Gray v Rizzo
[2023] QCAT 76
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Gray and Anor v Rizzo [2023] QCAT 76
PARTIES:
GEOFFREY RAYMOND GRAy (applicant)
ALAN EDWARD GOUGH (applicant)
v
SANTO RIZZO
(respondent)
APPLICATION NO/S:
RSL025-20
MATTER TYPE:
Retail shop leases matter
DELIVERED ON:
28 February 2023
HEARING DATE:
24 October 2022
HEARD AT:
Brisbane
DECISION OF:
Presiding Member Bertelsen
Member McBryde
Member Norling
ORDERS:
The Respondent Santo Rizzo pay to the Applicants Geoffrey Raymond Gray and Alan Edward Gough the sum of $15,540.70
CATCHWORDS:
LANDLORD AND TENANT – RETAIL TENANCY - where dispute about repayment of security bond held under lease on vacate – immediate seamless subsequent lease of premises on identical terms and conditions – whether obligation to return premises to pre lease condition lay with original lessee or subsequent lessee – landlords conduct a waiver of lessees obligations
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3, s 4, s 10, s 100
Retail Shop Leases Act 1994 (Qld), s 5A, s 5C, s 83, s 115
APPEARANCES & REPRESENTATION:
Applicant:
Geoffrey Raymond Gray
Kaylene Gray
Respondent:
Santo Rizzo
Mark Wright
REASONS FOR DECISION
By notice of dispute filed 28 October 2019 the Applicants Geoffrey Raymond Gray (Mr Gray) and Alan Edward Gough (Mr Gough) seek from Santo Rizzo (Mr Rizzo) return of a security bond $22,250.00 plus interest or the balance of $18,970.00 being $22,250.00 less an insurance payout of $3,280.00 supplied by them as a condition of lease of free-standing premises at 735 Albany Creek Road, Albany Creek.
Background and Evidence
Mr Gray and Mr Gough as lessees and Mr Rizzo as lessor entered into a lease agreement for the lease of 735 Albany Creek Road, Albany Creek for a term of two years commencing 1 August 2017 at a rental of $6,583.33 plus GST per calendar month. The retail business to be conducted at the premises was to be sale of hot and cold beverages including beer and coffee and ready to serve and made to order meals including desserts, that is, a restaurant named Samuel Grays Cafe. The security bond equated to 3 months’ rent inclusive of GST $21,725.00 with $22,250.00 being paid at commencement. The lease provided for the lessee to service and maintain all the equipment in the premises an inventory of which was attached to the lease. No lease inventory was produced to the Tribunal.
When the lease expired on 31 July 2019 Mr Gray and Mr Gough stayed on as monthly tenants subsequently being notified by Mr Rizzo’s solicitor on 19 August 2019 to vacate on 30 September 2019 and being told to complete make good works namely remove signage, clean premises, repair/replace plant and equipment missing or not working, remove graffiti from side wall, repaint front wall in original white and repaint entrance kerb in original brown. Mr Rizzo said conversations at the time were to the effect that the premises be returned to the same condition as at lease commencement, in particular a beer line installed be removed together with the counter but with the mirror to be reinstated. He said he discussed with Mr Gray the obligation to repaint and redecorate in terms of the lease because the premises had in the meantime been painted in different colours both internally and externally.
Mr Rizzo said later he became aware there was a prospective tenant to take over the premises.
According to Kaylene Gray, Mr Gray’s wife (Ms Gray), she met with Mr Rizzo on Sunday 29 September 2019 to discuss exiting the premises and to go through the list of items that were included in the premises and conduct a formal inspection. When Mr Rizzo arrived, he did not enter the restaurant proper. He did not inspect the premises. Assertedly he stated, “I don’t have to be here you can just hand the keys to the new lessee Karen Early”. In the event and at Mr Rizzo’s say so keys were handed directly to Karen and David Early on 1 October 2019 the commencement date of their lease after Mr Gray and Mr Gough vacated the day before. There were no rent arrears at vacate. Assertedly Mr Rizzo while in attendance on Sunday 29 September 2019 said words to the effect “I’m happy, you’re happy, they are happy, so we are all happy”. The lease to Karen and David Early (lease in the name of Early May Enterprises Pty Ltd trading as Andre and Oskars) attached an inventory of plant and equipment which both Karen and David Early signed off on.
