| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : BABURA PTY LTD -v- PETER JOHN HARVEY AND COLIN MANSELL HARVEY [2005] WADC 136 CORAM : EATON DCJ HEARD : 11-12 NOVEMBER 2004 & 9-10 MAY 2005 DELIVERED : 9 AUGUST 2005 FILE NO/S : CIV 2645 of 2002 BETWEEN : BABURA PTY LTD Plaintiff
AND
PETER JOHN HARVEY AND COLIN MANSELL HARVEY
Defendants
Catchwords: Landlord and tenant - Lease - Breach of covenant to make good - Damages - Assessment
Legislation: Nil
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Result:
Damages of $3,967 awarded to the plaintiff plus interest at six per cent from 19 June 2002 in the sum of $747.32 Representation:
Counsel:
Plaintiff : Mr P A Nevin
Defendants : Mr H Kremer
Solicitors:
Plaintiff : Taylor Smart
Defendants : H Kremer & Co
Case(s) referred to in judgment(s):
De Pledge v Shaydav Enterprises Pty Ltd (2002) 29 SR (WA) 280
Robinson v Harman (1848) 1 Exch 850
Telecom & CPS Community Credit Co-op Ltd v Heberg Pty Ltd [1992] VConvR 54-453
Case(s) also cited:
Alamdo Holdings v Australasian Window Furnishings (NSW) Pty Ltd [2004] NSWSC 487
Anstruther-Gough-Calthorpe v McOscar [1924] 1 KB 716
Bunyip Buildings Pty Ltd v Gestetner Pty Ltd [1969] SASR 87
Clowes v Bentley Proprietary Limited [1970] WAR 24
Eyre v McCraken; 10/2/2000 UKCA ; unreported
Gimtak Pty Ltd v Cathie [2001] VSC 88
Graham v Markets Hotel Pty Ltd (1943) 67 CLR 567
Haskell v Marlow [1928] 2 KB 45
Joyner v Weeks [1891] 2 QB 31
Proudfoot v Hart [1890] 25 QBD 42
Radford v de Froberville [1977] 1 WLR 1262
Regis Property Co Ltd v Dudley [1959] AC 370
Roper v Johnson (1873) LR8CP 167
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Sparta Nominees Pt Ltd v Orchard Holdings Pty Ltd & Ors [2002] WASC 54
Wood Factory Pty Ltd v Kiritos Pty Ltd [1985] 2 NSWLR 105
Zis, O'Donnell v Keogh [1961] WAR 120
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1 EATON DCJ: The plaintiff, a company incorporated in Western Australia was the registered proprietor of commercial premises known as Lots 9 and 10 on Diagram 74823 otherwise known as 21 and 23 McIntyre Way, Kenwick in the State of Western Australia, respectively.
2 By a lease dated 31 December 1991 the plaintiff leased 21 McIntyre Way, Kenwick to the defendants for a period of five years from 4 October 1991 with an option to renew for a further term of five years commencing on 4 October 1996. By a Deed of Extension and Variation of Lease dated 25 December 1996 the plaintiff leased those premises to the defendants for a further term of five years commencing on 4 October 1996. 3 By a lease dated 11 June 1997 the plaintiff leased to the defendants 23 McIntyre Way, Kenwick for a term commencing on 1 July 1997 and terminating on 4 October 2001 with an option to renew for a further term of five years from 4 October 2001. 4 The plaintiff's statement of claim alleges that the two tenancies came to an end on or about 4 October 2001 when a director of the plaintiff and a representative of a real estate firm inspected both premises. 5 The plaintiff alleges that as at 4 October 2001 the defendants had failed to comply with certain of their obligations under the two lease agreements. In particular, the plaintiff alleges that they failed to make good those premises at the termination of the tenancies such that the plaintiff was obliged to arrange and pay for certain cleaning and remedial work at both premises. The plaintiff further asserts that, by reason of the defendants' failure to make good both premises, the plaintiff was unable to let those premises for a period of approximately eight months from 4 October 2001 until on or about 22 June 2002. 6 The plaintiff's claim is for damages in the sum of $8,896.25 being the cost of cleaning and remedial work and in the sum of $37,190 in respect of unpaid rent with interest on each amount. 7 By their defence the defendants plead that they vacated both premises on or about 14 September 2001 having notified the plaintiff in writing on or about 30 May 2001 of their intention not to renew. In general terms they deny the allegations of the plaintiff and say further that, at all times commencing at least one month prior to the termination date, the plaintiff by its agent was advertising the premises as being available for lease or sale and that any rental income or payments of outgoings unavailable to the plaintiff after the termination date resulted from the failure of the plaintiff to find a lessee or buyer for the premises
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and not by reason of the condition of the premises. Further, say the defendants, the plaintiff took no steps to carry out any work upon the premises until some nine months after the termination date (4 October 2001) and failed to mitigate its alleged losses which, in any event, are expressly denied. 8 The lots comprise two industrial units, side by side, each having an area of approximately 2,000 square metres and each with a warehouse with a small office at the front.
The lease provisions 9 By cl 5(2) of each lease agreement the lessee was bound by covenant to, during the term: (a) keep the lease premises cleaned, drained, in a sanitary condition and clear of rubbish and debris; (b) at the expiration or sooner determination of the term to clear the leased premises of all rubbish and debris and to leave the leased premises in a clean and tidy condition to the satisfaction of the lessor; (c) maintain and keep the leased premises in good and substantial repair and condition consistent with the condition of the same at the commencement of the term so that generally the condition of the leased premises not be permitted to become prejudicially affected or impaired or to deteriorate beyond the condition of the same at the commencement of the term … fair wear and tear and damage by fire, flood, lightning, storm, tempest, earthquake, act of God and war excepted; (d) permit the lessor and its agents, servants and contractors at any reasonable times to enter upon and view the condition of the leased premises and shall forthwith repair and make good all defects or wants of repair for which the lessor or its agents, servants or contractors may find on an inspection and of which the lessor shall have given notice in writing to the lessee to amend and make good the same. 10 By the Deed of Extension and Variation of Lease made 28 December 1996 the parties agreed that the lease of 21 McIntyre Way would be
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extended for a further period of five years expiring on 3 October 2001 at a final rental of $44,630 per annum exclusive of outgoings payable by equal consecutive monthly instalments of $3,719 without review and otherwise upon and subject to the same conditions, covenants and powers provided for in the original lease. 11 Both leases are in identical terms so far as the lessee's obligations, quoted above, are concerned. Both leases oblige the lessee to, at the expiration or sooner determination of the term, yield and deliver up to the lessor the leased premises in such good order and condition as shall be in compliance with the lessee's covenants and agreements. 12 By letter of 30 May 2001 the defendants wrote to Mr Harry Kassinas of Beckenham advising: "We will not be taking up our option to extend the leases on 21 and 23 McIntyre Way, Kenwick and we will be vacated by 3/10/2001. David Sykes from Sykes Transport, 17 McIntyre Way, Kenwick has shown some interest in leasing these buildings. I hope this is of some help to you." 13 Mr Kassinas was at all material times a director and shareholder of the plaintiff. He gave evidence first for the plaintiff. He said that Babura Pty Ltd had purchased 21 and 23 McIntyre Way, Kenwick in 1991 and sold them in October 2002. 14 The defendants are father and son, respectively. 15 It is clear that it was Mr Kassinas on behalf of the plaintiff who made arrangements for the acquisition of both properties and who spoke on behalf of the plaintiff when it came to dealing with matters arising out of the tenancies of each. According to the first defendant he and his father got on well with Mr Kassinas during the course of the tenancies, particularly so in the case of Mr Kassinas and the second defendant they being, according to the first defendant, of about the same age. 16 Some time after receipt of the letter just quoted the plaintiff instructed Mr Peter Murphy of Ray White Commercial to act on its behalf with respect to both premises. By letter of 14 September 2001 Mr Murphy wrote to the defendants in the following terms: "Further to our recent discussion we have advised Harry Kassinas the gates were damaged during a car theft incident and he will need to claim the repairs on insurance. In
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this regard he questioned, had the matter been reported to the police. Please call Harry, who can be contacted by phone on 9358 6480. As a result Harry has requested us to advise you that you are to complete your 'make good' in accordance with the provisions of the lease prior to the termination date. Should this work not be completed rent is payable on a monthly basis until completion. We understand Harry is expecting a good if not a high standard of workmanship." 17 The first defendant said that about a year before the expiry of the tenancies he began looking for alternative premises. He found land in Maddington and entered into an agreement with the owner of that land for the construction of new premises suitable for his business. He gave evidence that the defendants were operating from the new premises on 6 August2001. He said that they were in the throes of vacating the premises between that date and 3 October 2001 and attended to, according to him, the defendants' obligations pursuant to the terms of the lease. 18 It appears that there was an inspection of the premises at 9.00 am on 8 October 2001. Those who attended were Mr Kassinas, Mr Murphy and the first defendant. The latter was told that he was not allowed on the premises because he was no longer the tenant. He left and says that later that day he received a facsimile message from Mr Murphy which contained the following: "Further to our inspection of the above property we enclose a schedule of items which have been overlooked in preparation for vacating the above properties. These are a combination of outstanding maintenance and make good items. No 21 McIntyre Way, Kenwick 1. Reinstate grass on verge. 2. Remove tree stumps from garden bed. 3. Turn soil in garden bed and make ready for planting. 4. Plant two replacement shrubs in front garden bed. 5. Repair and straighten the front 15 metres of the northern boundary fence. 6. Repair the damage to bitumen in front of the workshop door.
