Brodies Qld Pty Ltd and Tri-Step Pty Ltd v Guraya Investments Pty Ltd [2006] RSLT 3

1 [2006] RSLT 3 THE RETAIL SHOP LEASES ACT In the matter of Dispute No 2005/0077 BRODIES QLD PTY LTD TRI-STEP PTY LTD - Claimant - and - GURAYA INVESTMENTS PTY LTD - Respondent EX TEMPORE DECISION Coram: G Lee (CHAIRMAN) N Judge G Somerville Given orally in Brisbane on Wednesday, 15 March, 2006 -- 1 of 4 -- Brodies Qld Pty Ltd & Tri-Step Pty Ltd-v-Guraya Investments-2005/0077 15 March 2005 2 Decision This Notice of Dispute was lodged by the Claimant on 14 July, 2005 against the Respondent Landlord, Guraya Investments Pty Ltd. The demised premises are Shop No 1, Forest Court Convenience, 85 Joseph Banks Avenue, Forest Lake. A Directions Hearing was held on 7 October, 2005 and the matter was ultimately set down for hearing today. The original lease, the subject of these proceedings, was entered into on 18 March, 1998 to run for 10 years expiring on 17 March, 2008, between Brodies, the tenant, and a former Landlord. The Respondent Landlord purchased the property including the demised premises in or about November 2002. Prior to taking possession of the premises in 1998, the Lessee, Brodies, raised with the then Landlord issues in relation to the pooling of water on the floor in the kitchen area. As a result of that, the then Landlord attempted to cure this by laying a further layer of tiles on top of bedding over the existing layer of tiles.. The Claimant’s case in this matter is essentially based on Subclause 25.1.2 of the lease. Clause 25 is headed “Brodies Standard Clauses” and the subheading “Landlord’s Additional Covenants”. Subclause 25.1.2 states as follows: The Landlord shall rectify as soon as practicable any defect in the foundations, walls, floors, roof, ceiling, plumbing and other facilities of the premises provided by the Landlord found to be defective by reason of design, material or workmanship. In support of that claim, the Claimant has provided a Surveyor’s Report by Building Survey Australia and the report is dated 16 March, 2005. It’s fair to say that the report effectively says that the installation of the tiles in the kitchen area is badly deteriorating, including cracked tiles, dislodged tiles, drummy tiles, deteriorating and dislodged jointing grout. The conclusion of the report states, among other things, as follows: The rework to the floor tile process including an ‘over tile’ of the existing floor tile process is poor tradesman like practice and could contribute to the shortened longevity of the installation. It is questioned whether an appropriate laying process was used (i.e. the tiles appear to be bedded in the sub-strate mortar bed). Silastic (rubberised) glue on top of the sub-strate together with 2-pak epoxy jointing grout is considered to be -- 2 of 4 -- Brodies Qld Pty Ltd & Tri-Step Pty Ltd-v-Guraya Investments-2005/0077 15 March 2005 3 Decision the appropriate installation method. The recommendation of the report was that: It is strongly recommended to upgrade the commercial kitchen tile installation including the use of non-slip tiles and an appropriate laying process. Also, during the hearing, an invoice was produced by the Respondent dated 16 July, 2004 from Formula Maintenance, a contractor who had performed certain work on the tiles in the kitchen area in about July 2004. Formula Maintenance’s invoice reads in part as follows: Laid 21 floor tiles on what appeared to be road base and concrete. Advised by Aaron when returned to site that tiles had not adhered to areas in heavy water areas On the other hand, the Respondent’s case is that the tile problem in the kitchen area of the demised premises is a repair problem. Reliance is placed on Subclause 10.6 of the lease. Clause 10 is headed “Alterations to Premises” and the subheading is “Tenant’s Obligation to Maintain”. 10.6 The Tenant must: (a) keep the premises and any fixtures, fittings, furnishings and other property owned by the Landlord in good repair excluding fair wear and tear, fire, storm, flood, Act of God or other cause beyond the control of the Tenant. (b) replace damaged plate glass and those floor coverings and furnishings owned by the Landlord in the premises. In this respect, the Landlord has provided as part of its case a report from Scientific & Engineering Consultants dated 2 December, 2004. The background of the report and the basis upon which that report was obtained is as follows: Issues have arisen with floor tiles in a food preparation area and either the matter of cause and effect or the method of remediation required the type of grout be conclusively categorised as epoxy or not and, if not epoxy, your tests will determine what type of grout it is. The conclusion of the report states as follows: -- 3 of 4 -- Brodies Qld Pty Ltd & Tri-Step Pty Ltd-v-Guraya Investments-2005/0077 15 March 2005 4 Decision The grout consisted of fine mineral aggregates bound by an epoxy polymer (which is typical for a food preparation area). The Tribunal notes that that report tends to focus on the type of grout and not anything else. It was not concerned with the content of the bedding layer beneath. The Respondent also relies upon evidence to the effect that the tile problems in the kitchen are as a result of the Claimant’s operations and the method of the operations. Weighing up all the evidence, the Tribunal accepts the Claimant’s claim in this respect. It accepts that the defect in the works is within the meaning of the Subclause 25.1.2. That clause overrides other general clauses in the lease in this respect. In that respect, the Tribunal will make the following orders: 1. That the Respondent Landlord complete all rectification work of the entire kitchen floor area of the demised premises within a reasonable time but no later than three months from today. Such works are to be in accordance with Brodies’ specifications at the time of entering into the lease. In this respect, the Claimant Lessee is to remove all equipment from the kitchen for the purposes of the rectification works and then to replace them at the conclusion of the rectification works. In respect of the loss of revenue or income if you like for the period of time in which the works are to be carried out, the Tribunal accepts that five days is reasonable. The Tribunal accepts that the quantum of this part of the claim as prepared by the Claimant’s accountant is reasonable in the circumstances. Accordingly, the second order of the Tribunal will be: 2. That the Respondent pay the Claimant the amount of $10,158 within a reasonable time. In this jurisdiction, there is no question of costs. G. Lee, Chairman -- 4 of 4 --