D & D Enterprises (Qld) Pty Ltd v Hara Lambos Pty Ltd and Comino [2001] RSLT 20

1 [2001] RSLT 20 THE RETAIL SHOP LEASES ACT In the matter of Dispute 90/00 D & D ENTERPRISES (QLD) PTY LIMITED - Claimant - and - HARA LAMBOS PTY LIMITED & QUEENIE COMINO - Respondents DECISION Given in Brisbane on 16 July, 2001. -- 1 of 6 -- D&D Ent -v- Lambos & Anor 2 Decision The jurisdiction of this Tribunal with regard to outgoings is laid down in s.109(3) of the Retail Shop Leases Act 1994. The relevant portions read: A Tribunal has jurisdiction to hear a retail tenancy dispute about - (b) the basis on which lessor's outgoings are payable by and the procedure for charging lessor's outgoings to a lessee under a retail shop lease, but not the actual amount of the outgoings; or (c) whether an item or part of an item of the lessor's outgoings for the retail shopping centre or leased building in which a leased shop is situated was reasonably incurred in, or directly attributable to, the operations, maintenance or repair of the centre or building. The Belmont Road Shopping Village (hereinafter referred to as "the centre") consists of three separate structures, each being a freestanding building. The claimant is the tenant of one of the structures, namely, that constructed for and used as a child minding centre. This centre or structure is independently fenced, with a small amount of carparking outside the fence. The other structures are a tavern which, before being converted to a tavern, contained retail shops and a retail shopping building occupied by numerous retail traders. Clauses 5.12 and 5.13 provide for the manner in which outgoings are to be paid by the tenants. A distinction is made between each of the freestanding buildings (one of which is the child minding centre), and what is referred to as the major building. Clause 5.12 gives the landlord a discretion to distribute outgoings in an equitable manner. We set out clause 5.13: 5.13 Contribution to Outgoings - The Tenant shall contribute to the outgoings for each Accounting Period in the proportion that the area of the Demised Premises bears to the total Lettable Areas of the Centre, which proportion as at the Date of Commencement is expressed as a percentage set out in the Reference Schedule, provided however that:- 5.13.1 where any of the rates taxes charges or other levies payable to any local or other authority in respect of the Centre are paid directly by any tenant then any balance of the same payable by the Landlord shall be contributed by those tenants who have not been required to pay any such levies directly to the said authorities in the proportions which the Lettable Area occupied by each such tenant bears to the total Lettable Areas occupied by all such tenants; and 5.13.2 the tenant or tenants of each of the two free standing -- 2 of 6 -- D&D Ent -v- Lambos & Anor 3 Decision buildings forming part of the centre shall pay the total of outgoings for lighting cleaning maintaining repairing removing of refuse and supplying other services and consumables in respect of the building it occupies but shall not contribute to such outgoings in respect of the major building forming part of the Centre which outgoings shall be contributed to by those tenants of the major building in the proportions which the Lettable Areas occupied by each such tenant bears to the total Lettable Area of the major building. The dispute in this matter involves an interpretation of this clause and investigations as to whether certain expenses or outgoings charged to the claimants relate to the major building and therefore cannot be claimed by the respondents against the claimant. The parties have referred to the expenses incurred in respect of each of the three structures or three main buildings as the main expenses; and those attributable to the centre as a whole and not severable, so as to be attributable to each of the main buildings, are referred to as the basic expenses. The claimant's allegation is that expenses which should have been referred to as main expenses or categorised as such have been categorised as basic expenses. The lease between the parties was executed by the respondents on 3 rd September 1998 and by the claimant on 2 nd September 1998. A statement has been filed by Minh Dao on behalf of the claimant. In clause 17 of that statement, Dao alleges that a statement of the operating expenses of the centre was provided by the respondents' accountants as part of the negotiations and in terms of the material provided a large number of items now claimed as operating expenses falling into the category of "basic expenses" were excluded from payment by the claimants as tenants. He said that, had he not been misled by misrepresentations, he would not have entered into the lease. The Chairman suggested to Mr Stevenson, an articled law clerk appearing on behalf of the claimant, that if a claim was based on misrepresentations inducing the lease, then it had to be raised before it could be relied on. An opportunity was given to the claimant's representatives to discuss the matter with Mr Stevenson, who subsequently informed the Tribunal that the claimant was not relying on a misrepresentation inducing the lease. For this reason, such a claim has been excluded from our deliberations. Clause 5.13 of the lease reads: 5.13 Contribution to Outgoings - The Tenant shall contribute to the outgoings for each Accounting Period in the proportion that the area of the Demised Premises bears to the total Lettable Areas of the Centre, which proportion as at the Date of -- 3 of 6 -- D&D Ent -v- Lambos & Anor 4 Decision Commencement is expressed as a percentage set out in the Reference Schedule, provided however that:- 5.13.1 where any of the rates taxes charges or other levies payable to any local or other authority in respect of the Centre are paid directly by any tenant then any balance of the same payable by the Landlord shall be contributed by those tenants who have not been required to pay any such levies directly to the said authorities in the proportions which the Lettable Area occupied by each such tenant