SAMMUT and AVM HOLDINGS PTY LTD

[2011] WASAT 32

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)

CITATION:   SAMMUT and AVM HOLDINGS PTY LTD [2011] WASAT 32

MEMBER:   DR B DE VILLIERS (MEMBER)

HEARD:   1 FEBRUARY 2011

DELIVERED          :   25 FEBRUARY 2011

FILE NO/S:   CC 785 of 2010

BETWEEN:   ANTHONY SAMMUT

KAY JOAN SAMMUT
Applicants

AND

AVM HOLDINGS PTY LTD
Respondent

Catchwords:

Commercial tenancy ­ Categorisation of predominant activity ­ Definition of delicatessen ­ If delicatessen is not defined in the lease, what meaning should be attached to it ­ Does an ancillary use of the premises change the predominant use? ­ Reliance on extrinsic material such as reports from inspectors of the local government to determine what the predominant use of the premises is

Legislation:

City of Stirling District Planning Scheme No 2
City of Stirling District Planning Scheme No 3
Commercial Tenancy (Retail Shops Agreements) Act (WA)
Food Act 2008 (WA)

Result:

The application is, with the exception of one question, dismissed

Category:    B

Representation:

Counsel:

Applicants:     Mr T Carmody

Respondent:     Ms J Le

Solicitors:

Applicants:     Williams & Hughes

Respondent:     Brickhills Barristers & Solicitors

Case(s) referred to in decision(s):

Nil

REASONS FOR DECISION OF THE TRIBUNAL: 

Summary of Tribunal's decision

1. The proceedings concerned several questions arising from a commercial tenancy (retail shops agreement) lease, but the most prominent question was whether the premises was used in accordance with the permitted use, namely, as a delicatessen.  Other questions arising were: whether fixtures have been attached to the premises without the approval of the applicants; whether the premises or part thereof was used for any illegal purpose; and whether the respondent had an obligation to provide a bank guarantee to the applicants.  The questions arose under the Commercial Tenancy (Retail Shops Agreements) Act 1985 (WA).

2. The applicants contended that the premises was not being used for a delicatessen but that the use has, over time, shifted to that of a lunch bar.  The applicants said that if the overall activities of the operation are taken into account, then it becomes clear that a change had occurred to products being available for immediate consumption similar to what is expected of a lunch bar.  The applicants further said that the use of a storage area as a kitchen was inconsistent with the lease and with the local government planning scheme, and that the use of the premises for food preparation was illegal.  The applicants also said that several fixtures have been attached to the premises without the approval of the applicants and machinery was stored on site without the necessary approval.  Finally, the applicants contended that the respondent breached the lease by failing to provide to them a bank guarantee as was required by the lease.

3. The respondent contended that the preparation of sandwiches, rolls and focaccias are in limited number of 40 ­ 60 per day and therefore, even if taken with the other limited prepared food being offered on sale, were incidental to the predominant commercial activity of the delicatessen.  The respondent relied on the inventory of products that were stocked on the premises as well as the outcome of several inspections that had taken place by officials from the City of Stirling.  The current operations have been accepted by the City as falling within its planning scheme as being a delicatessen.  The respondent refuted that any of its activities was illegal and said the preparation of sandwiches and other food had been investigated and approved by the City.  The respondent further said that the working table and cupboards were not fixtures and these can be removed at any time.  The respondent also disputed that the premises had been damaged and said that the bolt that had been installed to a door to protect machinery that was stored on site has been removed and any damage repaired.  Finally, the respondent acknowledged that it was responsible to provide a bank guarantee to the applicants and said it had arranged for the guarantee to be reissued after the original had not been received by the applicants.  The respondent contended that its lawyers advised it against handing over the guarantee to the applicants.

4. The Tribunal found as follows in regard to the questions:

   •The use of the premises was predominantly consistent with a delicatessen.

   •No illegal activity occurred in the storage area or any other part of the premises.

   •No fixtures have been attached to the premises without the approval of the applicants.

   •No damage has been caused to the premises.

   •The respondent must provide a bank guarantee to the applicants.

5. The application was dismissed although an order was made for the respondent to provide the bank guarantee to the applicants within seven days from the date of those orders.

Issues

1. The following questions were identified by the applicants in their amended statement of issues, facts and contentions:

   1)Is there a breach of the lease in that the premises is not being used in accordance with its permitted use, namely, a delicatessen?

