Sydney lawyer takes up fight with Quest over rent

This week, The Australian Financial Review revealed CEM has ceased operating three Quest hotels – two in Melbourne and one in Queensland – and had asked landlords to surrender their long-term lease agreements.

Due to the impact of the pandemic on the hotel sector and, in particular, the second lockdown in Melbourne, CEM said it did not have the funds to make any further payments to landlords.

On Thursday, Quest offered Ms Waterhouse the opportunity to surrender her lease.

“[If i sign], I will lose all rights to sue, so I will not be signing,” Ms Waterhouse said.

Mr Constantinou responded on Thursday saying “we are all working in the same current lockdown environment”.

“Times are very tough for both franchisees and landlords,” he told the Financial Review.

“We are working as best we can to support everyone as we move on.”

Many Quest apartment owners are self-funded retirees who invested in a Quest apartment on the basis of a fixed rental return which does not vary depending on the performance of the business.

In April, Ms Waterhouse, a partner at Waterhouse Lawyers, secured a small victory for Quest landlords when her tenant agreed to adhere to the code of conduct for commercial tenancies and pay a reduced rent in proportion to the reduction in turnover.

Prior to her actions, CEM had sought to pay no rent at all between April and July.

“CEM also agreed to provide an amount of rent payable under the Code together with evidence of revenue within seven business days of the end of the month,” she said.

But Ms Waterhouse said she was growing increasingly concerned given the three hotel closures by CEM and the fact that it had to date not provided the agreed rent and revenue statement for September.

She said attempts to contact senior Quest management and its legal department have been unsuccessful.

Ms Waterhouse, who was relying on the income from her Quest investment to fund her retirement, said most investors were mum-and-dad types.

In explaining its decision to cease trading the Chapel Street hotel, CEM said the COVID-19 pandemic and current restrictions in Melbourne “have had a catastrophic impact on the business”.

“Furthermore, there are significant obstacles for recovery in the form of the protracted nature of the Victorian government’s recovery road map and the disjointed actions of each of the states and territories in Australia in opening their respective borders.

“It is widely accepted by industry experts and economists that the hospitality industry has been, and will continue to be, one of the hardest hit industries in Australia.