Becker v Cariste

[2001] NSWSC 663

CITATION:	Becker v Cariste [2001] NSWSC 663
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 2673/01
HEARING DATE(S):	3 August 2001
JUDGMENT DATE:	7 August 2001
PARTIES :	RA & K Becker Pty Ltd (P) Cariste Pty Ltd (D)
JUDGMENT OF:	Austin J

COUNSEL :	R J Webb (P) C J Leggat (D)
SOLICITORS:	Eakin McCaffery Cox (P) Hunt & Hunt (D)
CATCHWORDS:	CONTRACTS - proper construction of lease - whether underground tanks and pipes were 'plant and equipment' for which lessee responsible - LANDLORD & TENANT - construction of covenant for quiet enjoyment - whether covenant obliged lessor to repair tanks and pipes which were used by lessee for conduct of service station business.
CASES CITED:	Booth v Thomas [1926] 1 Ch 109 Martin's Camera Corner v Hotel Mayfair [1976] 2 NSWLR 15 Burns Philp Trust Co Ltd v Kwikasair Freightlines Ltd [1964] NSWR 63
DECISION:	Lessee's summons for declaratory and other relief dismissed

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

TUESDAY 7 AUGUST 2001

2673/01 R A & K BECKER PTY LTD V CARISTE PTY LTD

JUDGMENT

1   HIS HONOUR: The defendant (one of the directors of which is Mr Peter Roach) is the owner of a small suburban shopping centre at Galston. The plaintiff (a company whose directors are Mr Russell Becker and his wife) is the lessee of a service station at the shopping centre. The point of these proceedings is to determine whether the plaintiff or the defendant, or neither of them, is obliged to repair underground fuel tanks and pipes which supply petrol and diesel fuel to bowsers at the service station.

2   The shopping centre comprises eight shops, the drive-through area of the service station, which is covered by an awning, and parking areas. The plaintiff is the lessee of two of the shops as well as the drive-through area, using one as a retail shop and the other as a workshop. The fuel tanks are located in the shopping centre but they are not part of the demised premises. The tanks are underground, surrounded by fill, and pipes run underground from the tanks to the bowsers in the drive-through area of the service station. Concrete covers the land under which the tanks and pipes are located.

3   The plaintiff has been in occupation of the service station since April 1991. There appears to be a dispute between the parties as to whether an option to renew the first lease was ever properly exercised, but the question does not need to be considered now because it is agreed by both parties that the plaintiff's occupation has been continuous since 1991, and that the underground tanks and pipes were installed before the plaintiff entered into possession. The current lease is dated 8 July 1998.

4   On 3 March 1998 the plaintiff's solicitors wrote to the defendant's solicitors commenting on a draft of the lease which had been submitted for execution. The letter asked for a list of equipment to be included in Item 13 in the Schedule to the draft lease. The defendant's solicitors replied on 23 March 1998 saying ‘no equipment is to be provided by the Lessor for use by the Lessee’. After further correspondence on other issues, the lease was executed by both parties.

5   During the period from January to June 1999 Mr Roach and Mr Becker had several telephone conversations about the underground tanks and pipes. Mr Roach informed Mr Becker in January 1999 that according to his legal advice, Mr Becker's company was responsible for the tanks and pipes.

6   On about 9 June 1999 Mr Becker became aware of what he described as a water problem in super bowsers numbers 1 and 2. He wrote to Mr Roach on that day, drawing attention to the problem and expressing his belief that, as there was no evidence of water in the tank, the problem was leakage in the supply line.

7   Initially Mr Becker's intention was to repair the leak, but on 15 June 1999 he wrote to Mr Roach again, saying that according to his legal advice, the defendant as the owner and landlord of the property was responsible for the repair and maintenance of underground tanks, pipes and equipment. Mr Roach responded on 20 June 1999, saying that according to his legal advice, confirmed in writing, the lessee was responsible for the items mentioned.

