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[2011] VCAT 1160
Victorian Civil and Administrative Tribunal
2011-06-20
Mr P
Original judgment source is linked above.
NOW THAT WE KNOW THE COST OF RESOLUTION: We expect the Landlord to pick up the cost of the entire roof report of estimated to be $125,000. [sic]
The rent negotiations appear to be going no where. Accordingly we require that a valuer be appointed to determine in accordance with the lease.
Please note that we are advised by the Owners Corporation that the roof has been repaired and they are in the process of installing four overflow pipes in the gutter.
As to the roof repair: My understanding is that the roof repair, would in essence [be] a replacement, encompassing major effort and funds, upwards of over $100,000. It does not seem possible in the time sense I provided you this information that an adequate replacement/repair has been performed.[sic]
Roof: I have spoken with our management in Australia and they do not believe any major repair or replacement of the roof has taken place. Please forward all invoices showing the work recently done on the roof, to my attention.
The Lessor shall be responsible for maintaining the building in good repair and condition including its structural integrity and ensure that the roof and drainage system are maintained.
... the Lessor at the request of the Lessee hereby demises unto the Lessee subject to the covenants, conditions, power and provisos contained in the Original lease but amended as set out in the terms of this Deed all of the leased premises ... [Emphasis added]
1(a) The [210] Lessors must pay to the tenant $57,500 in full and final settlement of:-
(ii) cost of repairs to the roof of the lease premises up to and including 15 July 2009;
(c) Within 120 days the [210] Lessors must undertake at their own cost and expense all necessary and proper repairs, alterations, additions and improvements to the roof of the leased premises and otherwise comply with clause 2(b) of the lease.
(d) Until such time as the [210] Lessors have complied with clause (c) above the tenant will notify the [210] Lessors in writing of any issue[s] which relate to or concern the state of repair and condition to the roof of the leased premises. [Communication to be with Mr Robert Cukierman]
(e) The [210] Lessors must, within a reasonable period of time after receipt of notice of the kind referred to in clause (c) above, effect all necessary and proper repairs, alterations, additions and improvements to the roof of the leased premises as may be reasonably required to ensure that the roof is in good order and condition. The [210] Lessors must bear all costs and expenses to comply with this clause (e).
(f) If the [210] Lessors fail, refuse and/or neglect to effect all necessary and proper repairs to the roof of the leased premises within a reasonable period of time after receipt of the notice ... the Tenant may, in its absolute discretion (after written notice to the [210] Lessors) effect all necessary and proper repairs, alterations, additions and improvements to the roof of the leased premises as may be reasonably required to ensure that the roof is put in good order and repair. The [210] Lessors must reimburse the Tenant the cost and expense of all such repairs, alterations, additions and improvements undertaken under this clause (f).
"building" means "the building of which the demised premises forms part"...
the demised premises comprise that part of the building falling within the boundaries of unit 2 as set out above.
... subject to s52 of the Act, strata plan 026183R and the terms of the current lease ...
The Lessor covenants to maintain the Premises in a structurally sound, waterproof and windproof condition, including, without limitation, maintaining all gutters and drainage systems servicing the Premises.
... Mr Mujedinovski ... has generally stated that it is the responsibility of the [Owners Corporation] to maintain the roof and effect repairs, and that as he does not have a controlling vote on the [Owners Corporation], he is not able to force the [Owners Corporation] to undertake the work required to rectify the issues with the roof and the water leaks.
On 18 February 2011, Mr Mujedinovski called me and indicated that he would be replacing the rotten window frame at the front left of the Dandenong store. He also stated to me that in any appearance in relation to the present Proceeding, he would state that the roof should be replaced and he believed that the other landlords and the [Owners Corporation] should be ordered to do so. Mr Mujedinovski also told me that he would comply with a court order in relation to the roof at the Dandenong store.
The valley gutters are each divided into four segments. I understand there are down-pipes at each divider, but my attention was only drawn to the double down pipes approximately at the mid point of the valley gutters.
There is a line of west-facing highlight windows of around 700mm high at the step-down.
