The applicant is the lessor and the respondent is the lessee of a café/takeaway restaurant and separate garage located at Malabar ("the premises"). The lease commenced on 9 December 2015 and is for a term of five years with one five year option (the lease").
The applicant seeks orders restraining the respondent from committing what it says are breaches of the lease essentially to do with the manner in which the respondent uses a shared yard, and an order for payment of the applicant's legal costs said to have been incurred by reason of the alleged breaches.
[2]
Background
The premises are located on the ground floor of a two-story building owned by the applicant ("the building"). The upper level is a residential apartment ("apartment"). A Mr Ajaka and his family occupy the apartment. At the rear of the building is a communal yard ("the yard)", a separate laundry ("the laundry") and a separate garage. The yard and laundry are designated common areas under the lease. The premises have a rear door that that faces the yard. Adjacent to that door is a flat grate over a stormwater drain. Next to it and slightly elevated is a sewerage drain covered by a grate.
The building is managed for the applicant by Mr Nick Illek ("Mr Illek"). The applicant's sole director is Ms Helen Abbott ("Ms Abbott"). The respondent's sole director is Mr Ashraf Selim ("Mr Selim".)
Sometime after the lease was signed, an external spiral staircase was constructed at the rear of the building to permit the apartment occupants to enter and leave there via the yard. Prior to the construction of the staircase, the occupants entered and exited the apartment through the premises. At ground level there is a narrow gap between the staircase and the external rear wall of the premises.
Prior to entering into the lease, the applicant leased the premises to Beachside Bakery Pty Ltd which conducted the café business from there under the name Beach Café Malabar. That company was owned by Mr Ajaka. In December 2015, he sold Beach Café Malabar to the respondent. At the same time the applicant sold the furniture, fixtures and fittings inside the premises to the respondent. One of the items sold was an ice making machine. It is common ground that this particular machine was subsequently replaced by the respondent.
Since about August 2016 there has been an ongoing dispute between the parties predominantly to do with the respondent's use and the state of the yard and, to a slightly lesser extent, with its use and state of the laundry. Extensive correspondence passed between the parties' legal advisers or between Mr Illek and Mr Selim over these matters.
In short, the applicant complained that in breach of the lease the respondent was:
leaving the yard in a dirty state;
leaving milk crates and bread baskets out in the yard;
not promptly removing from the yard deliveries to the respondent's business that had been left there for collection;
causing a nuisance to the tenant occupying the upstairs apartment due to the odours permeating into the tenant's kitchen from mops and buckets hung below off hooks screwed into the external rear wall of the premises
hosing off rubber floor mats containing waste over the stormwater drain in the yard and leaving them there to dry;
leaving the laundry in a dirty state and storing an ice machine there;
in storing the ice machine in the laundry the respondent was putting the applicant's insurance coverage at risk; and
playing loud music from the premises;
Also thrown into the mix was an issue as to whether the lease entitled respondent its own letterbox instead of one shared with Mr Ajaka.
In summary the respondent:
disputed that it had not kept the yard clean;
claimed that it was entitled to clean the mats in the yard which was the practice of the previous lessee;
cleaning the mats in the yard constitutes a reasonable use of the common area;
crates have always been stored in the common area as the previous lessee had done, and deliveries are collected and stored as soon as they arrive;
the the ice machine was stored in the laundry by the previous lessee and therefore it was entitled to also keep it stored there; and
in following the practices of the previous owner of the business conducted from the premises, it was relying on what was represented to Mr Selim by Mr Ajaka who had previously been in a relationship with Ms Abbott and was the source of some of complaints made about the respondent's activities.
It is common ground that since the respondent purchased the business, there has been tension between Mr Selim and Mr Ajaka.
In the course of this ongoing dispute, the applicant served a number of breach notices on the respondent. In September 2016 three notices were served. Relevantly, one of the notices alleged that the respondent was using the common property for a purpose other than access to and egress from the property, failing to keep the property clean and failing to properly dispose of waste.
In 17 January 2017, the applicant's solicitors wrote to the respondent's solicitors about excessive noise coming from a sound system first thing each morning and in the afternoon on weekdays and especially Friday and Saturday evenings around 9.00 PM when the café was closing. The letter said this noise was amongst other things disturbing the upstairs tenant. The respondent disputed that the noise was excessive describing it as only ambient music.
In May 2017, two further breach notices were served by the applicant on the respondent. One of the notices again alleged that the respondent was in breach of the lease for using common property for a purpose other than for access to and egress from the property, and for failing to keep the property clean.
