Alamdo Holdings Pty Ltd v Reece Australia Pty Ltd

[2025] NSWSC 946

Supreme Court

New South Wales

Medium Neutral Citation:

Alamdo Holdings Pty Ltd v Reece Australia Pty Ltd [2025] NSWSC 946

Hearing dates:

23-26 June 2025

Date of orders:

20 August 2025

Decision date:

20 August 2025

Jurisdiction:

Equity - Commercial List

Before:

Nixon J

Decision:

1. Direct that the parties are to bring in short minutes of order by 5pm on 3 September 2025 to give effect to the reasons for judgment.

2. Direct that, in the event the parties are unable to agree on orders to give effect to the reasons for judgment (including orders as to interest and costs), the parties are to exchange and provide to the Associate to Nixon J, by 5pm on 3 September 2025, the orders which each party proposes and submissions (limited to 5 pages) on those orders, indicating whether, and if so why, an oral hearing is requested to deal with the matters in dispute.

Catchwords:

REAL PROPERTY – COMMERCIAL AND RETAIL LEASES – claim for unpaid rent and outgoings – whether the Defendant validly terminated the lease pursuant to a contractual right of termination – whether the Defendant breached the Lease prior to termination – whether there was a causal link between the Defendant’s breach and the event giving rise to the right to termination

Legislation Cited:

Environmental Planning and Assessment Act 1979 (NSW) s 1.3, 9.34, 9.37

Environmental Planning & Assessment Regulation 2021 (NSW) s 24(3), 36, 39, 64

Environmental Planning and Assessment (Development Certification and Fire Safety) Regulation 2021 (NSW) s 19(1)(c)

Cases Cited:

Abourjaily v Parkview Estate Pty Ltd [2017] NSWSC 1256

Alliance Building and Construction Pty Ltd v Veesaunt Property Syndicate 1 Pty Ltd [2024] QCA 75

BP Refinery (Westenport) v Shire of Hastings (1977) 180 CLR 266

Cheall v Association of Professional Executive Clerical and Computer Staff [1983] 2 AC 180

Coshott v Wollahra Municipal Council (1988) 14 NSWLR 675

CSKS Holdings Pty Ltd v Woollahra Council (2014) 205 LGERA 207

Cypjayne Pty Limited v Babcock & Brown International Pty Ltd [2011] NSWCA 173

Electricity Generation Corporation v Woodside Energy Ltd; Woodside Energy Ltd v Electricity Generation Corporation (2014) 251 CLR 640; [2014] HCA 7

Gange v Sullivan (1966) 116 CLR 418; [1966] HCA 55

Haxglow Pty Ltd v Mirvac Retail Sub SPV Pty Ltd [2020] NSWSC 233

HDI Global Speciality SE v Wonkana No 3 Pty Ltd (2020) 104 NSWLR 634; [2020] NSWCA 296

Hunyor v Tilelli (1997) 8 BPR 15,629

Italo-Australian Club Ltd v National Australia Bank Ltd (1989) NSW ConvR 55-461

Joseph Street Pty Ltd & Ors v Tan & Ors (2012) 38 VR 241; [2012] VSCA 113

Kheng v Secola & Ors [2001] WASCA 3

Kyrwood v Drinkwater [2000] NSWCA 126

Langley v Foster (1906) 4 CLR 167

Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70

Masters v Belpate Pty Ltd [2001] NSWSC 169

Mitchell v Pattern Holdings Pty Ltd [2002] NSWCA 212

MK & JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA

MM Constructions (Aust) Pty Ltd v Port Stephens Council [2012] NSWCA 417

Mordue v Kroone [2009] NSWSC 255

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37

National Australia Bank Ltd v Clownes [2013] NSWCA 179

New Zealand Shipping Co Ltd v Societe des Ateliers et Chantiers de France [1919] AC 1

Nina’s Bar Bistro Pty Ltd v MBE Corp (Sydney) Pty Ltd [1984] 3 NSWLR 613

Norton Property Group Pty Ltd v Ozzy States Pty Ltd (in liq) [2020] NSWCA 23

Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126; [2001] HCA 45

Plumor Pty Ltd v Handley (1996) 41 NSWLR 30

Re Sigma Finance Corp (in administrative receivership) [2010] 1 All ER 571; [2009] UKSC 2

Rudi’s Enterprises Pty Ltd v Jay (1987) 10 NSWLR 568

Sanctuary Investments Pty Ltd v St Gregory’s Armenian School Incorporated (1998) 9 BPR 16,823

Sentinel Orange Homemaker Pty Ltd v Davis Investment Group Holdings Pty Ltd (in liq) [2021] NSWSC 550

Suttor v Gundowda Pty Ltd (1950) 82 CLR 418; [1950] HCA 35

Tamanna v Zattere [2017] NSWSC 1388

TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130

VS Property and Holding Pty Ltd v Zurzolo [2024] VSCA 199

Westpac Banking Corporation v Tanzone Pty Ltd (2000) 113 NSWLR 73; [2000] NSWCA 25

Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370

Category:

Principal judgment

Parties:

Alamdo Holdings Pty Ltd (Plaintiff, Cross-Defendant)
Reece Australia Pty Ltd (Defendant, Cross-Claimant)

Representation:

Counsel:
J A C Potts SC and A A Cameron (Plaintiff)
J Lazarus SC and J Pokoney (Defendant)

Solicitors:
Speed and Stracey Lawyers (Plaintiff)
Mills Oakley (Defendant)

File Number(s):

2023/00256237

Publication restriction:

Nil

JUDGMENT

Introduction

1. This proceeding concerns a commercial lease between the Plaintiff, Alamdo Holdings Pty Ltd, and the Defendant, Reece Australia Pty Ltd (the Lease). The principal issue for determination is whether the Lease was validly terminated on 27 June 2023 or whether it remains on foot.

2. The Lease was executed on 23 December 2022 and is expressed to be for a period of ten years, with a number of options to renew. The Premises which are the subject of the Lease are Unit 4, 6-8 Hudson Avenue, Castle Hill, being one of four units in a commercial warehouse building.

3. Reece contends that it terminated the Lease on 27 June 2023, pursuant to Article 29(9), which provided that “either party may terminate this lease if an Occupation Certificate is not obtained within the period ending six (6) months from the Commencement Date”. It is common ground that an Occupation Certificate was not obtained by the relevant date (namely, 23 June 2023).

4. Alamdo contends that Reece was unable to rely on the express right to terminate in Article 29(9) of the Lease, as it was Reece’s own default that caused the delay in obtaining an occupation certificate. In particular, Alamdo contends that the delay resulted from Reece’s breaches of:

1. its obligation under Article 29(1) of the Lease to apply to the Hills Shire Council (the Council), by 23 December 2022, for development consent for its proposed fit-out works and use of the Premises; and

2. its obligation under Article 29(2) of the Lease to “provide all plans, statements and other information required for Council to expeditiously process its application”.

5. The claim brought by Alamdo is for rent and outgoings said to have fallen due following 27 June 2023. If Reece validly terminated the Lease, then this claim must fail. If not, then Reece did not advance any other ground for asserting that the Lease had come to an end, or for disputing the sum claimed by Alamdo.

6. Reece has brought a cross claim against Alamdo, which will rise or fall depending on the outcome of Alamdo’s claim against Reece. The cross claim relates to a bank guarantee in the amount of $149,640 which was provided by Reece on 7 March 2023 as security for the performance of its obligations under the Lease (the Bank Guarantee). On 14 September 2023, Alamdo called on the Bank Guarantee and, on 21 September 2023, funds totalling $149,640.00 were transferred by the National Australia Bank (NAB) to Alamdo. It was common ground that:

1. if Alamdo’s claim against Reece succeeds, then Reece’s cross claim will fail (with the amount of the Bank Guarantee being applied to reduce the quantum of rent and outgoings owing to Alamdo); and

2. if Alamdo’s claim against Reece fails, then Reece’s cross claim will succeed, and Alamdo will be liable to repay the amount of the Bank Guarantee to Reece.

7. Accordingly, the main issues that arise for determination are:

1. the proper construction of Article 29 of the Lease;

2. whether Reece breached its obligations under Article 29(1) or Article 29(2) of the Lease;

3. if so, whether there was a causal link between any such breach and the failure to obtain an occupation certificate by 23 June 2023; and

4. whether, by reason of those matters, Reece was not entitled to rely on the express right of termination under Article 29(9) of the Lease.

Factual Background

Lay witnesses

8. Each of the parties called a single lay witness.

9. Alamdo called its principal, Mr Anthony Maurici.

10. Reece called Ms Aranka Young of Novatec Design Pty Ltd, who was engaged by Reece to manage Reece’s development application.

11. There was no challenge to the credit of either witness.

12. In its closing written submissions, Alamdo submitted that Reece had, without explanation, failed to call:

1. any employee of Reece who had involvement with the Lease or the development application (noting that Reece had served an affidavit of one of its officers, Mr Kerr, but elected not to call him after being notified that he would be required for cross-examination); or

2. Mr Brent Williams, who was engaged by Novatec and who (as discussed below) prepared various iterations of a “BCA Compliance Assessment” in relation to the Premises.

13. Alamdo submitted that it should be inferred that the evidence of any such witness would not have assisted Reece’s case.

14. However, for the most part, the factual background was uncontentious. The findings set out below are principally based on the contemporaneous documentary record. In setting out the relevant events, I address any factual matters of significance which were in dispute (and any particular inferences sought by Alamdo regarding such events, which Alamdo contended could be more confidently drawn in the absence of Mr Williams or any employee of Reece).

Commencement of negotiations

15. The previous tenant of the Premises was Flip Out Australia Pty Ltd, which operated an indoor trampoline facility. Flip Out vacated the Premises in 2021.

16. In around April 2021, Alamdo and Reece commenced negotiations in respect of a lease of the Premises. On 21 June 2021, Alamdo and Reece entered into a non-binding Heads of Agreement, which granted Reece an exclusive due diligence period for 30 days.

17. The Heads of Agreement contemplated that Reece would undertake fit-out works “required to enable Reece to operate its business from the [Premises]”. By around this time, Reece had already prepared fit-out plans for the Premises, which were provided to Alamdo.

Fire Safety Order

18. On 19 August 2021, the Council issued Alamdo with “Fire Safety Order Number 1”, pursuant to section 9.34(1)(b) of the Environmental Planning and Assessment Act 1979 (NSW) (the Fire Safety Order).

19. The Fire Safety Order directed Alamdo to undertake certain fire safety works to the commercial warehouse building within which the Premises were located. The Fire Safety Order identified 17 separate items in respect of which works were required to be undertaken, namely:

1. fire seals protecting openings in fire-resisting construction;

2. fire hydrant booster – signage;

3. fire hydrant booster – pressure gauge;

4. fire hydrant booster – thrust block;

5. fire hydrant booster – assemblies;

6. external attack fire hydrants;

7. installation of bollards to carparking spaces;

8. exit signage;

9. emergency lighting;

10. travel distance to exit (northern basement carpark);

11. locked fire exits;

12. door handles and latches;

13. separation of external walls and openings in different fire compartments;

14. sprinklers – block plan;

15. sprinklers – certification;

16. location of hose reels; and

17. mechanical air handling system.

20. The reasons for the making of the Fire Safety Order were stated to be as follows:

“1.   The current provisions for fire safety and fire safety awareness are not adequate to ensure the safety of persons in the event of a fire.

2.   The current provision for fire safety is inadequate to prevent fire.

3.   The current provision of fire safety is inadequate to suppress fire.

4.   The current provision for fire safety is inadequate to prevent the spread of fire.

5.   The lack of maintenance of the premises constitutes a significant fire hazard.

6.   There are insufficient measures to protect persons using the building, and to facilitate their egress from the building, in the event of fire.

7.   Council officers conducted an initial site inspection (walkthrough) of a portion of the building and identified issues with the fire hydrant system, automatic fire detection system and exit signage.”

21. The Fire Safety Order stated that compliance with the order “must be achieved by 15 February 2022” (emphasis in original). The Fire Safety Order further stated that non-compliance was an offence, for which substantial penalties could be imposed.

22. The Fire Safety Order was signed on behalf of the Council by Mr Charbel Gittany, whose title was “Senior Building Surveyor – Fire Safety”.

23. Although Alamdo sent a number of emails to the Council requesting an extension of this deadline, there was no evidence that any such extension was formally granted.

