Patterson and Citygate Properties Pty Ltd
[2017] WASAT 142
•13 NOVEMBER 2017
PATTERSON and CITYGATE PROPERTIES PTY LTD [2017] WASAT 142
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2017] WASAT 142 | |
| COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) | |||
| Case No: | CC:682/2017 | 21 AND 22 SEPTEMBER 2017 | |
| Coram: | MR T CAREY (MEMBER) | 13/11/17 | |
| 23 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | LEONIE ANN PATTERSON CITYGATE PROPERTIES PTY LTD |
Catchwords: | Landlord and tenant Retail shop in shopping centre Hot bread shop Lack of grease arrestor Whether landlord under obligation to install when required by local government authority Implied term of lease Misleading or deceptive conduct Renovations to shopping centre Impact on demised premises Extent of impact Whether statutory claim for compensation made out Whether landlord breached lease term permitting renovations Whether landlord breached covenant of quiet enjoyment |
Legislation: | Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA), s 14 |
Case References: | BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 City of Subiaco v Heytesbury Properties Pty Ltd (2001) 24 WAR 146 Duke of Westminster v Guild [1985] QB 688 Edler v Auerback [1950] 1 KB 359 Hill v Harris [1965] 2 QB 601 |
Orders | For the above reasons:,1. The application is dismissed. |
Summary | The applicant was the tenant of retail shop premises in a shopping centre owned by the respondent. She operated a hot bread shop/café bar from the premises for almost four years, before prematurely ceasing trading. Ultimately, the lease was terminated for default in payment of rent.,The applicant attributed the failure of her business to two causes for which she considered the respondent responsible:,a) The requirement of the local government authority that a grease arrestor be installed. She had not been made aware of any such requirement by the respondent, which refused to arrange or pay for it; and,b) Extensive works to renovate and refurbish the centre and her shop.,In relation to each cause, the applicant contended for three possible legal bases upon which liability might arise.,The Tribunal decided in relation to the grease arrestor claims:,i) There was no term to be implied in the lease that there was a grease trap present in the premises at the commencement of the relevant term. In particular, the Tribunal rejected the proposition that such an implication arose in order to make the demised premises suitable for the use contemplated by the lease.,ii) The lack of a grease arrestor did not amount to a derogation from the grant of the lease.,iii) No misleading or deceptive conduct was made out. ,In relation to the renovation claims, the Tribunal preferred the evidence of the respondent going to the impact of the works on the applicant’s business to that of the applicant, which it found to be significantly exaggerated. In respect of the applicant's legal claims, the Tribunal decided:,i) The claim under s 14 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), by which tenants can be compensated for disruption to trading caused by landlords following the giving of a notice, could not succeed because there was no evidence of any ongoing interruption following the giving of a compliant notice.,ii) The claim of a breach of a clause of the lease granting a conditional right to undertake the works failed on the basis that the conditions (concerning the giving of notice of the proposed works and the works being conducted in a way to cause minimum inconvenience) were met.,iii) The claim that the respondent breached the applicant’s right to quiet enjoyment of her premises was rejected in light of findings made regarding the duration and nature of the works and evidence indicating the failure of the applicant's business resulted primarily from other factors. ,The application was accordingly dismissed. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) CITATION : PATTERSON and CITYGATE PROPERTIES PTY LTD [2017] WASAT 142 MEMBER : MR T CAREY (MEMBER) HEARD : 21 AND 22 SEPTEMBER 2017 DELIVERED : 13 NOVEMBER 2017 FILE NO/S : CC 682 of 2017 BETWEEN : LEONIE ANN PATTERSON
- Applicant
AND
CITYGATE PROPERTIES PTY LTD
Respondent
Catchwords:
Landlord and tenant Retail shop in shopping centre Hot bread shop Lack of grease arrestor Whether landlord under obligation to install when required by local government authority Implied term of lease Misleading or deceptive conduct Renovations to shopping centre Impact on demised premises Extent of impact Whether statutory claim for compensation made out Whether landlord breached lease term permitting renovations Whether landlord breached covenant of quiet enjoyment
Legislation:
Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA), s 14
Result:
Application dismissed
Summary of Tribunal's decision:
The applicant was the tenant of retail shop premises in a shopping centre owned by the respondent. She operated a hot bread shop/café bar from the premises for almost four years, before prematurely ceasing trading. Ultimately, the lease was terminated for default in payment of rent.
The applicant attributed the failure of her business to two causes for which she considered the respondent responsible:
- a) The requirement of the local government authority that a grease arrestor be installed. She had not been made aware of any such requirement by the respondent, which refused to arrange or pay for it; and
- In relation to each cause, the applicant contended for three possible legal bases upon which liability might arise.
- i) There was no term to be implied in the lease that there was a grease trap present in the premises at the commencement of the relevant term. In particular, the Tribunal rejected the proposition that such an implication arose in order to make the demised premises suitable for the use contemplated by the lease.
ii) The lack of a grease arrestor did not amount to a derogation from the grant of the lease.
