Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 3]

[2009] WASC 52

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 3] [2009] WASC 52

CORAM:   EM HEENAN J

HEARD:   13 - 17, 20 - 24, 27 - 31 OCTOBER & 3 - 7, 10 - 14, 17 - 21 NOVEMBER 2008

DELIVERED          :   9 MARCH 2009

FILE NO/S:   CIV 1707 of 2003

BETWEEN:   CLAMBAKE PTY LTD (ACN 009 242 371)

Plaintiff

AND

TIPPERARY PROJECTS PTY LTD (ACN 054 744 713)
First Defendant

WARREN PERRY ANDERSON
Second Defendant

FILE NO/S              :CIV 2093 of 2003

BETWEEN             :OWSTON NOMINEES No 2 PTY LTD (ACN 001 769 099)

First Plaintiff

TIPPERARY PROJECTS PTY LTD (ACN 054 744 713)
Second Plaintiff

AND

CLAMBAKE PTY LTD (ACN 009 242 371)
First Defendant

LAND CAPITAL PTY LTD (ACN 058 548 806)
Second Defendant

IVOR FREDERICK COHEN
Third Defendant

Catchwords:

Lease - Claim for unpaid rent and outgoings - Holding over tenancy - Whether claims for interest a penalty - Management fees - Rent review on CPI index - Attempted rent review after termination of lease - Claims for costs (including legal costs) - Other outgoings

Liability for tenant to pay GST under lease where covenants do not expressly extend to GST liability - Review opportunities to increase or decrease rent

Set off - Availability of tenant's claim for damages as a set off against rent - Equitable set off - Provisions in lease excluding set off against rent

Guarantee - Claim against guarantor - Liability of guarantor - Whether guarantor can set off against his liability under the guarantee a claim by the principal debtor for damages

Cross-claim for breach of covenant to insure against risks for public liability and fire - Extent of liability

Action for damages for loss of property caused by fire - Negligence - Nuisance - Occupiers Liability Act 1985 (WA) - Damages for breach of covenant for quiet enjoyment in lease - Misleading and deceptive conduct s 52 and s 82 of the Trade Practices Act 1974 (Cth) - Damages for misleading and deceptive conduct s 9 and s 10 of the Fair Trading Act 1987 (WA) - Silence as misleading and deceptive conduct - Alleged obligation to disclose deficiencies in fire protection system in leased premises

Bailor and bailee - Ability of bailee to sue in its own name for the entire value of property owned by bailor - Obligation to account to bailor - Need to elect when judgment taken - The rule in The Winkfield [1902] P 42 - Whether that rule applies to claims under the TPA or the FPA - Assignability of causes of action under the TPA

Exclusion clauses - Whether bailor bound by exclusion clauses applying to bailee

Uniform building by-laws - Whether UBBLs represent a relevant standard of care for fire protection requirements - Alleged approval of premises by local authority - Effectiveness of an operating fire sprinkler system to contain fire - Alleged need to install operating fire sprinkler system - Alternatives adopted to subdivide building into segregated fire compartments - Effectiveness of attempted subdivision - Unauthorised changes to fire walls - Extent of knowledge available to landlord

Whether tenant would have removed property from premises if informed of alleged inadequacies in fire protection system - Valuation of property - Large collection of valuable and historic antiques, furniture, carpets, paintings and other objects - Methods of valuation of rare collection of watercolour paintings of Australian bird life

Legislation:

Fair Trading Act 1987 (WA)
Legal Profession Act 2008 (WA)
New Tax System (Goods and Services Tax Transition) Act 1999 (Cth)
Occupiers Liability Act 1985 (WA)
Property Law Act 1969 (WA)
Rules of the Supreme Court 1971 (WA)
Supreme Court Act 1935 (WA)
Taxation Administration Act 1953 (Cth)
Trade Practices Act 1974 (Cth)

Result:

CIV 1707 of 2003:
Judgment for plaintiff for $408,736.10 plus interest as claimed at 17% per annum (to be calculated) against first and second defendants
No liability to pay or recover GST
Claim for costs and interest pursuant to lease ordered to be tried separately
No entitlement to set-off in equity by either defendant

CIV 2093 of 2003:
Tipperary's claims for damages for breach of the covenant of quiet enjoyment, negligence, nuisance, breach of the duties arising under the Occupiers' Liability Act 1985 (WA) and for misleading and deceptive conduct contrary to the TPA and the FTA are all dismissed
Owston's claims for damages against Land Capital and Mr Cohen are all dismissed
Owston's claims for damages for negligence, nuisance and breach of the OLA are all dismissed
Owston's claims for damages for claims for misleading and deceptive conduct contrary to the TPA and the FTA against Land Capital and Mr Cohen are dismissed
Owston's claim for damages for misleading and deceptive conduct contrary to the TPA and the FTA against Clambake are upheld and damages assessed in the amount of $14,625,400

Counterclaim:
Clambake's counterclaim for an indemnity against Tipperary for its liability to Owston in the amount found of $14,625,400 be upheld and judgment entered for Clambake against Tipperary for an indemnity for that amount on that aspect of the counterclaim
The counterclaim by Mr Cohen against Tipperary be dismissed
Clambake's counterclaim against Tipperary for damages for wrongfully subletting or parting with possession of some or all of the leased premises without consent be dismissed
The counterclaim by Clambake and Mr Cohen for an indemnity or contribution against Tipperary on the grounds that the latter is a joint or concurrent tortfeasor be dismissed
The application by Tipperary to disallow the amendments made by Clambake introducing the claim for damages for the alleged failure to insure be refused
The claim by Clambake against Tipperary for damages for the latter's alleged failure to insure, pursuant to Section IV of the lease, be stood over for trial as a separate issue with an order that the matter be listed for directions at a time and date to be fixed

Category:    A

Representation:

CIV 1707 of 2003

Counsel:

Plaintiff:     Mr P J Deakin QC & Mr S E McCarthy

First Defendant              :     Mr S Rushton SC & Mr J Giles

Second Defendant         :     Mr S Rushton SC & Mr J Giles

Solicitors:

Plaintiff:     Minter Ellison

First Defendant              :     Solomon Brothers

Second Defendant         :     Solomon Brothers

CIV 2093 of 2003

Counsel:

First Plaintiff                  :     Mr S Rushton SC & Mr J Giles

Second Plaintiff             :     Mr S Rushton SC & Mr J Giles

First Defendant              :     Mr P J Deakin QC & Mr S E McCarthy

Second Defendant         :     Mr G R Hancy

Third Defendant            :     Mr P J Deakin QC & Mr S E McCarthy

Solicitors:

First Plaintiff                  :     Solomon Brothers

Second Plaintiff             :     Solomon Brothers

First Defendant              :     Minter Ellison

Second Defendant         :     Sparke Helmore

Third Defendant            :     Minter Ellison

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Table of Contents

Introduction
Two sets of proceedings
The fire claim

A.  The rent claim
Rent review
Defences to rent claim
The terms of the lease
Definition of 'rent'
Holding over

Guarantee
Other provisions
Approach to construction of the lease
Management fees
Insurance outgoings
The CPI indexed rent reviews
Retrospective exercise of the power to review rent
Goods and services tax (GST)
Claim for interest - whether a penalty?

Costs

Guarantor
Set-off
Exclusion of any set-off
Ability of Mr Anderson to set off any liability of Clambake to Tipperary on its cross‑claim against his personal liability under the guarantee
Conclusions in relation to rent claims

B.  The fire claims and counterclaims

The fire claim

No bailment to Tipperary?
Bailment - Possession - Election
Tipperary's claim for breach of the covenant of quiet enjoyment - Tipperary in breach for non-payment of rent
Details of fire claims
History of the premises
Acquisition by Sectam Pty Ltd
Acquisition by Clambake and later leasing to Tipperary
The north-south wall
Fire precautions generally
Mr Norman Samarchi
The Uniform Building By-laws 1974 - Application
Knowledge of non-compliant fire wall and defective fire protection system
Half Price Pine
Significance of Clambake's insurers' recommendations - September/ October 2002
Presence, location, visibility and operation of the sprinkler heads
Mr Anderson and Clambake’s Evidence Regarding the Sprinkler Heads
Meeting between Mr Anderson and Mr Aldo Gianotti
Meetings between Mr John Davies and Mr Warren Anderson
Swiss Grand Hotel Meeting in Bondi
Failure to call Mr Bert Gianotti with regard to the controversy over whether or not Mr Anderson met with Mr Cohen at the Claremont premises in June or July 1992 and before a lease of the premises was taken by Tipperary
Clambake as trustee
Knowledge of valuable collection stored in Tipperary's premises
Clambake's foreshadowed counterclaim for failure to insure
Tipperary's contentions on claims for failure to insure
Exclusion and limitation clauses - counterclaim for indemnity

(a)  Clauses 5.01, cl 6.02 and cl 9.04

(b)  Other exclusion clauses:  cl 13.05, cl 13.06 and cl 13.07

The nature and extent of the property destroyed
Were the Cayley watercolours, and other significant parts of the collection owned by Owston?

The Warren Anderson Family Trust
Quantum of loss
Storage of the Cayley watercolours
The valuers

(a)      Andrew Campbell Isles

(b)      Janet Sylvia Muir

(c)      Timothy Allan McCormick

(d)      Lauraine Beth Diggins

(e)      David Emlyn Thomas

(f)       Andrew Sydney Clifford Broadway

Tipperary's claim for damages for breach of the covenant of quiet enjoyment

Negligence

(a)  Review of authorities

(b)  Should Clambake have investigated the adequacy of the fire systems?