24. Alamdo did not provide Reece with a copy of this Fire Safety Order during the negotiations in respect of the Lease. Reece only learned of the existence of the Fire Safety Order, as the result of a search conducted by its solicitors, shortly prior to entry into the Lease.

25. As outlined below, the works that were necessary in order to bring the building into compliance with the Fire Safety Order had not been completed by the time that the Lease was entered.

Engagement of Novatec and BW&A

26. In September 2021, Reece engaged Novatec to prepare an initial plan or concept drawing for the Premises. Ms Young was responsible for managing this project.

27. Ms Young has been a director of Novatec since 1993. In that period:

1. Novatec had been engaged by Reece to provide architectural and design services in respect of Reece’s industrial and commercial developments, and the fit-out of industrial trade branches and offices; and

2. Ms Young had overseen approximately 686 development applications, some 177 of which related to tenant fit-out work, and 88 of which were in New South Wales.

28. Shortly after Novatec was retained by Reece, Novatec in turn engaged Mr Brent Williams of BW&A National Building Consultants. Mr Williams’ initial engagement was to ascertain, amongst other things, the building’s type of construction, in order to determine whether a fire-rated wall would be required between the Premises and the adjoining unit in the building (Unit 5).

Communications in October 2021

29. On 1 October 2021, Mr Maurici informed the Council that Flip Out had vacated the Premises, and that the Premises were to be leased to another tenant who would be using them for “storage, distribution and sales of hardware, building and landscaping supplies”. On 5 October 2021, the Council informed Mr Maurici that it would be necessary for the new tenant to lodge a development application for the change in use and for any building works which were proposed.

30. Subsequently, Mr Maurici provided Reece with various documents relating to Flip Out’s tenancy of the Premises, including the development consent obtained by Flip Out from the Council, and a report which had been prepared for Flip Out by BuildCert Consultants, dated 9 December 2013. This report contained the following statements in a section headed “Purpose of Building Report”:

“The purpose of this report is to:

• Identify the relevant Deemed-to-Satisfy Provisions of the Building Code of Australia (BCA) in relation to Clauses C, D, E & F and provide any non- compliances with the relevant Clauses for the proposed development;

It is understood, this report will accompany a development application to be lodged with the Hills Shire Council.”

31. The BuildCert report identified the building as being of “Type A” construction. The report contained a section headed “Building Code of Australia Assessment” which set out, on a clause-by-clause basis, the deemed-to-satisfy provisions in the Building Code of Australia (BCA), and which stated whether each provision was applicable or not (and, if it was, indicated whether there was compliance, non-compliance or “capable of compliance with design”).

32. On 20 October 2021, Mr Mitchell Howes, an engineer who was engaged by Reece, inspected the Premises. On 22 October 2021, Mr Howes provided a report to Reece which raised various “Fire Rating Issues”, including that the intertenancy wall between the Premises and Unit 5 did not meet the requirements for a fire wall.

33. On 26 October 2021, Reece forwarded Mr Howes’ report to Alamdo. Several hours later, Mr Maurici wrote to Reece, disputing the conclusions of Mr Howes and stating that there was “no requirement for a fire wall” as the building was of “Type A construction”. (It should be noted that the experts in this matter agreed with Mr Maurici’s conclusion.) In the same email, Mr Maurici stated that there had been “enough delay” and that Alamdo would be “seeking other tenants for the premises”.

34. This communication appears to have brought the lease negotiations to a halt for a period of around eight months.

Communications in June to November 2022

35. In around June 2022, negotiations appear to have recommenced.

36. On 14 June 2022, Ms Natashia Radford, the Property Development Manager at Reece, contacted Mr Brendan Wein of CBRE, Alamdo’s real estate agent, with a query regarding “the construction/detail of the wall separating [the Premises and Unit 5] and if any fire rating has been installed on this wall”. Mr Maurici responded the following day, confirming that “the wall does not require to be fire rated because it is within a compartment that does not exceed the maximum permissible area or volume”. Mr Maurici noted that Mr Howes was “not a BCA consultant”, and invited Reece “to have a BCA consultant review the premises”.

37. On 18 August 2022, Ms Young, emailed Mr Williams of BW&A to request “a quotation for a NCC [National Construction Code] report base[d] on the documents in this dropbox”. Ms Young stated that BW&A was to issue a report to Reece “so they can negotiate a lease contribution deal to make the site comply”. Ms Young also noted that it would be necessary “to do a change of use at council etc…”. Ms Young confirmed in cross-examination that she was aware, at this time, that there would need to be development consent for Reece’s fit-out of the Premises and for the change of use, and that the proposed report from BW&A was “a step along the way to that process”.

38. On 30 September 2022, BW&A provided Novatec with a draft report “for comment”. Ms Young stated in cross-examination that this report was commissioned so that if the project “progressed to construction certificate stage we had some ideas of what [we] needed to address”. This report described the “Scope of Review” as follows:

“• Determine scope of works required to achieve a C of O [Occupation Certificate] for the base building.

• Determine elements that require upgrading to achieve an Occupation Certificate.

• Determine if any of the element outcomes are not achievable, as this will be the dealbreaker on the tenancy.”

39. This report identified the building as being of “Type A” construction and concluded with the following “Findings”:

“It is my opinion that Construction Certificate would issue for the fit out of the building as a Workshop/Wholesale building for the use by Reece.

•  Unsure of the original base build Occupation Certificate however should a new use be proposed a new Occupation Certificate would be issued at            satisfactory completion of the required works.

•  To achieve an Occupation Certificate for the new use, the building will need to comply with the current BCA requirements. This may include:

•  Construction of Fire Walls between tenancies.

•  Maintaining/upgrading fire walls and or external walls to ensure correct fire resistance is achieved.

•  Upgrade alterations to the exiting fire service.

•  Should the existing mezzanine floor be proposed to be reused a structural engineer will be required to assess the structure to review loadings proposed in relation to the existing structure.”

40. On 21 October 2022, the Council issued a development consent in respect of an application made by a business called Dutton for the occupation and fit-out of Unit 5 for use as a car dealership (Dutton DA). This development consent was granted around one month after the Dutton DA was lodged, and appears to have been granted without a BCA report having been provided by Dutton to the Council.

40. On 8 November 2022, Ms Radford sent an offer for the lease of the Premises to Alamdo’s agent (Mr Matthew Alessi of CBRE), and attached Reece’s proposed fit-out and the draft report provided by BW&A in September 2022.

41. On 11 November 2022, Mr Maurici sent Reece a counter-offer, and also provided comments on the draft BW&A report. Mr Maurici stated that he had “offered to recommend a more competent building surveyor, because the report contains many errors [of] fact and incorrect recommendations primarily based on their engineer’s [Mr Howes’] report”. Mr Maurici expressed the view that the report was “correct” in stating “that an OC [Occupation Certificate] could be obtained”, but that its conclusions regarding “fire walls and resistance” were “incorrect”, and repeated that Mr Howes’ report had “erroneously” stated that “the intertenancy wall should be a fire wall”. Mr Maurici concluded that he was “confident that no major upgrade works will be required to the premises”. Ms Radford forwarded these comments to Ms Young, who in turn forwarded them to Mr Williams, stating that she “would prefer not to have any surprises for documentation and permits if things proceed”.

42. On 17 November 2022, Mr Maurici sent an email to Ms Radford attaching the BCA compliance report prepared for Flip Out by BuildCert (see paragraph [30] above), together with:

1. an advice prepared by Mobius Fire Safety Pty Ltd for Flip Out, dated 12 November 2015, which concluded that the building was Type A construction and, accordingly, the intertenancy wall was not required to be a fire wall; and

2. a fire engineering report prepared by Mobius dated 24 February 2016, regarding its development of the “alternative solution” in respect of the mezzanine level of the Premises.

44. In this email, Mr Maurici stated that: “As I am confident that the building complies to your use and will require minimal compliance works, Alamdo is prepared to carry out any BCA compliance work to the base building, should any issue arise in this regard…”. On the same day, this correspondence was forwarded by Reece to Novatec.

Preparation of the BCA Report Version 1

45. In December 2022, Novatec was preparing a development application for Reece in respect of the Premises. Ms Young gave evidence that a member of her staff, Mr Bradley McKinley, was putting together the documents for this application under her supervision.

46. Ms Young acknowledged during cross-examination that, at this time, the Council was not a council that she was “familiar dealing with”. She recalled being shown a “council checklist” downloaded from the internet, which included a reference to a BCA report (although there was no form of the checklist in evidence which was issued by the Council as at that date and which bore such a reference). Ms Young gave evidence that Mr McKinley had made a telephone call to the Council on 15 December 2022, to confirm what was required for the development application. Mr McKinley informed Ms Young that he had been told, in this call, that in order to make the development application, Novatec “needed to obtain a BCA report”. Mr McKinley did not convey to Ms Young that the Council employee had told him anything regarding what the BCA report needed to include.

47. Ms Young explained that it was her view at that time, based on previous development applications, that a BCA report generally identifies whether “a particular element is likely to comply”, but does not “provide any advice”, because “at the end of the DA process the council will put conditions in the approval process and what they want”.

48. Ms Young also gave evidence that, on the same day, she informed Reece that the Council required a BCA report to accompany the development application. She did this so that Reece “understood [Novatec] needed to procure one”, because she needed to get approval to incur the related costs.

49. Ms Young’s evidence that Novatec was informed by the Council, on 15 December 2022, that the Council required a BCA compliance report in order to assess Reece’s development application is confirmed by the following matters:

1. at 3.12pm on 15 December 2022, Ms Young left a message for Mr Williams, as follows: “Wanting to speak to you about doing a BCA Compliance Report for the council at the above mentioned address [namely, the Premises]” (emphasis added);

2. at 2.47pm on 16 December 2022, Mr Williams sent an email to Ms Young enclosing a report headed “Preliminary Regulatory BCA Compliance Assessment” (BCA Report Version 1); and

3. around 15 minutes after receiving this email, Ms Young forwarded the BCA Report Version 1 to Ms Radford, describing it as “a BCA report that needed to be done as part of the change of use for the DA”.

50. I accept Alamdo’s submission that, given the timing of Ms Young’s request and Mr Williams’ response, and given the content of the BCA Report Version 1, it appears that Mr Williams prepared this report in less than a day, based on another document. In particular, the opening words of the report state that it is based on a review of design development drawings dated September 2021 and prepared by “Bruce Mactier (Architect)”. There were no such drawings prepared by Mr Mactier. Ms Young agreed in cross-examination that Mr Mactier is a person who had no involvement with Reece’s development application.

51. The BCA Report Version 1 identified the building as being of “Type A Construction”. Leaving aside the preliminaries, the entirety of the substantive part of the report was as follows:

“Based on the NCC 2019 Volume 1 Amendment 1 – the following sections outline the non-compliances that must be addressed:

Section B. Structural Provisions:

Structural Certification of the existing mezzanine floor will be required to satisfy loads proposed to be improvised

Section C. Fire Resistance:

Fire Resistance level of existing walls to be established.

Doorway providing access to toilet facilities may be required to be fire rated.

Section D. Access and Egress:

Existing exit doors (3of) will satisfy the requirements of the BCA.

Travel distance to exits will need to be considered in conjunction with the racking layouts.

Access for persons with disabilities will be required to be provided throughout the building and is subject to detailed review.

Section E. Services and Equipment:

The building will need to be provided with, but not limited [to];

•  Fire Hydrants

•  Fire Hose Reels

•  Fire Extinguisher

•  Exit Signs

•  Emergency Lighting

•  Mechanical Ventilation

•  Portable fire extinguishers

•  Fire Door (If required)

A full list of Essential Safety Measures required to be installed and maintained within the building which will be provided in the way of a Fire Safety Schedule at the time of issue of the Construction Certificate.

Assessment of the existing fire hydrant & fire hose reel system will be carried out at Construction Certificate assessment.

Section F. Health and Safety:

Toilet Facilities are provided.

The number of facilities required will depend on the number of people deemed to occupy the building. Statement by tenant to be provided indicating building occupant numbers. An accessible unisex toilet facility has been indicated as part of the fitout works.

Section J. Energy Efficiency:

Section J assessment of the building may be required, however will be further considered at the time of Construction Certificate Assessment.

Other Comments:

Fire Service Certification will be required.

