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OK Gift Shop (Aust) Pty Ltd t/as OK Gift Shop v Peakgate Pty Ltd  QCAT 156
OK Gift Shop (Aust) Pty Ltd t/as OK Gift Shop
Peakgate Pty Ltd ACN 100 001394
Retail shop leases matters
24 November 2015
29 January 2016
RETAIL SHOP LEASE – where air conditioning supplied to premises has failed – whether lessor or lessee’s responsibility to repair air conditioning system – whether appropriate to make order for ongoing maintenance and repair of services
Retail Shop Leases Act 1994 (Qld), s 42, s 43, s 83, s 103
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
- OK Gift Shop operates from premises in Cairns, which it leases from Peakgate. There have been ongoing issues with the air-conditioning of the premises since at least 13 February 2014 when OK Gift Shop obtained a quote for the repair of the air conditioning. The agent for Peakgate was advised on 24 September 2014 that the air-conditioning was no longer operational and was requested to advise what steps Peakgate would be taking to rectify the repair and/or replacement of the air conditioning equipment.
- After further correspondence the agent advised that it was their view the air conditioning needed to be repaired by OK Gift Shop. Following testing of the room temperature in the shop a notice to remedy breach was issued by OK Gift Shop to Peakgate on 16 February 2015 and re-issued on 23 February 2015. The agent requested details about the air conditioning system and its service company which were supplied.
- The parties were not able to resolve the dispute and OK Gift Shop made an application to the Tribunal on 25 March 2015. It has requested that the Tribunal order Peakgate to fulfil its obligations under s 33 and s 35 of the lease to keep the premises clean, tidy and in good condition and to ensure that the services supplied to the premises are working efficiently by repairing/and or replacing the air conditioning system.
- The Tribunal has jurisdiction to hear rental tenancy disputes, that is a dispute under or about a retail shop lease, or about the use or occupation of leased shop under a retail shop lease, in accordance with s 103 of the Retail Shop Leases Act 1994 (Qld) and subject to the limitations in that section. This dispute is not subject to arbitration or before the courts and is not in regard to the arrears or amount of rent or the amount of outgoings. The Tribunal may make an order it considers just to resolve a retail tenancy dispute including an order for a party to a dispute to do, or not to do something or to pay an amount to a specified person.
- The original lease between the parties does not include any amount for outgoings see clause 12 of the lease. OK Gift Shop is obliged to keep the premises in good condition, except for fair wear and tear, including carrying out any repairs and fixing any damage caused by them in accordance with clause 29.2 of the lease. The premises are defined as the part of the first floor and part of the second floor of the building erected on the land, as outlined in schedule 3. OK Gift Shop is obliged to tell Peakgate of any damage to the premises or the centre of which they become aware in accordance with clause 24.3 of the lease.
- Peakgate is required to do all it reasonably can to keep those parts of the centre it owns clean, tidy and in good condition in accordance with clause 33 of the lease. If Peakgate supplies any services to the premises or the centre it must do all it reasonably can to ensure that they are working efficiently during the centre trading hours in accordance with clause 35 of the lease. However, subject to the Act, they are not liable to any compensation and OK Gift Shop cannot end the lease if they do not. In considering what are included as services the definition of outgoings included providing services to the premises and includes air conditioning.
- A lease is taken to include provisions for compensation payable to lessees where they suffer loss or damage because the lessor does not have rectified as soon as is practicable any breakdown of plant or equipment under the lessor’s care.
- Only if OK Gift Shop were to install any additional air conditioning to the premises would it be responsible to enter into and keep current a service and maintenance agreements to keep the air conditioning plant and equipment in the premises supplied by them in good condition in accordance with clause 47.2 of the lease.
- The state of the air conditioning system servicing the OK Gift Shop premises was summarised in email from Babinda electrics, the company servicing the system of 13 February 2014. It concluded “I believe it is your only option to replace the unit as your existing unit is at the stage that it will continuing failing costing you thousands everytime we have to fix it”. Accompanying this was a quote to replace the air conditioning in the amount of $34,100 plus GST.
