Allegretto Pty Ltd v Chias Pty Ltd [2002] RSLT 3

[2002] RSLT 3 THE RETAIL SHOP LEASES ACT In the matter of Dispute 10/02 ALLEGRETTO PTY LTD - Claimant and CHIAS PTY LTD - Respondent DECISION Given in Brisbane on 6 August, 2002. -- 1 of 6 -- 10/02 2- Decision The tenant, Allegretto Pty Ltd (“Allegretto”) seeks compensation from Chias Pty Ltd (“Chias”) under a collateral agreement allegedly associated with its lease in a suburban shopping centre. (An alternative basis of the claim might be section 43[2][b] of the Act, but Allegretto did not plead that provision.) The directors of Allegretto signed the lease on 8 November 2001; Chias’ signed it in the first week of December. This claim is unusual in that none of the material facts is in dispute. THE FACTS In September 2001 Allegretto’s lease was about to expire. With the assistance of Mr Curtis, a retail consultant, Allegretto began negotiations for a lease from Chias of premises in a city building. That building was then being transformed from an indoor market area to residential accommodation above two levels of retail shops. Both parties were aware that Allegretto needed to re-commence trading as soon as possible. Allegretto trades as a pawnbroker, and there were outstanding loans to be dealt with and staff to be paid. On 18 September 2001 Messrs Smith and Strickland, directors of Allegretto, sent a letter of intention to lease to Chias’ agent1 seeking a commencement date of 1 December 2001 “or as advised by Lessor”. The proposed “handover” date (for fitout purposes) was 21 days earlier, i.e. 5 November 2001. The essential terms of the lease, including a provision for three months free from rent are set out in the same letter. Chias’ agent accepted the above offer by letter one week later.2 The Lessor’s Disclosure Statement, dated 10 October 2001 notes the commencement date as 1 December 2001. However, by mid-October 2001 the Lessor’s building work was behind schedule and Allegretto was becoming anxious about the threatened delay. There was an on-site meeting of the parties’ representatives and the project 1 Exhibit 1 2 Exhibit 4 -- 2 of 6 -- 10/02 3- Decision manager. By then it was clear that the premises could not be handed over to Allegretto by 5 November, and Chias sought an extension of the “handover” date to 16 November, with the lease to commence on 7 December 2001. (As appears in a letter from Allegretto’s solicitor to Chias’ solicitor (annexed to Mr Miller’s statement) Allegretto’s contractors were not ready to commence the fitting-out on 16 November.) However, Allegretto accepted the proposed changes, on the basis that (as Mr Smith put it) 3 “[Allegretto] would be compensated by an additional rent free month for each week or part thereof that the lessor’s works remained unfinished beyond 16 th November 2001.” Chias concedes that it accepted these arrangements, and they are reflected in the Lessees’ Disclosure Statement of 15 November 2001. Despite the best intentions of Mr Miller (for Chias) Allegretto did not gain entry on 16 November. The original arrangement was that Chias would install partitions between the leased premises and the neighbouring tenancy while Allegretto installed internal partitions to its own specifications. But on 16 November Chias’ builders were still installing ceilings and partitions, and it was impossible for each party’s contractors to work simultaneously. Therefore it was decided -- as early as September according to Mr Smith -- that Chias’ contractor would install internal partitions and do certain other work at Allegretto’s expense. That decision is reflected in the Agreement to Lease signed by A on 8 November 2001.4 In that document the nominated date for the “fitout” period to end is 6 December 2001.5 In accordance with the amended arrangements the “fitout” was partially completed by Chias. Then, commencing on 12 December, Allegretto fitted shelving and opened for business on 18 December 2001. 3 Statement Neville Allan S, paragraph 9 4 Clause 13.1 (2) 5 Reference Schedule : Item 5. -- 3 of 6 -- 10/02 4- Decision At that time some of the Lessor’s works were incomplete, including air- conditioning, some lighting and a bulk-head over the entrance from the common area. Mr Smith produced photographs showing relevant work in progress. We note that Allegretto has never received a Notice of Completion and that lighting of the requisite power has only recently been provided. During November and December 2001 correspondence flowed between the parties’ solicitors or between a party and its solicitor: • 6 November: Chias instructs its solicitors that it was prepared to remit rent in the amount of $4,800; • 16 November: Allegretto seeks an extra one month rent free: see Annexure MJM 1 to the statement of Michael Miller; • 27 November: Allegretto seeks an additional two months rent free; • 3 December: Allegretto repeats its request of 27 November; • 7 December: A complains that it was promised possession of the premises for fitout in the week immediately after 7 December and now demands an extra three months rent free ; • 20 December: Chias points out that the delay in giving sole possession was due to the work carried out for A and offered an additional two months rent free On 27 December 2001, without informing Chias that the latter’s offer of 20 December was rejected, A signed a Notice of Dispute, which it filed on 13 February 2002. In that document A sought by way of compensation an additional five months rent free, subsequently amended to six months. A contends that such compensation is within the terms of the amended collateral agreement of 24 October 2001. Chias issued its first rent invoice to A on 5 February 2002 6 , on the basis that the first rent period began on 1 January 2002. In that document Chias 6 Annexure MJM 5 to statement of Michael John M -- 4 of 6 -- 10/02 5- Decision allowed an extra two months rent free, plus thirteen rent free days in December 2001. Chias submits that Allegretto has enjoyed free occupation to the value of $4,800 for the delay to 16 November 2001. FINDINGS The Tribunal has difficulty applying the agreement of 24 October 2001 to the matter of delay. It appears that the relevant terms were never clearly documented. The original commencement date was 1 December 2001, following “fitout” period beginning on 5 November 2001. By agreement those dates were altered to 7 December and 16 November 2001 respectively. We were informed, without dissent, that a “fitout” period is commonly three weeks. In this case, by agreement, Chias carried out a substantial part of that task on behalf of the Tenant before 12 December, while it completed its own renovations. It follows, in our view, that the handover period was impliedly abbreviated, although the exact time involved is not clear. We note that Allegretto was let into possession on 12 December and that it was able to complete its fitout and open for business six days later, on December 18. Therefore, in our judgment, the actual delay to Allegretto’s resumption of business extended from 7 December to 18 December 2001, a period of between one and two weeks. Chias’ invoice of 5 February is evidence that it has: • allowed Allegretto two months’ rent free for that delay, in accordance with the amended collateral agreement; and • gratuitously allowed a further thirteen days (19 December to 31 December) rent free. Furthermore Chias has given the Claimant rent relief to the value of $4,800 for the delay from 5 November to 16 November 2001. -- 5 of 6 -- 10/02 6- Decision Accordingly we find that Allegretto has received full and fair compensation in accordance with the amended collateral agreement described above. No further compensation is warranted under the agreement or under the Act. The application is dismissed. ANNE FORBES Chairman. -- 6 of 6 --