bears to the total Lettable Areas occupied by all such tenants; and 5.13.2 the tenant or tenants of each of the two free standing buildings forming part of the centre shall pay the total of outgoings for lighting cleaning maintaining repairing removing of refuse and supplying other services and consumables in respect of the building it occupies but shall not contribute to such outgoings in respect of the major building forming part of the Centre which outgoings shall be contributed to by those tenants of the major building in the proportions which the Lettable Areas occupied by each such tenant bears to the total Lettable Area of the major building. Examination of this clause reveals the following:- ƒ Clause 5.13.2 provides for the tenants of each of the two freestanding buildings to pay the total outgoings for lighting, cleaning, maintaining, repairing and removing of refuse and supplying other services and consumables in respect of the building it occupied, but negates a duty to contribute to such outgoings in respect of the major building. The two freestanding buildings are referred to as "main" buildings and payments in respect of these are referred to as "main payments." ƒ Clause 5.13.1 provides that where any rates, taxes, charges or other levies payable to any local or other authority in respect of the centre are paid directly by any tenant, then the balance becomes payable by the landlord and those tenants who have not been required to pay any such levies directly to the authorities in proportion to the lettable area occupied by such tenants must contribute towards the landlords' payment. ƒ Clause 5.13 deals with what has been referred to as "basic contribution" and requires the claimant to pay a percentage (fixed at 11%) of total outgoings fixed to sub-clauses 5.13.1 and 5.13.2. The terms used by the parties are unfortunate. Main contributions or levies are those referred to as being payable by the tenants of the two freestanding -- 4 of 6 -- D&D Ent -v- Lambos & Anor 5 Decision buildings. However, the tenants of the main building are also required to pay towards the defined category in respect of such building. The third category referred to as the basic contributions are those payable in respect of the whole centre and which cannot be allocated to the tenants of the two main buildings or to the tenants of the main shopping centre. The basic expenses, about which the dispute arises, are set out in paragraph 8 of the affidavit of Minh Dao. The allegation made is that the items claimed do not relate to the premises leased by the claimant, but are expenses relating to the major building of the shopping centre. The contentions of the parties can be summarised as set out below. The claimant contends that the leased premises, namely, the child minding centre, is distinct from the remainder of the centre in that the claimants pay for maintenance, cleaning, rubbish removal, etc. On this basis, the general facilities of the centre and the costs of maintaining them are entirely costs which should be allocated to the occupant of the major building. The respondents contend that those facilities provided in the centre outside the two freestanding buildings and outside the major shopping area are facilities for the benefit of all tenants and have been correctly allocated between them, resulting in a sum being payable by the claimants. The evidence for the claimants is that the premises leased by them are virtually independent from the rest of the centre. As opposed to this, the respondents contend that these facilities are available to the users of the child minding centre, which include the use by those persons who drop off or collect children and, in the course of the same trip before or after picking up the children, park their motor vehicles in the parking facilities available to the centre. They may also make use of toilet facilities in the common area. For this reason, the claimants as tenants of the Child Minding Centre become liable for payment towards the expenses in cleaning, maintaining and landscaping facilities generally available. The difficulty which arises is whether people using common facilities as part of the same trip to pick up or drop off children are using them as users of the child minding centre, or users of them as customers of the tenants of the major building. We have no direct evidence in this regard and can only rely on our private observations and experiences in everyday life. It seems to us that it is impossible to apportion the use of such persons between their use in relation to the child minding centre and their use in relation to associated shopping. We further take the view that this was never intended. On our view of the facts, so long as it is shown that some use is made of common facilities by persons whose purpose in coming to the centre was associated with the child care centre, then the necessary link has been established. -- 5 of 6 -- D&D Ent -v- Lambos & Anor 6 Decision It is implied from what we have stated that we have come to the conclusion that such minimal link has been established. We look at the individual items which are alleged by the claimants to have been wrongly allocated on the basis that they apply to specific items in respect of the major building. The respondents have originally conceded in their written argument that various items have been incorrectly allocated. The respondents have undertaken to have these charges adjusted. They are conveniently set out on pages 13 and 14 in the claimant's written submissions. The last four items on page 14, namely, for security services, waste removal, recycling for paper bins, we take the view that these items do not form part of the basic expenses. We expect the respondents' auditors to make proper alterations incorporating these and others to which their attention is drawn, or of which they become aware. If there is a continuing dispute in this regard, we give the parties leave to come back to the Tribunal by arranging a date with the Registrar and by one party giving notice to the other. P V Loewenthal, Chairman. -- 6 of 6 --