Smooth Flight Pty Ltd v Mo & Leung [2015] NSWCATCD 71

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Smooth Flight Pty Ltd v Mo & Leung [2015] NSWCATCD 71 Hearing dates: 27 April 2015 Decision date: 26 June 2015 Jurisdiction: Consumer and Commercial Division Before: D Patten, Principal Member Decision: 1 Declare that the respondents are liable to indemnify the applicant in respect of the Cost of complying with the Emergency Orders issued by Hurstville Council on 19 September 2013 and 14 May 2014. 2 Order that the respondents pay the sum of $32,675.97 to the Applicant forthwith. 3 Leave to the Applicant to file and serve within 14 days submissions in support of an order for costs, respondents leave to file submissions in reply within 14 days. Thereafter matter to be decided on the papers. 4 Subject to 3 above no order as to Costs. Catchwords: LESSOR AND LESSEE – obligation to repair – exclusion of structural work and fair wear and tear Legislation Cited: Retail Leases Act Cases Cited: Step Footwear Pty Ltd v Accord Pacific Land Pty Ltd [2005] NSW ADT 191 Category: Principal judgment Parties: Smooth Flight Pty Ltd (applicant) Fang Mo and Yim Wa Leung (respondents) Representation: Counsel: Mr M Lawson (applicant) Solicitors: Mr P Folino-Gallo Smith Lawyers (respondents) Prime Lawyers File Number(s): COM 14/42490 Publication restriction: Unrestricted

Reasons for decision 1. These proceedings relate to a lease of premises at [*****] Hurstville ("the premises"). The lease (hereafter "the lease") registered AE204923K was granted by Fang Mo and Yim Wa Leung ("the respondents") to Hua Ben Jiang and Dianne Shu Yi Yan for a term of 8 years from 28 May 2008. Subsequently, in October 2012 the balance of the term of the lease was transferred to Smooth Flight Pty Ltd ("the applicant"). 2. A dispute arose between the applicant and the respondents as to the liability for repairs to the front and roof of the premises leading the applicant to commence these proceedings in which it seeks: 1. A declaration that the Respondents are jointly and severally liable for the cost of complying with Hurstville City Council Emergency Order ON2013/0238 dated 19 September 2013, and therefore not entitled to seek reimbursement form the Applicant. 2. A declaration that the Respondents are liable for the cost of repairing the roof of the premises ([*****] Hurstville) including but not limited to the replacement of coverings, flashings and drainage. 3. An order that, within 28 days, the Respondents reimburse the Applicant in the sum of $37,219.47 being for building works to the Premises and associated costs, as detailed below. 4. An order that should the Respondents fail to reimburse the Applicant in accordance with order 3, then the Applicant is entitled to deduct so much of the balance of the sum $37,219.47 as then remains outstanding from future rental payments due by the Applicant to the Respondents. 5. An order that the Respondents pay the Applicant's legal costs as agreed or assessed. 1. Relevant to the issues between the parties are several terms of the lease: "5. Repairs Notwithstanding any provision to the contrary in this lease, (i) the Lessee will at all times maintain repair amend replace renew and keep the property leased and any plant, equipment, fixtures and fittings of the Lessor in good and substantial repair order and condition in all respects and in as nearly as possible in the same condition as at the commencement of the term or in the event of any part thereof having been replaced or renewed during the Term then in respect of such part in as nearly as possible the same condition as at the date of such replacement or renewal in all cases having regard to the age of the property leased and excepting reasonable wear and tear war damage and damage by fire lightning flood or tempest. (ii) the Lessor shall be exempted from all liability for water and fluid damage (including overflow and leakage) to the Lessee's goods and property, business, goodwill, loss of profits and the leased property. (iii) the Lessee shall be responsible: (a) for all electrical repairs but not the replacement of electrical wiring required through age. (b) for all plumbing and drainage repairs (except replacement of broken pipes where such pipes have not been broken by the Lessee). (c) where the property leased is the whole of a building, regular cleaning of exterior gutters and downpipes. (iv) If the lessor's air conditioning unit solely services the leased property, the lessee must use a contractor approved by the lessor for the maintenance and other work relating to the air conditioning unit. 15. Repairs Renovations Alterations and Additions The lessee shall not carry out any repairs renovations alterations and additions to the premises without the approval of the lessor. The lessee shall be fully responsible to obtain all the necessary governmental approvals for the carrying out of such repairs renovations alterations and additions and also for all costs in relation to the same. The lessee must at all times comply with and observe the lessor's reasonable requirements in respect of any air conditioning supplied to the leased property." "Part 7 – CONDITION AND REPAIRS Who is to repair the property? 7.1 The landlord must - 7.1.1 maintain in a state of good condition and serviceable repair the roof, the ceiling the external walls, and the floors of the property and must fix structural defects; and 7.1.2 maintain the property in a structurally sound condition; and 7.1.3 maintain essential services. 