Tonini v Whitehouse Bakery Pty Ltd

[2007] NSWADT 161

CITATION:	Tonini & anor v Whitehouse Bakery Pty Ltd & ors [2007] NSWADT 161 This decision has been amended. Please see the end of the decision for a list of the amendments.
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Silvano Tonini and Liliana Tonini FIRST RESPONDENT Whitehouse Bakery Pty Ltd SECOND RESPONDENTS Sante Deidda and Rosa Deidda
FILE NUMBER:	065215
HEARING DATES:	18 June 2007
SUBMISSIONS CLOSED:	18 June 2007
DATE OF DECISION:	26 July 2007
BEFORE:	Rickards K - Judicial Member
CATCHWORDS:	Claim for payment of money
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Retail Leases Act 1994
REPRESENTATION:	APPLICANT J Watts, Barrister FIRST & SECOND RESPONDENTS H Ledinh, Solicitor
ORDERS:	1. I order the Respondents to pay to the Applicants the sum of $11,496.52.; 2. Unless any party files written submissions as to costs within twenty eight (28) days, there will be no order as to costs.

Introduction

1 In about August 1997 the First Respondent Whitehouse Bakery Pty Ltd leased retail shop premises known as 19 Padstow Parade, Padstow (“the premises”) from the then owner of the premises, Mr Lario DiFrance.

2 The premises were in a somewhat derelict state prior to occupation. The First Respondent ultimately operated a bakery on the premises, and in order to meet the requirements of the Council to permit such use, the 1st Respondent spent approximately four months renovating the premises from August to December 1997 at its own expense, pursuant to agreement reached with the then Lessor.

3 On 18 October 1998, the Applicants purchased the premises from Mr DiFrance.

4 On 1 January 2001, the Applicants and the First Respondent agreed on a new Lease for a 3 year period and then, approximately 2 years later, the parties agreed that the First Respondent would use the front of the premises as a coffee lounge to be operated by the Manager of the First Respondent’s business. Accordingly, a new Lease dated 1 January 2003 was executed, and the Second Respondents Mr and Mrs Deidda guaranteed performance of the First Respondent’s obligations under this new Lease.

5 The new Lease was due to expire on 31 December 2005. On 13 December 2005, the Respondents advised the Applicants that they would not be exercising their option to renew the Lease for a further period of 3 years, because they had purchased a factory unit and would be moving the bakery business to that location. The Second Respondent Mr Deidda introduced a Mr Morris Grasso to the Applicants, and indicated that Mr Grasso wished to enter into a new Lease for the premises.

6 After 31 December 2005 the First Respondent remained in occupation of the premises on a monthly periodic tenancy, as provided for by the terms of the Lease.

7 On 7 March 2006 the Applicants met with the Second Respondent Mr Deidda and discussed the issue of removal of a large baker’s oven from the premises, which could not be dismantled. It was agreed that the best method for removal was to go through the rear wall of the premises which would necessitate the removal of a roller door and part of the surrounding brick wall. An agreement was reached that the Respondents would then restore the area with a brick wall and window.

8 On 6 June 2006, verbal advice was given by Mr Grasso on behalf of the Respondents to the Applicants that the First Respondent would be moving out, but no exact date was provided. Rent was paid by the First Respondent to cover up to 30 June 2006.

9 On 19 June 2006 the baker’s oven was removed. Later on that day, the Applicants attended at the premises and saw that part of the back wall had been demolished, as had been anticipated. Enquiries made by the Applicants of another person then present at the premises as to when the new brick wall and window would be built did not produce a definite response. Thereafter, the relationship between the parties deteriorated markedly.

10 On 21 June 2006 the Applicants again attended at the premises, by which time they observed that the Respondents had caused a brick column to be built over a section where the wall had been removed, with a fibro stud wall covering the remainder of the area. By that time, the First Respondent had vacated the premises, and it is common ground that there was a lot of rubbish in and around the premises as well as some broken fixtures, fittings and tiles on the floor and wall.

11 The Respondents assert that the fibro stud wall was built as an interim measure only, and that it had been their intention to have the brick wall restored and a new roller door installed before the end of that month. Both the Applicants and the Respondents indicate through their respective evidence that by this time there was agreement that these restoration works would now include a new roller door.

12 The Applicants say that they were unhappy with the state of the premises and asked to meet the male Respondent, Mr Deidda. This meeting took place on 27 June 2006. It is common ground that the Applicants presented a list setting out what works they wanted completed, and that Mr Deidda was very unhappy with their demands. There is no evidence before me of what was on this list. By this time, the Respondents had hired a skip bin which had been at the back of the premises from 24 June 2006 but, as a result of the somewhat acrimonious meeting on 27 June 2006, the bin was picked up empty on 3 July 2006 and no further works were undertaken by the Respondents.