The Development Approval (DA) may contain conditions that may affect the building design. All conditions of the DA should be reviewed in detail. A full investigation should be made in relation to contributions – levies and other applicable fees that may apply to the development.

Conclusion:

Based on the information submitted to date no major concerns have been identified and no issues that would not [sic] prevent the issue of the Construction Certificate and eventually Occupation Certificate.”

52. As set out above, Mr Williams’ report referred to “NCC 2019 Volume 1 Amendment 1”. It was common ground that the relevant version of the BCA at all material times is the version headed “National Construction Code Volume 1 - Building Code of Australia 2019 Amendment 1”.

53. In her email which forwarded the BCA Report Version 1 to Reece on 16 December 2022, Ms Young advised that it “does not need to go [to] the building owners as it is for a council DA” (emphasis in original), and stated that she did not want the landlord “using this document for his OC purposes”.

Query regarding Fire Safety Order

54. On 16 December 2022, Reece’s solicitors sent to Ms Radford a “Certificate as to Orders” of the same date. This Certificate was issued by the Council, and indicated that the Fire Safety Order was still outstanding. The Certificate stated that Mr Charbel Gittany of the Council should be contacted for any further information regarding this matter.

55. On 19 December 2022, Ms Radford sent an email to Mr Maurici which attached the Certificate in respect of the Fire Safety Order, and sought assurance that Alamdo had “this in hand” and that the required works would “be completed prior to lease commencement”. On the same day, Mr Maurici responded to Ms Radford, describing the Fire Safety Order as “an old notice” which “has been addressed by both our fire services contractor and also our fire engineering consultant”. Mr Maurici provided comments in respect of each of the seventeen items in the Fire Safety Order. He indicated that eleven of them had been addressed, and that the remaining six were “in hand”, these being items numbered 4 (fire hydrant booster – thrust block), 5 (fire hydrant booster – assembly), 10 (travel distance to exit), 13 (separation of external walls and opening in different fire compartments), 15 (sprinkler – certification) and 17 (mechanical air handling system). Mr Maurici also stated as follows:

“None of these items impact on your tenancy directly other than item 13 and are Lessor’s compliance works.

The work will not be completed by the commencement date and will not interfere with Reece obtaining a DA for occupation and use”

56. Shortly after receipt of this email, Ms Radford asked Mr Maurici: “do you have the close out doc’s / has council sent through a letter to confirm the items [in the Fire Safety Order] have been completed?” Mr Maurici responded as follows:

“Council wants all works to be completed before withdrawing the order. Please bear in mind that the building generally complied with all previous regulations and codes and the items in the order relate to upgrade compliance works relevant to the new codes. From a practical fire safety perspective everything works now.

I expect that all items will be finished with sign off from Council before you occupy. However, even if they have not been completed, Council will not use that to hold up the DA or impose onerous conditions. Dutton had no difficulty in relation to the matters in the order in obtaining their DA.”

Development Application is submitted

57. On 19 December 2022, Ms Young sent Reece a copy of the “documents that will form the DA submission once Reece approves”. Ms Young listed, in a series of bullet points, the relevant documents including “BCA Compliance Assessment” (that is, the BCA Report Version 1), and attached a copy of each of them.

58. On 20 December 2022, Novatec uploaded Reece’s development application to the Planning Portal (Development Application).

59. The “Pre-Lodgement Application Form”, which was completed by Novatec when submitting the Development Application, included the following statement:

“Once this application form is completed, it and the supporting documents will be submitted to the Council for lodgement, at which time the fees will be calculated. The Council will contact you to obtain payment.”

60. The Development Application sought approval from the Council to:

1. change the use/classification of the Premises under the BCA from class 9b (recreation) to class 7b (warehousing);

2. install signage;

3. conduct minor external works, including modifying the existing roller door to allow for a new sliding entry door, and installing a new canopy over this entrance; and

4. conduct an internal fit-out.

61. The documents provided with the Development Application included the BCA Report Version 1.

62. On 21 December 2022, Ms Radford forwarded Ms Young’s email of 19 December 2022 (see paragraph [57] above) to Mr Maurici, stating: “Please see attached the DA to be submitted into council for your approval”. It appears that, before this email was forwarded to Mr Maurici, Ms Radford deleted the reference to the “BCA Compliance Assessment” from the series of bullet points in Ms Young’s email, and removed the BCA Report Version 1 as an attachment to that email. Reece did not provide any explanation as to why Ms Radford sought Mr Maurici’s approval of the Development Application only after it had been submitted to the Council, or as to why she did not provide a copy of the BCA Report Version 1 to him (and instead deleted the reference to the “BCA Compliance Assessment” from the email which she forwarded). It is likely that Ms Radford chose to remove this report from the materials forwarded to Mr Maurici based on Ms Young’s previous statement that it did not “need to go” to Alamdo (see paragraph [52] above).

63. Approximately one hour later, Mr Maurici responded, stating that the Development Application was “OK” and adding: “do not lodge unless the lease is signed”.

The Lease

64. On Friday, 23 December 2022, Alamdo and Reece entered into the Lease.

65. Article 28 of the Lease permitted Reece to carry out fit-out works. It relevantly provided as follows:

“28.01   The Lessee may, at their own cost and expense, fitout the Demised Premises as required to enable the Lessee to operate its business from the Premises, including painting, erecting signage and badging to both the interior and exterior of the Demised Premises in accordance with the Lessee’s standard corporate colours, signage and badging (Lessee’s Works).”

66. It was common ground that (as is apparent from the above clause) the terms “Premises” and “Demised Premises” were used interchangeably in the Lease to refer to the Premises.

67. Article 29 of the Lease provided as follows:

“The Lessor, at its own cost and expense, will carry out any compliance works to the building necessary for the issue of an Occupation Certificate to the Lessee for the Premises relating to the Base Building and not arising from the Lessee’s Works. For clarity, Base Building means the existing building and fittings and fixtures within the Premises, including the mezzanine and intertenancy wall.

PROCEDURE TO BE FOLLOWED

1. The Lessee must apply to The Hills Shire Council for development consent for its Lessee’s Works and use of the Premises on or prior to 23 December 2022.

2. The Lessee must provide all plans, statements and other information required for Council to expeditiously process its application.

3. The Lessor will give consent to the application on receipt of plans for approval after review, which shall not delay the Lessee’s application.

4. Upon obtaining consent, the Lessee must apply for a Construction Certificate from its Certifier within fourteen (14) days.

5. The Lessor will as soon as possible after the Lessee obtains the Construction Certificate carry out expeditiously and continually any BCA compliance works to the Base Building, stemming from the conditions of consent and Construction Certificate, in relation to the Base Building, and not from the Lessee’s Works.

6. The Lessor may satisfy the conditions of consent and Construction Certificate by providing alternative solutions for any BCA deemed to satisfy requirements in the conditions of consent and Construction Certificate to allow the issue of an Occupation Certificate.

7. On practical completion of the Lessee’s and Lessor’s works, if any, the Lessee must apply for an Occupation Certificate from the Certifier within two (2) days.

8. If the Lessor’s Works delay the issue of an Occupation Certificate, beyond four (4) months after the Commencement Date, the Lessor agrees to extend the Rent Free Period provided by clause 26.01, until an Occupation Certificate for the Lessee’s use of the Premises is obtained.

9. Subject to the Lessor complying with clause 5, the Lessor and Lessee agree that either party may terminate this lease if an Occupation Certificate is not obtained within the period ending six (6) months from the Commencement Date.”

68. The term “Base Building” was not defined, but the term “Building” was defined in Article 1.08 as follows:

“the buildings erected upon the Land together with any modifications, extensions or alterations thereto from time to time and together with the fittings, fixtures and other improvements and conveniences, amenities and appurtenances thereof from time to time other than Lessees’ fixtures.”

69. Article 18.01 of the Lease required Reece to provide a bank guarantee to Alamdo as security for the performance of its obligations. (Reece subsequently provided the Bank Guarantee in the amount of $149,640.00 on 7 March 2023.)

70. Article 18.05 provided that:

“Upon the termination of this Lease and subject to the due performance by the Lessee of all covenants and obligations of substance on its part herein contained or implied and payment of all moneys payable by the Lessee to the Lessor pursuant to this Lease, the Lessor will return the Guarantee to the Lessee within 14 days of the Lessee having satisfied all of its obligations under the Lease.”

Payment of fee – lodgement of Development Application

71. On 23 December 2022, Ms Radford sent an email to Mr Maurici, confirming “the DA has been lodged but our consultant is now on xmas leave”.

72. On 4 January 2023, Council issued a notice to Novatec, stating that the fee payable in respect of the Development Application was $2,458.00. This notice stated that a failure to pay this amount “within 2 business days, may result in your application being returned in the NSW Planning Portal and requiring resubmission”.

73. At this time, Novatec’s offices were shut for the Christmas holiday period.

74. On 10 January 2023, Mr Maurici sent an email to Ms Radford, stating that he could not find any record of the Development Application on Council’s website and seeking confirmation that it had been lodged.

75. At 9.39am on 12 January 2023, upon the reopening of its office, Novatec paid the fee in respect of the Development Application.

The First RFI

76. By 17 January 2023, Mr Gittany had completed his initial review of the Development Application. As noted at paragraph [22] above, Mr Gittany was the Council officer who had signed the Fire Safety Order.

77. Mr Gittany determined that the BCA Report Version 1 was “unsatisfactory” for the following reasons:

“i.   The report is not a clause-by-clause assessment, just a mere summary of what the author believes is relevant for each section.

ii.   The report has considered the building to have a rise of one, when the building has a rise of at least two.

iii.   The report has considered the building to be Type A construction – however based on the existing Fire engineering report the building has been compartmentalised and assessed as Type B construction.

iv.   The report has not considered the existing performance solution applicable to the building.”

78. Mr Gittany concluded as follows (emphasis in original):

“The applicant is requested to submit the following documentation so that a proper assessment of the application can be undertaken:

1. In order for Council to be satisfied the existing building is capable of complying with the BCA, the applicant will need to submit a revised BCA report by a suitably qualified Building Surveyor (unrestricted) (previously known as A1 accredited certifier) for the existing building which assesses the existing building against the Deemed-to-Satisfy Provisions of Parts B, C, D, E and F of the BCA and address the following: -

a.   The report needs to assess the current building using a clause-by-clause assessment against the deem-to-satisfy provisions and states whether it is [compliant] or non-compliant.

b.   Where any non-compliance is identified, [a] photograph is to be provided and the author of the report is to make recommendations as to the proposed level of compliance with the current BCA

c.   Design advice is required to be provided in order to address the non-compliance identified. The registered certifier must provide advice as to how to amend a plan or specification, proposed a design option for the aspect of development, including proposing a performance solution to ensure that the aspect will comply with the Building Code of Australia or a legislative requirement.

d.   Where recommendations are proposed, they will need to be shown on the plans.

e.   A summary list of recommendations proposed is to be provided at the front of the report.

f.   The Author of the report needs to state their qualifications and accreditations on the report.

2.   The original base building is subject to a Fire Engineering Report prepared by Red Fire Engineers which assumes the building is a single storey type B construction. The report states ‘This assessment is valid provided that there are no significant changes to the building, its contents, occupancy, classification, and/or use, as described in this report.’

The proposed development application proposes a change to the approved original design. As such, the application is requested to submit documentation from a Certifier – Fire Safety… which verifies consistency with the report.

The letter of consistency must comment the performance solution and must verify that the proposal is consistent with the analysis and state how that conclusion has been established.

3.   The applicant will need to provide section plans for the multi-storey parts of the building, this includes demonstrating where the carparking level terminates in relation to the rest of the building, as this will have implications on BCA upgrades required.”

79. On 2 February 2023, the Council issued its first request for information to Novatec in respect of the Development Application (the First RFI).

80. The First RFI stated that, pursuant to s 36 of the Environmental Planning & Assessment Regulation 2021 (NSW) (EPA Regulation), Novatec was requested to provide, within 30 days, certain “additional information to enable the further processing of [the Development Application]”.

81. The First RFI stated that the Council’s Fire Safety officer had reviewed the application and had made a number of comments. The First RFI then set out, verbatim, Mr Gittany’s criticism of the BCA Report Version 1 and the additional information which he had determined should be provided in respect of the Development Application (see paragraphs [77]-[78] above).