7.2 The tenant must otherwise maintain the property in its condition at the commencement date and promptly do repairs needed to keep it in that condition but the tenant does not have to - 7.2.1 alter or improve the property; or 7.2.2 fix structural defects; or 7.2.3 repair fair wear and tear. 7.3 The tenant must also - 7.3.1 reimburse the landlord for the cost of fixing structural damage caused by the tenant, apart from fair wear and tear; and 7.3.2 maintain and decorate the shop front if the property has one; and 7.3.3 decorate the inside of the property in the last 3 months of the lease period (however it ends) – 'decorate' here means restoring the surfaces of the property in a style and to a standard of finish originally used e.g. by repainting." 1. It is also relevant to note that the use permitted by the lease is "restaurant" and it therefore constitutes a Retail Lease within the Retail Leases Act. 2. According to the affidavit of Ji (Aaron) Mi a director of the applicant in October 2012 TD Shopfitting was instructed to fit out the premises. Mr Martin Jin of TD Shopfitting sent Mr Mi an email on 10 November 2012: "During the heavy raining period yesterday afternoon at [*****]Hurstville, we found serious leaking along the shop front side of the awning. It was pouring from the internal side along the lease line and also from the two metal handle light fittings. This is a serious problem which will affect your new shop front once we install it. The leaking from the two lights also an evidence of water leaking into internal side of the awning. Considering the future light fitting install for the awning, it is safety issue which need to be fixed before we install the shop front. We bring this to your attention for you to arrange the repairing work with landlord as soon as possible." 1. On 12 November 2012 Meyer Solomon and Associates the Solicitors for the applicant wrote to the respondents agent Aust City Realty Pty Ltd as follows: "We have been informed by the directors of our client that during the recent inclement weather and, in particular, the storm on the 9 November 2012 there was substantial water seepage into the premises and the awning area outside the premises. The water seepage has also penetrated into electrical installations and light fittings which pose a hazard. Our client is ready to commence the interior fit out of its premises and requires the lessor to immediately arrange for rectification work to the roof, including gutters and downpipes, to abate the water seepage. Our client's directors have indicated that they would be prepared to seek a quotation from their shopfitters and contractors to carry out the necessary rectification work at your clients' costs. We enclose a copy of a photograph of the ceiling to the premises which discloses the water seepage into the premises. Our instructions are that should we fail to receive a prompt and favourable reply that the lessors shall immediately arrange to carry out the necessary rectification work then: Our client shall arrange to obtain a quotation to carry out the rectification work; and Submit a copy of the quotation for the lessors' information and record; Failing to receive the lessors prompt approval to the quotation our client shall proceed to carry out the rectification work at your clients' cost. We advise our client has no alternative other than to seek the rectification work to be carried out immediately to enable it to proceed with its fitout to mitigate any loss it may incur with respect to commencing trade. We await your prompt advice as to the lessors instructions." 1. Although undated, an email by Aust City Realty to Mr Jin written on or before 13 November and copied to Meyer Solomon and Associates seems to constitute the respondents reply: "Dear Mr Marin Jin, We are the property managers for the above-mentioned property. We understand you are the tenant's contractor carrying out the building construction works for demolishing and installing new shop fittings. You have completely demolished the existing shop fit out including the shopfront and causes damages to the awning which is attached to the building. You leave the shop open to the sky allowing raining (sic) raining water into the shop through the awning gaps and demand your client to pay extra for repair the damaged awning made by your demolishing. In today's building inspection, you told us that it is impossible that an awning would not be damaged during shopfront demolishing as the awning is attached to the shop front and has been sealed for waterproofing purpose. We note the landlord holds accountable liability for the subject damage and request you immediately repair the damages made on the awning during your building construction works. You also must pay more attention to repair the possible roof water leakage in such area where the kitchen exhaust fans and ventilation installed and the area above cool room units and air conditioning units installed on the roof, where we have found many screw holes and large gaps appeared running brand new pipes and wiring by your construction works. Some of photos are attached for your information. Yours faithfully, Jimmy Feng Austcity Realty Ltd" 1. Mr Jin replied on 13 November : "Dear Mr Jimmy Feng, Regarding your comments on the water leaking of the awning. We did the removal of the existing shop front on site to prepare