Australian Asset Consulting Pty Ltd v Staples Super Pty Ltd [2016] VCAT 1726 | Case summary

Australian Asset Consulting Pty Ltd (ACN 600 957 659)

Australian Asset Consulting Pty Ltd v Staples Super Pty Ltd [2016] VCAT 1726 | Case summary | Zoe

[99]

Precisely because the object of estoppel is to prevent an unjust changing of position, I consider AAC's argument based on estoppel is misconceived. The reality is that Staples terminated the lease on 28 September 2015. Whether or not Staples changed its position about the legality of AAC's use of the premises, it is impossible for the Tribunal now to make an order restraining Staples from terminating the lease on the basis of an estoppel.
Even if this were not the case, I am not satisfied that AAC could have established an estoppel in any event, because I do not consider that any change of position by Staples caused AAC any detriment. Mr Staples deposed that when he initially agreed to lease the office space he made it clear to Mr Short that the property was in an Industrial Zone. I accept that, as his evidence accords with the zoning. Mr Staples also deposed that Mr Short did not raise the fact that the business was a retail business. I accept this evidence because the lease that Mr Short's company NAC proposed was not a retail lease, but a commercial lease. Mr Staples also gave evidence that he did not appreciate that in carrying on a real estate business Mr Short would be conducting a retail business for the purposes of the RLA. I accept this evidence also. The term of the lease was stated in both NAC's offer to lease and in the NAC lease itself as two years, rather than five years, as required by s 21 of the RLA. Also, no outgoings statement was issued by Staples nor asked for by Mr Short, as one might have expected if the parties had an appreciation that the RLA was to be engaged. In all these circumstances I am satisfied that the parties did not discuss the creation of a lease which would be covered by the RLA. Mr Staples deposed that he first realised the RLA might apply was when this was asserted by AAC's lawyers. I accept this, evidence, as it is consistent with the fact that AAC's lawyers raised the application of the RLA in a letter dated 10 March 2015.[5]
Here, the reality is that AAC was largely the author of its own misfortune. Mr Staples did not prepare the lease, nor did his company engage either a lawyer or a real estate agent to act on his company's behalf and prepare the lease.
The evidence is that the lease was prepared by AAC, that is to say under Mr Short's supervision, and the lease specified a use which was inconsistent with the zoning of the area in which the demised property was located. Mr Short is a professional commercial real estate agent, and as such either was aware, or should have been aware, of the property's Industrial 1 Zoning, because of his knowledge of the businesses carried on in the area by Mr Staples and others. I consider that it was AAC's decision to open a retail business in an area zoned Industrial that caused its loss, not any alteration of position on the part of Staples.

[100]

As previously noted, Staples says the issue as to whether AAC was in breach of the permitted use of the premises under the lease by operating a retail business was determined by Member Kincaid at the injunction hearing on 24 September 2015. No transcript of that hearing was made available to the Tribunal for the purposes of the hearing of the present proceeding, but, in my view, the fact that Member Kincaid dismissed AAC's application for an injunction restraining Staples from re-entering the property or otherwise forfeiting the lease pursuant to the September s 146 notice is consistent with, and only with, the proposition that Member Kincaid concluded that AAC was in breach of the lease because the use of the property for retail purposes was not a permitted use. It follows that Member Kincaid's decision established that the lease could be lawfully terminated on this basis.
The lease was terminated on the express ground that, in breach of the September s 146 notice, AAC continued to conduct retail activities at the property following Member Kincaid's ruling, even though it did not have the requisite planning permit from the council.
When he was being cross-examined by Counsel for Staples, Mr Short deposed that Member Kincaid had said that AAC did not have to vacate, but he had to cease trading. I accept that there is a distinction to be drawn between occupying premises under a lease, and trading from those premises. The question that arises accordingly is whether, as a matter of fact, AAC continued to conduct retail activities at the property after Member Kincaid had determined that using the property for retail purposes was not permitted under the lease because of the zoning.
Mr Short deposed that after Member Kincaid made his decision on 24 September 2015 the property was not used for retail purposes. He put a sign on the door telling members of the public they could not enter. He sent it this sign to Mr Dong at the council on 24 September 2015.[6] Reference to this letter indicates that Mr Short advised Mr Dong:

[102]

