Adlam v Bonnibrook P/L [1994] RSLT 7

_____________________________________________________________________ _____ [1994] QRSLT 7 RETAIL SHOP LEASES ACT 1994 In the matter of Dispute No. 13 of 1994 PAUL ANTHONY RICHARD ADLAM Tenant - and - BONNIBROOK PTY LIMITED - Landlord Coram: P Loewenthal J (Chairman) Mrs S Kairl (Member) Mr M Macrae (Member) DECISION on Thursday, 17 November 1994 in Brisbane _____________________________________________________________________ -- 1 of 9 -- _________ -- 2 of 9 -- Adlam-v-Bonnibrook 3 Decision The claimant, Paul Anthony Richard Adlam, entered into an Agreement for Lease dated 1 October 1993 with Bonnibrook Pty Limited. The lease was in respect of a coffee shop which was being constructed by the respondent as part of a shopping centre known as the Deception Bay Shopping Centre. The Agreement for Lease provided for a five year lease and dealt with the completion of the shopping centre, the coffee shop and its shopfitting by the claimant. In particular, in paragraph 5 of the Agreement for Lease, the following appears: - 5.3 The Lessee shall ensure that completion of the fitout work is effected in accordance with the provisions of the Tenancy Fitout Guidelines, the ordinances and bylaws of the Caboolture Shire Council, and all rules, regulations, bylaws, orders and directions of every competent authority in any way dealing with the Lessee's fitout works. The Lessee shall observe and be bound by the provisions of the Tenancy Fitout Guidelines and shall, without limiting the generality of the aforegoing: .comply with and be bound by any directions given by the Development Manager to the Lessee in accordance with the Tenancy Fitout Guidelines; .cause its servants, agents, contractors and consultants to comply with and be bound by any directions given by the Development Manager to such servants, agents, contractors and consultants in accordance with the Tenancy Fitout Guidelines. 5.4The use and occupation of the demised premises by the Lessee during the fitting out period shall only be for carrying out such work required to fit out the demised premises, and shall be at the Lessee's risk in all respects, and the Lessee hereby agrees to indemnify and keep indemnified the Lessor against all claims, demands, writs, suits, proceedings, judgments, orders, decrees, costs, damages, losses and expenses of any nature whatsoever which the Lessor may suffer or incur or become liable for in connection with or in any way arising out of such fitout by the Lessee. The lease continues:- 6. FITOUT PLANS 6.1In accordance with the Tenancy Fitout Guidelines the Lessee shall submit five (5) copies of its final interior design and full specification to the Lessor for approval. The design and specification shall fully describe all works to be carried out by or on behalf of the Lessee. 6.2If the Lessee's design necessitates, in the opinion of the Lessor, any -- 3 of 9 -- Adlam-v-Bonnibrook 4 Decision alteration or addition to the Lessor's Development works: (a)the Lessor will advise the Lessee of the cost of such alteration or addition and the reasons therefore; (b)the Lessee shall elect either to alter its design or to accept the alteration or addition and agree to bear the cost thereof. 6.3If the amendments required by the Lessor or by the Lessee effect the Lessee's design the Lessee shall submit amended plans for approval and clauses 6.1 and 6.2 shall apply in relation to such amended plans. 6.4Upon the Lessor approving the Lessee's plans the Lessor shall deliver one copy of the plan endorsed with its consent to the Lessee and one copy to the Lessor's builder on site and shall retain the other copies. 6.5The Lessee shall be solely responsible for obtaining any necessary local or other authority approvals to its proposed fitout works. if any authority requires any amendment to the Lessee's plans then the amended plans shall be submitted to the Lessor for approval and clauses 6.1 and 6.2 shall again apply. 