Ginninderra Properties Pty Ltd v Gelonese
[2017] ACTMC 25
•28 April 2017
MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: Citation: | Ginninderra Properties Pty Ltd v Gelonese [2017] ACTMC 25 |
| Hearing Dates: | 2 June 2016; 9 September 2016 |
| DecisionDate: | 28 April 2017 |
| Before: | Magistrate Morrison |
| Decision: | See paragraph [82] |
Catchwords: | CIVIL LAW – Application under Leases (Commercial and Retail) Act 2001 – whether Defendant given false and misleading information about construction of a mezzanine floor on the premises – whether construction of a mezzanine floor was possible – whether construction required development application – whether plaintiff entitled to costs of proceedings under express provision in lease – whether costs provision inconsistent with Act and void. |
Legislation Cited: | Leases (Commercial and Retail) Act 2001(ACT) ss 19, 154. |
Cases Cited: | Liangis v IPEX ITG Pty Ltd [2005] ACTCA 28. |
| Parties: | Ginninderra Properties Pty Ltd (Plaintiff) |
| Representation: | Counsel Mr Whybrow (Plaintiff) Self-represented (Defendant) |
| File Number: | CL 25 of 2014 |
MAGISTRATE MORRISON:
The Plaintiff is the owner of commercial premises known as the Marketplace Gunghalin Shopping Centre (“the Centre”). It is not in dispute that the Defendant entered into an agreement to lease premises within the Centre. I refer to the parties as Landlord and Tenant for convenience.
A dispute arose between Landlord and Tenant and the Landlord terminated the lease. The Landlord says that it was entitled to do so and that the Tenant is liable to pay it outstanding rent, damages and costs.
The Tenant was not legally represented. I refer later to my understanding of the basis for his case. Suffice to say for present purposes that he contests the Landlord’s entitlement to terminate the lease, denies liability for the amounts claimed by the Landlord and counter claims for certain losses he says he has suffered.
I made an order nunc pro tunc at the end of the evidence on 9 September 2016 for a separate issues hearing restricted to the quantum of the Tenant’s counter-claim if his counter-claim was successful. The transcript sets out the unusual circumstances which led to the making of that order.
The conflict between the parties arose primarily over the construction of a mezzanine floor on part of the premises to be leased. The parties had entered into an agreement described as an “Agreement for Lease” on or about 15 April 2013. There followed certain discussions between the parties giving rise to their entry into agreements described as a “Deed of Variation” and a “Fitout Contribution Deed”. It is not in dispute that the parties entered into the several agreements referred to, and nor are the express terms of those agreements in dispute.
It is convenient to set out the scheme of the obligations entered upon by the parties in the Agreement to Lease and how they were altered by the Deed of Variation.
The Agreement for Lease includes various definitions which are relevant for present purposes. They include:
a. “Landlords Works” by reference to schedule 3 which sets an extensive list of works. That list includes on its first page the following descriptions:
Landlord will construct a mezzanine floor with access stairs to a mezzanine area of 60m2.
Landlord to construct internal toilets 1 disabled males and 1 disabled female WC.
b. “Tenant’s Works” by reference to item 7 of schedule 1. That list appears in these terms –
Means the works in accordance with the Fitout requirements contained in the Landlord’s Tenancy Design and Fitout Manual to be carried out by the Tenant to the Premises as required for the Permitted Use and included but in no way limited to the Acoustic Treatment Works, and approved by the Landlord under clause 3.
c. “Tenant’s Plans” means the plans, designs, images, samples and specifications for the Tenant’s Works.
d. “Commencement Date” meaning –
The commencement date of the Lease, which is the earlier of: -
· The date the Tenant starts trading from the Premises; or
· The day after the last day of the Fitout Period.
e. “Lease” meaning the lease contained in schedule 2 to the Agreement to Lease.
f. “Fitout Period” meaning, by reference to item 6 of schedule 1 -
The period of 28 days commencing on Practical Completion.