The incoming lessees Karen and David Early were in fact lessees of the next-door embroidery shop. According to Mr Gray and Mr Gough the Earlys were happy with the way the premises were handed over to them.
Subsequently on 23 October 2019 Mr Gray enquired about return of the bond but was informed there would be no return of the bond due to the state of the premises at exit. But no particulars were provided despite repeated requests other than to say Mr Rizzo was upset a prickly pear bush had been removed. It was explained to Mr Rizzo the shrub was removed because it restricted access to electrical, plumbing, air conditioning, gas fitting and refrigeration trades persons as well as because it was a noxious prohibited invasive species.
Mr Gray and Mr Gough maintained that on exit all floors walls windows and doors were thoroughly cleaned, ceiling fans inspected and cleaned, walls and ceilings painted all to the satisfaction of the incoming lessees the Earlys (in the context of no inspection on 29 September 2019 by Mr Rizzo). Items and equipment were repaired or replaced, bar area lights fully replaced, fans installed due to aged air conditioners not worth repairing.
In his statement filed 25 March 2020 Mr Rizzo stated there were a number of expenses to which he had been put
(a)Repainting to same colours internally and externally as at commencement $5,100.00
(b)The LED green sign had been storm damaged. He had it repaired at a cost of $4,994.00 the price quoted by a contractor John Brown of Getem LED Signed Pty Ltd on 20 December 2019.
(c)The incoming lessees, the Earlys, complained about the state of cleanliness of the kitchen on entry. Cleaning of the canopy flu and filter together with a kitchen degrease clean was carried out on the 6 October 2019 by Owens Management Services at a cost of $1,562.00.
(d)Mr Gray and Mr Gough when removing the prickly pear bushes caused damage to a timber retaining wall. He produced a quote dated 10 October 2019 from AAP Building and Maintenance for replacement of sleeper retaining walls, timber gate, section of fence and waste disposal at a cost of $4,609.00.
(e)To put the kitchen back to its original condition, replace the bulkhead, vanity unit, glass door, removal of counter all required to put the premises back in its original condition not done on exit, a quote from AAP Building and Maintenance for $14,179.00 was produced. The quote appears contradictory in that it is dated 19 February 2020 with an expiry date of 8 January 2020. There is no detail of work to be undertaken rather a notation that the estimate was visual, a full costing being required to fully price.
(f)Unity water account for time in possession. Total invoice for period 18 July 2019 to 10 October 2019 was $559.10 and lessees share to 30 September 2019 being $449.10.
In summation Mr Rizzo said he did not inspect at time of changeover because he had already informed Mr Gray the premises had to be thoroughly cleaned, painted and reinstated. He relied on lease terms Clause 7.3 redecorate at end of lease, Clause 8.3 take down and remove any fixtures installed and Clause 24 return the premises in the order and condition as at commencement except for fair wear and tear.
In reply Mr Gray said the new tenants the Earlys were happy to take over the premises with beer lines intact because they would form an integral part of their business Andre and Oskars café restaurant and bar. They would reinstate to Mr Rizzo’s satisfaction. Mr Gray said this was a stipulation included in the Early/Rizzo lease. This arrangement was verified in the statement of 31 March 2020 by Karen Early produced to the Tribunal. That arrangement further involved a contract between Samuel Grays Café (Mr Gray and Mr Gough) and Early May Enterprises (Karen and David Early) dated 1 October 2019 whereby Samuel Grays sold the beer lines and peripherals to Early May Enterprises for $10.000.00 payable by instalments.
With respect to redecorate Mr Gray stated that the premises was repainted and decorated; that there was never any stipulation as to colour; that in any event the premises was painted white externally the colour demanded by Mr Rizzo’s solicitors in their letter of 19 August 2019, but which Mr Rizzo later stated was not the colour the premises was painted in externally initially. He said Mr Rizzo was contradicting himself. Karen Early in her statement of 31 March 2020 said she observed Kay Gray painting internal walls ceiling etc prior to handover. She also stated she was not aware of any painting ever being done since.