On 28 February 2018 the parties attended a mediation but were unable to settle the dispute.
On 9 March 2018 the applicant's solicitors wrote to the respondent's solicitors stating the applicant's position in relation to various issues that were still unresolved. They were: -
milk crates were to continue being stored in the far corner of the yard for removal by suppliers during the daily milk deliveries
mops are only to be stored between the shed and garage and no other cleaning items such as buckets and brooms are to be stored in the yard
the ice machine is not to be installed in the laundry as it could result in a claim under the buildings insurance policy being reduced or refused
mats are not to be cleaned in the yard until council confirms it is permitted
mail is to continue to be placed in the sole letterbox near the rear gate
daily deliveries will be permitted to remain in the yard until staff arrive in the morning and at other times will be promptly removed from the yard area if they are left there and
the lessors right in respect of the loud music is reserved.
On 9 June 2018, Mr Illek sent an email to the Environmental Health Officer at Randwick Council seeking advice on whether the respondent was allowed to store the ice machine in the laundry, and also whether the respondent was allowed to dispose of its café floor waste into the stormwater drain located in the yard.
A Senior Environmental Health Officer at Randwick Council responded by email on 14 June 2018 to Mr Illek and, relevantly said this:
The manager of the café was spoken to regarding ensuring that the ice machine is stored within the approved food preparation and/or storage areas and not in the common laundry. In addition, the manager was also advised that under no circumstances must waste water from the food business into the stormwater drainage system, as this constitutes a water pollution offence under the Protection of the Environment Operations Act 1997."
Mr Illek sent a further email to the Senior Environmental Health Officer at Randwick Council on 15 June 2018 seeking advice on the respondent's cleaning of kitchen rubber floor mats in the yard using a high-pressure hose to remove oil, grease, food and general waste from the mats. The email reply from the Council officer relevantly said this:
Please be advised that the concerns raised has (sic) been discussed with the proprietor as such activity also constitutes a water pollution offence under the Protection of the Environment Operations Act 1997.
The owner has assured Council that no waste water will be emptied into the stormwater drainage system at any time.
On 24 October 2018, Mr Illek sent an email to Randwick Council complaining that the respondent was continuing to hose off dirty kitchen floor mats from the premises into the stormwater drain in the yard. On 9 November 2018 an Environmental Health Officer from the Council sent an email to Mr Illek which relevantly reads as follows:
In response to the concerns you raised, Council's officers attended the premises to undertake a full investigation. The owner of the café was advised that under no circumstances must waste water from the food business into the stormwater drainage system, as this constitutes a water pollution offence under the protection of the environment operations act 1997. A warning letter has been issued to the proprietor and a follow-up inspection will be undertaken to ensure that no waste water is entering the stormwater drainage system.
[3]
The application
In the application, which was filed on 1 May 2018, the applicant sought the following relief:
1. An order that the respondent refrain from storing its milk crates in the common area (the yard) anywhere other than stacked neatly in the far south western corner of the yard next to IPG Cylinders.
2. An order that the respondent refrain from storing its mops and brooms in the yard other than on hooks or hangers between the shed and garage in accordance with the Lessor's consent given to the respondent's point request to store them there.
3. An order that the respondent refrain from storing no other cleaning equipment in the yard, for example mop buckets.
4. A declaration that the respondent is not entitled under the lease to store its ice machine or any other cafe equipment or items in the laundry or yard.
5. An order that the respondent refrain from storing its dirty laundry in the laundry.
6. An order that the respondent refrain from cleaning its floor mats in the yard.
7. An order that the Lessee refrain from disposing of its floor water waste in the Yard.
8. An order that the Lessee remove its deliveries from the yard: -
1. in the case of deliveries made before the cafe opens, as soon as the first staff arrive in the morning;
2. in any other case, as soon as practicable after delivery.
1. An order that the Lessee (and its employees and agents) refrain from playing music at volume levels which affects the quiet enjoyment of the upstairs tenant.
2. An order that the Lessee keep the yard and laundry clean and that, other than the items mentioned in orders 1 and 2 above, it store no other items in the Yard or Laundry.
3. An order that the parties' mail continue to be received in the sole letterbox near the rear gate and the Lessee leave any mail not addressed to it in the letterbox.
4. An order that the Lessee pay the Lessor's legal costs relating to the Lessee's unauthorised use of the common area and its use of the property causing annoyance/nuisance to other tenants in the building in the amount of $4,182.75 including GST.