for the new shop front. The bottom part of the awning was attached to the top of the existing light box and we didn't cut off anything from the awning. The water leaking was existing issue and it is always leaking from the two existing light fitting. As a professional property manager, you know that the awning should be fully sealed water tight without any water leaking into the internal section of the awning. You were blaming that the awning was damaged due to our demolition of the shop front, this blame is pointless and unreasonable. We had nothing to do on top the awning that can cause any damage to it. We had check the top of the awning yesterday and found the gutter was rusted and damaged as you can see on the attached photos. This is the reason why the water was leaking into the awning and cause all the internal leaking to the footpass (sic). You can arrange your own contractor and check this out on site. We can't accept any responsibility for this damage and you'd better to arrange your contractor to fix this problem as soon as possible. Please be aware of that the water cause safety issue because of the light fitting in the awning. Please call me on [*****]for any enquiry. Have a great day! Martin Jin" 1. At this point the applicant commissioned a report from Global Design Lab. That report is not in evidence but there is evidence that it was sent on 23 November 2012 by Meyer Solomon and Associates to Aust City Realty under cover of a letter which referring to the report said: "On a cursory inspection of the report it appears that as well as defects in roof awnings and gutters and downpipes there are structural integrity issues in relation to the building." The letter concluded: "The only obligations of the Lessee are to maintain the property in the same state of condition of repair as at the commencement date of the Lease as set out in additional clause 5 of the initial Lease. It is noted that our client did not carry out any works to the roof and awning of the premises prior to taking occupation. We advise it is now incumbent upon the Lessor to immediately carry out the necessary rectification work to ensure the structural integrity of the building roof and awning and to abate water seepage into the premises. Should we fail to receive your immediate advice that the Lessor shall without delay attend to the rectification works then any damage which is occasioned to persons in or near the building to our client's plant and equipment shall be at Lessor's risk. We advise as a matter of courtesy that as the Lessors are now on notice in relation to the poor and dangerous condition of the premises then any claim against the Lessor for injury or damage to property may not met (sic) by the Lessor's insurer. We advise should we fail to receive prompt and unequivocal reply that the Lessor shall intend to carry out the rectification works then our client shall have no option but to carry out the rectification works and seek reimbursement for the cost of the same together with any loss sustained by our client with regard to its commencement of trade." 1. Aust City replied to the letter from Meyer Solomon and Associates with an email to TD Shopfitting on 24 November: "TO TD Shopfitting 42 Riverside Rd Chipping North NSW 2170 ATT: Harry Varvaressos c.c. Solomon Solicitors Dear Harry, Thank you for visiting our office this Morning. Refer to our building inspection this Morning, we confirm the followings: 1. Both structural walls attached to the buildings of [*****]have no structural problems or damages. 2. The roofing and its tin roof, where ventilation pipes and wiring installed into and air-conditioning units and kitchen exhaust fans installed onto, are in a reasonable good conditions - no structural problems or damages. 3. We have found settlement movement gap on bricks, above shopfront facing the street, sized up to 60mm, near the bricks hanging rods for the awning. 4. We are not sure that brick gap could cause a structural problem, which subject to structural engineering inspection, and you will arrange your engineering inspection. If your engineering inspection confirms that gap is a normal settlement for all old buildings - not a structural problem, it will be fine. 5. If your engineering inspection indicates any structural problem, please forward the report to us ASAP, enable us to obtain a second opinion from other structural engineer inspection." Regards! Jimmy Feng Auscity Realty Pty Ltd " 1. The applicant thereupon commissioned a report from Structural Engineer Mr Edmund Satchi who on 15 December 2012 reported as follows: "Re: Awning For: [*****]Hurstville The site inspection at the premises was carried out on Monday the 26 November 2012 around 9.00 AM as per Harry,s (T D SHOPFITTING) request. It was observed that the canopy at the kerb end has deflected about 60mm approximately. This was due to damage to the existing brick columns. The canopy at the kerb end should be raised to correct level & brick columns made to good condition. Therefore in our opinion the kerb end of the canopy should be propped with immediate effect to prevent any danger to the public. The modification procedure was issued to T D Fittings. (Drws 529 SH1 & SH2). 