82. In addition, the First RFI requested a “floor plan of the proposed mezzanine”, details regarding “the proposed number of staff and patrons expected to be on site”, and confirmation as to whether consent was sought for operation of the Premises on Sundays.

83. The First RFI concluded by stating that the Development Application would be “held in abeyance pending receipt” of the requested information.

Steps to respond to First RFI

84. On the day of receiving the First RFI, Ms Young informed Ms Radford that the Council had requested a copy of the Fire Engineering Report prepared by Red Fire Engineers (copying the text of paragraph 2 of the First RFI into her email), and asked if Reece had a copy of the report. Ms Radford immediately forwarded this request to Mr Maurici, who responded on the same day, attaching a copy of the report.

85. Red Fire Engineers had been retained in 2018 by “Croc’s”, a previous tenant of Unit 5 to prepare a fire engineering assessment of the proposed fit-out of that unit as a playcentre for children. The matters addressed in the report were the floor covering that was to be used for the children’s play areas and the sign, which was constructed out of a combustible aluminium panel, that was to be attached to an external wall. Those matters were of no relevance to Reece’s application in respect of the Premises. The statement in this report that the building was of “Type B construction” was, as noted above, incorrect.

86. Also on the day of receiving the First RFI, and within less than half an hour of its receipt, Ms Young sent an email to Mr Williams, alerting him to the Council’s “comments on the NCC report you provided”, and promising to send him the report from Red Fire Engineers when it was received. Ms Young accepted in cross-examination that she understood that there was an urgency in dealing with the First RFI, and that she wanted to address it as quickly as she could.

87. On the following Monday, 6 February 2023, Mr Williams responded to Ms Young’s email, stating that he would review his report and “prepare [an amended version] along the lines of the request by council”. He also asked for the “latest drawings including the mezzanine floor”, which the Council had requested.

88. Ms Young confirmed in cross-examination that, at around this time, she understood that Mr Williams would be providing her with a revised BCA report by Friday, 10 February 2023. However, on 9 February 2023, Mr Williams sent an email to Ms Young stating that he would not able to get the revised report to her by the following day, adding that: “I clean forgot I will be in the Yarra ranges tomorrow”. He indicated that he would have the report completed by “early to mid-next week”.

89. Shortly after receipt of this message, Ms Young replied to Mr Williams, adding the word “URGENT” to the subject line of the email. She stated that “any delays in answering Council are difficult”, explaining that Alamdo was “pressuring [Reece] to achieve a DA within a certain timeframe, there is a significant rent penalty involved”. She concluded as follows:

“We cannot delay answering council any longer.

I would appreciate your response by Tuesday COB please.”

90. Ms Young confirmed in cross-examination that she was, by this time, concerned about the delay:

“Q. Were you growing frustrated with Mr Williams’ apparent failure to produce the work you’d expected of him?

A. I was concerned.

Q. Because of the delay?

A. Yes.

Q. And you were concerned the delay was going to be prejudicial to your client, Reece, correct?

A. I was more thinking, in the first instance, to respond to RFIs as quickly as you can.

Q. Because you knew your client wanted its development consent urgently, correct?

A. Yes.

Q. Because you knew it had a landlord breathing down its neck, correct?

A. Could you rephrase that, please?

Q. You knew Reece had a landlord that was pressuring it to get a DA within a certain timeframe?

A. Yes.”

91. Despite the urgent terms in which Ms Young’s email was expressed, she did not receive a revised report from Mr Williams by the deadline she had stipulated (14 February 2023), or for another two weeks thereafter.

Issue raised regarding Fire Safety Order

92. On 16 February 2023, Ms Young had a discussion with Mr Gittany. She took a handwritten note of this conversation. (Ms Young confirmed in cross-examination that she could not remember anything of this call, other than what was in the note.) The note records that Mr Gittany told her: “Building owner has not complied with any fire orders – still outstanding”. The note also contains the following statements:

“Council advised that with each tenancy adjustment tenants are slowly updating the Buildings to be more compliant.

[Ms Young] asked if our BCA report addresses the fitout as compliant then points to landlord works to be completed would be accepted – (council understood that this was difficult).”

93. It is apparent from this note that Mr Gittany did not say anything to indicate that a BCA report which only “addresses the fitout as compliant” would be acceptable.

94. On the following day, 17 February 2023, Ms Radford sent an email to Mr Maurici, seeking confirmation that the works required by the Fire Safety Order had been completed. On 18 February 2023, Mr Maurici replied as follows:

“More of the works have been completed and as advised previously they will all be finished before you occupy. They will not impact on the issue of your DA or OC. Council approved the Dutton DA under the same circumstances as yours without any concerns regarding those works, see their DA consent attached.

I will ask you again to please provide the RFI now to allow me to see what the issues may be and not after [Ms Young] has finalised it, which has no end date or delivery deadline. I am concerned that there may be a lack of urgency in pushing through the DA and I would like to avoid potential disagreement between us over Reece’s compliance with lease clause 29, point 2, which requires Reece to provide all information to Council to allow it to expeditiously process the application.”

95. Ms Radford forwarded this email to Ms Young. On 20 February 2023, Ms Young replied to Ms Radford, noting that the conditions of consent to the Dutton DA required “what could be perceived as Owners works to be completed in item 8”, and that she expected similar clauses to be written into the consent to Reece’s Development Application.

96. Item 8 of the consent to the Dutton DA required upgrading works to be undertaken in respect of various fire safety measures, including the fire hydrants, fire extinguishers, emergency lighting and exit signage. As set out below, Ms Young’s expectation proved correct, with similar conditions subsequently being imposed on the consent to Reece’s Development Application.

BCA Report Version 2

97. On 23 February 2023, Mr Williams carried out a site inspection of the Premises.

98. On 27 February 2023, Ms Young had a telephone call with Ms Madison Morris from the Council in respect of the First RFI. Ms Young deposed as follows:

"During this conversation, I said to Ms Morris that Reece's response to the First Request for Information in respect of the Red Fire Engineers report was that the report was not applicable to the Premises, and that Reece therefore did not propose to obtain a report or letter from a fire engineer. Ms Morris told me that this information should simply be noted in the cover letter to Reece's response to the First Request for Information."

99. Accordingly, this conversation appears to have largely resolved the issue regarding the Red Fire Engineering Report.

100. On the same day, Ms Young informed Ms Radford of the outcome of this conversation, and indicated that she had discussed with Mr Williams the results of his site visit and that he would issue “the BCA report” later that day, adding: “then we can complete the RFI ASAP”.

101. On 28 February 2023, Mr Williams sent an email to Novatec attaching a "Building Inspection Report". This report consisted of one page of text and a few photographs, and appears to have been compiled following his site visit. The Building Inspection Report records the following "notes":

"Wall between subject building and car dealer in unit 5 not fire rated.

…

Floor loadings of Mezzanine/first floor to be checked by structural engineer for suitability of new use."

102. On 28 February 2023, Ms Young sent the Building Inspection Report to Ms Radford, and noted that Novatec had informed Mr Williams “that Reece were not intending to use mezzanine”. Later the same day, Reece provided Novatec with a letter addressed “To whom it may concern”, confirming that:

“It is not proposed that the existing mezzanine level will be incorporated into the proposed fit out as the intention is to close off access to this area to prevent the use of the space. Rather a new mezzanine structure is to be built as detailed. This will be used as a raised storage area and will be supported on the racking system beneath which will be structurally designed to carry the loading intended.”

103. Also on 28 February 2023, Mr Williams provided to Novatec a draft revised BCA Report which was designated as “Version 2.0” (BCA Report Version 2).

104. On 1 March 2023, Ms Young sent an email to Mr Williams and to Mr Peter Adorna of Reece, attaching a marked-up version of the BCA Report Version 2 for "consideration and amendment". Ms Young noted in her email that the report would "go to the building owner via Reece and to the council for the DA RFI". Ms Young also noted that Novatec was preparing “new architectural drawings showing new STD Reece mezzanine over bunking”.

105. On 3 March 2023, Novatec sent updated drawings to Mr Williams, requesting that he “finalise the report as soon as you can so we can get this back into council”. On 6 March 2023, Ms Young chased up Mr Williams for a response to this email “as soon as possible”, noting that "the council RFI closing date has lapsed".

Submission of response to First RFI – BCA Report Version 3

106. On 7 March 2023, Mr McKinley sent an email to Ms Morris of the Council, requesting an extension of time for Novatec to respond to the First RFI.

107. On the following day, 8 March 2023, Mr McKinley sent a further email to Ms Morris, attaching a response to the First RFI, along with various attachments, including revised drawings and a revised BCA Compliance Report which was marked as “Version 3.0” (BCA Report Version 3).

108. The covering letter contained the following response to “RFI Item 2”, which was consistent with the telephone conversation between Ms Young and Ms Morris (referred to in paragraph [98] above):

“The original base building fire engineering report prepared by Red Fire Engineers was for the former Crocs Playcentre tenancy. The fire engineering report was prepared for the proposed Crocs flooring and signage. The Crocs tenancy has been completely removed since (including floor finishes & signage).

Therefore, this fire engineering report is not applicable to the current Unit 4 tenancy & RFI item 2 shall be deemed closed out.”

109. The BCA Report Version 3 identified the building as being of Type A construction. The report contained a table which addressed individual provisions of the BCA, with various items being stated to be “Not applicable to fitout works”. The report concluded with a “Summary of Non-Compliance Issues”. The first item in that summary was as follows:

“The existing is [sic] sandwich Panel Wall between tenancies 4 & 5 is not fire rated.

Refer to Part C2 of this report. As the total building volume (Both Tenancies 4 & 5) exceeds the max 21,000m3 for Type B, the building will need to comply with Type A Construction as per Table C2.2 (see Appendix A at the end of this report for construction requirements).”

110. On 9 March 2023, Novatec was advised by the Council that the response to the First RFI was required to be submitted via the Planning Portal, and that its email attaching that response “will not be actioned”. Novatec submitted the document via the Planning Portal around five minutes later.

111. In cross-examination, Ms Young agreed that the response to the First RFI was not expeditious; that the process of preparing a response to the First RFI was poorly managed by Mr Williams; that he did not treat this task with any degree of urgency; and that there was no reason why, if he had done so, “a fulsome response to [the First RFI] could not have been provided a week or two after 2 February 2023”.

Mr Maurici’s response to BCA Report Version 3

112. On 9 March 2023, Ms Radford forwarded to Mr Maurici an email from Ms Young, attaching a copy of the BCA Report Version 3 and setting out the “Summary of Non-Compliance Issues” from that report. In respect of the first issue identified in this summary (namely, that the “Panel Wall between tenancies 4 & 5 is not fire rated”), Mr Maurici responded as follows:

"The report appears to assume that the building is Type B construction for the purpose of determining the fire rating of the intertenancy wall, whereas it has always been Type A or equivalent from its original design and construction. Type A construction allows a greater volume and floor area and for the areas involved does not require a fire rated intertenancy wall. Your building surveyor could observe the elements to the building and conclude that it would satisfy these requirements.

Would you like me to speak with your building surveyor about this to expedite resolution?"

113. Mr Maurici followed this up with a further email a few hours later, noting that the BCA Report Version 3 did not refer to the Mobius advice of 12 December 2015 which had concluded that the building was of Type A construction (see paragraph [43] above). Mr Maurici attached another copy of that document. He asked that this material be sent to Mr Williams “for consideration in finalising his report and submit it to council at your earliest convenience to avoid further delay”.

114. On the morning of 14 March 2023, Mr Maurici sent an email to Ms Radford, asking whether the BCA Report Version 3 had been amended in light of the comments in his emails of 9 March 2023 (quoted at paragraphs [112]-[113] above). Mr Maurici's email continued as follows:

"If you do not reply I shall assume that you and Reece has deliberately misled me regarding its intention to expeditiously pursue it[s] DA and commit to the Lease to Alamdo's disadvantage and is now stalling again."

115. Within approximately half an hour of that correspondence being sent, Ms Radford responded to Mr Maurici by email, copying in Ms Young and requesting that Ms Young provide an update in respect of the response to the First RFI. Shortly afterwards, Ms Young forwarded Ms Radford's email correspondence to Mr Williams, stating that Mr Maurici's comments in respect of the BCA Report Version 3 were "serious" and requesting that Mr Williams "assist in answering the technical question on Building Type for [Mr Maurici]".

