Romantica DK Pty Ltd v Pennidan Pty Ltd

[2021] QCAT 361

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Romantica DK Pty Ltd v Pennidan Pty Ltd [2021] QCAT 361

PARTIES:

ROMANTICA DK PTY LTD T/AS ROMANTICA RISTORANTE PIZZERIA

(applicant)

v

PENNIDAN PTY LTD

(respondent)

APPLICATION NO/S:

RSL160-19

MATTER TYPE:

Retail shop leases matter

DELIVERED ON:

20 October 2021

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Bertelsen

ORDERS:

The Respondent pay to the Applicant the sum of $11,345.80

CATCHWORDS:

LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OTHER MATTERS – retail shop lease – assignment – security bond held – state of leased premises on assignment – owner’s consent – assignment effected – liability to return security bond on assignment

Retail Shop Leases Act 1994 (Qld) Part 5 Division 3

APPEARANCES & REPRESENTATION:

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

REASONS FOR DECISION

1. By notice of dispute filed 2 September 2019 the Applicant Romantica DK Pty Ltd (Romantica) seeks from Pennidan Pty Ltd (Pennidan) return of a security bond of $11,000 supplied by it as a condition of lease of premises 233A Given Terrace, Paddington.

Background and Evidence

1. Romantica and Pennidan entered into a lease agreement for the lease of 233A Given Terrace, Paddington for a term of 5 years commencing 31 July 2018. The retail business to be conducted at the premises was to be an Italian restaurant and pizzeria. That required the installation of a pizza oven which was agreed to early on and duly installed. The lease provided that Romantica furnish a security bond of $11,000 in this case a bank guarantee dated 31 July 2018. Almost a year later on 23 April 2018 Romantica contracted to sell the restaurant business to Hoang Dang Nguyen. A deed of assignment and covenant was required to be entered into pursuant to the terms of the subject lease of the premises. Disclosure obligations pursuant to Part 5 Division 3 of the Retail Shop Leases act 1994 appear to have been adequately met by both assignor and assignee or at least are not disputed by the lessor Pennidan.

2. A deed of assignment and covenant was prepared by the lessor’s solicitors James Varitimos. It was signed by David Ruggiero a director of Romantica and returned to James Varitimos on about 7 May 2019.

3. In anticipation of settlement of the transfer of the restaurant business on 14 May 2019 Romantica’s solicitor SLF Lawyers wrote on 13 May 2019 requesting that James Varitimos return a copy of the deed of assignment and covenant signed by the lessor together with Romantica’s bank guarantee.

4. The same day 13 May 2019 James Varitimos replied stating

   I don’t have the original deeds yet. I will send the bank guarantee once I get the replacement one with all documents from the new tenant

5. The same day 13 May 2019 SLF Lawyers replied, noting that as the deed of assignment and covenant provided for signature in counterparts one original was not required. Additionally that it anticipated receipt of the replacement guarantee on 14 May 2019 and that same could be delivered to James Varitimos office and the original bond guarantee collected.

6. Then SLF Lawyers sent a further email to James Varitimos on 13 May 2019 asking if James Varitimos was agreeable to an exchange of bank guarantees at his office on 14 May 2019.

7. Subsequently on 14 May 2019 James Varitimos furnished SLF Lawyers with a signed page of the deed of assignment and covenant. The same day 14 May 2019 SLF Lawyers requested James Varitimos agreement to receiving the replacement bank guarantee by express post and return of Romantica’s bank guarantee by post.

8. James Varitimos replied by email stating that same day 14 May 2019

   Yes, send to me and when I get it I will send the old one back.

9. On 15 May 2019 SLF Lawyers forwarded the original bank guarantee as agreed.

10. There then appears to have been a hiatus of 6 days when on 20 May 2019 James Varitimos requests Romantica to attend to roof repairs prior to release of the original bank guarantee.

11. In an email of 20 May 2019 to James Varitimos a Jim Helwani of Pennidan says he attended the restaurant on Saturday the week before Tuesday 14 May 2019 where he noted the removal of the pizza oven from the back and the ceiling left with a manhole and the main chimney on the roof not removed

    … I want him to remove the chimney and replace the sheet as it was and repair the ceiling as it was and I did ask him to do it and nothing has been done.

