Orbis Management Pty Ltd v Alphabet Designs Pty Ltd
[2012] QCAT 299
•13 July 2012
| CITATION: | Orbis Management Pty Ltd v Alphabet Designs Pty Ltd [2012] QCAT 299 |
| PARTIES: | Orbis Management Pty Ltd (Applicant) |
| v | |
| Alphabet Designs Pty Ltd (Respondent) |
| APPLICATION NUMBER: | MCDO1665-11 |
| MATTER TYPE: | Other minor civil dispute matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | K Buxton, Adjudicator |
| DELIVERED ON: | 13 July 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Alphabet Designs Pty Ltd pay to Orbis Management Pty Ltd the sum of $10,328.61 being $9,088.97 in claim plus $984.64 in interest and $255.00 in filing fee by 30 July 2012. |
| CATCHWORDS: | Commercial tenancy – insurance premiums to be paid by tenant – whether lessor obliged to minimise premiums |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
REASONS FOR DECISION
Orbis Management Pty Ltd (Orbis), the applicant in these proceedings, is the owner of commercial property in Ashmore. It leased that property to Alphabet Designs Pty Ltd (Alphabet), the respondent. Alphabet previously owned the property and sold it to Orbis, remaining in possession as Orbis’ commercial tenant.
Orbis has sought to pass on to Alphabet the costs incurred by Orbis in insuring the building for the relevant periods. Orbis relies upon clause 4 of the terms of the Commercial Tenancy Agreement which provides:
“4.OUTGOINGS
4.1 Tenant to pay outgoings
(1)The Tenant must pay to the Lessor the whole, or where a percentage is stated in item 9 of the Reference Schedule that percentage of the Outgoings for the Premises or the property of which the Premises is part as applicable.
(2)Outgoings are payable to the Lessor within 14 days of production to the Tenant of a copy of the Lessors assessment notice or account.
4.2 Outgoings
For the purpose of this clause Outgoings means the following charged levies or expenses payable in respect of the Premises or property of which the Premises is part:
…
(2)Insurance premiums payable by the lessor;
…”
Item 9 specifies 100% of the outgoings as payable by the tenant.
In its response Alphabet asserts that, when it owned the building, its insurance premiums were considerably cheaper than those incurred by Orbis. Alphabet declined to pay any amount, including the lesser amount it considered to be a reasonable sum for insurance ($4,447.40 in accordance with the premiums it had previously been charged) and also submitted that Alphabet should not have to pay any interest.
The essential issue to determine is whether there should be an obligation or term implied into the commercial tenancy agreement that the outgoings be “reasonable” or “minimised” in some way. The nature of the respondent’s complaint is that cheaper cover could have and should have been obtained. The question is whether Orbis was obliged to do so.
During the course of this proceeding, opportunity was provided to the parties to present to the Tribunal expert evidence to support the various contentions as to the scope of the policy and its cost. If, for example, the cover taken out by Orbis was broader than required by clause 4 of the Commercial Tenancy Agreement or included premises outside the scope of that agreement the respondent may not be obliged to pay the full amount for that cover. Despite this opportunity having been provided, no proper expert report or written submissions were made by Alphabet in support of its case.
On 9 December 2011 Orbis filed the policy schedules and wordings and submitted that they had insured no more than the demised premises. Orbis asserted during the hearing of this matter that there may be any number of reasons why the policies it paid were more than those previously paid by Alphabet and that it simply relied upon clause 4 of the Commercial Tenancy Agreement as provided an unfettered entitlement to recover the full amount of $9,088.97 in premiums for the relevant periods.
Legal authority supports the applicant’s contention. A commercial contract will be construed by reference to the language used and the plain words of the contract.[1] There is no obligation upon the lessor to secure the best price or even a reasonable price for the outgoings.[2]
[1] Byrnes v Kendle [2011] HCA 26 at [98] per Heydon and Crennan JJ.
[2]Bandar Property Holdings Ltd v JS Darwen (successors) Ltd [1968] 2 All ER 305, 309 per Roskill J.
There is no evidence that the premiums paid by Orbis for outside the scope of clause 4 and no legal reason why the contract should not be enforced by requiring Alphabet to pay 100% of those premiums. Even if the price of the policy were relevant, there is no evidence to suggest it is unreasonably high. It is simply higher than the sum previously paid by Alphabet.
It follows that Orbis is now entitled to its claim in full plus interest to the date of filing of this application at 10% per annum, for one year and one month, together with the filing fees it has incurred.
The Tribunal orders that Alphabet Designs Pty Ltd pay to Orbit Management Pty Ltd the sum of $9,088.97 plus interest of $984.64 and filing fee of $255.00, totalling $10,328.61 by 30 July 2012.
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