25. 2002 – The Lucky Country

Life will be brighter than noonday, and darkness will become like morning. You will be secure, because there is hope; you will look about you and take your rest in safety. You will lie down, with no one to make you afraid, and many will court your favor. 

In late 2001 and early 2002 Amir Bodenstein had eight meetings with Mr Voukelatos, the owner of 39 Glebe Point Road. Due to a lack of seating and a bad smell coming from under the floor of that building, meetings were often held in the nearby MPSA studio. The owner impressed Bodenstein as a pleasant and honest man with whom he could do business.

In January 2002 a “core lease agreement” over the property was finalised between Voukelatos and Bodenstein. In it, the former agreed that he would pay the Council rates, that he would give Bodenstein the options of subleasing the premises and selling the business in it. Moreover, Bodenstein would not need to provide a guarantor or any insurance other than that for public liability.

Other conditions agreed to by Voukelatos included:

  • 3×5 years, $3,684.00 monthly
  • Rent increases adjusted to CPI annually and up 8% every 5 years
  • Reduced rent for six months
  • Owner would given tenant $5000 for roof replacement
  • An insurance claim regarding vandalism could be handled by the tenant, who would be paid any rebate due

In 1989 Voukelatos lodged a DA for the construction of a balcony and an outside stairs at the rear of the building as an extension to the first floor residence. That DA also changed the rear room of the first floor into kitchen/dining room.

Voukelatos told Bodenstein had previously engaged Phillip Johnston, a civil engineer, to inspect and report on 39 Glebe Point Road with a view to checking the structural feasibility of making an opening in the side wall.

Johnston’s first reported in 1990 that there were cracks in the wall, including a large crack in the south wall facing the park and that there were two poplar trees in that park which may have contributed to some of the cracks.

After making a second inspection, Johnston reported in 2001 that the two poplar trees had been removed and that just a small tree remained. The big crack in the southern wall seemed to have lessened since the first inspection. Underpinning was not considered appropriate. There was some water penetration which should be fixed. The wall seemed to have a slight bend which, however, thought could be an optical illusion. To achieve stability the internal walls did not need to be removed nor was the demolition of half of the building necessary. The still existing third tree should be removed.

In 2002 Bodenstein asked the owner if he had “any other documents” which might be relevant to him. The owner denied that he had.

Bodenstein paid the owner three months’ rent and a part payment of lease preparation fees. Mr and Mrs Voukelatos and his wife, Bodenstein and Pimost had dinner together to celebrate. Bodenstein thought to himself that Australia was indeed the “lucky country”.

1. A friendly relationship
2. Exclusive rights for 15 years
3. Plans from 1990
4. Johnston’s report from 2001
5. Any other documents
6. The Lucky Country

1. A friendly relationship

From 7 December 2001 to 3 January 2002 I had more than eight meetings with Mr Voukelatos. Soon after I met him in December 2001 Evos, who had owned a restaurant in the past in Thailand, came up with the idea of a Moroccan Restaurant as he also knew that my Partner is of Jewish Moroccan origin.

There was a bed smell from the ground floor of 39 G.P.R and no chairs to sit on. Most of our meetings took place at the Morden Paint studio which is a ten-minute walk and most took from one to two hours. On the occasions that I met Mr Voukelatos at 39 G.P.R he usually suggested that we go to the studio.

Morden Paint was completing the Arnott Residence project at that time and the studio was active mainly with making samples of Morden Paint products. Evos took part in some of those meetings and a good rapport was established between Mr Voukelatos, Evos and me.

Mr Voukelatos was impressed with Morden Paints products, awards and capabilities. He presented as a pleasant and honest man with whom I felt I could do business. It was apparent that he felt the same as he also extended an invitation to my family to visit and stay at his hotel in Greece.

2. Exclusive rights for 15 years

On 3 January 2002, we finalized the core lease agreement. Before that Mr Voukelatos was also negotiating leasing the premises with a prospective tenant who wanted to lease just the ground floor as a convenience shop.

I had some experience with Morden Paint in preparing two commercial leases in Mortlake Street, Concord and in Mitchell Street, Glebe. I was in Israel when those leases were created, yet at the time I was involved in all the commercial dealings of Morden Paint. I asked Mr Voukelatos to agree to certain conditions because of the big investment that would be required.