12. The only reference to Mr Helwani’s attendance by Romantica was that it was both unannounced and unlawful.

13. Also produced to the tribunal were two quotes for repairs dated 4 June 2019 and 20 May 2020 for $4400 and $6380.60 respectively. The two quotes are for virtually identical work namely:

    (a)Remove vinyl floor from flooring

    (b)Replace timber skirting

    (c)Sand and repolish floor

    (d)Replace VJs in ceiling made for flue of oven and repaint ceiling

    (e)Remove flue from roof and replace roof sheets

14. In its response Pennidan relied on sections 4 and 12 of the lease for failure to repair damage when leaving because Romantica did not “repair damage and fix as it was before”.

15. Section 4 (1) (a) reads

    The Lessee shall at all times during the lease term keep and maintain the demised premises in good and substantial repair and condition subject to fair wear and tear …

16. Section 12 determination of lease. Section 12 (a) states

    The Lessee shall at the expiration or sooner determination of the term hereof yield up the demised premises in the manner herein prescribed.

17. Romantica asserted that holding and purporting to retain the benefit of two bank guarantees both for $11,000 where assignment has since taken place was a contradiction in terms and unlawful.

Conclusions

1. There are a number of observations and conclusions here.

2. The lease here is certainly a retail shop lease. There is a dispute about maintenance and repair. QCAT has jurisdiction to entertain and determine the dispute notice.

3. The lease between the parties came to an end on 14 May 2019 the date of settlement of the restaurant business sale contract fully consented to at that date by Pennidan.

4. There was no written evidence that as at 14 May 2019 there was any dissatisfaction with the state of the premises or of any necessity to carry out repairs so called. That accords with Pennidan’s solicitors email statement of 13 May 2019 stating:

   I don’t have the original deeds yet. I will send the bank guarantee once I get the replacement one with all documents from the new tenant.

   Then Pennidan’s solicitors email of 14 May 2019 the words “yes, send to me and when I get it I will send the old one back” (referring to the bank guarantees). It could reasonably be construed that assignment was fully effected and unconditionally consented to, that is in terms of the lease no further liability devolved on Romantica as the outgoing lessee. The statements are clear, unequivocal and unqualified.

5. Latterly some 6 days post-settlement Pennidan’s Mr Helwani refers to an attendance in the week prior to settlement referring to ceiling repair and chimney removal and roof replacement that he asked to be done. There was nothing specific, no time frame, just an asserted verbal request made when he attended the premises on the Saturday prior to 14 May 2019. Pennidan did have its solicitor attending to its interests as lessor. If that statement is to be relied on at all it smacks of an extraordinarily casual approach. Moreover there is no quote for repairs until 4 June 2019 by which time the lease assignee would if not already operating would presumably have been well ensconced in the premises. The two email statements made on Pennidan’s behalf are preferred to establish unfettered assignment.

6. Nor does section 4 of the lease serve to enable repair issues post-unconditional consent to assignment. It is not as if there was any defect or damage or repair to be made that was hidden such as to cancel out prior consent given.

7. Nor can section 12 be relied on. That section contemplates determination of the lease not continuity through assignment.

8. Even if it could be construed post-assignment liability devolved on Romantica the quotes themselves are unreliable. There is an increase of some $2000 from 4 June 2019 quote to the 20 May 2020 quote for what appears to be virtually identical work.

9. There is no evidence to suggest that the premises was not fully operational in the assignee’s hands immediately post-assignment nor any evidence any asserted repairs have ever been carried out. In fact there was nothing remarkable about the transaction. It was a business sale necessitating assignment of lease duly completed.

10. The tribunal can not see any basis for imposing on Romantica post settlement liability. In those circumstances the original security bond be returned by the respondent to the applicant. The applicant’s application fee of $345.80 is allowed. The order will be:

    1.    The Respondent pay to the Applicant the sum of $11,345.80.