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7. Sweep bitumen. 8. Remove or paint out all signage on the front walls. When removing signs fill all holes and repaint to match surrounding surfaces. 9. Repair and replace all downpipes and drains and replace damaged bell adaptors on the adjoining drains. 10. Remove sign on back wall and repair holes. 11. Clean all soak wells including the removal of gravel and foreign matter. 12. All drains are to be cleaned, fully operational and free of oil, grease or contaminants. 13. Sweep warehouse walls and remove dust, cobwebs and accumulated grime. 14. Pressure clean the warehouse floor. 15. Pressure clean walls in southern west corner removing oil and grease residence. 16. Remove flyscreens in north west corner. 17. Sink unit can stay. 18. Remove speaker, wiring and bracket. 19. Remove fan in the wall and reinstate wall. 20. Repair all holes in the walls. 21. Repair all holes in the roof. 22. Clean the toilets and amenities including but not limited to walls, floors, fittings and fixtures. 23. Clean all windows including frames. 24. Clean all floors in the offices. No 23 McIntyre Way, Kenwick 1. Remove weeds on southern boundary fence.
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2. Provide key to right of way gate. 3. Reinstate garden bed adjoining front fence. 4. Remove pallets and cut grass in the right of way. 5. Remove concrete blocks on front fence. 6. Reinstall letter box. 7. Repairs to front fence are the subject of an insurance claim and the lessee was responsible for the payment of any excess or expenses incurred in its repair or replacement. 8. Remove or paint out signage on façade. 9. Clean windows in office. 10. Clean office floors. 11. Reinstate floor covering in office. 12. Pressure clean the warehouse floor and remove all paint, grease and oil. 13. Remove all loose bricks, concrete and timber at the rear of the property. 14. Clean all the soak wells and drains ensuring they are fully operational and free of debris. 15. Reinstate all down pipes and replace any damaged bell adaptors on the connecting drains. 16. Remove weeds and grass in back fence. 17. The airconditioner in the office is to be fully operational and the front grill is to be reinstated. Your prompt attention to above would be appreciated and rent is payable for this month while the work is in progress. All work is to be of a good standard and in this regard some patches to the walls are of a poor standard and barely acceptable. When you consider the above work has completed another inspection
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will be undertaken and in the interim should you have any queries, please do not hesitate to contact the undersigned." 19 Mr Murphy sent a further facsimile transmission to the defendants on 19 October 2001 in the following terms: "Further to our inspection of the above properties on 18 October 2001 a copy of our notes is attached. The owner has advised the rent for this month is outstanding and we reiterate rent is payable until you yield up the properties to the lessor in good condition. The oil and grease residue in the floors of both warehouses is of concern and you may need to consult the supplier of degreasing compounds in order to remedy the matter satisfactorily. The soak wells at No 23 are holding water and an oil residue is apparent. In this regard the soak wells are to be cleaned and, we will require you to demonstrate all parts of the drainage system are free of oil and grease. Other items of damage requiring repair or reinstatement include: 1. The back of the office warehouse door at No 23 is damaged. 2. The exterior light fitting by the front door of No 23 has been removed. The owner has advised that he has an excess water account which will be delivered to you for payment. As discussed you were responsible for maintaining the properties during the term of the lease and to yield up in good condition. To date that situation has improved progressively and we would like to think the outstanding items can be completed within a week." 20 The plaintiff instructed solicitors who wrote to the defendants by letter of 12 November 2001 requesting completion of the following items: "Unit 21 McIntyre Way, Kenwick 1. Reinstate grass on verge. 2. Turn soil in garden bed and make ready for planting. 3. Plant two replacement shrubs in front garden bed. 4. Repair and straighten the front 15 metres of the northern boundary fence.
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5. When removing signs fill all holes and repaint to match surrounding surfaces. 6. Repair and replace all downpipes, one piece of downpipe required on northern wall. 7. All drains to be cleaned, fully operational and free of oil, grease or contaminants. 8. Pressure clean the warehouse floor. 9. Pressure clean walls in south west corner removing oil and grease residence. 10. Repair all holes in the walls. 11. Repair all holes in the roof. 12. Clean the toilets and amenities including but not limited to walls, floors, fitting and fixtures. 13. Clean all floors in the office. 14. Cleaning of the soak wells, removing all residue, grease and any other contaminants. Unit 23 McIntyre Way, Kenwick 1. Remove weeds on southern boundary fence. 2. Provide key to right of way gate. 3. Reinstate garden bed adjoining front fence. 4. Cut grass in the right of way. 5. Repairs to front fence are the subject of an insurance claim and the lessees with (sic) responsible for the payment of any excess expenses incurred in its repair or replacement. 6. Clean windows in office. 7. Clean office floors. 8. Reinstate floor covering in office.
