| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) CITATION : BEUGELAAR and ESTATE OF RECHICHI (Deceased) [2011] WASAT 107 MEMBER : MR T CAREY (MEMBER) HEARD : 6 APRIL 2011, 16 JUNE 2011, 24 JUNE 2011 DELIVERED : 12 JULY 2011 FILE NO/S : CC 1674 of 2010 BETWEEN : HENDRIK BEUGELAAR Applicant
AND
THE ESTATE OF MARIA RECHICHI (Deceased)
Respondent
Catchwords: Landlord and tenant Retail shops Repossession by landlord for nonpayment of rent Whether ground made out Effect of agreement as to arrears and their repayment Application to adjourn hearing to allow new claim that agreement unenforceable Tenant's claims for reimbursement of cost of materials used by him in improvement works to rented premises Legislation: Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)
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Result: Application successful in one part and otherwise dismissed Category: B
Representation: Counsel:
Applicant : Self-represented
Respondent : Mr M Levitan
Solicitors:
Applicant : Self-represented
Respondent : Melvyn Levitan
Case(s) referred to in decision(s):
Nil
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REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision 1 The applicant, who rented commercial premises from the respondent for a number of years, and was evicted from the premises for nonpayment of rent in October 2010, sought various forms of relief from the Tribunal. Ultimately, the Tribunal was concerned with three claims: recovery of possession, recovery of rent allegedly overpaid, and reimbursement of amounts associated with certain works to improve the premises in accordance with an alleged agreement between the parties. 2 When the matter first came on for hearing, the first and second claims were, on a consensual basis, dealt with by a consideration of particular disputed issues concerning the date upon which an increase in rent became effective and a series of alleged payments claimed to have been made. This was despite clear evidence of an agreement between the parties on 7 July 2010 as to the amount then owing by the applicant on the rent account and the repayment of that amount which would allow him to remain in occupation. Subsequent to the first hearing day, the Tribunal wrote to the parties to invite submissions about whether or not it was necessary for the terms of the agreement to be given their full effect and, to that end, listed the matter for a second hearing day. 3 When the matter again came on for hearing, the applicant suggested that the July 2010 agreement was not capable of enforcement for a variety of reasons, none of which had been raised by him in written submissions where the subject of the agreement had previously been dealt with. The Tribunal decided, based upon the principle of finality of litigation and the factual circumstances, that the applicant should be denied the opportunity to raise new arguments going to the validity of the agreement. 4 The Tribunal held that the agreement had the effect of determining the question of the applicant's indebtedness as at the time of its making. It went on to consider and determine whether or not three alleged payments were made as claimed by the applicant. 5 The Tribunal found that between the date of the agreement and the date of the applicant's eviction, not only did the applicant fail to pay off the arrears as he had agreed, but he failed to meet his continuing obligation with respect to rent. Accordingly, the respondent was entitled to reenter the premises, and the applicant's claim for recovery of rent allegedly overcharged at an earlier time failed. (Page 4)
6 Based on the evidence, the Tribunal upheld one claim for reimbursement of the materials' cost incurred by the applicant in effecting renovations to the premises, based on a finding that there was an agreement for such reimbursement between the applicant and the landlord's agent, and dismissed a second similar claim. 7 The Tribunal gave its reasons for decision orally at the end of the second hearing day. Those reasons, taken from the transcript and edited purely for enhanced readability, are as follows.
