Medioz Enterprises Pty Ltd v Jovicsan Pty Ltd

[2018] QCAT 391

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Medioz Enterprises Pty Ltd v Jovicsan Pty Ltd [2018] QCAT 391

PARTIES:

MEDIOZ ENTERPRISES PTY LTD
(applicant)

v

JOVICSAN PTY LTD

(respondent)

APPLICATION NO/S:

RSL162-17

MATTER TYPE:

Retail shop leases matter

DELIVERED ON:

19 November 2018

PROCEEDING TYPE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Browne, Presiding
Member Kairl
Member McBryde

The notice of dispute filed by Medioz Enterprises Pty Ltd on 16 October 2017 is dismissed.

CATCHWORDS:

LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OTHER MATTERS – contracts – commercial contract clauses – retail shop lease – where claim for cleaning – meaning of ‘services’ – whether costs of cleaning the grease arrestor payable by the tenant

Australia New Zealand Food Standards Code – Standard 3.2.3, s 5, s 5A
Food Act 2016 (Qld), s 49, s 58
Retail Shop Leases Act 1994 (Qld), s 103, schedule s 5
Water Supply (Safety and Reliability) Act 2008 (Qld),
s 180, s 193

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640

Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104

REPRESENTATION:

Applicant:

Self-represented

Respondent:

Self-represented

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).

REASONS FOR DECISION

1. Medioz Enterprises Pty Ltd (‘Medioz’) entered into a ‘retail shop lease’ with Jovicsan Pty Ltd (‘Jovicsan’) for premises located at Kuraby, Queensland commencing on 1 June 2012 (the lease).[1]

   [1]For the purposes of s 103 of the Retail Shop Leases Act 1994 (Qld) as defined in s 5A.

2. Medioz says that it has paid over $6,600.00 for cleaning the grease trap and has many times brought this issue to Jovicsan as the landlord.[2] Medioz says that Jovicsan’s response to its request for payment of cleaning was that cleaning of the grease trap is not the lessor’s responsibility and the cost of cleaning and maintaining is a lessee expense.[3]

   [2]Affidavit of Pervez Zahidur Rahman Khan sworn 23 October 2018.

   [3]Written submissions of the applicant filed 11 September 2018.

3. The lease has come to an end. Medioz as the former tenant wants the landlord to pay $6,600.00 plus legal costs for ‘removal of liquid waste from the premises’.[4] This requires the Tribunal to consider:

   (a)Whether Jovicsan as the landlord is responsible under the lease for the cost of cleaning or removal of waste from the grease trap; and

   (b)If Jovicsan is responsible for such costs, should the Tribunal order Jovicsan to pay Medioz $6,600.00 plus legal costs for the costs of cleaning or removal of waste from the grease trap?

   [4]See Notice of Dispute filed 16 October 2017.

4. Under the Retail Shop Leases Act 1994 (Qld) (‘the RSL Act’), the tribunal has jurisdiction to hear a retail tenancy dispute. A retail tenancy dispute means any dispute under or about a retail shop lease, or about the use or occupation of a leased shop under a retail shop lease, regardless of when the lease was entered into.[5]

   [5]RSL Act, s 103 and see schedule s 5.

5. The notice of dispute filed by Medioz concerns a dispute between a former tenant and landlord about the reimbursement of money to the tenant for the costs of cleaning or removal of waste from the grease trap that is more properly known in the industry as the grease arrestor. We are satisfied that this is a retail tenancy dispute for the purposes of the RSL Act.

   What are the issues to be determined?

6. The issue that arises in this matter is whether, upon a true construction of the lease, Medioz is responsible for the costs of cleaning or maintaining the grease arrestor or grease trap (‘the trade waste cleaning’).

7. Medioz Enterprises says that trade waste cleaning is the landlord’s liability. Medioz says that the grease trap was fitted by Jovicsan for the disposal of trade waste and the grease trap is not located on the premises. Medioz says that cleaning the grease trap should fall into cleaning costs and materials and rubbish removal that fall within the definition of outgoings under the lease, and therefore such costs are not payable by the tenant.[6] Medioz Enterprises says that it is important that clear and specific wording is used in the lease when specifying what a tenant’s responsibilities are.[7] Medioz Enterprises makes the following submissions in support of its claim:

   (a)The lease was prepared by the landlord and the landlord could have included a specific provision in relation to the grease trap;

   (b)There is no reference to cleaning the grease trap in the tenant’s obligations on vacating the premises. Cleaning refers to cleaning the premises not the building;

   (c)If ‘grease trap cleaning’ does fall within the definition of ‘services’, it also fits within the definition of outgoings. Where it is possible to fall within both definitions and the landlord prepared the lease, the interpretation of the lease should ‘err on the tenant’s side and cleaning the grease trap should fit within the definition of outgoings’.[8] The fact that the premises is used in clause 5.2 cleaning (and not the term building) also aligns with this interpretation;[9] and

   (d)Grease trap cleaning is not the responsibility of the tenants. Medioz therefore claims reimbursement of all costs associated with the grease trap cleaning and the ‘sufferings’ it went through which was caused by the landlord’s agent in the total amount of $10,200.00.[10]

   [6]Written submissions of the applicant filed 11 September 2018.