By the time the application came before the Tribunal, the number of issues in dispute between the parties had been significantly reduced.
[4]
Jurisdiction
It is not in dispute that the lease is a retail shop lease, the application is a retail tenancy claim as defined under the Retail Leases Act 1994 ("the Act"), and the orders sought by the applicant are within the Tribunal's power under section 72 of the Act.
[5]
Relevant provisions of the lease
The lease is a 2007 version of The Law Society of New South Wales commercial lease. For the purposes of these proceedings, the following provisions of the lease are relevant:
1. clause 3.4 which provides as follows:
If the property has facilities and services shared in common with other persons in the same building as the property, clause 11.3.2 applies to those common facilities. The lessee shares the common facilities with the lessor, and with other lessees of the lessor. The lessor can set reasonable rules for sharing these common facilities.
1. Clause 5.1 which relevantly provides that the lessee must pay to the lessor as the lessor directs -
the reasonable cost to the lessor of remedying a default by the lessee.
1. Clause 6.1 which relevantly provides that the lessee must:
6.1.3 keep the property clean and dispose of waste properly
1. Clause 6.3 which relevantly provides that the lessee must not:
6.3.1 do anything that might invalidate any insurance policy covering the property or that might increase the premium unless the lessor consents in which case the lessee must pay the increased premium
6.3.2 use the property as a residence or for any activity that is dangerous, offensive, noxious, illegal or immoral or that is or may become a nuisance or annoyance to the lessor or to the owner or occupier of any neighbouring property
6.3.6 without the prior written consent of the lessor and/or the owners corporation, use the common property for any purpose other than for access to and egress from the property.
1. Clause 11.3 which relevantly provides that the lessor must:
11.3.2.1 allow reasonable use of the facilities and service connections including -
the right for the lessee and other persons to come and go to and from the property over the areas provided for access;
access by the lessee to service connections; and
the right for the lessee's customers to park vehicles in any area set aside for customer parking, subject to any reasonable rules made by the lessor.
1. Clause 19 which relevantly provides that the premises include:
the ground floor café and garage area. The parties acknowledge that the external laundry and yard are common property to which clause 11.3.2 applies.
1. Clause 31 relevantly provides as follows:
31.2 the lessee acknowledges and warrants to the lessor that it is not relying upon anything the lessor or any other personal behalf of the less or has given to the lessee or told the lessee apart from the information which has been included in this lease.
[6]
Evidence
The applicant's evidence consists of two unsworn but signed statements by Mr Illek. The first statement was in chief and the second in reply. The first statement is dated 20 June 2018 and includes a large bundle of documents. They predominantly consist of the lease, a contract between the parties for sale of the fixtures and fittings in the premises, correspondence between the parties' representatives, a number of coloured photographs taken of the yard area over a period of time and correspondence with officers of Randwick Council.
In his statement, Mr Illek describes himself as the applicant's accountant and business advisor to its sole director, Ms Ablett. He also says that he is the attorney under a power of attorney given to him by the applicant. A copy of the power of attorney dated 8 May 2018 is included in the bundle of documents that accompanied his statement. Mr Illek says that since the respondent took occupation of the premises in December 1915, he has managed the tenancy on the applicant's behalf.
Mr Illek describes the history of the disputes in his statement by reference to the correspondence between the parties legal advisers, between Mr Illek and Mr Selim and with Randwick Council.
It is common ground that the correspondence between the parties and their representatives included in the bundle of documents sets out their respective positions on the issues in dispute.
The respondent's evidence consists of an affidavit sworn on 28 July 2018 by its director and shareholder, Mr Ashraf Selim, and an affidavit sworn by Mr Hasan Bhuiyn also on 28 July 2018. Annexed to Mr Selim's affidavit is a copy of the contract for sale of business between his company and Beach Side Bakery Pty Ltd and a number of what are described as recently taken photographs of the café and the yard.
In his affidavit, Mr Selim describes how he came to purchase the café business from Beach Side Bakery Pty Ltd. He said he met with Mr Ajaka to discuss the operations of the café business which he says he observed for a few hours during its opening and closing hours. He also sets out what he claimed was said to him by Mr Ajaka in relation to the way in which the café business operated. Relevantly, he said that Mr Ajaka:
1. showed him where on the rear wall of the premises, there were screws and hooks on which mops brooms and buckets were held and, he informed him that "given the little storage space inside the café, this was the best place to keep them"; and
2. in answer to Mr Selim's question: "Given there is so little space inside, and it's not safe to wash inside anyways for hygiene purposes, where do you wash install these floor mats?" he said: "We sweep any floor food items off the mats with a broom, and then take them outside to the courtyard at the end of the business hours for a quick hose to ensure they are clean the next day".