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9. Pressure clean the warehouse floor and remove all paint, grease and oil. 10. Clean all the soak well and drains ensuring that they are fully operational and free of debris. 11. At bottom of rear downpipe north side needs resecuring. 12. Remove weeds and grass in back fence. 13. The airconditioner in the office is to be fully operational and the front grill is to be reinstated. 14. The back of the office warehouse door is damaged. 15. The exterior light fitting by the front door has been removed. 16. Cleaning of the soak wells, removing all residue, grease and any other contaminants." 21 By letter of 27 November 2001 the defendants wrote to the solicitors for the plaintiff in the following terms: 22 Shortly thereafter the defendants instructed solicitors and the solicitors for both parties then began to correspond. 23 The obligation of the defendants during the term of each tenancy was to keep the premises in good and substantial repair and condition consistent with the condition of the same at the commencement of the
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term so that generally the condition of those premises should not be permitted to become prejudicially affected or impaired or to deteriorate beyond the condition of the same at the commencement of the term subject to fair wear and tear and damage by external forces. 24 Having regard to the exchange of correspondence quoted above there is no doubt that there was at about 4 October 2001 and thereafter a dispute between the parties to the leases as to whether the defendants had met those obligations pursuant to the covenant to yield up in good order and condition. Clearly, whether they had, in fact, met their obligations will involve a comparison of the state of the premises upon the determination of each lease with the state of those premises at the commencement of the tenancy in each case and the impact of fair wear and tear and other intervening events, in each case. 25 The tenancy in respect of 21 McIntyre Way, Kenwick ran from 4 October 1991 to 3 October 2001. The tenancy in respect of 23 McIntyre Way ran from 1 July 1997 to 3 October 2001. In neither case is there any written record of the condition of the premises as at the commencement of the tenancy. The plaintiff called evidence in that regard from Mr Lloyd Houthuysen, the manager of Global Machinery & Scrap Metal Pty Ltd which originally carried on business at 21 McIntyre Way. He said that he and his wife bought that property when it was a vineyard. They built a warehouse and office. It seems that they later bought 23 McIntyre Way. The plaintiff became registered proprietor of those properties on 7 October 1991. At that time the defendants had been the tenants of 21 McIntyre Way since July 1988. Some time after that Mr Houthuysen built a warehouse structure on 23 McIntyre Way and leased it to Glen Park Engineering Pty Ltd. 26 Others to give evidence as to the state of the premises at the commencement of the defendants' tenancies were Mr Kassinas of the plaintiff, the first defendant, Robert Darren Taggart, a director of Glen Park Engineering Pty Ltd and James Lawson Hughes, a director of Hughes Industrial Services Pty Ltd. Of those who gave evidence as to the state of the premises at the commencement of the tenancies Mr Taggart, Mr Houthuysen and Mr Hughes could be regarded as being relatively independent. Perhaps the best record of the general state of the premises historically was in the form of photographs taken by the first defendant. 27 Mr Kassinas, a director and shareholder of the plaintiff, gave evidence that the plaintiff had purchased 21 and 23 McIntyre Way, Kenwick in 1991 and sold them in October 2002. He said that, at the time
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of purchase, he did not go inside 21 McIntyre Way other than to go into the office at the front and to look through the back door. When asked by counsel for the plaintiff as to the condition of the property at the time of the purchase he said "that was on a really good condition, the property. I look very well outside but not inside and I try many time to get inside but he wouldn't let me to go through." "He" was a reference to the defendants or one of them. Mr Kassinas said, so far as the outside of the property was concerned, that it was clean and in good condition. So far as the structure of 21 McIntyre Way was concerned he said that the walls were undamaged. He said that when he purchased the properties he inspected them. He said that the building on 21 McIntyre way was older than the building on 23 McIntyre Way. He said that, when he purchased the properties, there were no drainpipes missing and that the drains were "nice and clear". He said that the fences were in "really good condition". He said that, at the front of 21 McIntyre Way there was a garden with pine trees. The floor inside was "very nice and clean with no oil stains." 28 With respect to 23 McIntyre Way Mr Kassinas said that following the departure of Glen Park Engineering he organised the cleaning of the floors with a heavy duty steam cleaner and the cleaning of the walls. He said there were no oil stains on the floor, no downpipes missing and that the drains were in good condition. When asked whether there was any damage to the walls he sad: "Not at all, was beautiful property, that one." He recalled that the lights were all working and that the property was clean. He described the fences as being in "tremendous condition". He removed grass from the base of the fences. 29 Mr Taggart gave evidence that he was a director of Glen Park Engineering Pty Ltd which was, from 1989 to 1997, a tenant of 23 McIntyre Way, Kenwick. He said that the premises were used as an engineering fabrication workshop. He recalled that when Glen Park Engineering left the premises there was no oil staining of any significance noting that his engineering work involved cutting and welding and that the presence of flammable materials on the floor was a significant safety issue. He noted that there was a machine in a particular part of the premises which used oil as a lubricant and that there were oil stains on the floor associated with the use of that machine. 30 When he left the premises there was some damage to the walls in the form of a hole in the sheeting of the side wall. To his knowledge there were no downpipes missing. He said the gates and fences were in reasonable condition and served their purpose. The gates on either side of the office were second hand when they were installed. In
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cross-examination he was asked about the garden at 21 McIntyre Way. He said: "Well, to be honest with you, I wouldn't even refer to them as gardens." He could not recall any pine trees or landscaping. He said that there would be dents to the cladding of the walls but no perforations other than the hole made by him in a side wall. He said that he never emptied the soak wells but cleaned them out by hand from time to time. When asked as to the condition of the cyclone fences he replied "they did the job". He said that one of the side fences and the rear fence was super 6 rather than cyclone fencing. 31 Lolke Sjoerd Houthuysen, known as Lloyd Houthuysen, said he was the manager of Global Machinery and Scrap Metal Pty Ltd which originally started off in business at 21 McIntyre Way. He and his wife had purchased that property in the 1970s. They later purchased 23 McIntyre Way. The latter property was leased to Glen Park Engineering Pty Ltd. As their business expanded Global Machinery acquired premises at 248 Welshpool Road and moved to those premises. 21 McIntyre Way was then let to the defendants. He could recall no damage to the floor of the warehouse. He said that the walls were Colorbond and should have been in fairly good condition. He could not recall any damage to the walls. Similarly, he said that the fences should have been in "fairly good condition". On further reflection he described them as "pretty ordinary". When asked as to the condition of the yards when the properties were sold to the plaintiff he said that they would have been "extremely good". As to the floor of the warehouse at 21 McIntyre Way at that time he said that it would have been in "fairly good condition". He could recall no specific damage. He further said that the structure built at 23 McIntyre Way was an already standing warehouse which was relocated and re-erected. He said that the business carried on at 21 Kenwick Way was that of machinery and scrap metal. 32 In cross-examination he said that the building at 21 McIntyre Way was erected in 1980 using new materials. He said that at no time prior to the sale to the plaintiff in 1991 did he undertake any refurbishment of that building or the fences. He originally erected fences. He said that the mesh in the fences would have been replaced before moving out. 33 James Lawson Hughes said that he is the principal and a director of Hughes Industrial Services Pty Ltd. In mid 1997 he was looking for alternative premises and saw a sign at the front of 23 McIntyre Way. He
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eventually contacted the first defendant who, he thought, had just taken over the tenancy of the premises. His company agreed to sub-lease a portion of those premises from the defendants. 34 23 McIntyre Way comprises 2,061 square metres. There is a right of carriageway over the southern boundary of 23 McIntyre way in favour of the proprietors of Lot 67 on Plan 2976 at the rear of 23 McIntyre Way. The right-of-way enabled the owner of Lot 67, a trucking company, to have alternate access to McIntyre Way, the front of Lot 67 being on Albany Highway. The right-of-way was created in 1989. Mr Hughes said: "You always got the impression the shed was too big for the actual ground area because to the left of the building was an access-exit point for another company which was Western Trucks. They had access 24 hours a day, so when we changed the locks for security reasons we had to give them a key so that they could exit and access the place in the middle of the night if they had to." When asked if the right-of-way was fenced off he said that it was "a little bit dilapidated and rusty in a lot of areas." He said that there was a gate at the McIntyre Way end of the right-of-way and another gate to Lot 67 at the other end. According to his evidence the southern wall of the warehouse on 23 McIntyre Way ran along the boundary of the right-of-way. There was no fencing between the gate and the front corner of the building nor between the rear corner of the building and the gate to Lot 67. In other words, the right-of-way was not, at that stage, fenced off and, by using the right-of-way, a vehicle could drive around the warehouse. As to the fencing that was in place at 23 McIntyre Way he said "it wanted replacing really." He said that where the warehouse abutted the right-of-way there was a 10 foot wide carriageway used by trucks which occasionally damaged the warehouse downpipes and walls. When asked as to the existence of grass or a garden he said that there was no grass and no garden but weeds all over the place. When asked as to the condition of the floor of the warehouse he said that: "In general the concrete side was very good but there was a lot of stains and oil marks and we tried on several occasions to even steam clean it. We would leave oil absorbing material on it at night and then try and clean it off in the morning. We did remove some of it, but it was quite deeply ingrained into the concrete."