Background 8 Mr Hendrik Beugelaar rented premises situated at 813 Beaufort Street, Mount Lawley for many years. It appears that he used the premises for both commercial (conducting an internet cafe business) and domestic purposes. No issue has been raised in this proceeding about the tenancy being anything other than a retail shop lease within the definition of that expression in the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (Retail Shops Act). 9 As at mid2006, according to Mr Beugelaar, he had occupied the premises pursuant to a verbal agreement with the landlord, Ms Maria Rechichi, and the rent had remained at $110 per week for about eight years. Although Mr Beugelaar believes that this happened at an earlier time, I am satisfied that management of the premises passed to Stuart Weston Real Estate (Stuart Weston), in mid2006. 10 On 5 July 2006 Stuart Weston wrote to Mr Beugelaar. The letter will be reproduced in full later in these reasons. Although on its face the letter was concerned with the prospect of the parties entering a 'new lease' to commence on 1 August 2006, the respondent has in this proceeding relied upon the letter as constituting notification to a monthly periodic tenant of an increase in the rent to $250 per week effective 1 September 2006. 11 The parties did enter a new lease, in the sense that they signed a written lease document which is agreed to regulate their subsequent landlordtenant relationship, in the form of a 'contract to lease retail premises by offer and acceptance' (written lease). The written lease records Ms Rechichi's acceptance on 30 January 2007 and provides for a lease term of 60 months commencing 1 March 2007 at a monthly rent of $1,083.33, equivalent to $250 per week, payable monthly in advance. (Page 5)
12 At some time subsequent to the parties entering the written lease Ms Rechichi died. Management of the property by Stuart Weston continued. 13 It is fair to say that during the term of the written lease, rent was rarely, if ever, paid precisely as contemplated by the written lease. Similarly, in respect of the preceding six month period of 1 September 2006 to 28 February 2007, only two payments of rent occurred, $1,100 on 11 October 2006 and $1,083.33 on 6 February 2007. The result, according to the respondent, was that Mr Beugelaar was 'continually in arrears' requiring Stuart Weston to 'continually follow up with him'. 14 Mr Beugelaar's assessment was that he was more often than not in advance on his rent account by reason of paying amounts in excess of the required amount. He also referred to the extensive renovation and repair works undertaken by him at no cost to the owner throughout the tenancy. Mr Beugelaar's application includes a claim seeking recompense for two particular projects, works performed to a ceiling at the front of the shop and to a hallway. His claims rely upon representations made by the principal of Stuart Weston, Mr Stuart Weston (Mr Weston) prior to the works, that Mr Beugelaar would be paid the cost of materials in each case. Mr Beugelaar seeks $3,000 for each. 15 The issue regarding alleged default in payment of rent came to a head in July 2010 when an agreement was reached regarding repayment of arrears of an agreed sum of $5,628.64 comprising rent and outgoings by fortnightly payments of $1,000. It is common ground that Mr Beugelaar did not meet the obligations cast upon him by this agreement. An adjustment to the agreement where Mr Beugelaar was to pay the arrears by payments of $500 per week was also not honoured. On 15 October 2010, subsequent to a notice of its intent to do so, the landlord, through its agent, retook possession of the premises and changed the locks.
Application and issues 16 Although originally broader in its terms, the application has, by reason of concessions given by the respondent and reconsideration by Mr Beugelaar, been reduced to the following: 1) Recovery of rent for the period 1 October 2006 to 28 February 2007 at the rate of $140 per week. (Page 6)
Recovery of rent and unlawful repossession claims 17 The approach taken when the matter came on for hearing on 6 April 2011, which was put to and agreed by both parties at the commencement of the hearing, was that the first and third issues were both to be determined by a consideration of the underlying disputes concerning whether the increase in rent was effective prior to or at commencement of the written lease, and amounts claimed by Mr Beugelaar to have been paid which were disputed. 18 Although seemingly at odds with this agreed approach, correspondence from Mr Beugelaar subsequent to the hearing suggests that I may also need to rule upon a number of outgoings raised by the landlord, and disputed by Mr Beugelaar, before finally determining whether or not the landlord was entitled to reenter. 19 On my further reflection since, I have formed a view that the agreed approach may have been erroneous because it ignored the agreement between the parties entered into on 7 July 2010, the effect of which was to resolve the dispute over what was owing in a manner which permitted Mr Beugelaar to remain in occupation. 20 This agreement is the subject of a letter from the respondent's solicitor in the following terms: 8 July, 2010 Mr H Beugelaar
