A Wynnum fast food operator who disputed she must pay ongoing repair costs for an 18-yr-old air conditioner has won $5.5k in landlord compensation.
Arguing that it was time for the unit to be replaced as a “capital item” at the landlord’s cost, Joanne Baxter fought out the claim among 8 other complaints over 5 days in the Queensland Civil and Administrative Tribunal.
Baxter’s company acquired her Subway franchise in February 2011 and occupies the premises as sub-tenant from Subway.
Because neither Subway nor centre owner Greg Baker gave Baxter a Retail Shop Leases Act disclosure notice at the start of the lease, she claimed compensation under RSLA s22.
Subway and Baker countered that she could not possibly be in any worse position by the absence of a disclosure notice given she had retained an accountant and lawyer to advise, had thoroughly read the lease, had conducted extensive due diligence and had previously owned two other Subway franchises.
QCAT’s appeal panel agreed. “It is difficult to accept she was prejudiced by any non-compliance and no evidence to indicate that any such information was excluded from the due diligence enquiries”.
When it came to air-conditioning, Baxter argued that uneconomical repairs to the old aircon unit are a “capital” expense, not a maintenance cost and therefore should be borne by her landlords.
The QCAT panel ruled – in support of Baker’s assertion that “it can last forever if properly maintained” – that because the lease provides for repairs, she must front the cost “until the air-conditioning unit cannot be repaired”.
On the other hand, re-painting might ordinarily be considered a “capital” item and therefore not recoverable from the subtenant under RSLA s 7(1)(a).
The painting charges billed to Baxter though, were only those relating to graffiti removal, fading and weathering. Because the “repaint did not improve the functionality of the building and did not change its character”, the panel ruled it was an allowable maintenance expense.
Baxter did have some wins.
Baker’s resistance to allowing a separate meter installed for power supply by an alternative electricity retailer resulted in an award of $3.5k compensation.
The value of stock lost when power was disconnected and the cost to interruption to trade as a result of flooding in April 2015 gave her another $2k.