However, Mr Short conceded that he, Mr Cannizarro and Mr Soultas continued to attend at the property to conduct business. He agreed that he and his staff made business-related phone calls including setting up future meetings. However, he denied that they were preparing leases. He agreed that on Friday, 25 September 2016 he was in the office between 11.00am to 4.00pm, and on the following Monday was in the office for seven hours. When pressed by Counsel for Staples to say what he was doing, he said he could not recall, and offered to look at his phone. When it was put to him that 'it was business as usual', he emphatically denied this.
Although I must accept that in circumstances where Mr Short and his colleagues were not seeing clients at the property they were not conducting 'business as usual', I am not satisfied AAC ceased to operate a retail business. AAC conducted a real estate business. The essence of such a business is the provision of professional real estate services to the public for financial reward. I find that this falls within the concept of 'retail provision of services; for the purposes of the definition of retail premises contained in s 4 of the RLA. In the days in question after 24 September 2015, Mr Short and both the current employees of AAC attended work. Neither of the employees, Mr Cannizarro or Mr Soultas, were laid off or suspended or took holidays. Although Mr Short denied that leases were prepared during the days in question, he could not say what work was done other than on the telephone. It was conceded that telephone conversations took place including conversations relating to future meetings. Such telephone conversation must have been with clients or potential clients. There is an inescapable inference that those calls related to the conduct of the real estate business. The upshot is that although I accept that Mr Short and his colleagues did not meet with clients at the property, he and his colleagues did communicate with clients from the property. In these circumstances, I find that AAC continued to carry on a retail business from the property. Accordingly, it was carrying on a business in breach of the applicable zoning.
This finding means that AAC's claim for damages for unlawful termination of the lease must fail.

[119]

Because Mr Staples would have been acting in a manner inconsistent with the interests of another tenant, and his own business interests, if his company had supported AAC with its application for a zoning amendment, Mr Staples is not to be criticised for making the election not to support, indeed to oppose, AAC's town planning application. Any obligation it might otherwise have had not to oppose AAC's town planning application was negated by its obligation to co-operate with the tenant in occupation of the factory area of 52 Freight Drive.
For these reasons, I find that there has been no breach of the Mackay v Dick implied term.
Lest I am in error in making this finding, I note that, even if a breach of the Mackay v Dick implied term could be established, I consider that AAC would have trouble establishing any loss flowed from Staples' objection to its town planning application. Mr Dong, of the council, gave evidence that AAC had the right to have reviewed the council's failure to deal with its town planning application if it was not dealt with within 60 days. Mr Dong explained that the 60 days would be suspended if a request for information was made, but as there had been no request for information made, the time ran continuously from the date the application had been submitted. This meant that the right to seek a review arose on 4 August 2015.
It is relevant to note that Staples' objection to the town planning application was made on 27 August 2015, that is to say, some days after the right to review arose. The objection from Mr Cunningham's business, Water Technologies, was made on 20 August 2015. Thus, AAC would not be able to establish that any objection caused the failure of AAC's town planning application. The process was not determined by the time the objections had been made, and AAC had taken no step to press its application by insisting on a review. Furthermore, as was noted in AAC's submissions dated 14 June 2016, at the date of those submissions, the town planning application remained on foot and had not been decided.

[120]