- B.E. Air conditioning logged the temperature within the premises between the 7th and 11th February 2015 and noted that from the data collected it is clear that the air conditioning in the store is not sufficient to handle the load. In discussing the air conditioners servicing the premises they stated that the temper zone split ducted system servicing the ground floor show room is not operational and has not worked for some time
- When this was brought to Peakgate’s attention the lessor initially advised through its agent that it was OK Gift Shops responsibility under clause 29.2 of the lease to repair the air conditioning. Which were then supplied by email of 23 February 2015.
- A statement dated 20 February 2015 from Mr Minoru Nakamura, the manager of the OK Gift Shop was filed confirming the understanding of the lessee that in relation to air conditioning plant and equipment they were to undertake the maintenance which including cleaning, changing filters and filling up the gas and that it was the lessor’s obligation to repair or replace them. Five air conditioners in 2009. We, OK Gift shop, had been undertaking the maintenance obligations on regular monthly basis despite the lease providing outgoings are not applicable. We have employed Babinda electrics Air Conditioning to under the regular maintenance. The Temperzone OPA780 air conditioning unit that services the premises has not been performing for some time despite the fact that regular maintenance has been undertaken.
- Following the filing of the application negotiations continued between the parties. A series of quotes were obtained and the lessors agent stated in an email dated 1 June 2015 that Peakgate would replace and maintain the air conditioning. Peakgate accepted a quote from Alpha Cool in the amount of $27,417.50 plus GST a total of $30,159.25. A deposit of $16,363.64 plus GST was required to be paid. The deposit totalling $18,000 was in accordance with an email from Peakgate’s agent paid on 2 October 2015.
- Peakgate has not filed a response to the application and in accordance with the Tribunal’s directions of 22 September 2015 the matter has been determined on the papers on the basis of the material filed by OK Gift Shop.
- As mentioned above Peakgate is obliged to ensure that the services it supplies to the premises are working efficiently in accordance with clause 35 of the lease. The air conditioning system is mounted on the roof of the building outside of the premises and is therefore a service supplied to the premises. The evidence shows that the air conditioning system has not been operational for some time and this was clearly communicated to Peakgate by OK Gift Shop with a request that it be remedied. There had been agreement by Peakgate that the work would be done but as at the time of the hearing there was no confirmation that it had been done.
- This matter has been ongoing for an extended period of time and the Tribunal wishes to ensure that OK Gift Shop is not in a position where they will enter another summer without air conditioning. The Tribunal directs Peakgate to pay the balance of the amount required to complete the installation of the air-conditioning to Alpha Cool on or before 1 December 2015 and to do all thing necessary to ensure that the air conditioner is installed by 15 December 2015. OK Gift Shop is directed to cooperate with Peakgate to installation of the replacement air conditioner package.
- OK Gift Shop also requested a direction that Peakgate be directed to regularly maintain the air conditioning system. This was on the basis that following Peakgate taking over the obligation to pay for the maintenance of the air conditioning system in April 2015 no further maintenance had occurred. While there are obligations in the lease in regard to any air conditioning system installed by OK Gifts to be subject to a service and maintenance agreement in clause 47 of the lease there is no similar requirement on the Peakgate under clause 33 or 35 of the Lease.
- It is up to Peakgate to determine how it will ensure it meets its obligations under the lease not for the Tribunal to enforce a maintenance regime. It is only when the lessor fails in their responsibilities that the Tribunal should make the appropriate order to enforce those obligations as it has done here. That is ensuring that the necessary services are provided but considering any awards of compensation in regard to losses suffered as a result of the failure of the lessor to maintain and repair the services as is available under the Retail Shop Leases Act 1994 (Qld). The Tribunal has not then made an order in regard to the ongoing maintenance and repair of the air conditioning system
- Published Case Name:
OK Gift Shop (Aust) Pty Ltd t/as OK Gift Shop v Peakgate Pty Ltd
- Shortened Case Name:
OK Gift Shop (Aust) Pty Ltd t/as OK Gift Shop v Peakgate Pty Ltd
 QCAT 156
Member Allen, Member McBryde, Member Judge
29 Jan 2016