With respect to the LED sign, it was storm damaged, but Mr Rizzo refused to claim on his own building insurance. Mr Gray said he claimed on his own insurance, was paid $3,280.00 by Albany Insurance with John Brown of Getem LED Signs offering to reduce his invoice to $3,758.00 in view of the lesser payment of $3,280.00 by Albany. The $3,280.00 is still held available to be offset against the security bond claimed.
With respect to cleanliness of the premises Mr Gray said the incoming lessees the Earlys undertook their own cleaning arrangements because they were installing new appliances and wanted the premises clean to their own satisfaction. Such accorded with Karen Early’s statement of 31 March 2020 wherein she stated the kitchen was not cleaned to her satisfaction and she informed Mr Rizzo. She qualified her assessment by saying Earlys’ standard may have differed to Samuel Grays and that she was not aware of the state of the premises at commencement of Samuel Grays’ lease. Samuel Grays may well have left the kitchen as they received it. Cleaning costs of $1,562 were incurred deducted over two months’ rent payment by Earlys.
With respect to prickly pear removal Mr Gray reiterated removal for reasons already stated adding that subsequent inspection by Moreton Bay Regional Council plumbing inspectors revealed the prickly pear bushes obscuring illegal plumbing works in place there prior to the lease commencement. He said there was no damage to any retaining wall rather just to rotten termite ridden timber sleepers. The gate and fence were nowhere near the place where prickly pear was planted and in need of repair prior to lease commencement. Mr Gray stated there was a washing machine that was removed from its original position connected to an illegal floor mounted water inlet and draining into an open drain directly outside the main cold room. He installed a new washing machine to the correct water supply and trap drain in accord with plumbing regulations.
Mr Gray was agreeable to paying the appropriate share of the final Unity Water invoice.
In a further statement dated 13 August 2020 Mr Rizzo said the prickly pear bush was planted to protect the wall from graffiti; that the whole restaurant had been painted in different colours including his apartment; there were changes to the bar from glass mirror and glass shelf to black timber; installation of a new counter for coffee machine and cake fridge; installation of a 30 metre beer line including beer taps; replacement of disabled toilet vanity basin with a washing machine and washing tub. He asserted all equipment was in working order from cooking stoves to refrigeration all checked by Tech Refrigeration and Speedy Plumbing. However, within a month there was a complaint about a dishwasher not working. It was replaced. He asserted that as of 30 September 2019 nothing was working including the dishwasher, ice maker and glass washer; that one of two stoves with an oven and six burners only had three burners working. Only the frame of the other stove with three burners was found in the shed.
He reiterated he paid for the LED green sign repair this time $4,999.00 and that he would need to repair or buy an exhaust canopy fan at a cost of around $5,000.00 because it was not used during the course of the tenancy.
Mr Rizzo said Mr Gray called him and informed him that the Earlys had purchased the beer line and other equipment that belonged to Samuel Grays Café. Mr Rizzo said he needed a written declaration form signed by Mr Gray and by David and Karen Early that if something went wrong with the Earlys’ lease the Earlys would be responsible to return the restaurant in the same condition that it was given to Mr Gray. He said Mr Gray agreed but no declaration form was ever given to the Earlys.
Mr Rizzo said when the Earlys left, the computer and point of sale was not working, deep freezer was missing, pizza fridge was not working, thirty metres of beer line was left in the roof and fifty salt and pepper grinders were missing. He said because of changes to plumbing, counter for coffee machine and beer line without Council approval he copped the blame from Moreton Bay Regional Council. He had no choice but to fix everything.
Mr Gray replied in his statement of 24 August 2020. In summary he reiterated the prickly pear bush was cut down. It was noxious, invasive, and banned and shielded illegal plumbing. The restaurant was painted to suit Samuel Grays’ own style. There was never any registered apartment. It was somewhere Mr Rizzo used to sleep. The bar area was changed to suit lessee’s décor. Coffee bar and beer lines were added. The vanity unit which was outside the disabled toilet was failing – it was removed. A laundry tub was added. A replacement washing machine was moved in. A mirrored wall cabinet was added.
