Ellis's Town House Pty Ltd v Botan Pty Ltd

Ellis's Town House Pty Ltd sought leave to appeal from a judgment of the District Court of New South Wales, which had awarded damages to Botan Pty Ltd for breaches of the lessor's painting and repairing covenants under a lease. The appeal concerned a sum less than $100,000 and did not raise any issue of principle, question of general importance, or apparent injustice.

The primary legal issues before the Court of Appeal were whether the District Court had erred in awarding damages for the breach of the landlord's covenants to maintain the motel premises in good condition and serviceable repair, and to paint and varnish certain parts of the premises. Specifically, the court had to determine whether damages were appropriately awarded on a 'costs of cure' basis, given that the tenant had not yet incurred any expense in remedying the landlord's defaults and the landlord contended that the tenant had suffered no actual loss.

The Court of Appeal reasoned that the established measure of damages for breach of a landlord's repairing covenant, where the tenant has not yet incurred the cost of cure, is generally the cost of carrying out the necessary work. This approach, often referred to as the 'costs of cure' measure, is favoured over the 'difference in value' measure unless the cost of cure is wholly disproportionate to the benefit gained by the tenant. The court found no error in the District Court's application of this principle and concluded that leave to appeal should be refused.

Accordingly, the summons seeking leave to appeal was dismissed with costs.