MISTELLE BICKLEY PTY LTD and SYKES
[2024] WASAT 41
•7 MAY 2024
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION: MISTELLE BICKLEY PTY LTD and SYKES [2024] WASAT 41
MEMBER: MS R PETRUCCI, MEMBER
HEARD: 17 JANUARY 2024, 18 JANUARY 2024, 19 JANUARY 2024, 12 FEBRUARY 2024 AND 12 MARCH 2024
LAST SUBMISSIONS FILED ON 29 MARCH 2024
DELIVERED : 7 MAY 2024
FILE NO/S: CC 1216 of 2022
BETWEEN: MISTELLE BICKLEY PTY LTD
Applicant
AND
MICHAEL SYKES
First Respondent
LYNETTE SYKES
Second Respondent
Catchwords:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) - Dispute resolution - Retail shop - Landlord and tenant - Questions arising under a retail shop lease - Restaurant - Tenant Guide - Disclosure statement - Operating expenses budget - Relevant proportion - Landlord's operating expenses - Referrable expenses - Group of premises - Total lettable area - Lettable area - Whether lease provides for apportionment of expenses - Electricity charges - Expenses associated with toilets - Common facility - Whether exclusive use of toilets - Apportionment of expenses - Notice of election that rent be determined by reference to turnover - Security deposit - Alleged failure to make good - Wear and tear - Assessment of damages - Discretionary statutory power to make orders - Turns on own facts
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 3, s 3(1), s3(3), s3(3)(c), s 3(3)(d), s 3(3)(e), s 6(1), s 7, s 7(1), s 12, s 12(1), s 12(1a), s12(1b), s12(1c), s 12(1d), s 12(1e), s 12(3), s 16, s 16(1), s 25C, s 25D, s 26, s26(1)
Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA), reg 3AA, reg 3AA(3), reg 6A, Sch 2
Income Tax Assessment Act 1997 (Cth), Chapter 1, Div 6
Interpretation Act 1984 (WA), s 5
State Administrative Tribunal Act 2004 (WA)
Result:
Questions referred answered and orders made
Category: B
Representation:
Counsel:
| Applicant | : | In Person |
| First Respondent | : | In Person |
| Second Respondent | : | In Person |
Solicitors:
| Applicant | : | N/A |
| First Respondent | : | N/A |
| Second Respondent | : | N/A |
Case(s) referred to in decision(s):
Mistelle Bickley Pty Ltd and Skyes [2023] WASAT 69
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28
Contents
Introduction
Relevant procedural history and evidence
Legal framework
CTRSA Act and Regulations
Factual background
Questions referred and orders sought
Consideration
Question 2: what proportion of the shared utilities, outgoings and other costs for the common areas is allocated to the Tenant?
Lettable area, total lettable area and relevant proportion
Question 3: if the Tenant has paid more than the Tenant's proportion of the shared utilities, outgoings and other costs for the common areas, is the Tenant entitled to a refund?
Question 4: is the Tenant liable to pay expenses for the access to water from the Landlord's bore, a car parking fee, lawn maintenance, and rubbish disposal?
Question 5: is the Tenant entitled to compensation for pecuniary loss suffered by the Tenant as a result of the Landlord's failure to provide a Disclosure Statement?
Question 6(a): is the Tenant required to pay the turnover rent component if the Tenant did not consent to turnover rent in writing on [the] Form 2 before the provision was included in the [L]ease and the Tenant objected, in writing, to the turnover rent component?
Question 6(b): if the Tenant is required to pay the turnover rent component, does 'turnover' include tips paid to the Tenant's employees?
Question 7: is the Tenant entitled to a refund for the turnover rent component paid?
Question 8: is the Tenant to retrieve the Security Deposit money paid to the Landlord, and other invoices outstanding and payments made?
Other issue
Conclusion
Orders
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
In Conspirata, a best-selling novel, the author wrote:[1]
Well, well – be careful of what questions you ask, for fear of what answers you may receive.
[1] R Harris, Conspirata, (2010).
Broadly this proceeding concerns questions asked by the applicant, Mistelle Bickley Pty Ltd (Mistelle Bickley or Tenant) arising under a retail shop lease. The answers to the questions asked are found in these reasons for decision.
Mr Michael Sykes and Mrs Lynette Sykes are the registered proprietors of the relevant property in Bickley (Mr and Mrs Sykes or Landlord). Mr and Mrs Sykes operated a vineyard, cellar door and a café for about 11 years with a 'loyal following' or regular customers[2] before they decided, in 2018, to step back and lease out part of their property.
[2] ts 945, 12 March 2024.
Pursuant to a lease with the commencement date recorded as 1 October 2018 (Lease), Mistelle Bickley leased a portion of the property (premises) to operate their restaurant, 'Mistelle'. The premises include a private residence. Mr Benoit Lasplace and Mrs Chantelle Lasplace are the directors of Mistelle Bickley.
The Lease was for a term of four years at a rate of $3,336 per month and was subject to review as provided for in the Lease. Mistelle Bickley vacated the premises on or about 30 September 2022.
The relationship between the parties was described as 'good' for the first three years. According to Mr Sykes, the relationship started to sour after 17 October 2021 when he asked Mistelle Bickley to provide their turnover figure for 2020/21 in order to calculate if turnover rent was payable under the Lease.[3] The relationship continued to sour when, according to Mr Sykes, Mistelle Bickley queried what Mr Sykes described as the 'large' electricity bill for April 2022.[4]
[3] Hearing Book at page 461 and ts 859, 12 March 2024.
[4] ts 884, 12 March 2024.
The parties attempted to resolve their dispute, including with assistance from the Small Business Development Corporation, but the attempts were unsuccessful.[5] Consequently, Mistelle Bickley commenced this proceeding in the Tribunal on 1 September 2022 under s 16(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (the CTRSA Act). The application was accompanied by a certificate issued under s 25C of the CTRSA Act by the Small Business Commissioner to Mistelle Bickley. Having such certificate means Mistelle Bickley's application may commence in the Tribunal (s 25C and 25D of the CTRSA Act).
[5] Hearing Book at pages 156 to 165.
Having accepted the application from Mistelle Bickley, the first step for the Tribunal is to determine if it has jurisdiction to determine the matter. The Tribunal did this by way of a 'preliminary issue' which was determined on 31 July 2023. The Tribunal found that the Lease is a 'retail shop lease' under the CTRSA Act: Mistelle Bickley Pty Ltd and Skyes [2023] WASAT 69 (Mistelle Bickley and Skyes). Consequently, the Tribunal has proceeded to hear Mistelle Bickley's application referring questions arising under the Lease.
In their closing written submissions, Mistelle Bickley seek payment from Mr and Mrs Sykes in the amount of $37,408.93.[6]
[6] Mistelle Bickley's closing submissions filed on 28 March 2024 at pages 3, 6 and 10.
Mr and Mrs Sykes refute that any money is payable to Mistelle Bickley. Mr Sykes' in giving evidence states 'they're [Mistelle Bickley] trying to claw back every cent they can, any way they can'.[7] In their closing written submissions, Mr and Mrs Sykes went further to say:[8]
This claim has been concocted by the tenant as a direct consequence of being required to pay an additional rent payment in April 2022 related to their business income for FY 2020-21.
…
This claim has no basis in fact. The claimant has lied, exaggerated, minimised, omitted and mis-led the Tribunal in an attempt to create a false perception of the real situation and all claims should be rejected.
[7] ts 885, 12 March 2024.