1. Mr Satchis report was sent to Aust City which replied on 21 December 2012: "Dear Meyer, Refer to your email and the attached report, our landlord will obtain a second opinion from other engineer and to find out the cause. There are some evidences that both tenants (Japanese Restaurant & Chinese Restaurant) have wrongly installed their heavy duty commercial air-conditioning system units on the subject awning years ago. Your client ([*****]) has recently removed one of heavy machine from the awning 3-4 weeks ago, the other heavy machine remains on the awning. Unless the engineer finds other cause, we are looking at the material evidences, and requesting both tenants to fulfil their obligations to fix the wall/awning problem caused by installation of both heavy machines on the awning. We note it is very unfair if the tenants installed their heavy machines on the light awning and causes wall/awning problem and produces a potential risk to the public, whiles the tenants accuse their landlords for negligence. Once we received the second opinion we will forward to you. We now advise the tenant (Japanese (Restaurant) for the above issue." 1. Mr Jin who gave oral evidence testified that as far as he is aware neither the respondents nor anyone on their behalf subsequently obtained an engineering report. On 28 January 2013 however Aust City wrote to the applicant: "It has been brought to the Lessor's attention that the roof the machines attached (exhaust fans, ventilation motors and pipes and air conditioning units which were previously and/or update installed) has been damaged, which causes water leakage into the ceiling. It will potentially cause roofing structural damages. Pursuant to Clause 5 of the assigned Retail Lease (#6963997R), we instructed by the Lessor to serve you this Notice, requesting you immediately carry out the roof repair in order to stop water leakage into the property. Clause 5 – REPAIRS Notwithstanding any provision to the contrary in this lease: (i) The Lessee will at all times maintain repair amend replace renew and keep the property leased and any plant, equipment, fixtures and fittings of the Lessor in good and substantial repair order and condition in all respects and in as nearly as commencement of the term or in the event of any part thereof having been replaced or renewed during the Term then in respect of such part in as nearly as possible the same condition as at the date of such replacement or renewal in all cases having regard to the age of the property leased and excepting reasonable wear and tear war damage and damage by fire lightning flood or tempest. (page 7) Where the roof is unable to repair because of the installed machines on the roof being oversized or overweight or other reasons, you are requested to remove the machines away from the roof and install them on site of building near kitchen with small size and light weight machines. You are requested to give a report of the repair on the completion of repair and provide an access to the lessor's agent and building inspector to exam the repair whether or not the damage is properly repaired. Failure to the repair the damage is in breaching of Clause 5 of the assigned Retail Lease, as a result, the Lessor will serve you a Notice to Quite (sic) without delay." 1. As rainwater continued to leak into the premises the applicant engaged Mr Evan Fittinghoff of Resident Property as building advisor. He first reported in February 2013 but later prepared a formal experts report dated 7 March 2014 which is in evidence before me. In that report he expresses his summary and conclusion: "1. Summary & Conclusion In consideration of my findings on site, it is my opinion that: Damage and deterioration noted to the roof coverings and associated flashings and roof drainage. The damage and deterioration is due to general wear and tear. Rectification of the roof coverings, flashings and drainage is required. Due to the extent of the required repair works, consideration from a cost perspective should be given to the replacement of roof sections rather than repair. This relates to the rear section of the roof where there is a large concentration of roof equipment and penetrations. It is my opinion that the general roof covering over the rear section of roof is not fit for purpose and requires replacement. Flashings generally are not fit for purpose and require replacement. Extensive deterioration and damage to the perimeter parapet walls noted. New flashings and repairs to the walls are required to prevent moisture ingress into the building and to extend the serviceable life of the structure. The damage and deterioration is due to general wear and tear. Installation of the air conditioning units on the roof is of poor workmanship. Wear and tear to the components of the system are also noted, requiring leaks to be rectified and the units on the roof to be re-mounted. Installation of the water heater on the roof is of poor workmanship and has general wear and tear. Repairs are required to prevent water heater from collapsing and causing damage to the unit and adjacent surfaces. Electrical defects noted to the supply air fans in the kitchen require rectification by a licensed electrician. Water damaged ceilings should be repaired once all roof rectification works have been completed. All rectification works are to be undertaken in accordance with the relevant Australian / New Zealand standards and the Guide to Standards & tolerance 2007. All rectification should be carried out by certified and licensed contractors. All rectification works are to be undertaken within the scope of an approved quality assurance plan and monitored by an independent and suitably qualified consultant." 