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He thought that the oil staining affected about five to seven per cent of the floor area. He said that there dents and damage to the left hand wall facing the right-of-way. There were nine or ten penetrations to the cladding. He said that all downpipes were in place although they were not always joined. As to the lighting he said there were a number of fluorescent tubes which were not working. 35 Mr Hughes said that his company was a sub-tenant of 23 McIntyre Way for about 13 months leaving in mid 1998. 36 The defendants became tenants of 21 McIntyre Way on 13 July 1988. Some three or four months before taking possession the first defendant took photographs of the premises which were then occupied by Global Machinery & Scrap Metal Pty Ltd. Those six photos comprising exhibit 8 are predominantly taken from the roadway of McIntyre Way depicting a commercial warehouse or workshop with a brick frontage and Colorbond metal side walls. There are brick office premises at the front. The front fencing appears to be what is known as pool fencing. The front gates appear to have cyclone wire. There is no evidence of any garden or landscaping. The photos do not depict the interior of either the office or the warehouse. The yard of 21 McIntyre Way could only be described as a jumble of machinery and scrap metal some of which appears to be leaning against the side wall of the warehouse. 37 Exhibit 9 was a photograph taken by the first defendant between six months and a year after the defendants had taken possession of 21 McIntyre Way. The defendants' signage is on the front wall of the warehouse indicating the business of "Auto Dismantlers". Another free standing sign in the yard indicates the business of "Wreckers". The building and the fencing along with the gates appear to be in reasonable condition. The yard is relatively clear depicting just a couple of parked vehicles. There appeared to be about three small shrubs growing near and on the inside of the fence line to the right of the main gate. There appears to be no lawn or landscaping. 38 Exhibit 11 comprises 13 photographs said to have been taken by the first defendant at different stages of the tenancies of 21 and 23 McIntyre Way. Those taken of 21 McIntyre Way depict predominantly the counter and customer service areas which appear to be well organised and tidy. Those depicting 21 McIntyre way do not show the interior of the warehouse to any great degree although what is shown depicts the usage of premises in keeping with the nature of the business being carried on there.
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39 Those photographs, being part of exhibit 11, which are said to be of 23 McIntyre Way depict, with the exception of one photograph being of a tidy office, the warehouse. The floor appears to be bare concrete. The front portion of the warehouse appears to be predominantly occupied by free standing storage racks with, towards the rear of the premises, what appears to be two motor vehicle hoists. Attached to the rear wall is a sign indicating "Wash Bay".
40 The building at 21 McIntyre Way was erected in 1980 and used continuously until 4 October 2001, a period of about 21 years, firstly by a dealer in machinery and scrap metal and secondly for the purposes of the business of automotive wrecking and dismantling. Despite Mr Houthuysen's tendency to suggest that he was meticulous in the care of his premises during his occupation of 21 McIntyre Way if the photos of those premises at that time (exhibit 8) are anything to go by he may not have been quite as meticulous in his treatment of the premises as his evidence would suggest. The photos of 21 and 23 McIntyre Way during the period of the defendants' tenancy of those premises do suggest that the premises were kept relatively clean and orderly. It seems that, on the evidence, from the time of its construction to 4 October 2001 there was no refurbishment of the built structure on 21 McIntyre Way by any owner. 41 Once the structure at 23 McIntyre Way, Kenwick was complete it was leased to Glen Park Engineering Pty Ltd as an engineering fabrication workshop. It was used for that purpose from 1989 to 1997 and thereafter was used by the defendants in their wrecking and automotive dismantling business and, for about 13 months, a portion of the premises were used by Hughes Industrial Services. It would be fair to say that 23 McIntyre Way was used for a period of about 12 years continually for industrial purposes without refurbishment of the building by any owner. It is also the case that in respect of both 21 and 23 McIntyre Way there was no evidence of the owner making any requirement, written or otherwise, of any tenant to carry out work pursuant to the maintenance covenant of any lease. I note, at this point, in passing that neither lease contains a covenant to paint.
The leased premises 42 Although not particularly defined by the pleadings there arose during the trial the question of what was meant by the phrase "leased premises" with respect to 23 McIntyre Way, Kenwick. That phrase, in the lease dated 11 June 1997 was defined to mean "all those premises more particularly described in item 2 of the schedule and includes the chattels thereon." Item 2 describes the leased premises as "all that the premises
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situate at and known as Part of Lot 10, 23 McIntyre Way, Kenwick in the State of Western Australia." The lessor, in the lease, is described as being the registered proprietor of the land described in item 1 of the schedule. The land, in the schedule, is described as "Portion of Canning Location 12 and being Lot 10 the subject of Diagram 74823 and being the whole of the land comprised in Certificate of Title Volume 1834 Folio 207." The title to Lot 10 on Diagram 74823 indicates that on 17 August 1989 a right-of-carriageway over land on the southern boundary of Lot 10 was transferred to the proprietors for the time being of Lot 67 on Plan 2976(2) being the owners of the land at the rear of Lot 10. The reference in the lease of 23 McIntyre Way is not to Lot 10 but rather to Part of Lot 10. As already observed it appears that the southern wall of the built structure on 23 McIntyre Way is on the boundary of the right-of-way. The right-of-way was otherwise fenced to the rear and to the front of Lot 10 for the purpose of securing 23 McIntyre Way. Given the description of the leased premises in the lease dated 11 June 1997, the obligation of the lessor to permit the lessee quiet enjoyment of the premises and the obligation of the lessees to only use the leased premises for the business of motor wrecking and vehicle sales I conclude that the leased premises so far as 23 McIntyre Way were concerned did not include the right-of-carriageway over the portion of land described in Transfer E172153 registered on 17 August 1989. It follows from that conclusion that the lessee's obligations described in the lease do not extend to that portion of Lot 10.
The obligations of the parties 43 The leases of 21 and 23 McIntyre Way are in almost identical terms. In neither case is the lessor obliged to repair the premises. It appears to be the case that during the continuance of the terms created by the two leases and extensions thereof the lessor did not carry out any repairs to either premises. Nor, as has been observed, did the lessor provide any notice in writing to the lessee in either case to do so. 44 What is complained of in this matter is a breach by the defendants of cl 5(6)(j) of the lease in each case obliging the lessees "at the expiration or sooner determination of the term, to yield and deliver up to the lessor the leased premises in such good order and condition as shall be in compliance with the lessee's covenants and agreements herein contained." It is clear that the lessee's covenant to maintain excepts the impact of fair wear and tear and damage by fire, flood, lightning, storm, tempest, earthquake, act of God and war. The only one of those factors applicable to the premises in this case would appear to be fair wear and tear. As
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mentioned, in order to assess the extent of the obligation imposed upon the lessees pursuant to the "yield up" clause in each lease one must have regard not only to the condition of the premises at the commencement of the term but also to the impact of fair wear and tear during the course of each term. Consideration of the latter must have regard to the permitted use of the premises in each case being "motor wrecking and vehicle sales".
The Scott Schedule 45 On 24 October 2003 the plaintiff was ordered to deliver a Scott Schedule to the defendant and the defendant was ordered to complete the same and file and serve the completed schedule. The parties complied and on 2 April 2004 the defendant filed a completed Scott Schedule. Regulation 8 of the District Court Rules 1996 enables a registrar of the Court to order that the plaintiff file and serve a concise statement of the issues of fact and law which the plaintiff contends will need to be determined at trial which, in respect of actions concerning building or engineering disputes, shall be in the form of a Scott Schedule. Sensibly, notwithstanding that this matter is not strictly speaking a building or engineering dispute, the Registrar directed the filing of a Scott Schedule. I regard the Scott Schedule in this case as being a statement by the parties of the issues of fact to be determined at trial. 46 Confusingly, the Scott Schedule makes reference to Lots 21 and 23 which I take to erroneously be a reference to 21 and 23 McIntyre Way being respectively Lots 9 and 10. At the beginning of the trial counsel for the plaintiff sought and was permitted to amend the statement of claim by deleting from within the "Particulars of Make Good Work to be Completed on the First Premises" the words "repair hole in concrete floor at rear of warehouse" and inserting that phrase under the heading "Particulars of Make Good Work to be Completed on the Second Premises." The second premises were defined by par 5 to be the premises known as 23 McIntyre Way, Kenwick. I therefore conclude that item 8 in the Scott Schedule "Replace section of concrete floor in rear of Lot 21 where a four metre squared hole was cut in floor" should be a reference to 23 or Lot 10. 47 The Scott Schedule comprises nine items. In response to items numbered 3, 6, 7, 8 and 9 the defendant has indicated, inter alia, that part of what is required to be done by the defendants was not part of any claim made by the plaintiff prior to the commencement of the litigation. The covenant to yield and deliver up to the lessor the leased premises at the
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expiration of the term in such good order and condition as shall be in compliance with the lessee's covenants and agreements casts an obligation on the lessees which is not qualified by any requirement of the lessor to give notice to the lessee. Of course, from a practical point of view, an allegation by a lessor of a lessee's failure to abide by that covenant would necessarily involve giving some particular notice to the lessee of what is said to be a breach of that covenant and what is required of the lessees in order to remedy the alleged breach. The giving of such a notice serves to alert lessees and affords lessees the opportunity to deal with such matters, if appropriate. If, as a matter of fact, allegations of breach are raised for the first time in the course of litigation, there may be implications in terms of costs if such allegations are found to be of substance.
