An appeal court has confirmed that a restaurant be relieved of liability for rent arrears and collect more than $100k compensation because the landlord moored its giant whale watching vessel on the other side of the dock, blocking its harbour views.

The boat was not moored within the confines of the property that was leased and there was no covenant in the three year lease to allow the preservation of the outlook over the Urangan boat harbour in Hervey Bay.

Notwithstanding this and even though the lease expired in June 2009 leading to occupation thereafter on a month to month basis, the Queensland Civil and Administrative Tribunal (QCAT) ruled that parking the vessel was indeed a breach of the landlord’s obligation to give the Deck Restaurant & Bar ‘quiet enjoyment’ for which compensation for a “significant drop in trade” was payable under s 43 of the Retail Shop Leases Act (RSLA).

On appeal, the landlord argued that such part of award for the period its Spirit of Hervey Bay catamaran remained docked there after the expiry of the 3 year lease in May 2011, was beyond the jurisdiction of the tribunal by reason of the “periodic tenancy” compensation exception contained in RSLA s 42 (2).

The three appeal judges ruled there was no question of QCAT’s s43 jurisdiction in respect of the period covered by the lease. And although it had no authority under that section to award compensation for the holding over period – noting that a “covenant for quiet enjoyment ordinarily continues to apply after the expiry of the lease term if the lessee holds over” –  the court ruled it nevertheless had the power to make the award for that period under the general law.

Because the tribunal’s finding  that the breach of the quiet enjoyment was a finding of fact it was un appealable – and there being no error of law – the QCAT ruling would stand.

In addition, the tenant also sought relief for the landlord’s “conversion” of its goods and fixtures taken over and used by the landlord after the tenant vacated. QCAT awarded $57,000 under this claim which was the equivalent to the amount of rent arrears. That finding as not challenged on the appeal.

The subsequent tenant is however unconcerned about the vessel. JT Michaels now operates the business, which has been renamed Harvey’s Bar and Bistro.

Quoted in the Fraser Coast Chronicle before the appeal was heard, Michaels said the boat parked outside his restaurant was a non-issue because there was still enough of a view available for customers to enjoy and “boats were a part of the view at any marina”.

“The restaurant now has a greater focus on supplying fresh Hervey Bay seafood and attracting locals instead of depending on tourists for business”, the Chronicle quoted him at that time.

Orsay Holdings Pty Ltd v Mecanovic & Ors [2013] QCA 232 Brisbane Holmes JA and Atkinson and Philip McMurdo JJ 23/08/2013


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