Mr Selim described how Mr Ajaka worked for him for approximately two weeks after he took over the café and then left as did a number of the staff. He described Mr Akaka as being "disruptive in respect to the trading of the café business." According to Mr Selim, all of the issues raised by the applicant in the correspondence "relate to complaints and/or evidence from the "upstairs tenant", who is Mr Ajaka."
Mr Bhuiyn is a chef and currently employed by the respondent. He was previously employed by Mr Ajaka's company, Beach Side Bakery Pty Ltd. In his affidavit Mr Bhuiyn describes the operation of the café business prior to it being acquired by the respondent and the departure of staff from there not long after the acquisition. He also says that after the respondent took over the café business in December 2015 it continued to operate in exactly the same manner when managed by Mr Ajaka.
Mr Illek's second statement is dated 9 November 2018. It is in reply to Mr Selim's affidavit of 28 July 2018. Attached to the statement is an email from a Mr Paul Pace to Ms Abbott regarding the finalisation of negotiations with the respondent on the sale of the beach Café business and the terms of the lease, and emails between Mr Illek and officers at Randwick Council.
In the statement, Mr Illek says that:
1. he was not aware of Mr Ajaka having any communications with the respondent or Mr Selim regarding the lease negotiations, and that all such negotiations were handled by Mr Pace;
2. to the best of his knowledge the previous tenant of the premises did not hose the café floor mats in the yard or dispose of that wastewater in stormwater drain, nor was he aware of the previous tenant having sought the applicant's consent to do any of those things;
3. on his visits to the premises, usually around closing time, he never witnessed the previous tenant or staff washing mats other than within the kitchen area inside the premises and that the previous tenant stored its mops and brooms in the garage not on the rear wall of the building;
4. the screws and hooks drilled into the wall were installed sometime after the current lease commenced without the applicant's consent and when they were discovered, and following demands being made to the tenant to remove them, which they did not do, arrangements were made for their removal on behalf of the applicant; and
5. it was brought to his attention on 21 October 2018 that the respondent's staff were hosing and emptying the café's garbage bin waste directly into the stormwater drain and a few days later he re-commenced corresponding with Randwick Council.
[7]
Hearing
At the hearing the applicant was represented by Ms Borodin, solicitor, and the respondent was represented by Mr Knoll of counsel. Both Mr Illek and Mr Selim were cross examined at the hearing. Mr Bhuiyn was not required for cross examination.
The evidence of both witnesses was generally in accordance with the evidence in their statements or affidavit.
[8]
Issues
Submissions dated 21 June 2018 and supplementary submissions dated 26 November 2018 were filed by Ms Borodin.
In the supplementary submissions, Ms Borodin said that the following issues appear to be the only issues that remain in dispute:
1. whether the applicant is entitled to require the tenant to refrain from storing its mops and buckets on the wall under the upstairs tenants unit; and
2. whether the applicant is entitled to require the tenant to refrain from disposing of its wastewater in the common yard and stormwater drain.
Ms Borodin also said that order 9 of the application was not pressed. By order 9, the applicant sought an order that the respondent refrain from playing music at volume levels which affect the quiet enjoyment of the upstairs tenant. Ms Borodin explained that the order was not pressed because the lease "is clear on its terms that the lessee must not use the property for any activity that is or may become a nuisance or annoyance to the less or an occupier of any neighbouring property which would include the playing music at volume levels which affects the quiet enjoyment of the upstairs tenant (clause 6.3.2)."
As to the other orders being sought by the applicant, Ms Borodin said this in her supplementary written submissions:
While the other issues in the Application appear to be substantially resolved, the Applicant nevertheless presses for declaratory relief in order to "bring clarity to the parties respective obligations and to avoid future disputes arising between the parties on the issues contained in the Application.
Ms Borodin's oral submissions were generally confined to the two issues she identified as remaining in dispute.
Mr Knoll's written outline and oral submissions were likewise generally confined to the two issues identified in Ms Borodin's supplementary submissions as those that remain in dispute. He also provide brief submissions on the applicant's claim for costs.
Ms Borodin did not refer to costs in her supplementary submissions but the Tribunal assumes, as Mr Knoll presumably did as well, that it also remains a live issue.