Mr Rizzo’s equipment was in “somewhat” working order but lasted only a short while. The pizza oven was repaired numerous times. The replaced dishwasher did not last and a new one was rented from Silver Chef. Kitchen cool room was repaired. Ice machine broke down and taken away by technician but never returned replaced with a rental from Silverchef. Glass washer lasted a few months a replacement unit being rented from Silverchef. The oven and grill were over twenty years old and tired. The grill was removed to the rear shed. The oven was moved by the Earlys.
All cleaning was done as per lease requirements. There was no need to replace the exhaust canopy. The Earlys had the filters replaced when they moved in. There were no photos on the date of vacate 30 September 2019 by Samuel Grays. The Earlys/Early May Enterprises were responsible to return the premises to the satisfaction of Mr Rizzo as part of their lease requiring the premises be redecorated upon vacate. The computer was working as it ran the LED sign. Early May Enterprises took over the point-of-sale equipment. Mr Rizzo took away a freezer which Samuel Grays replaced. The pizza fridge was in working order. Mr Gray knew nothing of any complaint about missing salt and pepper shakers.
Mr Gray stated he only found out later through Moreton Bay Regional Council that the premises was non-compliant as a restaurant, that the roof canopy was illegally structured and that there was illegal plumbing installed.
Mr Gray asserted that Mr Rizzo could not state if items were working or comment on the state of the premises or what was missing as he did not inspect the premises or any items of inventory at the expiry date of Samuel Grays’ lease being the same day the Earlys took possession ie 30 September 2019. Rather he (through Ms Gray) was instructed to hand over the keys to the Earlys/Early May Enterprises whose lease subsequently only lasted some six months. It was their responsibility pursuant to their lease to return the premises to Mr Rizzo’s satisfaction.
Latterly on 17 December 2020 Mr Rizzo filed a counter application. In this document he now claimed $39,943.10 as follows;
(a)Repair LED screen $4,994.00
(b)Repaint premises $6,600.00
(c)Cleaning $1,562.00
(d)Replace sleeper wall gate and fence $4,609.00
(e)Conversion to original condition
(f)Replace bulkhead $14,179.00
(g)Unity Water $499.10
(h)Legal costs $4,000.00
(i)New compressor cool room $3,500.00
The Statement by Karen Early dated 31 March 2020 stated that on 12 September 2019 the Earlys signed a lease commencing 1 October 2019. On 30 September 2019 they met the Grays who had been instructed by Mr Rizzo to hand over the keys. There was no inspection by Mr Rizzo that day. In fact, Mr Rizzo was not sighted at all that day. Upon entry they did not consider the kitchen clean to their satisfaction acknowledging that their standards may have been very different to how Samuel Grays received the premises at commencement of their lease. Mr Rizzo was notified with cleaning cost deducted over two months’ rent payments. Karen Early observed Ms Gray painting internal walls, ceiling etc prior to handover, with Ms Gray advising that such was required to be done as per their lease.
Karen Early confirmed purchase of the beer lines and fittings to remain during their tenancy. Mr Rizzo told the Earlys they would need to remove beer lines and fittings at the end of their tenancy which they agreed to do. She confirmed that their lease stated they must redecorate at the end of their lease. She stated as at 31 March 2020 no painting had been undertaken by Mr Rizzo inside or out. She stated they had painted, fixed damaged walls, ceiling, lights, electrics internally as well as cleaned floor and made repairs but have not been reimbursed at all. Mr Rizzo was requested to repair loose floorboards and voids in the ceiling.
On 1 February 2020 there was a small fire at the premises which identified that the premises did not have a certificate of classification class 6 restaurant at its front entrance as required by law. There was a meeting with the Community Fire Inspector (QFES) as there was no fire exit signage. Mr Rizzo attended the meeting. The roof front portion of the building was only temporary. There was no approval for building works. QFES advised that Moreton Bay Regional Council should be contacted to check that the premises was building compliant as there was no fire wall between the fence, timber wall and timber floor, no emergency exit lighting/signage and illegal internal heaters resulting in reduced seating capacity.