(c)  Standard of care

Nuisance
Occupier's Liability Act 1985 (OLA)
Quiet enjoyment
Contributory negligence
Misleading and deceptive conduct

(a)  Conduct in trade and commerce

(b)  Silence as misleading or deceptive conduct

(c)  Equity and unilateral mistake

(d)  Silence and intent

(e)  Effect of demands by Clambake's insurer to install sprinkler systems

Land Capital
Mr Cohen

Causation
Summary of conclusions on fire claim

EM HEENAN J: 

Introduction

1. During the late afternoon of Sunday 22 December 2002 a fire broke out in a suite of commercial premises located at 201 - 207 Stirling Highway, Claremont.  This consisted of a number of showrooms, shops, display and storage areas all forming part of a large single storey building on the northern side of Stirling Highway between Loch Street in the east and Brown Street in the west.  There were six separate tenancies.  Forming part of the structure at the rear of the north‑eastern end was a covered garage.

2. The fire started somewhere in the roof above the premises known as 'Half Price Pine' ‑ a retail furniture shop stocked with large quantities of pine furniture.  It was located just to the west of an internal dividing wall running from south to north and which I will refer to as the 'north south wall'.  This wall features prominently in this litigation but its origins, purpose, characteristics and potential significance can be left for consideration later. 

3. The fire in the roof resulted in burning materials falling into the interior of the Half Price Pine store and these ignited the contents causing the fire to grow rapidly in size, intensity and ferocity.  Under the influence of a strong easterly wind the fire took hold and spread to the adjoining tenancies to the west, eventually consuming all of the building west of the north south wall and destroying the contents of those showrooms, retail shops and storage areas.  The fire brigade attended and their actions saved the section of the building and contents east of the north south wall and prevented this large fire from spreading to surrounding homes or buildings.  Nothing of value was left in the burned areas.

4. The owner of the whole site at 201 ‑ 207 Stirling Highway at the time was Clambake Pty Ltd (Clambake) which is the trustee for the Esjay (No 1) Unit Trust under the terms of a deed of trust dated 26 November 1985 (exhibit 54).  The various unit holders were investors in the retail project which had been developed and promoted by Clambake as will be described.  The management of the premises on behalf of Clambake was conducted by its agent, Land Capital Pty Ltd (Land Capital), which traded under the business name Churchill Knight Real Estate Agents.  Land Capital had been appointed managing agent as and from 1 August 1995 (exhibit 10) and had the day to day management of the Claremont property continuously from 1 September 1995 (exhibit 57) until the fire and since.  Mr Ivor Frederick Cohen (Mr Cohen) was at all material times, and still is, a director and shareholder of Clambake and of Land Capital and was the senior representative of both companies dealing with the commercial premises.

5. One of the tenants of Clambake was Tipperary Projects Pty Ltd (Tipperary) which occupied the premises immediately to the west of the Half Price Pine showroom.  While Tipperary had a tenancy of the whole of that area from the Stirling Highway frontage to the rear it had sublet a small portion at the front to 'Jacquie McPhee Interiors', a firm of interior designers and decorators whose shopfront window and display area presented to Stirling Highway.  At the rear of the area occupied by Ms Jacquie McPhee an east west partition had been erected and the balance of the area to the north of the partition was the storeroom used and occupied by Tipperary.  No business was conducted by Tipperary from these premises.  Rather they were used exclusively for the storage of a vast collection of antiques, objets d'art, fine furniture, artworks, valuable antique and oriental carpets and other valuables which formed part of a larger collection said to be owned by Owston Nominees (No 2) Pty Ltd (Owston) as the trustee of the Warren Anderson Trust. 

6. Mr Warren Perry Anderson (Mr Anderson) is a director and shareholder of Tipperary and Owston.  He had amassed a considerable fortune from the construction and sale of large retail shopping centres around Australia in the 1980s and had used part of his wealth to indulge in his interests in natural history, art, fine furniture and antiques.  He, or companies in his group, owned large residential properties in Sydney, the Blue Mountains, Perth and elsewhere.  In 2002 he had planned to build a large new home for himself and his family in Peppermint Grove in Perth and to furnish it with paintings, carpets, furniture and other valuables from his collection.  He had arranged for a large part of the collection to be moved from his other homes in Sydney to Perth for storage so that the architects and designers of his new Perth home would be able to undertake their work in the knowledge of the nature, extent and dimensions of the furnishings which he hoped to include in the new home.

7. There was also another tenancy in the Claremont property to the west of the area occupied by Tipperary and its sub‑tenant Jacquie McPhee Interiors.  This was on the north western side of the building facing Brown Street.  The tenant was Albertine, a business which dealt in wrought iron furniture, appliances and other outdoor goods.

8. The areas of the premises at Claremont respectively occupied by these six tenants and the adjoining covered car park to the rear are all shown on exhibit 2 and, in more detail on exhibit 34.  Moving from east to west the tenants were; first, Solomon Carpets; second, Touch of Brass; third, Maxwell Interiors; there was then a small vacant area which was not occupied at the time of the fire and had not been occupied at any time since Tipperary had taken up possession.  Still moving from east to west, the fourth tenancy was Half Price Pine, the fifth Tipperary (with Jacquie McPhee Interiors as its subtenant at the front) and sixth and finally, Albertine facing Brown Street.  All the areas occupied by Half Price Pine, Tipperary, Jacquie McPhee Interiors and Albertine were destroyed in the fire.  Significantly for this present litigation, all the valuable collection of paintings, furniture, stuffed animals, carpets and other objets d'art stored by Tipperary for Owston were destroyed.

Two sets of proceedings

1. With this preliminary introduction of the principal parties, it is possible to turn to the details of this litigation.  There are two actions (CIV 1707 of 2003 and CIV 2093 of 2003) which have been heard together and in which directions have been made that, unless otherwise ordered, all the evidence in one is to be treated as evidence in the other and vice versa.  The first action can conveniently be termed 'the rent action' and the second 'the fire claim'.

2. In the rent action Clambake is suing its former tenant, Tipperary, for arrears of rent and outgoings said to be payable by the tenant in respect of its use of the premises under the terms of a lease dated 25 August 1988 (exhibit 4) later assigned to Tipperary by Deed of Assignment dated 2 December 1992 (exhibit 5) and extended and varied by Deed of Extension and Variation also dated 2 December 1992 (exhibit 6).  It is common ground that the term set by that lease as assigned, varied and extended had expired before the fire and that from the date of the expiry of the term, namely 2 September 1996 (see exhibit 6), Tipperary continued in possession of the premises as a monthly tenant pursuant to the holding over provisions contained in cl 13 and elsewhere in the lease. 

3. Mr Anderson is the sole guarantor of the obligations of Tipperary under the lease and is sued, as second defendant in the rent action, upon that guarantee. 

4. Both Tipperary and Mr Anderson acknowledge that each is liable, to some extent, for unpaid rent and outgoings under the lease, and in Mr Anderson's case pursuant to his guarantee, but they contest the extent of the liability alleged particularly with regard to:  increases in rent claimed to have been made under rent review powers; outgoing of various kinds but particularly management fees; liability for GST and for interest. 

5. As well as contesting the extent of their alleged liability in the rent action both Tipperary and Mr Anderson seek to set off against any established liability for rent and outgoings, an equivalent amount of the counterclaims in the fire action.  This gives rise to issues of whether or not it is possible under the terms of the lease, at law or in equity for any claims to be set off against the rent and outgoings and, further, whether Mr Anderson, who is not a party to the fire claim, may set off against his liability under the guarantee a cross‑claim advanced, not by him but by the principal debtor Tipperary.  Those issues will all be addressed later.

6. The amount of the claim for rent, outgoings and other moneys due under the lease and guarantee put by Clambake at the trial is an aggregate of more than $1,527,958 made up as follows:

   Rent and outgoings to 23 December 2008            $456,124

   Interest to 23 December 2008           $222,975

   Interest from 23 December 2008 to 20 November 2008              $458,658

   Plus legal costs (GST excluded)      $369,886

   Interest to 20 November 2008      $20,315

   Total costs and interest           $390,374

   Plus GST       (To be calculated)

   Total       $1,527,958

   Plus interest accruing after 20 November 2008

The fire claim

1. There are two plaintiffs in the fire claim, Owston claiming as owner of the property destroyed and Tipperary, claiming as bailee in possession of these goods at the time of the fire under a gratuitous bailment terminable at any time by notice or demand by Owston.  Tipperary does not claim any proprietary or special interest in any of the goods destroyed by the fire but maintains that its possession of them as bailee is sufficient for it to advance most, if not all, of the causes of action relied upon by virtue of the principle recognised in The Winkfield [1902] P 42. To cite Palmer NE, Bailment (2^nd ed, 1991) 308:

   At common law, a bailee's possession entitles him to exercise any of the remedies to which possession is a prerequisite, or to which it is one of several grounds of potential qualification.  His lack of full ownership does not preclude him, moreover, from recovering the full value of the chattel or the full cost of its impairment; the rule in such circumstances is that 'as against a wrongdoer, possession is title'.  Thus, if the goods are wrongfully taken from him or are damaged while in his possession, he may sue the wrongdoer in trespass, conversion or detinue just as if he were the bailor under a revocable bailment or an owner whose goods had never, before the wrongdoing, left his possession.

   (This paragraph was cited with apparent approval by McGregor J in Millar v Candy [1981] FCA 208; (1981) 58 FLR 145, 163 and was approved in Goodwin v Ron Heath Tyre Services (SA) Pty Ltd [1999] SASC 222 [91]).

2. It is acknowledged by Tipperary that, in the event of it becoming entitled to judgment for damages in respect of the destruction of this property, and if electing to take such a judgment, it would be obliged to account to Owston for the benefit of that judgment to its full extent.