In relation to the renovation claims, the Tribunal preferred the evidence of the respondent going to the impact of the works on the applicant’s business to that of the applicant, which it found to be significantly exaggerated. In respect of the applicant's legal claims, the Tribunal decided:
- i) The claim under s 14 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), by which tenants can be compensated for disruption to trading caused by landlords following the giving of a notice, could not succeed because there was no evidence of any ongoing interruption following the giving of a compliant notice.
ii) The claim of a breach of a clause of the lease granting a conditional right to undertake the works failed on the basis that the conditions (concerning the giving of notice of the proposed works and the works being conducted in a way to cause minimum inconvenience) were met.
iii) The claim that the respondent breached the applicant’s right to quiet enjoyment of her premises was rejected in light of findings made regarding the duration and nature of the works and evidence indicating the failure of the applicant's business resulted primarily from other factors.
Category: B
Representation:
Counsel:
Applicant : In Person
Respondent : Mr J Skinner
Solicitors:
Applicant : N/A
Respondent : LSV Borrello Lawyers
Case(s) referred to in decision(s):
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
City of Subiaco v Heytesbury Properties Pty Ltd (2001) 24 WAR 146
Duke of Westminster v Guild [1985] QB 688
Edler v Auerback [1950] 1 KB 359
Hill v Harris [1965] 2 QB 601
Introduction
1 Ms Leonie Ann Patterson (Patterson) took an assignment of a lease of a retail shop in the Minninup Forum Shopping Centre in a suburb of Bunbury in October 2012. The lease is a retail shop lease for the purposes of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (CTRSA Act). Patterson used the premises for the permitted use under the lease of a hot bread shop, as had her predecessor.
2 In the first month of operating the shop, the local government authority, City of Bunbury (the City) issued Patterson with an industrial waste permit which permitted waste discharge conditional upon the installation of a grease arrestor. This was claimed by Patterson to be the first occasion such a condition had been placed upon the shop, and no grease arrestor had previously been installed in relation to the discharge of waste from the shop. Patterson attempted without success to persuade the landlord, Citygate Properties Pty Ltd (Citygate), to install the required grease arrestor. No grease arrestor was installed during Patterson's occupation as a tenant of the leased premises.
3 In addition, in September 2013, Citygate commenced renovation works at the shopping centre. Works occurred in stages, and those most directly affecting Patterson's shop occurred from July 2014 until October 2014. Patterson complains of various incidents of the renovation works said to impact the operation of her business from the shop.
4 In September 2014, the City issued Patterson with a notice requiring her to stop production because of dust originating from the renovation works. It appears she never thereafter reopened the shop for business. After a period when Patterson attempted unsuccessfully to sell the business, her lease was terminated in March 2015 on the ground of her default in paying rent.
5 In her application, Patterson seeks compensation from Citygate for loss said to result from:
• the lack of a grease arrestor and Citygate's refusal to install one, and
• the renovation works.
6 In respect of each cause, she relies upon a number of different legal constructions as to how liability might arise.
7 I will, in the reasons which follow, deal with the factual claims made and legal arguments relied upon to ground Patterson's asserted causes of loss and damage. I will then, to the extent that it is necessary, address the issue of compensation.
Grease arrestor claim
Factual background
8 Patterson became the tenant of Shop 1 Minninup Forum Shopping Centre upon her execution on 4 October 2012 of a deed of assignment of lease and deed of variation of lease. She had previously entered into a purchase of the business operated from the leased premises. The business was described as a hot bread shop. It had, since commencement of the original lease in 2008, offered for sale bread baked on the premises, but other lines as well such as fried foods, pies and pasties, cakes, sandwiches and drinks, as well as sit down meals.
9 Patterson's intention was to continue to operate the shop as it had been previously, with the addition of some hot meals and small catering lines. In a written application for the tenancy, she answered 'lunch barcafé' to a question about the nature of the business to be operated from the leased premises.
10 Patterson points out that she conducted due diligence inquiries aimed at ensuring that any deficiencies in terms of the readiness of the premises to be used for her desired purpose were rectified prior to settlement. This included identification of issues by the City's health department and appropriate attention to them being given by the vendor of the business. At one point, she delayed settlement with the assignor in order for one such item lack of a kitchen floor waste drain to be rectified.
11 Settlement occurred on 5 October 2012, and Patterson opened the shop for business on 25 October 2012.
12 The genesis of the problem regarding the need for a grease arrestor appears to have been Patterson's receipt, prior to the settlement, of a form from the Water Corporation titled 'Industrial Waste Application'. She completed the form and returned it.
13 Patterson's evidence regarding the first time she was informed of the City's requirement that a grease arrestor be installed is ambiguous, having referred to both a time in September 2012 when she was cleaning out the shop and was approached by a Water Corporation officer, and also her receipt of a copy of the letter referred to in the next paragraph of these reasons.
14 By letter dated 9 October 2012, the City wrote to Citygate informing it of the City's receipt of an application for an Industrial Waste Permit (IWP), noting the shop was not, according to its records, connected to a grease arrestor, and advising that the Water Corporation required waste from food preparation areas to be discharged to the sewerage system via an approved grease arrestor system.