In the Tribunal's view, what Ms Borodin is in effect asking the Tribunal to do by pressing for declaratory relief in respect of issues that are no longer in dispute is to give a hypothetical or advisory opinion on those issues. It is not, however, the role of the Tribunal to give an advisory opinion on issues that are moot (see: Schultz v NSW Land and Housing Commission [2015] NSWCATAP 35 and Commissioner of Police, NSW Police Force v Field [2016] NSWCATAP 59). In addition, if issues in respect of the lease have been resolved, then no "retail tenancy claim" as defined by section 70 of the Act exists in respect of those issues which means the Tribunal is unable to exercise the power vested in it under section 72 of the Act.
Accordingly, the issues to be determined are those identified by Ms Borodin as the ones that remain in dispute and the applicant's claim for costs.
[9]
Whether the applicant is entitled to require the tenant to refrain from storing its mops and buckets on the rear external wall of the premises under the upstairs tenant's apartment
The issue as to whether the mops and bucket can be hung on the rear external wall of the premises comes down to whether the wall forms part of the premises demised to the respondent.
The evidence is that at some point in time after the respondent entered into the lease, the mops and buckets it was using in its business conducted from the premises were being hung from hooks screwed into the external wall of the premises next to the spiral staircase leading to the apartment above.
The applicant asserts that complaints had been received from the tenant residing above the premises (and it is common ground that the tenant is Mr Ajaka), that a strong odour was permeating into his kitchen and bedroom from the dirty mops and buckets. This was not disputed by the respondent. It is also common ground that the nails and hooks were removed by a maintenance contractor on behalf of the applicant after requests made of the respondent to do so. Mr Illek said that as he recalled:
… the previous tenant stored its mops and brooms in the garage, not on the rear wall of the building (besides the stairs to the upstairs tenants apartment, directly below the upstairs tenants kitchen) as alleged by Mr Selim… The screws and hooks drilled into this wall were installed sometime during the current lease without (the applicant's) consent.
Mr Selim's evidence is that after he acquired the business from Mr Ajaka, all of the business operations were running as they were when it was managed by Mr Ajaka. In particular, he says this in his affidavit:
Mops, brooms and buckets were kept in the courtyard area by being attached to the screws and hooks which had been attached to the rear wall of the leased premises.
In his affidavit, Mr Bhuiyn describes the operation of the café business from the premises when the café was owned by Mr Ajaka's company. Relevantly he says this:
When we cleaned the leased premises, we would use mops, brooms and buckets that were hung on screws and hooks that were drilled into the rear wall of the lease premises.
It is to be noted that Mr Ajaka did not provide a statement or give any oral evidence. As the previous tenant of the premises who operated the café business from there, his evidence as to whether the mops and buckets were hung from hooks on the rear wall during the time he occupied the premises would have been crucial.
Given Mr Bhuiyn's evidence on this issue and the fact that he was not cross examined, and the inference drawn from that and the fact that Mr Ajaka was not called to give evidence, the Tribunal is comfortably satisfied, and accordingly finds, that mops and buckets were hung from hooks and screws drilled into the rear external wall of the premises when Mr Ajaka's company leased the premises, and those hooks and screws remained affixed to the wall from the time the respondent commenced to lease the premises until they were later removed by the applicant.
As the Tribunal understands it, the applicant submits that:
1. The storing of the mops and buckets on hooks on the external wall of the premises is a breach of clause 6 of the lease, in particular sub-clause 6.3.2 which prohibits using the property for any activity that is or may become a nuisance or annoyance to the applicant or an occupier of any neighbouring property;
2. that clause 19 of the lease provides that the yard and external laundry are common property and pursuant to clause 3.4, if the property has facilities and services shared in common with other persons in the same building, the applicant can set reasonable rules for sharing these common properties; and
3. the applicant has set rules for the use of the common property facilities requiring the respondent to remove items stored there such as mops and buckets.
The applicant's evidence does not identify any formal "rules for the use of the common property facilities". One would normally expect to see in a lease copies of rules for the use of common property yet nothing of that nature is in evidence. The Tribunal assumes that what is being referred to in the supplementary submissions as rules set by the applicant is really no more than the correspondence from the applicant's solicitors or Mr Illek to the respondent requiring the respondent to refrain from storing on hooks underneath the spiral staircase leading to the apartment.