In its amended points of claim, AAC says that Staples' conduct in determining the lease was conduct in trade or commerce which was unconscionable conduct 'within the meaning of section 20 of the Competition and Consumer Act 2010'.
The prohibition against the person in trade or commerce engaging in conduct that is unconscionable, within the meaning of the unwritten law from time to time, is to be found in s 20(1) of the ACL. The ACL is itself schedule 2 of the Competition and Consumer Act 2010 (Cth).
AAC does not provide any particulars in its amended points of claim as to what features of Staples' conduct is said to be unconscionable. Nor is any guidance given in the final submissions. As AAC is not legally represented, it falls to the Tribunal to assess the claim on the relevant legal principles. As it has been found that the RLA applies to the lease, a claim made under s 77 of the RLA, which deals with unconscionable conduct of a landlord, must also be considered.
AAC is not relying upon the statutory prohibition of unconscionable conduct in connection with goods or services contained within s 21 of the ACL. Accordingly, it is necessary to have regard to the equitable principles surrounding 'unconscionable conduct'. One of the leading Australian cases on the topic is Commonwealth Bank of Australia v Amadio.[9] In that case, Mr and Mrs Amadio, who were Italian immigrants with a limited command of English, sought to rely on the doctrine of unconscionable conduct in order to be relieved of the consequences of having signed a mortgage in favour of the bank to support their son. Justices Mason, Wilson and Deane JJ constituted the majority that held the Amadios suffered from a special disadvantage vis-a-vis the bank which made it unconscionable for the bank to rely on the guarantee.
Guidance as to the nature of unconscionable conduct can be found in the judgment of Mason J where he said, at [2]:
1. Historically, courts have exercised jurisdiction to set aside contracts and other dealings on a variety of equitable grounds. They include fraud, misrepresentation, breach of fiduciary duty, undue influence and unconscionable conduct. In one sense they all constitute species of unconscionable conduct on the part of a party who stands to receive a benefit under a transaction which, in the eye of equity, cannot be enforced because to do so would be inconsistent with equity and good conscience. But relief on the ground of "unconscionable conduct" is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage ...
Mason J went on to say, at [3]:

[171]

Ms Prendergast deposed that she had not issued any compliance notice. Reference to her report confirmed this was so. This determination by the independent body responsible for environmental protection in Victoria does not support of AAC's case.
In these circumstances, there is a question as to whether the smell in the premises was of such a degree that it constituted a breach of the covenant for quiet enjoyment.
Furthermore, in the light of Ms Prendergast's note that she 'saw production records that showed that the machinery produces ant bait and runs for a few days and then is not run for up to a month ...', there is an issue as to the extent of the problem in temporal terms.
Although Mr Cannizarro gave evidence that when the plant was running there was a smell of 'rotten fish' which made him feel nauseous, and agreed under cross-examination that he felt like vomiting and became light-headed, he agreed he did not vomit, and he did not say that he was forced to go home because of the smell.
A WorkSafe Victoria report prepared by Mr James Doulis was tendered by consent. Mr Doulis did not think the smell created an OHS issue.
Mr Soultas gave evidence that the fish smell was quote 'unbearable', and said that he went to the doctor about it. However, he could not recall how often he went, or what medicine was prescribed by the doctor. Although he initially said the machine was running every day, he retracted this under cross-examination and said it was being used every day for two months. He agreed a vent had been installed by ACTA to improve the situation.
Mr Short also referred to the smell, and noted Mr Soultas had been upset about it.
Direct evidence about the operation of ACTA's manufacturing plant was given by Benjamin James Hall, who works as a product controller with the company. His evidence was that manufacturing started on 8 August 2014, and continued with a small production run on 1 September 2014 and another on 2 September 2014, followed by another small production run on 3 October 2014. Mr Hall deposed that the ventilation system was installed on 24 October 2014 or thereabouts. His evidence was that no employee of ACTA complained about the smell.

[172]

Relevant to AAC's claim that Staples breached its covenant of quiet enjoyment is the question of whether AAC's business was materially interfered with. Although Mr Soultas, in particular, gave evidence about how he was affected by the smell, and went to the doctor about it, he did not say he missed substantial periods of work because of it. Nor did Mr Cannizarro say that he missed work because of the smell. Furthermore, there is no evidence from any of AAC's three employees (including Mr Short), that the flow of customers to AAC's premises was affected by the smell. Accordingly, I find that AAC has not established that there was material interference with its business as a result of the conduct by ACTA of its pest control product manufacturing business.
There is another relevant factor, namely, the reasonableness of Staples' actions. Mr Short was well aware of the nature of Mr Staples' business in general. For instance, he gave evidence that when he took instructions from Mr Staples regarding the leasing of the property at 55 Metrolink Drive, he was told that there were bales and bales on pallets of animal control technology products stored there.
When the tenant who had been the occupier of the rear of 52 Freight Drive moved to 55 Freight Drive, Mr Staples moved ACTA's business to 52 Freight Drive and the materials stored at 55 Metrolink Drive were transferred there.
It is to be noted that the lease was executed by AAC on 26 August 2014. By this time, ACTA was already in occupation of the factory at 52 Freight Drive, as is evidenced by Mr Hall's statement that the first production run was on 8 August 2014.
As AAC, through Mr Short, had knowledge of these matters, AAC cannot say that it was not aware that it might be affected by smell or noise arising from the manufacture of pest control products in the factory. It signed the first lease on the basis that ACTA was in occupation, even though its predecessor NAC may have taken possession of the office area at 52 Freight Drive at a time when ACTA was not in possession.
In these circumstances, I find that AAC has not established that there has been a breach by Staples of its covenant for quiet enjoyment.

