A dispossessed tenant has been awarded $100K in damages primarily from the obstruction of panoramic waterfront views over the Hervey Bay marina. The restaurant business declined significantly, the rent fell into arrears, and the landlord took possession. The decision addresses several topical issues relating to lease disputes and applicable case law.
History
“The restaurant is part of an attractive complex of shops which is in turn part of a much larger precinct of shops, accommodation and other facilities built around the boat harbour. The harbour, and the land surrounding it on which these various improvements are built is the property of the State of Queensland, and the landlord’s title derives from a head lease from the Department of Transport.” (1) Chas Straker Pty Ltd ETC and Anor v Orsay Holdings Pty Ltd [2012] QCAT 208 (Queensland Civil and Administrative Tribunal dispute under Retail Shop Leases Act 1994, ss 37, 43)
The restaurant had operated for a number of years with several prior changes to ownership structures and lease conditions leading up to this dispute. A new lease commenced 1 July 2006 for a term of three years with an option for another three years.
“As a result, the new lease changed the tenants’ liability for outgoings from a proportion of the increase from a base year, to its proportion of the whole of those outgoings. It is not clear from the evidence what this change amounted to in dollar terms, but it was presumably significant.”(1)
The following year, the landlord removed a number of small pontoon finger berths adjoining the restaurant and constructed a substantial walkway to allow the servicing and passenger loading of a commercial tourist vessel. This caused some loss of views and passenger congestion which arguably diminished the utility of the premises. “However from the tenants’ point of view, worse was to come.”(1)
The landlord acquired a much larger 250 person capacity boat which was 3 metres higher than the previous vessel albeit of similar length and berthed it outside the restaurant from mid-2008.
“The lease was to expire on 30 June, 2009, but there was an option for renewal for 3 years. The option was not exercised, but (the tenant) says they would have exercised it but for the problem of the boat. As it happened, they continued on as a tenant from month to month. However the lease contained a provision (clause 16.8(4)) that if on any holding over no consent was obtained from Department of Transport, then the tenancy terminated three months after the expiration of the term. No one sought consent. The landlord took the view that the tenant then held as a tenant at will. The tenant was finally locked out on 30 May 2011.” (1)
Synopsis of Disputed Issues
the impact of the dismantling of the existing pontoons, dredging and construction to facilitate the new larger scale mooring facility
the impact of the boat obstructing water views from within the restaurant premises
the impact of the associated queuing pedestrian traffic
the impact of the ongoing cleaning and maintenance of the vessel
the impact on the obstructed advertising signage over the marina basin and passing tourist traffic
the obligations concerning unpaid rent
the seizure of the tenants plant and equipment
other reasons for the decline in business trade
Findings
“After inspecting the site, the tribunal came to the conclusion that the presence of the boat berthed in front of the restaurant did materially impact on the views otherwise afforded to diners. Certainly there were still some limited views to be had, but nothing like the panorama of the harbour the applicants had when the lease commenced, and … that the boat materially blocked the visibility of the restaurant and its signage from the harbour and from nearby resort accommodation.”
“The general decline in the restaurant’s trading figures is consistent with the conclusion that the positioning of the boat adversely affected the tenants’ trade and we so find. This is not to say that it was the only impact … The most significant of the other impacts was undoubtedly the general and local economy. … half of the applicants’ drop in trade should be attributed to the landlord’s conduct with the boat, and half to other factors for which the landlord is not liable.”
“As the Hawksbury Nominees case (and others) makes clear there will be a breach where the ordinary and lawful enjoyment of the premises is substantially interfered with, whether or not title or possession of the land is affected. We find the taking away of the harbour views of a harbourside restaurant comfortably within the concept of substantial interference, or of making the premises materially less fit for the purpose.”
(quoting Hawksbury Nominees) … “It is incorrect as a matter of law to say that the obligation to give quiet enjoyment is dependent upon payment of rent and outgoings so that non-payment relieves the landlord thereafter of the obligation, even when the obligation is expressed to be subject to the lessee complying with the provisions of the lease.” (1)
In the absence of any expert evidence, the Tribunal considered various methods of calculating the tenant’s business loss. It ultimately followed the approach adopted by the Retail Shop Leases Tribunal in Charlies (Broadbeach) Pty Ltd v Goldsea Pty Ltd [2007] RSLT 7 which utilised a modified profit and loss calculation starting with adjusted gross sales, cost of goods and operating expenses to arrive at a projected reduction in net profit of $100,238.
“As for goodwill, as we have calculated the loss to the end of the option period, we find that the tenants would not have had a saleable asset, unless they were able to negotiate a further lease. There is no evidence that they would have. In those circumstances we do not think it correct to allow anything for lost goodwill.” (1)
In relation to the chattels, plant and equipment the Tribunal considered various precedents including:
“Queensland Court of Appeal decision of Curtain v Meadlow Holdings Pty Ltd [2001] QCA 145 where Justice Thomas, referring to a decision of Windeyer J in City West Media v Galaxy Media 1998 9 BPR 16 said: “His Honour also noted that at common law, chattels that a tenant brings onto leased premises can be removed at will by the tenant, and should be removed prior to the termination of the lease, but that failure to so remove the chattels prior to termination of the lease does not bring about any change of ownership. That of course might be altered by the specific terms of the lease, but forfeiture should not be lightly implied, and clear words would be necessary to achieve that effect.”
“The common law doctrine of distress for rent was abolished by section 103 of the Property Law Act 1974.34 The landlord therefore has no common law right to seize the chattels and appropriate them for arrears of rent. Accordingly any right of a lessor to seize or retain the lessee’s chattels must derive from the lease. We can therefore find no basis on which the respondent (Landlord) could claim that his appropriation of the plant and equipment, so far as it consisted of chattels, was lawful.” (1)
There was neither expert evidence nor detailed inventory available in relation to the chattels, plant and equipment. QCAT considered various value amounts including those contained in correspondence between the parties when they attempted to settle the matter immediately after the termination.
Ultimately QCAT found that damages relating to seizure of the tenants property by the landlord was equivalent to the arrears in rent of $57,000. Similarly, opposing claims for interest on those items were also balanced out.
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