1. The applicant then obtained a quotation from Sydney Gutter and Roof Restoration for repairs to the roof. The quotation was as follows: "Thank you for allowing me the opportunity to quote on the roof and guttering at [*****]Hurstville. Parapet walls: * Apron flashing * Top barge capping $4,452.00 + GST Roof sheeting (replacement) (Roof over kitchen and front awning) $5,592.00 + GST Box Gutters * Awning and 2 roofs including vertical wall sheets with box gutter $1,886.00 + GST Water Heater Base $500.00 + GST Heater pipe work penetration $350.00 + GST Mounting of air conditioning units $1,522.00 + GST Water leak extractor fan/ back trays and flash ducts $2,498.00 + GST Any damage to roof due to air conditioning Units $650.00 + GST 1. The quotation was sent by the applicant's then Solicitor Veronica Ng of Smith Lawyers to Aust City with this email: "Dear Jimmy Without Prejudice Our client Smooth Flight Pty Ltd We refer to our email of 19 February 2013. Our client's building inspector obtained a quote from Sydney Gutter Roof Restoration for the repair to the premises, copy attached. We are instructed by our client's building inspector that items 1 2 and 3 of the quote relate to damage to the property resulting from fair wear and tear. Accordingly it is your client's responsibility to effect those repairs. In relation to items 4 to 8 our client, on a without prejudice basis and without admission of any liability, is prepared to attend to those repairs at their cost subject to your client agreeing to items 1, 2 and 3 referred to above at their own cost. We look forward to receiving your client's positive response to the above." Yours faithfully Michael Smith' 1. Aust City sent an uncompromising response: "We are the property manager acting for the Lessor. We are instructed to serve you this notice: A Retail Lease (#6963997R) was entered by the business vendor. Mr Hauben Jiang ("Jiang") on 29/5/2000. Smooth Flight Pty Ltd purchased the business from Jiang being the successor of the Lease ("Lessee") on 2/12/2012. Jiang modified the original roof by installing kitchen exhaust fan, ventilation motor and air-conditioning unit on the roof, in order to establish new restaurant business. The wirings and pipes were installed on the roof connecting the cool room, ducted air-conditioning, ventilation and kitchen exhaust fan. One air-conditioning unit was heavily hanged on the wall above the shop front. Jiang maintained and repaired the modified roof from time to time till he sold the restaurant business to the Lessee on 2/12/2012). After the business transaction, the Lessee obtained a roof status report and building report. The Lessee was aware of the roof sheet appeared damages and the roof sealant had problems, need repair before the Lessee reinstall any new equipment on the roof. The Lessee chose to ignore those building reports and re-modified the roof sheet and reinstalled the upgraded larger and heavier kitchen exhaust fan, ventilation motor and air-conditioning unit on the roof. The wirings and pipes were also upgraded and reinstalled connecting to the cool room, ducted air-conditioning, ventilation system and kitchen exhaust fan without repair of roof sheet damage and roof sheet sealant problem. The roof sheet damage and the roof sheet sealant problem have been intentionally left by the Lessee. The Lease rules that the Lessee must maintain and repair the modified roof during the lease period from time to time: Clause 5 – REPAIRS Notwithstanding any provision to the contrary in this lease: (i) The Lessee will at all times maintain repair amend replace renew and keep the property leased and any plant, equipment, fixtures and fittings of the Lessor in good and substantial repair order and condition in all respects and in as nearly as possible in the same condition as at the commencement of the term or in the event of any part thereof having been replaced or renewed during the Term then in respect of such part in as nearly as possible the same condition as at the date of such replacement or renewal in all cases having regard to the age of the property leased and excepting reasonable wear and tear war damage and damage by fire lighting flood or tempest. Regular maintenance and repair for the modified roof sheet or roof sheet sealant is unconditional in accordance with Clause 5 of the Lease. During the lease period, the damage made on the roof sheet and the roof sheet sealant problem caused by lacking of maintenance and/or wear or tear must be repaired from time to time by the Lessee, not the Lessor. The Lessee is requested to take immediate action to repair the roof sheet damage and fix the roof sheet sealant problems. In case of repair cannot be carried out because of the sized of heavy equipment, the Lessee is requested to remove all equipment from the roof sheet and install them in the lane near the kitchen wall. The Lessee is also required to produce a written report to the Lessor upon completion of the repair in order to secure the assigned Lease and make sure the Lease will not be breached in future. We note failure to maintain and repair the modified roof sheet damage and the sealant problem is in breach of the Lease. As a result, the Lease ought to be terminated and Notice to Quit shall be served on the Lessee." 