Bruno Delights Pty Ltd v Alexiadis [2014] QCAT 88

CITATION: Bruno Delights Pty Ltd v Alexiadis [2014] QCAT 88 PARTIES: Bruno Delights Pty Ltd (Applicant) v Mr George Alexiadis (Respondent) APPLICATION NUMBER: RSL007-13 MATTER TYPE: Retail shop leases matters HEARING DATE: 22 October 2013 and 6 December 2013 HEARD AT: Brisbane DECISION OF: Member Allen Member Judge Member Macrae DELIVERED ON: 13 March 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. Mr Alexiadis is ordered to pay Bruno Delights the amount of $20,889.57 within 14 days of the date of this order. CATCHWORDS: RETAIL LEASE DISPUTE – claim for compensation by former tenant – breach of covenant for quiet enjoyment by lessor – tenant unable to remove their property from premises – claim for rent following termination Retail Shop lease Act s 42, 43 Kenny v Preen [1963] 1 QB 499 Shevill v Builders Registration Board (1982) 149 CLR 620 Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185 Curtin v Meadlow Holdings Pty Ltd [2001] QCA 145 APPEARANCES and REPRESENTATION: APPLICANT: Mr Alati, director appeared for Bruno Delights -- 1 of 8 -- 2 Pty Ltd RESPONDENT: Mr Alexiadis was self-represented REASONS FOR DECISION [1] Bruno Delights was the tenant of premises at 53 Johnston Street, Southport of which Mr Alexiadis was the Landlord under a lease dated 15 June 2012. The lease was to commence on 2 July 2012 with a term of 7 years. The premises were be used as take away shop selling amongst other things kebabs. The tenancy did not last through July and Bruno Delights has made claim for compensation and damages in respect of what it alleges was the wrongful termination of the lease on 27 July 2012. The ultimate claim was for $40,510.17 including legal costs of $5,050.00. [2] Bruno Delights made three payments to Mr Alexiadis. The first on 15 June 2012 in the amount of $15,000 being for Bond $7,850 and the first month’s rent $7,150. The second was paid on 29 June 2012 in the amount of $5,000 pursuant to an invoice issued by Mr Alexiadis for monies which were claimed to be due for insurances (1 year in advance); rates (1 year of rates in advance), gas, bank fees, pizza trays, packaging expenses and other miscellaneous expenses. A further amount of $1,279.40 was paid on 29 June 2012 to Mr Alexiadis to cover a cheque payment he made to one of the suppliers to the business, Total Packaging. Bruno Delights became aware that this payment had not been credited as they received a statement from the company showing the amount was still owing on 9 July 2012. [3] The amount of $5,000 paid by Bruno Delights was in response to an invoice dated 27 June 2012 from Mr Alexiadis. The invoice was untotalled but the items totalled $7,858.19 for:- Chattel insurance $1,820.00 Building insurance 950.16 Rates 1,200.00 Gas 693.78 Registration fee Bank approval and fees 800.00 Pizza trays 196.00 Schweppes 654.75 Carter Lester lawyers 165.00 Chattel registration 70.00 Chemicals (comm.kitchen) 162.86 Global 73.82 Right bag packaging 1,071.77 -- 2 of 8 -- 3 [4] The Tribunal notes that the outgoings set out in item 10 of the lease were chattel insurance, building insurance, rates and water including trade waste. Any of the above items which are not outgoings in accordance with the lease will otherwise have to have been for the benefit of Bruno Delights and for which it was liable having regard to the requirements of the lease and the Retail Shop Leases Act 1994. [5] A further invoice was received from Mr Alexiadis dated 10 July 2012. This showed the amount outstanding from 20 June 2012 was $1,578.74 acknowledging payments of $6,279 .12. Which would include the $5,000 and $1,279.40 payments. It is stated that all insurances have been paid in full. The second invoice also includes rental for this month which is said to be due on 25 July 2012 in the amount of $5,500.00. The rent is said to be in arrears. Bruno Delights also provided evidence to the Tribunal that they had paid the amount of $800 towards the lessor’s legal costs in respect of the lease. [6] Bruno Delights claimed that they were locked out of the shop on 27 July 2012 and that they were not able to recover their chattels and stock in trade which they ultimately valued at $6,244.97; most of these items are included in the amount mentioned above. Mr Alexiadis accepted that there were some items left on the premises which were on the list provided by Bruno Delights to the value of $1,524.26. [7] Mr Alexiadis counterclaimed an amount of $25,192.21 owing to him, being for Unpaid rent 1st August to 28 October 2012 $20,527.41 Chattels insurance 433.80 Building insurance 226.00 Smart gas equipment 12/8/12 1,667.00 20/8/12 1,788.00 OZ fire 200.00 Cracked sliding door window 350.00 Invoices were