On behalf of the respondent, Mr Knoll submits that:
1. The demise of part of the building to the respondent necessarily includes the external walls of such part as was demised. Baier and anor v Heinemann [1962] Qd R 192 at 199 ("Baier") is cited in support of this submission;
2. pursuant to clause 3.2 of the lease, the demise included the applicant's fixtures, they being screws and hooks in the rear wall of the premises where mops and brooms were hung at the time the lease commenced;
3. the photos show that the screws and hooks have been removed and, it is submitted, the applicant had no right to do so in breach of the respondent's quiet enjoyment of the lease;
4. clause 11.3.2 relevantly provides that "if the property has facilities and service connections shared in common with other persons the lessor must - allow reasonable use of the facilities and service connections…" It must be common ground that this provision applies and the yard, which abuts the external wall that has been demised, is such a facility and that storing mops and buckets outside to allow them to dry is a reasonable use so long as they do not interfere with the residential tenant's use of the yard.
The submissions raise three issues for determination:
1. Is the external wall part of the demised premises and if it is, does the demise include the screws and hooks?
2. Does the storage of the mops on the said hooks constitute a nuisance within the meaning of clause 6.3.2 of the lease?
3. Is the respondent permitted to store the mops and buckets in the yard by reason of clause 11.3.2 of the lease?
Before dealing with these issues there is one aspect of this dispute that the Tribunal should deal with and that concerns the respondent's allegation that there was a related party relationship between Mr Ajaka and Ms Abbott.
In his evidence, Mr Selim goes into some detail as what he says was represented to him by Mr Ajaka, prior to taking the lease, about the way in which the café business was conducted from the premises. He also describes the relationship between Mr Ajaka and Ms Abbott. He referred to that relationship as "related party nature between (Mr) Ajaka and (Ms) Helen Ablett (the director/shareholder of the lessor company)". What Mr Selim seems to be asserting is that having relied on Mr Ajaka's representations he adopted practices, practises which the applicant says are in breach of the lease, however, given the relationship between Mr Ajaka and Ms Abbott, these practices did not constitute breaches of the lease. The respondent also seems to be seeking to rely on the fact that Mr Ajaka resides in the apartment above the premises and portrays him as the cause of the complaints and someone who has a hidden agenda. In his outline of submissions Mr Knoll referred to the Ajaka/Abbott relationship and Mr Ajaka's occupation of the apartment in a more circumspect way and certainly not with the same conviction as Mr Selim regarding its relevance to the issues at hand.
In the Tribunal's view what if anything Mr Ajaka may have said to Mr Selim about the operation of the café business prior to the respondent entering into the lease, any historical relationship between Mr Ajaka and Ms Abbott or the fact that Mr Ajaka resides in the upstairs apartment, is irrelevant. The applicant's evidence, which the respondent does not dispute, is that all contact between the parties over the lease negotiations was handled by Mr Paul Pace. Mr Selim also acknowledges in his affidavit that he did not have any direct communications with Mr Ajaka in relation to the purchase of the café business. Furthermore, clause 31.2 of the lease contains an acknowledgment and warranty by the respondent that in entering into the lease it does not rely on anything applicant or anyone on its behalf gave to or told the respondent, apart from what is in the lease.
[10]
Is the external wall part of the demised premises and if it is, does the demise include the screws and hooks?
On behalf of the respondent it is submitted that the external rear wall of the premises is part of the demise and the demise included the applicant's fixtures being the screws and hooks. In support of this submission, the respondent relies on the decision in Baier.
Briefly stated, the defendant in Baier was the lessee of a guest house owned by plaintiff. The plaintiff resided in a flat below the guest house. The electricity supply to the flat was by way of a sub-meter the switchbox to which was attached to the rear wall of the building near the back door of the guest house. It had been there since prior to the parties entering into the lease. The defendant cut off the electricity supply to the plaintiff's flat. As a consequence, the plaintiff alleged that the defendant was in breach of clause 5 of the lease and gave notice terminating it. Clause 5 was a covenant by the defendant "not to do or suffer to be done in or upon the demised premises or any part thereof any act matter or thing which shall be or may become a nuisance damage or annoyance to the lessors in the lessor's said building".
In his decision, Gibbs J (as his Honour then was) relevantly said this:
However, it is clear, and it was not disputed, that the demise of part of the building would include the external walls of such part as was demised. Clause 15, which restricts the lessee's right to a fix advertisements to the outside of the demised premises is consistent only with the view that the parties intended that the external walls would be included…. Therefore, in my opinion, the switchbox, which was on the wall at the time when the agreement was made, was included in the demise, either because it formed part of the external wall, or by reason of the principal that a demise will include anything reasonably necessary for the enjoyment of the thing demised.(at page199)
Professor Brendan Edgeworth in Butt's Land Law (7th Edition) also observes that a "lease of land and buildings prima facie comprises the whole of the buildings including the external walls." (at 7.100)
Ms Borodin did not address the submission that the external rear wall and the screws and hooks affixed to it were part of the demise.