13 On or about 3 July 2006, the Applicants utilised the services of a business called ADT Building Services to undertake work at the premises. The operator of the business ADT Building Services is Mr Guido Tonini who is the brother of the Applicant Silvano Tonini.

14 It is common ground between the parties that the premises at this time were in a very untidy state with general grease and dirt about, particularly in the area where equipment had been removed, general debris in the loading bay, an abandoned machine and a number of crates, and a large quantity of stale baker’s dough and other assorted rubbish in and about the premises. It is also common ground that the area underneath where the baker’s oven had been removed was untiled and was covered with accumulated debris, and that adjacent electricity cables, water pipes and gas pipes had not been disconnected.

15 Clause 8.1 of the Lease required that

“the Lessee shall keep the Leased Premises and immediate surroundings in a thorough state of cleanliness and shall not allow any accumulation of useless property or rubbish and the Lessee will pay for the caretaking and cleaning of the Leased Premises”.

16 Further, Clause 21.2 of the Lease provided that:

“In complying with this clause the Lessee shall rectify any damage which may be caused to the Leased Premises by the removal of the Tenant’s Fixtures and the Lessee shall reinstate the Leased Premises to the condition they were in on first delivery of possession thereof to the Lessee (as improved by either party if relevant) subject to fare wear and tear. If the Lessee fails to make good any damage or reinstate the Leased Premises within a reasonable time then the Lessor may do so and all the Lessor’s reasonable costs of so doing shall be paid their liquidated debt owing by the Lessee to the Lessor, payable upon demand.”

17 The Respondents concede that they are liable to pay the reasonable costs of cleaning of the premises and restoration of the premises in accordance with the provisions of the Lease, but say that a number of the works undertaken are outside the Respondents responsibility. The Respondents also take issue with the amount which the Applicants claim in respect of the works undertaken.

18 The Applicants also claim 2 months’ rent from the Respondents. The Applicants submit that they are entitled to one month’s rent for July 2006 due to the failure of the Respondents to give one month’s written notice of termination, as required by the terms of the Lease, and a further month’s rent is claimed by the Applicants by reason of their assertion that the premises were unable to be rented until the end of August 2006 due to the necessary works which had to be completed.

Evidence and Submissions

19 On behalf of the Applicants, Affidavits from Mr Silvano Tonini, Mrs Liliana Tonini and two Affidavits from Mr Guido Tonini have been placed into evidence, and those persons have also given evidence.

20 The amount claimed by the Applicants for restoration and cleanup of the premises is $19,723.20.

21 In relation to this claim for cost of rectification and cleaning of the premises the Respondents submit that this amount is excessive for three reasons.

22 The first submission of the Respondents upon this issue is that because the premises were deteriorated at the time that the Respondents first occupied the premises in 1997, it is to that standard that the duty of restoration should be measured, and not the standard of the premises as at date of commencement of the new Lease on 1 January 2003. I do not accept this submission, simply because of the expressed terms of the Lease as recited above. The Respondents had a duty to keep the premises clean and free of rubbish pursuant to Clause 8.1, and agreed to rectify any damage caused by removal of fixtures and to reinstate the premises to the condition that they were in “on first delivery of possession… to the Lessee (as improved by either party, if relevant) subject to fair wear and tear.” It is clear from this express term referring to prior improvements made by either party that, at the time of entering into the Lease on 1 January 2003, the parties contemplated that Clause 8.1 referred to delivery of possession to the Respondents pursuant to this present Lease and that the standard of condition of the premises at the time of ending of the Lease would be the condition of the premises as at the commencement of the Lease, namely 1 January 2003.

23 The second submission of the Respondents is that part of the amount claimed by the Applicants relates to improvements of the premises rather than restoration, and the third submission of the Respondents is that the charges and amounts claimed by the Applicants are generally excessive. Consideration of these submissions requires careful examination of the Affidavits and evidence of Liliana Tonini and Guido Tonini, and consideration of the likely condition of the premises as at 1 January 2003 as compared to the condition of the premises following the departure of the First Respondent.