15 Further, according to the letter:
16 • a failure to discharge waste from food preparation areas to a grease arrestor would breach state legislation;
17 • business owners are required to apply for a new IWP and install any grease arrestor in the event, among others, of change of business owner.
18 Geoff Prosser (Prosser), a director of Citygate, denies ever having previously been informed of such a requirement. He said that previous tenants had always cooked 'fast food take away' items without any query by the City.
19 On or shortly after 22 October 2012, Patterson received the Water Corporation's letter of this date informing her of the approval of discharge of waste from her business into the sewerage system and attaching her IWP. The letter pointed out that the current lack of a grease arrestor was in contravention of the legislation, and informed her of the condition in the IWP that a grease arrestor of a particular capacity is required to be installed within 90 days of the effective date of the permit (approximately 20 January 2013). A further express condition of the IWP, contained on the 'General Terms and Conditions of Permit', stated:
4. RESPONSIBILITY OF BUSINESS OWNER OR CORPORATE ENTITY
a. At their own cost provide, operate and maintain in good working order and condition all fixtures and pipework associated with the waste discharge. …
21 On 6 February 2013, Patterson sent an email to Ms Gazendam requesting that she review the requirement for a grease arrestor. The email has a number of interesting features:
• It indicated that Patterson already uses a 'grease disposal system' used by other food outlets at the centre, she 'already [pays] for the use of the system, which has served this centre for years'. There is no evidence backing these claims.
• It stated 'The previous owners in my shop have all cooked and (sic) fried food and used this system quite successfully'.
• It referred to a suggestion by Ms Gazendam on her original inspection that she 'could get away with using a separator of sorts in the drains which a plumber has to install' and that was an option she would be happy to proceed with as it is more affordable than the $5000 to $8000 cost of a grease arrestor.
22 Although Ms Gazendam's response indicated that the email had been forwarded to Water Corporation's 'Country Co-ordinator' for advice, no direct response to the email was ever forthcoming. However, on 22 September 2014, and again on 8 December 2014, Patterson was issued with Trade Waste Permits (the successor of IWPs) (TWP) once again approving of waste discharges on condition of the installation of a grease arrestor by extended dates 1 December 2014 in the case of the first TWP and 31 May 2015 in the case of the second. Patterson had discontinued trading prior to the first being issued.
Legal claims of liability
1. Implied term of lease
23 According to Patterson's statement of issues and contentions (Exhibit 1), it was an implied term of the lease that there was a grease trap in the leased premises.
24 Implication of such a term was said to be:
25 (a) necessary to give business efficacy to the grant of the leased premises for use as a hot bread shop (for which a grease trap is essential);
26 (b) reasonable in its nature and circumstances; and
27 (c) consistent with the written terms of the lease agreement.
28 This submission adopts the well-known criteria for implication into a lease of terms as a question of fact, as expressed in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282-283 (BP Refinery). However, in my view, the submission misapplies the criteria.
29 The error into which Patterson has fallen is amply demonstrated by her expression of the business efficacy criterion. Whereas the Privy Council in BP Refinery observed at 267 '[I]t must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it[.]', Patterson's enunciation incorporates the required use of the premises demised under the terms of the lease as a hot bread shop for which a grease trap, it is said, is essential. It therefore goes further that considering the necessity for the term to make the lease commercially effective, by insisting upon its implication to facilitate the use of the premises contemplated by the lease.
30 English and Australian courts have rejected such a basis for the implication of a term into a lease over a long period of time. In City of Subiaco v Heytesbury Properties Pty Ltd (2001) 24 WAR 146 (Heytesbury), Ipp J at [34] quoted the following passage from Hill v Harris [1965] 2 QB 601 of Diplock LJ at 614615:
It has been submitted that, where a lease of property is entered into and it is in the contemplation of both parties that the property shall be for a certain purpose, there is contract or condition on the part of the landlord, implied by law, that the premises are fit for the purpose, that is to say, that they can lawfully be used for the purpose, and that there will be no let or hindrance to their being so used. That is a proposition in support of which no authority has been cited[.]
31 Devlin J in Edler v Auerback [1950] 1 KB 359 said at 373:
The relevant principle of law was enunciated by Parke B in Hart v Windsor [1843] 12 M & W 68 at 87 and quoted with approval by Scrutton LJ in Bottomley v Bannister [1932] 1 KB 468 and is as follows:
'… there is no contract, still less a condition, implied by law on the demise of real property only, that it is fit for the purpose for which it is let.'
[N]o inference can be drawn merely from the provisions to which I have referred (or any other provisions of the leases) that the parties intended that the leased premises be fit for the purposes of carrying on a manufacturing business. That is because, as Devlin J stated in Edler v Auerbach (at 374), '[i]t is the business of the tenant, if he does not protect himself by an express warranty, to satisfy himself that the premises are fit for the purpose for which he wants to use them'[.]
33 The facts that the demised premises had been conducted for broadly the same purpose as the use made of it by Patterson back as far as 2008, and that there was never any grease trap servicing the premises, gives the lie to the proposition that the lease lacked business efficacy in the absence of the asserted implied term.