   2)Is part of the premises being used for an illegal purpose?

   3)Have fixtures been installed to the premises without the owner's permission?

   4)Is the respondent required to provide a bank guarantee to the applicants?

   5)Should costs be awarded to the successful party?

Background

1. The permitted use of the premises the subject of the application is described by the lease as a 'delicatessen'.  The lease does not define 'delicatessen'.

2. The application was lodged on 9 June 2010.  On 12 August 2010, the matter was referred for mediation.  The mediation was not successful.

3. Leave was subsequently granted for the applicants to amend the application so as to clarify the questions that arise under the lease.  The amended statement is dated 22 October 2010.  The application originally included a list of defaults which were amended and, finally, further additional issues were raised during the hearing.

4. Both parties made oral and written submissions.  A site inspection was conducted by the Tribunal in the presence of the parties.  Ms Kay Sammut and Ms Antonia Viola, for the respondent, gave oral evidence during the hearing.  The decision was reserved on 1 February 2011.  The parties were given an opportunity to make final written submissions.

Questions

1. The Tribunal will reply to each of the questions separately and, in doing so, will first give its decision and then follow it with the reasons for the decision.

Is there a breach of the lease in that the premises is not being used for the permitted use namely the operation of a delicatessen?

1. The answer to this question is 'no' ­ there is not a breach of the lease, since the Tribunal finds that the premises is predominantly operated as a delicatessen as provided for by the lease and the local government planning scheme.

2. The reasons for this finding are as follows:

   a)The Tribunal concurs with the legal representative of the applicants, Mr Carmody, when he says the question whether the premises is being used as a delicatessen or a lunch bar is a factual question which can only be addressed by taking into account all of the actual activities on the premises.  The Tribunal also agrees that the difference between a delicatessen and a lunch bar or sandwich bar may be one of degree, with a grey area in­between.  It is not possible to draw a definitive line or exact distinction when an operation ceases to be a delicatessen and becomes a lunch bar, especially not in the absence of a definition in the lease by what is meant by a delicatessen and no reference in the lease to a lunch bar or a definition thereof.  All information about the activities that occur on the premises must therefore be taken into account to form a view of what is the predominant activity and what are possible ancillary activities.  It is especially in the absence of a definition of 'delicatessen' in the lease that the Tribunal must rely on the general evidence and information provided to it, communications from the City of Stirling (City), as well as its own observations during the site inspection.

   The Macquarie Concise Dictionary (Third Edition) defines 'delicatessen' as follows:

   A shop selling cooked or prepared goods ready for serving; usually having a noticeable proportion of continental or exotic items.

   It must be noted that, other than the evidence of Ms Sammut and the contentions of Mr Carmody, there is no evidence before the Tribunal of any expert provided by the applicants.

   When all the information before the Tribunal is taken into account, the Tribunal is satisfied that the proper characterisation of the predominant use of the premises is consistent with the lease, namely, a delicatessen.  The items on display in the photographs, and the stock visible during the site inspection and in the inventory of all products on the premises, are clearly of the kind that would fall within the description of a delicatessen, and most certainly offer a much wider range of products than would be expected of a lunch bar.  While the provision of some prepared food and sandwiches for lunch or for immediate consumption may be part of the range of products offered by the respondent, such sandwiches and prepared food are incidental to its general profile as a delicatessen.  Both objectively and subjectively speaking, one could not possibly conclude that the list of items on the inventory, the photographs provided and the range of items visible during the inspection, were indicative of a lunch bar.

   b)The lease does not contain a definition of what the parties meant by the word 'delicatessen'.  The lease merely provides in cl 1.15 as follows: 'The permitted use is: Delicatessen'.  In the absence of a contractual agreement as to what is precisely meant by a delicatessen, the Tribunal must rely on the general understanding of the word ­ especially in light of the local planning scheme that zones the premises for operation of a delicatessen.  Neither of the parties called any expert evidence as to what is the generally accepted definition of a delicatessen and how such definition reflects on the conduct of the business the subject of these proceedings.  However, both parties, on questioning by the Tribunal, accepted for the purposes of these proceedings the definition of a delicatessen used by the City in its letter of 14 August 2006, namely:

   Delicatessen is 'a building for the sale of prepared food (including those of a continental nature) and daily grocery needs, principally to persons resident within the immediate locality.  A delicatessen can sell food for immediate consumption (such as pies, rolls, sandwiches and cakes) as an incidental component to the main use[;] however, under the definitions of the Planning Scheme, these food items may not be manufactured on the site, and certainly not in bulk'.