provided for the Ozfire, Smartgas, and window accounts. Mr Alexiadis is also claiming payment of the Gold Coast City Council Water rates in the amount of $1,230.98 for the period 1 July 2012 to 31 December 2012. [8] Bruno Delights through their solicitors Ramsden Lawyers made a demand on Mr Alexiadis by letter of 14 November 2012 for payment of $36,010.16 which were described as costs thrown away in setting up the business. Claiming that by his actions he had consistently interfered with Bruno Delights quiet use and enjoyment under the lease. That he had installed new locks on the premises and used these to lock Bruno Delights out on 27 July 2012 and this was done without serving a notice under s 124 of the Property Law Act 1974. That this unlawful entry into possession of the -- 3 of 8 -- 4 lease and wrongful termination of the lease gave Bruno Delights a right to terminate the lease. [9] Mr Alexiadis alleged that Bruno Delights through Mr Alati, its director had indicated at a meeting held on 26 July 2012 that the company would not be able to pay the next months rent and that it had been agreed that the company would vacate the premises on 27 July 2012. Further that a notice under s 124 had been served at the premises on 10 July 2012 and Mr Alexiadis had a witness who provided a statement and confirmed at the hearing that this had occurred. [10] Mr Alexiadis asserted that the rent was payable on the 25th of each month and it is alleged by Mr Alati that he made demands for the rent, which by invoice 409313 issued on 10 July that rent was due on 25 July 2012. The lease shows that the term commenced on 2 July 2012 and the rent due date is the first day of each month (item 4). This is repeated in clause 3.1 of the lease. Though clause 3.6 states the rent and outgoings are due on the 25th day of each month. This may relate back to the original intended commencement date of the lease which was set out in the disclosure statement as 25 June 2012. The Tribunal is satisfied based on the fact that the lease commenced on 2 July 2012 that the rent would be payable in advance on the first day of each month in accordance with the items schedule and clause 3.1. On this basis Bruno Delights was not in breach of the lease in regard to the payment of rent as of 27 July 2012 and there was no ground for Mr Alexiadis to make any demand for payment of rent on 25 July 2012. [11] At the hearing Mr Alati agreed that he had had a meeting with Mr Alexiadis on 26 July 2012 and that he had agreed to vacate the premises on 27 July but only because he was afraid that he would be locked out if he did not vacate and was intending to seek legal advice on that day to ascertain what his rights were under the lease. Mr Alati stated that he saw an application to transfer the food licence for the premises which was in the name of Mr Alexiadis entity on a table when he visited him on 26 July 2012. [12] There were a series of emails and letters provided to the Tribunal emanating from Mr Alexiadis which showed his ongoing concern in regard to various matters including the cleanliness of the premises, smoking by Mr Alati, unauthorised use of carparks. Bruno Delights argued that the inspections and interference by Mr Alexiadis amounted to harassment. Mr Alexiadis asserted that he had a right to inspect under various clauses of the lease in particular as he had leased various chattels to Bruno Delights. One of the actions of Mr Alexiadis which he has not denied is that he removed the gas hoses from some fryers following an inspection which meant that they could no longer be used. [13] The events of the 27 July 2012 commenced with an inspection by Mr Alexiadis accompanied by an observer Mr Astin in the early hours of the morning. It is not denied that frozen food items were taken by Mr Alexiadis from the freezer and placed in tin boxes with ice and left -- 4 of 8 -- 5 outside the premises. This is confirmed by an email sent by Mr Alexiadis at 2.48a.m. When Mr Alati attended the premises in the morning he claimed he was locked out and took the food stuffs which had been placed in the tin boxes this is also confirmed by Mr Astin. Mr Alexiadis claims that access would have been available through the rear doors but this was not confirmed by Mr Astin and Mr Alati. While there were attempts to enable more of Bruno Delights chattels and stock in trade to be recovered the only item which was recovered was an eftpos machine. [14] The lessor has a right to enter and view the condition of the premises at all reasonable times in accordance with clause 6.3 of the lease and 22.1.9 in respect of the lessor’s chattels. These inspections must not breach the tenant’s right to quiet enjoyment under clause 12.1 of the lease. In that