Scott Schedule – Item 1 48 The plaintiff called Alan Peter Murphy, a certified practising valuer. As mentioned earlier, the defendants had written to the plaintiff by letter of 30 May 2001 indicating an intention to vacate 21 and 23 McIntyre Way on or before 3 October 2001. Mr Murphy said that he was approached by the plaintiff. His employer, "Ray White Commercial" was appointed as selling or leasing agent for the premises. Prior to that there had been no managing agent. Mr Murphy said that in May or June of 2001 he inspected the premises and spoke with the first defendant. He again inspected the premises a few days after 4 October 2001. He spoke of grass growing along the rear boundary fence of both 21 and 23. He said that there were no garden beds in either premises just the outline of where they might have been. When Mr Murphy wrote to the first defendant he made no mention of the rear fence at 21 McIntyre Way. With respect to 23 McIntyre Way he asked that weeds be removed from the southern boundary fence and that weeds and grass be removed from the back fence. In cross-examination he confirmed that as at 8 October 2001 the yards had been cleared. He confirmed that grass on the rear and side fence of 23 McIntyre Way was then a problem. 49 The first defendant gave evidence and was asked about the condition of grass along the fence lines of the premises in October 2001. He described the condition of grass along the fence lines of 21 McIntyre Way as being "quite good". He said that on about 4 October 2001 the defendants had mowed and sprayed grass on the boundaries of 23 McIntyre Way. He said that the situation of grass on the fence lines at 23 McIntyre Way was much the same when he left as it had been at the beginning of the lease of those premises.
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50 In the course of the plaintiff's case Mr Kassinas referred to photographs of the premises which were taken in February 2004. At the time of their tender they were received on the basis that they might assist in describing a place and built structures at that place without necessarily being of any probative value so far as the state of the premises at the beginning or the end of the leases were concerned.
51 David Leonard Turner, a proprietor of a firm called "DTS Restorations" gave evidence to the effect that in April 2002 he had cause to attend and inspect the premises at 21 and 23 McIntyre Way, Kenwick. He was referred to some photographs which became Exhibit 21 and confirmed that the bottom left hand photograph of a group of four depicted the gate to 21 McIntyre Way. He referred to the growth of buffalo grass along the fence between 19 and 21 McIntyre Way. Mr Kremer for the defendants indicated that the evidence from the first named defendant would be to the effect that those photographs were taken by the first defendant shortly after 4 October 2001 and were annexed to exhibit 17, a letter written by him to the solicitors for the plaintiff dated 27 November 2001 to evidence the fact that the premises at 21 McIntyre Way were being used by "new tenants". 52 Given the effluxion of time perhaps the most reliable evidence of the state of the premises as at the time of the commencement of the lease of 21 McIntyre Way is the photographic evidence. Exhibit 8 comprised photographs taken from the roadway by the first defendant showing the state of the yards and fencing at 21 McIntyre Way when it was occupied by Global Machinery & Scrap Metal Pty Ltd. Those photos were taken some three months before the defendants took possession of the property. The first defendant says that there was, at the time, grass and weeds along the fence line, particularly at the rear. He denied that there was any landscaping. Certainly, the photographs comprising exhibit 8 depict none. The photograph comprising exhibit 9 depicts apparently tidy premises with no obvious landscaping and about three shrubs. Of course, the defendants took possession of 21 McIntyre Way in about July of 1998. The premises were purchased by the plaintiff in about October 1991. The photograph comprising exhibit 9 of 21 McIntyre Way was taken prior to the acquisition of the premises by the plaintiff. 53 The plaintiff claims an amount of $8,896.25 being the cost of remedying the defendants' failure to yield up the premises in accordance with their obligations. An amount of $4,620, being slightly more than half of the total amount claimed, is claimed in respect of item 1 in the Scott Schedule. The quote for the work to be done was rendered on
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23 April 2002 and the tax invoice for the work carried out in the total amount claimed, inclusive of GST, was dated 19 June 2002. Mr Turner said that the charge rendered by him for cleaning the yards and fences was based on three tradesmen working eight hours a day for a week at approximately $35 an hour. No landscaping was carried out. They undertook the cutting of grass or removal of grass and weeds. There was no reinstatement of the verges or gardens in the front. 54 Ideally, the plaintiff would have photographic proof of the state of the yards and the fencing as at the commencement of the lease and as at the termination of the lease in the case of both 21 and 23 McIntyre Way. I am asked to rely primarily on the evidence of Mr Kassinas as to the state of the premises in that regard at the commencement of the lease. So far as the state of the premises in that regard at the termination of the leases were concerned I am asked to rely on the evidence of Mr Murphy without the assistance of any contemporaneous photographs of the premises. The photographs relied upon by the plaintiff were taken in February 2004 (exhibit 7) and the work done by Mr Turner's firm (unsupported by photographs) was undertaken some seven months or more after the defendants had vacated the premises. The best evidence as to the state of the premises as at the time of the expiry of the leases by effluxion of time would appear to be that of Mr Murphy. He confirmed that work had been undertaken by the defendants on the fence line on the right hand boundary of 21 McIntyre Way. He confirmed that the real problem was the rear fence line in respect of both 21 and 23 McIntyre Way. He was uncertain as to whether there was a grass problem on the side boundary of 23 McIntyre Way. When asked how much work he thought was involved in removal of the grass and weed problem identified by him he said that he thought it would take a couple of men about a day and a half. Doing the best I can with respect to this item and given that the onus is on the plaintiff to prove its case I am prepared to allow for two men to have been employed for two days to undertake the work that I consider would have been required to comply with the obligation to yield up the premises in compliance with the lessee's obligations. It follows that I would allow an amount of $1,232 in respect of item 1 in the Scott Schedule inclusive of GST.
Scott Schedule – Item 2 55 This item refers to soakwells and the need for them to be cleaned. Item 1 in the Scott Schedule was a claim for $4,620 which, as I understand the evidence, represented three men working for five days, eight hours per day at $35 an hour plus GST. In examination-in-chief
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Mr Turner was asked how many tradesmen worked to clean the soakwells. He replied "what part of – the three guys that spent the week there, that was one of the jobs they did." To clarify that counsel for the plaintiff asked whether that work was included in that week and Mr Turner replied that it was. Item 2 of the Scott Schedule claims an amount of $308 for cleaning soakwells over and above the amount claimed in item 1. Having regard to the passage of evidence just quoted there would appear to be some duplication of charging. 56 As to the condition of the drains or soakwells at the beginning and end of the tenancies, the photographic evidence is of no assistance. Mr Kassinas said that when he purchased the property the drains were "nice and clean". The terms "drain" and "soakwell" seemed to be used, during the course of the trial, interchangeably. For example, Mr Murphy, in evidence-in-chief, said: "Well, the soakwells obviously October, summertime, and when its not wet weather are holding water, they're not working. Come wintertime – if they're not working in the summertime, wintertime they're only going to get worse and there's going to be water and problems where your drains don't work. You're going to have water accumulating on the property. So it’s a matter of getting them repaired. He was in the process of moving out. He wasn't going to be there next winter to repair them." 57 He later said that when he inspected the property on 19 October 2001 the work requested of the defendants so far as the soakwells or drains was concerned had not been undertaken. James Lawson Hughes of Hughes Industrial Services Pty Ltd gave evidence that he had been contacted by the first defendant in October 2001 to undertake work at the premises. Initially he said that the work undertaken included cleaning the drains but was asked in cross-examination whether he actually knew that the drains had been cleaned because he had not personally been present. In re-examination he said "certainly all the soakwells were cleaned out". 58 The first defendant was asked whether he had engaged Hughes Industrial Services to clean the soakwells at 21 and 23 McIntyre Way. He said that he did, except for those within the right-of-way. He said that he asked Hughes Industrial Services to clean the four soakwells that were on Lots 21 and 23. He said that they brought in machinery, took the lids off the soakwells, cleaned them up and made sure they were free of any "muck". When asked in cross-examination what could be said about the
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condition of the soakwells after 18 October 2001 Mr Murphy said that the soakwells appeared to have water in them. He didn't mention any other materials or residues. He didn't specify which soakwells he was talking about. 59 The first defendant said that he cleaned all soakwells except those on the right-of-way. Having regard to my earlier findings the lessees would not have been responsible for the state of the soakwells in the right-of-way. 60 I have not been provided with any plan or diagram indicating the precise layout of the drains and soakwells. Nor have I been provided with any photographic evidence as to the state of the soakwells. I am reliant almost entirely upon vive voce evidence in that regard. It is the plaintiff who carries the onus or burden of satisfying me on the balance of probabilities. With regard to this item I am not satisfied that the defendants were, as alleged, in breach of their obligations concerning drains and soakwells once the work undertaken by Hughes Industrial Services Pty Ltd had been completed.