   The Tribunal takes note of the submissions of the legal representatives of the parties, and the evidence by Ms Sammut and Ms Viola, as to whether the activities, within their subjective view, are of the nature expected in a delicatessen.  Their respective assessment is, however, of limited use, since they obviously have an interest in the outcome of the proceedings.  If the applicants had called an expert to assess the content of the shop, its inventory and the nature of the activities, and such an expert had found that the premises was not being used in accordance with what is generally understood to be a delicatessen, their contentions may have been on firmer ground.

   In the absence of an expert assessment of the activities, the Tribunal is guided for its conclusion by the inventory, observations by inspectors of the City and the Water Corporation, the photographs tendered and observations made by the Tribunal during the site inspection.

   After taking into account all of such information, the Tribunal concurs with the assessment of the City's Mr Neil Duffin in his letter of 18 August 2010 when he says that 'the City is satisfied that any food preparation (included limited cooking activities) is incidental to the approved use of the premises as a delicatessen and is entirely consistent with the medium risk rating assigned to the premises'.

   The Tribunal must stress that it does not seem as if Mr Duffin had come to this conclusion, as was suggested by Mr Carmody, based solely on information given to him by Ms Viola.  On the contrary, the evidence is that the City had on various occasions inspected the premises and that its views were very well informed and reflective of information gathered over an extended period.  Ms Sammut also acknowledged that she had brought complaints to the City and officials of the City had investigated the complaint.  The inspectors of the City therefore seemed to have a very good and intimate knowledge of the entire business operation and were not merely relying on the information provided to them by Ms Viola.  The City's understanding of the entire operation is evidenced by Mr Duffin saying as follows in his letter, namely, that 'all food handling operations carried out on the premises have been fully considered' by the City … ' (Tribunal emphasis).

   Although Mr Duffin was not called to give evidence, the Tribunal can take into account his assessment and, on the basis of the lack of other expert evidence, concurs with his categorisation, since it is consistent with the other evidence and information provided to the Tribunal as well as the observations made by the Tribunal during the site inspection.

   c)The Tribunal accepts, as has also been acknowledged by the City, that some minimal preparation of food occurs on the premises.  In addition to the food preparation, there is also heating up of prepared food in a bain­marie.  It must be noted that the total area where sandwiches and rolls are kept comprise an estimated 3.3 square metres compared to the 131.9 square metres of the remainder of the delicatessen.  Ms Viola has been open and honest about the nature and extent of food preparation that occurs.  The uncontested evidence of Ms Viola is that she sells between 40 ­ 60 prepared sandwiches, rolls and focaccias per day.  For this purpose, she fries approximately 10 schnitzels per day on site.  Although Mr Carmody cross­examined Ms Viola at length about possible inconsistencies between her evidence and the invoices of purchases that were tendered, the Tribunal was impressed with her consistent and credible answers in which she explained repeatedly and in great detail (and without any notes) why different volumes and quantities of products were ordered and how they were put to use.  The Tribunal could not find any weakness or contradiction in her responses that may be indicative of less than honest replies.  The Tribunal rejects the contention of Mr Carmody that the evidence of Ms Viola was 'inherently improbable'.  Ms Sammut, in her evidence, said that she would regard 20 sandwiches as acceptable but she failed to provide a logical basis for limiting the level of acceptability to 20 sandwiches.  Ms Sammut therefore conceded that a delicatessen could sell the type of sandwiches, rolls and focaccias as done by the respondent, but she took issue with the quantum sold.  She failed, however, to explain why the selling of 20 sandwiches falls within an acceptable range but 40 ­ 60 sandwiches does not.  The Tribunal is satisfied that the volumes of sandwiches, rolls and focaccias stated by Ms Viola are generally consistent with the data contained in the invoices.  The applicants did not provide the Tribunal with any expert evidence to refute the evidence of Ms Viola.  The food preparation on the premises is, indeed, as has been commented on by the City, incidental to the main operation as a delicatessen and it does not alter the general categorisation of the operation from delicatessen to lunch bar.