   [7]Ibid.

   [8]Ibid.

   [9]Ibid.

   [10]Ibid.

   What does the lease say about cleaning or removal of waste?

8. The lease signed by both parties contains relevant clauses as to, amongst other things the term of the lease, the permitted use of the premises and the tenant and landlord’s obligations under the lease including the payment of rent and other expenses such as, for example, rates, gas and electricity.

9. The permitted use as provided under Item 6 of the lease is: supermarket, butchery, multicultural foods (including takeaway), groceries and vegetables.

10. Under clause 2 of the lease the tenant must pay the landlord, amongst other things, ‘charges for services to the premises during the term’. ‘Services’ is defined under the lease to mean ‘all gas, electricity, telephone, water, sewerage, fire prevention, ventilation, air-conditioning, hydraulic, elevator and security services and all other utilities, services or systems provided in the building’ (emphasis added). Further, clause 2.1(k) provides that the tenant must pay the landlord any other payments arising from the tenant’s use of the premises. The tenant is also responsible for keeping the premises clean and tidy.[11]

    [11]Clause 5.2.

11. The tenant is not responsible for ‘outgoings’ as stated in clause 7.10. Further, clause 7.10 provides that the landlord must ‘pay all outgoings not payable by the tenant or other occupant of the building’. Relevantly ‘outgoings’ as defined under the lease means the landlords reasonable expenses directly attributable to the ‘operation, maintenance or repair of the Building and charges, levies, premiums, rates or taxes payable by the landlord because it is the owner or occupier of the building or the land’ and such expenses include, but will not be limited to, all costs associated with, amongst other things rates, taxes and charges payable to any government or other authority, cleaning costs and materials; and rubbish removal.[12]

    [12]See Affidavit of Pervez Zahidur Rahman Khan sworn 23 October 2018, attachment marked ‘PK-2A’.

    Tenant’s obligation to obtain all permits or consents

12. The tenant is responsible for all permits or consents necessary to carry on the permitted use in the premises.[13] This is reflected in clause 4.5(a) of the lease. Clause 4.5(a) provides that the tenant must ‘open and maintain all permits or consents required from any government authority to carry on the permitted use in the premises’.

    [13]Affidavit of Pervez Zahidur Rahman Khan filed 29 June 2018 attachment, [9].

13. Here, Medioz operated a food business that included a supermarket, butchery, multicultural food (including takeaway), groceries and vegetables. Medioz in operating its food business was required to obtain approval or consents from the relevant government authority. This includes a licence under the Food Act 2006 (Qld) (the Food Act).

14. A person operating a ‘licensable food business’ is required by law in Queensland to hold a licence.[14] Section 48 of the Food Act defines a licensable food business to mean, amongst other things a business that involves the manufacture of food; or is carried on by an entity other than a non-profit organisation and involves the sale of unpackaged food by retail. Section 48 provides examples: a restaurant or delicatessen, a catering business, a takeaway pizza shop, a motel supplying meals with accommodation and a food business that involves selling hamburgers from a motor vehicle or unpackaged food from a food vending machine.

    [14]Food Act 2006 (Qld) (‘Food Act’), s 49.

15. Under the Food Act, a licensee must not carry on a licensable food business from premises other than premises stated in the licence for carrying on the business.[15] In deciding whether premises are suitable for carrying on a licensable food business the local government may have regard to amongst other things, whether the premises comply with the food standards code, Standard 3.2.3 (‘standard 3.2.3’).[16]

    [15]Ibid, s 50.

    [16]Food Act, s 58.

16. Standard 3.2.3 sets out requirements for food premises and equipment that, if complied with, will facilitate compliance by food businesses with the food safety requirements of standard 3.2.2 (food safety practices and general requirements). The objective of the standard is to ensure that, where possible, the layout of the premises ‘minimises opportunities for food contamination’. Further, food businesses are required to ensure that their food premises, fixtures, fittings, equipment and transport vehicles are designed and constructed to be cleaned, and, where necessary, sanitised. Businesses must ensure that the premises are provided with the necessary services such as, for example, water, waste disposal, light, ventilation, cleaning and personal hygiene facilities, storage space and access to toilets. Food premises must have a sewage and waste water disposal system. The standard also includes relevant provisions for the disposal of sewage and waste water.