[178]

AAC did not refer to s 54 of the RLA at the hearing or in its submissions, but, as AAC is not a party represented by a professional advocate, I consider that it is appropriate that I should make reference to this provision, as it provides a statutory remedy to which AAC might well have relied had it had the benefit of legal representation.
It would not have been too late for AAC to have made a claim under s 54 of the RLA. Although s 54(3) requires the tenant must give the landlord written notice of the loss or damage as soon as practicable after it is suffered, the section goes on to say that a failure to do this does not affect any right of the tenant to compensation.
The following points may be made about the potential application of s 54(2) of the RLA. Firstly, compensation is not available if the tenant has suffered only nominal damage. This means that, in order to obtain compensation, AAC will have to demonstrate it has sustained more than nominal damage. This of itself might prove fatal to any claim for compensation, because there was no evidence Mr Short nor any of his employees took time off work because of the smell.
Secondly, there is no prospect of a claim under s 54(2)(a), as access to AAC's premises was not impeded. Nor is s 54(2)(e) engaged as there has been no breakdown of plant or equipment, nor is there any defect in the building. Furthermore, s 54(2)(f) cannot be relied on by AAC, as cleaning is not an issue. The upshot is that only s 54(2)(b), (c) or (d) might potentially be in issue.
In order to win an award of compensation under s 54(2)(b) of the RLA, AAC will have to demonstrate that the landlord or its agent had unreasonably taken action that substantially inhibited or altered the flow of customers to the retail premises.
I consider that any claim for compensation made under s 54(2)(b) would fail because there was no evidence that fewer customers came to the premises than might otherwise have been the case, or that business was otherwise interfered with.
In order to claim successfully under s 54(2)(c), AAC would have to demonstrate that the landlord or its agent had unreasonably taken action that caused significant disruption to the tenant's trading at the premises.
The party in occupation of the factory area at 52 Freight Drive was not Staples, but ACTA. In carrying out its manufacturing process, ACTA was seemingly acting on its own behalf. Mr Staples may have been a common director, but that fact alone did not make necessarily ACTA an agent of Staples.
However, even if it is assumed for the purposes of argument that the acts or omissions of ACTA can be attributed to Staples because Mr Staples was a common director, it can hardly be said that ACTA was acting unreasonably in carrying out its manufacturing process in the industrially zoned factory which it had leased.
For these reasons I find that no breach of s 54(2)(c) could be established by AAC.
Finally, I turn to s 54(2)(d), which is concerned with the landlord failing to take reasonable steps to prevent or stop significant disruption to the tenants trading at the premises. There is evidence that ACTA's staff left the front and rear doors of the factory open when the manufacturing process was underway if the weather allowed, and ACTA installed a vent in October 2014 to alleviate the smell problem. I consider that these steps were reasonable steps for ACTA ‒ and therefore Staples, if ACTA is the agent of Staples ‒ to have taken, and hence there has been no breach of s 54(2)(d).
For all these reasons, I find I would not have been disposed to have made an award of compensation to AAC had AAC framed a claim under s 54 of the RLA.

[224]

