Star Coffee Company, owned by Chris Hannay, Mat Waters, Charles Daoud in court with Harbour Town owners of $20m redevelopment
Hospitality business owners in Harbour Town are suing the centre for damages, after they claim their business was ruined by a $20m food court renovation.
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A HIGH-profile Gold Coast lawyer, a businessman and chef are suing owners of a major Gold Coast shopping centre for $1.3m, claiming their cafe business was ruined by a $20m food court renovation.
Lawyer Chris Hannay, Charles Daoud and chef Mathew Waters, owners of Harbour Town’s popular Star Coffee, have accused the centre’s ownership of misleading, deceptive or unconscionable conduct.
The trio claims they signed a new lease on the cafe after being told it would benefit from a $20m redevelopment in 2015, however the benefits had not eventuated and the cafe was “no longer profitable”.
In documents filed with the Supreme Court, the men and their company, Star Coffee Company, are claiming $1.311m in damages, plus interest and costs, from Lend Lease Fund Management and Lewis Land Group.
Property behemoth Lewis Land owns 50 per cent of Harbour Town, while ASX-listed Lendlease last week struck a $358m deal to sell its half share to Vicinity Centres.
Both property companies have lodged their intention to contest the claim.
Court documents show the cafe had been a tenant of Harbour Town since 1999 through successive leases, including one executed in 2015.
While negotiating that lease, the Star owners’ claim said an agent for the shopping centre, Karen Soeters, told Mr Daoud that there would be no more than five additional food outlets opened as part of the refurbishment, and there would no new takeaway food outlets.
According to the claim, Mr Daoud was told carparking and foot traffic would be boosted by the redevelopment, and that all tenants, including Star Coffee, would “substantially financially benefit” as a result.
Instead, an additional 18 food outlets, including 14 takeaway shops, were opened nearby Star Coffee in the centre’s new Eat Street precinct, the Supreme Court claim said.
It said the redevelopment had resulted in 200 fewer parking spaces and lower foot traffic and turnover, resulting in Star Coffee being “no longer profitable”.
The cafe business, worth $600,000 before the centre redevelopment, was worth just $25,000 afterwards, according to the claim.
The businessmen claimed the lease was signed “on the faith and truth” of the agent’s promises, and that they would not have otherwise renewed it.
In their defence, Lewis Land and Lend Lease Funds Management denied there had been representations made about the number of food outlets, parking spaces, foot traffic or financial benefit.
The defendants said the claimed representations from the agent could not be considered false, misleading or unconscionable because they had never been made.
They said there were 17 food outlets in the Eat Street precinct redevelopment, and that foot traffic had increased since the redevelopment, from 9.57 million people a year to 9.75 million.
The defence said the refurbishment had reduced the amount of carparking by 70 spaces, not the 200 spaces claimed by the cafe company and its owners.
Lewis Land and Lend Lease contended it was their preference for Star Coffee not to renew the lease after its expiry in 2014 and for a new tenant to take on the space.
Under the lease, Star Coffee was required to pay annual rent of $200,000, increasing yearly over seven years to $268,019, as well as annual marketing fees starting at $7609.
The lease required the company to upgrade the cafe’s wall finishes, floor covering, signs, light fittings, shop fitting, fixtures and shopfronts by December 2015.
According to the court file, the cafe company “wasted” $85,000 in capital outlays on the refit and suffered trading losses of about $676,000 in FY2019.
In their statement of defence, Lewis Land and Lend Lease said the value of the Star Coffee business would have been “$nil” had the new lease not been signed and that the capital outlay in re-fitting the shop was not “wasted” as the tenant had benefited from it.
The defence said Mr Waters, Mr Hannay and Mr Daoud should be struck out as plaintiffs, as they had no individual claims, only “reflective loss as shareholders” in Star Coffee Company.
The defence statement denied Mr Daoud was acting on behalf of the Star Coffee company and its co-owners in the lease negotiations, and added the cafe was “also represented” in the negotiations by its solicitors Woods Hatcher.
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Originally published as Star Coffee Company, owned by Chris Hannay, Mat Waters, Charles Daoud in court with Harbour Town owners of $20m redevelopment
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