Foodtech Group Pty Ltd v DHK Consolidated Pty Ltd [2013] NSWADT 309

Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Foodtech Group Pty Ltd v DHK Consolidated Pty Ltd [2013] NSWADT 309 Hearing dates: 3 December 2013 Decision date: 03 December 2013 Jurisdiction: Retail Leases Division Before: G Mullane, Judicial member Decision: The Application of Foodtech Group Pty Ltd filed on 30 September 2013 is refused and dismissed. Catchwords: Retail Lease - outgoings - tenant's Liability Category: Principal judgment Parties: Foodtech Group Pty Ltd (Applicant) DHK Consolidated Pty Ltd (Respondent) Representation: No solicitor for the Applicant Betar Lawyers (Respondent) File Number(s): 135129

reasons for decision

INTRODUCTION 1This is a dispute regarding outgoings paid by the applicant tenant in respect of a lease of a retail shop in Newtown. The applicant tenant paid 45% of the outgoings for, I think, three years and the outgoings were in respect of land on which the shop is located. Also located on the land is another shop and a residential flat. 2The tenant says that under the lease the proportion of the outgoings that should have been paid by the tenant is about one third of 45% of the outgoings on the land because the provision in the lease creating the liability to pay outgoings should be interpreted as the tenant paying 45% of the outgoings referrable only to the premises leased, not the outgoings referrable to the whole of the land.

RELEVANT PROVISIONS OF THE LEASE 3Para 3.2(a) of Schedule 2 of the lease provides a definition of "outgoings": (a) "Outgoings" means the total amount of the following costs and expenses properly or reasonably assessed or assessable charged or chargeable paid or payable or otherwise incurred in respect of the Land or in the conduct or maintenance of the Building: (i) all rates levies and charges payable to the Council of the Municipality of Marrickville or other local government body ("Council Rates"); (ii) rates and charges including any environmental levy payable to Sydney Water or any other body or authority responsible for the supply and/or reticulation of water and/or sewerage and/or drainage ("Water Rates"); (iii) New South Wales land tax and any other tax assessed or charged against or to the Lessor by virtue of its ownership of land whether by any Parliament State or Federal or by any competent authority local government or otherwise assessed on a single holding basis for a beneficial owner ("Land Tax"); (iv) any other taxes rates charges and assessments and other outgoings of like nature which are now or at any time during the term charged upon the land or against or to the Lessor whether governmental semi-governmental municipal or otherwise. (v) insurance premiums payable by the Lessor in respect of the Building and the plant equipment fittings and fixtures of the Lessor therein' in their full insurable reinstatement value against fire flood lightning storm and tempest and in respect of insurance of the Building and the Lessor against such other risks (referrable to the Building or the Lessor in relation to the Lessor's ownership or interest in the Building) as the Lessor may deem reasonably necessary including consequential loss and against other risks as the Lessor may request in respect of the Building ("Insurance Premiums"). 4It is noted that in that clause the important wording is "charged or chargeable, paid or payable or otherwise incurred in respect of the Land or in the conduct or maintenance of the Building." It does not refer there to the outgoings being "in respect of the premises the subject of the lease", but refers to "the Land" and "the Building". "Land" is defined in clause 1.1 of the same schedule as "the land described under the heading 'Property Leased' on the front page of this lease". 5The words appearing on the front page of the lease under that heading are: "Folio A/164571 PART being Ground Floor and Mezzanine Floor , known as shop 2, 273 - 275 King Street Newtown". 6 The land described, as distinct from the premises leased, is the land in Folio A/164471. It is the land on which the building is erected and the building comprises 2 shops and a residential flat. 7Paragraphs 3.2(b) and 3.2(c) of Schedule 2 provide: (b) In addition to the Yearly Rent the Lessee shall in respect of each year during the Term, any Further Term or during any holding over period pay to the Lessor in the manner provided in clause 3.2 (c) the Lessee's Proportion of the Outgoings. (c) Within fourteen (14) days of receipt by the Lessee from the Lessor of a statement in writing of the amount of the Outgoings or any part thereof, the Lessee shall pay to the Lessor the Lessee's Proportion of the Outgoings or such part thereof AND it is hereby. agreed and declared: (i) that subject to paragraph (li) of this Clause 3.2(c) the liability of the Lessee to pay the Lessee's Proportion of the Outgoings will not be determined or otherwise prejudiced by the prior expiry of the Term or other termination of this Lease; (ii) that if the Term expires or is otherwise terminated the Lessee shall pay to the Lessor that proportion of the Outgoings accruing due prior to the date of expiry or termination. For the purpose of making any such apportionment the Outgoings shall be deemed to accrue from day to day. Any moneys found to be due and owing by the Lessee to the Lessor under the provisions of this clause shall be paid within one (1) month of the date of expiry or termination. 8The tenant is liable to pay "the Lessee's Proportion of the Outgoings". That expression is defined in clause 1.1 of Schedule 2 as "the proportion (expressed as a percentage) in item 5 in the Reference Schedule". The proportion stated in item 5 of the Reference Schedule to the lease is 45%. 9Accordingly the tenant is liable to pay 45% of the outgoings "in respect of the Land or in the conduct or maintenance of the Building" on the Land. 10The tenant has interpreted the description of the property leased on the front page of the lease as a definition of the land, rather than of the property leased, however the only land described in that description is the land in folio A/164571. There is no separate title identified for the property leased and there is no evidence that there is any separate rating or taxing of the property leased. On the face of the lease the clear intention is for the tenant to pay 45% of the outgoings for the land in folio A/164571 or for the building on that land. 11There is then Clause 4.5 of the second schedule, which specifically provides for gas, electricity, water and oil consumed on the premises. It provides: "The Lessee shall pay all charges for gas electricity and water and oil consumed in or on the Premises or solely in connection with the Premises and shall also pay all charges in respect of any telephone (including facsimile) services connected to the Premises and all other charges and impositions imposed by any Relevant Authority for the supply of any service supplied to the Premises (including trade waste discharge). If the Lessee makes default in the payment of such charges the Lessor may pay the same and recover the amount so paid as if the same was rent payable under this Lease on the date on which the Lessor pays the same."