Victorian Civil and Administrative Tribunal|2008-01-31|Before: Mr P

The applicant's primary case is that the old AC4 enjoyed a direct ducted supply of fresh air from the roof fan. The findings that I have made necessarily entail a rejection of that view of things. Both old AC4 and new AC4 would it seems have had access as at the time the lease was entered into to fresh air to be found in the ceiling space as supplied from the fan on the roof. I have rejected the applicant's primary case based upon the alleged removal of ducting. Nevertheless, in my view the respondents have not maintained the air-conditioning system in the same condition as it was at the time that the lease was entered into with respect to AC4. In its original configuration the old AC4 was located in the ceiling space to the right-hand side of the centrally located front entry of the building on its eastern frontage. To put it another way AC4 was to the northern side of the ground floor ceiling space. The new AC4 is to the southern side or to the left as one enters the building. Between it and the terminal of the fresh air duct from the roof fan there stand the very bulky supply ducts which carry the conditioned air to the various outlets on the floor. The photographs supplied with Mr Pang's (December) report show in my view that the existence of this supply ducting constitutes a dramatic restriction on the free air flow within the ceiling space. This relocation of AC4 does not entirely prevent it from having access to fresh air but it drastically restricts the access relative to that which the old AC4 had not being located on the wrong side of one of these bulky air ducts. There is only a few millimetres of clearance at the lower edge of the supply duct. The upper side of the duct is fitted hard against the underside of the first floor. Once again in my view the reconfiguration entailed in the replacement of AC4 means that the air-conditioning system has not been 'maintained' to the same level as it was at the time that the lease was entered into. This view of things was supported by Mr Pang in his evidence on the final day. Based on the photographic evidence I prefer Mr Pang's opinion on this point to any contrary view of Mr Boyle or Mr Lolas.

AC1, AC2 and Remaining Old Units on the First Floor

Mr Best submitted that these units were all worn out and should be replaced. There is a body of evidence and opinion, from Mr Boyle in answer to a question from me that the wise thing would be to replace these old units, in comments from a former apprentice who worked on the units, Mr Cameron Oates to the effect of their poor condition, from Mr Lolas and Mr Pang to the effect that these units were already past their design or expected lifetime. It may well be that wise lessors would replace these units. Nevertheless, Mr Klempfner submitted that in circumstances such as the present it was for the lessors to determine whether to replace or not, so long as the plant was continuing to function albeit with a higher level of service support so long as there was no evidence of extended down time as a result. I accept that submission. Here there was no evidence of any particular incident where loss was inflicted on the applicant as a result of failure of these older units. The claim with respect to the replacement of AC1 and 2 therefore fails and the same reasoning applies to the remaining old units operating at first floor level.

Mr Klempfner made extensive and telling criticisms of the manner in which the applicant's case was presented. He noted the entire absence of any quantitative measurements of the efficiency of the air-conditioning system in the premises. He also noted the absence of an attempt to call witnesses who would provide any historical perspective including those who had inspected the system and reported upon it in earlier years. Finally, he was critical of the absence for almost the entirety of the protracted hearing of any representative of the applicant company, the case was mounted entirely based upon the expert opinion of Mr Pang.
These are weighty criticisms and for the most part fully justified; nevertheless for the reasons given they do not alter the fundamental facts which I have found in these reasons. Reliance on Section 52 of the Retail Leases Act 2003 necessarily entails a comparison of the condition of fixtures, services and so forth at the time that complaint is made as against their condition when the relevant lease was entered into. The present building has been shown by the expert evidence to be deficient in fresh air ventilation. That fact in itself gives no entitlement to relief to the applicant, nevertheless where the applicant proves that the insufficiency of fresh air ventilation has increased from the time that the lease was entered into until the present time there is an entitlement to relief under Section 52 and that is the basis upon which this matter has been determined.

In its prayer for relief the applicant seeks orders that any remedial work be made in accordance with the applicable Australian standards. It seems to be common ground between the parties that the present air-conditioning configuration is not in accordance with the Australian standards. Mr Klempfner as previously noted submits that the term implied by Section 52 gives a tenant no entitled to 'upgrade' which submission I have accepted.
There is no covenant in the lease nor no covenant implied by the Retail Leases Act or otherwise nor if it matters any covenant alleged in the applicant's pleadings which would oblige the lessor to comply with a particular Australian standard. Mr Best submitted that the contractors involved in any work that might now be carried out would necessarily have to comply with the relevant standards. This was a bold assertion and I was not taken to any statute which would have that effect. It may well be that Mr Best is correct. What I am concerned with however is compliance with the lease and any statutory implied terms. If compliance with the lease entails incidentally some measure of upgrade because those involved in carrying out works must comply with the Australian standard so be it. If the roof of premises deteriorated and in accordance with the Section 52 implied covenant must be replaced, it would be no answer for a lessor to say that the sort of roof which originally existed on the premises was no longer manufactured and only a superior form of roof was available which would necessarily entail an upgrade. Similarly, if compliance with the Section 52 standard by a side wind requires the lessor companies to comply with the Australian standards so be it. If that is the consequence it is the consequence of other statutes which it has not been suggested create any private rights which this applicant is entitled to enforce. Accordingly no order that is made by the Tribunal should require compliance with any particular Australian Standard.

It is not evident to me how the roof mountings, assuming the criticisms that are made of them in the applicant's pleading, namely that they are unsatisfactory, need to be remedied by virtue of the Section 52 implied covenant. It is not suggested that the mountings are now any worse than they were at the time the lease was entered into. This part of the applicant's claim must fail.
Similarly the evidence as to the electrical connections does not as it seems to me clearly establish a breach of the Section 52 covenant. If work has not been neatly done as is alleged that does no credit to Boyle and Grigg, nevertheless it has not been demonstrated that any lack of proper 'making good' constitutes a failure to maintain as distinct from an aesthetic problem. This part of the applicant's claim therefore fails.

There was some debate as to the propriety of ordering the lessor companies to carry out works. It was suggested that this was not a proper matter for the equitable remedy of specific performance. Ultimately the parties were agreed that I should publish my reasons and stand the matter over to enable the parties to make submissions as to the proper relief or any further element in the proceedings which would follow, for instance, a claim for damages.

I have no heard no submissions on the question of costs and so I will reserve them.

My Club Pty Ltd v Samalex Nominees Pty Ltd (Retail Tenancies) [2008] VCAT 171 (31 January 2008)

My Club Pty Ltd v Samalex Nominees Pty Ltd

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Judgment (8 paragraphs)

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Cases Cited (1)

My Club Pty Ltd v Samalex Nominees Pty Ltd (Retail Tenancies) [2008] VCAT 171 (31 January 2008)