8   Mr Becker shut down the two super bowsers as soon as the problem was detected, and they have remained shut down until the hearing. The plaintiff undertook repairs at its own cost to customers' cars, to remove contaminated fuel from vehicle petrol tanks. Mr Becker gave evidence that it was difficult to calculate the loss resulting from the non-use of the super bowsers, as there were still three working super bowsers at the service station.

9   On about 20 April 2000 Mr Becker became aware that water was contaminating the fuel being dispensed from the only diesel bowser at the service station. He shut that bowser down, and arranged for an employee to inspect the diesel tank and the diesel fuel supplied from the bowser hose. On 26 April 2000 he wrote again to Mr Roach, referring to a problem with water contaminating the diesel supply. He expressed his belief that the water was entering via a broken pipe, because there was no sign of excess water in the diesel storage tank. He said he was unable to sell any diesel fuel until the problem was corrected, and asserted that it was the defendant's responsibility to have repairs carried out. Mr Roach replied on 27 April 2000, confirming the view that he had expressed in the letter of 20 June 1999, that it was the lessee's responsibility to carry out repairs to the tanks and pipes.

10   The plaintiff engaged a contractor to carry out further testing to determine the cause of the water contamination in the supply of diesel fuel. When the pipes were uncovered, it was found that part of a pipe had been laid in clay rather than sand and had become rusty, and there were two rust holes in it. Mr Becker says that from his experience as a service station proprietor, it is necessary to lay pipes in sand rather than clay to prevent them from rusting. A leaking water pipe was also found. Mr Becker wrote to Mr Roach on 28 April 2000 drawing attention to the leaking water pipe, and Mr Roach arranged for the repair of the water pipe shortly afterwards.

11   The plaintiff repaired the diesel fuel pipe at a total cost of $2180, and on 15 May 2000 Mr Becker wrote again to Mr Roach, demanding payment. On 20 May 2000 Mr Roach replied saying that the lessor would pay amounts due to be paid under the lease but, on the legal advice he had received, the lessor was not responsible for underground tanks, pipes or any other equipment.

12   The plaintiff commenced the present proceedings by summons filed on 17 May 2001, claiming declarations that upon the true construction of the lease, the defendant is obliged to repair the fuel tanks and pipes which supply petrol to bowsers Nos 1 and 2, and that the defendant was obliged to repair the pipes supplying fuel to the diesel bowser. The summons seeks a mandatory injunction requiring the defendant to repair the tanks and pipes which supply petrol to bowsers Nos 1 and 2, to prevent water contamination of the fuel in them. The summons also seeks damages for breach of clauses 12.1 and 12.2 of the lease. However, at the hearing counsel for the plaintiff informed me that if a mandatory injunction is granted with respect to the super bowsers, the claim for damages will be confined to the expenditure of $2180 for repair of the diesel fuel pipe. He said his client did not wish to pursue any claim for damages for the cost of repairing damage to motor vehicles caused by contaminated fuel, or for loss of profits.

The terms of the lease


13   The lease is for a term of five years commencing on 1 March 1998, with an option to renew for a further period of five years. It appears that the text of the lease is based on a precedent and is not ‘tailor-made’ to reflect the agreement of the parties. Thus, some of clauses of the lease contain provisions the effect of which depends upon Items in the Schedule, but in many cases the relevant items are completed with ‘N/A’, which I take to mean ‘not applicable’. The rent is an annual base rent of $102,000, reviewed annually for changes in the consumer price index. Clause 5 provides for payment of rent based on a percentage of turnover prescribed in Item 2 of the Schedule, but Item 2 is one of the items which says ‘N/A’, and therefore it appears that there is no turnover rent. I mention clause 5 because it seems to me that some of the sub-clauses of clause 26, which is of central importance in this case, assume that there is a turnover rent, because they make provisions for the lessee to keep records relating to sales and for the lessor to inspect those records.