On 6 February 2020 Moreton Bay Regional Council building inspector attended the premises. There were non-compliant building works. A defect notice would be issued. A week later a Moreton Bay Regional Council plumbing inspector attended the premises. There were non-compliant plumbing works throughout the property including illegally discharging waste into a storm water drain. A plumbing defect notice would be issued. Karen Early went on to say that on 28 February 2020 after receiving the plumbing defect notice they were advised they could not open the restaurant until all plumbing defects were rectified. As of 31 March 2020, the restaurant remained closed. No certificate of classification was forthcoming, that is , no approval to conduct a restaurant business.
At hearing
A number of witnesses gave evidence at the hearing
Karl Betschwar
Karl Betschwar of Karls Cleaning Services stated he undertook some three hours of cleaning at about the time of expiration of Samuel Grays’ lease. He did everything that was absolutely necessary: windows, fans and cleaned the tracks of the front sliding doors. Further cleaning may have been required. He charged $80.00.
Alan Edward Gough
Mr Gough, an electrician by trade, and Mr Gray were in partnership dissolved one year into the lease term. He said equipment at commencement was in poor condition but some not necessary to their operations in any event. Repair of holes in walls was carried out, the hall repainted, and insulating material installed in the extension on the buildings side. Power dropped out a number of times due to overload, fridges broke down and an ice machine taken away for repair was never returned. The dishwasher broke down. It was replaced. Appliances could not be fixed so they rented their own. In particular the pizza oven broke down. Gasfitters were called out five or six times to replace thermo couples. The pizza oven door fell off due to age.
Geoffrey Raymond Gray
Mr Gray confirmed lease termination on 30 September 2019. There was no inspection by Mr Rizzo on that day. It was some six months later when the Earlys were evicted from the following lease that claims were made by Mr Rizzo. In reply to the Tribunal’s questioning about the six points raised in Solicitor Torbey’s letter of 19 August 2019 he said (1) All signage was removed (2) cleaned premises in full (3) repairs and replacements attended to (4) Graffiti removed (5) front wall repainted in white (6) entrance kerb repainted not in brown but rather safety yellow.
It was suggested to Mr Gray that the issue of return of the bond was raised in April 2019, but Mr Gray said that was not the case. He said it was only when he requested the bond back that Mr Rizzo sought a declaration from Karen and David Early to be obtained by him to the effect that he Mr Rizzo would get his restaurant back the way it was given to Samuel Grays in 2017. Mr Gray did not obtain any such declaration because the Earlys had signed a following lease.
Regarding the LED sign Mr Gray said it was repaired after exit. He had allowed for a set off given he was holding his insurance claim money.
Regarding the beer line Mr Gray said it was sold to the Earlys when they took over the premises. When the instalment purchase agreement faltered sometime later, he took back all that was recoverable. That did not include the beer lines which may have remained in the ceiling. Mr Gray was aware the Earlys considered the kitchen area cleaning not up to scratch but that was as far as it went.
Mr Rizzo evidence
Mr Rizzo referred to his statement filed 17 December 2020 and as presented to the Tribunal. He said Mr Gray would get his money back provided he left the restaurant in the same condition as it was given to him. He reiterated the prickly pear bush was cut down outside everything inside destroyed including two stoves, one six burner and one three burner, a dishwasher, glass washer, ice maker and two under counter fridges and the cold room. He said there were holes in the cold room and the granite top in the bar. The exhaust fan in the kitchen was not working and dirty. The new counter built by Mr Gray for his coffee machine and cake fridge and point of sale computer was not removed. The restaurant was painted black and white. A washing tub and washing machine were placed in the disabled toilet. A sink was damaged and never repaired. The beer line in the ceiling was never removed.
He confirmed when Mr Gray asked for return of the bond, he told Mr Gray that he needed to get a signed declaration from the Earlys stating that when they finished their lease they would put the restaurant back in the condition as it was given to Mr Gray. He said he became aware the Earlys had purchased the beer line equipment and a deep freezer the latter which he said was his.