34 Patterson relies upon express references in the lease to grease traps. However, those references (in clause 4.02(5) and clause 4.02(7)) are to the lessee's obligation to share the cleaning cost of a grease trap where the premises are connected to one, and the prohibition from use of any grease trap for a purpose other than that for which is was constructed, respectively. They do not of themselves require installation of a grease arrestor, nor do they give rise to the implication of such a requirement.
35 Patterson also relies, in support of the implication of a term of a grease arrestor, upon certain prohibitions or limitations upon the lessor contained in the lease, which, she says, are consistent with the implication of the suggested term.
36 Clause 4.02(10) prohibits the tenant from making any alterations or additions likely to injure, mark, drill or deface part of the leased premises. Patterson says that all of those impacts would occur upon installation of a grease arrestor. She also relies upon Schedule 1 item 9.1.1 of the lease, which confines the tenant's fit out to the interior of the leased premises.
37 Clause 8.01 of the lease provides:
(The l)essee shall comply with and observe at his own expense all present and future legislation regulations bylaws or orders of any competent authority affecting the use or cleanliness of the leased premises by the lessee and with all notices received either by the lessor or the lessee from any statutory or public authority including notices requiring the carrying out of any repairs, alterations or works… Provided that in nothing herein contained shall make it obligatory upon the lessee to carry out any work of a structural nature except such as may be required or necessary by reason of the lessee's business or its use of the leased premises and in the event of any dispute arising as to whether any work is of a structural nature the question in dispute shall be determined by an architect or structural engineer who shall be nominated by the lessor…
38 As a provision which deals specifically with compliance with legal requirements affecting use of the premises, and which contemplates works by the tenant of a structural nature where they are necessary by reason of the tenant's business or use of the premises, clause 8.01 takes precedence over the limitations contained in the previously discussed clauses in the case of any conflict.
39 Patterson's submission that she was not obliged to carry out any work of a structural nature such as installation of a grease trap under clause 8.01 is clearly wrong. The evidence establishes that the grease arrestor requirement was imposed by a competent authority, with reference to state legislation, and was necessary by reason of Patterson's business or use of the leased premises. Further, Patterson never challenged the position adopted by Citygate which, in the context of a dispute under clause 8.01, would have entailed a request for a reference to an architect or structural engineer.
40 I am not persuaded that there was an implied term of the lease requiring Citygate to install a grease arrestor. The position at law is that upon receipt of the Water Corporation's advice and permits notifying that the grease arrestor was necessary, it was Patterson's obligation to install one.
2. Derogation from the grant
41 Again according to Patterson's statement of issues and contentions:
… The landlord knew or should have known that the leased premises did not contain a grease trap and that it was therefore not fit for the stated purposes leased to the tenant (i.e. hot bread shop with menu…); the landlord thereby breached their common-law obligation not to derogate from the grant…
42 The common law obligation not to derogate from the grant of a lease is concerned with a restriction placed on a lessor not to do nor allow to be done, in connection with other land retained by the lessor, anything having an adverse impact on the demised land. However, the obligation does not impose any obligation on a lessor to improve the condition of the leased premises beyond their condition at the commencement of the lease: Duke of Westminster v Guild [1985] QB 688.
43 The premises were not connected to a grease arrestor prior to commencement of the lease. The requirement that they be so (or at least notification of the requirement to Patterson) was imposed by a competent authority, which, under clause 8.01 of the lease, was at the Patterson's expense.
44 Patterson did not pursue this claim at the hearing, and I find no basis arising in the circumstances of the present case to support such a claim.
3. Misleading or deceptive conduct
45 Citygate's liability for misleading or deceptive conduct, according to Patterson's statement of issues and contentions, arises because:
The landlord misled the tenant to believe that there was a grease trap in the leased premises in circumstances where the landlord knew that one was required for the tenant's intended use of the leased premises.
46 Incidents of the misleading or deceptive conduct relied upon are:
a) (silence) entering into the lease agreement knowing that there was no grease trap in place; and
b) (actions) misleading the tenant to believe that there was a grease trap in leased premises.
47 The misleading by silence claim depends upon the discredited proposition that a lessor is under an obligation to ensure that the premises be occupied by its lessee and is suitable to carry out the intended business. The mere assignation in the lease of a particular business description (in this case, hot bread shop) does not convey any representation as to the suitability of the premises to undertake that use.
48 The specific 'action' relied upon in Patterson's statement of issues and contentions as constituting misleading or deceptive conduct is the express mention of grease traps in clause 4.02(5) and clause 4.02(7) of the lease. The assertion in Patterson's statement that she was misled by those references into believing that a grease trap was installed in the premises flies in the face of the subject matters of those clauses being as I have described them earlier. The claim is destroyed completely by Patterson's evidence that she was not provided with a copy of the lease until late 2013, well after her taking the assignment of the lease.
49 This is another claim not expressly pursued at the hearing. I am not satisfied that any misleading or deceptive conduct as alleged occurred, nor that Patterson relied on any such conduct to her detriment.