6.6All costs of the Lessor's consultants, including the Lessor's architect, consulting engineer and air-conditioning consultant in perusing the Lessee's fitout plans shall be borne by the Lessee and paid by the Lessee as required by the Tenancy Fitout Guidelines. The Fitout Guidelines referred to in the Agreement for Lease were attached to the Agreement for Lease. They provide that Theiss Contractors Pty Limited is the head contractor. Burns Bridge (Australia) Pty Limited (referred to as "BBA") was appointed tenancy co-ordinator to guide tenants in the timely completion of their fitouts. Jamie Garden and Damien Toppi were nominated as the representatives of BBA. For convenience, I set out some of the clauses of the Tenancy Fitout Guidelines: "2.5.2 Service Checking Fees All costs of the lessor's consultants, including the lessor's architect and consulting engineers in perusing the lessee's fit-out plans shall be borne by and paid by the lessee. At the time of submitting shopfitting drawings and specifications for approval by Bonniebrook Pty limited, the Tenant is also required to submit fully completed Design Detail Forms (See Appendix B), together with a Service Checking Free of $300. Any requirement for additional checks -- 4 of 9 -- Adlam-v-Bonnibrook 5 Decision will incur further checking fees. Completed Design Detail Forms and your design drawings will be forwarded to the Landlord's services designers to ensure the Landlord's proposed service provision are compatible with the tenancy design. Any alterations deemed necessary to accommodate your design will be notified to you by the Tenancy Co-ordinator, together with an indicate value of the design and installation costs. Implementation of the design amendments and construction of the works on site will be organised by the Tenancy Coordinator on receipt of a Tenancy Variations Order authorising this work to proceed and payment of the $300 fee by Tenant. 3.3Programmes Prior to the documentation submission date the designer shall submit to the Tenancy Coordinator a detailed programme for all aspects of the fit-out delivery. The programme must show all stages and trades and shall illustrate weekly time intervals. The Tenancy Coordinator shall monitor the progress of fit-out against this programme. Should delays arise at any stage, remedial measures will be implemented to overcome such delays as agreed with the Tenancy Coordinator, eg overtime/change of suppliers. Any costs arising from such action will not be borne by Bonniebrook Pty Limited or the Tenancy Coordinator. 3.5.2Concrete Floor The concrete floor to be installed by the Lessor will be placed by the Head Contractor in the normal building sequence. Should the tenant require underslab services laid prior to the floor placement, then all such Tenant Variations must be ordered by the Tenant via the Tenancy Coordinator. Any costs to alter the concrete floor once poured will be to the cost of the Tenant. 3.5.7 Service Connections Service connection points are available as designated on the drawings. The capacity of services provided by the Lessor are as follows:- (i)Power63A single phase 12 pole sub-board at the rear of the tenancy -- 5 of 9 -- Adlam-v-Bonnibrook 6 Decision (ii)Telephone3 Pair cable terminating in distribution box located adjacent to electrical sub-board (iii)Water Supply 20mm diameter cold water supply (iv)House Drain 100mm diameter stub for sink to common drain (v)Trade Waste No special provisions have been made for trade waste or grease arrester. Should these be required a trade waste system will be designed by the Lessor and installed by the Head Contractor at the lessor's cost. The claimant appointed Innovation Shopfitters Pty Limited (Innovation) as shopfitters to carry out the complete shopfitting of the coffee shop. Innovations submitted design and fitout plans for the premises. The checking fee of $300 was paid. The design plans clearly refer to butane cooker as well as a completed form B/B. This form refers to a four burner cooktop. It also refers to a deep fryer and oven, which the design plans clearly indicate are to be gas operated. Form D/B, which refers to mechanical services, has a column for heat generated in respect of each appliance. The unit required is watts and the form has been filled in. In our opinion and on the evidence given, a watt is a general unit of energy and does not necessarily refer to electricity, as contended for by the defendant. It is clear to us that both the claimant and Innovations believed that gas was to be provided to the premises. Even the employees of BBA probably accepted this as a provision, as when it was pointed out that no gas was available, remedial steps were contemplated but never carried out. Our task is to examine the documents and see whether the belief of the claimant and Innovations was the proper inference from the documents. Attention has been drawn to the words, "are available as designated on the drawings." The drawings provided by BBA to Innovations do not show service connection points. On the other hand, clause 3.5.7(v) is quite express in its provisions. We accept that this clause is a clear statement or representation made by BBA on behalf of the defendant that gas will be provided to the demised