Gimtak Pty Ltd v Cathie & State of Victoria
[1998] VSC 6
•29 July 1998
SUPREME COURT OF VICTORIA
CAUSES JURISDICTION Not Restricted
No. 5191 of 1995
GIMTAK PTY LTD Plaintiff v CATHIE AND THE STATE OF Defendants VICTORIA JUDGE: SMITH , J. WHERE HELD Melbourne DATE OF HEARING: 27 to 31 March, 1 to 16 April, 1998 DATE OF JUDGMENT: 29 July, 1998 MEDIA NEUTRAL CITATION [1998] VSC 6 CATCHWORDS: Lease - tenant’s covenant to repair - tenant’s covenant to
re-alter to original condition.
APPEARANCES: Counsel Solicitors For the Plaintiff Dr C.L. Pannam,QC Aitken Walker & and Mr P. Best Strachan For the Defendant Mr W. Lally, QC Ronald C. Beazley and Mr M. Clarke
HIS HONOUR
The Proceedings
In these proceedings the plaintiff Gimtak Pty. Ltd. ("Gimtak") seeks damages
from Ian Robert Cathie as Minister administering the Education Act 1958 and the State of Victoria ("the defendants") for alleged breaches of covenants in a lease entered into by the first defendant on 18 December 1985.
Background History
The lease was for a term of ten years commencing on 1 August 1984 (“the second lease)”. It related to land situated at 46-60 Albert Street, Preston ("the premises"). At the time the lease was entered into, the premises were occupied by a teaching institution then known as the Preston College of T.A.F.E.. At the time the Council of the Preston College of T.A.F.E. was a body corporate which ran the College.
The College’s connection with the site had in fact commenced in 1973 when, as the Preston Institute of Technology, ("the Preston Institute") it leased and occupied what has become known in the case as the “north building” on the site. The Preston Institute entered into a lease of the whole of the premises on 1 August 1974 for a term of 10 years (“the first lease”). That term expired on 1st August 1984 by which time the Institute had become a College of T.A.F.E.. The Preston College of T.A.F.E. remained in occupation from 1 August 1984 until the execution of the second lease, on 18 December 1985 and continued in occupation for the duration of that lease. During that lease there were further organisational changes; for example, the Preston College of T.A.F.E. became part of a larger institution, the Northern Metropolitan College of T.A.F.E., in 1988.
In 1974 when the Preston Institute first leased the whole of the site, there were buildings on it that had been erected as factory buildings in the 1930s. The two main buildings were known as the north building and the south building. Of relevance also were some buildings immediately south of the south building which were described as a caretaker's residence, a canteen and a scrap metal building and store. During the first lease substantial changes were made to the premises involving an expenditure in excess of $2m. I will refer to these changes in more detail later but the changes
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included increasing the supply of electricity to the buildings on the site, demolishing the caretaker's residence, the canteen and the scrap metal building and store and erecting two buildings in their place known as the drain-laying and sheet-metal buildings. It also involved the construction within the buildings of extensive partitioning and false ceilings, some mezzanine floors, a larger toilet block, booths for welding and the like, with associated gas piping, and the construction of classrooms.
Policy changes within the Education Department resulted in the College ceasing to occupy the premises at the end of the second lease. In leaving the premises, the tenant removed some items of equipment without making good the areas from which they were removed.
Shortly prior to the expiration of the term, on 26 July 1994, Gimtak gave notice requiring the lessee to comply with a number of specific terms of the second lease concerning reinstatement of the premises and repair of damage and also requiring the removal of all fixtures, fitting and floor coverings and the realteration of alterations made by the lessee with a view to returning the premises to their "original condition". The defendants have declined to make any response to that notice although they concede that in certain areas to which I will refer they are obliged to do so. In essence, the plaintiff seeks compensation for the alleged failure of the defendants to comply with the obligations it says were imposed upon the first defendant by the lease to make good the premises on its departure in the areas referred to in the notice.
Terms of the Lease
There are several terms of the second lease which are of significance in
this case.
Clause 4.7 of that lease provided
4.7 The Lessee shall at all times during the term at the Lessee’s own expense and without any notice or demand from the Lessor -
(a) well and sufficiently and substantially repair, cleanse, maintain, mend and keep as at the commencement hereof the demised premises and all additions made
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thereto, damage by fair wear and tear fire flood lightning storm tempest Act of God riot civil commotion explosion aircraft accident objects falling from aircraft operation of war and inevitable accident excepted PROVIDED THAT the Lessee shall not be liable to do work of a structural nature except such as may be occasioned by the act of neglect or default of the Lessee or by its use or occupancy of the demised premises;
(b) make good any defects or damage to the demised premises and the building or any part thereof or any facility or appurtenance thereof or to the Lessor or any occupier of any part of the building occasioned by any act neglect want or care misuse or abuse on the part of the Lessee or its employees agents or contractors customers invitees or persons claiming through or under the Lessee or otherwise occasioned by any breach or default of the Lessee hereunder;
(c) to (f) ...