116. On 22 March 2023, Ms Young emailed Mr Williams, again requesting an answer to her query in respect of the “Building Type” of the Premises which was sent on 14 March 2023 and noting that Novatec wanted to “close this out with council ASAP”. Mr Williams responded on the same day, stating that BW&A had “identified the building as Type A” and that the BCA Report Version 3 had “referenced an old fire engineering report [namely, the Red Fire Engineers Report in relation to the playcentre fit-out for Unit 5] that indicated the building as Type B”.

117. As noted at paragraph [108] above, the response to the First RFI stated that the Red Fire Engineers Report was “not applicable to the current Unit 4 tenancy” and that the query raised by the Council in the First RFI (regarding the reference in that report to the building being of “Type B” construction) “shall be deemed closed out”.

Second RFI

118. Mr Gittany reviewed Novatec's response to the First RFI and prepared a memorandum dated 9 March 2023 setting out his comments, as follows:

“•  Classification of the building has been listed as Class 7b (Storage), Plans also show trade counter and trade area (class 6), BCA report is to be updated to include class 6 classification.

•  The report has provided an exclusion in relation to design advice.

[this exclusion was quoted]

Building surveyors are not required to provided [sic] design advice if they are the Principal Certifier on the project. This particular situation, the author is a BCA consultant and can provided [sic] design advice. Where ever [sic] a 'non-compliance' is identified, design advice must be provided, as to how to amend a plan or specification, proposed a design option for the aspect of development, including proposing a performance solution to ensure that the aspect will comply with the Building Code of Australia or a legislative requirement.

•  Throughout the BCA report it states 'not applicable to fitout works', this response is not considered acceptable, author will need to [advise] if the building is 'compliant' or 'non-compliant'.

…

•  Within D3.1 of the report is state[d] the following

Access is not required to new mezzanine floor as it is proposed to be under 200m² …

Designed to clarify provision of access to Mezzanine in accordance with D3.3(f)(ii) as floor area exceeds 200m² and/or clarify if an exemption is being sought under D3.4 – Exemptions

(Note: the tenant has advised that they do not plan to use the exi[s]ting mezzanine floor area)

As the existing mezz[a]nine will still be present, the floor area of the ‘storey’ is going to be greater than 200m² this will need to be reviewed. Alternatively, if the applicant wishes to use the concession in the BCA, they should show the existing mezz[a]nine to be demolished.

•  D3.2 & D3.3 has not been assessed.

•  E1.3 states that the hydrant system complies, yet the internal hydrants may not be able to provid[e] coverage to the existing mezzanine level. Any external hydrants relied on are required to be 10m away from the building they are protecting unless they have appropriate shielding in accordance with BCA and AS2419.1-2005."

119. On 16 March 2023, the Council issued its second request for information in relation to the Development Application (the Second RFI). The Second RFI stated that the Council’s Fire Safety officer (namely, Mr Gittany) had reviewed the BCA Report Version 3, and set out, verbatim, the six bullet points set out in Mr Gittany’s memorandum of 9 March 2023.

Response to Second RFI

120. On the day that Novatec received the Second RFI, there was a telephone conversation between Mr McKinley and Mr Gittany. This conversation was referred to in an email which Mr McKinley sent to Mr Gittany in respect of the Second RFI on the following day (17 March 2023). The email recorded that Mr Gittany had indicated that he would be “happy if [Novatec] removed the existing mezzanine stairs, so the existing mezzanine will not be considered in any floor area calculations”. Mr McKinley’s email of 17 March 2023 attached new drawings which showed the mezzanine stairs being removed.

121. On 22 March 2023, Mr Gittany prepared an internal Council memorandum, in which he recorded that he had “reviewed the updated plans and [was] satisfied that the floor area of the mezzanine is less than 200m²”. Accordingly, the issues raised in Mr Gittany’s 9 March 2023 memorandum and the Second RFI regarding the mezzanine appear to have been resolved by the material provided by Novatec on the day after the issuance of the Second RFI. However, Mr Gittany recorded that it remained necessary for a further version of the BCA report to be prepared in order to address his other concerns:

“…I will still require an updated BCA report addressing my comments in my [file note] dated 9 March 2023, the BCA report should be referring to the updated plans as currently provided and highlighting any existing non-compliances with the existing building so that they be conditioned to be upgraded accordingly.”

122. On 24 March 2023, Ms Morris sent an email to Mr McKinley, setting out the comments of Mr Gittany that are quoted above.

123. On the same day, Mr Maurici had a telephone conversation with Mr Paul Curran, a Fire Safety Coordinator at the Council. Mr Maurici deposed that Mr Curran made statements to him to the following effect:

“[Mr Curran]: The current BCA report is defective because it does not assess the building with respect to the required portions of the BCA. There are sections which do not answer the question of compliance which is required. Sections of the BCA Report state that an assessment of compliance is not applicable. This needs to be amended to state whether or not the development complies for every relevant part.

…

[Mr Maurici]: The previous fire report from Mobius Fire Safety confirmed the building is type A construction and does not require a fire wall between units 4 and 5.

[Mr Curran]: I agree that it is a type A construction building and it does not need a fire wall. However, there will need to be a statement in the report as to whether it complies or not.”

124. At 11.48am on 29 March 2023, BW&A sent Novatec “Version 4.0” of the BCA Report (BCA Report Version 4). At 3.14pm on the same day, Mr McKinley emailed BW&A to advise that “the old DA drawing” had been used in the BCA Report Version 4, and provided an “attached DA drawing to replace the old plans in the report”. Mr McKinley also attached a copy of the BCA Report Version 4, which was marked up “with a few minor tweaks required”. Mr McKinley requested that BW&A attend to these matters, so that Novatec could submit its response to the Second RFI by close of business that same day.

125. Shortly afterwards, at 3.53pm, Mr Maurici sent an email to Mr Adorna and Ms Young, in which he referred to his discussion with Mr Curran:

“… I spoke with Paul Curran, Council’s Fire Safety Coordinator, who has the same understanding of the building as I in that it is Type A construction and there would be no requirement for a fire wall between the tenancies in that compartment.

However, he did say that the DA has stalled because of the vagueness of your building surveyor’s report where he has notes in Section C Fire Resistance and Section F Health and Amenity stating ‘Not applicable to fitout works’, in a report meant to support an application to Fit-Out a class 7b warehouse for Reece’s use. These notes must be modified to correctly answer the questions posed for which purpose the report has been written, that is fitout works. He said that the DA could not proceed unless these changes were made.

Could you please pass this observation to your building surveyor so that he can make the necessary changes to clear the path for an approval from council?”

126. It is apparent from the terms of Mr Maurici’s conversation with Mr Curran, as relayed to Reece and Novatec, that the main issue which was delaying the Council’s assessment of the Development Application was not any confusion over the construction type of the building (with the Council agreeing that it was Type A, as stated in each version of Mr Williams’ BCA reports), but rather the fact that the Council had not, despite its previous requests, been provided with a report which undertook a clause-by-clause assessment of the building, rather than the fit-out, against the provisions of the BCA.

127. At 4.03pm, on the same day, 29 March 2023, Ms Young forwarded Mr Maurici’s email to Mr Williams, requesting that Mr Williams provide “the updated BCA report as soon as possible”.

128. On 4 April 2023, Mr McKinley sent a follow-up email to BW&A, requesting that the BCA Report Version 4 be “finalised and issued”, adding that “[Novatec] were expecting this last week so I am hoping someone can attend to this ASAP”.

129. On the morning of 6 April 2023, Ms Young again chased up Mr Williams for the amended report, stating as follows:

“Apologies for pestering on this one, however we have

•  a DA that may be cancelled as the RFI’s have been beyond the time frames requested.

•  A Landlord who has the option of cancelling the lease if Reece don’t get a DA in March.

Understand this may be a staffing issue, but the amount of time taken to amend a report is excessive.

We have been of the understanding the corrections are relatively minor and easily checked, if this is not the case please advise ASAP.

Please provide the updated BCA report today.”

130. Ms Young confirmed in cross-examination that it was her view at the time that the time taken to respond to the Second RFI was “excessive”.

131. Later on the same day, BW&A provided “Version 5.0” of the BCA Report to Novatec (BCA Report Version 5). At 3.24pm, Mr McKinley sent Ms Morris an email attaching, in response to the Second RFI, updated DA drawings and the BCA Report Version 5.

132. The BCA Report Version 5 concluded with a “Summary” identifying non-compliances. The first point in this summary was in the following terms (which are substantially the same as in the BCA Report Version 3, but with a further sentence now added in bold):

“86. The existing is [sic] sandwich Panel Wall between tenancies 4 & 5 is not fire rated.

Refer to Part C2 of this report. As the total building volume (Both Tenancies 4 & 5) exceeds the max. 21,000m3 for Type B, the building will need to comply with Type A Construction as per Table C2.2 (see Appendix A at the end of this report for construction requirements).

Building owner to upgrade non-compliant wall.”

133. At 3.40pm on 6 April 2023, Ms Young forwarded Novatec’s response to the Second RFI to Mr Adorna, stating that this material had now been sent to the Council and uploaded to the Planning Portal. Ms Young quoted the “Summary” section of the BCA Report Version 5, and stated as follows: “I don’t think we should entertain [Mr Maurici] with this until we see what conditions council put onto the permit.”

Further queries regarding Fire Safety Order

134. In the period during which the response to the Second RFI was being prepared, there were further communications between Reece and Alamdo regarding the Fire Safety Order. It is apparent from the terms of those communications that, at this time, Alamdo still had not completed the works necessary to comply with the Fire Safety Order.

135. On 21 March 2023, Ms Radford sent an email to Mr Maurici requesting an update on the “land lord compliance works that have been completed”. On the same day, Mr Maurici responded to Ms Radford as follows:

“If you are referring to works under Council’s Fire Safety Order Number 1, I reiterate what I have said previously that all of those works will be completed before Reece occupies the premises under its anticipated DA consent. The works in the Order would not delay Reece’s occupation of the premises and are essentially an upgrade of existing fire safety measures that were compliant before changes in the BCA.

If you are referring to Lessor’s Works under the Lease, those works do not and cannot commence until the Reece DA has [been] issued with conditions of consent.”

136. On 28 March 2023, Ms Radford sent a further email to Mr Maurici, copying Ms Young and Mr Adorna, asking Mr Maurici to confirm via email that the items on the Fire Safety Order “do not incorporate” any of the “common area, allocated car parks etc” and that “an Occupancy Cert[ificate] has been obtained for those areas”. Ms Radford further noted that “this was [her] last day at Reece”.

137. On 29 March 2023, Mr Maurici sent a response to this email to Mr Adorna and Ms Young, stating as follows:

“I won’t comment again regarding works to be completed by Alamdo as part of Council’s fire order other than to reiterate that they will be completed prior to completion of Reece’s fitout and in any case they will not stop the issuing of an OC for your premises if they are not.”

138. Mr Maurici accepted, in cross-examination, that as at the end of March 2023, there were still works to be done in order to comply with one item of the Fire Safety Order and that Alamdo had not received sign-off from the Council that there had been compliance with that order.

Third RFI

139. On 11 April 2023, there was a telephone call between Ms Young and Mr Gittany. Ms Young took a contemporaneous handwritten note of this conversation. According to this note, Mr Gittany told Ms Young that “what he was after” was “all issues [with the] building” (that is, he wanted the BCA compliance report to identify any issues of non-compliance with respect to the building). In this conversation, Mr Gittany referred to section 64 of the EPA Regulation which applies, relevantly, to “a development application that involves … alteration of an existing building” in certain circumstances (which are addressed below), and requires the consent authority to consider “whether  it is appropriate to require the existing building to be brought into total or partial conformity with the [BCA]”. According to Ms Young’s file note, Mr Gittany made the following statement regarding how this process should occur:

“building surveyor provides a list of full non compliances and council decides what they will accept.”

140. It is apparent, from Mr Gittany’s comments, that he was of the view that the BCA Report Version 5 was not sufficient, because it had not addressed “all issues [with the] building” and had not provided “a list of full non compliances”.

141. On the same day as his conversation with Ms Young, Mr Gittany prepared a memorandum which was dated 11 April 2023 and was addressed to Ms Morris. This memorandum stated as follows:

“I have tried to contact the certifier and left messages to call me back to discuss the report with him, to no avail.