1. Further negotiation between the parties did not resolve the issues between them and in light of the attitude of the respondents the applicant engaged Sydney Gutter & Roof Restoration to carry out such repairs as were necessary to prevent water penetration of the premises. Work on the roof was carried out in July 2013 and work to waterproof the parapet walls in November. 2. In the meantime in September 2013 Hurstville Council wrote to the respondents regarding the awning at the front of the premises: "Please be advised that under Section 121D of the Environmental Planning and Assessment Act, 1979, if Council is of the opinion that an emergency situation exists then an Order can be issued immediately, negating the need for a prior Notice of Intention to Serve an Order being served. The enclosed Order has therefore been issued as a result of an emergency existing due to the dilapidated awning located at the front of the above premises. Your immediate actioning of the terms of the Order will prevent any further litigation. Should you have any further questions regarding the above please contact Mr J Daniels on 9330-6222 between 9.00am and 10.00am weekdays, by facsimile on 9330-6223 or email hccmail@hurstville.nsw.gov.au" 1. The letter was accompanied by a formal notice under the Environment Planning and Assessment Act: "Emergency Order Section 121B, Order No.4 (a) Environmental Planning and Assessment Amendment Act 1997 Premises: Lot A DP 44128 - [*****]HURSTVILLE NSW 2220 Please be advised that under Section 121D of the Environmental Planning and Assessment Act 1979, if Council is of the opinion that an emergency situation exists then an Order can be issued immediately, negating the need for a prior Notice of Intention to Serve an Order being served. Pursuant to the powers vested in Council under Section 121B of the Environmental Planning and Assessment Act 1979, you are hereby directed within twenty-one (21) days of the date of this Order to: Terms of Order 1. Repair or make structural alterations to the dilapidated awning located along the front of the above premises. 2. Submit to Council a Structural Engineer's report stating the structural adequacy of the awning. Reason for the Order 1. Awning is or is likely to become a danger to the public. 2. Council is in receipt of a complaint about the structural adequacy of the awning. Please note that any person who fails to comply with an Order issued under the Act is guilty of an offence which carries a maximum penalty of $1,100,000.00 and to a further daily penalty not exceeding $110,000.00. Under the provisions of Section 121ZJ of the Environmental Planning and Assessment Act 1979, if an Order issued under the Act is not complied with, Council may also give effect to the Order and recover all associated costs in any Court of competent jurisdiction. Please note that any person on whom an Order is served may appeal against the Order to the Land and Environment Court within twenty eight (28) days of the service of the Order. Should you require further information please contact Mr J Daniels, Trainee Building Surveyor, Planning and Development Directorate between 9.00am and 10.00am on weekdays on 9330-6222 or by facsimile on 9330-6223." 1. Aust City wrote to the applicant about the Notice: "Re: Mo & Leuang lease to Smooth Flight P/L Shop: [*****]Hurstville NSW 2220 Hurstville City Council has recently received your employee's report and issued the Emergency Order on 19/9/2013, requesting immediate repair of the damaged awning located along the front of the premises. The order is attached. Pursuant to Clause 5 & 15 of the assigned Retail Lease (#6963997R), we are instructed by the landlord to serve you this Notice, requesting you to carry out the repair and submit to Council a structural engineer's report stating the structural adequacy of the awning. Failure to comply with Councils' Emergency Order will breach Clause 5 & 15 of the assigned Retail Lease. As a result, Hurstville City Council will issue a heavy penalty and make an order to cease the business operating concerning health and public interest. Further, the landlord will serve you Notice to Quite (sic) to terminate the tenancy for breach of Council's order. If you have any question in this regard, please do not hesitate to contact this office as soon as possible. Details: Refer to tenant's previously modifications and the latest modification on the awning / roof in December 2012 (the modification procedure was issued to TD Fittings Drws 529 SH1 & SH2), the shop front was demolished together with some gutter box, down pipe, flashing, capping and lead connected to the awning, those elements were not properly restored and repaired. Your repair in July 2013 did not restore and repair them as well. It leaves a tiny gap along the awning allowing raining water leaks into the awning and drip on the shop front window glass. See photos attached. Yours Sincerely Jimmy Feng Austcity Realty Pty Limited c.c. Smith Lawyers The landlord, F Mo & YW Leung" 1. In light of the respondents attitude towards the Council notice the applicant itself took steps to comply. It procured a structural engineers report and arranged for it to be sent to the Council. The applicant also arranged the installation of acrow props to secure the safety of the awning as a temporary measure while seeking once more to resolve outstanding issues with the respondents. 