Industrial Merchandising Pty Ltd v Clarkson

[2010] QCAT 9

CITATION:Industrial Merchandising Pty Ltd v Clarkson & Anor [2010] QCAT 9

PARTIES:   Industrial Merchandising Pty Ltd

v

William John Clarkson and Lorna Jane Clarkson as trustees for the Fit 1 Property Trust, Fit 2 Property Trust, Fit 3 Property Trust and Fit 4 Property Trust

APPLICATION NUMBER:            RET011-09  

MATTER TYPE:   Retail Tenancy Dispute

HEARING DATE:   20 January 2010

HEARD AT:   Brisbane

DECISION OF:   Barry Cotterell

DELIVERED ON:   20 January 2010

DELIVERED AT:   Brisbane

ORDERS MADE:   Lessee to pay

CATCHWORDS:  Retail tenancy dispute, claim by lessor for outgoings for insurance, public liability insurance, terms of lease

APPEARANCES and REPRESENTATION (if any):

William Carlton, Julie Morris for the Applicant
Chris Robinson for the Respondent

REASONS FOR DECISION

Hearing
20 January 2010

This is a claim in relation to outgoings for insurance under a lease. The insurance claimed by the lessor relates to both public liability insurance and property, being the building itself. The lessee (claimant) is seeking a declaration by the Tribunal as to the insurance premiums claimable by the lessor and payable by the lessee.

The previous owner of the property, New Farm Pty Ltd and the lessee, Industrial Merchandising Pty Ltd had an arrangement whereby the lessee took out insurance under an Allianz ‘business pack’ which in referring to the insured on the tax invoice named the lessee and included the words “(owner-plant & New Farm Pty Ltd ATF New Farm Unit Trust and Others”. No second bracket was used. On the schedule of cover under the heading “insured name” only ‘Industrial Merchandising was inserted without ‘Pty Ltd’. But under the heading ‘Insured Name 2’, “Pty Ltd and Others” was inserted. This wording of who was the insured could raise potential issues for dispute in the event of claim.

This policy covered a multitude of risks including Section One – Fire & Perils, Section 4 – Money, Section 5 – General Property, Section 6 – Glass, Section 7 – Public and product Liability, Section 8 and 9 were not insured, Section 10 – Machinery Breakdown, Section 11 – Computer/Electronic Equipment and Section 12 – Transit, which was not insured. Sections 2 and 3 were not included in the documentation provided to the Tribunal despite all six pages of the numbered document being provided.

In the opinion of this Tribunal, this policy could result in significant disputation in event of a claim by the lessor. As an example, if the building was entirely destroyed by fire, this policy purports to insure Industrial Merchandising for replacement of the building, removal of debris, etc. even though Industrial Merchandising do not own the building. The Tribunal did not sight the actual policy document.

The lessor has taken out public liability and property insurance in their name to protect their interests. Clause 36.5 of the lease requires the lessor to have insurance of the building in the joint names of the parties. The Tribunal considers that this requirement is inappropriate for the reasons set out above. The lessor under Clause 36.5 is required to take out this insurance and under Clause 10.1 relating to ‘Outgoings’ is entitled to claim the premiums and stamp duty from the lessee.

The Tribunal finds that, given the agreement of the parties, the replacement value of the building is $684,000.00. The lessor is entitled to claim the premiums on this amount, from the lessee under Clause 10.1 of the lease. The Tribunal notes that the lessor accepts that insurance on any higher amount is at the cost of the lessor. The lessee may be able to re-negotiate their insurance premium once building replacement, removal of debris, etc. is removed from their current policy. These items do not appear to be appropriate items for a lessee to have to insure but that is a matter that this Tribunal does not have to decide.

With regard to the public liability insurance taken out by the lessor, the Tribunal finds that this is appropriate to protect the lessor’s interests which may in fact be in conflict with those of the lessee in event of a claim. The fact that a lessor has obtained a quote from an insurance broker satisfies the Tribunal that the process of assessing the premium is reasonable. We do not have jurisdiction to assess the amount under Section 109 (1b-iii) of the Act. This premium is recoverable as an ‘outgoing’ from the lessee under Clause 10.1 of the lease.

In conclusion the Tribunal Orders that:

1)    The lessor is entitled to claim the insurance premiums for public liability and building insurance calculated on the basis set out in these reasons;

2)    The lessee is required to pay these ‘outgoings’ under the lease.”