [1950] 2 KB 106
Cite 2 - [1950] 2 KB 106
Jones v Herxheimer (1950) 1 All ER 463
1 citation
Jump To
Cite 1 - (1950) 1 All ER 463
Midcoast Petroleum Pty Ltd v Keldros Pty Ltd [2019] NSWSC 970
2 citations
Jump To
Cite 1 - [2019] NSWSC 970
Cite 2 - [2019] NSWSC 970
Robinson v Harman (1848) 154 ER 363
2 citations
Jump To
Cite 1 - (1848) 154 ER 363
Cite 2 - (1848) 154 ER 363
Smiley v Townshend [1950] 2 KB 311
2 citations
Jump To
Cite 1 - [1950] 2 KB 311
Cite 2 - [1950] 2 KB 311
State of New South Wales v Stevens (2012) 82 NSWLR 106
2 citations
Jump To
Cite 1 - (2012) 82 NSWLR 106
Cite 2 - (2012) 82 NSWLR 106

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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