17. Relevantly, section 5 of standard 3.2.3 provides as follows:

    5 Sewage and waste water disposal

    Food premises must have a sewage and waste water disposal system that:

    (a) will effectively dispose of all sewage and waste water; and

    (b) is constructed and located so that there is no likelihood of the sewage and waste water polluting the water supply or contaminating food.

18. The word ‘sewage’ is defined under division 1 and includes ‘the discharge from toilets, urinals, basins, showers, sinks and dishwashers, whether discharged through sewers or by other means’. ‘Sewage’ includes waste water, ‘whether or not it drains to a sewer, septic tank, vehicle tank or other disposal system’.[17]

    [17]Standard 3.2.3, division 1.

19. Under division 2 of standard 3.2.3 there is a requirement that sewerage and waste water disposal effectively dispose of all sewage and waste water. This is so that there is no contamination of food or the water supply from the disposal system. This requirement applies to all food premises. Section 5 relevantly, provides:

    This outcome of this requirement is that sewage and waste water are disposed of effectively.

    There must be no contamination of food or the water supply from the disposal system.

    The requirement applies to all sewage and waste liquid produced by the business, including waste from cleaning and cooking processes and toilets. Stormwater is also included. Solid waste is covered under clause 6.

    …

    The term ‘disposal system’ means the system that removes the waste from buildings, vehicles and stalls, and from the curtilage of the premises (that is, the land where the building, vehicle or stall is situated) that is within the control of the food business. This includes drains and sewers, holding tanks, grease arrestors and on-site treatment plants for sewage, waste water and stormwater (emphasis added).

20. As set out above, the relevant s 5 provides that the term ‘disposal system’ means the system that removes the waste from buildings, vehicles and stalls and from the curtilage of the premises. This includes grease arrestors (emphasis added).[18] Further, the standard requires that food premises must have a sewerage and waste water disposal system that will effectively dispose of ‘all sewerage and waste water’.

    [18]Australia New Zealand Food Standards Code – Standard 3.2.3 - Food Premises and Equipment.

21. A plain reading of standard 3.2.3 in particular s 5 relevant to the disposal of sewage and waste water, is that ‘sewage’ includes the discharge of waste water more broadly to include waste water that discharges to a grease arrester. It is open for us to find that a grease arrestor forms part of the sewer system servicing the subject premises from which a licensable food business is conducted.

    Is cleaning of the grease trap a ‘service’ payable by the tenant?

22. It is settled law that a provision of a contract as to the rights and liabilities of parties should be determined objectively.[19] In determining the meaning of the terms of a commercial contract it is necessary to ask ‘what a reasonable businessperson would have understood those terms to mean’.[20] As held by the High Court in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited,[21] this requires a consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.[22] Further unless the contract indicates otherwise the contract ‘should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”’.[23]

    [19]See Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640.

    [20]Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104, [46].

    [21](2015) 256 CLR 104, [47].

    [22]Ibid.

    [23]Ibid [51].

23. We have carefully considered the terms of the lease and the obligations of the tenant and landlord as set out under the lease. We have also considered Medioz’s written submissions and evidence filed in support of the notice of dispute relevant to the intention of the parties at the time of signing the lease.

24. A grease arrestor or grease trap is necessary in order for the tenant to conduct its food business. It is an offence and is subject to a penalty for a person to discharge ‘trade waste or seepage water’ into a sewerage service provider’s infrastructure without approval.[24] In other words, a grease trap is necessary for Medioz to conduct its food business in accordance with the permitted use under the lease. Further, Medioz clearly benefits from the grease trap because it is necessary in order for Medioz to conduct its food business.

    [24]Water Supply (Safety and Reliability) Act 2008 (Qld), ss 180, 193.

25. There is evidence before us that the parties at all times contemplated that a grease trap would be installed in the premises. The letter of intent to lease includes a special condition that refers to ‘[grease] trap’.[25] The letter of intention is relevant to the circumstances to be taken into consideration in determining the intent of the parties at the time of signing the lease.[26]

    [25]Affidavit of Pervez Zahidur Rahman Khan filed 29 June 2018 attachment ‘PK-1C’.

    [26]Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640.