   d)The Tribunal finds no credibility in the evidence of Ms Sammut that pasta had been produced or manufactured at the premises.  Ms Sammut had no independent evidence to support her allegation and it was properly explained by Ms Viola that, although she had made enquiries initially when she entered the lease about the production of pasta, the idea was not pursued.  In fact, Ms Sammut seemed to ignore all information that contradicted her allegation that pasta was being manufactured on the premises, including the letter dated 11 August 2010 from Mr Sam Chisari, in which he states that Ms Viola had been buying pasta from him for many years for purposes of re­selling at the premises.  More importantly, there is nothing in the letter of the City dated 2 March 2010 to suggest that pasta was being manufactured on site.  Ms Sammut also did not provide to the Tribunal any other photographic evidence of pasta production, nor did she, during the site inspection, point to any equipment or other evidence of the manufacturing of pasta.  The Tribunal, at various stages of the directions hearing process that preceded the hearing, asked Ms Sammut about evidentiary aspects of this allegation.  It seemed as if she persisted with an unfounded claim in the face of all information available.

   e)Although the applicants referred to the premises being used as a lunch bar, they did not provide any expert or other evidence of what is meant by a lunch bar and how that term can then be applied to the operations of this enterprise.  The term 'lunch bar' was used in a very loose and unstructured way without the substance necessary to justify a specific categorisation.  There is nothing in the signage of the premises, the advertisements inside or the assessment by the City that refers to it being a lunch bar.  The only reference to it being a lunch bar was made by a selling agent and the Tribunal deals with that aspect later in these reasons.

   f)The Tribunal benefitted greatly from the site inspection it conducted with the parties.  The overwhelming impression of the Tribunal visiting, entering the premises and walking around in it, was that it is what one could call a neighbourhood delicatessen.  A substantial area of floor space is dedicated to the typical products one would expect in a delicatessen and these are set out in the Inventory of Products filed by Ms Viola.  The applicants did not challenge the inventory or provide any expert analysis of the stock of the delicatessen.  Although Mr Carmody made much in his submissions about the products on sale, those submissions were not supported by credible evidence.  It is clear that certain specialist and exotic products are available, such as olives, cheeses, sausages, pastas, breadcrumbs and so on.  All of these fall within the general expectation of what can be found in a delicatessen ­ especially one with a large Italian clientele, as has been stated by Ms Viola.  The counter that offers sandwiches and focaccias was clearly marked, as was the price list for those products but, on balance and taking account of the entire commercial activity in the premises, the Tribunal is satisfied, as the City is, that the sandwich­making part is a small and incidental element of the operations.  There is no expert or independent evidence before the Tribunal to suggest that the provision of sandwiches, focaccias, chicken and sausages on such a small scale is inconsistent with the operation of a delicatessen.  The Tribunal notes the observation by Mr Carmody and the confirmation by Ms Viola that the quantity of stock has shown a decrease since 2009 ­ the decrease has been taking place especially since the middle of 2010, according to Ms Viola.  The Tribunal accepts the explanation of Ms Viola that the stock was allowed to decline since a purchaser had been found for the business and that her financial resources have been under pressure due to the litigation.  On balance, the reduced stock levels do not diminish the overall appearance that the predominant commercial activity on the premises is that of a delicatessen.

   g)The Tribunal notes the contention of the applicants that the commercial activities in the delicatessen have shifted from 'take­home' products to immediate consumption products.  The applicants did not offer any expert assessment of stock to substantiate their contention.  Mr Carmody referred in this regard to the milk and cold drink container sizes to show that clients are, in effect, encouraged to consume what they buy on the spot.  According to Mr Carmody, this is indicative of a lunch bar rather than a delicatessen.  The Tribunal does not accept this contention.  First of all, it is not supported by any evidence or assessment by an expert of the stock profile of a delicatessen.  Mr Carmody merely made a contention without the benefit of any evidence of substance to support it.  Secondly, it is generally known that any delicatessen would have a range of products that can be consumed on the premises or taken away.  That does not change the categorisation of an operation as a delicatessen to a lunch bar.  If the total inventory is considered, it is patently obvious that the bulk of activity falls within what Mr Carmody described as take­home items.

