Espere Pty Ltd v Herbert Anton Winkler and Another File No. 486 of 1988 Judgment No. 3672 Number of Pages 3 Breach of Terms of Lease

[1992] SASC 3672

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA FULL COURT Bowen J.(1), Master of the Supreme Court

CWDS
Breach of term of lease - lessor entered into possession - damages limited to date of entering into possession.

HRNG ADELAIDE, 15 October 1992 #DATE 15:10:1992
Counsel for plaintiff:             M.S. Blumberg
Solicitors:   Andersons Barker Gosling
No appearance by defendant

ORDER
Damages assessed.

JUDGE1 BOWEN, J. This action relates to claims, arising from a lease dated 5 January 1984, in which the plaintiff is the lessor and the defendants the lessees. In this action, the plaintiff seeks damages, under various heads, in respect of loss, which it claims to have sustained, as a result of the defendants vacating the premises and breaching the terms of the lease in various ways. The various forms of breach are set out in para.5 of the Statement of Claim. The extent of the loss, resulting from each of the alleged breaches, is set out in para.9 of the Statement of Claim. On 29 November 1991, Master Anderson entered judgment for the plaintiff against the defendants, for damages to be assessed. This matter has come on before me today for the purpose of assessment of the damages. Mr Blumberg of counsel appeared for the plaintiff and there has been no appearance by, or on behalf of, the defendants. Before proceeding with the evidence as to the loss as a whole, Mr Blumberg asked that I make an order, pursuant to Rule 75.02. (c) of the Supreme Court Rules, that a point of law raised on the pleadings be disposed of before proceeding with trial. The matter, alluded to by Mr Blumberg, was whether the plaintiff was, in the circumstances of this case, entitled to damages in respect of the period, after it went into possession of the subject premises, on 3 October 1985. Since the matter is proceeding before me as an assessment and the defence filed on behalf of the defendant does not raise, or plead, the matter raised by Mr Blumberg, strictly speaking, the matter does not arise on the pleadings. Nevertheless, in the circumstances of the case, it seemed to me, in the interests of expedition and justice, appropriate for me to make a decision on the matter as requested. The lease was tendered and letters from the defendants' solicitors to the plaintiff dated 29 August 1985 and from the plaintiff's solicitors to the defendants' solicitors dated 17 September 1985 were also tendered. Mr Blumberg then referred to Shevill and Another v The Builders Licencing Board, 149 CLR, 620. That case concerned a lease, which contained a Clause 9 (a), which was substantially the same as Clause 4 (a) of the subject lease. Mr Blumberg did not seek to distinguish the clause in any way. In that case, the Chief Justice, in the High Court, at p.627 said; 'It is clear that a covenant to pay rent in advance at specified times would not, without more, be a fundamental or essential term having the effect that any failure, however slight, to make payment at the specified times would entitle the lessor to terminate the lease.' His Honour also went on further on that page:- 'In my opinion it does not follow from the fact that the contract gave the respondent the right to terminatae the contract that it conferred on it the further right to recover damages as compensation for the loss it will sustain as a result of the failure of the lessee to pay the rent and observe the covenants for the rest of the term.' At p.628, his Honour also went on to say that 'The words of Clause 9 (a) -', and I interpolate that equates with 4 (a) of the present lease, 'afford no support to the respondent's argument.' 'In my opinion these words refer, distributively, to the three different sorts of circumstances in which the provisions of clause 9 (a) take effect.' 'If this view of the clause is correct the only remedy of the respondent in the present case was to recover arrears of rent.' 2. Mr Blumberg also drew my attention to the case of The Progressive Mailing House Proprietary Limited v Tabali Proprietary Limited, 157 CLR, 17. In that case the High Court was again considering such a clause and, this time, gave relief. However, at p.32 Mason J said; 'In support of this submission the appellant points out, correctly, that repudiation of a contract is a serious matter and is not to be lightly inferred and that neither a breach of a covenant to pay rent nor a breach of a covenant to repair, without more, constitutes a breach of a fundamental term, nor amounts to a repudiation