The context for the negotiation of the NAC offer to lease is the subject of an affidavit sworn by Mr Staples on 16 July 2015 in this proceeding. Mr Staples deposed he had responded to an advertising pamphlet issued by NAC in or about January 2014. Mr Staples stated that he met Mr Tristan Russell of NAC. The affidavit does not make it clear when Mr Staples met Mr Short.
Mr Staples 'eventually' engaged NAC as agent to draft a lease for the properties at 115 Metrolink Circuit, 45 Freight Drive and 55 Freight Drive.
In about February 2014, Mr Staples was advised by Tristan Russell that NAC wished to lease the office space at the property. Staples did not immediately agree to this, but ultimately did so in or about March 2014. In or about late March 2014, Mr Staples negotiated the terms of the lease with Mr Russell and Mr Short in a series of meetings which were held either at his office at 50 Freight Drive or at the property.
Mr Staples then deposed that he was sent the NAC offer to lease in early April 2014, and that he checked it to ensure its terms were the same as those he had discussed with Mr Short. He said that the terms were the same, save for the fact that the offer did not mention the car parking requirements, and these were then agreed in conversations. He executed the NAC offer to lease, and NAC began occupying the property on 4 April 2014.
According to Mr Staples, the next step was that, in or about June 2014, Mr Short attended at his office and provided him with a NAI Harcourt's lease titled 'Commercial Lease'. This is clearly the NAC lease. Mr Staples swore that he asked Mr Short if this lease was on the same terms as the NAC offer to lease which had been negotiated between the parties. He received verbal assurance from Mr Short that this was the case, and that he executed the NAC lease without reading it 'and relied on Short's representations and assurances'.
Mr Staples then deposed that between April 2014 and August 2014, NAC occupied the property pursuant to the terms of the NAC lease.
Mr Staples in his affidavit of 16 July 2016 then deposed that, in or about July 2014, Mr Short visited him and informed him that he wanted to go into business by himself, and break away from NAI Harcourts. Mr Staples deposes he agreed to enter into a fresh lease 'as long as we did so on the same terms as we have orally agreed earlier' as noted in the NAC offer to lease, which he understood to have been reflected in the NAC lease.
Mr Staples then deposed that, on or about 26 August 2014, Mr Short visited his office and advised him that he had established a new agency trading as Square Feet Commercial, and that he was the sole director of the company. Mr Short presented a copy of a new lease. Mr Staples deposed that he asked Mr Short whether this lease contained the same terms that had been agreed upon, and was assured that they did. He says that, based on Mr Short's representations and assurances, he executed this lease on 26 August 2014. This lease is 'the lease' which is the subject of this proceeding.
In his affidavit sworn on 16 July 2016, Mr Staples placed weight on the negotiations he conducted with Mr Short. He said:

[228]

In support of Staples' claim, Mr Staples gave evidence that he signed the AAC lease on the basis of representations from Mr Short that it conformed with the NAC offer to lease, and that the lease was identical to the previous NAC lease.
I consider that the evidence of Mr Staples that he signed the NAC lease without reading it means that Staples' claim regarding rectification of the lease regarding the guarantee must fail. The lease clearly does not contain a signed guarantee. Indeed, it does not appear to even contain an unsigned guarantee. The drafting, accordingly, gives support to Mr Short's evidence that Mr Staples had agreed that he, as well is Mr Russell, was to be released from signing the guarantee. I find against Staples in respect of this particular claim for rectification.
It remains to deal with Staples' contention that the lease was meant to reflect an agreement that AAC would pay electricity outgoings on a pro rata basis. The claim was not addressed in Staples' written submissions, but there is no indication that this limb of the claim for rectification has been discarded. The basis of the argument for rectification appears to be that the NAC offer to lease provided that AAC would pay 20% of rates, taxes and other outgoings and charges, 100% of Council Rates, building insurance and water service, but that electricity would be charged by 'actual usage'.
The lease relevantly provides in its schedule at item 11 that electricity is to be apportioned on the basis listed in item 11 A. Reference to item 11 A indicates the proportion referred to is 20%, being the proportion that the lettable area of the premises bears to the lettable area of the building.
Mr Short's explanation, in his evidence, was that the reference to 'actual usage' for electricity contained in the NAC offer to lease assumed that there would be separate metering for the two tenancies.
Mr Short also deposed that when the lease was executed it superseded the NAC lease and the NAC offer to lease. His point, no doubt, is that the terms of the lease accurately reflect the ultimately agreed arrangements between the parties.
In the absence of compelling evidence from Mr Staples to the contrary, I find for AAC in respect of the second limb of Staples' rectification claim as well.