813 Beaufort Street
MT LAWLEY WA 6051 Dear Sir, RE: LEASE 813 BEAUFORT STREET, MOUNT LAWLEY We confirm our Mr Levitan's attendance on you at your office on 7 July 2010. We confirm that you have agreed to pay off the outstanding rent arrears of $5,628.64 by making a payment of $1,000.00 on 8 July 2010 and (Page 7)
21 Consistent with the Tribunal's procedural fairness obligations, I caused the hearing to be reopened in order to apprise, in particular, Mr Beugelaar of my provisional conclusion of the primacy of the parties' agreement and to afford him the opportunity to comment. 22 The Tribunal received several communications from Mr Beugelaar subsequent to the notice to the parties of the reconvening of the hearing today, which strayed into a number of topics unrelated to the question of the primacy of the July 2010 agreement and the isolated issue raised by Mr Beugelaar in one of his emails regarding treatment of outgoings in considering Mr Beugelaar's indebtedness at the time of reentry. I have taken no account of those communications, the reopening of the hearing not being at large but limited to the two issues just mentioned. 23 Mr Beugelaar's response to the proposition that the agreement of 7 July 2010 resolved as a matter of finality the state of his rental account had a number of elements. His initial response was that there was no such agreement, although ultimately I regard his submission as being that although he did agree, he did not do so of his free will. He said that the agreement was a forced agreement; that it was put to him that he had to pay the $500 a week or he was out, giving him no option but to accept the agreement. 24 He also referred to his physical condition at the time, being a mal epileptic, and that he had, shortly previous to the relevant visit by Mr Levitan upon Mr Beugelaar, been hospitalised twice. He said that the landlord was aware that he was in no position to do anything other than accept the terms that were put to him. 25 It was pointed out to Mr Beugelaar that as these claims had not previously been made in the proceeding before the Tribunal, adjournment of the hearing would be necessary in order for proper notice to be given to (Page 8)
the respondent and for the respondent to respond. The respondent opposed any adjournment for this purpose. 26 Although it is possible that at least some of the arguments that have been raised by Mr Beugelaar at today's hearing might form the basis of consideration by this Tribunal of the validity of the July 2010 agreement, perhaps falling under its jurisdiction to deal with questions arising under a lease, in my view, it would not be consistent with the administration of justice to allow those arguments to be explored now at this late stage. 27 Without going into the history of the matter in any great detail, the application was filed on 17 November 2010. It has been the subject of a number of directions hearings and many communications from both parties but in particular Mr Beugelaar. The main hearing was on 6 April 2011 and today's hearing was convened for the purposes I have identified. 28 Tellingly, the reference to the July 2010 agreement, which should have triggered a response along the lines of the one which is now being urged upon the Tribunal by Mr Beugelaar, was included in the respondent's submissions to applicant's application and documents dated 16 December 2010 and filed 17 December 2010. The response by Mr Beugelaar came in the form of the applicant's submission to the respondent's submission and documents dated 5 January 2011 and filed 7 January 2011. In relation to the agreement, Mr Beugelaar's response was to suggest that the tenant status report record of his rental account was inaccurate and included overbilling. In fact, according to Mr Beugelaar, the rent by this time was in front and there were in fact no arrears. 29 Accepting that Mr Beugelaar is not legally trained, the omission of the matters now sought to be relied upon in relation to whether or not the agreement was valid is, in my view, critical in determining whether he should now have the opportunity to raise those fresh matters. It was important that, to the extent he was wanting to ultimately rely on those matters, his written response to which I have just referred made mention of them. 30 One effect of referring only to the 'true' state of the rental account to the extent that that was different from what was agreed in July 2010 - was that the hearing was conducted on the basis that Mr Beugelaar did not wish to argue, for example, that he was overborne in discussions by the landlord or the lawyer of the landlord and that he was in no physical or mental condition to protect his legitimate interests. Further, the absence (Page 9)