regard deliberate and persistent attempts by the lessor to drive the lessee out of possession of the demised premises by persecution and intimidation, including threats of physical violence (not relevant here) and removal of the lessee’s belongings will amount to a breach of the covenant of quiet enjoyment1. [15] The Tribunal considers that the actions of Mr Alexiadis in relation to his demanding inspections at times and frequencies which would not be considered reasonable, demands for rent when no rent was due constitute a breach of the covenant of quiet enjoyment. While Mr Alati has said that he stated he would leave the premises this was as a result of Mr Alexiadis harassment and in particular the demands for rent which was clearly not due for another week. [16] Mr Alexiadis has claimed that the premises were unclean and unhygienic which is denied by Mr Alati. The witnesses who provided statements for Mr Alexiadis included Mr Marano who was only able to say that Mr Alati did not keep the premises as clean as Mr Alexiadis would have. That is not to say that they were unclean. Mr Astin in his oral evidence stated that there was one tray that was greasy and a smell in the freezer and he could not say whether Mr Alexiadis had been in the shop before him. This is relevant as there was evidence of chicken labelled poisonous in the freezer. The Tribunal notes that Mr Alexiadis did not provide any photographic evidence nor was there a report made to the local council health department which would appear to be the normal course of action in a case like this. [17] The Tribunal notes that clause 19 of the lease deals with the right of the tenant to remove their fitting and contents within 14 days of the termination of the lease and if this is not done then they must be stored at a public warehouse by the landlord at the tenants cost and risk or if not so removed they will be deemed to be abandoned. Stock in trade is to be removed and the landlord is required in circumstances such as this to allow access to the premises to do so. 1 Kenny v Preen [1963] 1 QB 499 at 513. -- 5 of 8 -- 6 [18] In cases where the lessor has terminated a lease the lessee may be entitled to compensation or damages where the lessor is in breach.2 In the Curtin case the premises were a snack bar and the lessee was in arrears with the rent. The lessor locked the tenant out and Thomas JA held by that action the lessor had terminated the lease. The lessee was held to be entitled to compensation in respect of their fittings, contents and stock in trade. In the Hawkesbury case it was held that the lessor was not entitled to rent following termination of the lease if the lessor was in default in accordance with the decision in Shevill v Builders Registration Board (1982) 149 CLR 620. The measure of the lessee damage was said to be that which would be assessed for breach of contract and the damages are the means of placing the plaintiff in the position they would have been in had the contract been performed including expectation loss. It is noted that there is no claim here for loss of profits. [19] Bruno Delights is seeking its costs thrown away in entering the lease and its legal fees. This would include amounts for accountancy and legal fees and payments to utilities. The Tribunal did not receive any material to support the claims for legal and accountancy costs and there was no grant of legal representation for Bruno Delights. The Tribunals consideration of the claim will be limited to the amounts paid by Bruno Delights to Mr Alexiadis, the entitlement if any of Mr Alexiadis to those payments and a claim in respect of the chattels, contents and stock in trade which were not able to be retrieved from the premises. [20] The Tribunal has jurisdiction to hear retail tenancy disputes in accordance with s 103 of the Retail Shop Leases Act 1994. Where the claim is in respect of compensation the Tribunal may also entertain a claim for arrears of rent. In this case s 43 of the Act would apply as the lessor is liable to pay compensation for loss or damage suffered by the lessee because the lessor causes the lessee to vacate the leased shop before the end of the lease. The Tribunal is satisfied that the actions of Mr Alexiadis have caused Bruno Delights to vacate the leased shop and therefore Mr Alexiadis is liable for the loss or damages suffered. [21] As mentioned Bruno Delights made payments to Mr Alexiadis which total $21,279.40 in respect of rent, the bond and outgoings and other associated amounts. There were outgoings set out in the lease. There was also an amount of $800 paid to Carter Lester Lawyers for Mr Alexiadis legal costs in respect of the lease. Bruno Delights is not liable to pay those legal costs in