Scott Schedule – Item 3 61 Again, photographic evidence as to the state of the premises at the commencement of the tenancies and at the termination of the tenancies with regard to lighting is not available. This item appears to be confined to 23 McIntyre Way. In that regard, there is no mention of lighting or electrical work in the comprehensive list of items to be attended to sent by Mr Murphy by facsimile transmission to the defendants following the inspection of 8 October 2001. By further facsimile transmission to the defendants of 19 October 2001 Mr Murphy noted that the exterior light fitting by the front door of 23 McIntyre Way had been removed. The first defendant said that after the premises were vacated the only electrical work that was done was to a light fitting by the front door of 23 McIntyre Way which he had installed during the course of the tenancy. In cross-examination Mr Harvey was asked whether the lights were working when he left the premises at 23 McIntyre Way. He said that they were and that the lessees had replaced some tubes before leaving. 62 Given the state of the evidence on this item I am of the view that, having regard to the age of the premises, re-wiring, if it was required, might well have been required as the result of fair wear and tear. Certainly, in his evidence-in-Chief, Mr Murphy made reference only to the absence of the light fitting at the front door. Pursuant to cl 5(6)(h) the obligation of the lessees was, prior to the determination of the term of the
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tenancy, to remove all chattels, fixtures and fittings belonging to or brought onto the leased premises by the lessee and to promptly make good to the satisfaction of the lessor all damage caused or occasioned by such removal. It appears to me that the removal of the light at the front door was in accordance with that clause. The remainder of the claim in item 3 of the Scott Schedule seems to be unsupported by the evidence. I am not prepared to make allowance for that item.
Scott Schedule – Item 4 63 This item relates to downpipes and the alleged need to replace damaged or missing downpipes at both 21 and 23 McIntyre Way. The defendants' response in the schedule is that par 15(vi) of the statement of claim relating to 23 McIntyre Way is an admission that the defendants had reinstated all downpipes and replaced damaged bell adapters on connecting drains by the time of the inspection of the premises on or about 18 October 2001. By par 16 what is claimed in respect of 21 McIntyre Way to be unremedied at that stage was the repair and replacement of all downpipes and one piece of downpipe required on the northern wall and, with respect to 23 McIntyre Way, the re-securing of a bracket at the bottom of a rear downpipe on the northern side. 64 When asked as to whether there were any downpipes missing at the time when he purchased the properties Mr Kassinas said that there were not. When asked whether, at the commencement of the tenancy of 21 McIntyre Way there were any downpipes missing the first defendant replied: "There was to the left side of the building, the front downpipe was always missing and one other, the next one along. Not the whole downpipe just the bottom section." In cross-examination he said that so far as he could remember, at the commencement of the tenancy of 23 McIntyre Way, there were no downpipes missing. Nor, he said, were there any missing at the termination of the tenancy. That evidence does not sit easily with the apparent acceptance of the plaintiff's claim that certain work had been done so far as the downpipes at 23 McIntyre Way were concerned by the time of the inspection on or about 18 October 2001. 65 There is no evidence to the effect that any maintenance on the downpipes at 21 McIntyre Way was ever carried out from the time of the construction of those premises to the termination of the tenancy by the defendants, a period of about 20 years. Having regard to the photographs
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(exhibit 8) taken of 21 McIntyre Way at the time of the occupation of those premises by Global Machinery & Scrap Metal Pty Ltd I find it hard to believe that there was not some damage to the downpipes of that structure at the time when the defendants' tenancy of those premises commenced. Downpipes, being attached to the exterior walls of built structures are inevitably likely to suffer wear and tear over such a period. I am not persuaded that, with respect to downpipes, the defendants were in breach of their obligation to yield up the premises. It seems to me that, either for the purpose of sale or further tenanting, a landlord such as the plaintiff might well be required to undertake some refurbishment or repair to accommodate the impact of fair wear and tear over such a long period. My assessment is that whatever work remained to be undertaken so far as the downpipes were concerned fell into that category.
Scott Schedule – Item 5 66 Given the use to which these premises were put by a series of tenants over the years one could hardly expect the floors to be in pristine condition. To the contrary, particularly in areas where vehicles or machinery are used, some degree of oil staining over a period of time is inevitable. Following the inspection of both premises on 8 October 2001 the list of required measures sent by facsimile transmission by Mr Murphy to the defendants included, with respect to 21 McIntyre Way "pressure clean the warehouse floor" and, with respect to 23 McIntyre Way "pressure clean the warehouse floor and remove all paint, grease and oil." Mr Harvey said in his evidence about the state of the floors at the time of the determination of the tenancies: "Quite obviously they had some wear and tear on them. In 21 because of the amount of – you know, the amount of business that we put through that building, certainly more than usable quite obviously because I was using it. We washed them before we left, we degreased them before we left and, as I say, we had a Hughes Industrial run around with their cleaning – cleaned it, brushed it, given them a bit of a touch up." He said that the floor of 21 McIntyre Way had deteriorated with normal usage over the years. The first defendant said that Hughes Industrial Services Pty Ltd had brushed the floor of 23 McIntyre Way with an industrial sweeper. He said that the floors were not completely clear of grease and oil conceding that there was a small patch underneath the hoist which was a staining of the floor despite the cleaning.
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67 Mr Hughes of Hughes Industrial Services Pty Ltd occupied a portion of the premises at 23 McIntyre Way from mid 1997 for a period of just over 12 months. When asked as to the condition of the floor of the warehouse during his occupancy he said:
"In general the concrete side was very good but there was a lot of stains and oil marks and we tried on several occasions to even steam clean it. We would leave oil absorbing material on it at night and then try and clean it off in the morning. We did remove some of it, but it was quite deeply ingrained into the concrete." He said the area affected was about five to seven per cent but it was widely spread. He indicated that his company undertook sweeping of the premises using his machines in about late October 2001. 68 Mr Murphy said that oil and grease was evident on the workshop floors in both 21 and 23 McIntyre Way although there was more in the former than the latter. He commented that it had accumulated through the years and soaked into the concrete. He said that the surplus oil had been swept, brushed or wiped away but that there was a distinct heavy oil residue in the surface of the concrete and to get it out you would need to pressure clean or use a degreasing agent. What he saw had accumulated through the years. 69 I have no doubt that it was not appropriate or practical in accordance with the lessee's obligations to return the floors of the premises to a pristine condition. I do, however, accept that it would be appropriate for the lessees, given the nature of the use of the premises, to have steam cleaned the floors at least once. I accept that there would have been a degree of oil staining both at the beginning of the tenancy and at the end of the tenancy in each case. Nevertheless, it does seem commensurate with the use of the premises that there would have been spillages and accretions of oil and grease on parts of the floors of both premises. In the circumstances, I am prepared to allow the amount claimed in item 5 of the Scott Schedule being the sum of $1,925.