[8] Mr and Mrs Sykes' closing submissions filed on 29 March 2024 at page 1.
In addition, Mr and Mrs Sykes assert that the Security Deposit of $10,800, which they hold, is not sufficient to adequately repair the damage to the premises and replace the items damaged or removed by Mistelle Bickley that they estimate to be in excess of $20,000.[9]
[9] Ibid at page 7.
In the reasons which follow, I answer the questions referred by Mistelle Bickley for determination by the Tribunal. My conclusions are set out at [386] to [387] and following that, I set out the orders requiring Mr and Mrs Sykes to pay to Mistelle Bickley $10,787.67 within 30 days of the orders.
Relevant procedural history and evidence
Following the determination of the preliminary issue (see above at [8]), on 19 October 2023, at a directions hearing, the Tribunal made orders programming the matter to a final hearing. The orders required Mistelle Bickley to file with the Tribunal and to provide to Mr and Mrs Sykes:
(a)a statement of the issues, facts and contentions (SIFC) Mistelle Bickley say arise in the proceeding in respect of the questions and orders sought numbered 2 to 7 inclusive;
(b)a book of documents, containing all the documents on which Mistelle Bickley wishes to rely to prove their case; and
(c)a list of the persons who Mistelle Bickley propose to call to give evidence at the final hearing, together with a short summary of the evidence to be given by each such person.
In addition, the orders of 19 October 2023 required Mr and Mrs Sykes to file with the Tribunal and provide to Mistelle Bickley:
(a)their own SIFC setting out:
(i)by reference to each paragraph number in Mistelle Bickley's SIFC whether they accept or reject the issue, fact or contention identified by Mistelle Bickley; and
(ii)any other issues, facts and contentions they say arise in the proceeding;
(b)a book of documents, containing all the documents on which the respondents wish to rely to prove their case; and
(c)a list of the persons who they propose to call to give evidence at the final hearing, together with a short summary of the evidence to be given by each such person.
In accordance with the Tribunal's usual practice in matters of this nature, the hearing was conducted on the basis that all the documents filed with the Tribunal would be regarded as being in evidence,[10] subject to any objection. There was no objection. At the final hearing, the Tribunal marked the following documents, to which I have had regard for the purpose of my determination in this proceeding, as an exhibit:
Exhibit 1Hearing Book prepared by the Tribunal on 10 January 2024 (pages 1 to 579) (Hearing Book); and
Exhibit 2Witness Statement of Charlotte Vaughan dated 30 November 2023 filed by Mr and Mrs Sykes with the Tribunal on 18 January 2024 (pages 1 to 5).
[10] Although forming part of the Hearing Book prepared by the Tribunal on 10 January 2024 and provided to the parties, the parties' contentions and submissions in the Hearing Book are taken to be submissions, rather than evidence.
I had the benefit of the affirmed oral evidence from Mr Lasplace, who filed his witness statement dated 27 February 2023 and from Mrs Lasplace, who filed her witness statement dated 27 February 2023. At the final hearing, both Mr Lasplace and Mrs Lasplace confirmed the contents of their witness statements.
Further, for the applicant, I had the benefit of the affirmed oral evidence of:
(a)Ms Aofe Landers who was employed as a restaurant supervisor by Mistelle Bickley from 7 October 2018 to 18 October 2020. Ms Landers' witness statement is dated 23 February 2023.[11] At the final hearing, Ms Landers confirmed the contents of her witness statement. Ms Landers gave evidence about usage of the toilets from October 2018 to October 2020; and
(b)Ms Pauline Packer, who is Mrs Lasplace's mother. Ms Packer did not file a witness statement with the Tribunal. At the final hearing, Ms Packer gave evidence as to the condition of the timber floors of the premises and her role in assisting with the cleaning of the premises prior to Mistelle Bickley leaving.
[11] Hearing Book at pages 170 to 172.
I also had the benefit of the affirmed oral evidence from Mr Sykes, who filed his witness statement dated 26 March 2023 and from Mrs Sykes who filed her witness statement dated 24 March 2023.[12] Both Mr Sykes and Mrs Sykes confirmed the contents of their witness statements at the final hearing.
[12] Hearing Book at pages 267 to 269.
Further, for the respondents, I had the affirmed oral evidence of:
(a)Ms Peta Furness, a sister of Mrs Sykes, who was employed as a casual cellar door manager for Hainault Vineyard and Cellar door (Hainault) from 2020 to 2023, filed a witness statement dated 23 March 2023 with the Tribunal.[13] At the final hearing, Ms Furness confirmed the contents of her witness statement. Ms Furness gave evidence about Hainault's customer numbers and the usage of the toilets;
(b)Ms Geraldine McCann, a cook and kitchen hand employed by Hainault from April 2018 to September 2018 filed a witness statement dated 28 November 2022 with the Tribunal.[14] At the final hearing, Ms McCann confirmed the contents of her witness statement. Ms McCann gave evidence about the condition of the restaurant kitchen facilities at the commencement of the Lease and at the end of the Lease;
(c)Ms Jemma Williams, a kitchen hand and restaurant manager employed by Hainault from June 2007 to September 2018, filed a witness statement dated 29 November 2023 with the Tribunal.[15] At the final hearing, Ms Williams confirmed the contents of her witness statement. Ms Williams gave evidence about the condition of the restaurant at the commencement of the Lease;
(d)Ms Charlotte Vaughan, a tenant from 7 October 2022 until 6 March 2023, filed a witness statement dated 1 September 2022 with the Tribunal on 18 January 2024.[16] At the final hearing, Ms Vaughan confirmed the contents of her witness statement. Ms Vaughan gave evidence about the condition of the premises including the need to scrub the kitchen units and oven when she moved in;
(e)Mr Philip Dodd, a friend of Mr and Mrs Sykes for approximately 18 years, filed a witness statement undated but filed with the Tribunal as part of Mr and Mrs Sykes' bundle of documents on 7 December 2023.[17] At the final hearing, Mr Dodd confirmed the contents of his witness statement. Mr Dodd gave evidence about a proforma lease template he provided to Mr and Mrs Sykes and the various discussions he had with Mr and Mrs Sykes along with Mr and Mrs Lasplace prior to them signing the Lease; and
(f)Mr Dafydd Heathcote, a vineyard worked at Hainault since September 2021 and who resides at the property, filed a witness statement dated 1 December 2023 with the Tribunal.[18] At the final hearing, Mr Heathcote confirmed the contents of his witness statement. Mr Heathcote gave evidence about Hainault's customer numbers and other visitors to the property.
[13] Hearing Book at page 264.
[14] Hearing Book at pages 468 to 469.
[15] Hearing Book at page 470.
[16] Exhibit 2.
[17] Hearing Book at pages 471 to 472.
[18] Hearing Book at page 475.
Ms Sarah Harris who was employed as a casual runner and waitstaff filed a witness statement dated 20 February 2023 with the Tribunal.[19] Ms Harris was not able to attend the final hearing. As Ms Harris was not available to answer questions, I have placed no weight on her witness statement.
[19] Hearing Book at page 169.
Finally, Mr Jim Volmer, the owner of Plume Estate until March 2023, filed a witness statement dated 22 March 2023 with the Tribunal.[20] Mr Volmer was not able to attend the final hearing. As Mr Volmer was not available to answer questions, I have placed no weight on his witness statement.
[20] Hearing Book at page 265.
It is first necessary to set out the legal framework and factual background against which the consideration of the questions referred for determination by the Tribunal (see below at [43] and [44]) must be made.