premises. The fact that a connection point is not shown on the drawings does not detract from the clear statement that gas supply will be provided. We point out that we are interpreting a document provided by and on behalf of the respondents. The claimant sets out that there are three general areas of claim: - (a)failure by the landlord to supply gas to the tenancy; (b)the carrying out of certain plumbing and building works without the claimant's permission as required by the Tenancy Fitout Guidelines; and -- 6 of 9 -- Adlam-v-Bonnibrook 7 Decision (c)certain miscellaneous disputes. Area (a) arose because after Innovations had commenced work, including the bringing of gas heating equipment to the premises, they found that no gas was available. No remedial action was taken by the landlord, and the gas equipment had to be replaced. This has given rise to claims for the additional cost of a greater capacity switchboard, the additional cost of electric over gas appliances, and the continued additional cost of using the more expensive gas instead of electricity. Claim (b) relates to internal plumbing work and in particular plumbing work below the slab of the premises. Claim (c) relates to certain minor items which we deal with in due course. At a late state of the proceedings, Mr Lance, who appeared on behalf of the defendant, raised the question of the jurisdiction of the Tribunal. He contended that under s.40 of the Retail Shop Leases Act the Tribunal had no power to make an award in the nature of compensation or damages. He refers to the words, "pay money" in s.40(1)(a), and says that "money" means a liquid sum. The Chairman has rejected Mr Lance's submission. Section 15(1)(b) refers to "reasonable compensation for injury suffered by the tenant." It is quite clear that such reasonable compensation does not mean a liquid sum. As an order for such compensation must be made under s.40, it follows, in the Chairman's conclusion, that s.40 permits the award of such liquid sum. The claim, based on the failure to supply gas, insofar as it relates to the additional cost of the switchboard and the electrical heating equipment, has not been proved to our satisfaction. The claimant has paid out more money. On the other hand, he is now the owner of electrical equipment instead of gas equipment. We are told that normally the maintenance of electrical equipment is less than that of gas equipment, although the claimant, in his evidence, notes that this is not his experience. His experience is limited to less than a year and cannot give us a general indication. We have no evidence before us which indicates the present value of the electrical equipment. It may well be that the electrical equipment has held its value much better than gas equipment would have. This value is there for the benefit of the claimant. Assuming that the claimant sells his business at this stage, he may well be able to claim a higher price because of the electrical equipment. If he retains the business, he may well have something more valuable than if he used gas equipment. In the absence of evidence, there is no basis for a finding in his favour. With regard to the increased cost of gas over electricity, the only information put before us is by the claimant. These calculations form Annexure B to his statement. We accept that he has the expertise to make such calculations based on his evidence that he has 13 years experience as an electrical fitter and -- 7 of 9 -- Adlam-v-Bonnibrook 8 Decision electrical sales engineer. No great expertise is needed to make such calculations. During the course of the hearing the respondent's witnesses were asked to comment on these calculations by a Member of the Tribunal. They all declined to do so. We therefore have the uncontradicted evidence of the claimant that the additional cost of using the fryer is $138 per month and of the range, $16.97 per month, making a total of $157.69 per month. The claimant calculates this over the 60 month period of the lease. He makes no reduction for its present capitalised value. One dollar in five years time compounded at 10% is only worth approximately 60c at this stage. No provision has been made for other eventualities inherent in the operation of a retail shop. We have decided that the figure of $9,461.40 must be reduced. We have adopted a generally accepted method of establishing the present value of a business as 3 times its annual super profit. Applying this to an annual loss to the claimant of $1,892.00 per annum over 3 years, this comes to $5,676.00, which is the figure we allow. There is a further claim for loss of