Mr Rizzo produced to the Tribunal a memorandum of expenses comprising some thirteen items totalling $63,974.55 plus GST a substantial increase on his December 2020 Part D counter-application for $39,943.10, comprising some eight items. Neither the Tribunal panel nor Mr Gray had seen this document prior. It was pointed out to Mr Rizzo that if new claims were made in addition to claims referred to in Part D such may not be considered for the reason that Mr Rizzo was required to furnish all his material by 11 December 2020 pursuant to Tribunal directions of 13 November 2020. Those directions also stated, “No party will be allowed to present any evidence at the hearing that is not contained in the statements without justifying the need for such additional evidence to the Tribunal”.
Nonetheless the Tribunal made no determination at that point about inclusivity as part of the evidence of the memorandum of expenses, rather proceeding to hear evidence on each item as a matter of correct practice with the inclusivity issue forming part of the Tribunal’s final decision.
Item 1 Cleaning at $1,562.00. Mr Rizzo agreed his claim here remained the same.
Items 2 and 3 Cleaning by Monica Kroll and Tiffany Jackson $1,500.00 each in the period 22 April 2020 immediately after vacating by the Earlys through 23 September 2020 the date Mr Rizzo reopened the restaurant. Both were paid in cash.
Item 4 Painting by Salvatore Ferrini $18,000.00 in the period April 2020 through July 2020. According to Mr Rizzo the inside and outside was painted with Mr Salvatore being paid bit by bit never in advance. Mr Salvatore’s Tax Invoice dated 21 March 2022 does not record an ABN simply reciting “Painting work to restaurant, labour and material”. No receipts for payments were produced.
Item 5 Building and equipment repair by Deana Ophyal Marie quote $20,518.00 (actually $20,218.00) dated 10 March 2022. Mr Rizzo said he paid that sum bit by bit because he knew the people doing the work and they knew him.
Item 6 Building repair quote Anthony Napoli $14,179.00 not pursued.
Item 7 Anthony Napoli Invoice dated 8 January 2022 for cabinetry relocation, plumbing relocation for coffee machine and electricals $3,140.50. Paid according to Mr Rizzo.
Item 8 Anthony Napoli Invoice dated 19 March 2022 for bathroom repairs $764.50. Paid according to Mr Rizzo
Items 9 and 10 Exhaust fan canopy repair and cleaning 100 hours by Tony Macaroni and Santo Rizzo not claimed.
Item 11 $720.00 Purchase of chest freezer from Good Guys Carseldine as replacement for one allegedly taken by Mr Gray. Purchase stated to be March 2022. No Tax Invoice or receipt produced. Assertedly paid for by debit card.
Item 12 $5,500.00 Getem LED Signs. LED Sign repair paid for in cash and by debit card. Previously claimed at $4,494.00. Mr Rizzo accepted $4,494.00 as claim quantum. Sign reinstalled 14 November 2019.
Item 13 $550.00 Kallangur Bowls Club. Second hand six burner stove purchased early 2020 and paid for by debit card.
With respect to Mr Rizzo’s Counter Application Part D claim Mr Rizzo confirmed expense item 2 repaint premises $6,600.00 was superseded by his $18,000.00 painting claim in his memorandum of expenses. Item 4 Part D claim , replace sleeper wall gate and fence was no longer pursued. Item 6 Unity Part D water claim remained on foot. Item 8 Part D new compressor at $3,500.00 was to be added to the current claim though no sum was expended in respect of such item.
Finally, Mr Rizzo said the Grays were good rent payers but that he had to fix his equipment that he had had for twenty-three years.
Witness Fiona Norlander
Fiona Norlander confirmed she painted the right-hand exterior wall up to the eaves (as one looks at the building) on 26 September 2019 for four or five hours. She stated she negotiated around the garden beds to cover up the graffiti. The wall prior was a dirty white but painted clean white over the top the latter being the only colour applied.
Witness Karen Hampson
Karen Hampson stated that on 26 September 2019 she assisted Kay Gray clean the kitchen area for about four hours. She listed the tasks performed in her statement dated 24 March 2019 which included removing and stacking plates and crockery, cleaning crockery storage shelving, cleaning, and scrubbing food preparation areas, polish stainless steel in those areas, vacuum under sink and food preparation areas, clean and polish legs of pizza oven and vacuum floor under pizza oven.