2. On 30 April 2014 the Council issued a further notice regarding the awning requiring compliance within 7 days. The notice was again addressed to the respondents whose agent sent it to the applicant with a letter demanding that the applicant comply with the notice within 7 days. 3. Following receipt of further correspondence from the Council the respondents sent a notice to the applicant on 16 May 2014: "HEREBY GIVES NOTICE OF TAKING CONTROL OF REPAIR under Special Condition 5 & 15 of the Lease (#AE204923K) between the Landlord and the Tenant in respect of the Premises on the following ground: 1. Complying Development Certificate endorsed by Hurstville Council ("Council") on 19/9/2012), As the applicant, you are obligated to complete all building construction works and left no safety issue to the Premises before you open your business under the requirements and development standards of the State Environmental Planning Policy and the Assessment Regulations. 2. The safety issue referring damages made to the awning was found during your building construction work specified within your Roof Status Report (by Global Design) of 20/11/2012). Without dealing with the safety issue, your private building certifier issued the Final Occupation Certificate (#130/12) on 6/12/2012. 3. The safety issue regarding the awning damage remains and it was confirmed by your Engineer Report with Structural Drawings (by Edmund Satchi) on 15/12/2012. Council made the emergency order for the repair on 19/9/2013. Received the Council's order, you had installed 5 posts supporting the awning for carrying out a repair. But, you have not completed the repair. 4. Council served the second order dated 30/4/2014 and the third order dated 14/5/2014, requesting the repair to be carried out immediately. On 5/5/2014, the Landlord served on you the Notice to Comply with Council's Order requesting you to complete the repair within 7 days. But, you have failed to the repair. In respect of Public Safety, a decision is made that the Landlord hereby takes control of the repair, in order to comply with Council's order without delay. The Landlord now instructs the licensed builder to complete the repair. You will be requested by 48 hours' notice to give access to the Premises and cease your food business at least one day, and the footpath may close temporary during the repair. The costs incurred by the Landlord in carrying out the repair refer to Complying Development Certificate and the Council's orders will be recovered by the Landlord as a debt under Special Condition 5 & 15 of the Lease." 1. On 10 June the applicant received an email from the Council in effect stating that the notice had been complied with and that the temporary acrow props might be removed. 2. There were further emails between the parties the applicant maintaining that the cost of all work done to the roof and awning was the responsibility of the respondents. The respondents not only maintained the opposite position but threatened to apply money paid as rent towards the costs incurred in respect of the awning. These proceedings were then commenced. 3. In addition to the evidence of Mr Mi the applicants case included the report of Mr Fittinghoff (part of which is reproduced above), his oral evidence and a Scott Schedule (Exhibit D) completed by the parties. It became apparent that Mr Ransley referred to hereafter contributed the remarks on the Scott Schedule attributed to the respondents. 4. Mr Fittinghoff said that in respect of the roof repairs he was retained as Project Manager and that his fees claimed in these proceedings relate only to his work as Project Manager as opposed to work done as an expert engineer. He said that in his opinion it was necessary to replace much of the roof which otherwise would have been "leaking like a sieve." 5. In the respondents case there was a report by Mr Tony Ransley an accredited Building Consultant and he gave oral evidence. Mr Ransley inspected the property on 16 October 2014 after the repairs to the roof by the Applicant. He was unable to say whether the repairs were necessary without knowing the previous condition. Although he concluded that the roof works were conducted to reasonable standards he expressed the opinion that the main cause of water penetration was the presence of poorly detailed box gutters with inadequate capacity and outlets from box gutters having inadequate capacity. 6. In cross examination Mr Ransley agreed that the new box gutters were of the same size as those they replaced because they fitted the available space. He conceded that structural work would have been involved in increasing the space for the installation of larger box gutters. 7. He also agreed that it was appropriate for someone to coordinate the tradesman, assess their work their claims etc. Mr Ransley was cross examined upon his comments in the Scott Schedule to which I will return later in these reasons. 8. To a significant extent the resolution of the issues in this case requires the Tribunal to determine the proper construction of the provisions in the lease referred to above, 9. As I understand the submissions made on behalf of the respondents they were to the effect that condition 5 exposes the lessee to a liability for structural work except where there is "reasonable wear and tear war damage and damage by fire lightning flood or tempest". This of course would be an unusually onerous provision and in my view would require plain language. Despite the opening words of the condition I do not think it should be interpreted as negating the express terms of cl 7.1 which includes a specific reference to the roof ceiling and walls of the building. If the respondents interpretation is correct there is virtually no work for cl 7.1 to perform. 