Perpart Pty Limited v Foreman Material Pty Limited [2003] NSWADT 25 (7 February 2003)

Last Updated: 3 March 2003

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL RETAIL LEASES DIVISION

CITATION: Perpart Pty Limited v Foreman Material Pty Limited [2003] NSWADT 25

PARTIES: APPLICANT

Perpart Pty Limited

RESPONDENT

Foreman Material Pty Limited

FILE NUMBERS: 025137

HEARING DATES: 24/01/2003

SUBMISSIONS CLOSED: 24/01/2003

DECISION DATE: 07/02/2003

BEFORE: Fox R - Judicial Member

LEGISLATION CITED: Retail Leases Act 1994

CASES CITED:

APPLICATION: Claim for payment of money

MATTER FOR DECISION: Principal

APPLICANT REPRESENTATIVE: APPLICANT

Mr Graeme, agent

RESPONDENT REPRESENTATIVE: RESPONDENT

Mr Harris, agent

ORDERS: 1. Pursuant to Section 72(1)(a) Foreman Material Pty Limited is to pay to Perpart Pty Limited within 28 days of this date the sum of $1,865.00 being cost of repair and refurbishment (retiling and filling of facade and plaster filling of holes in internal walls, and redecorating by way of repainting the internal walls)

2. No order for costs

Reasons for Decision:

1 The Applicant Lessor seeks an order for payment of money against the Respondent Lessee in respect of a Lease of premises at 571 Willoughby Road, Willoughby, such lease having commenced on 1 December 1998 for an initial period of 3 years, with several options.

2 The Applicant was represented by Mr Graeme, a director of the company, and the respondent was represented by Mr Harris, also a director of his company.

3 It is acknowledged that the initial term of the Lease expired and the Respondent remained in occupation, trading, pursuant to the holding over provisions. It vacated the premises on 30 June 2002.

4 The Applicant claimed that no notice was given, and consequently an entitlement to a month's rent in lieu of notice, and further claims that the premises were not left in a proper condition, and claims for the cost of painting decorating and general refurbishment.

5 Only Mr Graeme and Mr Harris gave evidence. Mr Graeme had available 49 photographs of the premises to illustrate their condition at the time of vacation, but, as is perhaps usual, regrettably, none which illustrated the condition of the premises at the commencement of the occupancy. He further tendered several quotations for the repainting of the premises, one for $2,640.00 inclusive of GST, another for $1,980.00 including GST, and that was in fact, the amount which was eventually paid to do the work. The Respondent tendered a quotation from another painter which read as follows:-

"Preparation of the walls for painting (filling up the holes, cracks, sanding etc). Applying undercoat where necessary.

Applying two coats of the paint and select the colour.

Applying two coats of the paint on the walls in the toilet.

Paint a door inside in select colour. Price $1,400.00 GST included".

6 Turning first to the question of the condition of the premises, it was Mr Harris' contention that the premises were not in excellent condition when he first took occupation, and that he did the best he could to put them in similar condition when he left. He acknowledged that he drilled a series of holes in several walls, to support the uprights which held shelving fixtures, and that, upon removing the shelves, he had himself plugged the holes and then applied paint to that particular wall. In other areas, where he had removed things, the installation of which had not quite done so much damage to the walls, he had, matching as best he could, simply painted parts of walls. In one case, apparently, he took the trouble to take a sample of the paint and have it matched in a paint store. In other cases, he simply used the same brand or tint of paint, either from left over containers, from when he first painted the shop on taking occupation, or by purchasing same. Of course, the difficulty in this latter regard is that such a matching process makes no allowance for the fading of the original paintwork, and that raised a question of a patchy effect, claimed by Mr Graeme, and, to some extent, illustrated by some of his photographs.

7 I am satisfied that the respondent tenant's main difficulty is the fact that it did not comply with the plain requirements of the Lease:-

"The tenant must also...

7.3.1 re-reimburse the landlord for the cost of fixing structural damage cause by the tenant apart from fair wear and tear;...

7.3.3 decorate the inside of the property in the last three months of the lease period however it ends - ("decorate" here means restoring the surfaces of the property in a style and to a standard of finish originally used eg by repainting").

