Parra power Tools v Kalcev

[2000] NSWADT 177

CITATION:	Parra power Tools -v- Kalcev & ors [2000] NSWADT 177
DIVISION:	Retail Leases Division
PARTIES:
FILE NUMBER:	005039
HEARING DATES:	09/11/2000
SUBMISSIONS CLOSED:	11/09/2000
DATE OF DECISION:	11/09/2000
BEFORE:	Donald B - Judicial Member
APPLICATION:	Claim for declaration of rights, obligations and liabilities under a lease - Claim for payment of money - Claim for relief from payment of money
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:
REPRESENTATION:	APPLICANT In person FIRST RESPONDENTS In person SECOND RESPONDENTS G Brady, solicitor
ORDERS:	1. Declare that the lease requires that: (i) all delivery of jet ski craft from trucks be confined to locating the delivery truck on the nature strip (ii) the lessor is obliged to require any customers parking with craft in the access point immediately to move to ensure they do not remain in that location (iii) the lessor is required to install proper exhaust control within its workshop, and undertake to the lessee to direct both exhaust and noise direction back into the workshop and away from the common areas (iv) the crate and pallet rubbish must be located on the western end of the premises adjacent to the jet ski business premises, but so as clearly not to impede the westerly driveway access and exit (v) the management of the rubbish areas be such that the lessor implements its acknowledged obligation to require its other tenant, and to manage its own affairs, such that rubbish does not flow on to the carparking spaces allocated to the lessee; 2. No order as to costs.

1 This is a retail tenancy claim within s.70 of the Retail Leases Act 1994. The lessee seeks declarations of its rights and of the obligations of the lessor under the lease and claims an entitlement to a payment in respect of lost signage and a reduction in rent for continuing breaches of the lease.

SIGNAGE

2 The first issue for determination relates to claimed rights to signage in respect of the commercial complex of which the leased premises is one of three units.

3 The history of the matter is that when Parra Power Tools Pty Limited fell on hard financial times and was acquired by new owners as a going concern, they understood the business assets included not only rights under the lease, but rights in respect of certain signage at the premises, 280 Parramatta Road, Granville.

4 The lease that was subsequently entered into between the new proprietor of the business, and the then lessors contained no express rights in respect of the signage on common areas. There was no other evidence other than oral conversations from time to time concerning continued permission to use certain signage from which it could be inferred that, as a condition of the lease, there was any right to the two forms of signage on the street, the ground level signage and the high signage on the stand or pylon.

5 Accordingly, in my opinion as a matter of the legal relations between the parties, the best position for the lessee is that there was an informal licence to continue to use the signage. The fact that the signage had formed part of the assets of the business albeit not particularised in the contract for purchase, is only a matter as between the vendor of that business and the purchasers rather than being of any contractual effect between the lessor and the lessee. In any event, I do note that it was acknowledged that the total purchase price for the whole business as a going concern from the insolvency administration was of the order of $10,000 including the signage.

6 In my opinion, the legal situation was that, while the lessors permitted the lessee to continue to place and/or use two forms of signage at street level (the ground level sign and the sign on the stand), this was ultimately a matter of informal licence and able to be varied on appropriate notice.

7 The lease did provide for certain obligations of the lessor, where providing signage to all tenants, to ensure that all were included on reasonable terms. The prior lessor’ acknowledged clause 3.4 in that regard as indicating there would be certain obligations on the lessors and rights in respect of such access. Also clause 6.3, stated certain rights in respect of advertisements on the outside of the property.

8 However, in my opinion all of these simply indicate that as a matter of landlord and tenant law, the obligations of the lessor were to ensure continued signage available to the lessee if that were provided in respect of all tenants in the complex.

9 The factual situation was that a deal was struck with Yamaha to replace the existing signage on the stand with the new pylon sign. Originally this was to have required a tenant contribution for inclusion on the sign. As events developed that requirement was no longer imposed such that by the time the ground level signage for Parra Power Tools was removed by the new owner/lessor of the premises, Parra Power Tools had already achieved location on the new pylon sign. The principal difference is that the reference to the brand name, and range of stock, which the lessee says was of particular value to its business, was not included.

10 In my opinion in those circumstances, I do not believe that the lessor has failed to comply with any obligations that flow from the lease as to appropriate dealings with tenants in relation to signage. Any out of pocket loss of the lessee from the sign having been taken down and not given to it for further use (if any) is best measured by the amount paid for the sign since the sign at that location has been replaced for at no cost. Given that the total amount paid for the business in liquidation was $10,000 it would not appear to me that there has been a measurable loss in relation to the sign.

11 I understand that this matter was hotly disputed, that there were certain beliefs in Parra Power Tools' owners and managers as to their rights in respect of signage; however those beliefs were not, in my opinion, properly based in the legal rights that existed in respect of the signage. And while it is unfortunate that the dispute arose based on those beliefs, the situation on the evidence produced is that at no time was there an absence on the street of the Parra Power Tools logo and signage indicating the availability of its service at those premises.

12 I am not satisfied that the lessee has made out a basis whereby this Tribunal should make a financial order in relation to the dispute over signage either against the previous lessors or against the current lessor.