Renovation works claim
Factual background
50 In her statement of facts (Exhibit 1) Patterson asserts:
The landlord commenced a number of renovations and refurbishments… around September 2013, causing disruption and disturbances to the premises.
51 Her witness statement (Exhibit 3) provides the following further detail:
23. Around September 2013, workers, machinery, construction equipment, vehicles, dirt and fencing began arriving. …
25. Over the next few months, the renovation works increased, until my shop was entirely surrounded by construction works, fencing, roadwork equipment, dirt and rubble and a large portable toilet block.
52 Patterson was unable, in crossexamination, to give any evidence regarding the scheduling of the refurbishment works. Having read the statement of evidence of Mr Stephen Prosser (Stephen Prosser), who provided the clearest evidence in that regard, she said that she had no reason to disagree with the scheduling evidence of Citygate.
53 I should indicate at this point that in relation to most areas involving disputed facts, I prefer the evidence of Citygate to Patterson's. It is clear to me that Patterson was prone to exertion exaggeration or embellishment when it suited her case. I provide the following examples of this:
54 1) In Exhibit 2 at [41] Patterson states:
Around August 2013, the Minninup Forum shopping centre renovation works began, and evolved substantially about the general area in front of and about my shop.
55 Contrary to the impression created by this passage, the weight of the evidence indicates a far smaller scale of renovation works impacting her shop. Patterson accepted that the period during which works directly impacted her shop was limited to between July 2014 and October 2014.
56 2) In Exhibit 3 at paragraph 21, Patterson refers to a meeting she had with Prosser on 13 August 2014 to discuss the ongoing effect the renovations were having. Among a number of concerns listed as being discussed, she refers to 'the stench from the portable toilet block'. The statement refers to a letter sent by Patterson to Prosser following their meeting, which is attachment LAP 29 to Exhibit 2. There is no reference in that letter to toilets.
57 The point here is that at the time the meeting with Prosser occurred, the toilets had been removed some six weeks earlier.
58 In view of such a willingness to convey an impression of enduring disturbance and disruption, regardless of the evolving state on the ground of the refurbishment works, I have generally adopted an approach of accepting Citygate's evidence as to the course followed by the renovations where it is in conflict with Patterson's. This is particularly so where Patterson failed to produce any evidence corroborating her own, which is the case with the majority of her claims.
59 In relation to the scope and timing of renovation works, the evidence of both Prossers, and in particular Stephen Prosser, is clearly superior to that of Patterson in terms of knowledge and accuracy.
60 Stephen Prosser is a director of Citygate, and also a director of the building company (trading as R&M Prosser and Son) awarded the refurbishment contract by Citygate. In his witness statement, Stephen Prosser described the works, and provided plans and drawings for the works.
61 Stephen Prosser's scheduling evidence was to the effect that a decision was made to carry out the work in stages. The first two stages were described as:
1) Northern end of the shopping centre, including the removal and replacement of the veranda and awnings, removal and replacement of shopfronts, construction of new extra pathways, as well as construction of new ATM bunker at the main entrance shopping centre;
2) Southern end of the shopping centre, the removal and replacement of the veranda and awnings, removal of shopfronts, construction of new external pathways, and construction of new outdoor seating area and landscaping works.
62 According to Stephen Prosser, only stage 2 of the works included the works directly affecting the demised premises. He identified the period when those works were undertaken as July 2014 October 2014. He stated that the other stages of the works were not adjacent to and did not directly impact on Patterson's premises.
63 Stephen Prosser explained that it was more practicable to undertake staged work, which reduced the time that each section of the centre was directly impacted. He also said that the timing of one of the stages coincided with the end of the tenancy of one of the shops, which was able to be used as a temporary entrance. Breaks in construction for the busiest periods such as Easter and Christmas holidays were built into the staging of the works.
64 Particular issues emphasised by Patterson were reduced accessibility to her shop, the presence of temporary toilets near her shop, and the effect of building detritus and dust adjacent to and inside the shop.
65 In her affidavit (Exhibit 2) Patterson said:
I had two entrances to the shop, one at the front and one at the side. This fencing about the footpath areas to both the front and side of my shop was where my customers used to sit and enjoy their coffee. The availability for customers for either parking nearby or dining at my shop was gone, and left in this status for a very long time.
66 In cross-examination, Patterson said that the walkway in the front of her shop was 'closed off and on', and the walk way at the side of the shop was closed 'all the time'. She said that fences were first erected to the side of her shop in September 2013 where the builders stored their equipment
67 Stephen Prosser's evidence contradicted Patterson's in several respects. He said that fencing was constructed adjacent to the leased premises only on completion of stage 1 works in June 2014, the same fencing being used in both locations.
68 In his statement of evidence (Exhibit 9), Stephen Prosser agreed that the leased premises had two entrances. He described, with reference to a site plan, the placement of the fencing during the stage 2 works, as running immediately adjacent to the exterior of Patterson's shop although allowing entrance into the shop along the front, and at a distance of perhaps 4 or 5 metres along the side of the shop.