*As corrosion is beyond repair or reseal, roof sheeting is to be replaced
* Box gutter, wall cladding and flashing to be replaced
* Downpipes to be reinstalled to original size of 100mm-150mm
* Levelling of the building and computer levelling
*Further fees will be incurred if any bearer or floor joist needs to be replaced
* Remove and replace cappings, flashings, box gutter, wall cladding and roofing
*Remove and replace cappings, flashings, box gutter, wall cladding and roofing
Savers first experienced problems with water leaking from the roof of the Dandenong store in or around January 2000.
Although this evidence cannot have been based on her own observations because Ms McMaster did not commence working for Savers until 2004, it is unchallenged and I accept it.
In or around early 2008, due to the ongoing problems with water leaks that Savers was experiencing ... [it] engaged Fix-Rite plumbing again to inspect the condition of the roof and assess what repairs were required to prevent further leaks from occurring.
... quoted an amount of $125,000 to replace the roof.
A very broad estimate of costs of roof replacement would total approximately $125,000.00 plus GST, subject to the condition of the underlying fixing battens etc. which cannot be determined until the existing roof is removed.
The following report lists details of the photographs on the enclosed photo CD and works required.
The photos supplied show the general condition of the Savers Dandenong Store top roof area. You will notice quite a lot of rust present in [different] sections. The rust penetration through the base material is at various stages on various sections of roof shown.
Note: It is unfortunate that this decking is no longer available.
These show the rust present in a section of box guttering around about the centre of the store. This is in need of urgent replacement.
These show the rust present in the existing Brownbuilt decking to the east side of the building. This decking is no longer available. This may be able to be treated and coated to give it an extended life. However, some additional works will be required.
These show the front verandah and front roof areas. These roof areas are corroding and in very poor condition and flooding is occurring in heavy rain over two particular sections. Corrosion, poor design and inadequate drainage are causing a part of the problem.
These are composite photos of the corrugated iron roof to the west, some front sections and the east Brownbuilt deck roof.
The lower front roof section over the south east Exit Door area or the shoe section [of the shop] identified on the roof by Photo No 40; note this section curves down to two round down-pipes. It has no drop gutter to allow for water expansion in heavy downpours. The water most probably rises up to the lap of the roof sheeting and pours through the ceiling below.
NB: This section needs to be lifted for structural inspection purposes and if possible re-designed and re-roofed to cope with heavy rainfall. Also drain pipes need to be camered to assess if adequate for drainage.
Existing roof fixtures such as air-conditioning units and duct works, including large water and gas lines, electrical conduits and other items would need to be removed and replaced to enable re-roofing to be carried out successfully.
Downpipes and stormwater drains should be traced and camered to determine condition and if any silting has occurred over a long period of time.
Prior to the meeting [planned for the following week] can you email which clause suggests Landlord responsibility.
4. In your email you sent a quote for roof replacement, yet no mention of roof leaking, nor has the body corporate or myself received notice of any roof leak. Is the roof leaking?
We have received details from Savers (for the first time in a year or more) regarding the leaks in the roof. We will forward this to you as a separate document.
I took Mr Francis to the area within the Dandenong store which was still experiencing water leaks. Mr Francis told me, and I believe, that there was a cavity in the ceiling from which water had entered into the store. He also told me, and I believe, that he could not locate the source of the water leaks.
The sub-floor problems have also had an effect on the business conducted at the Dandenong store. A corner of the floor in the production room has sunk significantly and continues to sink. As a result, the swinging doors to the production room have had to be repaired more often as the brackets cannot hold them when the floor sinks.
I would like to ensure there are no penalties. I presume it is an insurance claim. Can you advise.
Please advise what the signs are for and who owns them.
This query was repeated to Mr Cukierman in an e-mail from Mr Wells of the Owners Corporation on 20 July 2010. Assuming that the documents produced comprise the Owners Corporation's entire file regarding this claim, the query was not answered.
maintaining the building in good repair and condition including its structural integrity [to] ensure that the roof and drainage system are maintained.
The roofs to the Western Awning and Southern Flat Roof Areas need to be replaced because of the extensive and widespread nature of the corrosion that has occurred to the metal components of the roofing system. This is greater than surface rusting with perforation/holing of the metal having occurred or likely to occur in the near future in a number of locations.