Legal framework
CTRSA Act and Regulations
Section 16 of the CTRSA Act provides that a party to a lease may refer any question between the parties arising under the lease to the Tribunal for determination as follows:
16.Party to lease may refer question to SAT
(1)Subject to section 11(5), a party to a retail shop lease may refer to the Tribunal any question between the parties which he believes to be a question arising under the lease and the Tribunal shall —
(a)determine whether or not the question referred to the Tribunal is a question arising under the lease; and
(b)if it is such a question, hear and determine it.
(2)The matter for determination referred to in subsection (1)(a) may be determined by the Tribunal in such manner as it thinks fit, subject to each party being given an opportunity to make a written submission.
What constitutes 'a question arising under a retail shop lease' is dealt with in s 3(3) of the CTRSA Act as follows:
(3)A reference in this Act to a question arising under a retail shop lease includes a reference to —
(a)a question whether or not a lease exists or has existed, including a question as to forfeiture; or
(b)a question whether or not a lease is or was a retail shop lease; or
(c)a question arising —
(i)in relation to any communication, including a disclosure statement under section 6, between the parties to the retail shop lease, prior to their entry into the retail shop lease, which communication was material to the terms and conditions of the retail shop lease; or
(ii)in relation to the retail shop lease under a provision of this Act;
or
(d)a matter that is in dispute between the landlord and the tenant under section 12 in relation to —
(i)operating expenses of the landlord under the retail shop lease generally; or
(ii)an allocation made under section 12(1)(b) of the proportion of those operating expenses; or
(iii)a determination of the relevant proportion for the purposes of section 12;
or
(e)any other matter that is in dispute between the landlord and the tenant in connection with the retail shop lease, whether or not that matter is dealt with by the provisions of the retail shop lease.
Section 12 of the CTRSA Act is a provision which deals with the application and validity of clauses in a retail shop lease whereby the tenant is obliged to contribute to the landlord's operating expenses.
Section 12(1) of the CTRSA Act limits the tenant's obligations to contribute to the landlord's operating expenses specifically referred to in the lease and only where the lease identifies how the tenant's contribution is to be determined, apportioned and paid. The section relevantly provides:
(1)If provision is made in a retail shop lease for payment by the tenant, in addition to rent, of all or any of the operating expenses of the landlord —
(a)the amount payable by the tenant under the retail shop lease is limited to the items of operating expenses that the retail shop lease specifies are to be paid wholly or in part by the tenant and does not include an amount in respect of which the retail shop lease does not specify both —
(i)how that amount is to be determined and, when applicable, apportioned to the tenant; and
(ii)how and when that amount is to be paid by the tenant;
and
(b)subject to subsection (1e), the proportion of those operating expenses payable by the tenant under the retail shop lease shall not be greater than the relevant proportion without the approval of the Tribunal; and
(c)where —
(i)the premises the subject of the retail shop lease are part of a group of premises; and
(ii)any part of the operating expenses is expenditure incurred as a result of some only of the premises in the group being open outside the standard trading hours,
the retail shop lease shall be taken to provide that a tenant whose retail shop was not so open is not required to make any payment of, and the landlord is not entitled to recover, the expenditure referred to in subparagraph (ii); and
(d)the retail shop lease shall be taken to provide that —
(i)the tenant is not required to make any payment of, and the landlord is not entitled to recover, any such operating expenses in respect of a year or part of a year until at least one month after the landlord has given to the tenant annual estimates of expenditure under each item of operating expenses in respect of the year; and
(ii)the landlord is required to give to the tenant a written statement in accordance with subsection (1a) (an operating expenses statement) that details all expenditure by the landlord in each accounting period of the landlord during the term of the lease on account of operating expenses to which the tenant is required to contribute.
The CTRSA Act provides that a tenant is required to contribute no more than the 'relevant proportion' in relation to the operating expenses of the landlord: s 12(1)(b) read with s 12(1e), where relevant, of the CTRSA Act.
Section 12(1e) of the CTRSA Act is not relevant in this proceeding as that provision concerns a retail shop in a shopping centre which is not the case here.
The definition of 'operating expenses' for the purposes of s 12 of the CTRSA Act is defined in s 12(3) of the CTRSA Act as follows:
operating expenses, in relation to a landlord, means expenses of the landlord in operating, repairing or maintaining —
(a)a building of which a retail shop the subject of a retail shop lease to which the landlord is a party forms the whole or a part; or
(b)if that retail shop is in a retail shopping centre, the building or buildings of which a retail shop the subject of a retail shop lease to which the landlord is a party forms the whole or a part and the common area,
and includes, if contributions are levied under the Community Titles Act 2018 or the Strata Titles Act 1985 on the landlord, that part of the contributions that relates to expenses of the landlord in operating, repairing or maintaining the building or buildings of which the retail shop forms part or that building or those buildings and the common area, as the case requires[.]
An 'operating expenses statement' is dealt with in s 12(1a), s 12(1b), s 12(1c) and s 12(1d) of the CTRSA Act as follows:
(1a)An operating expenses statement —
(a)is to be given to the tenant within 3 months after the end of the accounting period to which it relates; and
(b)if the relevant retail shop is in a retail shopping centre, must include a statement of the current total lettable area of the retail shopping centre and details of any material change in that total lettable area during the period to which the statement relates; and
(c)is to be prepared in accordance with relevant principles and disclosure requirements of the applicable accounting standards made by the Australian Accounting Standards Board, as in force from time to time; and
(d)may be a composite statement (that is, it may relate to more than one tenant) if each tenant to which it relates is able to ascertain from the statement the information required by subsection (1)(d)(ii) that is relevant to that tenant; and
(e)is to be accompanied by a report on the statement prepared by a registered company auditor within the meaning of the Corporations Act 2001 of the Commonwealth which includes a statement by the auditor as to whether or not the operating expenses statement correctly states expenditure by the landlord during the accounting period concerned in respect of operating expenses to which the tenant is required to contribute, and as to whether or not the total amount of estimated operating expenses for that period (as shown in the estimate of operating expenses given to the tenant) exceeded the total actual expenditure by the landlord in respect of those operating expenses during that period.
(1b)The landlord shall bear half of the cost of an audit referred to in subsection (1a)(e) and the other half of that cost shall be borne by —
(a)the tenant to whose premises that audit relates; or
(b)if there is more than one tenant to whose premises that audit relates, jointly in the relevant proportions.
(1c)An operating expenses statement is not required to be accompanied by an auditor's report if the statement does not relate to any operating expenses other than land tax (unless subsection (1g) applies), water, sewerage and drainage charges, local government rates and charges or insurance premiums and it is accompanied by copies of assessments, invoices, receipts or other proof of payment in respect of all expenditure by the landlord referred to in subsection (1)(d)(ii).
(1d)If a landlord does not comply with the requirement referred to in subsection (1)(d)(ii), the tenant is not obliged to pay, and the landlord is not entitled to recover, operating expenses from the date of that noncompliance until the landlord complies with that requirement.
The CTRSA Act also refers to 'referable expenses'. These are operating expenses of the landlord directly attributable to the retail shop(s) that share the benefit of that operating expense. In other words, some operating expenses (referable expenses) benefit some tenants but not other tenants. Consequently, the landlord may only recover an expense where the tenant enjoys or shares a benefit resulting from the operating expense (a referable expense). The tenant is only liable for the proportion of the referable expenses that the lettable area of the retail shop bears to the total lettable area of all the premises which incur the referable expense. That is, the 'referable expense' payable by the tenant cannot be greater than the 'relevant proportion' without the approval of the Tribunal.