Mr Voukelatos agreed to the following requests: he would pay council rates, give me the option to sub-lease the premises and to sell the business plus I did not have to provide a guarantor or any other insurance apart from public liability. The other main conditions of the core lease agreement were advantageous to both sides:

3×5 years, $3,684.00 monthly BA 1, 39

Mr Voukelatos said that as he resides permanently on Lefka Island, Greece where he operates his hotel, he was looking for a long-term tenant who will give him peace of mind.

Because of the big investment of resources that this kind of project requires, I made it clear that I would not enter into a lease for a period less than a total of 15 years.

“1. Rent: $3,684.00 p/m

 2. Option: 15 years (5*3)”

CPI anually and up 8% every 5 years BA 1, 39

The annually rent increases were to be adjusted to the CPI. Between the two renewals of the options we agreed to avoid the process of market value and to limit the five-year rent increases to a future agreed percentage with a maximum of up to eight per cent.

“3. Rent adjustment: 

a. C.P.A every year

b. increase of up to 8% every 5 years.”

Free hand in renovations BA 1, 39

Mr Voukelatos was residing in Greece and did not visit Australia for ten years and Morden Paint and I were successfully operating in the building trade. We agreed that I would manage any renovations and design and that Mr Voukelatos would give me his consent in the case of any needed future structural changes.

We also agreed that if I wanted to make any structural changes I would be required to obtain the appropriate permits from Council.

“11. Tenants must obtain the appropriate permits to any structural changes to the property and the landlord must sign the approval for obtaining the permits.”

Reduced rent for six months BA 1, 39

I estimated that it would take six months to complete the renovations and the fit-out on the ground floor for the Café Restaurant. We agreed that I would pay a reduced rent for the first six months of the lease (first three month’s deposit) with myself to pay back 50 per cent of this discount in the rent over the following two years.

“7. Payment schedule: 

a.  First 3 months we shall pay                 $866.00 P/M

b.  Following 3 months we shall pay         $1734.00 P/M

d.  2nd & 3rd years we shall pay               $3684.00 P/M  + $352.00 P/M (50% recovery)

8.  Deposit:  1. Keys = $2,598.00 (7a)

                    2. Monthly payments in advance (7.b onward)”

Roof replacement BA1, 39

We agreed that Mr Voukelatos would give me $5000.00 for the roof replacement, but because fixing the roof was not urgent and because of the reduced rent we agreed to delay the replacement to a period from six-months from the beginning of the lease.

“5.  Roof & insulation: Landlord is to replace roof and to insulate, not before 6 months into the lease.”

Insurance claim BA1, 39

We agreed that I was to handle an insurance claim and to receive the rebate for the damages caused by prior vandalism, should the Insurance Company approve the claim.

“6. Insurance money to be passed on to us.”

3. Plans from 1990

Mr Voukelatos lodged in 1989 a B.A. for the construction of a balcony and an outside stairs at the rear of the building as an extension to the first floor residence. This B.A. also changed the rear room of the first floor into kitchen/dining room.

Mr Voukelatos said words to the effect of: “I didn’t carry out the work, because soon after the D.A. was approved I leased the premises” and that “I bought a hotel in Lefka Island and I left for Greece with my family.”

Mr Voukelatos gave me the drawings of the plan and he was very much in favor of this addition saying words to the effect of: “I would contribute $25,000 if you were to carry out a similar plan in the future”.

01.02.90 B.A. Extension and separation *DB 1-5, 144-8

“Amendment to approved B.A Application at 39 Glebe Point Road, Glebe for Mr & Mrs Zois Voukelatos.

1:100   1st Feb 1990”

Proposed alterations and spiral stairs, 39 G.P.R, Mr & Mrs Zois Voukelatos Oct 1989.”

4. Johnston’s report from 2001

Mr Voukelatos said words to the effect of: “I had commissioned this report to check the structural feasibility of making an opening in the side wall” and that “I did it because the tenant at that time lodged a D.A. to make a door/opening in the wall” and that “the Council didn’t agreed to the door/opening to the park” and that “the tenant sub-leased the premises to other people” and that “the tenant didn’t pass on to me a few months’ rental”.