69 In relation to the curtailing of access issue, Stephen Prosser's statement includes:
30. While works were being carried out to the side of the premises, the area… was fenced off entirely, which prevented access to the premises through the side entrance, but during this time the public could still access the premises through the front entrance along the walkway.
31. While works were being carried out to the front of the premises, there were times when the walkway was fenced off or reduced in width, which at times reduced or prevented access to the premises through the front entrance, but during these times the public could access the premises through the side entrance.
32. While works were being carried out to the actual shopfronts of the premises, including removal of existing windows, removal of sections of wall and installation of new window frames and windows, it was not possible for the public to have access to the premises.
70 In his oral evidenceinchief, Stephen Prosser referred to a photograph which is annexed to Patterson's affidavit showing the side of the premises in a state whereby all paving was removed with the sand beneath revealed. Stephen Prosser explained that the photograph was taken approximately 15 August 2014, and that the area depicted was without paving for two or three days, during which the front entrance was maintained.
71 In crossexamination, Stephen Prosser agreed that for a period of approximately four weeks, the works resulted in eight car bays nearest to Patterson's shop being unavailable. A few bays were also rendered unavailable when the temporary toilet block was installed in the area of Patterson's shop. This unavailability was relatively insignificant however given a total car bay figure of approximately 160.
72 Stephen Prosser denied a suggestion that the fencing and other obstacles blocked the sight of uses of the car park to the shop. Photographs forming part of the evidence indicate a reduction in visibility, ameliorated to some extent by actions taken by Patterson such as fixing a coloured neon sign to an external wall.
73 As for the toilets, the following evidence appears in Patterson's affidavit:
A large temporary portable toilet block was positioned 12 metres from the side entrance door of my shop creating obnoxious odour, which was at times overpowering and caused one customer to vomit in my shop. The smell was particularly bad in the summer months. The odour from this toilet block was continually in my shop even with the side door closed. The few customers I had left constantly complained to me, I rang the Health Department and also Citygate… A number of times about the smell but nothing was resolved and the respondent was unhelpful.
74 In his statement, Stephen Prosser said that a transportable toilet block was installed in the car parking area adjacent to shop 2 (to which Patterson's shop was adjacent) during the stage 1 works at the northern end of the shopping centre. He gave as the reason for this location a combination of flat ground and the convenient access to existing power, water and sewer connections located at that corner of the carpark.
75 According to Stephen Prosser's statement, the water and sewer connections made the temporary toilet comparable to a permanent toilet facility, as distinct from a sitetoilet for a construction site, where the sewage is stored in the tank and requires regular emptying. The temporary toilet had to be a similar standard to internal toilets. They were cleaned twice a day.
76 The temporary toilets were placed from November 2013 to June 2014.
77 Patterson swore in her affidavit (Exhibit 2) that:
Sand and/or building aggregate was piled up directly at the front of my shop, dust and sand was very problematic to deal with . …
At one point, the side wall and window of my shop had been removed and replaced without any notification to me. Arriving the following morning, I found my shop, including the kitchen covered in brick pieces, dirt, dust and building rubbish. All my dishes, fridges, equipment and open shelving were covered in hazardous brick dust and dirt. This caused my business to stop with most of my stock needing to be discarded…
78 This evidence is related to the dispute between the parties over whether Patterson was given forewarning of the replacement of her shopfront. Stephen Prosser said that he believed he had done so personally, and both Prossers said that they believed Patterson was spoken to previously by the foreman of the shopfront refitters. Both assertions were denied by Patterson.
79 On 16 September 2014, Patterson was issued with a notice from the City to cease preparation of food and close until renovations were finished. According to the notice:
Dust originating from the renovation process in the abovementioned premises will definitely compromise the safety of your produce. Therefore you are advised to stop production during the time of renovation work being done in the above-mentioned premises.
80 By this time, Patterson had listed the business for sale. Prosser observes in his written statement that during the removal and replacement of the shop front of the premises, Patterson was unable to trade, and intimates that her attempt to do so resulted in the City's notice being issued.
81 According to her written statement, Patterson discontinued trading in October 2014, although in crossexamination she accepted that this occurred earlier, prior to the receipt of the TWP issued on 22 September 2014. I have assumed that she never reopened the shop after receipt of the City's notice on 16 September 2014.
Legal claims of liability
1. Section 14 of the Act
82 Section 14 of the CTRSA Act provides relevantly:
Where a retail shop lease provides for the occupation of a retail shop situated in a retail shopping centre, the lease shall be taken to provide that if the landlord –
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(b) takes any action that would substantially alter or inhibit the flow of customers to the retail shop; or
(c) causes, or fails to make reasonable efforts to prevent or remove, any disruption to trading within the centre which disruption causes loss of profits to the tenant;
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and after being given by the tenant notice in writing requiring him to rectify the matter does not do so within such time as his reasonably practicable, then notwithstanding any provision contained in the lease, the landlord is liable to pay to the tenant such reasonable compensation in respect thereof as is… determined by the Tribunal.