3. Simultaneously with this claim for damages by Tipperary as a bailee, Owston maintains its claims for damages as owner of the property destroyed.  There are some potential refinements of Owston's status as a claimant which deal with some aspects of the defence to its claims but these complications need not, at this point, interrupt this broad outline of the nature of the case.  Like Tipperary, Owston acknowledges that there could not be judgment entered in favour of both Tipperary and Owston and that, in the event that each establishes a liability for damages by any of the defendants to the fire claim, it will be necessary for an election to be made as to whether, and to what extent, a judgment is to be taken by Tipperary or by Owston, or vice versa, so as to avoid any prospect of double recovery. 

4. The question of whether or not Tipperary and Owston could simultaneously advance these claims for damages in the fire claims, pursuant to the rule in The Winkfield and as alleged owner of the property was the subject of controversy.  The defendants to the fire claim moved on 22 October, during the trial, for an order that Tipperary and Owston be put to an election as to which could pursue its claim but for reasons given at ts 723 ‑ 734 and summarised later in these reasons I declined to order that either Tipperary or Owston should be required to make any such election before the final decision of the court was announced but that then, depending on the outcome, such an election might be essential.

5. The defendants to the fire claim are Clambake, as the owner of the leased premises and as a privy to the covenant of quiet enjoyment in the lease; Land Capital, as manager of the premises; and Mr Cohen, as a person alleged to be knowingly involved in alleged misleading or deceptive conduct, by both Clambake and Land Capital contrary to s 52 of the Trade Practices Act 1974 (Cth) (TPA) and s 9 and s 10 of the Fair Trading Act 1987 (WA) (FTA).

6. The causes of action relied upon by Tipperary and Owston in the fire claim vary, as between the claimants and as against the several defendants.

7. Tipperary claims against Clambake for damages for breach of the covenant of quiet enjoyment in the lease; for damages in negligence; for damages pursuant to the provisions of the Occupiers Liability Act 1985 (WA) (OLA); for damages for nuisance; and for damages for misleading and deceptive conduct contrary to the TPA and the FTA. Tipperary makes similar claims for damages against Land Capital, except for the claim for breach of a covenant in the lease, damages for occupier's liability or for negligence. The only claims made by Tipperary against Mr Cohen are for damages for involvement in misleading and deceptive conduct contrary to the TPA and the FTA.

8. Tipperary concedes that, not being the owner of the property destroyed, it cannot make out its pleaded case for damages for misleading and deceptive conduct against Clambake, Land Capital or Mr Cohen notwithstanding the principle in The Winkfield because those statutory causes of action may only be maintained by the owner of the property destroyed or damaged and may not be assigned:  Boston Commercial Services Pty Ltd v G E Capital Finance Australasia Pty Ltd [2006] FCA 1352; (2006) 236 ALR 720 (Rares J) [49] ‑ [53], [57]. The reasons for this and its potential implications for the nature and success of any of the other claims by Tipperary and Owston and upon any ensuing obligation to elect when taking judgment are examined later in the fire claim.

9. Owston, as asserted owner of the goods destroyed, advances all of the foregoing causes of action, except for the claim for damages for breach of covenant in the lease (to which it was not a party), against Clambake. Against Land Capital it advances the claims for alleged misleading and deceptive conduct contrary to the TPA and FTA. Against Mr Cohen it advances the claim of knowing involvement in the alleged misleading and deceptive conduct contrary to s 87 of the TPA and s 9 and s 10 of the FTA. As alleged owner of the property destroyed it maintains that it is entitled to advance the causes of action for damages under the TPA and FTA against all the defendants.

10. The extent of the claim by Owston and Tipperary for damages for loss of the goods destroyed by the fire is, depending upon a major controversy concerning the value of a particular collection of paintings (the Cayley watercolours) $15,860,400 at its highest.  The parties agree that the value of antiques, collectibles and paintings destroyed in the fire, other than the Cayley watercolours, is $7,125,400.  The controversy over quantum is about the additional component for the value of the Cayley watercolours.  The expert evidence for Owston and Tipperary puts the value of the Cayley works at between $7,503,000 and $8,700,000 at the time of the fire, whereas the Clambake's experts put the value of those works at between $2,578,750 and $2,751,000.

11. It is the liability which Tipperary alleges against Clambake in the fire claim, assuming it is successful and elects to take a judgment for damages in consequence, which Tipperary seeks to set off against its liability to Clambake under the rent action.  It is this same asserted liability towards Tipperary in the fire claim which Mr Anderson also seeks to set off against his liability to Clambake as guarantor in the rent action.  Accordingly, as well as issues arising about the entitlement to a set‑off at law or in equity in the situation which has arisen, the pleaded set‑offs in the rent claim depend upon Tipperary not only being entitled to a judgment for damages in the fire claim but also upon it electing to take such a judgment, to the exclusion of Owston, at least to the extent necessary to constitute a total or partial set‑off.

12. Clambake, Land Capital and Mr Cohen advance many defences to the fire claim including denials of the existence of any of the alleged duties relied upon by Tipperary or Owston, and denials of breach of duty as alleged or at all.  In response to Owston's claims they do not admit Owston was the owner of any of the property destroyed.  There are, additionally, a number of special defences in which Clambake seeks to rely upon certain exclusion clauses in the lease to resist the claims by Tipperary, and by extension and in reliance upon the doctrine in Scruttons Ltd v Midland Silicones Ltd [1962] AC 446 sub nom Midland Silicones Ltd v Scruttons Ltd [1961] 2 Lloyds Rep 365 and Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (1980) 144 CLR 300 (PC), 304 ‑ 305 (PC) against the claims for damages brought by Owston.

13. Furthermore, Clambake has a counterclaim against Tipperary for damages for alleged breach of covenants in the lease requiring Tipperary to insure, in its own name and in the name of Clambake, against the risk of liability for a number of contingencies including, so it is alleged, the risk of destruction of the premises and their contents by fire, even by fire or other risks which may have been caused by or contributed to by the negligence of Clambake or its agents.  For reasons which I gave at the time of this pre‑trial application on 9 November 2008 (see ts 97 ‑ 109), I granted Clambake leave to amend its cross‑claim in this respect in the manner sought but reserved liberty to Tipperary and/or Owston to move to disallow the amendment if its effect would be to introduce a cause of action which, otherwise, would be statute barred by some relevant limitation provision or for other good cause.  The extent of the alleged liability for breach of the covenant to insure was put by Clambake at $5 million being the extent of the indemnity alleged to be necessary.

14. At the time the amendment was sought counsel for Clambake acknowledged that its introduction would expand the factual inquiries necessary for this trial in a manner, and to a degree, which could not be dealt with in the course of the trial of the two actions.  Accordingly, if the issues raised by the amendment needed to be pursued, it would be necessary for them to be dealt with as separate issues subsequently despite the inconvenience involved.  During the course of the trial counsel for Tipperary and Owston made an application to disallow the amendment and put in detailed written submissions in support of that application in the course of closing addresses.  The matter was left on the basis that I would attempt to determine whether the amended cross‑claim for damages for alleged breach of the covenant to insure was arguable, and if it clearly was not that I should disallow the amendment as part of my decision dealing with all the other issues in the case.  However, if I were to conclude that the new cause of action were arguable or that the application to disallow the amendment could not be adequately dealt with on the materials presently before the court, that is if further evidence or submissions on that application were necessary, I should dismiss the application or reserve my decision upon it for later determination. 

1. There is a further cross‑claim by Clambake against Tipperary for damages for alleged breach of covenant against parting with the possession of the leased premises without consent or for subletting without consent.  The details of this can be left until later.

A.  The rent claim

1. Clambake claims against Tipperary and its guarantor, Mr Anderson, arrears of rent, outgoings and other moneys payable under the lease accrued due over the period from 2 September 1995 until 23 December 2002 (the day following the fire) in a total amount, including interest calculated to 20 November 2008 (the last day of the trial on which submissions on this point were made) in the aggregate of more than $1,527,958.  In addition, Clambake contends that interest on the balance outstanding from 20 November 2008, continues to accrue due at the contractual daily rate of $212.44 until judgment. 

2. Commendably, the parties have agreed upon the mathematics applying to various permutations and combinations of the rent claim depending on the resolution of the issues in contest.  The amounts payable, depending upon the resolutions of the contested issues, are set out in the submissions of Clambake dated 20 November 2008 in three alternatives (pars 124 ‑ 135 of Clambake's final submissions in the rent action).  Here I will set out only the full claim of Clambake as advanced in its pleadings and in evidence.

3. Accordingly, Clambake's claim is as follows:

Subtotal	Total
(a)	Base rent from 2 September 1995 until 23 December 2008	$977,339.39
(b)	CPI increased rent	$108,071.07	$1,085,410.86
(c)	Outgoings	$256,620.76
(d)	GST on base rent	$32,367.12
(e)	GST on CPI increased rent	$5,634.42
(f)	GST on variable outgoings	$9,358.76
Total GST	$47,360.30
Total rent and outgoings	$1,389,391.52
Less payments made by Clambake - $933,268	($933,268.00)	($933,268.00)

Total outstanding as at 23 December 2002 exclusive of interest	$456,124.00
(g)	Interest to 23 December 2002 at 17% per annum	$222,974.75
Interest from 23 December 2002 to 20 November 2008 at 17% per annum (2,159 days at $212.44 per day)	$458,657.96
Total interest to 20 November 2008	$681,632.71	$681,632.71
Total due to 20 November 2008	$1,137,757.00
Interest accruing from 20 November 2008 at a daily rate of $212.44	[To be calculated]
(h)	Legal costs incurred by Clambake and payable by Tipperary pursuant to the terms of cl 3.08 of the lease (from 31 July 2003 to 17 November 2008	$369,885.77
(g)	Interest on legal costs at 17% per annum for the period from 31 July 2003 to 20 November 2008	$20,315.33
Total claim for legal costs and interest to 20 November 2008	$390,201.10	$390.201.10
Total claim including costs and interest to 20 November 2008	$1,527,958.10 (Plus further interest)

1. Under the assignment and variation of the lease between Clambake and Actus Australia Ltd (Actus) effected by the two deeds of 2 December 1992 (exhibits 5 and 6) only part of the premises previously leased by Actus was assigned to Tipperary.  The part which was assigned has been referred to as the 'showroom premises' with a floor space of approximately 912 sqm.  The remaining portion of the area, referred to as the 'warehouse area' and comprising about 474 sqm was later leased by Clambake to Albertine.  For present purposes one can ignore the area at the front of Tipperary's lease sublet to Jacquie McPhee Interiors because it is common ground that Tipperary remained liable to Clambake for the rent and outgoings payable in respect of that area as part of the whole area which it leased.