g. “Practical Completion” (or “Practically Completed”) meaning –
That the Landlord’s Works have been substantially completed except for minor omissions and minor defects. A certificate under the hand of the Project Manager to that effect is to be conclusive evidence. If the Project Manager (acting reasonably) believes that completion of some part of the Landlord’s Works may be more efficiently carried out at the same time as or after part or all of the Tenant’s Works have been carried out, the Project Manager may when issuing the certificate that the Landlord’s Works have been practically completed include in the notice details of that part of the Landlord’s Works. In those circumstances the Landlord’s Works will be deemed to have been Practically Completed on issue of the notice and the Landlord will complete that part of the Landlord’s Works at the same time as or after completion of part or all of the Tenant’s Works (as the case requires).
Under clause 2 of the Agreement to Lease, the Landlord agrees to carry out the Landlord’s Works.
Clause 3.3 of the Agreement to Lease imposes an obligation on the tenant to take possession of the leased premises and “carry out and complete the Tenant’s Works within the Fitout Period”.
Importantly that obligation is subject to the several conditions also set out in clause 3.3 of the Agreement to Lease. Those conditions include compliance on the part of the Tenant with obligations found elsewhere in clause 3 dealing with obtaining the Landlord’s approval and “all necessary permits and approvals required by the law or any Relevant Authority”.
Whilst the Tenants right of entry to the premises and to take possession of them to carry out and complete the Tenant’s Works is expressed to be conditional upon the Tenant having complied with various obligations, the commencement of the Lease is not expressed to be conditional. The Agreement to Lease provides at clause 4.1 (without reference to any express pre-conditions) that the Landlord must grant and the Tenant must accept the Lease commencing on the Commencement Date.
The effect of the provisions just referred to can be summarised in this way:
a. The Landlord must carry out the Landlords Works (and use reasonable endeavours to have them Practically Completed).
b. There are obligations upon the Tenant in relation to the Tenants Works, including some obligations to be performed before any such works can be carried out, but the commencement of the Lease, and therefore the obligations in it, are not expressed to be conditional upon those Tenant’s obligations being carried out – that is to say the Tenant’s obligation to e.g. pay rent is not conditional upon the Tenant’s fulfilling any obligations in relation to the Tenant’s Works.
The Deed of Variation is undated but nothing turns on that. It is not in dispute that it was entered into by the parties on or about 20 August 2013. The operative part of it is short. It varies the Agreement to Lease by deleting the original list of the Landlord’s Works and replacing it with a new list which is set out in schedule 4 to the Deed of Variation. The deed otherwise confirms the parties obligations under the Agreement to Lease.
The only change to the list of Landlord’s Works was to remove reference to the construction of the mezzanine floor and internal toilets referred to above.
At or about the time the parties entered into the Deed of Variation they also entered into the Fitout Contribution Deed. Again it is undated but nothing turns on that. Under the Fitout Contribution Deed the Landlord agrees to pay an amount of $140,000 (defined as being the Landlord’s Contribution) to the Tenant by way of instalments. The payment to be made is expressed to be a contribution “towards the fitout of the premises”.
Importantly, the Landlord’s obligation to pay the instalments is expressed to be subject to various conditions, including the Landlord having approved plans for the Tenants Works and the production of invoices showing payment of the cost of such works. Further the obligation to pay did not apply if there was a breach of the deed, or the Lease or other relevant agreement which was, in the opinion of the Landlord, incapable of remedy.
The effect of the Agreement to Lease and Deed of Variation and the Fitout Contribution Deed just referred to can be summarised as follows:
a. The Landlord remained obliged to carry out the Landlord’s works but they no longer included construction of a mezzanine floor and internal toilets
b. The construction of a mezzanine floor and internal toilets did not expressly become part of the Tenants Works
c. The Tenant was obliged to obtain both the Landlord’s “written approval of the Tenant’s Works and the Tenant’s Plans, which consent must not be unreasonably withheld” and “all necessary permits and approvals required by the law or any Relevant Authority to undertake the Tenant’s Works”.
d. The Landlord’s approval of plans for Tenants Works and the production of paid invoices showing payment for Tenants Works were pre-conditions to the Landlords obligation to pay the Fitout Contribution.