83 I will discuss the impact of the works in terms of customer flow and disruption to trading causing loss of profits to Patterson in my consideration of the successive legal claims. The claim under the CTRSA Act can be disposed of having regard to the requirements for notice and rectification.
84 The only candidate on the evidence presented for qualification of the notice required by the section to be given to the landlord is a letter from Patterson's solicitors, Max Owens and Co, dated 24 October 2014 to Citygate (Exhibit 2 attachment LAP 34). The letter refers to the 'significant fact' relating to the interruption to Patterson's trade as a result of refurbishments and renovations done and effected around the shopping centre area. Substantial interruption, at times total interruption, to access into the shop by members of the public is also alleged. Reference is made to the issue of the City's notice.
85 The letter concludes:
My client requests that, within seven days, all steps be taken to cease inhibiting the flow of customers to my clients shop; and indeed her own access to the shop.
86 In my view, no liability under cl 14 of the CTRSA Act dependent upon Patterson's solicitors' letter can possibly arise.
87 'The matter' for rectification in accordance with the letter is disruption of Patterson's business as a result of refurbishments and renovations. However, she now accepts that those works were completed, in so far as they impacted directly upon her shop, by the end of October 2014. There is no evidence of any later interruptions to her business. She had by then closed it, never to be reopened.
88 Patterson disputed completion of the works by the end of October 2014 on the basis that the evidence disclosed a gap in windows in the shop front installed as part of the works directly affecting her premises. Patterson's oral submission that this building defect contributed to the end of her ability to trade is unsupported by any evidence identifying it as a cause of her business difficulties. And she never reopened her shop subsequent to the works in question. Patterson's solicitors' letter omitted specific reference to it. I am not satisfied that it is a disrupting cause of such consequence that the landlord could be required, upon proper notice under s 14 of the CTRSA Act being given, to rectify it.
2. Clause 11.02 of lease agreement
89 Clause 11.02 of the original lease provides:
The lessor reserves the right to renovate, remodel, extend, add to, alter and/or build additional stories on the building of which the leased premises are part … PROVIDED HOWEVER that the lessor shall give three months' notice in writing to the lessee of any proposed works and shall ensure that such works are carried out in such manner as to cause a minimum of inconvenience to the lessee.
90 Although there was some discussion at the hearing regarding the applicability of a term regarding renovation works in the deed of variation on the assignment to Patterson, I am satisfied that clause 11.02 applied in respect of the renovation works, given that they were conducted during 2014, within the 'existing term' under the deed of variation.
91 Patterson contends she received no notice, written or otherwise, of the renovation works before they commenced. I consider this contention to be open to serious doubt.
92 Prosser pointed out that the shopping centre is of a small scale and that he gave personal notification of the renovations to tenants including Patterson in October 2013. Stephen Prosser, in crossexamination, said that he believed he also spoke with her regarding the works adjacent to her premises, including consulting her as to what times would least interfere with her trading.
93 In addition, there is evidence of written notification to an agent of Patterson. I am satisfied, despite Patterson's denial, that Adrian Seale was acting as agent for both the assignor and assignee at the time of the assignment of lease to Patterson. I have had regard to an email from Mr Blair on behalf of Citygate to Mr Seale dated 22 August 2012 (annexure GDP 1 to Prosser's statement), where Mr Blair refers to four terms upon which Citygate was prepared to enter the assignment. Apart from the inference that Mr Blair had been informed of the agency, three of the four terms appear in the deed of variation subsequently entered into (the fourth, the rent review clause, did not need to be reproduced as it was already a term of the lease). One of the terms included a precise figure in respect of a bank guarantee.
94 In the 22 August 2012 email, the following statement appears:
Leonie understands that Citygate Properties are about to commence an upgrade to the Minninup Forum shopping centre which will see her front shop renovated and which will cause some disturbance for the period the renovations will be taking place and that she will cooperate with the builders during the upgrading works.
95 Although it could be said that notice to Patterson prior to her taking up the assignment of lease, and some 14 months prior to commencement of any works at the centre (and just shy of two years prior to the works most directly impacting her shop) strains the interpretation of three months' notice in writing, I am prepared to give Citygate the benefit of the doubt where I am also satisfied that appropriate oral notification was given.
96 In any event, there is no claim made, in addition to the asserted impacts of the renovation works upon her business and, ultimately, their asserted contribution to its failure, arising from any default in the notice provisions.
97 Patterson claims that, contrary to the obligation conveyed by the words in clause 11.02 'and shall ensure that such works are carried out in such a manner as to cause a minimum of inconvenience to the lessee', the renovation works occurred over a two-year period and the inconvenience caused to the tenant was excessive. These claims reflect Patterson's exaggeration of the impact of the works on her business.
98 As I have said, the impression created on the face of the documents Patterson has filed in this proceeding is that the works were having an overbearing impact on her business at least a year before she was forced to close. Put simply, this claim is unsupported by the evidence presented.
99 It is instructive that Ms Patterson was seemingly unaware of the landlord's deliberate staging of the works and the delay in commencement of the stage directly impacting her business until July 2014.