I have reviewed the updated BCA report and there are still issues with the building that the certifier has not addressed:

1. As the part of the proposed building is a class 6 and the unit next (unit 5) door has been approved as a vehicles hire and sales (under 559/2023/HA) which is also considered a class 6, this may now trigger smoke hazard management requirement under E2.2 of the BCA as the floor area of the class 6 parts in the compartment may now be greater than 2000m².

[Mr Gittany set out an extract of the BCA Report Version 5 which stated that the smoke hazard management requirement under E2.2 of the BCA was “Not applicable”]

2. Could the plans also show the existing handrail on the existing mezzanine to be removed, if the area is not going to be trafficable there should not be a need for handrails.

3. It does not appear that the author has reviewed the path of travel from the rear of the tenancy to the road.

4. As previously mentioned, D3.2 and D3.3 have not been assessed.

5. The plans are to be updated to include any recommendations by the author.”

142. On 21 April 2023, Ms Morris sent an email to Mr McKinley, stating that Mr Gittany had a number of “remaining fire safety concerns”, and requesting that an amended BCA report be provided which addressed the five numbered points raised by Mr Gittany in his memorandum (which were set out in the body of Ms Morris’ email). This request was referred to in submissions as the Third RFI.

Response to Third RFI

143. On the same day that Ms Morris provided the Third RFI to Mr McKinley, he responded to her email. He stated that he had tried to call Mr Gittany to discuss the Third RFI, but had been unsuccessful. Mr McKinley provided some comments in response to the first four items in the Third RFI, as follows:

1. In respect of Item 1: “See below, a floor plan with the highlighted zone being the extent of Class 6 Retail Area. The area of the Class 6 zone highlighted is 157.15m2. The balance of the fit out is Class 7b Warehouse. Can you or Charbel [Mr Gittany] therefore clarify if this comment number 1 is applicable. If so, please explain.”

2. In respect of Item 2: “This will be shown on the next set of plans”

3. In respect of Item 3: “Can you or Charbel please clarify what this means”

4. In respect of Item 4: “The existing external doors have a 0mm threshold, the fit out is fully DDA [Disability Discrimination Act] compliant and a new compliant disabled toilet is provided”.

144. On 27 April 2023, Mr McKinley sent a further email to Ms Morris following up in respect of the comments he had provided in response to the Third RFI on 21 April 2023.

145. On 3 May 2023, Mr Gittany and Mr McKinley had a telephone conversation regarding the “outstanding matters” in the Third RFI. On the same day, Mr Gittany sent Mr McKinley an email in which he referred to this conversation, and stated as follows:

“As discussed if the comments [regarding items 1-4] could be included into the BCA report with further consideration/commentary from the BCA consultant and submitted for reassessment, I should be in a position to provide conditions on the consent.”

146. On the following day, 4 May 2023, Mr McKinley responded to Mr Gittany’s email, setting out a summary of Mr McKinley’s comments on items 1-4, as follows:

“•  Item 1 – I will get a comment added to the BCA report outlining the total Class 6 area (including Unit 5) is under 2000m2

•  Item 2 – Handrails will be removed in next set of DA drawings

•  Item 3 – I will get the travel path from the rear door addressed in the BCA report – a performance solution will be required and suggested in the report.

•  Item 4 – I understand your view on the DDA [Disability Discrimination Act] access from the street to the entry door.

Given this store is a strictly trade only branch (tradespeople must have an account with Reece Plumbing) selling HVAC & irrigation supplies, tradespeople arrive to site in utes or twin cabs & purchase supplies which are taken directly into their cars & taken to site.

Given the operation and nature of this business, we ask you consider this when addressing disabled compliance from the street to entry door & request you remove any requirement to upgrade the driveway to be DDA compliant.

Please note, we are upgrading the existing disabled car space with new diagonal line marking & bollard as per below – this will be shown on the next set of DA drawings.

[Diagram was set out].”

147. Mr McKinley’s email concluded as follows: “Once we have final comments from yourself [Mr Gittany] on the above, we can finalise the BCA report and be in a position to get this DA issued”.

148. On 18 May 2023, Mr McKinley sent an email to Mr Gittany and Ms Morris, attaching an updated set of DA drawings and an updated BCA Report, marked “Version 6.0” (BCA Report Version 6) in response to the Third RFI. The summary of non-compliances in the BCA Report Version 6 contained the same statement in respect of the Panel Wall separating Units 4 and 5 as had appeared in the BCA Report Version 5 (see paragraph [132] above).

149. In this email, Mr McKinley provided the following comments on Items 1–4 in the Third RFI:

“•  Item 1 – The BCA report outlines the total Class 6 area (including Unit 5) is under 2000m2.

•  Item 2 – Handrails are removed in the DA drawings

•  Item 3 – The travel path from the rear door is addressed in the BCA report – a performance solution will be sought at the CC [Construction Certificate] stage.

•  Item 4 – DDA access from the street to the entry door is addressed in the BCA report – a performance solution will be sought at the CC stage.”

150. Mr McKinley concluded his email by asking Mr Gittany and Ms Morris to “proceed to finalising the DA”.

151. It should be noted that Mr McKinley did not provide any comments on Item 5 of the Third RFI. Item 5 contained a request for “any recommendations by the author” of the BCA report, which was similar to previous requests by the Council for “Design Advice”. The BCA Report Version 6 included the following statement:

“Design advice.

As certifier of the proposed works and new use of the building we are bound by the building surveyors code of conduct and cannot provide Design Advice.

We will certainly [be] in a position to indicate the BCA non-compliance that are identified at this early stage and will provide a full BCA compliance report when the application is made for the Construction Certificate.”

152. Ms Young gave evidence that she called the Council about the requirement for “design advice”, in order to convey her understanding that design advice cannot be given by a building surveyor if they have been appointed for the project including for a construction certificate. It appears accepted that such advice was not required for the assessment of the Development Application, as the Council subsequently proceeded to issue the Development Consent without any such advice having been received.

153. On 19 May 2023, Ms Young sent an email to Reece confirming that “all information has been provided to council this week” and that there were “NO RFI’s left to answer”.

Development consent obtained

154. By 23 May 2023, Mr Gittany had completed his review of Novatec’s response to the Third RFI and the BCA Report Version 6. He set out his conclusions in a memorandum of that date which was addressed to Ms Morris. Mr Gittany stated that section 64 of the EPA Regulation required the Council to determine “if the measures contained within the building are satisfactory to protect persons using the building and assist in their egress in the event of a fire and restrict the spread of fire to other nearby buildings”. He stated that he had inspected the Premises, and that he had “reviewed the proposed plans and the existing fire safety measures in the building”. He identified the following five “BCA issues … that need to be addressed”:

“i. It is also worth mentioning the doorway to the premises is not accessible, which is contrary to the requirements of the Building Code of Australia (‘BCA’) and as such a condition has been imposed in this regard.

“[SENIOR COUNSEL FOR ALAMDO]: I was going to put to you the same question that my friend put to Mr King, which is, I had a note of it but I've lost it, but to the effect of do you submit that the time periods for the various things that Mr King has estimated are beyond the bounds of reason I think was the form of the question put? Do you submit Mr King's timing for these things are beyond the bounds of reasonable estimates?

[Mr Watson]: I think, I think Mr King's estimate of durations and sequences, so overlap is, is aggressive but achievable. Whether it's achievable in every instance, that's where I, I would probably take, take a different view. I think that particular activity, his estimate I've no problem. Could you achieve that for each and every activity in that sequence? I think there are, there are, there would be interruptions, there would be things that took longer, so, so overall my estimate it longer. So I, I think I'm more conservative than Mr King, but I think he's on the aggressive end and I may be on the conservative end. I've noted various, in the report, that there would be opportunities potentially to overlap things. Would you get that overall gain? That's where I would, that's where I disagree with Mr King.”

400. I do not accept Reece’s submission that the appropriate question to ask is what was a “reasonable” (or “conservative”) timeframe in which to complete the works. Article 29 specified a “Procedure to be Followed” in order to achieve the parties’ commercial objective of obtaining an Occupation Certificate by 23 June 2023, and imposed obligations on each party to move expeditiously in performing the steps assigned to it as part of that “Procedure”. In addition, each party was obliged to do all such things as were necessary to enable the other party to have the benefit of the Lease (see paragraphs [211]-[214] above). It was the objective intention of the parties that the program of works leading up to the issue of the Occupation Certificate be completed as soon as possible.

401. It is also relevant to take into account the means available to Reece in order to achieve this commercial objective and to comply with its obligations under Article 29.

402. Reece is part of a group of companies (Reece Group) which, at the relevant time, had significant financial resources. In the financial year ending 30 June 2023, the Reece Group reported, on a consolidated basis, EBITDA of $667.737m and NPAT of $387.607m, and had, at year end, net assets of $3.625bn, including $372.706m cash at bank.

403. Accordingly, the Reece Group had the resources available to ensure that it performed its obligations under Article 29 in a timely and expeditious manner.

404. Having regard to those matters, I do not accept that it is appropriate to approach the issue of the timing of the fit-out works on the basis of a program of works that was “conservative” or “reasonable” (unless the concept of “reasonableness” includes reference to Reece’s obligations and resources). It is instead appropriate to have regard to a program that was, like Mr King’s, aggressive but achievable.

405. Secondly, Reece contended that Mr King’s program – which has the Occupation Certificate being obtained by 16 June 2023 – would need to be adjusted in order to take account of a number of concessions made by Mr King, and that those obligations would push the date for the Occupation Certificate beyond 23 June 2023.

406. Two of these concessions related to the timeframes specified in Article 29 for certain steps by Reece: namely, Mr King had allowed eight days to submit an application for a construction certificate, whereas the Lease allowed fourteen; and Mr King had allowed one day for the application for an occupation certificate, whereas the Lease allowed two. Further, in the expert conclave, Mr King accepted that an additional five days had to be added to his program to account for “the link between the insertion of the mezzanine floor and commencement of the mechanical rough-in”.

407. Reece submitted that Mr King also made a concession that it might take three to four weeks to obtain a construction certificate, rather than the two weeks which he had allowed. It is, however, important to note the qualified terms in which the relevant question and answer were framed (emphasis added):

“[SENIOR COUNSEL FOR REECE]: So it might, for argument's sake, be three or four weeks that is required for the determination of the CC application, and perhaps even more if Mr Halstead's evidence is accepted. Correct?

[Mr King]: Well, I just go back to the word that you used in the question, that it ‘might’ be. So, the emphasis is, is on ‘might’.”

408. Further, Reece’s own expert, Mr Halstead, expressed the opinion that a construction certificate would be determined in “one or two weeks”.

409. If the application were determined in one week rather than two (as Mr King allowed), this would reduce the impact of the other adjustments referred to above. Further, Mr Watson accepted in cross-examination that, “if you’re in a hurry”, “a more aggressive work program” could be adopted which had a six-day week (rather than a five-day week, as Mr King had done), and that this “would potentially reduce the time needed”. In this regard, Mr King expressed the view that, if the works were programmed on a five-and-a-half-day week, this would reduce the program by “probably a week”.

410. It follows that, although some adjustments might be made which would lengthen Mr King’s program, others might be made which would shorten it by a corresponding amount. Further, in considering the availability of steps to shorten the program, it is again necessary to take into account both the parties’ obligations pursuant to the Lease and the resources available to Reece.

411. Thirdly, Reece noted that Mr King’s program adopted a start date of 23 December 2022, being the date when the Lease was signed. In particular, Mr King expressed the view in his report that Reece could begin, from that date, a number of tasks: namely, “Update Construction Drawings”, “Certifier Interface & Interaction”, and “Engage Relevant Consultants”. Reece submitted that it would have been “illogical” for an applicant for development consent to take such steps, “without knowing whether consent would be granted by the Council, when it would be granted and on what terms”.

412. In the joint report, Mr Watson expressed the view that: “Depending on the circumstances, documentation and some other steps can be undertaken whilst the Development Application was being considered by the Council”. In particular, he agreed, in cross-examination, that the construction drawings could be updated before the development consent was issued, adding that “to the extent that you don’t know what … the consent is going to, what conditions it’s going to put on to you, you’re progressing at risk”.

413. Although emphasising that such steps were “at risk”, Mr Watson did not suggest that this was an “illogical” course of action.