The Landlord’s case is that each of the Agreement to Lease, the Deed of Variation and the Fitout Contribution Deed are enforceable according to their terms. The Landlord says that after entering into the various agreements, it carried out what was required of it by way of Landlord’s Works, and gave notice to the Tenant of the intended date of practical completion of those works. The Landlord says that the Lease commenced on 26 October 2013 in accordance with clause 4.1 of the Agreement to Lease. That date is calculated as being the 28 days allowed by way of the Tenant’s Fitout Period after Practical Completion of the Landlord’s Works. The Landlord says that the Tenant failed to pay rent and outgoings under the Lease and that it terminated the Lease with effect from 8 April 2014.
The real contest in the litigation has been about the proposed construction of the mezzanine floor on the leased premises.
The Tenant was not legally represented and did not present as having any special legal knowledge, skills or experience. As is commonly the case in such circumstances the pleadings did not precisely identify the legal basis upon which the Landlord’s claims were contested. As a matter of fairness to the Tenant, in my assessment of his argument, I have concentrated upon what is raised in his evidence and by way of his written submissions after the evidence was received rather than the pleadings. I am satisfied that I can do so in this case without unfairness to the Landlord.
The essence of the Defendant’s case can be gleaned from his written submissions in these terms:
a. “The Plaintiff is unable to rely on the Deed of Variation, as it was entered into without proper disclosure and I submit the Deed of Variation is invalid and not able to be relied upon [by] the Lessor.” [paragraph 6 of written submissions]
b. “On 20th August 2013, Ginninderra Properties and Mr Gelonese entered into a Deed of Variation. The Deed is unenforceable.” [paragraph 7 of written submissions]
c. “Mr Gelonese was given false and misleading information. The Landlord withheld critical information from Mr Gelonese. The Landlord knew this structure could never be built and tricked Mr Gelonese into signing a Deed of Variation therefore causing an [in]surmountable problem.” [paragraph 22 of written submissions]
The Tenant does not particularise his allegation about proper disclosure just referred to. I infer it to be an allegation that the Landlord ought to have disclosed that, as alleged by the Tenant, it knew that the mezzanine floor could not be constructed. Similarly I infer that the allegation that the Tenant was given false and misleading information is intended also to refer to that allegation, by way of a claim that the information given to the Tenant was false and misleading because it did not disclose that the mezzanine could not be built. I draw the same inference about the allegation that the Landlord tricked the Tenant – that is that the alleged trick comprised non-disclosure by the Landlord that the mezzanine floor could not be constructed.
It is apparent that a core question in the proceedings has been whether a mezzanine floor was capable of being constructed. The evidence at hearing was directed to two different aspects of that question. One was whether the existing building structure was capable of supporting a mezzanine floor without special structural strengthening. The second was whether a development application was required for the mezzanine floor and if it was whether such an application was likely to be approved.
It is not in dispute that no mezzanine floor was ever constructed and that the development application submitted by the Tenant was not approved.
In the course of the hearing I did receive evidence going to the structural capacity of the building. I also received evidence about the Landlord’s internal design approval process and the development approval process, as well as what the Tenant was seeking to do by way of layout and design of the proposed lease area and the nature and size of his proposed business activities – and the interaction between all of those things just mentioned.
In support of his assertion that a mezzanine could not be constructed, the Tenant relies in part upon the contents of an email dated 11 October 2013 from Mr Ray Kusturin to a Mr Peter Begley. Mr Kusturin is a qualified engineer and the managing director of Henry and Hymas, the consultant engineers engaged by the Landlord.
I did not hear evidence from Mr Begley but I was told that he holds a building licence and had been engaged by the Tenant to assist him. I received a written statement prepared by the Tenant into evidence (Exhibit D1) as part of his evidence in chief and the email referred to is an annexure to it.