[235]

AAC's position, as reflected in Mr Short's cross-examination of Mr Staples, is that this account was excessive. I agree. The change of locks could have been effected late at night, as suggested by Mr Short, by a single locksmith when no-one from AAC was in attendance. I find that a reasonable charge to allow is $740 comprising $180 for the cylinders and the lever and knob set, $310 for two hours attendance at $155 per hour, plus the callout fee of $250.
The charge imposed by Manforce Protection Services of $440 inclusive of GST related to the attendance for 4 hours of two guards at $55 inclusive of GST each per hour. This account was addressed to ACTA, but Mr Staples deposed it was paid by Staples. I find, however, that it should not be allowed, as the locks could have been changed out of hours without the presence of security.
The first invoice from Gate Opening Systems Pty Ltd (No.8590) dated 28 September 2015 for $176 inclusive of GST was in respect of an attendance at 52 Freight Drive to delete the previous code from the keypad and program a new code in accordance with Mr Staples' instructions. Mr Short asked Mr Staples in cross-examination why this had been charged to AAC. Mr Staples' answer was that there was an eviction. I accept Mr Staples' view, and I find this to be a reasonable charge arising upon termination of the lease, and allow it in full.
There was a second invoice from Gate Opening Systems Pty Ltd (No.8343) dated 15 October 2015 for $308 inclusive of GST that related to a service call to 52 Freight Drive to program an existing remote control, and also to supply two new remote control units. Mr Staples deposed that two remote controls were not returned by AAC. Mr Short said during his cross-examination of Mr Staples that AAC had not been given any remote controls, and had to obtain them from 'a locksmith'. He also said that two remote controls were handed to Ben Hall. Ultimately, Mr Staples said that he accepted Mr Short's word regarding the remote controls. I find on this basis that the invoice should stand insofar as it relates to the reprogramming only, and will allow recovery of $140 plus GST in respect of this particular item, as invoiced. The allowed recovery is accordingly $154.
A third invoice from Gate Opening Systems Pty Ltd was referred to in Annexure A but was not tendered. No allowance will be made in respect of it.
Wellspring Group Pty Ltd charged Staples $165 inclusive of GST in respect of cleaning. The work took place on 17 October 2015, which was ten days after AAC vacated the property. Mr Staples said that the toilets and benches were cleaned. I find that this charge is reasonable, and will allow the recovery of the account in full.
Powerwide Electrical Services Pty Ltd charged $660 inclusive of GST in respect of the supply and installation of three new air-conditioning circuits to existing wall air-conditioning units in the upstairs office. Circuits to the switchboard were terminated, and tested. The work was carried out on 28 October 2015, some three weeks after AAC had vacated. The justification for this charge given by Mr Staples was that Mr Short had installed two air-conditioners in the upstairs office and he was concerned that the circuits might be overloaded. However, Mr Staples, at the hearing, indicated that the invoice was not being relied on. On this basis, no allowance will be made in respect of it.
At the hearing, Mr Staples also identified a bundle of tax invoices which his company had rendered to ACC. They were tendered.
The first of these invoices (No.197A) was for $1,693.18 and comprised the following items (inclusive of GST):

[239]