Further evidence Geoffrey Raymond Gray
Mr Gray produced four photos of the restaurant all dated 4 March 2022. In photo one looking directly at the restaurant bar Mr Gray said the black cabinet depicted was installed by Samuel Grays as well as two ceiling fans and LED lights all still functioning. In photo two looking towards the restaurant bar from the left Mr Gray said the coffee cabinet and cupboard on the right were still there. The fan depicted on the upper right was installed by Samuel Grays and clearly still there. Photo three depicts the canopy (annexe) with canvas cover. Samuel Grays installed polystyrene sheeting and insulation with surrounds painted black by Samuel Grays. They had not been repainted. Photo 4 generally depicts the fixed roof and canopy with poles painted green by Mr Rizzo.
Further evidence Santo Rizzo
Mr Rizzo confirmed the structure and terms of his lease to the Earlys was exactly the same as his lease to Samuel Grays, even the rent was identical. According to Mr Rizzo when the provision of a declaration making the Earlys responsible to return the restaurant to the state it was in as at commencement of Samuel Grays’ lease was raised David Early said, “I’m not signing anything”.
When the Tribunal enquired did Mr Rizzo explain to the Earlys that they had to remove the beer lines at the end of their lease, given there was no condition in their lease about beer lines, Mr Rizzo stated it was just a verbal between him Mr Gray and David Early after that lease was signed.
Mr Rizzo produced ten photos six of which were taken on 18 September 2019, one on 21 September 2019 and three on 2, 9 and 10 October 2019 which Mr Rizzo said depicted the state of the premises both interior and exterior as left by Samuel Grays. Mr Rizzo said he inspected the restaurant one week before Samuel Grays left.
When it was pointed out by the Tribunal the lease to the Earlys went ahead absent the declaration sought that such may have been a gross mistake on Mr Rizzo’s part Mr Rizzo said he was conned. It was put to Mr Rizzo by the Tribunal that the contract for the sale of the beer lines made it incumbent on the Earlys to return the restaurant to its prior condition to the satisfaction of Mr Rizzo. Would not that obligation comply with Mr Rizzo’s declaration demand. Mr Rizzo was equivocal answering yes and no.
CONCLUSIONS
Mr Gray and Mr Gough leased from Mr Rizzo the restaurant premises 735 Albany Creek Road, Albany Creek for a two-year term 1 August 2017 to 31 July 2019. It was not disputed that Mr Rizzo held a security bond of $22,250.00. Rent was never an issue rather the state in which according to Mr Rizzo that Mr Gray and Mr Gough (for all intentional purposes Mr Gray) left the restaurant premises upon vacate on 30 September 2019.
Mr Rizzo attended the restaurant premises on 29 September 2019. He did not inspect the premises simply instructing Ms Gray to hand the keys over to the new lessee Karen Early. Given that Mr Rizzo stated in evidence he inspected the restaurant one week before he would have no doubt observed any interior or exterior changes to the restaurant premises at that time. Yet on 29 September 2019 he says he is happy foregoing any formal inspection or reconciling the inventory. It could reasonably be inferred he was happy with the state of the restaurant premises as inspected by him the week prior. Even if that is not the case the fact of the matter is that Mr Rizzo did not conduct any inspection on the 29 September 2019. He did not attend at all on the 30 September 2019. He cannot state with any certainty what the state of the restaurant premises was on these two days. Nor did Mr Rizzo produce any evidence of the actual state of the restaurant premises as at 29th or 30th September 2019.
The lease to Samuel Grays terminated on the 30 September 2019. Mr Rizzo attended the restaurant premises shortly after. There was no evidence he was dissatisfied with the state of the premises at that time rather it was not until 23 October 2019 when Mr Gray enquired about return of the bond that Mr Rizzo informed him there would be no return of the bond due to the state of the restaurant premises at exit. But no particulars were provided save Mr Rizzo’s complaint that the prickly pear bush had been removed. It was not until some six months later at the time of the Earlys’ eviction under their own lease that claims were made by Mr Rizzo.