In his email Mr Kusturin raises concerns about the ability of the structure to support a mezzanine floor. He says that the mezzanine floor would need to be supported from the existing columns because the slab had not been deigned to take load points from a new column. He points out the difficulties in having a mezzanine supported by existing columns because some would be within the lease area of a neighbouring tenant. He goes on to say – “The only way that I can see to support the mezzanine would be to introduce strengthening beams under the slab in the car park which would take the mezzanine loads back to the structural columns.”
An affidavit sworn by Mr Kusturin was received in evidence at the hearing and he was available by telephone for cross examination. In his affidavit, Mr Kusturin deposed to having certified (on a date after the date of the email) that “the existing structure, including columns, transfer beams and slabs were all structurally adequate to carry all additional loadings from the proposed mezzanine”. Inferentially, the proposed mezzanine is what was described in the preceding paragraph of his affidavit as “a light weight, steel and timber mezzanine within the footprint of the shop 9 tenancy ...”.
In the course of cross examination, Mr Kusturin was asked questions about his email of 11 October 2013.
He was asked whether it was correct that he had said additional strengthening of the beams under the slab would be required. He responded by saying:
..... that was in my original letter just to alert everyone that we’d have to do some checking and make sure that – well, potentially we had to do some checking to make sure the existing structure was adequate. In worse case if it wasn’t adequate then we’d have to try and do – we’d have to either strengthen the floor underneath or take some beams to the columns on the other side of the petition to the other tenancy. But as I said subsequent to that we went to additional detail of actually doing calculations to back check the structure and satisfy ourselves that that wouldn’t be required and that we could do it by placing columns on the dividing wall between the tenancies.
Mr Gelonese went on to ask if it was common for Mr Kusturin to say that a structure won’t accept any point loads, and that it needs to be strengthened and then a month later to say yes, it’s fine, go ahead and build the structure. Mr Kusturin responded by saying:
Well the first comment was like a – like I’m trying to say was not – not give people hope that they’ve got an easy build here. I’m trying to point out there could be problems with this – with this proposed work and we’re going to have to do some checking with it. I think it’s fair and reasonable yes, to point out the risks involved in a project.
And in answer to further questions about how he had worded his email Mr Kusturin went on to say:
.... in my email of October, early October I was just trying to say that there’s potential problems there. We hadn’t – we hadn’t carried out a complete check of the structure or reviewed the loads and like I’m saying subsequent to that we carried out a thorough check and we found that the proposed construction of the mezzanine was possible.
Mr Kusturin gave evidence that after sending his email he had reviewed the original structural drawings for the building, including the existing post-tensioning drawings which showed the post-tensioning cables and reinforcement in the slabs and beams. He said that he did back calculations to see what the reserve capacity of those beams was, to take into account the additional loading of the mezzanine and went on to form the opinion that the existing structure was adequate.
Mr Kusturin used the expression “a lightweight mezzanine structure” in his testimony and had used a similar expression in his affidavit. In the course of cross examination he was asked the following question:
The structure that we proposed to build was not going to be a lightweight structure given the area that it was taking up and the fact that we had to put commercial kitchen, bathrooms, cool rooms, obviously furnishings and that kind of thing. The load would be over 20 ton, is that what you call a lightweight structure?
After some exchanges to clarify precisely what was being asked of Mr Kusturin the following exchange took place:
So your answer is yes, a 20 ton load, what you’ve described as the lightweight structure is still an appropriate structure and the method that was proposed for the transfer of that load downwards is still appropriate?---Yes.
The overall effect of Mr Kusturin’s evidence can be summarised in the following exchange under cross examination:
So even though you have written it here, saying “note that the slab has not been designed to take any point loads,” you don’t agree with that?---We carried out checks after that and thoroughly examined the structure of the existing drawings, the post (indistinct) that was installed and as originally designed we were happy that the proposed mezzanine could be installed.
No expert evidence was put before the Court by the Tenant to challenge the professional opinion expressed by Mr Kusturin. That does not mean that the Court is bound to accept his opinion evidence.