Mr Staples deposed that 20% of these charges were billed to AAC as this was what Mr Short had asked for. It is to be noted this was the percentage assigned to AAC at item 11 of the schedule to the lease in respect of rates, taxes, council rates, building insurance, water service, and electricity.
Mr Staples gave evidence that Ian Senior (who had identified himself when he gave evidence on 22 February 2016 as the chief financial officer of ACTA), had charged Staples $668.38 for electricity. The claim for this item was amended to this figure.
Mr Short asserted when cross-examining Mr Staples that AAC did not receive original electricity invoices to review. AAC, in its written submissions, relied on this issue, as well as Staples' refusal to provide a disclosure statement in accordance with the RLA, and Staples' failure to provide audited invoices for electricity charges as required by s 47(5) of the RLA.
Staples' response, in its submissions, is that AAC cannot rely on the failure of Staples to provide original source documentation as this issue was raised for the first time during the cross-examination of Mr Staples as a reason by AAC for non-payment of invoices. I do not accept this argument, as the evidence from both sides was that invoices for outgoings were regularly contested by AAC. In these circumstances, Staples can hardly have been taken by surprise by AAC's insistence at the hearing that it was entitled to sight the original electricity invoices which it was being asked to share. I find, on this basis, that AAC is not obliged to pay the demanded contribution to electricity charges in the sums of $668.38 and $83.67.
If I had not decided the issue of AAC's liability for electricity charges on this basis, then I would have done so on the basis of Staples' failure to insert a figure for electricity charges in the disclosure statement which it sent to AAC on 26 May 2015. Although I have already found that that disclosure statement can be relied on by Staples, the disclosure statement said that AAC's contribution to electricity was 'variable depending upon usage'. It did not say that AAC was liable for 20% of the electricity charged to another party in respect of the entire building. The inference is open that there was to be separate metering. In these circumstances, I do not think a proper estimate of the electricity outgoing has been given to AAC for the purposes of s 46(4) of the RLA, with the result that AAC is not liable to contribute in respect of this particular outgoing.
Mr Staples also deposed that ACTA charged Staples 20% of a building insurance premium of $2,753.98 invoiced by HWA Insurance Brokers. Reference to the insurer's invoice confirms that the base premium was for that amount. GST of $311.93 was added and then stamp duty of $302.94 and a broker's fee of $355.15 were charged, bringing the total invoice to $3,734.00.
In its written submissions, AAC contested its obligation to pay for insurance for 12 months, on the basis that the tenancy ended either on 28 September 2015 or 9 October 2015, depending on the legality of the termination. As the HWA invoice is expressed to cover the period 23 April 2015 - 23 April 2016, I accept the thrust of AAC's argument that it is not obliged to pay for insurance for a whole year. However, as AAC vacated the property on 9 October 2015, I consider that AAC should account to Staples in respect of its liability for the relevant insurance payments for the 24 weeks between 23 April 2015 and 9 October 2015.
AAC also raises Staples' failure to provide a disclosure statement. I have previously found that a valid disclosure statement was ultimately served by Staples. However, reference to that document indicates that the tenant's liability in respect of insurance was stated to be $627 per annum. I find that this is the figure which should be pro-rated for 24 weeks. I find accordingly that AAC's liability for insurance charges is $627 x 24/52 = $289.38.
Invoice No. 211 was for $73.41 and was expressed to be penalty interest for late payment of invoice 197A. Although reference to the lease at clause (w) confirms that the lessee must pay to the lessor on demand interest at a rate being the aggregate of 2% and the rate for the time being fixed under s 2 of the Penalty Interest Rates Act 1983 on any rental or other moneys which are due and payable, Mr Staples confirmed at the hearing that penalty interest was now not claimed. Accordingly, no allowance will be made for this invoice.
The next Staples invoice claimed (No. 214), was for rent of $2,210.38, inclusive of GST, was charged as at 1 October 2015.
AAC, in its submissions, contends that the total rent claimed is not payable because one month's rent has been billed, and the rental has not been adjusted to the end of the tenancy. If the tenancy ended on 28 September 2015, no rental is payable. If it ended on 9 October 2015, rent for 9 days is conceded.
Although Staples gave notice of termination of the lease on 28 September 2015, and sought to re-enter on that day, the re-entry was resisted by AAC. AAC did not vacate until 9 October 2015. As AAC was still in possession as at the date that the rental invoice was raised, namely, 1 October 2015, I find the demand for rental was legally made by Staples. I find for Staples in respect of this invoice and allow recovery in full of the $2,210.38 billed.
The final Staples invoice (No. 214A), was dated 1 October 2015, and was for $518.12. It was expressed to relate to 20% of the Hume City Council September rate instalment of $1,776.60, and 20% of an electricity charge of $636.38.
In respect of the council rates, AAC says in its written submissions, rather confusingly, that they have been charged 'for an annual quarter'. Reference to the council rate notice for the year 1 July 2014 - 30 June 2015, which is in the sum of $1,654, AAC suggests that Staples is seeking contribution to a full year's rates. I find that AAC is obliged to contribute 20% of the annual rates of $1,776.60 reduced to reflect the fact that AAC left the premises on 9 October 2015, ie, within the fourth month of the rate year. The relevant calculation is $1,776.60 x 20% x 4/12 = $118.44.
I find that AAC has no liability in respect of electricity outgoings for the reasons given above in respect of Staples invoice No197A. The total allowance for invoice No 214A is accordingly limited to $118.44.

Australian Asset Consulting Pty Ltd v Staples Super Pty Ltd

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Judgment (250 paragraphs)

Australian Asset Consulting Pty Ltd v Staples Super Pty Ltd (Building and Property) [2016] VCAT 1726 (3 November 2016)

Parties

Legislation Cited (6)

Cases Cited (5)