The terms 'lettable area', 'relevant proportion' and 'total lettable area' are important because, together they are used to calculate the upper limit of the landlord's operating expenses that are payable by the tenant. However, nothing in the CTRSA Act prevents a tenant and landlord agreeing for the tenant to pay less than the 'relevant proportion'.
The 'relevant proportion' is calculated by comparing the 'lettable area' of the retail shop to the 'total lettable area' of the group of premises at the commencement of the accounting year to which the operating expense relates: s 12(3) of the CTRSA Act.
A 'group of premises' is two or more premises, at least one of which is a retail shop that are adjacent, or form a cluster and which have, or on being leased would have a common head lessor and are grouped together for the purpose of allocating to each of those premises a proportion of an item of the operating expenses: s 3(1) CTRSA Act. In this case there two premises, one which is the retail shop operated by Mistelle Bickley and the other premises which comprise the Hainault cellar door and the other buildings. If the other premises were leased, the head lessor would be Mr and Mrs Sykes as they own the whole property.
The 'lettable area' of a retail shop is defined in s 3 of the CTRSA Act to mean an area of the shop defined or calculated:
(a)in such manner as is prescribed by the Commercial Tenancy (Retail Shops) Agreements Regulations 1985 (WA) (Regulations); and
(b)if the shop is part of a group of premises, in the same, or a substantially similar, manner as the area for each other retail shop in the group of premises is defined or calculated.
The 'total lettable area' of a group of premises is defined in s 12(3) of the CTRSA Act as the aggregate of the lettable areas of the premises that are retail shops (or areas set aside for retail shops); and if any of the premises are not retail shops, the lettable area of those premises defined or calculated in such matter as is prescribed by the Regulations.
Regulation 3AA and reg 6A of the Regulations provide as follows:
3AA.Area of shop defined (Act s. 3(1) lettable area)
(1)The lettable area of a retail shop means so much of the surface floor area of the premises as are designed and available for use in carrying on the business that is, or will be, carried on at the shop.
(2)Each of the following areas is not part of the lettable area of a retail shop, unless a particular tenant has a right to the exclusive use of the area —
(a)areas covered by awnings or similar coverings;
(b)balconies;
(c)areas under planter boxes;
(d)terraces;
(e)verandahs;
(f)public spaces;
(g)thoroughfares or access ways for the use of service vehicles or the delivery of goods;
(h)all other areas of a retail shop that are not reasonably capable of being used in carrying on the business that is, or will be, carried on at the shop.
(3)Each of the following areas is not part of the lettable area of a retail shop, if the area is provided as a common facility in the building where the shop is situated, unless a particular tenant has a right to the exclusive use of the area —
(a)access ways;
(b)cupboards;
(c)escalators, stairwells and landings;
(d)fire hose reel cupboards;
(e)lift shafts and lobbies;
(f)plant/motor rooms;
(g)recessed doorways;
(h)storage rooms;
(i)tea rooms and other service areas;
(j)telecommunications cupboards;
(k)toilets;
(l)car park spaces;
(m)entrance halls.
6A.Lettable area defined (Act s. 12(3) total lettable area)
The lettable area of any premises that are not retail shops is to be defined and calculated for the purposes of paragraph (b) of the definition of total lettable area in section 12(3) of the Act in the same manner as is prescribed under regulation 3AA but for that purpose —
(a)a reference in regulation 3AA to "a retail shop" or to "shop" is to be read as a reference to "premises"; and
(b)a reference in regulation 3AA to "in carrying on the business that is, or will be, carried on at the shop" is to be read as a reference to "by the tenant".
Finally, without limiting any power to make an order that is conferred on the Tribunal by the State Administrative Tribunal Act 2004 (WA), s 26 of the CTRSA Act sets out the Tribunal's discretionary statutory power to make orders.
Section 26(1) of the CTRSA Act provides that the Tribunal may make:
(a)an order that requires a party to any matter before it to pay money to a person specified in the order; or
(b)an order for a party to any matter before it to do, or refrain from doing, anything specified in the order; or
(c)an order dismissing any matter before it.
In addition, s 26 of the CTRSA Act provides:
…
(1a)The power in subsection 26(1)(b) includes power for the Tribunal to order the parties to enter into an agreement varying a retail shop lease as specified in the order where the Tribunal has found that the tenant under the lease was before entering into the lease misled by the landlord as to the meaning or effect of a term or condition of the lease.
(1aa)The Tribunal may, where it considers it appropriate to do so to resolve the matter concerned, make an order terminating a retail shop lease.
(2)In considering whether to make an order under the State Administrative Tribunal Act 2004 section 87(2) in a proceeding, the Tribunal may have regard to a certificate issued under section 25C that relates to the proceeding.
(3)An order of the Tribunal requiring anything to be done or discontinued may fix the time within which that thing is to be done or discontinued, as the case may be.
(4)The Tribunal may allow any equitable claim or defence, and give any equitable remedy, in a matter before it that the Supreme Court may allow or give.
Factual background
The following facts as set out in Mistelle Bickley and Skyes at [32] apply to this proceeding:
(a)the total land area owned by Mr and Mrs Sykes in Walnut Road, Bickley is 68,436m or 6.84 hectares;
(b)Mr and Mrs Sykes leased part of the premises to Mistelle Bickley pursuant to the Lease which is dated 1 October 2018 but was signed by the parties in or about June 2020;
(c)the Lease does not specify the size of the area leased by Mistelle Bickley or include a map or plan or the leased area, however, the total area leased by Mistelle Bickley is less than 1,000m²;
…
(e)On 7 November 2019, under the Liquor Control Act 1988 (WA) (Liquor Act), the Director of Liquor licensing granted a licence to Mistelle Bickley covering the reception, kitchen, private dining, alfresco dining, alfresco deck and toilet area;
…
(h)Mr and Mrs Sykes, trading as Hainault Vineyard and Winery, use part of their land in Walnut Road, Bickley for a vineyard, cellar door and for their personal residence; and
(i)Mistelle Bickley vacated the premises on or about 30 September 2022.
In addition, I make the following findings of fact which are uncontroversial or are not in dispute. [21] I have adopted the wording and numbering as set out in Mistelle Bickley's SIFC.[22]
[21] Hearing Book at pages 476 to 478.
[22] Hearing Book at pages 174 to 177.
…
1.3The Landlord did not specify the size of the leased premises or include a map or plan of the leased premises indicating the lettable area, at the commencement of the Lease.
1.4Neither the leased premises or the building for the Landlord's use, are fitted with electrical sub-meters to measure and isolate each occupant's electricity usage [.]
1.5The Landlord did not submit and obtain approval from [the Tribunal] to allocate a greater proportion of outgoings to the tenant, as required under the Act s 12(1)(c)(i).
…
1.8The Letter May Electricity Charges 30.05.22 – Mistelle prepared by the Tenant, provided an estimated calculation to assign the relevant proportion of outgoings between the parties. The Tenant estimated its portion to be 38%.
1.9The Landlord disagreed and refuted the claim, insisting the Tenant continue to pay all of the total amount of the electricity invoice.
1.10On 29 June 2022, the Tenant sent the Landlord a Letter of Demand. This stated the Tenant objected to paying the full amount of electricity and that a ratio needed to be established going forward and a reimbursement to correct the amount overpaid.
1.11On 6 July 2022, the Landlord rejected the demand, insisting the Tenant continue to pay the total amount of the electricity consumption.