... it is recommended that the gutter be realigned to provide a gradual fall to the downpipe pops. That all pops be checked for penetrations due to corrosion and be replaced if necessary. The veranda cladding is showing surface rusting (ie galvanised coating is deleted [sic] to a point of not offering protection to the steel). The application of a surface coating ie paint, will extend the life of the sheeting. With a regime of regular maintenance the cladding material could be extended indefinitely.
It would appear the pops installed into the copper gutter this area have been of galvanised sheet metal which have corroded due to the effect of galvanic action due to the dissimilar metals (copper and steel). The plumber advised that faulty pops have been replaced by PVC where found necessary.
I was advised by the plumber that the original down pipe 'pops' were of galvanised iron. Due to galvanic action the steel pops have/had corroded which has led to water entering the retail area. It is understood that the corrosion of the pops had led to considerable water entry to occur at times of intense rain events. All but 2 of these pops have since been replaced with PVC pops, with the remaining planned to be replaced shortly.
The internal downpipes are restricting the flow and discharge of stormwater from the roof resulting in leakage. These require replacement with downpipes to the originally installed sizes.
Only downpipe pops restricting water flow. Using the catchment area to each pop, calculation find that the position and size of down pipes are adequate. [sic]
The PVC down pipes visible from the retail area connect to rainwater pops which are of a smaller diameter than the PVC pipe. As a consequence the pop is the restrictor in the system, not the downpipe.
Box gutter, pops and downpipes under sized under current standards. Box gutters should be replaced.
Box gutters not under sized. (refer to calculations in report) Pops may have restricted flow in past but have been replaced with PVC.
Flashings, cappings and ridge ventilators have rusted. Remedial works required in relation to these items.
Flashings exhibit surface rusted but serviceable. Recommend that remedial surface coatings be applied.
... areas of flashings, cappings and gutters are rusted and/or damaged and will require replacement; ...
The separate sheet roofing to the ridge vents has rusted in many locations and these should be replaced.
Area 3 - the main flat deck roof, including the higher part of the 196 roof
... consideration should be given to the addition of a surface coating (eg paint), Such a coating will extend the life of the [roof] by a number of years and if regularly maintained will extend the life of the sheeting indefinitely.
Rectification should include replacement of the roof cladding fastened to graded roof battens to give a greater fall [than the current fall of less than 1 degree]. The installation of flashing at the intersection with windows etc at the step in the roof levels, that provides the necessary protection against the effects of prevailing wind driven rain.
The sub-floor framing system to the building consists of timber stumps supporting timber bearers and joists. There is very little sub-floor ventilation into the space below the building. This fact, together with the moist conditions introduced by the open stormwater drain on the east side of the building result in a prevailing damp environment.
Rotten timber stumps have been and will be an ongoing problem for this and all other buildings where this construction material is used. ... Regular maintenance can be undertaken, from time to time, to repair obvious defects or alternatively a full restumping could be carried out. The latter is considered unnecessary as it is apparent that the majority of the floor system is performing adequately.
SECTION 52 OF THE RL ACT, CLAUSE 2(b) AND THE AGREEMENT OF 15 JULY 2009
A retail lease is taken to provide as set out in this section.
The landlord is responsible for maintaining in a condition consistent with the condition of the premises when the retail premises lease was entered into-
(a) the structure of, and fixtures in, the retail premises; and
(b) plant and equipment at the retail premises; and
(c) the appliances, fittings and fixtures provided under the lease by the landlord relating to the gas, electricity, water, drainage or other services.
(1) A provision of a retail premises lease or of an agreement (whether or not the agreement is between parties to a retail premises lease) is void to the extent that it is contrary to or inconsistent with anything in this Act (including anything that the lease is taken to include or provide because of a provision of this Act).
In my view this is not the appropriate approach to construing a provision such as Section 52. The Retail Leases Act and cognate legislation regulates the rights and liabilities between one another of landlords and tenants; it is a zero sum game. A right given to a tenant is an obligation imposed on the landlord. An immunity given to a landlord is a right removed from the tenant. The policy of a statute such as the Retail Leases Act is to draw what Parliament regards as a proper balance between the rights and liabilities of landlords and tenants in the particular area regulated by the Retail Leases Act.