(g) maintain in good order and condition all painted papered or otherwise treated or decorated external and internal portions of the demised premises and within the last three months of every third year of the said term as well as within the last three months of the final year of the said term to repaint re-paper or otherwise treat and decorate as before;"
Another significant provision is clause 8. It provided, inter alia,
"8.2(a) The Lessee shall at the expiration or sooner determination of this lease peaceably surrender and yield up unto the Lessor the whole of the demised premises and every part thereof clean and free from rubbish and in a state of repair order and condition which is in all respects consistent with the covenants on the part of the Lessee herein contained;
(b) If the Lessee shall not have done so as of right under any provision hereof the Lessee shall if required so to do by the Lessor remove from the demised premises within fourteen days from the expiration or sooner determination of the term hereof any fixtures, fittings and floor coverings (to which such requirement shall relate) erected or installed by the Lessee during or prior to the term hereof and shall make good any damage whatsoever caused to the demised premises by such removal and if required by the Lessor shall re-alter any alterations made by the Lessee so that the demised premises shall be converted back to their original condition provided always that the Lessor may at its option itself cause any such fixtures or fittings to be removed and any such damage to be made good and any such alterations to be so re-altered and may recover the costs thereof from the Lessee as a liquidated debt payable on demand.
Principal Issues
The plaintiff alleges that clause 8.2(a) in combination with clauses 4.7(a), 4.7(b), 4.7(g) required the defendants to yield up the whole of the demised premises and every part of them clean and free from rubbish and in a state of repair, order and condition in all respects consistent with the covenants on the part of the Lessee - in
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particular, those, contained in clauses 4.7(a), 4.7(b) and 4.7(g). Thus it is said that the defendants were required to repair, clean, paint and reinstate the premises and make good any defects and damages to the premises occasioned since 1 August 1984 by any act, neglect or want of care, misuse or abuse on the part of the defendants or the College. It is also put that these clauses required that the defendants within the last three months of the final year of the term of the lease to re-paint, re-paper and otherwise treat and decorate the premises to the condition existing as at the last time of any painting, papering or treatment or decorating of the premises. The plaintiff alleges that the defendants breached these requirements.
The plaintiff also alleges that the defendants breached clause 8.2(b)by failing, after the request of the plaintiff, within 14 days after the expiration of the second lease to remove fixtures, fittings and floor coverings erected or installed by the defendants or the College as and from 1 August 1974 and also failed to realter the alterations made to the demised premises by the defendants and the College since that date to convert the premises back to their "original condition". The plaintiff asserts the original condition is to be established as at 1 August 1974 subject to one qualification to which reference will be made later.
I note that the plaintiff pleaded estoppels in support of its construction of
the lease but, in the course of the hearing, abandoned that part of its case.
So far as the measure of damages is concerned, the plaintiff's case is that the method of assessing damages for breach of clause 8.2(a) is that traditionally applied to breaches of covenants to repair namely the cost of repairs (Joyner v. Weeks [1891] 2 Q.B. 31). On the other hand if breach of clause 8.2(b) is established, the plaintiff submits that the proper measure of damage is the difference between the value of the property as it was handed over by the lessee to the plaintiff (evidence of which is to be found in the price received by the lessor on selling the property) and the value of the property on the basis that the required works had been carried out by the defendants. The plaintiff concedes that in determining the value of the property on the basis that the covenants had been complied with, it could not argue that works should
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be carried out beyond what was necessary and sufficient to achieve the commercial purpose of the covenant which had been breached even though the covenant itself may have required different and more extensive work. It is put that the commercial purpose of the covenant was to enable the lessor to have the lessee restore premises to a condition that would be commercially lettable. The plaintiff does not concede that the claim involves any overlap of compensation but this would need to be determined. The plaintiff has supplied a list of details of the work that it submits would have been needed when the premises were delivered up to restore the premises to a condition where they were lettable as a warehouse or factory.
The parties are in dispute about the construction and operation of the
above clauses of the second lease .