1.12On 12 July 2022, the SBDC issued a certificate to the Tenant to have the matter addressed at [the Tribunal].
1.13Effective 30 May 2022, the tenant paid their proportion of the electricity, based on a ratio 62%/38% as estimated in the Electricity Charges Resolution Letter of Demand. The 62% balance was not paid by either party and fell in arrears with Synergy.
…
2.1On 31 July 2022, the Landlord invoiced the Tenant for car parking. The Tenant did not pay the invoice as there is no provision for such charges in the Lease.
…
3.2The Landlord failed to complete and submit the Form 2 to the [Tribunal] for the provision of turnover rent to be included in the Lease.
3.3The Lease under clause 32 provides for an additional payment of 5% of the turnover exceeding $300,000 per annum (exclusive of GST) and $500 or 10% of the total bill for exclusive hire events.
…
3.7In April 2022, the Tenant paid the turnover rent for the financial year 2021 of $8,104.29 (inclusive of GST).
3.8On 13 August 2022 the Tenant served the Landlord a notice of objection to rent being determined by turnover.
3.9On 14 August 2022 the Landlord asserted the staff tip allocation should be included in the turnover rent calculations and invoiced the tenants for 5% of the staff tips for the financial year 2021.
…
3.12… the Tenant proposed two settlement offers:
(a)offer 1 on 17 November 2022 outlining offer based on principle; and
(b)a counteroffer on 23 March 2023 offering another proposed split with monetary value.
The Landlord declined both offers.
3.13The Landlord put an offer to settle with the Tenant on 17 February 2023.
…
4.1The [Security Deposit] was deposited into the Landlord's bank account over several months, totalling $10,008 as per the Lease.
…
4.3The Landlord leased the building to another party from 7 October 2022.
Questions referred and orders sought
Mistelle Bickley in their application provided the following questions for determination by the Tribunal and orders sought:[23]
[23] Question 1 per Mistelle Bickley's application is omitted in these reasons for decision as that question was determined as a preliminary issue by the Tribunal on 31 July 2023: Mistelle Bickley and Skyes.
Question 2:[W]hat proportion of the shared Utilities, Outgoings and other costs for the common areas is allocated to the Tenant?
Order sought for question 2: A determination that the proportion of the shared Utilities, Outgoings and other costs for the common areas payable by the Tenant shall not be greater than the relevant proportion.
Question 3:If the Tenant has paid more than the Tenant's proportion of the shared Utilities, Outgoings and other costs for the common areas, is the Tenant entitled to a refund?
Order sought for question 3: An order that the Landlord refund to the Tenant any overpayment of the shared Utilities, Outgoings and other costs for the common areas backdated to the commencement of the Lease, being 1 October 2018.
Question 4:Is the Tenant liable to pay expenses for the access to water from the Landlord's bore, a car parking fee, lawn maintenance, and rubbish disposal?
Order sought for question 4: A determination that the Tenant is not required to pay additional expenses for access to bore water, parking of cars, lawn maintenance and rubbish disposal.
Question 5:Is the Tenant entitled to compensation for pecuniary loss suffered by the Tenant as a result of the Landlord's failure to provide a Disclosure Statement?
Order sought for question 5: A determination that the Tenant is entitled to compensation for pecuniary loss suffered by the Tenant as a result of the Landlord's failure to provide a complete Disclosure Statement, particularly the failure to provide the outgoings budget.
Question 6(a): Is the Tenant required to pay the turnover rent component if the Tenant did not consent to turnover rent in writing on [the] Form 2 before the provision was included in the [L]ease and the Tenant objected, in writing, to the turnover rent component?
Question 6(b): If the Tenant is required to pay the turnover rent component, does 'turnover' include tips paid to the Tenant's employees?
Order sought for questions
6(a) and 6(b): A determination that the Tenant is not required to pay the turnover rent component and that tips paid to the Tenant's employees are not included in 'turnover'.
Question 7:Is the Tenant entitled to a refund for the turnover rent component paid?
Order sought for question 7: An order that the Landlord refund the turnover rent component paid.
On 26 October 2023, Mistelle Bickley sought leave of the Tribunal to amend their application to include the following additional question and order: [24]
Question 8:Is the Tenant entitled to retrieve the Security Deposit money paid to the Landlord, and other invoices outstanding and payments made?
Order sought for question 8: An order that the Security Deposit is included in the calculation of the landlord's liability to the tenant and that the wines returned to the landlord and cost of preparing lease document be refunded to the tenant.
[24] Hearing Book at page 236.
After considering the written submissions of the parties and hearing their oral submissions as to whether to grant leave to Mistelle Bickley to amend its application, at a directions hearing on 3 November 2023, the Tribunal gave leave and amended Mistelle Bickley's application to include the addition of order 8 and the grounds as set out in the document titled 'Request for an Additional Order' dated 26 October 2023 (see above at [44]).
As part of their response to Mistelle Bickley's application, Mr and Mrs Sykes sought to raise their own set of questions in relation to the questions referred under the Lease. Mr and Mrs Sykes raised questions under the following four main headings:
(1)Lease;
(2)shared areas;
(3)electricity charges; and
(4)property maintenance.[25]
[25] Hearing Book at pages 478 to 479.
At the final hearing, I indicated to the parties that in my view most, if not all, of the questions raised by Mr and Mrs Sykes could be capable of resolution under the rubric of the questions under the Lease referred by Mistelle Bickley. However, to the extent that they were not so capable, the questions should be the subject of Mr and Mrs Sykes' own application to the Tribunal under s 16(1) of the CTRSA Act, subject to the consideration of whether the Tribunal has jurisdiction to deal with them. For this reason, I have not referred to any of Mr and Mrs Sykes' questions specifically in these reasons.
Finally, I turn to consider the each of the questions referred by Mistelle Bickley for determination by the Tribunal.
Consideration
Section 16(1) of the CTRSA Act provides for a two-step process to deal with questions between parties which a party believes to be a question arising under the lease.
The first step is to decide whether the question referred to the Tribunal is a question arising under the relevant lease. If that is decided in the affirmative, then the second step is for the Tribunal to determine the question.
I will now deal with each of the questions referred by Mistelle Bickley in turn. For each question, I will summarise the competing position of the parties, refer to documents filed, and oral evidence given and submissions made at the final hearing, and in the closing written submissions which I find relevant to determine the question and then set out my own reasoning in determining the question.
Question 2: what proportion of the shared utilities, outgoings and other costs for the common areas is allocated to the Tenant?
A landlord's expenses are described in the CTRSA Act as 'operating expenses'. Leases often refer to these operating expenses as 'outgoings' or 'variable outgoings'. They can be a major cost.
Section 12(3) of the CTRSA Act provides that operating expenses, in relation to a landlord, means the expenses of the landlord in operating, repairing or maintaining the building of which a retail shop, the subject of a retail shop lease to which the landlord is a party, forms the whole or a part.
Examples of operating expenses include:
•council rates, water rates and taxes;
•cleaning (except for parts which are let);
•controlling vermin;
•security;
•repairs, services and maintenance (which no occupier other than the landlord is obliged to do);
•rubbish removal and sewerage disposal;
•insurance premiums and other charges in connection with insurance against fire, flood, malicious damage, machinery breakdown, public risk and loss of rent;
•gardening and landscaping;
•parking;
•signage; and
•charges for services provided (such as electricity, water, sewerage, fire control and air conditioning and all plant and equipment in connection with them as applicable) that are not separately metered to or paid for by a tenant or an occupier other than the landlord, such as for a common area.