   h)The Tribunal does not accept that the advertisement of the business as a lunch bar by agent, Mr Damien Bourke, for purposes of selling it, should be held to be determinative of the actual use of the premises.  Ms Viola explained her surprise when she saw that it had been described as a lunch bar and that she immediately called Mr Bourke to insist that the advertisement be corrected.  Mr Bourke was not called to give evidence as to why he had listed the business as a lunch bar and it is not clear what had been told to him.  The bundle of marketing documents provided to the Tribunal and marked as 'Exhibit L' show, however, that the premises was marketed by Mr Bourke as a 'Pasta Chef Gourmet Deli', with a photograph of the entrance of the delicatessen showing the same wording.  On the basis of the available evidence, the Tribunal accepts Ms Viola's explanation that Mr Bourke's use of the words 'lunch bar' was in error and does not, in itself, change the proper categorisation of the business activity.

   i)The Tribunal accepts that the assessment of the City cannot, in itself, determine the questions.  However, the Tribunal had the benefit of a site inspection as well as the evidence of the photographs, inventory and the evidence of Ms Sammut and Ms Viola.  If all of this is taken into account, the Tribunal reaches the same conclusion as the City.

1. The conclusion in reply to the first question is therefore that there is no breach of the lease, since the predominant use of the premises is for the operation of a delicatessen.

Is part of the premises being used for an illegal purpose?

1. The answer to this question is 'no' ­ there is not a breach of cl 9.2(a) of the lease, namely, that the premises is used for an illegal purpose.  The Tribunal finds that there is insufficient evidence to conclude that any part of the premises is being used for an illegal purpose as contended by the applicants.

2. The reasons for this finding in reply to the issues raised by the applicants are as follows:

   a)The Tribunal does not accept there is a breach of the lease, since a grease arrestor is not provided.  There is no requirement in the lease for a grease arrestor as a condition for the premises being used as a delicatessen.  The letter of the Water Corporation dated 12 November 2010 is unequivocal, namely, that the respondent is 'not required to discharge the kitchen waste to a grease arrestor.  There was no evidence that cooking was being carried out'.  The Tribunal accepts that the original approval granted by the Water Corporation suggested that a grease arrestor was required but, as Ms Viola explained, this was on the assumption that the respondent might apply to manufacture pasta on site and the possibility of operating a restaurant, thereby changing the use of the premises.  The respondent subsequently changed its mind and decided to continue with the delicatessen.  For purposes of these proceedings, it must be noted that whatever misunderstanding had existed regarding the grease arrestor, the letter of the Water Corporation dated 12 November 2010 should have allayed any concerns of Ms Sammut.  The letter makes it clear that the Water Corporation came to its conclusion after having visited the delicatessen and inspected the activities.  It escapes logic how Ms Sammut could continue to allege in her evidence before the Tribunal that there was a breach of the lease if there is not a requirement for a grease arrestor to be installed.  Even if it was Ms Sammut's view that an arrestor had to be installed, the letter of 12 November 2010 from the Water Corporation should have allayed her concerns.  Her contention during the hearing that the lease was being breached, since a grease arrestor had not been installed, demonstrated that the concern was frivolous, without any factual base and unfounded.