BREACHES OF THE LEASE

13 The second issue for determination relates to the part of the application that seeks a reduction in the rent of 25 per cent as a result of failure of the lessor properly to accord the rights of the tenant for access, management of noise and management of rubbish in the approaches and common areas of the property.

14 The key change affecting Parra Power Tool’s business has been the introduction of the jet ski business of the lessor in place of Paradise Doors tenancy. The new business generates a significant volume of noise for a brief but regular number of occasions each day, with associated exhaust fumes. Secondly, it generates packaging material associated with the carriage and delivery of jet skies, which are substantial and require a level of protection during transportation. Thirdly, it affects access to the lessee’s premises, given that customers of the jet ski business will, on a not infrequent basis, stop their vehicles for the purpose of bringing craft to and from, whether for service, or by way of acquisition, with consequent risk of impeding of access to the premises.

15 I observe that by its very nature, the premises on Parramatta Road, Granville requires unimpeded access for the successful operation of any business, given the pressure of traffic on that road; this was agreed. By the same token, there will from time to time inevitably be occasions where customers conduct themselves in a manner which, for a short time, impedes that access.

16 The applicant lessee presented photographic evidence of this occurring, and it is not absolutely denied by the lessor, although it is claimed that it occurs sufficiently infrequently as to be within normal bounds. I acknowledge the undertaking of the lessor to the Tribunal as the operator of the jet ski business, to take immediate steps whenever a customer is seen to be blocking that access. Were that to change, then I would accept that there would be justifiable basis for complaint by the lessee.

17 On the second issue of deliveries, the lessor asserts that delivery vehicles are confined to the nature strip, and as a matter of course excluded from blocking the driveway access; the lessor furthermore undertakes to the Tribunal that this would continue to be the case. I accept such an undertaking and submission as dealing with that aspect, but note that were there to be a variation of that then the lessee would have a justifiable complaint.

18 In relation to the crates and pallets issue, the lessor has undertaken to ensure that at all times any such items are stacked only at the Western end of the premises, and in such a manner as not to impede the driveway access at the westerly driveway. On that basis, and provided that such an undertaking continues, then in my opinion that will ensure this issue does not impede the legitimate right of the lessee for access and use of the common areas of the premises.

19 In relation to rubbish, it is agreed that the location of the rubbish bins has always been adjacent to the applicant’s premises, but off its particular carparking spaces. The problem arises where rubbish is allowed to flow over from the bins. Again the obligation, in my opinion, of the lessor is to ensure that this does not occur, and provided that continues to be the case, and is immediately remedied in any particular case, then this in my view would remove any basis of the complaint by the applicant lessee.

20 The final issue relates to noise and fumes. Photographs have been provided to the Tribunal which make it clear that the physical placing of equipment being tested can be confined within the workshop area of the jet ski business. The lessor has undertaken to the Tribunal to install exhaust systems to deal with the fumes. The Tribunal does declare that the obligation of a landlord in relation to Parra Power Tools is to require that any testing direct the noise and exhaust back into the workshop rather than out into the common areas, notwithstanding that this only happens on the average of four times per day for around a minute per time, with perhaps a somewhat longer period of time for the diffusion of exhaust.

21 I think it is fair, as between these parties, to declare that the obligations of the operation of this lease do require that if such a use is to be made of a workshop adjacent to another business then proper exhaust systems be installed and noise direction be required to reduce the impact on the existing operations of the existing tenants.

22 In my opinion, for the future, a proper implementation of all of the undertakings that I have outlined will, if properly enforced, satisfy the rights the lessee as against the lessor for the remainder of the lease.

23 The final question as whether there is, on the basis of the information provided to the Tribunal, sufficient basis made out for a reduction in rent for the period between October 99, when the new jet ski business was introduced, and the present time. The lessor has asserted that he predicts a level of reduction in turnover during the time, but in my opinion there is not sufficient evidence from which it is fairly able to be concluded that there is a particular dollar value flowing from the access and noise issues. Accordingly I do not think it is appropriate to make a financial order in this case.

24 Therefore in relation to the retail tenancy claim under section 70 of the Act, being a claim for the declaration of the rights, obligations, and liabilities of the parties under the lease, the declarations that I make are that the lease requires that:

(i) all delivery of jet ski craft from trucks be confined to locating the delivery truck on the nature strip.
(ii) the lessor is obliged to require any customers parking with craft in the access point immediately to move to ensure they do not remain in that location.
(iii) the lessor is required to install proper exhaust control within its workshop, and undertake to the lessee to direct both exhaust and noise direction back into the workshop and away from the common areas.
(iv) the crate and pallet rubbish must be located on the western end of the premises adjacent to the jet ski business premises, but so as clearly not to impede the westerly driveway access and exit.
(v) the management of the rubbish areas be such that the lessor implements its acknowledged obligation to require its other tenant, and to manage its own affairs, such that rubbish does not flow on to the carparking spaces allocated to the lessee.

25 In my opinion, with those declarations these parties ought be in a position to resolve their dispute and endeavor to optimise the operation of their businesses.