Clause 15 of the Lease is headed 'Utilities and Outgoings'. It provides:
(a)The Landlord will promptly pay land tax, council rates, water rates and sewerage rates in relation to the Property.
(b)The Tenant will promptly pay any charges for electricity, internet, telephone, water usage, gas, annual Biolytix fee approx, annual UV lamp replacement for water sterilisation unit, annual drinking water sample fee, pump out of site toilets or other charges related to or arising out of the Tenant's use of the Property.
The 'Property' (being the leased premises) is defined in clause 1 of the Lease. It is defined as:
Café/house building, garden around the house, veranda, deck, pebbled area, lawn area, stage, two outdoor toilets [.]
I am satisfied that a matter in dispute between Mistelle Bickley and Mr and Mrs Sykes concerning electricity charges and expenses associated with the toilets and the relevant proportion of those expenses payable by Mistelle Bickley is a question arising under a retail shop lease (the Lease) pursuant to s 3(3)(d) and/or s 3(3)(e) of the CTRSA Act.
Having satisfied myself of the first step, I now go on to consider the second step.
Mistelle Bickley seeks the following order in relation to Question 2:[26]
A determination that the proportion of the shared Utilities, Outgoings and other costs for the common areas payable by the Tenant shall not be greater than the relevant proportion.
[26] Hearing Book at page 36.
Mistelle Bickley take issue with the expenses associated with the toilets and with the electricity charges.
It is common ground that Mistelle Bickley paid all of the expenses associated with the toilets (on the premises) and a major portion of the electricity charges for the whole property (and not just the premises).
Mistelle Bickley's position is that both they and Mr and Mrs Sykes used parts of the property to operate their respective businesses, and both derived a benefit from the utilities (electricity charges), outgoings and other costs (expenses associated with the toilets) in relation to what they described as the 'common areas' (see below at [109]). Further, Mistelle Bickley say that Mr and Mrs Sykes did not obtain approval from the Tribunal to allocate to them a greater proportion of the electricity and expenses associated with the toilets other than their 'relevant proportion'.
Mr and Mrs Sykes' position is that prior to the commencement of the Lease, the parties had discussions about various charges. Most of the discussions were not recorded in writing.[27] However, Mr Sykes says that his notes clearly reflect that one party or the other party is recorded as being required to pay for the expense, and that there were no shared expenses.[28] Based on these discussions, Mr and Mrs Sykes believe that Mistelle Bickley agreed to pay for all of the electricity charges for the whole property in return for them providing the excess electrical energy generated from their 5KW PV system and to not charge Mistelle Bickley for water usage, parking, rubbish disposal and maintenance of the lawn area (concessions).[29]
[27] Hearing Book at page 139.
[28] ts 857, 12 March 2024.
[29] Ibid.
Mr Sykes explained it this way:[30]
We, the four [of] us, talked about how the lease was going to operate. We agreed on clauses. We even changed the wording in some of them after the fact. Not after the lease was written, but after those dot points Bistro X dots were made. They didn't all get implemented. Some of them got changed. Some of them got kicked off. These things here are what made it into the lease that you [Mr Lasplace] wrote, you included. You chose to include these. The words that came – that you've [Mr Lasplace] used would have come from the discussions that we all had before the lease.
[30] ts 974, 12 March 2024.
The concessions according to Mr Sykes totalled in excess of $30,000 over the period of the Lease and comprised: [31]
•bore water of $2,500 ($50 x 12 times per annum x four years);
•lawn maintenance of $3,576 (40% of the total bill over the four years);
•parking $20,000 ($100 per week over the four years);
•electricity subsidy (excess power produced by the photovoltaic (or solar power system) of 4.3 kWh per day) $1,569;
•rubbish collection and use of ute $2,000 over the four years; and
•electricity connection charge $1,460 over the four years (or about $1 per day).
[31] Hearing Book at page 459.
Mr Sykes explained that as they could not prove that they had excess electricity, they gave Mistelle Bickley the 'concessions' that would 'convince them that they [Mistelle Bickley] were not being ripped off'.[32] Mr Sykes said:[33]
…
I'm not – I'm not asking them for that money. I'm just telling the [Tribunal] that we didn't rip them [Mistelle Bickley] off. We made concessions that were very much higher value than the connection charge that we had to maintain, because that's our liability.
Electricity charges
[32] ts 887, 12 March 2024.
[33] ts 1009, 12 March 2024.
With respect to the electricity charges, Mr and Mrs Sykes' strongly assert that Mistelle Bickley fully understood and agreed that they would pay 100% of the electricity charges but now they want to argue that they are only liable to pay for their usage but without explaining how they would measure their electricity usage when there has only ever been one electricity meter for the whole property.[34]
[34] ts 855, 12 March 2024.
The details of the concessions as explained by Mr and Mrs Sykes are not set out in the Lease; in particular in clause 15(b) of the Lease.[35]
[35] Hearing Book at page 481.
Properly construed clause 15(b) of the Lease obligates Mistelle Bickley to pay for, for example, electricity charges related to or arising from Mistelle Bickley's use of the Property only (that is, the leased premises). In other words, Mistelle Bickley's is only obligated to pay for charges and other costs arising from their use of the Property and not for the whole property.
The alternative interpretation, which is that preferred by Mr and Mrs Sykes, that Mistelle Bickley is obligated to pay for all the electricity charges (including the electricity usage by Mr and Mrs Sykes) is, in my view, contrary to the terms of clause 15(b) of the Lease.
Further, the details of the concessions are not included in Mr Sykes' notes or summary of the meetings held in June/July 2018. When asked, Mr Sykes could not explain why details of the concessions are not documented (see also [147] below).
Mr Dodd when asked whether from his experience discussion points are part of the lease stated:[36]
To be fair, whatever is in the discussion, from my experience, doesn't really matter until it's in the lease. You know, you can – you can, you know – when I'm negotiating a lease, I can have an awful lot of conversations or emails going backwards and forwards between myself and whoever is representing the landlord. What matters is what finally ends up in the lease, from my point of view, because that's the end of discussion, and, quite often, in the lease, it will say, "Anything else outside the lease doesn't matter". You know, we're recognising that everything that's important about this deal is in the lease[.]
[36] ts 565, 19 January 2024.
Mr and Mrs Sykes' position in regards to the concessions is in conflict with what the Lease expressly provides for at clauses 19 and 32 for the following reasons.
First, clause 19 of the Lease provides that the Tenant must ensure that rubbish, recycling, trade refuse or other waste matter is regularly removed from the Property.[37]
[37] Hearing Book at pages 104 and 110 to 111.
Second, clause 32 of the Lease requires the Tenant to be responsible for the disposal of rubbish. Further, clause 32 provides that the Tenant is to be responsible for the repair or replacement of the lawn area in front of the stage.
In conclusion, in my view, while it is Mr and Mrs Sykes' position that in exchange for the concessions, Mistelle Bickley agreed to pay for all of the electricity charges for the whole property, this is not documented, apart from Mr and Mrs Sykes, no witness (including Mr Dodd) gave evidence that there was such an agreement and in any event it is clearly contrary to clauses 15(b), 19 and 32 of the Lease. I find that Mistelle Bickley is not obligated under the Lease to pay 100% of the electricity charges but only for what they used on the Property (the leased premises). I will return later in these reasons to consider how the electricity charges are to be apportioned.