On the question of the measure of damages, the parties are in agreement as to the appropriate measure of damages depending on which covenant is breached. Counsel for the defendants was concerned to make submissions raising matters that would need to be considered when assessing damages. For example, they were concerned to make the point that it will be vital to establish the date at which the "original condition" is to be established. My attention was also drawn to the danger of double-dipping and the need to establish a causal connection between the alleged breach of covenant and any damage. Reference was also made to the possibility that there may be situations where there is a breach of both the repair covenant and the covenant to realter. The defendants have conceded, however, that if the damages could be assessed on either basis in respect of a particular failure to repair or realter, the larger figure should be awarded to the plaintiff. They have also conceded that if, on a valuation basis, it was held that the property was worth more in 1994 than it was in 1984, then the repair basis should be the one used.
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Preliminary Determination of Issues
It will be apparent that ultimately it may be necessary to consider the various items of work one by one and determine whether any failure on the part of the defendants to do the work referred to constituted a breach of a particular covenant. The parties, however, have identified some key issues which once resolved may significantly narrow the ambit of any further investigation and hearing that may be required. They have submitted to me an agreed statement of issues in dispute. On 3 April 1998, I ordered that they be tried at the hearing of the proceedings. It is envisaged that I will remain in control of the litigation and that in light of the decisions I reach in respect of those questions, further directions can be given about the conduct of the matter including the possibility of the reference out of further questions to a referee.
To avoid any hypothetical approach to the answering of the questions, the parties provided a list of sample items chosen to highlight the various issues of construction that need to be resolved. I propose in due course to answer those questions and then to apply those conclusions to the sample items. Before doing so, however, it is convenient to identify the particular issues of construction which are of more general application and which will affect the answers to be given to the questions. The particular issues of construction to be considered first, I suggest, are the following:
1. The meaning of the word "lessee" in clause 8.2(b).
2. The meaning of the word "alterations" in clause 8.2(b).
3. The meaning of the expression “fixtures, fittings and floor coverings” in clause 8.2(b).
4. The meaning of the expression “prior to the term” in clause 8.2(b).
5. The meaning of the expression "original condition" in clause 8.2(b).
6. Whether there are preconditions to the lessor’s entitlement to compensation under clause 8.2(b).
7. The construction of clause 8.2(a).
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After I have dealt with those issues, I will then turn to the particular sample items and the questions that have been raised.
Before turning to the principal construction points concerning the second
lease, the issue of the factual matrix for construction purposes should be addressed..
Construction of Key terms - factual matrix
The parties sought to rely on a variety of facts which they submitted formed the background factual matrix in light of which any uncertainties in the language of the covenants should be resolved (Codelfa Construction Pty. Ltd. v. State Rail Authority of New South Wales (1982) 149 C.L.R. 337; B. & B. Constructions (Aust.) Pty. Ltd. v. Brian A. Cheeseman & Associates Pty. Ltd. (1994) 35 N.S.W.L.R. 227). The parties sought to refer to the facts relating to the previous history between them and facts known to the parties as a result of negotiations before the second lease and other matters said to be part of the common knowledge of the parties at the time they executed the second lease. The plaintiff and the defendants have submitted to me statements of the facts forming the background matrix of facts common to both parties, from which I distil the following facts.
1. Gimtak and the Preston Institute entered into a lease dated 10 October 1973 of a portion of the demised premises.
2. In June 1974 the same parties entered into a lease for the whole of the premises commencing on 1 August 1974. That lease contained an option for a further ten year term.
3. In relation to the premises leased under the 1974 lease the following facts of relevance concerning the premises and known to the parties to the second lease should be noted:
(a)
The demised premises comprised two substantial warehouse shells and associated buildings.
(b)
Under clause 19 of the first lease (see below in discussion of “original condition”) work was to be done
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by the plaintiff on or before 1 August 1974. As to that
work the following was not carried out by that date:(i) demolition of the old house and sheds and scrap metal store;
(ii) repair of the structure, roof, walls, windows, floors, ceilings, lighting and power of the small wooden building known as the canteen building and internal and external repainting of that building;
As to work to be done under that clause by 1 January 1975, the following was not carried out by the plaintiff by that date:
(i) restoring the northern and southern walls at the main factory area in Stramit or a similar building material.
(ii) the renovating and upgrading of the toilets to the satisfaction of the Maintenance Officer of the Preston Institute of Technology.
(c) The roof of the southern building was in a state of disrepair in parts as at 1 August 1974 and the toilets in the southern building were then in a semi-demolished and unusable state.
4. During the period of the first lease the parties adopted the following positions in relation to matters such as rights to fixtures.
(a)
On 15 September 1980 Gimtak in giving consent to the erection of a new maintenance building required as a condition that the fixtures be deemed to be part of the building on the demised land. There was no requirement imposed that the building be pulled down
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and the pre-existing weatherboard canteen reinstated. The Preston Institute opposed the condition that fixtures which can be removed form part of the building. On 22 September 1980 Gimtak confirmed that the fixtures referred to above did not include those considered to be chattels which could be removed without damage to the building and were not part of the building.