14   The following provisions of the lease are said to be relevant:

1. Definitions and Interpretation
1.1 In this Lease, the following definitions apply: …
‘ the Centre ’ means all of the Lessor's improvements (including Lessor's fixtures, fittings, plant and equipment) from time to time on the Land including the car park and other Common Areas and includes the Premises (where the context admits); …
‘ the Common Areas ’ means those parts of the Land (including all car parking facilities) which are not the subject of a lease or licence agreement, which are not restricted by the Lessor from common or public use and which are intended by the Lessor and are in fact used by tenants and/or the public as a common part of the Centre;
‘ the Equipment ’ means the equipment listed in Item 13 of the Reference Schedule as amended from time to time; [Item 13 of the Schedule reads ‘Equipment: (Clause 26) Not applicable’]; …
‘ the Premises ’ means that part of the Centre demised to the Lessee by virtue of the Lease and extending from the under surface of the floor to the upper surface of the ceiling, to the inside surface of the walls and including all doors, windows, shopfront and plate glass which bound or are comprised in the Premises; …

3. Reservations and Grant
3.1 The Lessor grants to the Lessee the right: ...
(b) in common with or other persons authorised by the Lessor to use the Common Areas including the car park at all times when the Centre is open for business.
3.2 Subject to the Act [the Retail Leases Act, 1994 (NSW), which is agreed to be inapplicable to the present lease] and to the provisions of this Lease, the Lessor reserves the right to:
(a) regulate the use of the Common Areas; …
(f) enter the Premises at all reasonable times and upon giving reasonable notice (except in the case of an emergency when no notice is required) to: …
(ii) carry out installations, repairs, renovations or maintenance to the Centre or Premises or its services provided that as little inconvenience as possible is caused to the Lessee; …

10. Use and Care of the Premises
10.1 The Lessee must use the Premises for the purpose specified in Item 7 of the Schedule and must not allow the Premises to be vacated, abandoned, or used for any other purpose. [Item 7 of the Schedule says ‘Permitted Use of Premises: (Clause 10.1) Service station, convenience shop and motor repairs’.] …
10.7 The Lessee must fully repair and keep the Premises including the Lessor's and Lessee's plant, fixtures and fittings in good and substantial repair, working order and condition provided that, with the exception of the Lessee's plant, fixtures and fittings and any plate glass:
(a) the Lessee is not obliged to effect any capital replacement; and
(b) the Lessee's obligations do not extend to any damage caused by … reasonable wear and tear. …
10.17 The Lessee must be open for business at least during the hours specified in Item 8 of the Schedule. [Item 8 says, relevantly, ‘Minimum Trading Hours (Clause 10.17) N/A’.]

12. Lessor's Covenants
12.1 The Lessor covenants with the Lessee that the Lessee paying the rent and other money payable under the Lease and performing the covenants on its part to be performed, the Lessee may peacefully and quietly enjoy the Premises without any interruption from the Lessor.
12.2 The Lessor must maintain, repair, replace and keep the Centre in good order and condition. The Lessor is not liable to the Lessee for a breach of this clause because of temporary breakdowns or for interruptions to services of the Centre for maintenance or repair and unless the Lessor has failed to comply with this covenant within a reasonable time after written notice to comply has been given by the Lessee to the Lessor. The Lessee is not entitled to determine the Lease by reason of a breach by the Lessor of its obligations under this clause. …

20. Termination and Make Good
By the sooner of the last day of the Term or the earlier determination of the Lease the Lessee must at its own cost remove all of its stock, plant, equipment and tenant's fixtures and fittings from the Premises and make good the Premises to their condition at the commencement of the Term fair wear and tear … excepted. … The Lessee must remove any substance or material, the presence of which is, or with the passage of time may, constitute or create an environmental contamination risk or hazard. The Lessee indemnifies the Lessor from and against all costs, damages, penalties, fines, losses or claims (of whatever nature and whenever incurred) which the Lessor sustains as a result of any such contamination, risk or hazard arising directly or indirectly from any substance or material brought onto or allowed to remain on the Land by the Lessee including the cost incurred by the Lessor in cleaning up and remediating the Land, to a standard which is satisfactory for the legal use of the Land, having regard to the uses for which it is zoned and the relevant Australian standards as determined by the Lessor acting reasonably, disposing of such material and complying with all legal requirements in the removal, storage, transportation and dispose of the material.