Mr Voukelatos said in regard to the report words to the effect of: “the engineer who is the same engineer that was responsible of rebuilding the front wall ten years ago did not find a problem with making the door/openings”.

Mr Voukelatos was skeptical about the possibility of getting a D.A. approval from the Council saying words to the effect of: “the wall is adjacent to a public park” (seating). I told Mr Voukelatos words to the effect of: “If it is possible to make the openings , I will want to carry out the work. Then I will request a two-and-a-half year extension to make the lease a total of 17.5 years”.

25.06.01 Johnston to Mr & Mrs Voukelatos DP 1-5, 176-80

“1.2 – Condition in 1990 The writer first inspected the building on 5th September 1990, when work was commencing to rectify large cracks in the front wall, facing the road. These cracks were later found to be due to long term twisted of the large timber beam supporting the walls over the shop front, and were not related to the cracking in other walls.  

Regarding the other walls, the report dated 6th September 1990 (copy attached) stated ‘There are many cracks in the wall of No 39, including a large crack in the (south*) wall facing the park. Two well-established poplar trees in the park and close to the building may have caused some of the cracking. Other cracks may be due to other factors, e.g. differential foundation movement.’

The main concern at the time was the front wall of the building, and no further consideration of the rest of the building was requested by the owner.

*’south’ was in error. The wall more nearly faces east.

1.3 – Recent inspections and reports. More recently, a tenant in No 39 submitted a Development Application with an accompanying Engineer’s report stating the wall facing the park needed underpinning.

The owner then engaged Rooney and Bye, Consulting Engineers, whose report No 4362 described the cracking in the wall and stated that ‘the wall bows in and out for the full height, and it appears that it rotated towards the east’. The cause of the cracking and bowing was not determined.  

The writer was asked by the owners’ agent to advise on rectification work which may be required, and the building was again inspected on 1 the June 2001.

Part 2 – Condition of the Building in June 2001.

2.1 – East wall, facing Dan Minogue Park. This wall has been the main focus of recent reports. The poplar trees mentioned in the report of 6th September 1990 have since been removed, apparently some few years ago.

There is one small tree near the rear end of the wall, and within one meter of the wall, but it does not appear to have caused damaged at this stage.

The cracks in the wall are shown below, and there are photos of the wall in report No 4362 by Rooney and Bye. The crack does not seem to be as wide as some were in 1990. They may have partially closed, or have been filled as mentioned by Rooney and Bye.

The current crack widths, generally less than 5mm, and most less that 1 or 2mm, would be regarded as slight damage if due to foundation movement, according to the classification in AS 2870. ‘Residential Slabs and Footing’, Appendix A. However it would be difficult to establish the reasons for the cracks, considering the age of the building and without knowing the history of when the cracks occurred.

The foundation material in the Glebe area, usually shallow clayey sand/silt grading to sandstone. Would be Class S, stable, under AS 2870, and would be expected to cause the degree damage seen in this wall. Some other possible causes would be building on filled or partially filled site, leaking of pipes causing lowered foundation bearing capacity, and localized damage from growth of nearby trees. E.g. the poplars mentioned above.

Part 3 Comments and Recommendation.

3.1 – Cracks in walls, and water Penetration. The crack widths are slight to moderate, and are more cosmetic problem than a structural problem.

To quote from AS 2870 ‘Residential Floor Slabs and Footings’ Appendix A, ‘Even significant masonry cracking with crack width over 5mm often has no influence on the function of the wall and only presents aesthetic problem. 

Underpinning of the east wall facing the park, suggested by others, is not considered to be necessary or appropriate. Underpinning is normally carried out where it is proposed to excavate beside an existing wall below the level of the footing thus undermining the footing.

The cracks may be allowing water penetration in wet weather, and if this reaches parts of the timber roof and floor frames, could lead to deterioration of the timber. It would be advisable, as a matter of routine maintenance, to find and correct the reason for the water penetration occurring at the front south-east corner, mentioned above, and also to check for other areas where water may be penetrating to the frame. 

3.2 – Compliance of the Building with Current Standards. Since the work on the building in 1990, new versions of AS 3700 ‘Masonry Structures (1998) and AS 1170.4 ‘Earthquake Loads’ (1993) have been issued.