Having regard to the principle enunciated in Baier and confirmed by Professor Edgeworth, the Tribunal finds that the rear external wall of the premises is part of the demise to the respondent. In addition, having found that the screws and hooks were affixed to the wall prior to and at the time the respondent entered into the lease with the applicant, the Tribunal also finds that the screws and hooks were included in the demise for the same reason that Gibbs J, found that the switchbox in Baier was part of the demise, that is, because they either "… formed part of the external wall, or by reason of the principle that a demise will include anything reasonably necessary for the enjoyment of the thing demised."
[11]
Does the storage of the mops on the said hooks constitute a nuisance within the meaning of clause 6.3.2 of the lease?
The applicant claims that the tenant occupying the apartment complained about "the bad odour permeating around the staircase and above and into the kitchen and bedroom" from the mops and brooms that were hung below on the rear external wall next to the staircase.
As the Tribunal understands it, the applicant's contends that clause 6.3.2 of the lease prohibits the respondent from using the property for any activity that may be a nuisance or annoyance to the applicant or any occupier of any neighbouring property.
It appears the applicant's evidence of the complaint by the upstairs tenant of odours permeating into the tenant's kitchen and bedroom are not challenged by the respondent. It also appears from the evidence and Mr Knoll's submissions that the respondent now stores its mops, brooms and buckets elsewhere.
Mr Knoll did not specifically address this issue in his submissions, presumably because he considered it to be unnecessary with the mops and buckets no longer being store on hooks affixed to the rear wall of the premises. In the circumstances, is not necessary for the Tribunal to make a finding on this issue but simply make the observation that if mops and buckets stored on those hooks permeate an odour which causes annoyance or a nuisance to the occupant's of the apartment, it is open to the applicant to seek relief for breach of clause 6.2.3.clause.
[12]
Is the respondent permitted to store the mops and buckets in the yard by reason of clause 11.3.2 of the lease?
Mr Knoll also submitted on behalf of the respondent that storing the mops and brooms in the yard to dry was a "reasonable use" of that facility within the meaning of clause 11.3.2 of the lease.
Ms Borodin submits that the respondent has not provided any valid reason why it must store its mops brooms and buckets in the yard and observes that the demised premises includes a garage and the items could be stored there.
Mr Knoll says that storing of the mops brooms and buckets outside to dry is a reasonable use so long as they do not interfere with the residential tenant's use of the yard. He also points to the premises having limited storage space something he says was pointed out to Mr Selim when he was shown the premises by Mr Ajaka.
Clause 19 of the lease contains an acknowledgement by the parties that the external laundry and yard are common property to which clause 11.3.2 applies.
Clause 11.3.2 relevantly provides that the lessor must allow reasonable use of the facilities including the right for the lessee and other persons to come and go from the property over the areas provided for access, access to service connections and the right for the lessee's customers to park vehicles in any area set aside for the customer subject to any reasonable rules.
In the Tribunal's view, as a matter of construction clause 11.3.2 does not either expressly or by implication permit the storing of the respondent's mops and buckets outside in the yard to dry or for that matter permitting the storage in the yard of any other items used in connection with the operation of its business. Granted the clause, in describing what amounts to "reasonable use", lists the items as "including" those specified, which would suggest that it is not a closed or finite list. That, however, does not mean that it also contemplates the storage of items belonging to the tenant in the yard. Rather the words used contemplate a limited and temporary use of the yard such as crossing it to go from one part of it to another, a construction that is consistent with clause 6.3.2 that prohibits the lessee from using the yard for anything other than access to and egress from the premises unless the applicant has given its prior written consent.
Accordingly, the Tribunal finds that the storing of the respondent's mops and buckets in the yard to dry is not a reasonable use within the meaning of clause 11.3.2 of the lease.
This conclusion does not affect the Tribunal's finding in relation to the demise of the external rear wall and the hooks affixed to it.
[13]
Whether the applicant is entitled to require the tenant to refrain from disposing of its wastewater in the common yard and stormwater drain.
The next issue for determination is whether or not the applicant is entitled to require the tenant to refrain from disposing of its wastewater in the common yard and stormwater drain.
