A Cairns retail tenant who paid for regular equipment servicing was told by its air conditioning contractor “it’s only option” was to replace the failing unit or pay “thousands” every time they were called out to fix it.
With the February 2014 replacement quote coming in at $38k, tenant OK Gift Shop passed the paperwork on to the landlord for it to make the arrangements for the work.
By the following October – with still no movement from the landlord and the mid-year climatic respite long forgotten – OK’s Minoru Nakamura demanded the problem be quickly addressed.
Landlord Peakgate Pty Ltd ignored OK’s pleas taking the view that air conditioning plant was the tenant’s responsibility.
After another hot summer OK finally served its notice to remedy breach in February 2015 – also ignored – and commenced proceedings in the Queensland Civil and Administrative Tribunal.
A QCAT conciliation attempt in October saw Peakgate pay an $18k deposit for replacement of the rooftop unit but when it failed to stump up with the balance so work could begin, a hearing was scheduled in November.
At the heart of OK’s claim lay competing interpretations of various provisions in the lease.
All three tribunal members noted the tenant had an obligation to “keep the premises in good condition, carry out repairs and fix any damage caused”.
The landlord though had a duty under the lease to ensure all services supplied to the premises were “working efficiently during the centre trading hours”.
The lease exempted the landlord from compensation liability to the tenant in the event of failure of services but as noted by the tribunal, such provision was contrary to section 42 of the Retail Shop Leases Act.
That section makes it clear that landlords are responsible to retail tenants who “suffer loss or damage” where a landlord fails to quickly repair “any breakdown of plant and equipment under the lessor’s care”.
On that basis the tribunal ruled that the replacement cost was clearly that of the landlord.
To ensure that the tenant was not left to “enter another summer without air conditioning”, the landlord was directed to pay the balance installation costs immediately.
OK also sought an order that the landlord maintain the equipment but because there was no dispute on foot as to that issue, the tribunal declined to make that order.