100 Although there were some works which, for between three and four months, no doubt resulted in disturbance, interference with her business and some reduction in profitability, the reality was far removed from the picture she paints.
101 Furthermore, Patterson herself attributed the drop in profitability she experienced in 2014 not only to the renovations, but also to the lack of a grease arrestor. In Exhibit 3 at paragraph 20 she said:
Between 25 October 2012 and 8 December 2014 I was unable to offer the full menu I had intended… and referred to in my Application for Tenancy. I estimate that, as a result of the absence of the grease arrestor, I could offer approximately half of my intended menu only.
102 Her statement goes on to estimate that her revenue would have been approximately 50% higher had she been able to offer the full menu.
103 In Exhibit 2 at paragraph 41, in the context of an approach made to Stephen Prosser, who was standing near her shop, to suggest Citygate install a grease arrestor at that time when the path had been removed, she bemoaned the diminution of customer numbers. She said:
I had to decrease my trading hours from seven to five days as I was only averaging a turnover of less than $100 a day for a significant time during 2014…
104 The removal of the path occurred on or about 15 August 2014. The works directly impacting the premises had been going on for less than two months. Based on Patterson's own evidence, her turnover figures for, perhaps, a number of months prior to those works were as low as $100 per day. This impact can only be attributed, at least in respect of the period before July 2014, to the lack of grease arrestor, for which Patterson herself is responsible.
105 I am left with an impression that the decline in Patterson's business had already become terminal by mid2014. The further disruption caused by the impact of the renovation works was the final blow. But the fate of the business was sealed by then.
106 I am also persuaded that the high point of disturbance from the works, when Patterson was required by the City to cease trading, was precipitated by her own conduct. That was when her shopfronts were being replaced and she refused to shut the shop for one or two days, in accordance with Citygate's recommendation. As an aside, Citygate sought to remedy the dislocation to Patterson's business at this time by proposing waiver of rent for the month of September 2014, which was accepted. The shop closure was not, as was painted to be the case, the manifestation of all the degradations visited upon the shop by renovations external to it.
107 I am not satisfied that any breach of clause 11.02 of the lease is established.
3. Common law right to quiet enjoyment
108 According to Patterson's statement of issues and contentions, Citygate may have interfered with Patterson's right to quiet enjoyment of the premises with the ongoing renovation works over a two year period.
109 The covenant of quiet enjoyment is an obligation cast by the general law on a landlord to not substantially interfere with the possession and enjoyment of leased premises. As is often the case, it is restated in the lease, in clause 6.01.
110 As I have indicated, Patterson overstates the period of any significant impact on her trading attributable to the works. This is once again reflected in the suggestion that her right to quiet enjoyment may have been interfered with for two years. The realistic timeline of any want by Citygate of compliance with the covenant of quiet enjoyment is some three months. And, as I have also said, the effect upon Patterson is highly questionable given the parlous state of the business due to other factors at the commencement of the relevant period.
111 The works undertaken by Citygate were sanctioned by the lease, and, in the long term, would no doubt benefit all tenants. Some short term disturbance of their businesses is a price for which tenants might be expected to pay for long-term gain.
112 On the facts as established by the evidence, for about three months, Patterson's shop was seemingly surrounded by fencing, workmen and equipment were being deployed, and sand and debris were the order of the day. Some inhibition of potential customers resulted. But I accept the essential elements of Stephen Prosser's evidence that the works were conducted in such a way as to mitigate their impact on tenants' businesses, both by the staging of the works to cause disruption in the different areas of the centre for the shortest possible time, and by adopting measures calculated to keep access open to tenancies and generally keeping disruption to a minimum.
113 Patterson's claim is notable for the lack of complaint while she remained in the business regarding the impact of the renovation works. The only written complaint, Patterson's letter to Prosser dated 22 August 2014 following the meeting between them nine days earlier, placed no demands on Citygate. It simply asserted a 'lack of funds which is due to the renovations that are happening at the front of my shop' and signified Patterson's intention to close. Although that is what happened, Patterson attempted, over the following five months, to extract concessions from Citygate, and also to reach an agreement with the Water Corporation for a less expensive means of satisfying its waste discharge requirements.
114 Although Patterson was unsuccessful in these endeavours, she does not explain satisfactorily why she kept her doors shut. The one available method of addressing her liquidity shortfall, at least subsequent to completion of the refurbishment works directly impacting her shop, was to recommence trading, unless the business was not capable of generating profits.
115 I am not satisfied that the interference with Patterson's shop attributable to any works relating to refurbishment of the shopping centre was of such magnitude as to warrant a finding of liability for breach of the covenant of quiet enjoyment.
Compensation
116 I have rejected the various arguments pursued by Patterson to ground her compensation claims based upon the lack of a grease arrestor and the renovation works. In those circumstances, it is unnecessary and impractical for me to deal with the compensation to which she may have been entitled had any of her liability arguments succeeded.
Order
For the above reasons:
1. The application is dismissed.
I certify that this and the preceding [116] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR T CAREY, MEMBER
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