productivity and staff efficiency using an electric range compared to using a gas range. It seems to us that this claim is too tenuous, on the material before us, to be properly evaluated. We next deal with the change of the concrete floor. We have already set out clauses 2.2.3, 2.5.2 and 3.5.2 of the Design Guidelines. At the stage when Innovation submitted their plan, the floor to the premises had already been constructed. This floor had to be partially removed in order to provide additional drainage facilities. The claimant has contended that the additional drainage was part of the shopfitting even though below the concrete slab. He has relied on clause 2.2.2, part of which reads "the tenant's works will include (but not be limited to): internal plumbing and drainage." He contends that the drainage must be below the slab. We reject this contention. The words used mean, in our opinion, that internal relates both to plumbing and drainage and there is internal drainage above the slab. The claimant has contended, and is supported by an unsigned letter from Innovations, that their quotation included below slab drainage. We have looked at the unsigned letter with a certain degree of suspicion. It is clear that the concrete slab had to be partially removed and replaced. Everything was designed to fit in with a limited and rigid timetable in that the defendant required a large number of retail shops to be available at the advertised opening day. BBA contend that the claimants did not provide them with an address. This is disputed by the claimant who says that he lives no more than 400 metres form the premises and indicated his residence to BBA's representatives. For this reason, BBA gave notice to Innovations that they were arranging for the concrete slab work to be done. Innovations were not called to deny this. -- 8 of 9 -- Adlam-v-Bonnibrook 9 Decision Looking at the various clauses of the Fitout Guidelines, we accept that the plans put forward by Innovations amounted to a request in writing to the landlord for the slab to be altered. BBA did not give the notice referred to in the fourth sub- paragraph of clause 2.5.2 to the claimant personally, but we accept that it was given to the claimant's shopfitter. The claimant has contended that failure to give such notice defeats a claim for the work. We reject this. There was, in our opinion, an implied request for the work to be done. Clause 3.5.2 makes it abundantly clear that the cost of the work had to be borne by the tenant, that is the claimant. BBA called upon the head contractor to do the remedial work. It has been contended that such remedial work could have been done at a much lower price elsewhere. The manner in which the price claimed by Theiss Constructions, as head contractor, was on an item basis as provided for in bills of quantities. To this an administration fee was added. We accept that the defendant as building owner was entitled to have his own contractors perform the concrete work. To have it done by some other person would have ben, in our opinion, impractical and unbusinesslike. not only would there have been possible conflict between contractors acting under a tight schedule but, if there were subsequent defects in drainage, the owner would have been placed in a difficult position with regard to remedies or warranties. For this reason, the fact that if some other contractor had done the work it could have been done at a lower price is irrelevant. The price charged by the head contractor as in accordance with the normal contract between it and the respondent and cannot be shown to be unreasonable. We therefore accept the landlord's claim in respect of this work amounting in all to $10,928.00. With regard to miscellaneous claims, the only one which we need look at is for roof penetration and exhaust. The claim is $442.00, having been substantially reduced after being examined by quantity surveyor, Mr Knot. it has not really been disputed in these proceedings. There is an agreed set-off allowance for ceiling and shopfront fit-out concern to Tenancy Fit-out Guidelines of $5,328.00. In the final result, we find that the claimant is entitled to a total of $11,004.00 being the extra cost of gas as set out above, and the $5,328.00. As against this, the respondent is entitled to payment of $10,928.00 plus $442.00, totalling $11,370.00, making a total, on balance, of $366.00 due by the claimant to the respondent. We order that the claimant pay to the respondent the said sum of $366.00 Dated at BRISBANE this SEVENTEENTH day of NOVEMBER 1994. (sgd) Chairman Retail Shop Lease Tribunal. -- 9 of 9 --