8 It seemed to be Mr Harris' argument that the condition of the walls were such that they did not need repainting and that this particular clause of the Lease appeared to mean that there was no need to restore and that "eg repainting" only applied if the surfaces were badly damaged, and that is what he had done in relation to several of the surfaces which were badly damaged, and he did not need to do it for surfaces which were not damaged.

9 That misconceives the meaning of the clause in the Lease - the plain intent is:

That the surfaces of the property are to be every three years restored to a style and standard of finish originally used, always allowing for fair wear and tear.

10 That must mean in relation to painted surfaces, that they must be repainted, although, I suppose the irregularities in the underlying surfaces brought about by fair wear and tear need not be refurbished. Another example would be, for instance, a polished marble floor. The clause obliges the tenant to attempt to restore the polished surface every three years, but it does not require the tenant to fix the hollows and chips which may have arisen from normal walking use of such a floor.

11 I note in passing that clause 7.3.3 does comply with the Retail Leases Act, Section 38 in that it indicates generally the nature, extent, and timing of the required refurbishment.

38 Refurbishment and refitting

Provision in a retail shop lease requiring the lessee to refurbish or refit the shop is void unless it gives such details of the required refurbishment or refitting as may be necessary to indicate generally the nature, extent and timing of the required refurbishment or refitting.

12 The Lessor's representative Mr Graeme is a builder, and in relation to the patching and plugging of the holes, his evidence was that the job had not been done properly and needed further work, whilst Mr Harris indicated that he, as a competent home handy man, had done the work himself and it was adequate.

13 I was shown some photographs which indicate some irregularity of surface, and on that basis I am not satisfied that the Lessee did the work in a proper and craftsman - like manner, and consequently the Lessor's claim is made out.

14 Of course, the Lessor has a duty to mitigate its damage, and consequently this part of the claim must be limited to the amount of the quotation which Mr Harris was able to bring in evidence.

15 There was also an issue in relation to the state of repair of the facade. Mr Harris admitted that his signage had damaged several of the 300 x 300 tiles which formed the facade of the premises, and acknowledged that they had been repaired by the Lessor. The Lessor's evidence was that the tiles were difficult to match and it cost $120.00 to locate and obtain similar (but not identical) tiles, and that his tradesman's time involved in the matter, at a rate of $45.00 per hour, justified a total claim of $465.00. This represented approximately one day's work, partly in patching some drill holes which were between the tiles of the facade, and, in removing the broken tiles and applying new ones. Mr Harris indicated that he thought this was too much, but had no evidence to place before me in that regard other than his personal view.

16 The Lessee is liable for the cost of the repairs.

17 On the question of notice of termination, I am satisfied that the Lessee in March of 2002 wrote to the Lessor to confirm that which had been said in a meeting some days previously:-

"Foreman material will finish up at 572 Willoughby Road, Willoughby at the end of June, so getting the best part of winter trading and giving you nearly four months to relet the shop".

18 The Lessor had at much the same time placed a "to let" sign within the shop window of the premises.

19 It was Mr Graeme's contention that when Mr Harris rang him, in the last days of June, to indicate the premises would be vacant within a day or two, he was still entitled to a month's notice, in accordance with the standard holding over termination provisions. It was his further assertion that he had not received the latter of March. Mr Harris indicated that the Lessor's office was upstairs in the Willoughby Road premises and that he either took the letter upstairs and placed it on the reception desk, or alternatively, if the door was shut, he pushed it under the door.

20 It cannot be contended that this was not adequate notice.

21 Even if it be the case that Mr Harris is mistaken, and such letter never left his premises, then it is still clear that the Lessor was aware of the fact that the tenancy was coming to its end, and took the opportunity to place a "to let" sign in the window. In these circumstances, on the balance of probabilities, I am satisfied that the tenant gave the requisite notice, and that part of the Lessor's claim fails.

22 The end result of all of the above is the following orders:-

Pursuant to Section 72(1)(a) Foreman Material Pty Limited is to pay to Perpart Pty Limited within 28 days of this date the sum of $1,865.00 being cost of repair and refurbishment (retiling and filling of facade and plaster filling of holes in internal walls, and redecorating by way of repainting the internal walls).