26. Equipment
26.1 The Lessee at all times shall ensure that the Equipment is operated:
(8) only by the Lessee or its employees;
(b) in accordance with the specifications and procedures of the manufacture and supply thereof;
(c) for the purposes specified in Item 7 of the Reference Schedule.
26.2 The Lessee shall not sell or otherwise dispose of mortgage pledge or otherwise encumber or part with possession of any of the Equipment.
26.3 The Lessee shall not store in the tank system forming part of the Equipment anything other than Motor Fuels.
26.4 The Lessee shall at all times keep proper records of all purchases and sales of all Motor Fuels at the Premises and shall permit the Lessor or its duly authorised representative at all reasonable times to inspect such records and make copies. The Lessee shall take daily dips of all tanks containing Motor Fuels and shall keep accurate records of the measurements so made.
26.5 When taking dips of tanks containing Motor Fuels, the Lessee shall use approved water-finding paste or paper or other substances or methods and shall immediately report to the Lessor in writing within one working day the finding of any water in the tank and shall immediately cease dispensing Motor Fuels from that tank.
26.6 The Lessee shall take daily meter readings on all pumps used at the Premises and shall keep accurate records of the readings which shall be compared on a daily basis with the records compiled under Clause 26.5 for the purpose of determining any discrepancies. The Lessee shall immediately report to the Lessor in writing within one working day any suspected or ascertained inaccuracy of a meter and immediately shall cease dispensing Motor Fuels from the pump containing that meter.
26.7 The Lessee shall immediately report to the Lessor within one working day any suspected loss of any Motor Fuels owing to faulty storage tanks or lines and shall include with the report records of daily tank measurements and meter readings.
26.8 The Lessee shall ensure that emergency stop switches on any items of equipment are clearly identified and in good working condition at all times. …
26.13 In relation to tanks and dispensing equipment at the Premises the Lessee shall:
(a) Discontinue the use of any pump and notify the Lessor when there is evidence of water, air or sandy matter in any pump and replace any pump nozzles, hoses, cupolas, drive belts of any pump as necessary;
(b) ensure that dip-pipe and fill-pipe caps form secure seals, ensure that the associated gaskets are in good condition, prevent building up of water around dip and fill boxes and generally prevent water and other contaminants from entering any tank;
(c) notify the Lessor promptly in every instance of a submersible pump not shutting off when a dispenser is shut off and of every instance of any leak, defect or valve tripping and shall rectify and repair the same. …
26.15 The Lessee shall at its own expense supply, install, repair, maintain and replace all plant and equipment other than the Equipment necessary for the conduct and operation of the Premises for the use specified in Item 7 of the Reference Schedule, in accordance with the provisions of all acts, ordinances, regulations and by-laws of any government, semi-government, municipal, statutory, regulatory or other authority and will operate such plant and equipment and the Equipment in accordance with the provisions of such acts, ordinances, regulations and by-laws and will comply with all orders, notices and directions of any authorities.

Construction of the lease


15   It is obvious from reading these provisions that nothing in the lease clearly and unambiguously allocates responsibility for maintenance of the tanks and pipes to one party or the other. The plaintiff says that when it commenced occupation the tanks and pipes were in place under the shopping centre and were not a part of the demised premises. It was understood between the parties, according to the plaintiff, that the plaintiff would be able to use the tanks and pipes which were connected to the petrol bowsers. On the plaintiff's view, these arrangements implied that the defendant would be responsible for the tanks and pipes. As its solicitor pointed out in correspondence, ‘it would seem absurd for an incoming lessee to be responsible for the state of underground pipes for which it cannot obtain access without removing the concrete laid on top of the said premises’.

16   On the other hand, the defendant maintains that Item 13 of the Schedule (the Equipment) was specifically stated to be ‘not applicable’, and the plaintiff was informed by the defendant's solicitors before the lease was entered into that no equipment would be provided. This made it clear, according to the defendant, that it was to have no responsibility for the tanks and pipes. In correspondence Mr Roach said:
‘This is an independent service station and has the ability to do deals with suppliers regarding the dispensing of products, including but not limited to tanks, bowsers, pipes, pumps, waste etc, all of which can change at the whim of the operator.’