2. The parties do not have a complete record of rent and outgoings charged nor of payments made in respect of the entire period from 1 August 1992 ‑ the possession date for Tipperary under the assignment of the lease (see exhibit 5 cl 1.1, cl 1.2 and cl 4.1(a)) ‑ until Tipperary ceased possession on 23 December 2002.  This is because Clambake's managing agent until August 1995 was the firm Mair & Co from which Land Capital took over on 1 August 1995 (exhibit 10).  Previous records relating to rent, outgoings and payments to that date have been lost or destroyed and cannot be replaced or re‑established.  Mr Cohen was a principal in the firm of Mair & Co and was involved in the management of the Claremont property from the date of its acquisition by Clambake in 1988 until the change of managing agent from Mair & Co to Land Capital in August 1995.  While his knowledge of events occurring before 1995 is asserted to be material in the fire claim, it has no bearing on the rent action and need not be examined at this point.

3. Despite the covenant in the lease requiring rent to be paid monthly in advance (cl 3.01) and for outgoings and other moneys to be paid when charged, Tipperary seldom, if ever, duly made regular monthly payments of rent or outgoings.  The only payments made by or on behalf of Tipperary over the period from 1 September 1995 until the fire and since, were:

12.10.95	$48,313.88
29.05.96	$88,000.00
13.12.96	$100,000.00
06.01.97*	$431.70

06.01.97*	$271.19
06.01.97	$492.21
06.01.97*	$465.42
06.01.97*	$293.57
03.09.97	$70,000.00
19.02.98	$144,992.00
08.10.98	$100,000.00
02.07.99	$100,000.00
11.10.01	$300,000.00
Total	$933,298.00

*These small payments made on 6 January 1997, were payments received, exceptionally, from Jacquie McPhee Interiors apparently for electricity or similar charges accruing in respect of the area occupied by her as subtenant.

1. It is common ground that despite these irregular payments, Tipperary was never in a position where it had paid all the rent and other moneys due to date.  In other words, it was always in arrears and hence in default under the lease.

2. By their pleadings Tipperary and Mr Anderson sought to assert that this irregular pattern of payment and constant default, was accepted by Clambake so that any breaches of the lease were waived on that account by the toleration of Clambake, through Mr Cohen, in accepting these payments and, in particular, by failing to take steps to terminate the lease and evict the defaulting lessee.  Mr Cohen denied this.  Exhibit 72 (1A to 35) is a series of invoices and correspondence prepared or received by Mr Cohen in relation to his efforts to chase Tipperary and Mr Anderson over arrears.  This includes a handwritten note of October 1998 threatening legal action if arrears of $110,081.70 were not paid.  Mr Cohen gave evidence that he frequently met with Mr Anderson, either at his office at West Perth or at a nearby café, to discuss matters relating to the Claremont premises and during these meetings repeatedly pressed for the payment of outstanding rent. 

3. Mr Anderson denied that meetings had occurred as frequently as Mr Cohen asserted.  In relation to the payment of rent he appears to have taken the position that, in the absence of legal action or an attempt to evict him from the premises, these demands or threats were no more than bluster.  He explained that he and his group of companies were experiencing severe financial problems in the late 1990s and following, and that he was preoccupied with larger issues concerning the preservation and even survival of the group.  Although nothing turns on the controversy over whether or not Clambake waived punctual compliance with covenants for the payment of rent and other moneys due because some convention, and hence estoppel, arose by reason of the continuation of the irregular payments, I am satisfied that Clambake never waived the obligation by Tipperary to make full and punctual payments of the rent and other outgoings as they fell due.

4. It is because of the missing financial records lease for the period up to 1 September 1995 that no claim for rent or other moneys due before that date is advanced by Clambake except for its acknowledgement that, as at 2 September 1985, Tipperary was in arrears to the extent of $21,788.94.  Accordingly, the claim begins at 2 September 1995 on the agreed basis that at that point Tipperary was $21,788.94 in arrears as noted.

5. Under the Actus lease, as assigned to Tipperary, the base monthly rent payable was $10,543.97 ($126,527.64 ÷ 12 = $10,543.97 ) (exhibit 5 and exhibit 13.1 par 158).  Under the rent review provisions that rent was increased to $10,894.47 per month by Mair & Co shortly before Land Capital took over the management.  That base monthly rate of rent continued unchanged until the date of the fire except that for periods after 1 July 2000 a 10% increment was added for GST.

6. The arrangements for the calculation, charging and payment of variable outgoings were that, towards the end of each financial year, Land Capital sent each tenant, including Tipperary, an annual variable outgoings budget setting out the anticipated outgoings for the next financial year and apportioning these amongst the several tenants in proportion to the respective floor areas leased by each tenant or lessee to the whole of the lettable area of the property.  Before the end of the succeeding financial year the statements of estimated outgoings were audited by accountants engaged by Clambake for the purpose.  To the extent that there was any variation between the pre‑estimate of outgoings for that year and the actual aggregate outgoings, the liability would be adjusted and each tenant or lessee would receive an appropriate credit or debit in the next statement of charges rendered.  So it was that monthly statements for rent and outgoings payable by Tipperary were despatched by Land Capital and, under the terms of the lease, the amounts due were payable monthly in advance. 

7. Tipperary's term under the assigned, varied and extended Actus lease expired on 1 September 1996 and was never renewed.  There were some brief references in the evidence to efforts made to negotiate a new lease but that did not eventuate.  Nevertheless, Tipperary remained in possession and was accepted by Clambake as a monthly tenant under the holding over provisions of the lease (cl 13.08 (exhibit 4)).  Invoices for monthly rent and the share of the outgoings, calculated as described, continued to be sent by Land Capital to Tipperary after the expiration of the term in September 1996.  As the table of payments, set out in [35] above, reveals irregular large payments thereafter continued to be made by Tipperary in December 1996, September 1997, February and October 1998, July 1999 and October 2001 without any objection being taken to the manner in which the rent and outgoings were calculated or charged.  Indeed, the evidence is that no complaint had ever been made by, or on behalf of, Mr Anderson or Tipperary about the calculation of the rent or the composition of outgoings at any time from September 1996 until after this rent action had been instituted.

Rent review

1. The lease, exhibit 4, contains provisions, in cl 2.03, for the annual rent to be reviewed in the manner provided by Item 4 of the Second Schedule from and including the specified rent review dates.  The rent review dates were to be 1 September in each and every year of the term 'and any extension renewal or holding over thereof '.  One of these methods of rent review available was to adjust the rent in accordance with a formula based on the annual Consumer Price Index (CPI).  Yet Mr Cohen said in evidence, he was only aware of one previous rent review conducted for Tipperary.  This was done shortly before Land Capital took over as managing agent in 1995.  In other words, for the whole of the period in respect of which rent is presently claimed, that is from 2 September 1995 until 23 December 2002, there was no increase made in the base rent payable by Tipperary under this rent review power until very recently.

2. Nevertheless, because cl 2.03 of the lease provides:

   The reviewed Annual Rental shall be payable from and including a relevant Rent Review Date irrespective of when such reviewed Annual Rental is calculated agreed or determined and shall be subject to further review as hereinbefore provided … and the Lessor's right to have the Annual Rent reviewed and the Lessee's obligation to pay the Annual Rental as so reviewed shall not be waived varied or prejudiced by reason of the Lessor's failure to enforce these provisions, or by the Lessor continuing to accept after the relevant Rent Review Date payment of Annual Rental at the rate applicable prior to the relevant Rent Review Date or by any other laches delay or forbearance on the part of the Lessor.

   Clambake has now purported to exercise this power retrospectively and has reviewed and increased the basic rent payable for each year from September 1995 until December 2002.  It made this attempt by letters from Clambake's solicitors dated 28 August 2008 (exhibit 8 (1)) being a rent review for the period commencing 1 September 1996 to 1 September 2002 and by letter dated 3 October 2008 (exhibit 8(2)) being a rent review for the year commencing 2 September 1995.  The relevant CPI increases relating to those years have been  extracted and listed in a document prepared by the solicitors for Clambake and which became MFI 58 in the action.  However it was never formally proved because counsel for Tipperary and Mr Anderson acknowledged the accuracy of the figures and, consequently, the calculations embodied in the revised rents claimed in exhibits 8(1) and 8(2).  There is therefore, no issue about the accuracy of the calculations for the asserted rent review.  Rather, the controversy is whether or not the power to review rent was exercisable, as asserted or at all, in September and October of 2008.