Mr Rizzo had gone ahead and leased the premises as left by Samuel Grays immediately to the Earlys who were satisfied with the state of the premises upon entry bar a kitchen cleaning issue. That is to say Mr Rizzo’s asserted changes to the restaurant premises particularly the interior and for which Mr Rizzo claimed Samuel Grays was latterly liable to reinstate formed part of Earlys lease. In terms of their lease the Earlys were bound to return the restaurant premises in due course to its state as at commencement of their lease namely 1 October 2019.
What followed was clearly an attempted backtracking by Mr Rizzo. With the Earlys’ lease already on foot with only an obligation to reinstate as at 1 October 2019, Mr Rizzo sought to have Mr Gray obtain from the Earlys a declaration from them that they would be responsible to return the restaurant in the same condition as when given to Samuel Grays in August 2017. Mr Rizzo said there was a verbal agreement between him, Mr Gray and David Early. Mr Gray denied agreeing to any such arrangement because under the Early lease it was their responsibility to return the restaurant premises to its original state. Clearly that refers to the state of the restaurant premises at the time the Earlys formally took possession, that is, 1 October 2019. David Early was emphatic saying he was not signing anything.
A ludicrous element here is Mr Rizzo’s attempt to impose a liability on the Earlys for a return to the state of the restaurant premises as at August 2017. The Earlys did not and could not know the state of the restaurant premises in August 2017. Additionally, the Rizzo/Samuel Grays lease is a stand-alone contract proceeding according to its own terms and conditions. It was terminated immediately following lease to the Earlys.
It can be concluded that Mr Rizzo by his actions or perhaps more correctly his inactions on 29/30 September 2019 accepted the state of the restaurant premises at that time for the purpose of an immediate release to the Earlys, that release utilising and incorporating the changes effected at that time. Those changes were of benefit to the Earlys’ café and bar particularly the installed beer lines for the relatively short time, on the evidence an indeterminate time, they operated Andre and Oskars Café and Bar. In turn, those changes also befitted Mr Rizzo, who was able to re-lease the subject premises on the day after the Samuel Grays’ lease came to an end. It was not competent for Mr Rizzo to then attempt to turn back the clock and seek to have the restaurant premises returned to a state as at 1 August 2017.
In so far as the memorandum of expenses is concerned the Tribunal considers it ought not form part of Mr Rizzo’s evidence. By any measure it would be entirely unfair to Mr Gray and Mr Gough to be expected to adequately address the substantially increased quantum without notice. The memorandum of expenses was proffered at hearing more than three years after the events the subject of the memorandum occurred, some three years after the notice of dispute was filed in the Tribunal and some two years after the Tribunal directed Mr Rizzo to file his material preparatory to hearing. No compelling reason for the delay was given. Mr Rizzo is constrained to his Counter Application Part D filed 17 December 2020.
Of his eight claims only three can be considered as not being excluded: 1 Repair of LED sign. Mr Gray effectively admitted liability for this claim as an offset to the bond return. However, he based his admission on his insurance payout of $3,280.00. There was sufficient evidence produced to the Tribunal to find the actual cost of repair was $4,994.00 incurred by Mr Rizzo. The offset therefore should be $4,994.00; 2 Cleaning at $1,562.00. There was no evidence produced by Mr Gray or Mr Gough that the restaurant kitchen was in need of a major clean as at 1 August 2017. The Earlys considered the kitchen area required cleaning but were otherwise satisfied with the state of the premises as at 1 October 2019. The invoice for cleaning from Owens Management Services a third-party arm’s length operator indicated a major clean of the kitchen area was required whilst Mr Grays cleaning of the kitchen area was based on short hourly cleaning by diverse individuals. On balance the Tribunal accepts that further cleaning was necessary and allows the claim at $1,562.00; and 3 Mr Gray agreed to water charges outstanding at $499.10.
The Tribunal finds that Mr Gray and Mr Gough are entitled to a bond refund of $22,250.00 less LED repair, cleaning and water charges totalling $7,055.10, resulting in a nett figure of $15,194.90. The Application is substantially successful. The filing fee of $345.80 is also allowed.
ORDER
1. The Respondent Santo Rizzo pay to the Applicants Geoffrey Raymond Gray and Alan Edward Gough the sum of $15,540.70
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