(b) In seeking permission to build a sheet-metal and drain- laying building on 2 July 1981 the Preston Institute stated that it wanted to retain the right to fixtures fittings equipment and machines. In a reply on 30 July 1981 Gimtak consented to the erection of the new building on the basis inter alia that items of fixtures usually deemed to be chattels should be excluded from being part of the building if they could be removed without damaging the building. There was no requirement in the consent to the erection of the drain-laying and sheet-metal building that it be pulled down at the end of the lease and the cottage reinstated.
5. In and between 1 August 1974 and October 1983 over $2m. was spent on works carried out at the premises ranging from demolition and building to carpeting.
6. There were no clauses in the 1974 lease requiring reinstatement of the premises at the end of the lease. Thus, if the lessee failed to exercise the option to vacate the premises under the lease prior to 18 December 1985, the plaintiff could not require any alterations then made to be realtered, any building to be demolished or buildings to be re-built.
7. The teaching institution, at the time the second lease was entered into, had been in continuous occupation of the
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premises as the Preston Institute and Preston College from at least 1974 and under the terms of the first lease was in fact the lessee.
8. As from 1 August 1984 the College had been in occupation of the premises. It was over-holding as a monthly tenant.
9. By August 1984 the changes made to the premises had transformed them from warehouse shells and associated facilities to a highly specialised technical education institution with a wide variety of fixtures and fittings, plant and equipment and new buildings reflecting that use. If left in that state the premises would be suitable only for use as a technical educational institution.
10. The rental paid during the first lease increased but in doing so did not reflect any improvement in value to the property. At the expiration of that lease, Gimtak kept the benefit of all improvements and new buildings.
11. Prior to the execution of the second lease, discussions occurred between Mr. Feder for the plaintiff and Mr. Carter from the Education Department on topics such as the amount of rent, the length of the term, payment of rent on capital improvements and the possible purchase of the premises or an option to purchase. There was no discussion of what appeared in clause 8.2(b). It first appeared in the draft prepared and submitted by the plaintiff's solicitors to the Department of Education in August 1984.
12. It was the intention of the College to do more work on the property and expand the site and not to vacate the premises
13. It was an assumption common to all parties that whoever formally entered into the lease as lessee, the premises would be occupied by the College for the duration of the lease. All
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communications between those involved which were relevant to the lease made it clear that it was the College which was to continue in occupation and neither side envisaged that it would ever vacate.
14. The initial advice on 5 July 1984 from the Education Department was that the second lease should be in the name of the College as lessee and it provided a form of attestation clause. As a result the first draft of the second lease named the College as lessee. Subsequently, on 19 July 1985, the Education Department advised that the lessee should be known as "Ian Robert Cathie as the Minister for Education administering the Education Act 1958" and the proposed definition of lessee was amended.
15. The common understanding of the parties was that the Minister was replacing the College as lessee. While of legal importance, the reality was that the College would remain in occupation and the ultimate burden of paying the rent and the ultimate financial responsibility would remain with State Revenue whoever executed the lease.
16. In and between June 1984 and December 1984, the College wanted the premises to be purchased and unsuccessful discussions took place as to the possible purchase of the property by the Education Department.
I turn then to the principal construction issues that have emerged in this
case.
The Meaning of the Word "Lessee"
The second lease as executed referred to the "lessee" on the cover sheet
as "Preston College for Technical and Further Education". On the first page of thelease, the plaintiff was identified as "the lessor". The Minister was referred to as the
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other party to the lease but not expressly identified as the lessee. The expression "the
Lessee" was defined as follows:
" 'The Lessee' means and includes the Lessee and the successors in title
and permitted transferees and assigns of the Lessee and (where not
repugnant to the context) the servants agents and invitees of the
Lessee;"
The use or purpose of the demised premises identified in the schedule to the lease was
"Apprenticeship Trade Annexe for the Preston College of T.A.F.E".
The plaintiff, in the end, has not argued that the lessee was the institution known as the Preston College of T.A.F.E. Instead the plaintiff submits that the "College" was plainly an invitee of the lessee, the Minister of Education. The “College” was not a servant or agent. It was there by invitation. It was there on a commercial or a business basis and it is clear from the discussions between the parties and from the schedule to the lease that it was assumed that the "College" was going to continue to occupy the premises throughout the second term. Thus the plaintiff submits that the definition of "lessee" includes the "College" as an invitee, except where the context otherwise required, wherever the word "lessee" appears in the lease.