3. It is common ground that the monthly tenancy by the holding over under the assigned lease came to an end either immediately after the fire on 23 December 2002 or shortly afterwards.  Exhibits 14(1) and 14(2) are two notices each dated 20 September 2003 from the solicitors for Tipperary, addressed and delivered to Clambake, purporting to terminate the tenancy pursuant to cl 13.02 of the lease (exhibit 14(1)) from the date of the notice, or (exhibit 14(2)) pursuant to cl 13.08 of the lease from a date one month after the date of giving notice.  As explained by counsel for Tipperary and Mr Anderson, these notices were in the nature of precautions because the primary position of Tipperary is that the tenancy was terminated by the fire.  This is made plain by terms of each notice which are, in this respect, identical in saying:

   EOn 22 December 2002 the Tipperary Projects' premises were destroyed by fire.

   FTipperary Projects Pty Ltd considers that the Lease and/or the monthly tenancy created by Tipperary Projects Pty Ltd holding over pursuant to the Lease was terminated on or about 23 December 2002 or on or about 19 May 2003.  Although Clambake Pty Ltd, by its solicitor at a status conference in Supreme Court Action CIV 1707 of 2003, stated that the Lease and/or Tipperary Projects Pty Ltd's monthly tenancy over Tipperary premises was terminated on 22 December 2002, Clambake Pty Ltd has continued sending invoices for rent and outgoings to Tipperary Projects Pty Ltd.

   GIn the event Tipperary Projects Pty Ltd's opinion and Clambake Pty Ltd's concession recited in Recital F above is incorrect, Tipperary Projects Pty Ltd gives this notice to terminate the Lease and the monthly tenancy created by Tipperary Projects Pty [Ltd] [sic] holding over pursuant to the Lease.

   Clambake has never attempted to assert that rent or other moneys payable under the lease are due in respect of any period after 23 December 2002.

4. For present purposes it is unnecessary to determine whether the lease, or more correctly the holding over tenancy, was terminated on 23 December 2002, or by one or other of the notices (exhibits 14(1) and (2)) in September or October of 2003.  It is clear, beyond dispute, that the tenancy has come to end and that no attempt has been made by Clambake to terminate the tenancy for default.  These are the circumstances in which the issue over the purported retrospective exercise of the power to increase the rents payable under the rent review clause come to be determined.

Defences to rent claim

1. Now, however, by their defence in the rent claim Tipperary and Mr Anderson assert that, upon the proper construction of the lease as assigned, extended and varied, including the holding over provisions, and in the events which have happened:

   (a)the rent payable by Tipperary as a monthly tenant under the holding over provisions amounts only to 1/12th of the amount of the annual rent, plus 1/12th of the aggregate of annual rates, taxes and insurance premiums but of no other outgoings;

   (b)by reason of the restricted rent payable during the holding over tenancy (as described in (a) above) no charge may be made for outgoings other than rates, taxes and insurance;

   (c)that Clambake is not entitled to charge for GST on rent, as it purported to do, from 1 July 2000 onwards;

   (d)there is no entitlement to charge for management fees paid by Clambake as part of the outgoings;

   (e)the charges in the outgoings for audit fees, pest control, water consumption, repairs and maintenance are not recoverable outgoings during the holding over period;

   (f)charges for contributions made to a sinking fund charged in two years were not properly chargeable;

   (g)if there is a set‑off which equals or exceeds the proper balance of the rent and outgoings payable by Tipperary, there can be no entitlement to interest at all;

   (h)the rate of interest charged on arrears of 17% is so great as not to be a genuine pre‑estimate of loss and is therefore void and invalid as a penalty;

   (i)the only entitlement which Clambake might have for interest, is a discretionary allowance under s 32 of the Supreme Court Act 1935 (WA);

   (j)retrospective increases of the rent payable by Tipperary by the application of the rent review formula based on the CPI index set out in cl 2.03 of the lease (exhibit 4) purported to have been implemented by Clambake on 28 August and 3 October 2008 cannot be recovered because the power of retrospective rent review ceased upon the termination of the tenancy following the fire in December 2002;

   (k)Clambake's claim for costs of $369,885.77 plus interest of $20,315.33 is not justifiable under cl 3.08 of the lease, or at all, because the amounts charged are excessive, are more than a party charged under the provisions of the Legal Profession Act 2008 (WA) would be liable to pay upon taxation at costs, and to the extent of the claim includes interest, the interest is excessive and unenforceable because it amounts to a penalty;

   (l)both Tipperary and Mr Anderson are entitled to set‑off so much of Tipperary's counterclaim, if established, as may be necessary to satisfy and extinguish the claim for rent and other moneys due under the lease and guarantee by Mr Anderson.

2. As noted, the pleadings in the rent action include an allegation by Tipperary and Mr Anderson that payments had been improperly charged in the outgoings for contribution to a sinking fund.  However, the evidence was that Tipperary was not charged for any such contributions and this allegation was not pursued.

The terms of the lease

1. The resolution of the issues joined over Clambake's ability to recover the alleged arrears of rent, outgoings and interest claimed depends, to a significant degree, upon the proper construction of certain provisions in the lease.  In addition, it is necessary to have regard to the principles applying to whether or not a contractual provision, such as the entitlement to interest relied upon by Clambake is void and unenforceable because it amounts to a penalty.  It will also be necessary to consider the authorities bearing on whether or not provisions in a contract, such as the rent review powers in this lease, can be exercised after the contract has been terminated or, after the right to possession has expired and possession has been yielded up to the landlord.

1. The terms of the Actus lease as assigned, varied and extended between Clambake and Tipperary and as guaranteed by Mr Anderson include:

   (a)Clause 2.01 - The Demise, which provides:

   The Lessor HEREBY LEASES to the Lessee and the Lessee HEREBY TAKES ON LEASE the Leased Premises described in Item 1 of the Second Schedule together with the rights (if any) specified in the First Schedule TO BE HELD by the Lessee at the rentals hereby reserved for the Term and upon and subject to encumbrances (if any) specified in the First Schedule and to the covenants and powers implied in every memorandum of lease by virtue of the Transfer of Land Act 1893 so far as not hereby expressly or by necessary implication negatived or modified and subject to the covenants, conditions, reservations and stipulations hereinafter contained or implied.

   (b)Clause 2.02 - Annual Rental:

   The Lessee shall pay for the Leased Premises an Annual Rental which shall be at the rate or rates specified in Item 3 of the Second Schedule subject to review and variation as hereinafter provided:

   'The Annual Rental prescribed in the Actus lease by Item 4 of the Second Schedule was $128,760 per annum based on designated rates per square metre of areas leased subject to a review by remeasuring those areas.  Under cl 4 of The Schedule to the extension and variation of the original lease (exhibit 6) the rent payable by Tipperary to Clambake was fixed at $126,527 per annum subject to renew [sic - review] in accordance with cl 3.'

   (c)Clause 4.1 of the assignment of lease (exhibit 5) by which Clambake covenanted:

   The Assignee agrees with both the Landlord and the Tenant separately that from and including the Possession Date:

   (a)the Assignee will pay the Rent and other moneys payable under the Lease of the Premises in the manner required by the Lease of the Premises and promptly comply with all the Tenant's other obligations under the Lease of the Premises; and

   (b)the Assignee is bound by all the provisions of the Lease of the Premises as fully and effectively as if the Assignee were an original party to the Lease of the Premises as Tenant.

   (d)Clause 5.1 of the extension and variation of the Lease (exhibit 6) by which Clambake, as tenant, covenanted:

   The Tenant agrees, during the Additional Term:

   (a)to pay the Rent (as varied from time to time in accordance with the Lease) and all other moneys payable by the Tenant under the Lease in the manner specified in the Lease; and

   (b)subject to the terms of this Deed to comply with all the Tenant's other obligations under the Lease.

Definition of 'rent'

1. By cl 1.01 of the Lease (exhibit 4) the 'Annual Rental' is defined as meaning the annual rental payable pursuant to this Lease, namely the $128,760 per annum fixed by Item 4 of the Second Schedule, subject to review.  By cl 1.1 of the assignment (exhibit 5) 'rent' is defined as meaning the rent payable under the Lease in respect of the Premises as at the Possession Date, that is, the sum of $126,527.64 per annum based on the area of the Premises of approximately 912 sqm and, similarly, by cl 1.1 of the extension and variation (exhibit 6) 'rent' is defined as meaning the annual rent specified in Item 4 of the Schedule, namely $126,527.64 per annum, subject to review.

2. Further the lease contains an express covenant for the payment of rent, cl 3.01, as follows:

   The Lessee shall pay:

   Cl 3.01 ‑ Rent

   to the Lessor at the address hereinbefore appearing or at such other address as the Lessor may from time to time in writing direct the Annual Rental without deduction or set‑off and without any demand therefore by equal monthly instalments in advance, the first instalment being due and payable on or before the Date of Commencement and subsequent instalments being due and payable on or before the first day of each and every succeeding month.

3. As already noted, the Deed of Assignment (exhibit 5) by cl 4.1 and the Deed of Extension and Variation (exhibit 6) by cl 5.1 also each contain additional covenants by Clambake to pay the Rent as there prescribed.

4. Further, terms which are material, include:

   Clause 3.03 ‑ Outgoings rent

   To the Lessor at the address hereinbefore appearing or at such other address as the Lessor may from time to time in writing direct an amount equal to the same proportion of the Outgoings as the leasable area of the Leased Premises bears to the leasable [the] area of the Land both as determined and certified from time to time by the Lessor.

   Clause 3.06 ‑ Lessee's insurances

   All premiums as and when owing in respect of the insurance policies to be taken out and maintained by the Lessee pursuant to the covenants on the Lessee's part hereinafter contained in Section IV of this Lease.

   Clause 3.09 ‑ Interest on arrears

   To the Lessor on demand interest at the Rate of Interest plus 2% on all moneys owing by the Lessee but unpaid in breach of the provisions of this Lease for more than seven days from and including the due date the said interest to be calculated on a daily basis on the total of the moneys owing from time to time and computed from and including the due date.