   b)The Tribunal does not accept that the current use of the storage area or the front area constitutes an illegal activity that is in breach of the lease or the local government planning scheme.  The approved plans of the premises submitted during the hearing show a large area to the back of the premises with no specific categorisation or description.  The lease does not describe or limit what the area may be used for, provided, of course, that it complies with the permitted use of the premises as a delicatessen.  It is accepted by the Tribunal that by the time the respondent commenced its tenancy, the area had a water basin which had been installed prior to the respondent taking possession.  The Tribunal also accepts that the cupboards and storage facilities against the wall, as indicated in photographs 10, 12, 13 and 14 of Exhibit F, were installed prior to the respondent taking possession.  Ms Viola admits to adding a steel table (freestanding and not attached to the premises) as per photograph 10, as well as other non­fixed cupboards.  In the absence of a contractual specification of use for the back area, the Tribunal must be guided by the zoning of the premises, the evidence of activities, its observations during the site inspection, and the assessment of the City of compliance with zoning requirements.  The Tribunal notes that, if zoning or other statutory requirements are breached, the relevant local authority is required to investigate and take action if a potential breach occurs.  Although the question arises under the lease, the applicant must put forward some credible evidence to support its contentions.  The mere allegations by Ms Sammut were not supported by any credible independent evidence of illegal activities.  It is not primarily for the Tribunal to determine if an illegal activity occurs on the premises since it is not the enforcement or prosecuting authority.  The Tribunal deals with a question arising under the lease.  On the basis of the absence of any negative finding by the City; the absence of any prosecution or penalties being imposed on the respondent; and the Tribunal's assessment of all the evidence before it, the Tribunal is satisfied that there is insufficient evidence to make a finding that an illegal activity occurs on the premises in general, and in the back room in particular.  The Tribunal notes the content of the City of Stirling District Planning Scheme No 2 and the City of Stirling District Planning Scheme No 3, and that planning approval may have to be required if the use within a building changes.  The appropriate authorities to investigate an alleged breach of the Scheme are the City and the Water Corporation.  It is therefore useful, in the absence of other expert evidence, to refer to their assessments of the delicatessen in general, and the use of the back area in particular.  The Water Corporation's assessment is that no cooking was being carried out and therefore a grease arrestor was not required.  The City, in its letter dated 26 August 2010, says 'there were no health[­]related concerns observed during the inspection' to determine if the requirements of the Food Act 2008 (WA) (Food Act) and the Australian and New Zealand Food Standards Code (Food Standards Code) had been complied with. The City further noted that 'all previous requested works have now been adequately completed'. This follows the letter of 18 August 2010 in which the City referred (it seems with some degree of frustration) to a 'considerable amount of time that has been spent investigating this issue … '. The City confirms that: the business complies with the Food Act and the Food Standards Code; it complies with the 'relevant planning approvals'; pasta products were not manufactured on the premises; and the approved use of the premises as a delicatessen is not negatively affected by the limited cooking activities. It is unclear how the applicants could, in light of these letters and the absence of any other credible evidence, bring the application to suggest illegal activities without any expert or independent evidence to support their allegations. While Mr Carmody did his best to explain why health and/or planning requirements may have been breached, there is nothing in the form of substantial evidence before the Tribunal to justify this question or the conclusions drawn by Mr Carmody. While Ms Sammut says that the 'kitchen', as the back area has been called, does not, in her opinion, comply with health requirements, she fails to explain what makes her an expert to come to such a conclusion. She also fails to explain why the activities in the front area constitute an illegal activity. She does not recognise that the City had conducted various inspections and has found the contrary, and she does not offer any expert or independent evidence. Her contentions are, in light of all the information, frivolous and without ground.

3. The response to the second question is therefore that there is insufficient evidence to find that any part of the premises is being used for an illegal purpose.

Have fixtures been installed on the premises without the owner's permission?

1. The answer to this question is 'no' ­ there is not a breach of cl 11.1(b) of the lease which provides that the respondent may not install any 'fitting, fixture, services, sign, plant, machinery, or equipment' on the premises without the approval of the applicants.  There is insufficient evidence to conclude that unauthorised fixtures have been installed on the premises.

2. The reasons for this finding are as follows:

   a)The Tribunal accepts the evidence of Ms Viola, which has not been disputed by Ms Sammut, that all the cupboards along the walls of the back room had been installed prior to the commencement of the tenancy.  The same applies to the water basin that was installed prior to the commencement of the tenancy.  Those items therefore fall outside the assessment of the Tribunal.

   b)The Tribunal accepts the evidence of Ms Viola that the steel working bench and other storage shelves and cupboards are removable and not fixed to the premises.  This was clearly visible during the site inspection.  Ms Sammut did not provide any evidence in the form of photographs or otherwise during the site inspection to show that the bench and cupboards were fixed permanently to the walls or the floor.  It is clear that Ms Viola used the large area in the middle of the storage area to place a working table where sandwiches and other products for sale in the delicatessen are prepared; for example, packaging of pastas.  There is, however, nothing to suggest the table and cupboards are permanent fixtures.  There is nothing in the lease that requires such a large area to remain vacant and not be put to some use.  The placing of removable working tables and storage facilities cannot be assessed as a breach of the lease.

   c)The Tribunal accepts the evidence of Ms Viola that the hot water system for the toilets was installed following a notice of default that was issued by the applicants in which it was demanded that such a system be installed.  On the one hand, Ms Sammut contends that the hot water system was installed without her permission and, during evidence in chief, she insisted that she had never given approval for it to be installed.  However, under examination by the Tribunal, she acknowledged (with some embarrassment and placing the blame on her lawyers) that she had caused to be issued a notice of default in which it was alleged that Ms Viola was in default for failing to provide a hot water system.  Ms Sammut, in effect, insisted that Ms Viola install the hot water system, but then she (Ms Sammut) denies having given approval for it.  In her reply to the notice of default, Ms Viola undertook to install the hot water system and this is what she subsequently did.  Ms Sammut's contention regarding the hot water system was misplaced, completely unfounded and without merit.