One source of concern about the evidence of Mr Kusturin is what he says about his email of 11 October 2013, and his intention in writing it. His assertion that his communication was “ .....just to alert everyone that we’d have to do some checking and make sure that – well, potentially we had to do some checking to make sure the existing structure was adequate” is clearly not supported by the plain words he uses in his email. It is unsurprising that a reader of the email would (as Mr Gelonese did) form the view that the existing structure was incapable of supporting the mezzanine floor.
Whilst Mr Kusturin’s assertions about what he meant in his email of 11 October 2013 raise concerns those concerns do not go so far as to persuade me to reject his other testimony.
It is apparent that Mr Kusturin had written the email before carrying out any detailed inspection or review of the building’s design specifications. He subsequently did so and concluded that construction of the mezzanine was possible without the need for any structural strengthening work to be undertaken.
In the end result I accept the professional opinion evidence of Mr Kusturin and I find that the mezzanine floor proposed could be constructed without the need for any structural strengthening work to be undertaken on the building.
The second aspect of the core question about the mezzanine floor is that of whether a development application was required. Consideration of that cannot take place without asking for precisely what any development application would be required.
Evidence was received at the hearing about the extent to which particular aspects of what the Tenant wished to do by way of his business operations at the premises triggered a requirement for development or other approvals. In particular, evidence was received about particular requirements in relation to the provision of toilets, disabled access and noise abatement facilities and what might flow from an extension of the building footprint to accommodate the Tenant’s needs if such an extension was undertaken.
Such considerations were no doubt very important, perhaps crucial, to the Tenant’s overall decision making but they are not determinative of the question to be answered about any development application.
I have already dealt with what I infer to be the Tenant’s allegations about the mezzanine floor at paragraph 21 above. The evidence before me is to the effect that, at the time of entering into the Deed of Variation, the exchanges between the parties had been about the construction of a mezzanine floor with little or no additional detail being discussed save that it was to have a maximum area of 60m2.
Under the terms of the Agreement to Lease, the Tenant committed to enter into a lease of the premises, but his commitment was not made subject to or conditional upon any development application being approved or any other necessary regulatory approvals being obtained. In fact, to the contrary (but as is commonly the case with leases of commercial premises) the agreement between the parties imposed express obligations on the Tenant to “obtain all necessary permits and approvals required by law or any Relevant Authority to undertake the Tenant’s Works” (clause 3.1.3 of the Agreement to Lease), and to “comply on time with all laws and the requirements of authorities in connection with the Premises, the Tenant’s Business, the Tenant’s Property and the use or occupation of the Premises (including obtaining all permits)” (clause 12.1(a) of the Agreement to Lease).
It is not in dispute that the proposed use of the premises by the Tenant was known to the Landlord. It does not however follow that what is to be considered is whether a development application was required not simply for the construction of a mezzanine floor of 60m2 but rather for the construction of such a mezzanine and for any other things necessary to accommodate the particular design, use and circumstances of the Tenant and his proposed business. To frame the question under consideration in that manner would be inconsistent with the tenor of the terms of the express agreements between the parties to which I have referred.
In the circumstances this second aspect of the question should be approached on the basis of asking whether a development application was required simply for the construction of a mezzanine floor with an area of approximately 60m2 but otherwise without regard to particular requirements for the proposed business operations of the Tenant.
The evidence at hearing included the testimony of Mr Rodney Thornton, the Landlord’s construction project manager, and Mr Petri Laajoki, a building certifier. Mr Thornton’s evidence was that the construction of a mezzanine of 60m2 would not result in the building’s allowable Gross Lettable Area being exceeded nor alter the building footprint or its fascade.
Mr Laajoki’s qualifications as an expert were not challenged. His evidence was that, in the circumstances described by Mr Thornton, no development application was required for the construction of the mezzanine floor.
Mr Gelonese put to Mr Thornton that he knew that the proposed mezzanine floor could never be built but that proposition was rejected by Mr Thornton. Mr Laajoki’s testimony that no development application was required was not challenged.
I accept the testimony of Mr Thornton and Mr Laajoki. On the basis of that evidence I find that the construction of a mezzanine floor of approximately 60m2 did not require a development application.