Counsel for the defendants submit firstly that while the "College" comes within the definition of lessee on the basis that it was an invitee, that construction creates a problem for the plaintiff because it would not permit the term lessee to be used in a retrospective way. Thus as I understand the argument there is common ground that "lessee" extends to the "College". The defendants submit, however, that the lease incorporated invitees prospectively - that is the “College” on execution of the lease, became the invitee of the Minister from then onwards - either 18 December 1985, or 1 August 1984.
This issue assumes significance because of the plaintiff's reliance on
clause 8.2(b), the fact that the "College" was not a party to the second lease and theMinister was not a party to the first lease. The plaintiff argues that clause 8.2(b) is
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intended to have retrospective effect in relation to "fixtures fittings & floor coverings" installed prior to the second lease and that, therefore, the expression "lessee" should be interpreted to enable that to occur. As stated above, the defendants submit that assuming "lessee" in that context includes the "College" as an invitee, it could only do so prospectively and thus references to fixtures fittings and floor-coverings installed by the lessee and alterations made by the lessee could only refer to any such items installed or made by the "College" after it became an invitee of the Minister other than those installed prior to the term of the second lease which were disputed at the time.
The plaintiff submits that in clause 8.2(b), the word "lessee" is used to identify persons and is capable of referring to persons who from 1984 happened to be invitees and who had prior to the lease installed fixtures fittings and floor coverings. In other words, the term "invitee" is used to identify the person or persons who happen to be invitees during the lease. In the case of the institution, then referred to as the “College”, the clause identifies it as an invitee so the clause may then apply in respect of any fixtures fittings and floor-coverings, for example, installed by the institution prior to the term of the second lease.
It should be noted that the submissions of the parties referred to the teaching institution as the “College”. In doing so they were as I understand them referring to the institution in its various forms. This is understandable and a sensible approach. The parties through the relevant periods do not appear to have sought to distinguish between the various forms of the teaching institution.
The precise legal status and identity of the institution at different times is unclear. I was referred to numerous proclamations which record changes over the relevant period. In view of the way the arguments were presented it is unnecessary to consider them in detail. Counsel did not invite me to do so and did not embark on any detailed analysis of them. I note, however, that in the various gazettes, reliance is placed on the concept of an institution which exists, functions and uses property. It is reasonable to assume that as between the contracting parties, the same sort of perception would have applied - that there existed an identifiable educational institution
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that did things on the premises, including the installation of fixtures and fittings and the making of alterations which were funded by the department. In addition, from the point of the view of the parties, there was no change in occupation of the premises from a practical point of view. As counsel for the defendant stated “the institutional facility remained essentially the same, although it went through changes”. Counsel for the defendants accepted the proposition that in reality there was the same occupant and the same source of funds to meet the obligations, namely, State revenue. The same institution but with a different name and controlling council was in occupation throughout the terms of both leases.
Ultimately what has to be determined is what the parties meant by the
reference to "lessee" in Clause 8.2(b).
In my view the clause was intended to impose an obligation on the Minister to remove fixtures fittings and floor coverings installed during the second lease and prior to that lease by a person or persons identified by the expression "lessee". It also acknowledged a right on the part of the Minister to remove stock in trade and fixtures and fittings of "the lessee". It was clearly not intended that the right be limited to those installed by the Minister during the second lease.
It must be borne in mind that the second lease as originally drafted was drafted on the assumption that the institution, referred to as the College, would be the lessee. The drafts of the lease prepared at the time the College was to be the lessee defined the term "lessee" as meaning and including:
"The lessee and the successors in title and permitted transferees and assigns of the lessee and (where not repugnant to the context) the Education Department or the State of Victoria, servants agents and invitees of the lessee;".
When it was decided that the lessee should be "shown as" the Minister for Education, the Education Department suggested that the definition of the lessee be amended by deleting the words "the Education Department of the State of Victoria". It was not suggested at that time that any alteration be made to clause 8.2(b) and it would be
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surprising if it was intended by the parties to the lease that its operation would change.
Its operation in fact does not change if the approach is taken that the references to "the
lessee" are simply there to refer to persons who have installed fixtures fittings floor
coverings or altered the premises under both leases. That interpretation necessarily
follows in my view from the fact that the clause purports to set up a regime in relation to
the removal of fixtures fittings and floor coverings which are described as "erected orinstalled by the lessee during or prior to the term hereof".