Section 52 and "the building" as distinct from "the premises"
Section 52... is a repair covenant in respect to "the premises", that is it does not extend to that part of the "Building" including common areas (such as the roof or perhaps the sub-floor) which is not part of the premises demised to the lessee.
... as a matter of interpretation, s52(2) speaks to "the structure of, and fixtures in, the retail premises"; "plant and equipment at the retail premises"; and "the appliances, fittings and fixtures provided under the lease or by the landlord relating to the gas, water, drainage or other services." [Mr Aghion's emphasis] Nothing in s52(2) restricts its application to the physical demise itself, except perhaps the internal fixtures.
... a canny landlord (or, as here, a tenant) could attempt to get around s52 by expressly excluding areas such as the external structure from the definition of the demised premises, but at the same time imposing a separate obligation upon the tenant or landlord (as appropriate) to maintain those exterior part of the building which did not form part of the demise.
Physical condition at the commencement of the lease
At the time of entering into the second lease and the current lease the roof of the premises, the drainage system of the premises, the front fascia and signage of the premises and the sub-floor of the premises were in good repair and condition. [Emphasis added]
9.1 by reason of the renewal of the lease, the condition of the premises at the commencement of the second lease is irrelevant;
9.2 the landlords are not the registered proprietors of, and have not leased the roof and sub-floor to Savers ...
9.3 the roof ..., drainage system, front fascia and the sub-floor of the premises are now in the same condition as at the time of entering into the current lease; and
9.4 the signage was installed by Savers, and was and remains a tenant's fixture.
It is noted that the 210 Landlords sought further and better particulars of paragraphs 9 and 12 on 11 August 2010, the same date upon which they filed and served their defence, but further and better particulars have not been filed by Savers.
At the time of entry into the 2008 lease, there were longstanding issues with both the roof and sub-floor, which were known to Savers.
... appears to identify most, if not all, of the roof issues that are presently being considered by the Tribunal.[7]
Further, all of the matters that Mr Johnston indentifies as defects (e.g. rusting roof iron, roof iron laid with inadequate fall, undersized gutters and downpipes, rotting stumps founded on timber sole plates, inadequate sub-floor ventilation, unsatisfactory sub-floor repairs, open sub-floor drain) by their very nature are most likely to have existed prior to 1 March 2008.
The roof and sub-floor therefore remain in the same condition as when the 2008 lease commenced.
Please note that we are advised by the Owners Corporation that the roof has been repaired and they are in the process of installing four overflow pipes in the gutter.
Work has been done and the altered work is leaking.
... where the applicant proves that the deficiency has increased from the time that the lease was entered into until the present time, there is an entitlement under s52 My Club at [58]
Section 52 and clause 2(b) of the lease
(2) The landlord is responsible for maintaining in good repair a condition consistent with the condition of the premises when the retail premises lease was entered into ...
... it is well established by a long line of authority that a contracting party will not in normal circumstances be entitled to take advantage of his own breach as against the other party
Within 120 days the Lessors must undertake at their own cost and expense all necessary and proper repairs, alternations, additions and improvements to the roof of the leased premises and otherwise comply with clause 2(b) of the lease.
In any event, section 94(1) of the RLA voids a provision of either a retail premises lease or an agreement to the extent that it is contrary to or inconsistent with anything in the RLA. To the extent that the settlement agreement provides in a manner that is inconsistent with or contrary to s52 of the RLA therefore, that part of the settlement agreement will be avoided. [Emphasis added]
Where there is a question of repair and maintenance to areas which are not under the control of the landlord, a claim for breach of quiet enjoyment will fail. The covenant for quiet enjoyment does not by a sidewind create a lessor's covenant to repair the demised premises.
For the reasons given above, I conclude that it is appropriate to make orders of the nature described below, subject to submissions as to detail by the parties.
I invite the parties to address me about the appropriate sizes of the replacement pops, down-pipes and sub-floor drains.
I am not persuaded that it is necessary that the box gutters be replaced.
[1] The 210 Landlords are companies owned and operated by members of what appears to be an extended family, some of whom spell their name Cukierman, and others Zukierman.
Savers INC (ARBN 075 452 185)
Herosy Nominees and Ors