5. Further in relation to the obligation to pay interest on rent or other moneys in arrear the relevant rate of interest applicable is defined by cl 1.01 as follows:

   'Rate of Interest' means the greater of 15% and the general maximum rate from time to time charged by the Commonwealth Trading Bank of Australia on overdraft accounts with a limit of less than $100,000.

Holding over

1. Importantly for present purposes, the Lease contains express provisions for the obligations arising during any holding over.  These are:

   Clause 13.08 ‑ Holding over provisions:

   In the event of the Lessee continuing to occupy the Leased Premises after the expiration or sooner determination of the Term with the consent of the Lessor then the Lessee shall become a monthly tenant only of the Lessor, such monthly tenancy being terminable by not less than 1 month's written notice given by either party and expiring at any time (whether or not at the end of a rent period) but at a rental equal to 1/12th of the aggregate of the annual rate of the Annual Rental, rates and taxes and insurance premiums payable by the Lessee immediately prior to such expiration or sooner determination and otherwise on the same covenants, conditions and stipulations mutatis mutandis as are herein contained or implied excepting any option to renew which shall be deemed expressly excluded.

Guarantee

1. As there is no issue about the enforceability of the guarantee given by Mr Anderson in respect of any liability for rent or other moneys due by Tipperary to Clambake, it is unnecessary to set out in full the provisions of the Lease and the other documents relating to the guarantee.  It is sufficient only to mention that the original guarantee and indemnity contained in the lease, exhibit 4, are to be found in cl 13.15 and were obligations entered into by Mr Derek Pynt, then the managing director of Actus, as set out in item 7 to the Second Schedule of exhibit 4.  The guarantee given by Mr Anderson is found in the assignment (exhibit 5) cl 9 which, by cl 9.2(a)(iii) is expressly stated to continue in full force and effect while the assignee is holding over under the lease of the premises.  This guarantee was confirmed by Mr Anderson in cl 8 of the subsequent extension and variation of the lease (exhibit 6).

2. Significantly, in relation to the guarantee, cl 9.5 of the deed of assignment (exhibit 5) provides:

   The Guarantor may not, without the prior written consent of the Landlord:

   (a)raise a set‑off or counterclaim available to it against the Assignee in reduction of its liability under this clause;

Other provisions

1. The general provisions of the lease also contain a covenant dealing with possible destruction of the leased premises.  This is as follows:

   Clause 13.02 ‑ Destruction of the Leased Premises

   Notwithstanding anything to the contrary contained or implied in cl 13.01 if the whole or any substantial part of the Leased Premises is destroyed then the Lessor shall be at liberty by written notice given to the Lessee within three months after that occurrence and thereafter the Lessee shall be at liberty by written notice given to the Lessor to terminate the Term as from the date of the giving of that notice without prejudice to the right of the Lessor for any antecedent breach by the Lessee of any term, covenant, condition or stipulation contained in or implied by this Lease PROVIDED THAT if within that 3 month period the Lessor by written notice given to the Lessee has elected to reinstate the Leased Premises and has commenced that reinstatement the Lessee shall have no such right of termination but the Lessor shall reinstate the Leased Premises to as nearly as practicable their original design.  For the purposes of this Clause 13.02 the expression 'a substantial part of the Leased Premises' shall mean 1/3rd or more of the gross leasable area (as defined from time to time by The Building Owners and Managers Association Ltd (W.A. Division)) of the Building and as determined by the Lessor or such a significant part of the Leased Premises as renders its restoration uneconomic or undesirable in the opinion of the Lessor.

2. As already noted, cl 2.03 contains the power of the Lessor to review the annual rent at the relevant rent review dates and Item 4 of the Second Schedule specifies that the rent review dates occur in each and every year of the term and any extension, renewal or holding over thereof.

3. The covenant to pay rent has already been set out in [52] above, but must be put in the context of the lease as a whole.  Section III, entitled Rent and Other Payments Provisions, is in effect one compendious covenant to pay a variety of liabilities, namely:

   3.01 ‑ Rent

   3.02 ‑ Rates and taxes of the leased premises

   3.03 ‑ Outgoings rent

   3.04 ‑ Services

   3.05 ‑ Telephone Service

   3.06 ‑ Lessee's insurances

   3.07 ‑ Legal costs and stamp duty

   3.08 ‑ Charges and expenses arising through default

   3.09 ‑ Interest on arrears

4. By operation of that covenant; indeed from the definition in cl 1.01; the specification of the annual rent contained in the schedules to the lease and the deed of extension (exhibit 6), the term 'rent' is strictly defined as being the annual rent of $126,527.64 subject to review, so distinguishing it from the additional liabilities to make monetary payments set out in cl 3, as just listed.  Those additional obligations are the subject of the separate sub‑covenants in cl 3, some of which have also been set out in full.  However, in relation to 'Outgoings Rent' in cl 3.03 the term 'Outgoings' takes its meaning from the definition in cl 1 as follows:

   'Outgoings' are the total amount expended or expendable by the Lessor (including provisions and adjustments) appropriate for the Lease Year in respect of the whole of the Building (and not otherwise the direct responsibility of the Lessee) and being:

   (1)Cleaning of the Common Areas and Signs;

   (2)Gardening, Landscaping and Maintenance of the Common Areas reasonably incurred by the Lessor;

   (3)Insurance including insurance on all buildings, structures of the Centre for their replacement value (which value shall be reviewed from year to year) against fire, fusion, earthquake, lightning, storm, tempest, rainwater and other damage including flood, explosion, malicious damage, riots, civil commotion and strikes, impact by vehicles including the insured's own vehicles, impact by aircraft and articles dropped therefrom, leakage, removal of rubble and debris and Public Risk Insurance with crossed liabilities effected by the Lessor on behalf of itself and all other Lessees or occupiers of the Centre:  Workers' Compensation, Common Law and Statutory Liability Insurance in respect of employees of the Lessor employed on, in or about the Common Areas and Loss of Rent insurance and any other insurance relating to the Lessor's ownership or interest in the Centre;

   (4)The maintenance, repair and replacement of all fire equipment, which expression shall extend to and include all stop‑cocks, hydrants, alarms, drench curtains, fire sprinkler systems, hoses, extinguishers or other fire prevention equipment in Common Areas of the Centre;

   (5)Lighting of Common Areas and Signs;

   (6)Caretaking and Security expenses (if any) reasonably incurred by the Lessor including the cost of the installation and maintenance of all devices and equipment used for the purposes of caretaking and security;

   (7)Garbage and waste disposal from areas external to the Leased Premises;

   (8)Air Conditioning Running Costs;

   (9)Management fees;

   (10)All disbursements or costs of the same nature as those mentioned in the preceding paragraphs (1) to (9) which are incurred by the Lessor in the running of the Centre or any extension thereto and which are not separately assessed against a Lessee of the Centre.

5. There are other provisions in the lease which are material to the fire claims; to Clambake's defence based on exclusion clauses; and to its own counterclaim for damages for the alleged breach by Clambake of the covenants to insure but it will be sufficient to set those out and address their effect later when dealing with the fire claim.

Approach to construction of the lease

1. The parties agree, at the abstract level, that this lease as assigned, varied and extended should be given a businesslike interpretation to take into account both its language and the commercial circumstances it addresses, together with the objects it is intended to secure:  Wilkie v Gordian Runoff Ltd [2005] HCA 17; (2005) 221 CLR 522 [15] and that the proper approach to construction is to determine the meaning of the relevant provisions by what a reasonable person in all the circumstances known to the parties at the time of the contract would understand it to mean: Toll FGCT Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 169. A construction should not be chosen if it is most unlikely to have been objectively intended by the parties: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22]; Toll FGCT Pty Ltd [40] and Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181, 188 [11]. The objective should be to adopt a commercial construction of the lease: McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 [22] (Gleeson CJ) and Zhu v Treasurer of NSW [2004] HCA 56; (2004) 218 CLR 530 [82].

2. This brings me immediately to the issue of the proper construction of the holding over clause, 13.08.  Clambake contends for a construction to the effect that the clause converts a lease for a term of years to a monthly tenancy terminable on notice, and converts an obligation for the payment of an annual rent to an obligation to pay monthly rent, being 1/12th of the 'annual rent' payable at the date of the expiration of the term.  The monthly rent payable is not merely 1/12th of the annual rental but 1/12th of the aggregate of the annual rent, rates and taxes and insurance premiums payable so that in the holding over tenancy the actual monthly rent is greater than 1/12th of the annual rent payable before because it includes those further components.  The reason for this, submitted by Clambake, is that rates and taxes and insurance premiums are generally payable annually and, if not brought to account in a calculation of the monthly rent, there would be a prospect that a holding over tenant continuing in possession for less than a year might escape an obligation to make contributions to those particular outgoings if the tenancy ended before arrangements had been made to estimate the forthcoming year's outgoings and include components of them in the charges for outgoings as was the practice during the term of the lease.  Clambake, by its submissions, stresses that the provision, in cl 13.08, that the holding over tenancy should be 'otherwise on the same covenants, conditions and stipulations mutatis mutandis' as are contained or implied in the lease means that all the other covenants in cl 3 in relation to liability to pay for, or contribute to, the various classes of outgoings, and for that matter all other terms in the lease, are adopted and applied with only the modifications necessary to render them applicable to a monthly tenancy rather than to a lease for a term of years.  On this approach the rent and other moneys payable under the holding over tenancy would include all the components of outgoings which had been payable by the tenant during the term and those obligations would be subject to the other provisions of the lease, including the power of rent review which, as already noted, was expressly recognised as being applicable during the holding over period; see the Second Schedule to the lease, exhibit 4.