It follows that I find that a mezzanine floor was capable of being constructed having regard to both the structural integrity of the building and the absence of any requirement for a development application.
Having made that finding the outcome for the Tenant’s claims is inevitable.
The Tenant’s claim that the Deed of Variation is invalid because the Landlord did not disclose that the mezzanine floor could not be built must be dismissed because the mezzanine floor could be built.
The Tenant’s claim that he was given false and misleading information, or that he was tricked by the Landlord because the Landlord knew that the mezzanine floor could not be built must be dismissed for the same reason – that is that a mezzanine floor could in fact be built.
It is apparent that the arrangement which was entered into between the Landlord and the Tenant left the Tenant exposed to some risks – including a risk that his business operation from the premises, as he wished to conduct it, would not be able to meet all of the necessary regulatory approvals under circumstances where he would be bound by the lease in any event.
The risk just identified is a risk which existed whether or not the special arrangements about the mezzanine floor had been entered into. There are various ways in which Mr Gelonese could have sought to minimise the risk, but they are not relevant for present purposes.
I have dealt with Mr Gelonese’s defence on the basis upon which his case was presented. Mr Gelonese’s allegation that the documents were misleading was limited to his claim that he was misled because the mezzanine floor could not be built, and not that he was misled in some way about the risk to which I have just referred. Indeed the risk referred to was always apparent on any fair reading of those documents. Mr Gelonese is not a person with any special vulnerability; he was legally represented at the relevant times and he had the opportunity to obtain legal advice on the documents.
Whilst it is unfortunate for Mr Gelonese that he could not do what he wished to do with the leased premises, and that appears to be what has led him to breach the lease, the fact remains that he has breached the lease and the Landlord is entitled to its legal remedies.
The conclusions just reached mean that the Plaintiff’s claim succeeds and the Defendant’s counterclaim cannot succeed.
I turn to consider the quantum of the Plaintiff’s claim.
At hearing, and in its written submissions, the Plaintiff’s claim was quantified as follows:
a.
Unpaid rent owing under the lease for the period from commencement (25 October 2013) to the date of termination (8 April 2014) – 166 days at $271.23 per day
$45,024.18
b.
Unpaid outgoings for the same period
$7,231.18
c.
“Lost rent” from the date of termination (8 April 2014) to the date when the premises were re-let (31 May 2015)
$116,345.31
d.
“Lost outgoings” for the same period
$21,359.80
e.
Proportion of the cost of the Landlord’s works
$51,684.67
f.
Interest in accordance with clause 8.7 of the Lease
g.
Costs on an indemnity basis in accordance with clause 6.1.6 of the Lease
I note that no evidence was presented by the Defendant on the issue of quantum, save for a passing comment in his statement that the premises were in fact re-let as a result of what he described as “my gesture of goodwill in referring the new and existing tenant, where I explained to the new tenant that I could not obtain required government approvals for the proposed cafe/restaurant, and that this space would suit his business, being prime location”.
I am satisfied that the evidence supports the claim for rent and outgoings for the period from the commencement of the Lease to the date of termination. These amounts are properly described as liquidated claims.
What are described by the Landlord as claims for “lost rent” and “lost outgoings” after termination are properly a claim for damages for loss of the benefit to the Landlord of the balance of the term of the Lease. The evidence establishes that the premises remained vacant for a period of a little over 12 months and were eventually re-let for a higher rent. I am satisfied on the evidence that the Landlord took appropriate steps to re-let the premises and so to mitigate its loss. In the circumstances I am satisfied that the appropriate measure of damages for what are described as “lost rent” and “lost outgoings” are the amount calculated by reference to rent and outgoings which would have been payable during the period of post-termination vacancy – that is amounts of $116,345.31 and $21,359.80, making a total of $137,705.11.