of any reference to those types of matters had a role to play in my steering the parties at the initial hearing towards a consideration of the underlying debt position and away from any critical analysis of the July 2010 agreement and the circumstances in which it was made. 31 It is a very important aspect of litigation that there be finality in the litigation within reasonable boundaries. Parties, and particularly unrepresented parties, should not be shut out from claims or issues they want to raise. On the other hand, it would be inimical to the proper administration of justice were parties allowed to raise new issues, that is, issues which had not been relied upon throughout the whole conduct of a matter, simply on the basis that time had demonstrated to the party that reliance upon such a new issue was in their best interests. That is not how litigation works. Litigation is based very much upon the issues raised by both parties when given the opportunity to do so. 32 For the reasons I have given, the application for a further adjournment of the hearing to allow the formulation and pursuit of a claim that the agreement entered into between the parties in July 2010 was not valid for some reason must be refused. 33 Although this might be considered a harsh outcome for Mr Beugelaar, as he is prevented from relying on any intrinsic error in the parties' calculation of what was owed, that was the price that he agreed upon in negotiating his continued right of occupation. 34 The result is that as at 7 July 2010 Mr Beugelaar was indebted to the respondent by way of arrears of rent and outgoings to the extent of $5,628.64, which he undertook to pay by an initial instalment of $1,000 and subsequent instalments in respect of ongoing rent and arrears of $1,000 per fortnight. As I have said, that agreement was subsequently adjusted to increase the frequency of payments. 35 Mr Beugelaar has conceded that he did not comply with these terms. 36 The question of Mr Beugelaar's compliance is complicated slightly because the parties disagreed over how much was paid subsequent to 7 July 2010. Three payments claimed by Mr Beugelaar are disputed, a payment of $400 on 22 July 2010, a payment of $600 on 23 July 2010 and a payment of $1,000 on 9 August 2010. Mr Beugelaar had very helpfully produced a schedule described as a 'rent ledger' (rent ledger) of rent payments, excluding outgoings, in respect of the period 1 September 2006 to 14 October 2010. (Page 10)
37 All three of the payments to which I have just referred are described in the rent ledger as cash payments to the respondent's solicitor Mr Levitan. They appear to reflect entries in Stuart Weston's trust ledger. However, other documents before the Tribunal give a different picture of payments made at the time. Those documents are copies of receipts issued by Mr Levitan and a copy of Mr Levitan's trust account ledger for Stuart Weston Real Estate. 38 According to the trust account ledger, the following cash payments occurred during the period under consideration: 22 July 2010 - $100, 30 July 2010 - $500, 6 August 2010 - $500. Copies of receipts for each of the payments of $500 are before me. 39 I regard the references to amounts received from Mr Beugelaar by Mr Levitan as the most reliable record of payments actually made during the period. It appears that Mr Beugelaar has unwittingly double counted some payments made. In the result, rather than $2,000 which he claims to have been paid on the dates mentioned, I find the amount he actually paid during the period in question to be $1,100. 40 As at 15 October 2010, taking into account rent accruing at $250 per week (I do this out of convenience but acknowledge that the rent was payable under the written lease monthly in advance) and the payments which I have found were made by Mr Beugelaar, the debt had increased from $5,628.64 on 7 July 2010 to $5,728.64. Not only had Mr Beugelaar failed to pay off any arrears, he also failed to meet his continuing obligation to pay rent. In those circumstances, the inescapable conclusion is that the landlord was entitled to reenter the premises when it did. For reasons I have given, it was also not possible for Mr Beugelaar to succeed in his claim for recovery of amounts of rent allegedly overpaid in respect of the period 1 October 2006 to 28 February 2007.
Claim for recovery of cost of works performed 41 The claim for $6,000 in respect of works brought about by Mr Beugelaar in relation to the ceiling and hallway is properly to be dealt with separately. 42 Although, based on Mr Beugelaar's evidence, one of his grounds for opposing the demands of Stuart Weston was to refer to the alleged failure to recompense him for the works as he had been promised, Mr Beugelaar did not before me seek to raise a credit for the claimed amounts to his rental account. To do so would have been met with the immediate obstacle under conventional landlord and tenant law doctrine concerning (Page 11)