3. By contrast the construction put forward for Tipperary and Mr Anderson is that the only obligation for payment during the holding over period is for rent at 1/12th the aggregate of the annual rental, rates and taxes and insurance premiums payable by the lessee immediately prior to the expiration of the term.  On this construction, all other outgoings and any increases (or for that matter reductions) in rates, taxes or insurance after the expiration of the term of the lease are not brought to account in the calculation of the monthly rent payable during the holding over period.  This submission includes the proposition that all other components of outgoings (except for rates, taxes and insurance) provided for in other parts of cl 3, including management fees, maintenance and repair, caretaking, air conditioning running costs, etc, are excluded.  This submission proceeds to contend that the provisions in cl 13.08 which record that the obligations of the holding over tenant should be 'otherwise on the same covenants, conditions and stipulations mutatis mutandis' as are contained in the lease must be read subject to the specific limitation of the holding over rent to mean 1/12th of the aggregate of the annual rent payable at the end of the term plus rates, taxes and insurance. 

4. Accepting that submission would produce a not immaterial reduction in the financial obligation of the holding over tenant in comparison with the extent of the obligation asserted by Clambake.  The mathematical details of this difference are to be found in the written submissions of the parties and comprise:  management fees, $6,405.96; other variable outgoings, $95,281; GST charged on variable outgoings, $9,358.76; producing a total of $257,118 - see the table of outstanding rent and outgoings agreed and in dispute (excluding interest) prepared by Clambake dated 20 November 2008.

5. In response Clambake submits that the construction advanced for Tipperary and Mr Anderson is quite uncommercial and should be regarded as never having been the objective intention of the parties or of persons in the position of the parties at the time the lease was negotiated, assigned, extended or varied.  Counsel for Clambake submits that the effect of accepting the submission would be to exclude any prospect of recovery by the landlord during the holding over period of charges for cleaning (cl 1.01(1)); gardening (cl 1.01(2)); maintenance of fire equipment (cl 1.01(4)); lighting (cl 1.01(5)); security (cl 1.01(6)); garbage (cl 1.01(7)); air conditioning (cl 1.01.(8)); management fees (cl 1.01(9)); all related expenses (other than insurance) (cl 1.01(10); increase in rent due to the exercise of rent review powers (cl 2.03); increased rent following alterations (cl 2.04); outgoings other than rates, taxes and insurance (cl 3.03); services including electricity and water (cl 3.04); legal and other expenses arising through default (cl 3.08); and even, perhaps, any liability for interest for late payments (cl 3.09).

6. It is unnecessary to examine each of those particular alleged consequences of accepting Tipperary's construction.  Rather, I consider it is preferable and more realistic to concentrate on whether cl 13.08 does, as contended for by Tipperary and Mr Anderson, have the effect of  excluding from the computation of the moneys payable during the holding over tenancy, components of the pecuniary obligation of the tenant accepted as being recoverable during the term of the lease and why this might or might not be so.

1. The real significance of this development was not so much the absence or the threatened absence of fire insurance cover for Clambake, but the implications which the position adopted by the underwriters had for the adequacy of the fire protection system in the building as a whole. 

2. What the correspondence from the underwriters in October 2002 signified was that, at least initially, the assessor had doubts over whether or not the old fire sprinkler system was operational and formed part of the fire protection system of the entire premises.  His recommendation and the underwriter's demand for a sprinkler system to be made operational are significant, not because the underwriter and the assessor were of the opinion that the premises should have an operational fire sprinkler system but because it exemplified the misleading and deceptive tendency of the then extant condition of the building.  From then on there was even more reason for Clambake to disclose to Tipperary and to the other tenants that, despite any appearances, the old sprinkler system was not operational nor part of the overall fire protection system.  It means that Tipperary, and hence Owston, were still labouring under the effects of the uncorrected false impression gained from Mr Anderson's visit to the building in 1992 and, for that matter, continuing from then on.  It is an example of the continued influence of that misleading and deceptive conduct and in circumstances where one might have hoped that Clambake would have sensed and acted on the need to dispel it.  However, the fact that Clambake did not then disclose the substance of the recommendation from the underwriters or explain to Tipperary or to others that there was no operating fire sprinkler system as part of the fire protection system of the building only means that the influence of the original continuing misleading and deceptive conduct remained undiminished. 

3. A great amount of time and many submissions were devoted to the proposition that the failure of Clambake to disclose the substance of the underwriter's demands in October 1992 and to explain that there was no operating fire sprinkler system at the premises was a breach of an obligation or duty to disclose which itself amounted to misleading and deceptive conduct and, as I have earlier discussed, also negligence.  I have rejected the submissions that this constituted negligence and, insofar as Owston contends that this was a new or separate episode of misleading or deceptive conduct, all I can say is that the effect of the original misleading and deceptive conduct continued undiminished but in circumstances where there was even more reason than before for Tipperary to make the necessary correction.

4. Consequently, I am satisfied that Owston has made out its allegation that there was misleading and deceptive conduct by Clambake from about June or July of 1992, commencing with the inspection of the premises by Mr Anderson prior to taking the assignment of the lease, and continuing from then on until the fire.

5. There was unquestionably a degree of sensitivity and latent embarrassment in the answers given by Mr Cohen in the course of cross‑examination about this aspect of the case.  Some of his reasons advanced for the equivocal correspondence from Land Capital to the underwriters, and some of his answers about why he did not consider it necessary or appropriate to inform Tipperary or the other tenants about this development were unconvincing, but I think that this was the product of  apprehension about the possible consequences of that inaction.  I am satisfied that Mr Cohen, and by him, Land Capital and Clambake, did not intend to mislead or deceive Tipperary by remaining silent, and I am also satisfied that they still did not realise that Owston, through Mr Anderson, had reached the erroneous conclusion that a sprinkler system formed part of the fire protection regime. 

Land Capital

1. Land Capital was not, of course, involved in the transaction which led to Tipperary taking the assignment of the lease in 1992.  It did not come onto the scene until August 1995, although I am satisfied that, when it did, it should be treated as having all the knowledge of the material events and of the history which was possessed by Mr Cohen.  However, at no stage was Land Capital involved in any discussions with Mr Anderson, with Tipperary or anyone else on behalf of Owston or Tipperary, about the nature, extent or adequacy of the fire protection systems at the Claremont building.  The most that can be said about Land Capital is that from 1995 onwards until the fire it also failed to dispel the mistaken impression formed by Mr Anderson, and hence Tipperary and Owston, that the building had an operational fire sprinkler system.  However, Land Capital was not involved in any way in the formation of that wrong impression and, apart from acting as the agent of Clambake for the collection of the rent and attending to routine administrative tasks concerning the management of the property, it was not involved in further transactions with Tipperary.  In all its dealings with Tipperary Land Capital was the disclosed agent of Clambake and there is no basis upon which I could find that at any time it acted independently or on its own behalf.  It is true that, like Clambake, Land Capital from 1995 onwards until the fire never made any disclosure nor gave any explanation which would dispel the continuing effect of the false impression formed by Mr Anderson for both Tipperary and Owston when the lease was assigned, but there does not seem to me to have been any occasion for Land Capital to do so, otherwise than as agent for Clambake. 

2. From October 2002 onwards Land Capital, like Clambake, was aware of the view taken by the underwriters and their assessor concerning their requirement to recommission a sprinkler system at the premises and, like Clambake, Land Capital did not make any disclosure or explanation to Tipperary about this.  However, I do not consider that to be a separate act of misleading or deceptive conduct by Land Capital any more than the episode of such conduct by Clambake.  It follows that the claims for damages for misleading and deceptive conduct against Land Capital should be dismissed.

Mr Cohen

1. It is now necessary to address the claim against Mr Cohen that he was knowingly concerned in or a party to the alleged misleading or deceptive conduct. It does not necessarily follow that Mr Cohen had been knowingly concerned in, or a party to, that misleading or deceptive conduct because such accessorial liability under s 75B of the TPA requires proof that he was an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention: Yorke v Lucas (1985) 158 CLR 661, 670 and ACC v Michigan Group Pty Ltd [2002] FCA 1439 per Dowsett J [3003]. It has been said that the issue of whether a person accused of accessorial liability under s 75B must know that the contravening conduct was misleading or deceptive is not a settled one: King v GIO Australia Holdings Ltd [2001] FCA 304; (2001) 184 ALR 98 per Moore J [17] and there is controversy over whether or not it is sufficient that the knowledge or awareness be of the facts or circumstances which constitute misleading or deceptive conduct rather than an appreciation that the conduct is misleading or deceptive: Wheeler Grace & Pierucci v Wright (1989) 11 ATPR 40 ‑ 940, but whichever test might be the correct one, the facts in this case are that Mr Cohen did not know that Owston, through Mr Anderson, was labouring under the mistaken belief that an activated sprinkler system formed part of the fire precaution system at the premises, nor did he know that, in reality, the fire protection system did not comply with the UBBLs because of the unauthorised alterations to the north‑south wall.

2. Mr Cohen was oblivious to the false impression which the appearances of the building conveyed to Mr Anderson about the old fire sprinkler system being part of an approved and necessary fire precaution system for the entire premises. He did not personally contribute to that false impression in any positive or conscious sense. His failure to correct the misleading tendency of the appearances of the building in the setting which I have described, either then or afterwards, was not intentional nor could it be described as knowing participation in misleading or deceptive conduct because of his failure to realise the objective influence of the appearances. Accordingly, I see no basis upon which he can be found to be liable as a knowing participant in misleading or deceptive conduct either under the TPA or the FTA.