Provisions in the Masonry Structures standards, which require limits on cracking, and on preventing water penetration, are not met because of the existing cracking, but the walls comply with other requirements such as fire resistance, strength, and stability. In particular, the stability of the front of the building was checked for wind or seismic loading acting at right angles to the sidewalls, as there are no cross-walls near the front of the building at the ground floor – see below.

Regarding the ‘bowing’ and ‘rotation towards the east’ mentioned by Rooney & Bye in Report number 4362, the writer considers this is only illusory caused by the fact the wall has a slight bend built into it about 4.5 meters back from the road. The bend can been seen outside by following the line of the wall at ground level, and inside by a bend in the wall/ceiling cornice, and by a joint in the wall lining board. When viewed from outside, the effect of the bend is to give the impression that the wall has bowed out.

This opinion is confirmed by: – a Surveyor’s Certificate by Michel C Whelan, Ref. 830327, dated 23rd March 1983, copy attached, which shows the existence of the bend in the wall, and, no separation or relative movement can be seen between the wall and the first floor frame.

Other Parts of the Building. As reported in 1990, there are cracks in other walls of the building. Cracks in the north end walls at the rear are mentioned, and shown in photos, by Rooney and Bye, report No 4362.

These cracks are near the ends of the sidewall and the centre dividing wall, which are about 16m and 22m long, respectively. The characteristic expansion of brickwork in those long walls may have caused the crack in the end walls, within a few years of construction.

The ground and first floor at the front, south east corner, where the front wall was re-built in brick-veneer in 1990, some water penetration has occurred, shoeing as straining of the plasterboard lining and cornice.

The front wall of No. 41, which was stabilized in 1990, has not yet been replaced in a similar manner to the 1990 re-building of the front of No. 39.

Considering the Plan view of the building, the first floor acts as a diaphragm providing lateral restraint to the front of the building, carrying the loads back to the internal cross-wall further back in the building.

Therefore for continuing stability it is necessary not to remove the internal cross walls, and not to demolish one half of the building leaving the other half standing.

3.3 – Existing Tree in Dan Minogue Park. The existing small tree within one meter of the east side wall does not appear to have caused damage yet, however, advice should be sought on whether it could do so in the future, including the species of the tree and its grown habit. In necessary it should be moved to location in the park further from the building.

Perhaps the onus to do this should be on Council.

3.4 – Property Title. The Surveyors’ Certificate by Micheal C Whelan, dated 23rd March 1983, states that the building was erected before the commencement of the Local Government Act in 1919, and that DP245404 describing Lot 9 was created in 1974.

It was indented to define the Lot by the location of the existing walls, but this was not done on the east side, where the boundary was defined such that the bend in the wall encroaches into the park. It might be possible to amend the DP so that Lot 9 encompasses the whole of the building, reflecting the actual facts on the ground when the DP was created.”

5. Any other documents

Around 3rd January, 2002, Mr Voukelatos gave me two documents. During our meetings Mr Voukelatos always carried a plastic bag containing papers. When he gave me the two documents which he pulled out from the same plastic bag and appeared to be sorting them out.

I asked Mr Voukelatos words to the effect of: “Do you have any other documents with information that I might need?” Mr Voukelatos replied words to the effect of: “No, I don’t have any documents that are relevant”. These two documents reflected his ideas about options for upgrading his premises.

6. The Lucky Country

Mr Voukelatos invited Evos and me to celebrate with him and with Mrs Vessela Voukelatos, our agreement in the next-door restaurant at 41 GPR. That evening I gave Mr Voukelatos $3,188.00 in cash being for three months reduced rent and $300.00 for my share in the cost of the lease preparation.

Mr Voukelatos in return gave me a receipt and the keys to the premises and it was agreed that Mr Voukelatos’ Lawyer would prepare the lease contract according to the Core Lease Agreement. At this diner I was saying to myself to the effect: “it is for real, it is the Lucky Country“.

05.01.02 Invoice Statement BB 1, 40

To:Amir Bodenstein

From: Zois Voukelatos/Vessela Voukelatos

Rent re 39 Glebe Point Road, Glebe for 3 months Jan/Feb&Mar 2002(3×866=2598)

Reimbursement legal fees 300 GST 290

Total received in cash $3188