26. It is non-controversial that a grease trap was installed to service the leased premises. There is no evidence before us to indicate that the grease trap was not installed in keeping with legal requirements including council requirements. As we have set out above, Medioz was required to obtain all permits and consents necessary to operate its food business. Medioz says that it spent over $300,000.00 for its fit out and other government development permissions and building approvals.[27] Included in Medioz’s material filed in support of its claim is a copy of the Brisbane City Council approval package in respect of the leased premises.[28] The Brisbane City Council approval package contains a number of requirements that must be met including, for example, item 13 that refers to ‘utilities’ and the requirement to supply and install ‘all service conduits and water and sewerage mains required in connection with the development and meet the costs of any alterations to public utility mains, existing mains, services or installations involved in the construction’. In the absence of evidence to the contrary, it is open for us to find that Medioz has complied with all necessary permits or consents to carry on its food business including obtaining any necessary licences such as a licence under the Food Act.

    [27]Affidavit of Pervez Zahidur Rahman Khan filed 29 June 2018.

    [28]Ibid ‘PK-3/B’.

27. Medioz does not dispute that it is responsible for the payment of ‘charges for services’ as provided in the lease. The lease does not further define for the purposes of ‘services’ the meaning of ‘sewerage’. Medioz says that cleaning of the grease traps should fall within the definition of outgoings and is therefore not payable by the tenant. The tenant accepts, however, that it is responsible for the cost of outlays for services as provided under the lease. In circumstances where both the tenant and landlord contemplated at the time of signing the lease that a grease trap would be installed, and in fact one has been installed, it is open for us to adopt a broad interpretation of the word ‘sewerage’ for the purposes of services as defined under the lease and, more importantly, the obligation of the tenant to pay the landlord charges for those services to the premises during the term as provided under clause 2.1 of the lease.

28. We find that ‘sewerage’ for the purposes of defining ‘services’ under the lease does include grease traps. Medioz as the tenant has the use and enjoyment of the grease trap that is part of the sewer system servicing the subject premises and more broadly defined is a service to the premises to be used by the tenant.

29. The tenant under the lease is therefore responsible for any charges for this service. The cleaning of the grease trap would be a charge. Also, the tenant is obligated under clause 2.1(K) to make any other payments arising from the tenant’s use of the premises.

30. We find that the cost of cleaning the grease trap more broadly would be a payment arising from the tenant’s use which we find would include more generally costs associated with complying with permits or local government requirements necessary to conduct the business. Clearly the cost of maintaining the grease trap falls to the tenant who holds the permit or food licence under the relevant legislation. We interpret the word ‘sewerage’ as referred to in the lease with respect to ‘services’ more broadly to include grease arrestors or grease traps. We find that the cost of cleaning the grease arrestor or grease trap is a cost payable by the tenant.

    Conclusion

31. Medioz is required to obtain all necessary permits or consents to conduct its food business including a licence under the Food Act. Medioz as the operator of the food business that holds the relevant permit, consent or licence is required to comply with all conditions and legislative requirements. This would include the cleaning of the grease trap or grease arrestor as it is necessary for the tenant as the permit or licence holder to use it. Further the discharge of waste from the food business includes more broadly ‘sewerage’ as a service that the tenant must pay the landlord. Because the grease trap forms part of the sewer system servicing the subject premises it is clearly sewerage that more broadly defined is a service to the premises that the tenant has the use and enjoyment of, notwithstanding our finding that the sewerage would include grease traps for the purposes of ‘services’ under the lease.

1. We have considered Medioz’s claim for costs of cleaning and maintaining the grease arrestor in the event that we are wrong about our interpretation of the relevant law and the meaning of ‘services’ as defined in the lease. We are not satisfied that Medioz has established its loss in respect of the claim against Jovicsan. There is no evidence before us as to the costs of cleaning the grease trap that Medioz says were paid by it as the tenant for the duration of the lease. The invoice from Bass Plumbing Services dated 7 July 2012 relied upon by Medioz does not identify with any certainty the amount paid, if any, for cleaning the grease trap. The invoice refers to ‘grease trap’ and then plumbing more generally and specifically refers to a ‘gas hot water system’.[29] Further, there is no evidence before us that Medioz took reasonable steps to mitigate any loss now claimed as being payable by Jovicsan associated with the cleaning of the grease traps, such as putting Jovicsan on notice as to the costs of the cleaning and therefore giving Jovicsan an opportunity to respond to that demand prior to payment of the costs now sought to be claimed by Medioz. The notice of dispute filed by Medioz on 16 October 2017 is dismissed and we order accordingly.

   [29]Affidavit of Pervez Zahidur Rahman Khan filed 29 June 2018 attachment ‘PK-6/3’.