Foodtech Group Pty Ltd v DHK Consolidated Pty Ltd
[2013] NSWADT 309
•03 December 2013
Administrative Decisions Tribunal
New South Wales
- Amendment notes
Medium Neutral Citation: Foodtech Group Pty Ltd v DHK Consolidated Pty Ltd [2013] NSWADT 309 Hearing dates: 3 December 2013 Decision date: 03 December 2013 Jurisdiction: Retail Leases Division Before: G Mullane, Judicial member Decision: The Application of Foodtech Group Pty Ltd filed on 30 September 2013 is refused and dismissed.
Catchwords: Retail Lease - outgoings - tenant's Liability Category: Principal judgment Parties: Foodtech Group Pty Ltd (Applicant)
DHK Consolidated Pty Ltd (Respondent)Representation: No solicitor for the Applicant
Betar Lawyers (Respondent)
File Number(s): 135129
reasons for decision
INTRODUCTION
This is a dispute regarding outgoings paid by the applicant tenant in respect of a lease of a retail shop in Newtown. The applicant tenant paid 45% of the outgoings for, I think, three years and the outgoings were in respect of land on which the shop is located. Also located on the land is another shop and a residential flat.
The tenant says that under the lease the proportion of the outgoings that should have been paid by the tenant is about one third of 45% of the outgoings on the land because the provision in the lease creating the liability to pay outgoings should be interpreted as the tenant paying 45% of the outgoings referrable only to the premises leased, not the outgoings referrable to the whole of the land.
RELEVANT PROVISIONS OF THE LEASE
Para 3.2(a) of Schedule 2 of the lease provides a definition of "outgoings":
(a) "Outgoings" means the total amount of the following costs and expenses properly or reasonably assessed or assessable charged or chargeable paid or payable or otherwise incurred in respect of the Land or in the conduct or maintenance of the Building:
(i) all rates levies and charges payable to the Council of the Municipality of Marrickville or other local government body ("Council Rates");
(ii) rates and charges including any environmental levy payable to Sydney Water or any other body or authority responsible for the supply and/or reticulation of water and/or sewerage and/or drainage ("Water Rates");
(iii) New South Wales land tax and any other tax assessed or charged against or to the Lessor by virtue of its ownership of land whether by any Parliament State or Federal or by any competent authority local government or otherwise assessed on a single holding basis for a beneficial owner ("Land Tax");
(iv) any other taxes rates charges and assessments and other outgoings of like nature which are now or at any time during the term charged upon the land or against or to the Lessor whether governmental semi-governmental municipal or otherwise.
(v) insurance premiums payable by the Lessor in respect of the Building and the plant equipment fittings and fixtures of the Lessor therein' in their full insurable reinstatement value against fire flood lightning storm and tempest and in respect of insurance of the Building and the Lessor against such other risks (referrable to the Building or the Lessor in relation to the Lessor's ownership or interest in the Building) as the Lessor may deem reasonably necessary including consequential loss and against other risks as the Lessor may request in respect of the Building ("Insurance Premiums").
It is noted that in that clause the important wording is "charged or chargeable, paid or payable or otherwise incurred in respect of the Land or in the conduct or maintenance of the Building." It does not refer there to the outgoings being "in respect of the premises the subject of the lease", but refers to "the Land" and "the Building". "Land" is defined in clause 1.1 of the same schedule as "the land described under the heading 'Property Leased' on the front page of this lease".
The words appearing on the front page of the lease under that heading are:
"Folio A/164571
PART being Ground Floor and Mezzanine Floor , known as shop 2, 273 - 275 King Street Newtown".
The land described, as distinct from the premises leased, is the land in Folio A/164471. It is the land on which the building is erected and the building comprises 2 shops and a residential flat.
Paragraphs 3.2(b) and 3.2(c) of Schedule 2 provide:
(b) In addition to the Yearly Rent the Lessee shall in respect of each year during the Term, any Further Term or during any holding over period pay to the Lessor in the manner provided in clause 3.2 (c) the Lessee's Proportion of the Outgoings.
(c) Within fourteen (14) days of receipt by the Lessee from the Lessor of a statement in writing of the amount of the Outgoings or any part thereof, the Lessee shall pay to the Lessor the Lessee's Proportion of the Outgoings or such part thereof AND it is hereby.
agreed and declared:
(i) that subject to paragraph (li) of this Clause 3.2(c) the liability of the Lessee to pay the Lessee's Proportion of the Outgoings will not be determined or otherwise prejudiced by the prior expiry of the Term or other termination of this Lease;
(ii) that if the Term expires or is otherwise terminated the Lessee shall pay to the Lessor that proportion of the Outgoings accruing due prior to the date of expiry or termination. For the purpose of making any such apportionment the Outgoings shall be deemed to accrue from day to day. Any moneys found to be due and owing by the Lessee to the Lessor under the provisions of this clause shall be paid within one (1) month of the date of expiry or termination.