If the defendants’ interpretation be correct it has the result that the
reference to "prior to the term hereof" is essentially meaningless, yet the parties had
agreed that such fixtures fittings and floor coverings were to be subject to the regime
set out in that clause. The defendants' interpretation would also prevent the Minister
removing fixtures fittings and floor coverings installed by the institution at public
expense prior to the 1985 lease notwithstanding that that lease permitted it.Plainly, at least, in that part of the provision dealing with fixtures, fittings and floor coverings, it is intended that the clause should operate retrospectively beyond the time of the commencement of the second lease and accordingly the term "lessee" should be interpreted in a manner that would enable that to occur. Thus the correct approach in my view is to treat the term "lessee" as a shorthand expression to cover both the Minister and the institution. I note also that the right to remove fixtures and fittings appears to have been exercised by and on behalf of the lessee in respect of fixtures and fittings installed prior to the second lease. The defendant would appear to be blowing hot and cold in its interpretation on this issue. The defendant concedes that it must make good any damage caused by that removal in accordance with clause 8.2(b).
Counsel for the defendants also submitted that Clause 8.2(b)
acknowledged that during the term of the second lease there would be some fixtures
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and fittings that had been installed under a prior lease when the "College" had carried out those renovations and had sought consent in respect to them. It otherwise, however, did not require going back to any earlier time. It was not retrospective in that sense. Counsel submitted that those fixtures which were installed prior to 1984 and which were the subject of dispute in that earlier time, were fixtures which the lessor could require to be removed.
I am not persuaded that the this interpretation, which would limit the reference in Clause 8.2(b) to fixtures and fittings which were the subject of dispute which had been installed during the earlier term is correct. The interpretation, of course, accepts the sort of construction of “lessee” I have referred to above. I can however, find no persuasive basis upon which to adopt the limited interpretation which limits the scope to fixtures in dispute. It was an approach the parties might have considered when drafting the lease. They did not, however, spell it out.
Bearing these points in mind it seems to me that the parties should be regarded as having intended that the word “lessee” in Clause 8.2(b) would include by reference to “servants, agents and invitees of the lessee” the institution, then known as a T.A.F.E. College. Alternatively, and this was not explored in argument, assuming that the lessee was the Minister for Education acting for the Crown, it may be that those persons who carried out the installation of fixtures, fittings and alterations under both leases were servants and agents or invitees of the Minister for Education of the day Alternatively, assuming the Minister of Education of the day acting for the Crown funded the installations, it might be argued that the clause was intended to cover fixtures fittings and floor coverings which the Minister of the day paid for prior to the second lease. These analyses, however, would require further investigation before they could be adopted. They have not been the subject of argument
The plaintiff's construction does, however, raise another issue. The liability for a liquidated debt payable on demand in respect of the removal of fixtures fittings and the making of alterations by the lessor, imposed by the latter part of clause 8.2(b), could not impose an obligation upon anyone other than a party to the lease,
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namely the Minister, and through him the Crown and could not impose an obligation on persons not a party to the lease. That is an example, however, of the flexible nature of the definition. It is a situation where the contextual limit referred to in the definition clause will alter the definition. The same result applies to the reference to "lessee" in clause 8.2(a) where an obligation is placed upon the lessee to peaceably surrender and yield up the premises. On the other hand the broader definition will operate in clause 7.4 which gives the lessor the right to remove any stock in trade and other fittings and fixtures "of the lessee". I note also that the reference to "lessee" in the first two lines of 8.2(b) would for similar reasons refer to the Minister only.
Another example of the way the word "lessee" is used is to be found in clause 4.7(a), quoted above, which imposes an obligation upon the Minister to repair the demised premises and all additions made thereto. The proviso excuses the Minister from liability to do work of a structural nature except such work as is occasioned by the act of neglect or default of "the lessee or by its use or occupancy of the demised premises". Plainly the occupant is to be the institution and the reference in the proviso to any act of neglect or default of the lessee should be construed as a reference to the Minister and the institution and also of course any other invitee or servant or agent of the Minister.
Construction Of Clause 8.2(B) - “Alterations”
The Plaintiff submits that the phrase “alterations made by the lessee” in Clause 8.2(b) refers to all changes made to the premises of whatsoever kind by the lessee. The Plaintiff submits that the word “alteration” is not a term of art but takes its meaning from the context in which it is used. It submits that Clause 8.2 is a self- contained code which should not be controlled by other provisions which serve other purposes, such as Clause 4.5. It further argues that a narrow construction should not be imposed because the clause is a purposive clause requiring realteration of the alterations “so that the demised premises shall be converted back to their original condition”. The Plaintiff submits further that the expression alter or alteration or like expressions are always used in the lease in relation to the demised premises (see Clauses 4.5, 4.6 and 8.2(b)). The Plaintiff concedes that in some contexts the word
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“alterations” has been construed to mean modifications to the form or structure of existing buildings. (Bickmore v Dimmer [1903] 1 Ch.158 and in Re Leveson-Gower’s Settled Estate [1905] 2 Ch.95). The Plaintiff submits, correctly in my view, that the context in those cases clearly restricted the operation of the term to modifications to the form and structure of existing buildings. The Plaintiff submits, also correctly in my view, that here the context that is set by Clause 8.2(b) is the ‘demised premises’. They are defined in Clauses 1.1 and 2 as “the premises situate at and known as 45-60 Albert Street, Preston”. The Plaintiff submits that in that context “alterations” refer to the whole of the premises including the buildings and not alteration to particular buildings.