Toilet expenses
In regards to the expenses associated with the toilets, Mr Sykes explained they first became aware there was an issue when Mistelle Bickley filed their application with the Tribunal. Mr Sykes explained it this way:[38]
… We didn't instruct our tenants to pay in full for the toilets. But the lease agreement says that you [Mistelle Bickley] will pay for the pumping out of the toilets. And the lease agreement says that the toilets are actually your property, while you're paying for that lease. You should clean them, you know. You're responsible, not us. If you choose to let people use it, that's your choice[.]
[38] ts 943, 12 March 2024.
While Mr Sykes accepts that the more people that use the toilets, the more frequent they need to be pumped out and therefore the higher the cost,[39] he was very clear that Mistelle Bickley had the 'exclusive use' of the toilets as they were part of the Property under the terms of the Lease. Further, Mr and Mrs Sykes' position is clear that clause 15(b) of the Lease provides that Mistelle Bickley is required to promptly pay any charges to 'pump out of site toilets'.
[39] ts 942 to 943, 12 March 2024.
In my view, as explained earlier, properly construed, clause 15(b) of the Lease obligates Mistelle Bickley to only pay for expenses in respect of the toilets from their use of the Property (the leased premises).
Mr and Mrs Sykes submit there are no references to shared or 'common areas and accessways' in the Lease which supports their view that Mistelle Bickley had 'exclusive use' of the toilets. Further, and in any event, Mr and Mrs Sykes say that Mistelle Bickley never took any steps to prevent any unwanted use of their toilet facilities.[40]
[40] Hearing Book at page 481.
It is common ground that besides the toilets which are part of the Property under the Lease, there are no other toilets available to customers visiting Hainault, and as Hainault is only licenced for 20 people it is not required to provide a toilet.
However, it is also common ground that Hainault operated from Mistelle Bickley's premises for the first 13 months of the Lease. However, the reasons given for doing this differ. Mistelle Bickley say it was because Mr and Mrs Sykes were renovating the Hainault cellar door to which they moved into in late 2019. Mr and Mrs Sykes say it was because Mistelle Bickley did not have a liquor licence. In the circumstances of this case, the reason is immaterial. What is relevant is that Mr and Mrs Sykes accept that they operated the Hainault cellar door from Mistelle Bickley's leased premises for 13 months from the commencement of the Lease.
Even though the Lease provides the Property leased to Mistelle Bickley includes the toilets and that the liquor licence[41] covers both the toilets and the accessway, in my view, the conduct of both parties did not give a right of 'exclusive use' of these areas to Mistelle Bickley.
[41] Hearing Book at page 32.
The term 'exclusive use' is not defined in the CTRSA Act. However, ordinarily it means that the area, such as the toilets and accessway, that is for the sole use of a person, in this case the occupier or tenant of the leased premises. However, the occupier or tenant, as the case may be, may at its discretion allow or deny people access to the area.
While Mr and Mrs Sykes assert that it was Mistelle Bickley's choice to allow people to access and use the toilets on the Property (the leased premises), there was no arrangement in place between the parties and I find that the conduct of both parties allowed people to use the toilets, certainly without exception in the first 13 months of the Lease but also, in my view, the same conduct continued after Hainault relocated to its renovated cellar door.
Mr Sykes' evidence is that when Hainault operated their cellar door from Mistelle Bickley's reception area, 90% of the customers who booked into the restaurant also had a wine tasting in order to select a wine to have with their meal.[42] The implication is that 90% of the customers were a customer of both businesses. There is no evidence before the Tribunal to suggest that Mr and Mrs Sykes or the Hainault staff asked Mistelle Bickley if their customers tasting wine could use the toilets, it just occurred without any arrangement in place.
[42] ts 864, 12 March 2024.
Ms Landers stated that customers from both Mistelle Bickley and Hainault could use the toilets. She gave evidence of tour groups as well as groups of friends and family coming through the property to Hainault when she was cleaning the toilets prior to the restaurant opening for lunch to ask her if they could use the toilets. Ms Landers said she never refused anyone who asked to use the toilets. This occurred, according to Ms Landers, up to the time she left employment with Mistelle Bickley on 18 October 2020. During the summer, when the avocado deck was in use, Ms Landers stated that she saw customers of Hainault walk through the upper carpark and down the driveway to access the toilets.
Ms Furness accepted that if a person had a booking at the Mistelle restaurant and also attended the Hainault cellar door to purchase some wine then that person was a customer of both businesses.[43] Ms Furness said that it was not often that wine tasters would ask about using the toilets, but if they did, she would say they did not have a toilet, unless they told her they were booked in for lunch at Mistelle Bickley, in which case she would tell them that there are toilets at the restaurant.[44] She said that if she saw a lady who was desperate to use the toilet she would allow the lady to use their compostable toilet.[45] It is Ms Furness' evidence that, unless a person had been to Hainault previously, they would need to be given directions to the toilets as they are not visible from the Hainault cellar door.[46]
[43] ts 673, 12 February 2024.
[44] ts 684, 12 February 2024.
[45] ts 673, 12 February 2024.
[46] ts 688, 12 February 2024.
Mr Heathcote's evidence was that he could see from anywhere on the whole property (of about 16 acres) if people were using the toilets, though he could not say if the person was a customer of Hainault or of Mistelle Bickley. In addition, Mr Heathcote said that when both businesses were closed, people who visit may access the toilets because they are located outside.[47]
[47] ts 665, 12 February 2024.
Mr and Mrs Lasplace said they nor the employees of Mistelle Bickley turned anyone away who asked to use the toilets as they knew there was no other toilet facility close by. In this regard, I find the toilets were a benefit available to both businesses.
When Hainault moved to their renovated cellar door, Mr Sykes said they kept records of people attending the cellar door which was between 27 to 30 people over the whole of any given weekend. Mr Sykes was clear that customers were told that they did not have a toilet for customer use, apart from customers who had a booking with Mistelle Bickley, in which case, they told the customer to use the toilets at Mistelle Bickley.[48]
[48] ts 865, 12 March 2024.
From the evidence before the Tribunal, and summarised above, I prefer the evidence of Ms Landers who gave evidence that tour groups as well as groups of friends and family coming through the property when she was cleaning the toilets prior to restaurant opening for lunch asked her if they could use the toilets which she never declined. I find that both customers of Mistelle Bickley and persons attending Hainault for wine tasting or to visit Mr and Mrs Sykes had access to and used the toilets on the Property. Mr and Mrs Sykes never sought permission from Mistelle Bickley if they or anyone attending Hainault could access and use the toilets but at the same time Mistelle Bickley never instructed Mr and Mrs Sykes that their customers could not access and use the toilets.
In conclusion, in my view, as a consequence of the conduct of both parties, Mistelle Bickley did not have 'exclusive use' of the accessway to, and the use of the toilets for the term of the Lease. As a result, in my view, the expenses associated with the toilets are to be apportioned. I will return later in these reasons to consider how the expenses associated with the toilets are to be apportioned.
Mistelle Bickley urged the Tribunal to calculate their proportion of the electricity charges and the toilet expenses based on their 'lettable area'. Mr and Mrs Sykes did not put forward any alternative, other than to contend that Mistelle Bickley's relevant proportion of the electricity charges and toilet expenses over the period of the Lease is 100%, apart from the contributions they made for electricity early in the Lease.
In particular, Mr and Mrs Sykes assert that the lettable area is not relevant. This is on the basis that Mistelle Bickley:
(a)agreed to pay all the electricity charges and had done so for over three years, being a major part of the Lease;
(b)received subsidised electricity charges for the entire Lease; and
(c)only queried the electricity charges when they were asked to pay the turnover rent in October 2021 for the 2020/2021 financial year.