414. Nor do I consider that it would be “illogical” in the circumstances of this case. Reece had agreed to a “Procedure to be Followed”, with tight timeframes and obligations to act “expeditiously”, with a view to obtaining an Occupation Certificate by 23 June 2023. In that context, it is not irrational or illogical for a party in Reece’s position to overlap some tasks, and to spend some preliminary costs on preparing for future stages of the “Procedure” (albeit that there is a risk of such costs being wasted in the event that matters do not proceed as planned). Such a course is consistent with Article 29 of the Lease, which requires both parties to take steps and incur costs in circumstances where there is a risk that development consent, or a construction certificate, or an occupation certificate, may not be obtained in the required timeframe (or at all), such that those costs are wasted. This makes commercial sense in a context where, unless an occupation certificate is obtained as quickly as possible and by 23 June 2023, other costs will be wasted, including wasted transaction costs and (for Reece) moneys spent on rent during the period when it is unable to occupy the Premises.

415. Fourthly, Reece submitted that Mr King, having allowed only seven days “for the perusal of the DA in order to identify any additional conditions and the incorporation of these additional conditions into the updated drawings”, acknowledged in cross-examination that if (as Mr Halstead has opined) it would take 50-70 calendar days to satisfy the conditions of consent in order to obtain a Construction Certificate, then this would “probably” delay the program by “a significant number of weeks”.

416. That answer logically flows from the assumption that Mr King was asked to make, namely, that Mr Halstead’s opinion should be accepted. (It should be noted that Mr King was not asked to review, or express any opinion, on Mr Halstead’s report.)

417. However, I am not satisfied that it would take 50-70 calendar days to satisfy the conditions of consent, or that the relevant work would need to be completed prior to the obtaining of a construction certificate.

418. There are eleven subparagraphs set out in Condition 9 of the Development Consent (see paragraph [158] above). Mr Halstead expressed the opinion that one of those subparagraphs would require no work, five would be able to be addressed with one day’s work, and the remaining five could be addressed with seven days’ work (with this work able to be “undertaken simultaneously by the necessary professionals”). The reason that Mr Halstead arrives at a figure of “approximately 50 days in a best case scenario” for the necessary tasks is that he expresses the view that, in respect of the items which require seven days’ work, it would take up to 40 days to “find and appoint” an appropriately qualified consultant. He does not explain the basis for this opinion. He does not, for example, refer to his experience in procuring services from access consultants, hydraulic engineers, or electrical engineers. Mr Halstead describes his experience as “a practising building surveyor carrying out certification work” and “an Accredited Practitioner Fire Safety Assessment”.

419. In contrast, Mr Watson (who, like Mr Halstead, was called by Reece) has extensive experience in programming, project delays and costs. He allowed a period of two weeks for the required consultants to be engaged.

420. Mr Watson made this allowance based on an instruction that “consultant reports for certain conditions under Section 64 of the development consent would have been required”. That instruction was likely based on Mr Halstead’s opinion that consultants were required in order to address the relevant conditions of the Development Consent, prior to the issue of a Construction Certificate.

421. There were five conditions in respect of which Mr Halstead expressed the opinion that a consultant would need to be engaged, namely, conditions 9(i), 9(v), 9(vii), 9(viii) and 9(x). As outlined below, Mr Halstead’s opinion was disputed by Mr Harriman.

422. Condition 9(i) was in the following terms:

“The existing building must be upgraded to be accessible and be provided with suitable sanitary facilities and carparking spaces to comply with DP1, DP2, DP8 and FP2.1 of the BCA.”

423. Mr Halstead expressed the view that “to satisfy this condition an Access Consultant would to be required engaged [sic] to undertake an audit of the building”, without identifying any basis for this opinion. Mr Harriman disagreed with this view and explained, in detail, his reasons for doing so:

“3.4.2 I disagree with the above as the requirements for a car space, sanitary facility and entry are all prescriptive requirements of AS 1428.1 which contains diagrams with the measurements required. The plans were already drawn to the correct measurements on the plan. Therefore, the DA plans did demonstrate that compliance could be achieved when built. In addition to this, a specification for the CC could be used to specify items that could not be readily shown on plans such as light switches and ancillary items.

3.4.3 I therefore am of the opinion that Condition 9i did not require any changes to the plans but was merely a statement requesting access is provided to the performance requirements.

3.4.4 I am also of the opinion that an access consultant is not required for this project as compliance with the Australian Standard and BCA can readily be achieved as indicated on the DC approved plans."

424. I accept Mr Harriman’s opinion on this matter, having regard to the reasoning set out above.

425. Condition 9(v) was in the following terms:

“The existing hydrant system serving the building is to be upgraded to comply with the current BCA, appropriate to EP1.3 of the BCA.”

426. It was common ground that this condition corresponded with the matter that had been raised by paragraph 6 of the Fire Safety Order (see paragraph [19] above). Mr Halstead expressed the opinion that it would be necessary to retain an appropriately qualified Hydraulics Engineer (21 days) to perform the necessary works (7 days). Mr Harriman disputed this opinion, on the following basis: “I am of the opinion no works are required to the hydrant system as a result of the proposed development as the works required in the fire order were evident as being carried out or existing on site”. Mr Harriman’s opinion is supported by Mr Maurici’s evidence that by the end of March 2023, most of the necessary works for compliance with the Fire Safety Order had been completed, with only one item remaining outstanding (which did not relate to the fire hydrants).

427. Condition 9(x) was in the following terms:

“The path of travel to the road (from the rear exits) must be upgraded to comply with EP2.2, DP4 and DP6 of the BCA.”

428. Mr Halstead expressed the view that condition 9(x) would require the appointment of an appropriately qualified BCA consultant (40 days) and the preparation of a report (7 days). However, Mr Harriman disputed the need for any such consultant, on the basis that the path of travel was already compliant with the provisions of the BCA. This was a view which Mr Harriman expressed based on his own inspection of the building, in his report in chief dated 17 November 2023:

“7.10.1   Condition 9x requires the path of travel to the road to be upgraded to comply with the performance requirements of the BCA.

7.10.2   During my inspection I walked around the rear of the building and identified that the rear exits from tenancies 4 and 5 discharge onto a 1.2m wide pathway that passes between the wall of the building and a retaining wall to the north. The path discharges to the main central driveway at the southwestern corner of unit 5. The pathway was clear of debris and readily accessible. It is my opinion that the exiting pathway does comply with the requirements of the BCA.

7.10.3   The relevant clause of the BCA is Clause C1.10 which requires an exit discharging to open space to have a path of travel to the road with an unobstructed width of 1m.

7.10.4   I note that BCA Report V6.0 does not address the path of travel to a road and I refer to Figure 12- Extract of BCA Report V6.0 above. It is my opinion that if BCA Report V6.0 did assess the existing path of travel and outlined why it complied, that council would not have imposed such a condition.

7.10.5   It is my opinion that no works are required to the base building to comply with this condition.”

429. Mr Halstead was provided with Mr Harriman’s report and was asked whether he “agree[d] with the conclusions reached by Mr Harriman” and “if not, why not?” In answer to this question, Mr Halstead provided comments on all parts of Mr Harriman’s report. His only response to the opinions quoted in the previous paragraph was to disagree with paragraph 7.10.4 on the basis that it was not necessary for the BCA Report Version 6 to assess existing paths of travel to the road.

430. Having regard to the matters set out above, I accept Mr Harriman’s opinion that it was not necessary to engage a consultant in order to address Condition 9(x).

431. The final two conditions of the Development Consent in respect of which Mr Halstead expressed the view (and Mr Watson assumed) that a consultant would have been required are Conditions 9(vii) (upgrade to emergency lighting) and 9(viii) (upgrade to exit and directional signs).

432. Condition 9 of the Development Consent relevantly stated as follows (emphasis added):

“Pursuant to Section 64 of the Environmental Planning & Assessment Regulation 2021, the following upgrades must be undertaken with the construction certificate works and must be completed prior to an occupation certificate being issued:

…

vii. Emergency lighting in the premises must be upgraded to comply with AS2293.1-2018, E4.2 and E4.4 of the BCA.

viii. Exit signs and directional signs must be upgraded in the premises in accordance with AS 2293.1-2018 and E4.5, NSW E4.6 & E4.8 of the BCA.

…”

433. As stated above, the “upgrades” in conditions 9(vii) and 9(viii) were matters to be addressed in the course of performing “the construction certificate works”.

434. On this basis, Mr Harriman disputed Mr Halstead’s opinion that these matters needed to be addressed prior to the issue of the Construction Certificate.

435. Mr Harriman was challenged on this opinion in cross-examination, by reference to Condition 5 of the Development Consent, which provided as follows: “Plans submitted with the Construction Certificate are to be amended to incorporate the conditions of the Development Consent”. Mr Harriman agreed that the reference to incorporating “conditions” of the Development Consent “must include condition 9”, and that “one way” of addressing this requirement would be to conduct a review to determine if an upgrade was required and, if (and to the extent that) any amendments to the plans were required as a result of such review, to make those amendments prior to submitting the application for a construction certificate. In re-examination, Mr Harriman was asked to identify “the other ways” of addressing this requirement. He responded as follows:

“The other way of doing it, which is very common in the industry is a staged construction certificate. If I apply the principles of staged construction certificate to this project, it could be that there was a construction certificate issued for the new building works which are partition walls and racking, and there could be a second stage which would address the audit report, if any. Certainly there was an audit report required on the hydrant system. That could be a second staged CC if there was work arising out of that audit.”

436. Reece submitted that this “other way” was inconsistent with the terms of Condition 5. However, Condition 5 must be read with Condition 9. It is plain from Condition 9 that the upgrades required by conditions 9(vii)-(viii) were to be undertaken as part of the construction works. Mr Harriman’s approach would be consistent with Condition 5 (in that plans for each stage of the construction certificate would be submitted with the application for that stage of the construction certificate), and Condition 9 (in that any upgrades would be performed in the required period).

437. Reece also submitted that the course proposed by Mr Harriman would be inconsistent with Article 29 of the Lease, which required a single application to be made for a construction certificate with 14 days of receiving Development Consent. However, Article 29 is to be interpreted in a manner consistent with its evident commercial purpose, which is for both parties to take steps expeditiously with a view to obtaining an Occupation Certificate by 23 June 2023. It is doubtful that the approach suggested by Mr Harriman, involving a staged process, would amount to a breach of Article 29. In order to reach this conclusion, it would be necessary to find that the requirement in Article 29(4) that Reece “must apply for a Construction Certificate” within 14 days of obtaining development consent necessarily precluded a staged construction certificate, even where such an approach was undertaken with a view to achieving the evident commercial object of Article 29.

436. For those reasons, I am not satisfied that any time taken to determine whether upgrades to emergency lighting or exit signs were required would add to the program proposed by Mr King.

437. Fifthly, Reece submitted that Mr King’s program must be extended in order to make allowance for Article 10.02(i) of the Lease, which provides as follows:

“within 21 days of the completion of the Proposed Works, the Lessee must provide to the Lessor a certificate by a consultant approved by the Lessor to the effect that the Proposed Works have been carried out in accordance with the Lessor’s approval of the Proposed Works, including the drawings and specifications submitted to and approved by the Lessor, and the requirements of all relevant Authorities.”

440. I accept Alamdo’s submission that there was no need for any such allowance in Mr King’s program, for the following reasons.

1. Article 10.02 applies in “cases where the Lessee seeks the consent of the Lessor to do any of the works set out in clause 10.01 above”.

2. Reece was expressly permitted, by Article 28.01 of the Lease to “fitout the Demised Premises as required to enable [Reece] to operate its business from the Premises”. Article 29(1)-(9) set out the “Procedure to be Followed” in respect of such works, including a requirement for Reece to obtain Alamdo’s consent pursuant to Article 29(3) (which occurred).

3. It follows that Reece did not need to seek Alamdo’s consent to the fit-out works pursuant to Article 10.01, and therefore Article 10.02 did not apply.

4. Even if Article 10.02(i) did apply to the fit-out works which were permitted under Article 28.01, it required that certain steps be taken “within 21 days of completion of the Proposed Works”. In contrast, Article 29(7) required that an application for an Occupation Certificate be applied for within two days of “practical completion of the Lessee’s and Lessor’s works, if any”. It would be inconsistent with those express timeframes to require the steps in Article 10.02(i) to be undertaken prior to an application for an Occupation Certificate being made pursuant to Article 29(7).