In the alternative, the Plaintiff submits that “alterations” means a change to the structure or form of existing buildings on the demised premises and the construction of any additional buildings on the demised premises. It seeks to support this construction by reference to the use of the term alter or similar terms in Clauses 4.5, 4.6 and 8.2(b) to the context in which the term appears and to the need to give a purposive construction to the clause.
The Defendants submit firstly, that the expression “alterations” in Clause 8.2(b), does not apply to buildings and structural improvements erected on the premises. They accept that it applies to changes to the structure or form of existing buildings but no more.
The Defendants argue that Clause 8.2(b) must be read in conjunction with
Clause 4.5. It provides as follows:
"4.5 Alterations And Installations By The Lessee
The lessee shall not without the prior consent in writing of the lessor
(which consent shall not be unreasonably withheld)
(a) Make any alterations or additions in or to the demised premises.
...
The lessor shall not be obliged to grant the aforementioned consent unless
(a) ...
(c) The alterations and / or installations be performed by a person approved by the lessor.
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The lessor hereby agrees and acknowledges that the property in all equipment and appliances installed by the lessee shall unless otherwise agreed in writing remain the property of the lessee and who shall be responsible for the repair and maintenance thereof and the lessee hereby agrees and acknowledges that all buildings and other structural improvements erected on the land of the demised premises prior to the commencement of the term hereof are the absolute property of the lessor and form part of the demised premises, PROVIDED HOWEVER that any improvements made to the demised premises by the lessee after the commencement of the term hereof should not be taken into consideration in any future rental assessments.
The defendants submit that Clause 4.5 draws a distinction between “buildings and other structural improvements” which become “the absolute property of the lessor and form part of the demised premises” and fixtures and fittings in the form of “equipment and appliances installed by the lessee. Attention is also drawn to the concluding words
"PROVIDED HOWEVER that any improvements made to the demised
premises by the Lessee after commencement of the term hereof
should not be taken into consideration in any future rental
assessments”
arguing that the words relate to structural improvements and buildings erected after commencement of the second lease. The defendants submit that whilst the clause intends that they become the absolute property of the lessor, they are not taken into account for rental assessments and thus, it is said, it is clear that buildings and structural improvements whenever erected, do not form part of alterations for the purposes of Clause 8.2(b).
This argument assumes that it was intended that all buildings and structural improvements erected on the premises before or after the commencement of the lease would become the property of the lessor and, therefore, that “alterations” in clause 8.2(b) was not intended to apply to buildings and structural improvements they being the property of the lessor. Accepting the former proposition, it does not follow that the parties would not agree that alterations in the form of structural improvements including buildings would not also be the subject of an agreement enabling the lessor to require the lessee to remove or realter the alterations made by the lessee. If the parallel had been intended, the same terms would have been used. It seems to me that the defendants are reading far too much into clause 4.5. What Clause 4.5 is intended to do is to resolve issues that it was thought could arise about ownership of
Gimtak P/L v. Cathie & Anor 19 JUDGMENT
equipment and appliances and buildings and other structural improvements. A similar
purpose is served by Clause 8.2(c) which provides:
"(c) Any fixtures or fittings not removed by the Lessee either as of right or by requirement of the Lessor as aforesaid shall be deemed abandoned by the Lessee and shall be and become the property of the Lessor.”
Counsel for the defendants also rely upon the commonly known desire of the College that the premises be purchased. They submit that that was part of the factual matrix and that, the parties were not concerned about the need to realter back to commercial shells. This is putting the matter too high. While purchase was plainly the desire of the College, the protracted and fruitless negotiation rather highlighted the fact that there was no certainty that the College or the government would purchase the property and that a contingency to be borne in mind was that the College would leave and that there would be a need to realter the premises.
The purpose of Clause 8.2(b) is to give the Lessor the power to require the Lessee to restore the premises to the extent defined by the clause. Such a clause obviously serves the purpose of enabling a Lessor to have a Lessee remove changes that have been made by the Lessee to the premises which may adversely affect the Lessor’s ability to re-let it. I am not persuaded that the above basis for limiting the meaning of "alterations" raised by the defendants supports their preferred interpretation.