the central obligation of tenants to pay rent without deduction. However, as I have said, Mr Beugelaar did not seek to argue to the contrary. 43 Mr Beugelaar informed me that the rented premises were in poor condition when he first moved in. Ms Rechichi had told him then, some 16 years ago, to stay there as long as he wanted and to do whatever he wanted, a reference I took to mean his ability to effect changes extending to structural alteration to the premises. He said that prior to the period with which the application is concerned, he undertook various works, including modifications of the kitchen and bathroom, either by his own hand or by engaging others whom he paid, without reimbursement. 44 There are, however, two projects involving a ceiling in 2007 and a hallway in 2009 for which Mr Beugelaar does seek recovery of the cost to him arising from his version of discussions with Mr Weston prior to the works in each case. 45 According to Mr Beugelaar's written statement, the front ceiling of the shop was in a very unsafe condition. Various panels buckled and hung down. It had a large hole and various small holes and one of two ancient three metre long fluorescent lights was hanging from one screw. The ceiling was rotten and affected by watermarking and dust. 46 Mr Beugelaar gave evidence that he contacted Mr Weston and informed him that the ceilings were dangerous and something needed to be done. According to his statement, he had replaced, at his cost, some 60 square metres of ceiling with new plaster and this was the last section of original plaster. He considered, and in fact says that he put to Mr Weston, that he had spent enough money on improving the premises and asked Mr Weston whether he could 'cover this'. He said that Mr Weston said 'okay' and that he would get some quotes. 47 Mr Beugelaar says that he then suggested that he do the work on the basis that the landlord pay for the materials, to which Mr Weston responded favourably. In Mr Beugelaar's words, he (Mr Weston) said 'that sounds good'. According to Mr Beugelaar, he obtained quotations for the materials he was about to buy, and in the course of a phone call with Mr Weston informed him the total materials cost would be between $2,500 and $3,000 and Mr Weston's response was to 'go ahead'. The materials included beams, boards (that is, panelling) uprights and screws, at a total cost of more than $3,000. He and a friend, Mr Craig Hawkins, got on with the works on a Sunday in late September 2007. (Page 12)
48 Mr Beugelaar is unable to produce receipts of the materials for which he was paid for the ceiling works due, he says, to their losing legibility over time. He says he faxed them to Stuart Weston at the time. However, his evidence that he spent about $2,400 on an initial trip to Bunnings in Morley for the materials used in the ceiling works is corroborated by Mr Hawkins' statement. The remaining costs taking the total to over $3,000 were incurred in the two weeks following the Sunday when most of the work occurred. Amongst other items, it covered the purchase of bamboo and varnish for the underside of the ceiling. 49 Turning to Mr Weston's version of events concerning the ceiling, it is to my mind instructive that Mr Weston's written statement limited itself to his contention that, rather than installing a new ceiling, Mr Beugelaar 'in fact built a room above the ceiling in the front of the premises'. 50 In oral evidence before me, Mr Weston agreed that he had a conversation with Mr Beugelaar 'about figures' in the context of Mr Beugelaar doing the work and being reimbursed the cost of materials, but said that he asked Mr Beugelaar to get three written quotes in writing and that he did not do this. He confirmed Mr Beugelaar's evidence of a discussion whereby Mr Beugelaar informed him of a range of $2,500 to $3,000, but said that he, perhaps for a second time, said that he needed three quotes. He recalled being 'surprised' when he saw the job. 51 As I have indicated, Mr Weston's statement refers to the fact that what was constructed was a new room above the ceiling. At the hearing, reliance was placed upon photographs which included the provision of access to the upstairs area. 52 Mr Beugelaar was open about the fact that he took the opportunity presented to construct a mezzanine floor. He said that it doubles as a ceiling. Although the new area is insulated and airconditioned, this was done at his expense. He argued that it was necessary given the state of the original ceiling to replace a large beam, and that the decision to install a selfstanding ceiling was based on considerations of strength and cost. 53 As already stated, Mr Beugelaar says that Mr Weston allowed the works to proceed on the basis of the estimate of the cost between $2,500 and $3,000 which Mr Weston denies. Mr Beugelaar also said that Mr Weston inspected the ceiling and said that those responsible had done 'a great job'. Although Mr Weston also denies making such a comment, as I will explain, it is significant in my view that the alteration was allowed to remain. (Page 13)