Scott Schedule – Item 6 70 This item relates only to 21 McIntyre Way and, in particular, to the side and rear internal walls of those premises. The itemised request for work to be carried out following the inspection of the premises on 8 October 2001 sent by facsimile transmission by Mr Murphy to the defendants made two references to the walls at 21 McIntyre Way,
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Kenwick. The first was "sweep the warehouse walls and remove dust, cobwebs and accumulated grime" and the second was "pressure clean walls in southern west corner removing oil and grease residence." In the letter written by the plaintiff's solicitors to the defendants of 12 November 2001 there was a request in the terms of the second of those mentioned. I assume, therefore, that the warehouse walls had been swept for the removal of dust, cobwebs and accumulated grime. 71 The first defendant said that when the defendants first occupied 21 McIntyre Way in July 1988 they painted the bottom half of the brick walls white to improve the interior light. He said that they repainted the offices a couple of times during the course of their occupation of the premises. No work was done to the metal walls. Those photographs comprising exhibit 11 said by the first defendant to be of 21 McIntyre Way, taken during the course of the tenancy of the premises, tend to confirm the first defendant's evidence in that regard. 72 The first defendant said that he was asked to sweep the warehouse walls at 21 McIntyre Way. He said that he high pressure hosed them. 73 Mr Murphy said with respect to 21 McIntyre Way that there was oil spilt or splashed onto the walls that needed to be removed. 74 Mr Turner said that when he attended 21 McIntyre Way in April 2002 the interior walls were extremely dirty. He said: "They had been painted at some time up to a height of approximately 1.8 metres, and they had originally been some white or off white colour. They were covered in grease and oil." He said that, at the plaintiff's instructions, the walls were high pressure cleaned up to 1.8 or 2 metres. That was done in preparation for painting. He said that the tradesmen who performed the pressure cleaning and painting work charged $1.50 per square metre for the pressure cleaning and $1.20 per square metre for painting. 75 I am prepared to accept that there was a need to clean away spilt or spattered oil residue from the walls and that it was not done by the defendants to an appropriate standard such that there was a need to undertake high pressure cleaning. My assessment is that the "yield up" provision did not require the defendants to paint the premises but rather to effectively clean. The state of the walls, once cleaned, would be in a condition consistent with many years of fair wear and tear. As with a
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previous item in the Scott Schedule painting of the walls might well be undertaken by an owner seeking to sell or re-lease aging premises. The total amount claimed in respect of this item is $1,098. I am prepared to allow the cleaning component but not the painting component. It follows, given that the painting component amounts to $1.20 per square metre and the cleaning component to $1.50 per square metre, that I should allow an appropriate proportion of the amount claimed. I will allow $610 for this item.
Scott Schedule – item 7 76 This item seeks that the defendants repair damage to the walls of both units and replace sheeting at the rear of 21 McIntyre Way. 77 When he was asked whether there was any damage to the premises when they were purchased by him Mr Kassinas said that there was not. I not prepared to accept that bald statement given the prior use of 21 McIntyre Way by Global Machinery & Scrap Metal Pty Ltd which had originally constructed the building in 1980. The metal cladding was new then. 78 Mr Houthuysen said that the structure at 23 McIntyre Way was a pre-existing building purchased and erected on that lot. He initially said that the cladding on that building was new and that there were no holes in it but then said that he couldn't be exactly sure it being a long time ago. 79 The first defendant said that in July 1988 when he took possession of 21 McIntyre Way the walls of the shed were "a little battered". There were dents, scratches and penetrations of the cladding. With respect to 23 McIntyre Way the first defendant said that the walls were "a bit knocked about" on the right-of-way side where trucks negotiating the access way had clipped or made contact with the cladding. When asked as to the condition of the walls of both premises at the time of the termination of the tenancies the first defendant said with respect to 21 McIntyre Way that there had been a few more "dents and nicks" over the period of time. With respect to 23 McIntyre Way he said there may have been slightly more damage to the walls in the form of indentations rather than penetrations. When asked whether he had caused any holes or penetrations he said that the only holes caused were those drilled for the purpose of putting up signage. Those were repaired and the signs were taken down. 80 The photographs taken in February 2004 referred to by Mr Kassinas do depict the exterior cladding of both premises. Exhibit 7.14, for
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example, is a photograph of the entirety of the rear wall of 21 McIntyre Way. Exhibits 7.16, 7.17 and 7.18 all depict the right hand wall of 23 McIntyre Way. There are other photographs of the metal cladding of both units within exhibit 7. 81 My conclusion is that those photographs depict what one would expect having regard to the age of each of the premises and the use to which they have been put. In the ordinary course of commercial/industrial use such cladding is apt to be damaged to one degree or another. It is impossible for me to discern damage inflicted by prior occupants of the premises or pre-existing damage to the cladding of 23 McIntyre Way when it was originally acquired from damage attributable to the defendants. The photographs taken for the plaintiff in February 2004 do indeed depict damage to the cladding of both premises. As mentioned, I would be surprised if there were no damage given that minimal maintenance has been carried out on these premises since their construction. In my view, there is a tendency or an expectation on the part of the plaintiff to attribute all damage to the cladding of the building to the defendants regardless of whether or not the defendants actually did cause the damage and fair wear and tear. The expectation expressed in this item goes beyond, in my view, what would be required by the defendants in accordance with their obligations pursuant to the terms of the lease.
Scott Schedule – item 8 82 The defendants point out that this item, which concerns a hole in the floor of "Lot 21", was not part of either requisition made by the plaintiff with respect to 21 McIntyre Way. Mr Murphy made no reference to this item in his evidence. Notwithstanding that Mr Turner, who inspected the premises in April 2002, gave evidence that at 23 McIntyre Way there had been a hole cut in the floor in an area at the back of the building. He said: "An attempt to repair it had been made. That attempt had been unsuccessful. The concrete, or the slurry mix, that had been used at the surface to level out the floor had cracked substantially because it had been a wet mix; quite weak." He said that the hole was three or four square metres in size. Although the Scott Schedule refers to a hole in the rear of Lot 21 I assume that the reference is to the hole described by Mr Turner. 83 The first defendant admitted that the defendants had cut a hole in the floor. That was to accommodate a wash-down bay and an oil-water
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separator. He had spoken with Mr Kassinas before cutting the hole in the floor of the shed. Mr Kassinas had given his consent saying: "You can do whatever you want as long as you make it right." The first defendant said that when the premises were vacated the equipment was removed and the hole was filled with gravel and "then we flushed the top over with concrete". When asked who undertook that work Mr Harvey replied "One of my employees – he's a roof carpenter." 84 I accept Mr Turner's evidence that the remedial work was not satisfactory. He said that a concreter undertook appropriate work. He thought the charge was about $200 or $250. The amount claimed in the Scott Schedule is $200. I am prepared to allow that amount.