In his affidavit he said:
‘The tank system is removable and can be changed in service stations depending on sales volumes of fuels. For example, if demand for a particular brand of fuel increases, a larger capacity tank can be supplied and installed. The recent trend away from leaded fuels is a further example of the necessity to replace or add new tank systems.’

17   In my opinion, both the plaintiff and the defendant have made some valid commercial points, which could have been used in negotiations had the issue of responsibility for the tanks and pipes been specifically raised. But as far as the evidence goes, it appears that the issue was never raised prior to the execution of the current lease. All I can do, therefore, is to construe the words of the lease in order to decide whether they cover the issue.

18   Plainly, the tanks and pipes are not part of ‘the Premises’, because ‘the Premises’ are limited to the surface of the floor of the specified area, and do not extend to anything under the floor level. Nor are they included in ‘the Equipment’, because Item 13 of the Schedule, by saying ‘not applicable’, asserts that there is nothing to which the special provisions about ‘the Equipment’ in the lease have any application. It is true that clause 26.3 speaks about ‘the tank system forming part of the Equipment’, but the correct interpretation of those words is that since there is no Equipment, there is no tank system forming part of the Equipment, and so the tanks and pipes actually used by the plaintiff may be ‘equipment’ but they are not part of ‘the Equipment’. This construction gives clause 26.3, and certain other parts of clause 26, no field of operation. But the normal canon of interpretation, that each provision should be given a meaning where possible, is in this case negated by the fact that the lease is not tailor-made, and quite a few of its clauses have no operation because relevant parts of the Schedule are marked ‘not applicable’.

19   In my opinion, the tanks and pipes are not part of ‘the Common Areas’. The Common Areas are defined as parts of the Land not subject to a lease or licence agreement, ‘which are not restricted by the Lessor from common or public use’. There is no direct evidence on this point, but I infer that the defendant has not permitted the tanks and pipes to be in common or public use. Additionally, the definition is confined to areas ‘which are intended by the Lessor and are in fact used by tenants and/or the public as a common part of the Centre’. This is not the case, as regards the tanks and pipes.

20   A more difficult, and centrally important, question is whether the tanks and pipes are part of ‘the Centre’. If they are, they fall within clause 12.2, which obliges the defendant to maintain and repair the Centre and keep it in good order and condition. In my opinion, the tanks and pipes are ‘Lessor's improvements (including Lessor's fixtures, fittings, plant and equipment)’, as those words are used in the definition of ‘the Centre’. It is unnecessary for me to decide whether the tanks and pipes are fixtures, because if they are not, then they are plant and equipment for the purposes of the definition. They are Lessor's improvements, as between itself and the Lessee.

21   However, they are not improvements ‘on’ the land, for the purposes of the definition. In my opinion, the word ‘on’ should be given its natural and literal meaning. Something which is under the surface of the land is not on the land. The context reinforces this conclusion. The definition continues by including ‘the car park and other Common Areas and includes the Premises’. The car park is on but not under the surface of the land, Common Areas are necessarily on or above the surface of the land, and ‘the Premises’ are defined to exclude anything under the surface of the floor.

22   That being so, nothing in the lease imposes on the defendant the obligation to repair the tanks and pipes. Failure to repair them does not constitute a breach of the Lessor's covenant for quiet enjoyment in clause 12.1, in my view. That covenant relates to the Premises, and the tanks and pipes are not part of the Premises. The plaintiff submitted that failure to repair the leaking pipes was a breach of clause 12.1 because, at least in the case of the diesel pipeline, it impacted on the ability of the plaintiff to carry on the very business that it was permitted (and, indeed, obliged) to carry on under the lease. The plaintiff noted that an omission can amount to a breach of covenant for quiet enjoyment: for example, Booth v Thomas [1926] 1 Ch 109; Martin's Camera Corner v Hotel Mayfair [1976] 2 NSWLR 15. While accepting that an omission can constitute a breach of that covenant, I reject the submission that the covenant implied an obligation on the defendant to repair any of the pipelines. Arguably, in the circumstances, the covenant for quiet enjoyment implied an obligation on the defendant to allow the plaintiff reasonable access for repair of the pipes, since the use of the tanks and pipes are necessary for the conduct of the plaintiff's business, but it does not follow that the defendant impliedly undertook an obligation, through the covenant for quiet enjoyment, to carry out the repairs itself.