accordance with s 48 of the Retail Shop Leases Act 1994. Bruno Delights occupied the premises between 2 July 2012 and 26 July 2012 a total of 25 days. It is therefore liable to pay the rent and outgoings attributable to that period, which is 25/365th of the amount payable, except for water rates which are for a 6 month period and so 25/184. The total payable for rent and apportionable outgoings was as follows:- 2 Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185 and Curtin v Meadlow Holdings Pty Ltd [2001] QCA 145. -- 6 of 8 -- 7 Rent $85,800.00 Chattel insurance 1,820.00 Building insurance 950.16 Rates 1,200.00 Water rates 1,230.98 Total $91,001.14 [22] The amount payable is then $89,770.16 x 25/365 which equals $6,148.64 and $1,230.98 x 25/184 which equals $167.25 which all together totals $6,315.89. There were other items included on the invoice some of these were to be used in the business which total $2,159.20 being for pizza trays, Schweppes, chemicals, global and right bag packaging. They will be dealt with when considering the entitlement for compensation for loss of items which could not be retrieved from the business premises. There was a further amount of $1,035.00 for registration fees, Carter Lester lawyer fees and chattel registration fees. Those items are not outgoings and are not otherwise allowable under the lease or the Retail Shop Leases Act 1994. [23] Mr Alexiadis also counterclaimed for further amounts for insurance which will not be allowed as his entitlement in that regard has been determined above. There was also a claim for repairs to equipment in the amount of $3,455.00 paid to Smart Gas. The only damage he could outline to the Tribunal was to the back of a stove. The claims for these repairs will be disallowed. The OZfire invoice in the amount of $220 was for work which ultimately Mr Alexiadis took the benefit and was not an apportionable outgoing. There was also a claim for a window repair the invoice was for work performed in 2013 and clearly relate to a period after the termination of the lease. Mr Alexiadis also as discussed above has no entitlement to rent after the date of termination of the lease as he was in default and so his counterclaim in the amount of $20,527.41 is disallowed except in regard to water rates which have been included above. [24] Of the amount of $21,279.40 which was paid to Mr Alexiadis he has an entitlement to $6,315.89 and Bruno Delights is entitled to the balance of $15,046.45 plus the legal costs of $800.00 which then totals $15,846.45. [25] There is also consideration of the amounts to be allowed for items which could be retrieved from the business premises. Bruno Delights has claimed $6,244.97 and Mr Alexiadis has accepted that items with a total value of $1,524.26 remained at the premises. The only items about which there is agreement that they were retrieved by Bruno Delights were the frozen goods left outside the premises, so the total will be adjusted for these items in the amount of $251.97. Bruno Delights have invoices for the items purchased for the business the Tribunal accepts the evidence of Mr Alati which is corroborated by Mr Astin that the only items removed were the frozen goods placed outside the shop. Mr Alexiadis has acted in breach of the lease in taking possession and has not allowed Bruno -- 7 of 8 -- 8 Delights adequate time to remove their goods, chattels and stock in trade. Bruno Delights is therefore entitled to damages. [26] This will be adjusted for the amount which Mr Alexiadis claimed on his invoices for consumables. Of this amount he will be given credit for those items apart from the right bag packaging which Bruno Delights did not request in the amount of $1,071.77, with a reduction in the amount for gas as a gas bottle was returned and the amount for gas should be $346.89 that is a total of $740.54. [27] While Bruno Delights has provided invoices as proof of purchase of the majority of the items at least a portion of those which are consumable could have been consumed in the business during the period that it operated. No evidence has been produced as to what was consumed except in regard to packaging where the claim is for 80%, if that is applied to the other items which were foods and consumables which totalled $1,046.67 then the amount allowed should be reduced by $209.34. [28] Of the amount claimed of $6,244.97 the amount which should be allowed is:- Total claimed $6,244.97 Less Frozen goods 251.97 Goods consumed 209.34 Owing to Mr Alexiadis 740.54 Total $5,043.12 [29] The total amount then which Bruno Delights is entitled is $15,846.45 and $5,043.12 which equals $20,889.57. Mr Alexiadis is ordered to pay Bruno Delights the amount of $20,889.57 within 14 days. -- 8 of 8 --