10. In my opinion condition 5 should be interpreted as modifying the tenants obligations arising under cl 7.2 and 7.3 and not as impacting upon the landlord's obligation under 7.1. 11. In the result I hold that the landlord was and is under the lease liable in accordance with cl 7.1 to maintain the structure of the building including the roof. I accept the opinion of Mr Fittinghoff quoted above as to the need for structural work to the "roof coverings and associated flashings and roof drainage" and as to the need for new flashings and repairs to the perimeter parapet walls to prevent moisture ingress into the building. It is to be noted that Mr Fittinghoff's evidence was not challenged by the respondents who had ample opportunity to do so. I also note that if I be wrong in my interpretation of condition 5 and cl 7.1 there is ample evidence provided by Mr Fittinghoff that most if not all of the work done resulted from fair wear and tear and was therefore in any event within the exception to the obligations contained in condition 5. 12. I except from what I have said the problems identified by Mr Fittinghoff relating to the air conditioning units the water heater and electrical defects. They seem to fall within cl 5 and not be the responsibility of the landlord. 13. In my opinion it follows that to the extent indicated the respondents were in breach of their obligations under cl 7.1. The applicant acted reasonably in carrying out the work itself following the respondents refusal to comply with their contractual obligations. If it had failed to do so it would have suffered additional loss. Damages which naturally flow from the respondents breach of contract are the costs to the applicant of doing the work which the respondents should have done themselves. 14. I turn now to the items listed in the Scott Schedule. In relation to work performed by Mr Fittinghoff as Project Manager I am satisfied by his evidence and to an extent by the evidence of Mr Ransley that it was reasonable for the applicant to employ a Project Manager and that the charges made by Mr Fittinghoff were reasonable and appropriate. 15. It is relevant to record that the respondents rejected the several attempts made to have them carry out the work themselves work which as I have found was always their responsibility. I would allow the total of $4,500.65 claimed for the Project Manager services of Mr Fittinghoff. 16. I also allow the sum of $1,056.00 paid for a Roof Status Report by Global Design Lab. This amount was conceded by the respondent. The sum of $20,847.32 paid to Sydney Gutter and Roof Restoration was largely conceded by the respondent. It seems to me it should be reduced by $1,150.00 to $19,697.32 to meet the conclusions expressed above in relation to the air conditioning units and water heater. 17. Items 4, 5 and 6 in the Scott Schedule relate to compliance with Hurstville Councils notice in respect of the awning at the front of the premises. It seems plain from the Councils notice and from the report of engineer Mr Satchi reproduced above that the work required by this notice was both structural and due to fair wear and tear. 18. In my opinion the obligation to comply with Hurstville Council's Notice fell entirely upon the Landlord as part of the contractual obligations contained in clause 7.1. The items in the Scott Schedule seek reimbursement only in respect of the cost of the report from Mr Satchi and the cost of temporary props required for public safety. Having regard to the evidence and the comments in the Scott Schedule I think that the amounts claimed for reimbursement should be allowed in full as damages flowing from the respondents breach of contract. They total $7,422.00. 19. It is appropriate that I make reference to two submissions made on behalf of the respondents. The first concerns reliance on condition 13 Lessee's Risk and Indemnities". It is unnecessary to reproduce the condition and it will suffice to say that I accept Mr Lawson's submission that it relates to personal injury and death only. 20. The other submission related to S 36 of the Retail Leases Act. It was contended as I understand it that the applicants remedy lay under that section rather than in these proceedings. 21. In my opinion there is nothing in S 36 which requires a lessee to exercise rights under the Section to the exclusion of any other remedy. That view seems to me to be consistent with what was said in Step Footwear Pty Ltd v Accord Pacific Land Pty Ltd [2005] NSW ADT 191. 22. As to the relief to which the applicant is entitled in addition to an order that the respondents pay to the applicant the total of the sums referred to above I think the applicant is entitled to a declaration broadly in terms of that sought in respect of the Councils Notice. It is unnecessary to make a declaration in respect of the roof repairs as they have been carried out. Nor I think is it appropriate to make an order as sought permitting the applicant to reduce the rent if the amount ordered to be paid by the respondents remains outstanding. 23. I was asked to reserve costs and I will do so. However my provisional view is that the respondents should pay the applicants costs as this was a commercial dispute between businessmen and the litigation was rendered necessary by arguably the unreasonable attitude of the respondents.