The Plaintiff also claims an amount of $51,684.67 as “a proportion of the Landlord’s Works”. The claim is properly framed as part of the claim for damages for breach of the Lease. The evidence to support this aspect of the claim is found in the statement of Mr Rodney Thornton, admitted into evidence as Exhibit P15 and his testimony on 9 September 2016. He describes the costs incurred as “redundant”. On the basis of his evidence I am satisfied that the amount claimed represents the costs incurred by the Landlord by way of undertaking Landlords Works for the benefit of the Tenant, that those works were not required by the new tenant, and that they are of no residual value to the Landlord. In the circumstances I am satisfied that the appropriate measure of damages for what is described as “a portion of the Landlord’s Works” is an amount of $51,684.67.
The Plaintiff’s claim includes a claim for costs. I did not receive detailed submissions on costs at the hearing.
Section 154 of the Leases (Commercial and Retail) Act 2001 provides that each party to any proceeding under the Act must bear their own costs unless the Court makes an order about costs.
Whilst the discretion implicit in this provision is not constrained by any requirement that special or exceptional circumstances be demonstrated, there must be some identifiable factor or factors sufficient to justify a departure from the normal rule. – see Liangis v IPEX ITG Pty Ltd [2005] ACTCA 28.
No submissions were made in the written submissions on behalf of the Plaintiff as to any identifiable factors sufficient to justify departure from the normal rule, insofar as a claim for costs in the exercise of the Court’s discretion is concerned.
There is authority for the proposition that where there is a contractual right to costs, the discretion to award costs should ordinarily be exercised so at to reflect that contractual right (see for example Gomba Holdings Ltd v Minories Finance (C.A.) [1993] Ch 171 at 194) but such authorities are not in the context of a statutory provision such as s154.
The Plaintiff’s claim for costs is not, in any event, expressed to be sought pursuant to the exercise of the Court’s discretion to order costs. Rather, it is expressed in the written submissions as being “on an indemnity basis in accordance with clause 6.1.6 of the Lease”. It was pleaded in the Amended Statement of Claim as a claim for costs pursuant to clause 8.7 of the Lease, but nothing turns on that for present purposes.
Framed as it is, the Plaintiff’s claim for costs is one for an amount claimed to be owing by virtue of the express agreement by the Tenant to pay the costs as set out in the Lease, rather than pursuant to the Courts discretionary power to make an order for costs under s154. It is in effect a liquidated claim for monies asserted to be owing by the Tenant under the Lease.
A claim for costs made on that basis faces two difficulties.
The first is that, pleaded in that fashion, the claim requires evidence to be presented at hearing as to the amount of costs asserted to be payable so that an appropriate award can be made in satisfaction of the liquidated claim. No amount was specified for the claim for costs and no evidence was presented to support any amount in respect of the claim.
The second and more fundamental difficulty, insofar as what is claimed is asserted to represent costs of the proceedings, stems from the effect of section 19 of the Act which provides that, if a provision in a lease is inconsistent with the Act, then the provision is void to the extent of the inconsistency.
Against the background of section 154 requiring that each party to proceedings bear its own costs (absent an order otherwise), a provision in a lease which extends to obliging a tenant pay the costs of proceedings is inconsistent with the Act and therefore void to that extent.
In the circumstances I find against the Landlord on its claim for costs of the proceedings.
The Landlord’s claim for interest is expressed to be made under clause 8.7 of the Lease. I cannot see that any evidence has been led which would permit the calculation of interest in accordance with that clause. In the calculations which follow I have allowed interest having regard to regulation 1619 of the Court Procedure Rules 2006 after allowing for some rounding, and, for ease of calculation, treating the whole of the claim for unpaid rent as having arisen on the date of termination and the whole of the balance claim as having arisen on the date the premises were re-let.
The formal orders of the Court are as follows:
a. I give judgment for the Plaintiff against the Defendant in an amount of $270,622.14 comprising $241,645.14 for claim and damages and $28,977.00 for interest to the date of judgment.
b. The Defendants counter-claim is dismissed.
c. I order that there be no order for costs of the proceedings.
I certify that the preceding eight two [82] paragraphs are a true copy of the Reasons for Decision of his Honour Magistrate P J Morrison.
Associate: Matthew Bautz
Date: 28 April 2017
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