   d)The Tribunal accepts that some machinery was stored at some point on site prior to the hearing commencing.  Ms Viola was honest about it and explained that they were looking for a buyer or, in the alternative, if they commenced with pasta production on site, to install the pasta­making machinery.  In the meantime, however, and prior to the date of the site inspection and the hearing, the machinery had been removed, the bolt that was installed to keep the storeroom secure had been removed and the door had been repaired.  The substance of the application had therefore fallen away before the hearing commenced.  Although the installation of the lock may have constituted a technical breach of the lease at the time, these proceedings were completely unnecessary, since the bolt had been removed several months before the hearing and the door had been restored.  The Tribunal was told during the site inspection that the bolt had been removed and Ms Sammut did not refute that the door where the bolt had been fixed has now been fully restored.  This part of the proceeding was also unnecessary.

3. The Tribunal finds, in summary, that the question arising regarding the storage of machinery on the premises is without substance.  The applicants did not, during the site inspection or by way of photographs, show evidence that machinery was still being stored on site or that the machinery is fixed to the premises.  The Tribunal accepts the evidence of Ms Viola that the pasta­making machinery was never attached to the floors or the walls; it was only stored on site and it had been removed several months before the hearing.  The suggestion by the applicants that cl 11.1 of the lease regarding attachment of a fixture, installation of machinery, or that conduct of works were conducted without the approval of the applicants is without grounds and the answer is in the negative.

Is the respondent required to provide a bank guarantee to the applicants?

1. The answer to the question is 'yes'.

2. The reasons for the finding are as follows:

   a)There is, in accordance with item 5.2 of the Schedule of Assignment of Lease, a requirement for the respondent to give to the applicants within 30 days from the commencement of the assignment a bank guarantee of $15,000.  The applicants say they have not received the bank guarantee although they have demanded it on several occasions.  Although Ms Viola says she mailed the bank guarantee and provided a handwritten note of confirmation of the date on which she allegedly had mailed the bank guarantee, Ms Viola has been aware for sometime that Ms Sammut says that she had not received the bank guarantee.  In fact, Ms Viola told the Tribunal during the hearing that she arranged for the bank guarantee to be reissued by the bank after she became aware that the original bank guarantee had gone astray.  With the most minimal of effort, she could have sent the bank guarantee by registered mail, or she could even have handed the bank guarantee to Ms Sammut at any stage of these proceedings or the mediation.

   b)The Tribunal is perplexed at the reasons that may have caused the reissued bank guarantee not to be delivered.  According to Ms Viola, she arranged for the bank guarantee to be reissued because she wanted to dispose of the matter.  She says that she handed the bank guarantee to her solicitor and requested it to be sent to Ms Sammut.  According to Ms Viola's evidence, her solicitor seemed to have refused her request and advised that the bank guarantee should not be delivered.  The Tribunal would be surprised if it is correct that Ms Viola's solicitor:

   i)advised her to deliberately not comply with a term of the lease; and

   ii)refused to act according to the instructions of Ms Viola.

   There is, however, no need for the Tribunal to make any further enquiry of findings in this regard, since it is accepted by Ms Viola that she must deliver the bank guarantee.

Conclusion

1. In conclusion, the Tribunal makes the following findings in reply to the questions arising from the lease:

   1)Is the premises being used as a delicatessen as per the lease? ­ Yes.

   2)Is the premises being used for a purpose that is illegal under the lease? ­ No.

   3)Have fixtures been installed to the premises without the owner's permission? ­ No.

   4)Is the respondent required to give a bank guarantee to the applicants? ­ Yes.

   5)Should costs be awarded to the successful party? ­ Further submissions will be invited.

Orders

1.The application is, with the exception of the issuing of the bank guarantee, dismissed.

2.The respondent must deliver within 14 days from the date of these orders the bank guarantee as required by the lease.

3.The question of an award of costs is set down for a directions hearing to take place on 10 March 2011.

I certify that this and the preceding [23] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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DR B DE VILLIERS, MEMBER