23   The Lessor's covenant to maintain and repair (clause 12.2) the Centre does not apply because the tanks and pipes are not part of the Centre. If, contrary to my view, the tanks and pipes were part of the Centre, I would still hold that clause 12.2 was inapplicable. This is because, in my view, clause 26.15 applies, for reasons given below. If, as a matter of construction, both clause 12.2 and clause 26.15 were capable of applying, while pointing in opposite directions, I would prefer to apply clause 26.15 because it is a more specific provision dealing with responsibility for equipment used for the purposes of the service station, whereas clause 12.2 is a more general provision dealing with the Lessor's responsibilities for the shopping centre as a whole.

24   Clause 26.5 and clause 26.13 (a) oblige the Lessee to report water in the tanks and in the petrol coming from the pumps, but those obligations do not imply that the Lessor is obliged, on receiving a report, to undertake the necessary repairs itself. It is arguable that these provisions, by requiring notification to the Lessor, imply an obligation on the Lessor’s part to respond to the notification by fixing the leak. However, any such implied duty would be inconsistent with clause 26.15 (discussed below). Moreover, there is a rational commercial explanation for the obligation of the Lessee to notify fuel contamination, not requiring the implication of a duty on the part of the Lessor - namely, that the Lessor has an interest in being notified because a contamination problem may affect the value of the demised premises and of the shopping centre as a whole.

25   If the Lessor wished to undertake any repairs of any kind, it would be entitled to enter the Premises (clause 3.2 (f) (ii)), but this does not impose any obligation to repair any particular item.

26   The Lessee is obliged by clause 10.7 to maintain and repair the Premises, but the tanks and pipes are not part of the Premises. Clause 10.7 refers to ‘the Premises including the Lessor's and Lessee's plant, fixtures and fittings’. But in my opinion the additional words are confined to plant, fixtures and fittings in the Premises, and therefore do not extend to the tanks and pipes. The Lessee may be obliged by clause 20 to drain the tanks upon termination of the lease (I do not decide the point here), but clause 20 does not cast any obligation on the Lessee with respect to the tanks and pipes themselves, and is therefore not relevant.

27   The Lessee is obliged by clause 26.13 (b) to prevent water and other contaminants from entering tanks. The provision is confined to tanks and dispensing equipment ‘at the Premises’, and therefore does not appear to extend to the underground tanks and pipes which are the subject matter of this case. Additionally, the subject matter of that provision appears to be contaminants entering into tanks through flow-back from defectively maintained bowsers and dip and fill boxes, rather than contaminants entering through corrosion of underground pipes.

28   In my view, the key provision is clause 26.15. Clause 26 is headed ‘Equipment’. It is literally unclear whether the heading is intended to refer to equipment generally, or to ‘the Equipment’(the defined term). The heading begins with a capital ‘E’, suggesting the defined term, but that may be explained by the fact that every heading commences with a capital letter, and the definite article ‘the’ is missing from the heading. If the correct heading were ‘the Equipment’, it would be arguable that clause 26 has nothing to say about the problem in this case, since the tanks and pipes do not fall within the definition of ‘the Equipment’. But the sub-clauses of clause 26 are not limited to the subject matter of ‘the Equipment’, as they deal with specific obligations relating to matters such as records of sales, dips of tanks, reporting the presence of water in tanks, meter readings on pumps, maintenance of stop switches and fire extinguishers and fuses, the cleaning of sumps and drains, and generally the maintenance of plant and equipment. Given the range of subject matter, it seems to me that the heading of clause 26 is intended to refer to equipment generally rather than to ‘the Equipment’.