of a lease.' Mr Blumberg then dealt with the present case and asked whether I found that the actions of the defendants amounted to repudiation of the lease. He suggested that there were five matters, including the failure to pay rent, which had to be considered. He called Mrs Georgoulopoulos, a director of the plaintiff company, to establish the facts in relation to each matter. I consider this matter on the basis of her evidence, which I accept. The rent was due on the fifth day of the month, and as at the date the plaintiff went into possession, there was one payment of rent in arrears. The letter from the defendants' solicitors to the plaintiff, which is Exhibit P2, says that the defendants are facing 'an acutely embarrassing financial situation.' It does not, however, say that they will not pay the rent. The letter from the plaintiff's solicitors to the defendants' solicitors, which is Exhibit P3, asks for payment by 3 October. Mrs Georgoulopoulos said that the monies were not paid by that date. Therefore, she told the sub-tenants to pay rent to the plaintiff direct and, thereby, the plaintiff went into possession. On its own, such action could not amount to repudiation on the basis of the High Court authorities. There were, however, four other matters, which Mr Blumberg asked that I should consider and determine; whether in conjunction with the failure to pay the rent these amounted to repudiation of the lease by the defendants. The first matter was an allegation that the defendants were in breach of Clause 2 (i) of the lease. That provision provides that the lessees were 'not to leave or deposit or suffer to be left or deposited outside the demised premises any goods or chattels of any kind whether in the nature of display or otherwise.' This matter was not referred to in the plaintiff's solicitors letter, Exhibit P3. Mrs Georgoulopoulos gave evidence that there were two motor vehicles, which were left in the carpark outside the subject premises. She did not give evidence as to when the vehicles were first known to have been there, nor in fact when they were removed. More importantly, however, there was no evidence that this matter had been brought to the attention of the defendants prior to 3 October 1985. The second matter to be considered in conjunction with the failure to pay rent is an alleged breach of para.2 (f) of the subject lease. The letter of the plaintiff's solicitors, Exhibit P3, refers to such a breach. However, reference to the lease itself shows that paragraph 2 (f) has nothing whatsoever to do with that type of matter. I am assuming, for the purpose of this matter, that it should have been a reference to Clause 2 (l), as mentioned in para.5 (g) of the Statement of Claim. Firstly, there is no evidence that the breach of Clause 2 (l) of the lease was brought to the defendants' attention prior to 3 October 1985. Secondly, I would query whether it was appropriate to suggest that there was a breach of Clause 2 (l) in any event. Para.2 (l) of the lease deals with the maintenance, cleansing and upkeep of the interior of the demised premises. The subject door was, in fact, a rear door, which I am assuming was an exterior door. The third matter raised relates to a leaking roof. The letter, P3, gives notice of a breach of Clause 2 (r) of the lease, in failing to advise the plaintiff of the fact that the roof was leaking. There was no evidence adduced before me that indicates that the matter had been brought to the attention of the defendants prior to the letter P3. Again, I would query whether, in fact, Clause 2 (r) would cover a matter such as the leaking roof. The lease itself gives the lessor a power to enter on the premises for the purpose of inspecting the premises as to their state of repair. Clause 2 (r) of the lease requires the lessees to give the lessor 'prompt notice in writing of any circumstances, including any accident to, or defect or want of repair in, any service to or fittings in the demised premises.' I would certainly not consider that the roof was 'any service to or fittings in' the premises. The fourth matter relates to an allegation that five fire extinguishers were missing when the plaintiff went into possession. Firstly, I would point out that this is not one of the alleged breaches of condition of the lease pleaded in the Statement of Claim. Nor is it mentioned in the letter, Exhibit P3. Finally, there is no evidence that this subject matter was drawn to the attention of the defendants at all prior to 3 October 1985. In all of these circumstances I do not consider that the defendants had repudiated the lease as at 3 October 1985.