5. Further, even if such a construction were adopted, Article 10.02 expressly provided that Alamdo “may in writing waive” the condition in clause 10.02(i), and it is likely that, if Alamdo’s insistence on any such condition would have given Reece a right to terminate the Lease, such a waiver would have been forthcoming.

441. For those reasons, I am satisfied that Mr King’s program of works, though aggressive, is achievable. In particular, I am satisfied that if the Development Consent had been obtained by mid to late February 2023, there was a substantial chance that the Occupation Certificate would have been obtained by 23 June 2023 and, further, this outcome would likely have been achieved.

442. It follows that Reece’s breach of Article 29(2) caused, or at least materially contributed to, the failure to obtain an Occupation Certificate by 23 June 2023.

Significance of the Fire Safety Order

443. The Fire Safety Order required various works to be completed by February 2022. As at the date when the Lease was entered (23 December 2022), a number of these items remained outstanding, and Alamdo had still not completed the required works by late March 2023.

444. Reece submitted that “the entire process of [the Council] requiring a BCA compliance report, and the delay it occasioned, was wholly due to the failure of Alamdo to maintain the base building in a compliant state”, adding that:

“Had Alamdo complied with its statutory (and contractual) duties, none of the delays in the determination [of the Development Application] would have occurred, and the [Development Application] would have been determined in sufficient time to enable an occupation certificate to be issued within the 6 month period in Article 29.9.”

445. This submission implicitly acknowledges that it is the delay in the determination of the Development Application that is critical and that, if the Development Consent had been obtained at an earlier point in time (in respect of the application which was lodged on 12 January 2023), then the necessary steps could have been taken to obtain an Occupation Certificate by 23 June 2023.

446. In order to address Reece’s submission in respect of the Fire Safety Order, it is necessary to consider the following matters:

1. first, whether Alamdo breached the Lease by not completing the necessary works in respect of the Fire Safety Order by some earlier point in time;

2. secondly, whether any such breach on Alamdo’s part caused or materially contributed to the failure to obtain the Development Consent at an earlier point in time (and therefore caused or materially contributed to the Occupation Certificate not being obtained by 23 June 2023); and

3. thirdly, whether, in the event that the matters in paragraphs (1)-(2) are established, Reece is able to rely on the termination right in Article 29(9).

447. The Fire Safety Order was issued pursuant to s 9.34(1)(b) of the Environmental Planning & Assessment Act 1979 (NSW). Accordingly, Alamdo was required to comply with that order, and any failure to do so was an offence: s 9.37.

448. The Fire Safety Order required that compliance “must be achieved by 15 February 2022”. There was no evidence that this deadline was formally extended. On Mr Maurici’s own evidence, various matters in the Fire Safety Order remained outstanding as at (and for a number of months after) this deadline had passed.

449. However, it does not follow that Alamdo was in breach of the Lease by reason of its failure to complete the required works. In submitting that there was such a breach, Reece relied on Article 13.05, which relevantly provides as follows:

“(a) The Lessor warrants and must carry out all necessary remedial works (including the replacement of parts and upgrading of Services) to ensure, that as at the Commencement Date, and throughout the Term, the Services are in good and serviceable condition and repair, operate to the design and performance specifications and comply with all applicable statutory and regulatory requirements, excluding any Services altered or installed by the Lessee (including sprinkler and fire alarm equipment) within the Demised Premises and to the extent that alterations to Services by the Lessee means that those Services no longer comply with this clause.

…

(c) In this clause, ‘Services’ includes electricity, water, sewerage, and fire detection and prevention equipment installed in or connected or supplied to the Demised Premises or the Land, and the repair and maintenance of everything (such as plant and equipment) needed to supply them.”

450. Relevantly, this clause required Alamdo to ensure that, as at 23 December 2022 and during the term of the Lease, the fire detection and prevention equipment installed on the Premises or on the Land complied with all applicable statutory and regulatory requirements.

451. In considering whether there was a breach of this clause, it is necessary to take into account the precontractual communications of the parties.

452. Shortly prior to entry into the Lease, Reece became aware of the terms of the Fire Safety Order and that the works required by that order had not yet been completed. On 19 December 2022, Ms Radford asked Mr Maurici for confirmation that the required works would “be completed prior to lease commencement”. Mr Maurici responded that they would “not be completed by the commencement date”, that a number of the requirements of the Fire Safety Order had been addressed but others remained outstanding (which were identified), and that he expected that “all items will be finished with sign-off from Council before you occupy” (see paragraph [55]-[56] above). Reece did not express any disagreement with Mr Maurici’s proposal. I accept Alamdo’s submission that it can be inferred, particularly in the absence of any witness from Reece, that Reece was aware from these communications, prior to entry into the Lease, that a number of items that were the subject of the Fire Safey Order would remain outstanding during the period in which Reece was seeking development consent from the Council, and that Reece was content to enter into the Lease on this basis.

453. There is force in Alamdo’s submission that, having regard to those matters, Reece could not insist on strict compliance with Article 13.05(a) insofar as that clause required the fire safety equipment to comply with the matters specified in the Fire Safety Order by the Commencement Date and throughout the term of the Lease. It is unnecessary, having regard to the findings below, to determine whether this would be because Article 13.05 would be interpreted in light of the matters known to both parties at the time of entry into the Lease, or because of some waiver or estoppel.

454. Even if it be assumed that Alamdo breached the Lease by failing to have completed the necessary works in respect of the Fire Safety Order by the Commencement Date of the Lease, I am not satisfied that any such default caused the delay in obtaining the Development Consent.

455. Reece contended that there was a “clear causal link between … the failure to comply with the fire safety order, and council embarking on this entire interrogation of Reece in terms of BCA compliance”.

456. As a starting point, it was common ground that the failure to comply with the Fire Safety Order meant that the fire safety measures in the existing building were “inadequate” within the meaning of s 64(1)(b) of the EPA Regulation, and that this in turn triggered s 64(2), which required the Council to consider, at the time of determining the Development Application, whether it was “appropriate to require the existing building to be brought into total or partial conformity with the [BCA]”. Further, I accept, for reasons set out at paragraphs [274]-[277] above, that Mr Gittany, in assessing the Development Application and in making requests for information, appears to have proceeded on the basis that the Council required a clause-by-clause assessment of the existing building’s compliance with the BCA for the purpose of the mandatory consideration in s 64(2) of the EPA Regulation.

457. However, it does not follow that those matters led to the delay in the issuing of the Development Consent.

458. The Council made known to Novatec that “a BCA report” was required before the Development Application was submitted, leading to Ms Young requesting a “BCA Compliance Report” from Mr Williams. If there was any doubt, as at the time the Development Application was submitted, about what the Council wanted this report to address, the First RFI made clear that the Council required a clause-by-clause assessment of the existing building against the deemed-to-satisfy provisions of the BCA, with a statement as to whether there was compliance or non-compliance. It was Ms Young’s evidence that such a report was able to be produced in around one or two weeks. The delay in obtaining the Development Consent was not due to the fact that such a report was requested, but was due to the time taken for such a report to be prepared. I have determined that, if such a report had been expeditiously prepared and provided to the Council, the Development Consent would likely have been granted by mid to late February 2023, that is, within around five or six weeks of the Development Application being lodged on 12 January 2023 (see paragraphs [365]-[392] above).

459. I accept that various aspects of the RFIs issued by the Council related to matters concerning fire safety measures. However, those requests were made in the context of the Council requiring that there be a clause-by-clause assessment of the existing building’s compliance with the BCA, and identifying respects in which the BW&A reports which had been provided to date did not meet that description (including by reason of failing to address matters relating to fire safety). Importantly, the Council did not, at any point, indicate that development consent would not be granted until the works necessary to comply with the Fire Safety Order had been completed.

460. The Council imposed, as conditions of the Development Consent, a requirement that various upgrades be undertaken, including some which (it is common ground) corresponded to items in the Fire Safety Order. For example, Alamdo accepted that:

1. condition 9(v), which required an upgrade to the fire hydrant system, corresponded to paragraph 6 of the Fire Safety Order;

2. condition 9(vii), which required an upgrade to emergency lighting, corresponded to paragraph 9 of the Fire Safety Order;

3. condition 9(viii), which required an upgrade to exit and directional signs, corresponded to paragraph 8 of the Fire Safety Order; and

4. condition 9(x), which required an upgrade to external walls and associated openings in different fire compartments, corresponded to paragraph 13 of the Fire Safety Order.

461. This correspondence between the conditions of consent and the requirements of the Fire Safety Order does not establish that a failure to comply with the Fire Safety Order caused a delay in the grant of the Development Consent. Instead, it shows that the Council did not require the outstanding matters in the Fire Safety Order to be resolved prior to the issuing of the Development Consent, and was instead content for them to be addressed in the course of the construction works. That was consistent with the approach which the Council had adopted in respect of the Dutton DA. The outstanding items in the Fire Safety Order did not hold up the issuing of consent in respect of that development application (with such consent being issued in October 2022, around one month after the application was made) (see paragraph [370] above). Instead, the Council required, as a condition of its consent to the Dutton DA, works in respect of various matters covered by the Fire Safety Order (including the fire hydrants, fire extinguishers, emergency lighting and exit signage) to be “undertaken with the construction certificate works and … completed prior to an occupation certificate being issued”.

462. Finally, even if it had been established that Alamdo had breached the Lease by failing to complete the works required by the Fire Safety Order prior to the Commencement Date, and that this had caused a delay in obtaining the Development Consent (with the result that the Occupation Certificate could not be obtained by 23 June 2023), it would not follow that, by reason of those matters, Reece was entitled to rely on the right of termination in Article 29(9) of the Lease.

463. If those matters had been established, the result would have been that the default of each party caused, or materially contributed to, the Development Consent not being obtained by 1 June 2023, in that the result would have been as follows:

1. Alamdo’s breach of Article 13.05 (by reason of non-compliance with the Fire Safety Order) resulted in the Council requiring a BCA compliance report in order to process the Development Application; and

2. Reece’s breach of Article 29(2) (by reason of its delay in providing such a report) resulted in the Council not having, until 18 May 2023, the material which it required to process the Development Application.

464. In such a situation, a “but for” analysis is not appropriate: “one does not have to see that the default was the whole cause of the non-fulfilment of the condition, nor must the opposing party necessarily be blameless” (Sanctuary Investments at 16,626 per Young J, referring to Hunyor at 15,633 per McLelland CJ in Eq).

465. Instead, in circumstances where each party materially contributed to the non-performance of the condition, such that there are two legally operative causes, the consequence is that neither party can rely on the contractual right of termination.

Conclusion – Causal Link

466. For those reasons, I find that Reece’s breach of Article 29(2) of the Lease caused, or at least materially contributed to, the non-fulfilment of the condition specified in Article 29(9) (namely, the failure to obtain an Occupation Certificate by 23 June 2023).

467. It follows that Reece was not entitled to terminate the Lease pursuant to Article 29(9), when it purported to issue a notice of termination on 27 June 2023.

468. It also follows that, since Reece did not allege that the Lease was brought to an end by any other means, the Lease remains on foot.

CONCLUSION & ORDERS

469. Alamdo has succeeded in its claim against Reece. It is entitled to a declaration that the Lease remains on foot, and judgment in the amount of the unpaid rent and outgoings, together with interest on that amount.

470. Reece has failed to establish its cross claim in respect of the Bank Guarantee, which will be dismissed.

471. Having regard to its success in respect of both its claim and the cross claim, Alamdo is also entitled to its costs of the proceedings.

472. The parties should bring in short minutes of order to give effect to these reasons for judgment. Insofar as there is a dispute regarding those matters, including any dispute regarding the calculation of the judgment sum or interest thereon, or regarding the form of costs order, I will give the parties an opportunity to make submissions on those matters and, unless any party requests an oral hearing, will deal with any such dispute on the papers.

473. Accordingly, I make the following orders.

1. Direct that the parties are to bring in short minutes of order by 5pm on 3 September 2025 to give effect to the reasons for judgment.

2. Direct that, in the event the parties are unable to agree on orders to give effect to the reasons for judgment (including orders as to interest and costs), the parties are to exchange and provide to the Associate to Nixon J, by 5pm on 3 September 2025, the orders which each party proposes and submissions (limited to 5 pages) on those orders, indicating whether, and if so why, an oral hearing is requested to deal with the matters in dispute.

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Decision last updated: 20 August 2025