Causation

1. I must now consider whether that misleading and deceptive conduct caused Tipperary to take and maintain the tenancy and for Owston to place and leave the collection at the premises in order to establish that the damage suffered was 'by conduct of another person that was done in contravention of …' (s 52 or s 51A) as alleged. Mr Anderson said that had he known that the premises to be taken by Tipperary did not have an approved sprinkler system or a fire protection system which complied in all respects with the UBBLs and the terms of the approval for the building alterations conducted by Sectam, he would not have allowed Tipperary to take an assignment of the lease or allowed Owston to place any of the valuable collection in their premises. He also said that if at any time during the currency of the letting, including the holding over period, he had become aware that there was not an operating fire sprinkler system, or that the building did not comply with the UBBLs and the terms of the approval he would immediately have arranged for the valuable collection to be removed and stored elsewhere in some safe place.

2. In cross‑examination Mr Anderson was confronted with the suggestion that these assertions were simply being made with the benefit of hindsight and, however conscientiously asserted, had been influenced by knowledge of the fire and the destruction of the property.  It was suggested to him that he was very casual in relation to ascertaining the nature and extent of the fire protection system of the building when the tenancy was first taken and throughout its duration and therefore had no concern for whether or not an operating sprinkler system existed.  It was put to him that if he had attached importance to the presence of a fire sprinkler system in the way that he claimed in his evidence, it would have been inconceivable that he would not have inquired about the matter from Clambake or caused inquiries on his own behalf to have been carried out.  It was also pointed out to him that, at the many other locations where valuable property belonging to him, or to one or more of his companies, was known to have been stored in the past, there were none where there was an operating fire sprinkler system.  It was also suggested to him that, even if he had learned that there was no fire sprinkler system in this building, he would not have moved the contents of the collection until other suitable accommodation could have been found and steps had been taken to implement the onerous task of packing and moving the various artefacts. 

3. Several other attacks were made upon Mr Anderson's credit on these issues and generally, and I was pressed to heed the many judicial observations about the need to be cautious when scrutinising evidence that, had a person been warned of a particular risk, they would have acted differently, when that evidence is given after some major loss or damage has occurred ‑ see for example Rosenberg v Percival [2001] HCA 18; (2000) 2005 CLR 434.

4. Mr Anderson was emphatic that he would not have allowed Owston's valuable collection of antiques to be placed in the premises leased by Tipperary or, indeed, Tipperary to take the lease if he had known that, contrary to his belief, the fire precaution system did not include an operating fire sprinkler system.  He explained that the many other places where he or one or more of his companies had kept valuable objects were mostly at his private homes, apartments or offices, or at small individual storerooms or warehouses not forming part of a large commercial complex.  He said that in those places it was not usual and he did not expect to have a fire sprinkler system.  He clearly distinguished the premises at Claremont as being part of a much larger complex in which he expected, due to his general experience and as it turned out correctly, the applicable building regulations to require a fire sprinkler system.  Implicit in this assertion is the assumption, also underlying the provisions in the UBBLs, that once a building reaches or exceeds a certain size, and particularly where combustible materials under the control or responsibility of others are stored, the risk of fire and its consequences have reached the point where additional special fire protection measures, including an operating sprinkler system, are needed in the exercise of reasonable care. 

5. I believe Mr Anderson when he offered these explanations.  Not only are they cogent but I was satisfied that he was a person with a keen appreciation of the value of Owston's collection, very attached to it and anxious to ensure that all proper precautions were made for its preservation.  Indeed, the very reason for taking a lease of the premises in 1992 was to have convenient access in Perth to the collection in a secure location.  The suggestions that he displayed little outward concern for the importance of a fire sprinkler system, and did nothing on behalf of Tipperary, Owston or himself to verify the assumption which he had made about its existence are answered by the confidence which he had in his assumption that the fire sprinkler heads, which he noticed, did form part of an operating fire sprinkler system.  His knowledge, experience and his expectation about the requirements of regulations all coalesced to convince him that the building had, as he expected that it must have had, such a system.  Having reached that conclusion, it did not occur to him to doubt it.

6. As to the contention that his claim, that he would have removed the collection from the premises immediately if he had discovered that there was no fire sprinkler system, was no more than hopeful hindsight, Mr Anderson was emphatic that he would have moved the collection immediately.  Many attempts were made to undermine or refute this and I have been invited to disregard it on the basis that it is transparently self‑serving.  It was even suggested that it was of recent invention, not being specifically mentioned in the early letters of demand from Mr Anderson's solicitors before these proceedings (exhibits 288, 294 and 295).  However, I reject all these attacks on Mr Anderson's credit and observe that, subject to some human defects in recollection, having regard to the time which had passed (for example, the assertion that Jacquie McPhee had paid no rent) which were promptly and readily corrected, Mr Anderson was a credible witness whose evidence is reliable.  I am satisfied that he was conscientiously setting out to give a truthful account of events.  Impressively, he did not seek in any way to embroider or embellish the terms of his recollection of his original discussion with Mr Cohen at the inspection of the premises and he quite readily acknowledged that there had been no discussion nor inquiry, nor any comment made, about the fire precaution system then or on any other occasion.

7. I have given careful consideration to whether or not, unconsciously, Mr Anderson has simply come to the conclusion that he would have acted differently and moved the valuables had he discovered that a fire sprinkler system was not in operation.  Mr Anderson gave evidence and was cross‑examined for several lengthy periods during this trial and I had the opportunity to observe his evidence carefully and to read the voluminous statements and other documentary evidence adduced.  Mr Anderson struck me as being a man of very firm views with a tendency to make important decisions quickly, with a sense of confidence in his own judgment and in the reliance which he could place on others.  He was certainly a very experienced and successful businessman and a man of strong and definite opinions.  He did not want for lack of resources, or choice of alternatives.  He was able to, and frequently did, make far‑reaching decisions involving major activities and significant expenditure.  He displayed a tendency to act quickly and decisively.  It was also evident that, for people whom he respected and trusted, he was prone to take them at their word and place considerable reliance on their statements.  He expected others to trust him and he expected to be able to trust others unless something appeared or occurred to show that they were untrustworthy.

8. It is clearly the case that he believed, from his observations and experience, that there should be and was a fire sprinkler system at the Claremont buildings.  It is also clearly the case that he expected Mr Cohen, or someone else on behalf of Clambake, to tell him if there was not.  The entire tenor of his evidence, his impatient demeanour when confronted with questions suggesting the contrary, all demonstrated a keen and inflexible belief that it was the responsibility of Clambake, and Mr Cohen in particular, to tell him explicitly that there was no operating sprinkler system in this building.  In my view, had Mr Anderson discovered that, contrary to his belief, there was no operating fire sprinkler system at this building he would, in all probability, have become exceedingly angry and would have adopted the position that he had been seriously misled.  In that situation he is just the kind of man to act immediately to show his disapproval and to make other arrangements.  When he says that he would have immediately moved the goods out, no matter what may have been the difficulties or consequences, I think it is highly probable that he would have reacted in that way. 

9. In my opinion, he would have treated that discovery as demonstrating a breach of an obligation of good faith by Mr Cohen regardless of whether or not such a belief was justified, and terminated his relationship with Clambake as quickly as possible.  He had the resources to move the collection.  It could have been sent back to Sydney or other premises in Perth could probably have been found.  Mr Anderson is not the kind of man to wait for excuses or explanations.  I am satisfied that he would have acted and moved the collection.  Whether the items would have been any safer in the place or places to which they were transferred cannot be determined with any confidence but I accept Mr Anderson's evidence that he would not have left them in the storeroom at Claremont.

Summary of conclusions on fire claim

1. For these reasons, therefore, all the claims by Tipperary for damages against Clambake, Land Capital and Mr Cohen should be dismissed.

2. In relation to the claims by Owston, I am satisfied that the claims for damages for negligence, for breach of the OLA and for nuisance should also be dismissed but that Owston's claim against Clambake for damages for misleading and deceptive conduct has been made out and that the damages have been shown to be the value of the property destroyed by the fire, namely $14,625,400.

3. In relation to Owston's claim for damages against Land Capital and Mr Cohen, I have concluded that these should be dismissed.

4. In relation to the counterclaim by Clambake and Mr Cohen against Tipperary, there is no occasion for an award of any indemnity or contribution to be ordered in respect of any liability by Mr Cohen and, accordingly, that part of the counterclaim should be dismissed.  However, with respect to the counterclaim by Clambake against Tipperary in respect of any liability which Clambake has been found to have to Owston, I consider that Clambake is entitled to an order that it be indemnified by Tipperary for the extent of the liability which it has to Owston, namely $14,625,400, and that Clambake should have judgment against Tipperary for such an indemnity.

1. The claim that Tipperary sublet or parted with the possession of some or all of the leased premises to Owston without the consent of Clambake contrary to the terms of the lease has not been made out and, therefore, insofar as Clambake's counterclaim seeks damages or other relief in respect of that claim, it should also be dismissed.

2. This leaves, in its counterclaim, Clambake's claim for damages for the loss of an indemnity claimed to have been payable because of Tipperary's alleged failure to take out and keep in force in the joint names of Tipperary and Clambake one or more of the policies of insurance contemplated under cl 4.04(a)(i) or cl 4.04(a)(ii) as introduced by the amendments of 9 October 2008 and found in par 29 and par 30 of the amended counterclaim. I have concluded that the application to disallow these amendments should not be upheld and that a defence should be filed. There may be need for further refinement of this claim by amendment if it is to proceed. There should be a separate trial of these issues and an order to that effect will be made under RSC O 42 r 4 with a further order that this aspect of the case be listed for a directions hearing at a time to be fixed.

3. All other aspects of the counterclaim by Clambake, including its claim for an indemnity or contribution on the basis that Tipperary was a joint or concurrent tortfeasor should be dismissed.

4. I will, however, allow the parties time to consider these reasons before moving for any final orders whether in the rent action or on the fire claims.