24 Given the photographs which have been admitted into evidence, I am satisfied that, as at 1 January 2003, the premises had been used as a bakery for almost six years and that the walls and floor of the premises would have been subjected to a reasonable degree of fair wear and tear over that period. I am also satisfied that, as at 1 January 2003, there were no tiles on the wall behind where the baker’s oven was located nor on the floor beneath the oven. Given these findings, and in the absence of any qualified evidence as to damage to tiles caused during removal of the oven, I do not consider that the Applicants are entitled to recover costs associated with supply and fixing of tiles to the walls or floor of the premises.

25 There is no evidence to suggest that the standard of the rear stairs and handrail was any different in July 2006 to that which it was in January 2003 and accordingly I find that the Applicants are not entitled to the cost of any related materials or works.

26 It is common ground between the parties that damage was caused to the ceiling by a storm which occurred sometime during the currency of the Lease. A claim is made by the Applicants for the cost of painting of the ceiling. It is clear that certain restorative works had to be done to part of the ceiling adjacent to where the rear wall had been removed and that this would have necessitated painting, but on the other hand a significant amount of work on the ceiling, including painting, would have been reasonably required due to the storm damage. Accordingly, doing the best that I can, I proposed to allow half the cost of painting.

27 Some aspects of the evidentiary material supplied through Guido Tonini in support of the Applicants’ claim are unsatisfactory. In the first Affidavit of Guido Tonini there is annexed an undated invoice which is not addressed to any party and which contains some entries of amounts relating to sub-contractors, some of which include GST and some of which do not. Furthermore, in relation to the work said to have been actually carried out by Mr Guido Tonini or his business rather than by sub-contractors, he has supplied general lump sum figures for jobs done which are not itemised but which upon his “recollection” he charged out at $50.00 per hour. There is no direct evidence by way of receipt, deposit slip or even cheque butt that this undated invoice was actually paid in the amount claimed, other than the statements by Liliana Tonini and Guido Tonini that it was so paid on or about 11 October 2006. Further, in the second Affidavit of Guido Tonini sworn on 12 June 2006, there is annexure “B” which is said in paragraph 6 to be “invoices for sub-contractors engaged by ADT Building Services to undertake works on the premises…” when two of the documents are merely quotations from Tony the Tiler and Glenayre Painting Services.

28 Given the observations above, I am not satisfied on the balance of probabilities that the Applicants are entitled to reimbursement of the entirety of the expenses claimed within the ADT Building Services invoice to be associated with due repair and cleaning of the premises. I allow only that part of the account of ADT Building Services which relates to clean up works on 5 July 2006 and works performed in relation to the exhaust fan and clean up on 10 August 2006, in a total sum of $2,000.00.

29 The Respondents concede that they are liable for the cost of the new roller door and its installation. The Respondents are also liable to reimburse the Applicants under the terms of the Lease for the expenses incurred in relation to plumbing, gas and electrical connections, and in repairing the roof following the removal of flues, and in paying skip bin fees. I do not accept that the cost of painting the roof or rendering the back walls should be borne by the Respondents pursuant to the terms of the Lease, as these works are improvements going beyond the state of the premises as at the commencement of the Lease.

30 In relation to the claims for rent made by the Applicants, it is conceded by the Respondents that written notice was not given as required by the Lease. I accept that certain works were still being undertaken in the middle of August, some six weeks after rent had last been paid by the Respondents. On the other hand, there has been no evidence provided by the Applicants concerning the terms of the new agreement reached by them with Mr Grasso for occupation of the premises, or at least the part of the premises comprising the coffee shop, after the Respondents had vacated, nor the extent or basis of any rent received or waived by them. In the circumstances, an amount of $4,466.00 will be awarded in respect of one month’s rent in lieu of written notice as required by the Lease.

31 In summary, I find that the amounts properly payable by the Respondents to the Applicants are as follows:-

ADT Building Services	$2,000.00
Clark’s Painting (1/2)	$880.00
Able Door Services	$737.00
DTK Plumbing	$308.00
Sam’s Roof Plumbing	$1,732.50
Mason Electrical	$198.00
M & C Petrow Waste	$440.00
One month’s rent	$4,466.00
$10,761.50

32 A claim is made for interest. I allow interest on the above sum at the applicable rate of 9% for the period 11 October 2006 to 16 July 2007, a period of 277 days, in the sum of $735.02.

ORDERS

1. I order the Respondents to pay to the Applicants the sum of $11,496.52.

2. Unless any party files written submissions as to costs within twenty eight (28) days, there will be no order as to costs.

17/08/2007 - To correct figure for one month's rent by replacing $2,230.00 with figure of $4,466.00 and to correct calculation of total payable and calculation of interest following correction of monthly rent figure - Paragraph(s) Order 1, Paras 30, 31, 32