[2011] WASAT 32
General information, not legal advice.
State Administrative Tribunal (WA)
2011-02-25
Ms J
Original judgment source is linked above.
The application is, with the exception of one question, dismissed
1 The proceedings concerned several questions arising from a commercial tenancy (retail shops agreement) lease, but the most prominent question was whether the premises was used in accordance with the permitted use, namely, as a delicatessen. Other questions arising were: whether fixtures have been attached to the premises without the approval of the applicants; whether the premises or part thereof was used for any illegal purpose; and whether the respondent had an obligation to provide a bank guarantee to the applicants. The questions arose under the Commercial Tenancy (Retail Shops Agreements) Act 1985 (WA).
2 The applicants contended that the premises was not being used for a delicatessen but that the use has, over time, shifted to that of a lunch bar. The applicants said that if the overall activities of the operation are taken into account, then it becomes clear that a change had occurred to products being available for immediate consumption similar to what is expected of a lunch bar. The applicants further said that the use of a storage area as a kitchen was inconsistent with the lease and with the local government planning scheme, and that the use of the premises for food preparation was illegal. The applicants also said that several fixtures have been attached to the premises without the approval of the applicants and machinery was stored on site without the necessary approval. Finally, the applicants contended that the respondent breached the lease by failing to provide to them a bank guarantee as was required by the lease.
3 The respondent contended that the preparation of sandwiches, rolls and focaccias are in limited number of 40 60 per day and therefore, even if taken with the other limited prepared food being offered on sale, were incidental to the predominant commercial activity of the delicatessen. The respondent relied on the inventory of products that were stocked on the premises as well as the outcome of several inspections that had taken place by officials from the City of Stirling. The current operations have been accepted by the City as falling within its planning scheme as being a delicatessen. The respondent refuted that any of its activities was illegal and said the preparation of sandwiches and other food had been investigated and approved by the City. The respondent further said that the working table and cupboards were not fixtures and these can be removed at any time. The respondent also disputed that the premises had been damaged and said that the bolt that had been installed to a door to protect machinery that was stored on site has been removed and any damage repaired. Finally, the respondent acknowledged that it was responsible to provide a bank guarantee to the applicants and said it had arranged for the guarantee to be reissued after the original had not been received by the applicants. The respondent contended that its lawyers advised it against handing over the guarantee to the applicants.
4 The Tribunal found as follows in regard to the questions:
5 The application was dismissed although an order was made for the respondent to provide the bank guarantee to the applicants within seven days from the date of those orders.
6 The following questions were identified by the applicants in their amended statement of issues, facts and contentions:
7 The permitted use of the premises the subject of the application is described by the lease as a 'delicatessen'. The lease does not define 'delicatessen'.
8 The application was lodged on 9 June 2010. On 12 August 2010, the matter was referred for mediation. The mediation was not successful.
9 Leave was subsequently granted for the applicants to amend the application so as to clarify the questions that arise under the lease. The amended statement is dated 22 October 2010. The application originally included a list of defaults which were amended and, finally, further additional issues were raised during the hearing.
10 Both parties made oral and written submissions. A site inspection was conducted by the Tribunal in the presence of the parties. Ms Kay Sammut and Ms Antonia Viola, for the respondent, gave oral evidence during the hearing. The decision was reserved on 1 February 2011. The parties were given an opportunity to make final written submissions.
11 The Tribunal will reply to each of the questions separately and, in doing so, will first give its decision and then follow it with the reasons for the decision.
Is there a breach of the lease in that the premises is not being used for the permitted use namely the operation of a delicatessen?
12 The answer to this question is 'no' there is not a breach of the lease, since the Tribunal finds that the premises is predominantly operated as a delicatessen as provided for by the lease and the local government planning scheme.
The Macquarie Concise Dictionary (Third Edition) defines 'delicatessen' as follows:
A shop selling cooked or prepared goods ready for serving; usually having a noticeable proportion of continental or exotic items.
It must be noted that, other than the evidence of Ms Sammut and the contentions of Mr Carmody, there is no evidence before the Tribunal of any expert provided by the applicants.
When all the information before the Tribunal is taken into account, the Tribunal is satisfied that the proper characterisation of the predominant use of the premises is consistent with the lease, namely, a delicatessen. The items on display in the photographs, and the stock visible during the site inspection and in the inventory of all products on the premises, are clearly of the kind that would fall within the description of a delicatessen, and most certainly offer a much wider range of products than would be expected of a lunch bar. While the provision of some prepared food and sandwiches for lunch or for immediate consumption may be part of the range of products offered by the respondent, such sandwiches and prepared food are incidental to its general profile as a delicatessen. Both objectively and subjectively speaking, one could not possibly conclude that the list of items on the inventory, the photographs provided and the range of items visible during the inspection, were indicative of a lunch bar.