The lease imposes upon the respondent a number of obligations including the requirement that it properly dispose of wastewater (clause 6.1.3) and not use the property for any activity that is illegal (clause 6.3.2).
The applicant's evidence is that the respondent has repeatedly been cleaning its kitchen mats over the stormwater drain. Randwick Council has in correspondence, which is in evidence, made it clear that the disposal of waste water from the food business to enter the stormwater drainage system as it constitutes a water pollution offence under the Protection of the Environment Operations Act 1997.
This does not appear to be disputed by the respondent. In his submissions Mr Knoll said this:
The resolution of (the dispute involving the disposal of wastewater) occurred on 9 November 2018, when Randwick City Council issued to the respondent a lettered dated 9 November 2018 warning against wastewater being hosed down a stormwater drain. Since June 2018, they are washed inside and only placed outside to dry.
The respondent does not wish to persist with an activity that is impermissible and accepts that wastewater must now be directed to the sewerage drain. The attached draft short minutes of order provide an appropriate undertaking in that regard.
The undertaking proffered by the respondent in relation to the disposal of liquid waste was in the following terms:
The Respondent will dispose of sediment and liquid floor waste into the sewerage drain rather than the stormwater drain.
The undertaking was part of a two part package proffered by the respondent which was not accepted by the applicant. It is therefore not necessary for the Tribunal to consider the appropriateness or otherwise of that undertaking. It is sufficient for the purposes of this issue for the Tribunal find, as it does, that the disposal of waste water by the respondent in the stormwater drain located in the yard would be in breach of the lease.
[14]
Applicant's claim for costs
The applicant seeks an order that the respondent pay the applicant's legal costs "relating to the (respondent's) unauthorised use of the common area and its use of the property causing annoyance/nuisance to other tenants in the building in the amount of the sum of $4182.75 including GST." An itemised bill of costs for the period 17 August 2016 to 9 March 2018 has been provided by the applicant's solicitors.
Ms Borodin has made the following submissions in relation to the claim for costs:
1. Clause 5.1.3 of the lease provides that the respondent must pay the applicant 'the reasonable cost to the lessor of remedying a default by the Lessee'.
2. The applicant has provided an itemisation of its legal costs for engaging solicitors to remedy the respondent's various defaults under the lease.
3. The applicant has been put to unnecessary expense by reason of the respondent's unreasonableness and unwillingness to co-operate on the issues. Had the respondent complied with the applicant's requests (which it submits were reasonable in the premises of these submissions), then those costs would not have been incurred.
4. Accordingly, the applicant says it should be entitled to the costs claimed.
Mr Knoll made the following submissions in relation to the claim for costs.
1. It was after a meeting on 29 March 2018 between Mr Illek and Mr Selim that the applicant commenced these proceedings.
2. By the time of that meeting the issue of waste water remained a live issue. As to mops, Mr Selim made the rather obvious point that mops needed to be stored where there is more space for example behind the waste oil container.
3. Given that the issues had narrowed to the point that they had by March 2018, and have now similarly narrowed again, there is a real question as to whether it was reasonable for the applicant to seek orders as extensive as those sought in the application.
4. Nevertheless, it is the respondent's position that each party should bear their own costs given the very narrow scope of the issues in dispute and the reality that the significant issue relating to wastewater was effectively determined only on 9 November 2018 following the Inspection of Council officers.
The applicant's solicitor's bill of costs describes in some detail the work that was undertaken by them on behalf of their client. However, a careful reading of the bill discloses that a relatively small proportion of the work was attributable to the storage of mops and buckets and even less to the cleaning of mats in the yard which related to the disposal of wastewater via the stormwater drain. In other words, the vast majority of the costs claimed deal with matters that the Tribunal was not required to determine. In those circumstances and given the conclusion that the Tribunal has come to in relation to the storage of the mops and buckets and the disposal of wastewater in the yard, the Tribunal declines to order the respondent to pay the applicant's legal costs in the amount claimed.
[15]
Orders
Accordingly the tribunal makes the following orders:
1. A declaration that the rear external wall of the premises and the screws and hooks affixed to it prior to and at the time the respondent entered into the lease are part of the demise to the respondent.
2. A declaration that the storing of the respondent's mops and buckets in the yard to dry is not a reasonable use within the meaning of clause 11.3.2 of the lease.
3. A declaration that the disposal of wastewater by the respondent in the stormwater drain located in the yard would be in breach of the lease.
4. The application is otherwise dismissed
[16]
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 22 May 2019