54 I prefer Mr Beugelaar's version of his discussions with Mr Weston over the matter of the ceiling to that of Mr Weston. When one considers the consistency between the contents of his written statement and his evidence given in crossexamination, corroborated in relation to cost by Mr Hawkins, it exhibits the hallmarks of persuasive evidence. The potential weakness concerns the issue highlighted in Mr Weston's statement of unauthorised embellishment by construction of a mezzanine floor. 55 Expert evidence of the cheapest possible build cost of a replacement ceiling without a traversable floor above is lacking, although I do have the benefit of Mr Beugelaar's evidence of the cost to him of a ceiling in the back part of the premises. Mr Beugelaar informed me that he paid approximately $3,500 for a ceiling with dimensions of 8 metres by 4 metres, the front ceiling being 6 metres by 4 metres. In the case of the back ceiling, it was necessary to engage a plasterer, plastering not being within Mr Beugelaar's capabilities, unlike, it would seem, a wide range of other building skills. 56 Even allowing for the limitation placed on the reimbursement entitlement that it be restricted to the cost of materials, it is difficult to escape the conclusion that the building owner has obtained value for money in relation to the completion of the project, albeit in respect of works of greater scope than originally contemplated. 57 Further, my acceptance of Mr Beugelaar's evidence that Mr Weston commended the works, and the fact that no action was taken subsequently by the landlord in respect of what are now claimed to be unauthorised works whether the whole of the works, given what is now said by the respondent to have been a failure to comply with a requirement for written quotes, or the embellishment constituted by the mezzanine floor has the consequence that any lack of authority is incapable of being relied upon. 58 Taking all the factors discussed above into consideration, in my view, Mr Beugelaar has established his entitlement to the refund by the landlord of the costs of materials in respect of the replaced ceiling in the amount of $3,000. 59 The parties present stories of greater divergence in respect of Mr Beugelaar's claim concerning renovation of a hallway. Almost unbelievably, given the events in 2007, Mr Beugelaar claims that he entered into an almost identical agreement with Mr Weston that he would be reimbursed the cost of materials if he effected extensive repairs to an (Page 14)
area he refers to as the hallway and to which Mr Weston refers as a veranda. 60 Mr Beugelaar says that the hallway, which is a walk through for customers of the shop to the toilet, was badly damaged by white ant rot. The floorboards, wall and posts were affected. Although the relevant discussions are said to have occurred in 2009, Mr Beugelaar's recollection of detail was noticeably less precise than in the case of those concerning the ceiling, although he maintains that Mr Weston agreed to his doing the works and to pay him the cost of materials. 61 Unlike what occurred in 2007, he did not obtain any written quotes in order to obtain the property manager's imprimatur as to the amount, and he did not fax Stuart Weston invoices for purchases made. He raised the same reason for not providing copies of those invoices to the Tribunal that they had become illegible over time, but such an argument is less compelling in the case of invoices produced in 2009 than ones from two years previous. 62 Mr Weston's evidence in the case of the hallway/veranda is, conversely, much clearer. He said in his evidence before me that he went to the shop one day and saw timber materials in the premises and that work on the area of the veranda had commenced. He said that there had never been any request made, as Mr Beugelaar said there was, although he acknowledged references by Mr Beugelaar to the 'rough old veranda out the back'. 63 I was less impressed with a reference in Mr Weston's written statement to his view that what Mr Beugelaar had done was to 'move a wall of the premises to where the boundary fence was and installed new windows into the premises', given that photographs showing the appearance before and after do not indicate that any wall was moved. The photos do, however, show a far more permanent and impressive wall along the boundary formerly occupied by an iron structure with obvious defects. 64 I am not persuaded that any discussion took place in relation to the hallway or veranda, as Mr Beugelaar says it did; nor am I prepared to accept Mr Beugelaar's excuses for failing to produce documentary proof of the costing as I was in the case of the ceiling. Although I note Mr Beugelaar's statement to the effect that the hallway was used by customers of his shop, I agree with the respondent's claim that this extensive renovation was primarily concerned with enhancing the amenity (Page 15)
of premises used as a residence by Mr Beugelaar and his family. His claim for recovery of $3,000 for the cost of materials for the hallway renovation undertaken by him is refused.
Conclusion 65 Mr Beugelaar has failed in his claims for recovery of rent and for the relief he sought based on unlawful repossession of the premises. As I have found, he was at the time of repossession indebted to the respondent to the extent of $5,728.64. However, as I have also found, he is entitled to recover from the respondent $3,000 for the materials' cost of the replacement ceiling. 66 There may be scope for the parties to agree on the basis on which Mr Beugelaar may be able to return to the premises. I will hear from the parties as to whether any such agreement is possible, and, if not, whether Mr Beugelaar seeks any further intervention by the Tribunal as part of the current application, and also as to the terms of the Tribunal's order based upon these reasons for decision.
Order 67 On 24 June 2011, the Tribunal issued an order in the following terms: |