Delicatessen is 'a building for the sale of prepared food (including those of a continental nature) and daily grocery needs, principally to persons resident within the immediate locality. A delicatessen can sell food for immediate consumption (such as pies, rolls, sandwiches and cakes) as an incidental component to the main use[;] however, under the definitions of the Planning Scheme, these food items may not be manufactured on the site, and certainly not in bulk'.
The Tribunal takes note of the submissions of the legal representatives of the parties, and the evidence by Ms Sammut and Ms Viola, as to whether the activities, within their subjective view, are of the nature expected in a delicatessen. Their respective assessment is, however, of limited use, since they obviously have an interest in the outcome of the proceedings. If the applicants had called an expert to assess the content of the shop, its inventory and the nature of the activities, and such an expert had found that the premises was not being used in accordance with what is generally understood to be a delicatessen, their contentions may have been on firmer ground.
In the absence of an expert assessment of the activities, the Tribunal is guided for its conclusion by the inventory, observations by inspectors of the City and the Water Corporation, the photographs tendered and observations made by the Tribunal during the site inspection.
After taking into account all of such information, the Tribunal concurs with the assessment of the City's Mr Neil Duffin in his letter of 18 August 2010 when he says that 'the City is satisfied that any food preparation (included limited cooking activities) is incidental to the approved use of the premises as a delicatessen and is entirely consistent with the medium risk rating assigned to the premises'.
The Tribunal must stress that it does not seem as if Mr Duffin had come to this conclusion, as was suggested by Mr Carmody, based solely on information given to him by Ms Viola. On the contrary, the evidence is that the City had on various occasions inspected the premises and that its views were very well informed and reflective of information gathered over an extended period. Ms Sammut also acknowledged that she had brought complaints to the City and officials of the City had investigated the complaint. The inspectors of the City therefore seemed to have a very good and intimate knowledge of the entire business operation and were not merely relying on the information provided to them by Ms Viola. The City's understanding of the entire operation is evidenced by Mr Duffin saying as follows in his letter, namely, that 'all food handling operations carried out on the premises have been fully considered' by the City ... ' (Tribunal emphasis).
Although Mr Duffin was not called to give evidence, the Tribunal can take into account his assessment and, on the basis of the lack of other expert evidence, concurs with his categorisation, since it is consistent with the other evidence and information provided to the Tribunal as well as the observations made by the Tribunal during the site inspection.
14 The conclusion in reply to the first question is therefore that there is no breach of the lease, since the predominant use of the premises is for the operation of a delicatessen.
Is part of the premises being used for an illegal purpose?
15 The answer to this question is 'no' there is not a breach of cl 9.2(a) of the lease, namely, that the premises is used for an illegal purpose. The Tribunal finds that there is insufficient evidence to conclude that any part of the premises is being used for an illegal purpose as contended by the applicants.
16 The reasons for this finding in reply to the issues raised by the applicants are as follows:
17 The response to the second question is therefore that there is insufficient evidence to find that any part of the premises is being used for an illegal purpose.
Have fixtures been installed on the premises without the owner's permission?
18 The answer to this question is 'no' there is not a breach of cl 11.1(b) of the lease which provides that the respondent may not install any 'fitting, fixture, services, sign, plant, machinery, or equipment' on the premises without the approval of the applicants. There is insufficient evidence to conclude that unauthorised fixtures have been installed on the premises.
20 The Tribunal finds, in summary, that the question arising regarding the storage of machinery on the premises is without substance. The applicants did not, during the site inspection or by way of photographs, show evidence that machinery was still being stored on site or that the machinery is fixed to the premises. The Tribunal accepts the evidence of Ms Viola that the pastamaking machinery was never attached to the floors or the walls; it was only stored on site and it had been removed several months before the hearing. The suggestion by the applicants that cl 11.1 of the lease regarding attachment of a fixture, installation of machinery, or that conduct of works were conducted without the approval of the applicants is without grounds and the answer is in the negative.
Is the respondent required to provide a bank guarantee to the applicants?
There is, however, no need for the Tribunal to make any further enquiry of findings in this regard, since it is accepted by Ms Viola that she must deliver the bank guarantee.
23 In conclusion, the Tribunal makes the following findings in reply to the questions arising from the lease:
I certify that this and the preceding [23] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________