In my view Mr and Mrs Sykes are required to pay the net amount of $479.05 to Mistelle Bickley.
Other costs claimed by the Landlord
In the list of amounts owed to them, Mr and Mrs Sykes claim the following further costs:[177]
[177] Hearing Book at page 463.
Description
Amount
Repair to portaloo
$150
Broken blender lid
$300
Processor, broken cord**[178]
$1,000
Shade sale repair
$450
Towel rails
$160
Salad spinner
$30
Garden hose
$25
4 x glass wash trays
$60
[178] The notation 'sealed unit cannot be repaired' was included with this item. Hearing Book at page 463.
While Mr and Mrs Sykes provided some photographs in respect of the above items,[179] none of these items appear in any of the inspection reports.
[179] Hearing Book at pages 419, 423, 428, 429 and 430.
Mr and Mrs Sykes explained that they provided an estimate of what they consider Mistelle Bickley owe them to rectify the damage and replace missing items, however, they have not provided invoices for some items as they have yet to receive a quote or make the purchase.[180]
[180] Mr and Mrs Sykes' closing submissions filed on 29 March 2024 at page 9.
In response, Mistelle Bickley says the towel rail is not damaged but rather it is tarnished due to aging.
In regard to the shade sail, Mistelle Bickley say it was damaged due to weather within the first two years of the Lease (sometime in 2020) and Mr and Mrs Sykes accessed the premises without giving notice to them and removed the shade sail.
In response to the portaloo issue, Mistelle Bickley say it was not damaged when they left the premises and in any event the photograph filed by Mr and Mrs Sykes that is before the Tribunal was taken on 26 December 2022, which is about three months after they left the premises and in circumstances when Mr Sykes gave evidence that they continued to operate the cellar door after they left and their customers were directed to the toilets when asked.
It is useful to start by considering the Lease.
In clause 1 of the Lease under the definition of 'Included Items' there is a detailed list of items including 58 dessert spoons and 11 cheese knives. In my view if the blender, processor and salad spinner, as listed above, was part of the 'Included Items' as that term is defined in clause 1 of the Lease, these items would appear in the list of 'Included Items'. I have not considered these three items further as they are not in the list of 'Included Items'.
In regards to the other items, none of them appear on the final inspection report and besides a photograph there is nothing to substantiate the damage including cost of repair, such as a quote. Consequently, I have not considered them further.
Conclusion on Security Deposit and other amounts
In conclusion, in my view, the Security Deposit of $10,008 is to be reduce by $1,570 (being $275 for oven cleaning plus $875 for repair of the deep scratches to kitchen floor plus $300 for damage to café blind plus $120 for repair to damage to bottom of pantry door). This means that $8,438 is refundable by Mr and Mrs Sykes to Mistelle Bickley.
Further, in my view Mr and Mrs Sykes are to pay the net amount of $479.05 to Mistelle Bickley in respect of the wines.
The result is Mr and Mrs Sykes are to pay $8,917.05 ($8,438 + 479.05) to Mistelle Bickley. It is appropriate in my view, to make this amount payable along with the other amount payable to Mistelle Bickley within 30 days of the orders.
Other issue
Changes to the Lease
Mr and Mrs Sykes assert that Mr and Mrs Lasplace changed the Lease without any discussion with them.[181] Mr Sykes gave evidence that Mrs Lasplace added the word 'residence' to the definition of 'Permitted Use' in clause 1 of the Lease. [182]
[181] ts 854, 12 March 2024.
[182] ts 853, 12 March 2024.
What Mr Sykes' is concerned about is that Mr and Mrs Lasplace by making changes to the Lease without discussion with them reflects an attitude by Mr and Mrs Lasplace that they 'don't give a damn about anyone else'.
Mr Sykes said that both he and Mrs Sykes signed the Lease nonetheless because at the time (June 2020) they were trying to make sure Mistelle Bickley's restaurant was successful as other restaurants in the area had failed.[183]
[183] ts 856 to 857, 12 March 2024.
It is not necessary for me to determine whether or not changes were made to the Lease. Mrs Lasplace concedes as much in her email of 3 July 2020 where she states:[184]
Here is a digital copy of the contract [Lease]. As mentioned earlier, I had made 2 changes. 1. I've cleaned up the doubling up/confusion at the beginning of the document of equipment etc, and 2. I've added the house can be used for personal use/residence (bank loan purposes).
I've got the original too pass to you as well so you can compare and keep for your records.
[184] Hearing Book at page 306.
Finally, and in any event, in my view, nothing in this proceeding turns on Mr Sykes' concern.
Conclusion
In the orders that follow, I set out the questions referred to the Tribunal by Mistelle Bickley and my answer to each question. The answers follow from the findings I have made and are set out earlier in these reasons.
In accordance with the above reasons and in the exercise of the Tribunal's statutory discretionary powers under s 26(1) of the CTRSA Act, I conclude that the appropriate orders to be made in this proceeding brought by Mistelle Bickley under s 16 of the CTRSA Act is to make an order under s 26(1)(a) requiring Mr and Mrs Sykes to pay $10,787.67 to Mistelle Bickley within 30 days of the orders.
Orders
The Tribunal orders:
1.The Tribunal determines and answers the questions referred to it as follows:
(a)Question 2: What proportion of the shared Utilities, Outgoings and other costs for the common areas is allocated to the Tenant [applicant]?
Answer: 66%.
(b)Question 3: If the Tenant [applicant] has paid more than the Tenant's [applicant's] proportion of the shared Utilities, Outgoings and other costs for the common areas, is the Tenant [applicant] entitled to a refund?
Answer:Yes, the Tenant [applicant] is entitled to a refund of $3,507.49 for electricity charges and $6,803.89 for expenses associated with the toilets.
(c)Question 4: Is the Tenant [applicant] liable to pay expenses for the access to water from the Landlord's [respondents] bore, a car parking fee, lawn maintenance, and rubbish disposal?
Answer: No.
(d)Question 5: Is the Tenant [applicant] entitled to compensation for pecuniary loss suffered by the Tenant [applicant] as a result of the Landlord's [respondents] failure to provide a Disclosure Statement?
Answer: No.
(e)Question 6(a): Is the Tenant [applicant] required to pay the turnover rent component if the Tenant [applicant] did not consent to turnover rent in writing on the Form 2 before the provision was included in the Lease and the Tenant [applicant] objected, in writing, to the turnover rent component?
Answer: Yes.
(f)Question 6(b): If the Tenant [applicant] is required to pay the turnover rent component, does 'turnover' include tips paid to the Tenant's [applicant's] employees?
Answer:Yes.
(g)Question 7: Is the Tenant [applicant] entitled to a refund for the turnover rent component paid?
Answer: No. The Tenant [applicant] is to pay $93.36 (outstanding) to the Landlord [respondents] for 2020/2021 and $8,067.49 for 2021/2022.
(h)Question 8: Is the Tenant [applicant] entitled to retrieve the Security Deposit money paid to the Landlord [respondents], and other invoices outstanding and payments made?
Answer: Yes. The Landlord [respondents] is to refund $8,438 of the Security Deposit to the Tenant [applicant]. Further, the Landlord [respondents] are to pay $479.05 to the Tenant [applicant] in respect of the Hainault wines.
2.Pursuant to s 26(1)(a) of the Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA), the respondents must pay the amount of $11,067.58 to the applicant within 30 days of the orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS R PETRUCCI, MEMBER
7 MAY 2024
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