29   Clause 26.15 obliges the Lessee to supply, install, repair, maintain and replace all plant and equipment necessary for the conduct of the Premises as a service station. There can be no doubt that if the tanks and pipes fall within the meaning of the words ‘plant and equipment’, they are plant and equipment necessary for the conduct of the Premises as a service station.

30   In my opinion, the tanks and pipes are ‘equipment’, as that word is used in clause 26. In support of that conclusion, I rely on my construction of the heading of clause 26. Additionally, in a clause that deals with equipment of various kinds, provisions are found dealing with tanks and lines. Further, clause 26.3 implies that the tank system can be part of the Equipment, and therefore can be characterised as equipment, and clause 26.13 speaks of ‘tanks and dispensing equipment’, suggesting that tanks are a kind of equipment.

31   At the time of execution of the lease, the tanks and pipes had been installed and had been used by the plaintiff for some years. In those circumstances the plaintiff contended that the ‘plant and equipment’ to which clause 26.15 refers does not include the tanks and pipes that had been installed so much earlier. In my view, however, clause 26.15 applies, in its terms, to equipment already installed at the time of commencement of the lease, as well as to equipment subsequently installed. In the former case, it imposes an obligation to repair and maintain the equipment. In so doing, it literally covers the problem raised by this case.

32   The plaintiff argued that the drafter of the lease distinguished between ‘fixtures’ and ‘fittings, plant and equipment’ - for example, in the definition of ‘the Centre’. The plaintiff submitted that the tanks and pipes were clearly fixtures. I am not in a position to decide whether the tanks and pipes are fixtures, since there is insufficient evidence concerning the circumstances of their annexation to the land. The decision whether a particular chattel has become a fixture depends upon the degree of annexation and the purpose of annexation. In the present case the extent of annexation (buried underground, covered by concrete) points towards the tanks and pipes being fixtures, but Mr Roach's evidence to the effect that a tank system is removable and can be changed depending on sales volumes of fuels, suggests to the contrary. According to Mr K Gray, Elements of Land Law (2nd ed, 1993), p 13, the more recent case law suggests that the relative significance of the degree of annexation has declined and that considerations of purpose are now of the first importance. It is therefore not to be assumed that the tanks and pipes are fixtures just because they are buried underground. In my opinion, however, the question in this case is not whether the tanks and pipes are fixtures, but whether they fall within the words ‘plant and equipment’ in clause 26.15, appearing as it does in a clause under the general heading ‘equipment’.

Conclusion


33   My conclusion, therefore, is that clause 26.15 obliges the plaintiff as Lessee to repair and maintain the underground tanks and pipes. Although the point was not fully argued, it appears to me that clause 12.1 (the covenant for quiet enjoyment) implies an obligation on the part of the defendant to allow the plaintiff reasonable access for the purpose of repairs to the tanks and pipes, although this obligation would not require the defendant to excavate, and the plaintiff's obligation to repair the tanks and pipes would extend to restoration of any concrete area disturbed for the purposes of repair.

34   The plaintiff is not entitled to the declarations or other relief sought in the summons. The summons will be dismissed. I shall hear argument as to costs, though at this stage I see no reason for departing from the usual rule that costs should follow the event.

35   I shall add a final observation about remedies, although the question does not arise because I have found against the plaintiff. I very much doubt that I would have granted a mandatory injunction to the plaintiff, if I had reached a conclusion otherwise in his favour. Even if a mandatory injunction is sometimes appropriate in such a case (see Burns Philp Trust Co Ltd v Kwikasair Freightlines Ltd [1964] NSWR 63), an injunction of any kind in a case such as the present would expose the Court to the risk of continual supervision of the performance of the contract between the parties. No good reason was given, other than a shortage of readily available funds, why the plaintiff could not have carried out the necessary repairs itself and then recovered the cost from the defendant by way of damages, if it had been entitled to do so.
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Last Modified: 08/15/2001