Lease Disputes – The Right to Quiet Enjoyment

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Under most lease agreements, tenants are usually granted exclusive use of the leased premises, free from the interference of the landlord. This right is usually documented and protected within the lease as the tenant’s “Right to Quiet Enjoyment” of the premises.

As the law on the Right to Quiet Enjoyment has developed, this right has now expanded under section 43 of the Retail Shop Leases Act 1994 (Qld)[1]. This section provides that a landlord will be liable to pay compensation to the tenant of a retail shop lease for loss or damage suffered by the tenant in certain circumstances where the landlord (without limitation):

  • substantially restricts the tenant’s access to the leased shop;
  • takes action that (other than a lawful requirement) substantially restricts or alters access of customers to the leased shop or the flow of potential customers to the leased shop;
  • causes significant disruption to the tenant’s trading or does not take all reasonable steps to prevent or stop significant disruption within the landlord’s control;
  • does not rectify certain breakdowns of plant and equipment, or defects in the centre which the landlord is responsible for; and/or
  • neglects to clean, maintain or repair the centre.

The case of Orsay Holdings Pty Ltd v Mecanovic & Ors[2] is an example where the Tenant’s Right to Quiet Enjoyment was in dispute.

The matter initially commenced in the Queensland Civil and Administrative Tribunal (QCAT), and subsequently appealed to the Court of Appeal Division of the Supreme Court of Queensland (the “Court”).

In Orsay, the Tenant operated a restaurant in a marina by a boat harbour.

The landlord-tenant relationship had broke down during the course of the lease, and the tenant was locked out of the premises by the landlord.

There were a number of issues that were dealt with by QCAT and the Court. Some of these issues included:

  1. Jurisdiction
    • It was submitted for the first time that QCAT had no jurisdiction to deal with the appeal. This submission was rejected and that QCAT had jurisdiction
  2. Unpaid rent and Catering
    • It was agreed that the tenants owed $57,073.19 in unpaid rent, and the landlord owed $1,539.30 for catering supplied by the tenants.
  3. Equipment unlawfully taken.
    • The landlord had physically locked out the tenant, and the tenant’s equipment or its value, had not been returned to the tenant. It was held that the equipment was taken unlawfully, and the landlord should pay damages for its loss to the tenants.
  4. The Boat
    • This became a central issue of the dispute. The tenants claimed that the landlord’s boat moored near the restaurant damaged the restaurants earnings. This claim was successful, and the tenants were awarded compensation in the sum of $101,777.30.

It was not surprising to find that there were competing evidence and arguments about whether the landlord’s conduct with the boat could be attributed to the tenant’s decrease in trade.

Amusingly, one such argument noted in the Tribunal’s reasons included that “The boat was painted an unattractive bright yellow.”

This decision is effectively summarised in the reasons of Mr Charles Brabazon QC, Member, and Ms Patricia Hanly, Member, when the matter was heard by the QCAT Appeals Division, with the following statement:

“… it is often said that ‘there is no right to view.’ Generally, that is true. But it is not true when it is a landlord who derogates from a grant or offends the provisions of the Retail Shop Leases Act 1994, and causes significant disruption to the lessee’s trading.”

Circumstances similar to the strained landlord-tenant relationship are by no means uncommon in today’s commercial climate. If you have a query as to your legal rights and obligations under a lease or the Retail Shop Leases Act 1994 (Qld), legal advice should be obtained as soon as possible.

 

Please contact our Business Development Manager on (07) 3252 0011 to arrange an initial appointment with one of our experienced Commercial Lawyers.

 

 

[1] A copy of this legislation is available at https://www.legislation.qld.gov.au/LEGISLTN/CURRENT/R/RetailShopLA94.pdf.

[2]  [2013] QCA 232