Scott Schedule – item 9 85 This item relates to fencing at both 21 and 23 McIntyre Way. The first requisition following the inspection of 8 October 2001 asked that the defendants repair and straighten the front 15 metres of the northern boundary fence at 21 McIntyre Way and, with respect to 23 McIntyre Way, said only: "Repairs to front fence are the subject of an insurance claim and the lessee was responsible for the payment of any excess or expenses incurred in its repair or replacement." 86 The letter from the plaintiff's solicitors to the defendants of 12 November 2001 repeated the request with respect to 21 McIntyre Way and made the same comment with respect to 23 McIntyre Way. Exhibit 7.2 is a photograph of the fence on the northern boundary of 21 McIntyre Way. When shown that photograph Mr Turner was asked to compare the photograph taken in February 2004 with the fence as it was when his workmen had done their remedial work. He said it was in about the same condition. The photograph (exhibit 7.2) depicts an old fence as one would expect. The initial request of the defendants was to repair and straighten the front 15 metres of that fence. Exhibit 7.2O is a photograph which appears to show the front portion of the relevant fence. When Mr Turner was shown exhibit 7.2, being a photograph of the fence on the northern boundary of 21 McIntyre Way, he was asked whether any work was done in relation to that fence. He replied: "Only removal of grass." When asked which fence was the subject of work he replied: "The front fence." He said that none of the gates opened well and the front fences were in what he considered to be a poor condition. When asked what work was done in that regard he said:
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"The guys did some maintenance work to the fences. … I wasn't there watching and I don't know exactly what they did. Straightening up some posts, as you mentioned, or whatever, tidying up, wiring and things like that." 87 I am not persuaded on the balance of probabilities that what was done by the workmen referred to by Mr Turner was anything other than remedial and brought about by fair wear and tear. 88 The first defendant said that at about the time that the defendants moved from the premises there was a break-in. The intruders drove through the front gates doing substantial damage to the gates and the fences. A vehicle was stolen. The police were called and a report of the theft made. The first defendant said that he contacted Mr Kassinas who indicated that he would make a claim on insurance. Mr Kassinas, he said, indicated that he expected the defendants to pay the excess on that claim. He said that he had never been advised of the amount to be paid and had never received a request for payment. Mr Kassinas said that he did notify his insurers to fix the gate and that he paid the excess. Whatever may be the situation concerning the excess under that claim it is not the subject of this action. 89 Having regard to the foregoing I am not prepared to make any allowance for item 9 in the Scott Schedule.
Loss of rent 90 It follows from the foregoing that I have clearly found that in certain respects the defendants were in breach of their obligations upon yielding up the premises to the plaintiff. I have allowed what I consider to be the reasonable cost of appropriate remedial work consequent upon the defendant's breach. In addition to that the plaintiff seeks damages for the loss of the use of the premises as a result of the defendant's failure to perform the work required of them. This amounts to a claim for loss of rental income. This claim must be judged according to ordinary principles applicable for assessing damages for breach of contract. 91 It is submitted by the plaintiff that the Court must undertake a two step process ascertaining, firstly, whether there was a period of necessary non-usability occasioned by the necessity to repair in a reasonable way and in a reasonable time frame and, if so, whether the premises in fact could have been let during that period had their been no breach and no necessary repairs.
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92 The defendants submit that consistent with the general principle of the measure of damages for breach of contract the innocent party must be put in substantially as good a position as if the contract had been performed so far as money can do so. The defendants submit that in order to recover the plaintiff must prove, firstly, that there was a breach by the defendants, secondly, that the breach necessitated repairs which were carried out within a reasonable time and in a reasonable way and, thirdly, that such loss of rental arose by reason of and as a necessary consequence of the defendants' breach.
93 The defendants gave notice in writing of their intended vacation of the premises at the end of the term in each case by letter of 30 May 2001. Notwithstanding that ample notice it was the case, of course, that the defendants effectively remained in occupation of the premises pursuant to the lease in each case until 4 October 2001. As has been seen, there was, fairly promptly, an inspection by Mr Murphy of Ray White Commercial, that firm having been engaged by the plaintiff. There was a necessity, as I have found, for the plaintiff to undertake certain remedial work as a result of the defendants' breach of its covenant to yield up the premises in an appropriate state. The plaintiff's claim for damages in that regard is reliant upon the work undertaken by Mr Turner's firm "DTS Restorations". It is apparent that the plaintiff did not take steps to obtain quotations for the remedial work until April of 2002. The plaintiff had instructed solicitors to act on its behalf in October 2001. The first defendant wrote to the plaintiff's solicitors on 27 November 2001 making it clear that, in their view, they had complied with their obligations. The dispute was clearly evident at that stage. The defendants subsequently instructed a solicitor who wrote to the plaintiff's solicitors by letter of 19 December 2001 denying, inter alia, any responsibility for the plaintiff's inability to re-let the premises. 94 Mr Murphy of Ray White Commercial said that he was contacted by the plaintiff in mid 2001. He prepared a brochure (exhibit 23) for circulation in the Maddington, Welshpool and various industrial areas in July and August of 2001. The brochure displayed photographs of both 21 and 23 McIntyre Way advertising both premises "for sale or lease". It would be fair to say that the premises were being marketed from that point onwards. Mr Murphy's involvement with the premises ceased in February 2002 when he left Ray White Commercial. 95 In cross-examination Mr Kassinas was asked why, for the period of nine months between October 2001 and June 2002, he had not done anything to secure the re-letting or sale of the premises. He replied "I
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haven't finished with Mr Harvey yet". He seems to have been under the impression that the defendants remained, beyond 4 October 2001, the tenant of the property by reason of their failure to yield up the property in an appropriate condition. In his letter of 14 September 2001 to the first defendant Mr Murphy said, inter alia: "As a result Harry has requested us to advise you that you are to complete your 'make good' in accordance with the provisions of the lease prior to the termination date. Should this work not be completed rent is payable on a monthly basis until completion." 96 As mentioned, the plaintiff instructed solicitors, Hammond Worthington, who wrote by letter of 30 October 2001 to the defendants advising, inter alia: "Our client advises that your lease expired on 4 October 2001 and that you are currently holding over in the premises pursuant to the provisions contained in the Lease. We further note that you are proceeding with rectification works to the premises. Please note that until such time as the rectification works have been completed, you are still considered to be holding over in the premises and liable for full rental during that time." 97 In each lease the only provision which refers to "holding over" provides: "If after the expiration or sooner determination of the term or any extension thereof the lessee with the consent of the lessor shall remain in possession of the leased premises or any part thereof, then the lessee shall be deemed to be in possession of the leased premises as a monthly tenant but otherwise at the same rent as that paid immediately prior to the termination of the term and on the same terms, covenants and conditions as are herein contained whether express or implied." Clearly, in the case of 21 and 23 McIntyre Way, there was no holding over by the tenants in that sense. In fact, having regard to the terms of each lease, it seems clear that Mr Kassinas was acting under a misapprehension, perhaps as a result of advice given to him, that the tenants, while remedial work was pending or being undertaken, remained liable for rent. That might explain his inactivity in that regard. 98 The evidence of Mr Murphy was that the leasing market at that time was "soft". It was a lessee's market and difficult to get a prospective
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tenant interested. The plaintiff initially listed both properties for sale at a price of $750,000 for the two. They were eventually sold for $570,000 in October 2002. There had been no offers to lease either premises. It seems that the remedial work undertaken by "DTS Restorations" must have been completed by 19 June 2002 when that firm rendered its tax invoice (exhibit 6.3).
The law 99 Both parties cite Telecom & CPS Community Credit Co-op Ltd v Heberg Pty Ltd [1992] VConvR 54-453 as authority for the state of the law relating to a suit by a lessor for damages for breach of covenant and loss of rent due to necessity to repair. In that case Fullagar J said at p 65, 276: "At the risk of repetition, in order to recover damages for breach of a covenant to repair the landlord must prove what it would cost a hypothetical landlord to do in a reasonable way such repairs as are necessary to put the premises into the condition in which they would have been had there been no breach. In order successfully to claim, as part of that cost, a loss of rent the landlord must prove that not only was a real state of non-repair caused by the breach but that the alleged non-usability of the premises was also caused by the breach. … In other words, to recover for 'not-lettability', the landlord must prove that a period of non-lettability would necessarily be incurred by the hypothetical reasonable repairer (a character which may or may not be played by the actual landlord, depending on the facts of the case) by reason of the doing in a reasonable way and within a reasonable time-frame of the breach-caused repairs. Only in this way could it be shown that non-lettability was caused by the breach." 100 In the case before me the plaintiff must prove that a period of non-lettability was necessarily incurred by reason of the doing in a reasonable way and within a reasonable time-frame of the breach-caused repairs. Counsel for the plaintiff agreed that the law was as set out in the passage quoted above noting that the comments of Fullagar J were cited by Viol DCJ in De Pledge v Shaydav Enterprises Pty Ltd (2002) 29 SR (WA) 280. |