The tenant is liable to pay "the Lessee's Proportion of the Outgoings". That expression is defined in clause 1.1 of Schedule 2 as "the proportion (expressed as a percentage) in item 5 in the Reference Schedule". The proportion stated in item 5 of the Reference Schedule to the lease is 45%.
Accordingly the tenant is liable to pay 45% of the outgoings "in respect of the Land or in the conduct or maintenance of the Building" on the Land.
The tenant has interpreted the description of the property leased on the front page of the lease as a definition of the land, rather than of the property leased, however the only land described in that description is the land in folio A/164571. There is no separate title identified for the property leased and there is no evidence that there is any separate rating or taxing of the property leased. On the face of the lease the clear intention is for the tenant to pay 45% of the outgoings for the land in folio A/164571 or for the building on that land.
There is then Clause 4.5 of the second schedule, which specifically provides for gas, electricity, water and oil consumed on the premises. It provides:
"The Lessee shall pay all charges for gas electricity and water and oil consumed in or on the Premises or solely in connection with the Premises and shall also pay all charges in respect of any telephone (including facsimile) services connected to the Premises and all other charges and impositions imposed by any Relevant Authority for the supply of any service supplied to the Premises (including trade waste discharge). If the Lessee makes default in the payment of such charges the Lessor may pay the same and recover the amount so paid as if the same was rent payable under this Lease on the date on which the Lessor pays the same."
CONCLUSION REGARDING COUNCIL RATES, SYDNEY WATER RATES FOR DRAINAGE AND SEWERAGE AND ENVIRONMENTAL LEVIES, LAND TAX AND OTHER TAXES, RATES, CHARGES AND ASSESSMENTS WITHIN SUBPARA 3.2(a)(iv) OF THE SECOND SCHEDULE TO THE LEASE OTHER THAN THOSE TO WHICH 4.5 APPLIES.
Accordingly the tenant's application for a refund of payments for outgoings for council rates, water rates, land tax and insurance premiums and any other amounts coming within the definition of "outoings" in para 3.2(a) of the second schedule fails.
CHARGES FOR REMOVAL OF TRADE WASTES, FOR WATER USAGE, FOR GREASE TRAP PUMP OUTS
When the above reasons were announced, Mr Ding, the agent for the applicant announced: "This is our first part - we have a dispute, there's another outgoing here, because there's another additional outgoing. Like there's a total amount of $3,480.68. We have two parts. The first part is we discussed - finished, and then we have another one. There's additional outgoing, it's including trade waste and grease trap and water usage. This is like additional outgoing."
There were then further submissions for each party regarding charges for water usage, removal of trade wastes and pump out of the grease trap and disposal of the material pumped out.
DECISION ON THOSE CLAIMS
The Respondent contends that these issues are not raised in the application. The applicant contends that these issues are also raised by the applicant in paras 1.1(b) (water usage) and 1.2(b) (removal of trade waste and pump out of grease trap and disposal)o the aplication.
The leased premises are separately metered for water usage by a "submeter" and the tenant has paid 100% of the water usage amounts, but argues the tenant's liability should have been 45% only.
But that interpretation ignores clause 4.5 of Schedule 2 which renders the tenant liable for 100%. Accordingly the tenant's submissions on water usage charges fails.
The same conclusion must follow in relation to charges by the Council for removal and disposal of trade waste from the leased premises. Such charges are specifically covered by clause 4.5 and the tenant is liable to pay the full amount..
Although grease trap pump outs are not specifically mentioned in clause 4.5, they are a form of "trade waste discharge", which is. A private contractor pumps out the contents of the grease trap for the leased premises and takes it to a disposal site operated by, or contracting to, Sydney Water. The present practice is that Sydney water then bills the tenant for this service. Accordingly this is a charge imposed on the tenant and not an outgoing incurred by the landlord that is recoverable by the landlord from the tenant.
But in the past Sydney Water billed the landlord for this and the landlord recovered the charge from the tenant. In that situation the charges were clearly within clause 4.5 and payable in full by the tenant as "impositions imposed by any Relevant Authority for the supply of any service supplied to the Premises (including trade waste discharge)". Under the lease the tenant is liable for the full amount of such charges; not 45%. Accordingly the tenant's claim in relation to pump out and disposal of contents of the grease trap for the leased premises also fails.
ORDER
The Application has therefore failed on all claims. The order of the Tribunal therefore is:
1. The application of Foodtech Group Pty Limited filed on 30 September 2013 is refused and dismissed.
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Amendments
02 January 2015 - Representation
Amended paragraphs: Coversheet
Decision last updated: 02 January 2015
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