The preferred definition of the plaintiff, however, would cover all "fixtures fittings and floor coverings" - accepting the plaintiff’s preferred position that “alterations” encompasses all changes to the premises of whatever kind. The plaintiff concedes that its alternative definition of change to structure or form of existing buildings or construction of any additional buildings would not include internal fixtures, fittings and floor coverings.
The defendants argue that Clause 8(2)(b) draws a distinction between "alterations" and "fixtures fittings and floor coverings". The defendants submit that the expression "alterations" was not intended to include items covered by "fixtures, fittings and floor coverings" in Clause 8.2(b) and that this distinction is emphasised when one looks at Clause 8.2(c) which relates solely to "fixtures & fittings" as distinct from "alterations". The defendants also refer again to Clause 4.5 where a distinction
Gimtak P/L v. Cathie & Anor 20 JUDGMENT
appears to have been drawn between “buildings and other structural improvements” which become the absolute property of the lessor and form part of the demised premises and fixtures and fittings in the form of “equipment and appliances installed by the lessee”.
As I have noted, Clause 8.2 is obviously intended to address problems that can arise at the end of a lease and attempts to spell out the rights and liabilities of the parties at that time. The provisions might have been drafted by reference to the traditional distinctions between landlord and tenant fixtures or simply have relied upon the distinction between fixtures and chattels. Instead the drafter, while acknowledging that the lessee had the right to remove tenants’ fixtures sought in cl.8.2(b) to address the issues that would arise on the departure of the lessee in relation to changes that had been made to the premises by the lessee. In the absence of express terms, the tenant would not be obliged to remove tenants fixtures but would have the right to do so, a right acknowledged in clause 8.2(b) (see Wincant Pty Ltd v South Australia (1997) 69 SASR 126). The defendants argue that the reference to “fixtures, fittings and floor coverings” was intended to be confined to tenants’ fixtures but cl.8.2(b) is couched in wider terms and such a provision could easily have been included and distinctions drawn on that basis if that had been the intention. I note that it was not argued by either party that the buildings added or any alterations to the structures of existing buildings came within the term “fixture” in the clause. (Compare Reid v Smith (1905) 3 CLR 656; Elitestone Ltd v Morris [1997] 2 All ER 513). It might be said that a building constructed on the premises would normally come within the definition of fixture. In Sanwa Australia Leasing Ltd v National Westminster Finance Australia (1998) BPR
9514. Powell J. summarised the law in the following propositions.
1. The question whether a chattel which has been placed on, or fixed to, land has become a “fixture” is ultimately to be answered by reference to the intention with which it has been placed on, or fixed to, the land; 2. That question is to be determined by the court having regard to all the relevant circumstances, including among which circumstances are the following: (a) the nature of the chattel in question;
(b) the manner in which it is usually, or most conveniently, utilised;
(c) the degree of “annexation” of a chattel to the land;
(d) the time - whether finite and short, or indefinite - during which the chattel is intended to remain “annexed” to the land;
(e) the purpose for which the chattel has been “annexed” to the land;
(f) any statements of intention made by, or agreements entered into between, the owner of the chattel and the owner of the realty;
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3.` None of the above is to be regarded as conclusive.” (See also Jordan
CJ. in Australian Provincial Assurance Co. Ltd v Corraneo (1938) 38
NSW LR at 712; N.H. Dunn Pty Ltd v L.M. Ericsson Pty Ltd (1979) 2 BPR
9241, 943-5; Wincant v South Australia, above, at 142).The argument might have been but was not relied upon by the plaintiff and I suggest for good reason. Due regard must be had to the drafting of Clause 8.2(b). The drafter wished to distinguish between “fixtures fittings and floor coverings” on the one hand and alterations to the demised premises on the other and prescribed regimes for each. It is, therefore, necessary to interpret the clause to enable a distinction to be drawn between “fixtures fittings and floor coverings” on the one hand and other fixtures, namely, "alterations" on the other. The defendants are correct in my view in suggesting that not dissimilar distinctions appear also in Clause 4.5 and Clause 8.2(c).
To enable the distinction to be drawn it seems to me that the word “alterations” in Clause 8.2(b) should be construed in the alternative manner suggested by the plaintiff - a change to the structure or form of existing buildings and the construction of additional buildings. Thus it would not include other fixtures or fittings such as equipment and partitions or floor coverings.
Interpretation Clause 8.2(b) - Fixtures Fittings & Floor Coverings
The plaintiff further submits that the expression “fixtures” in Clause 8.2(b) means any chattel affixed to the improvements on the property by the “lessee” and that “fittings” is not a term of art and may overlap in meaning with fixtures and often does so. To the extent that it does not, the plaintiff says it means equipment, parts, accessories and something that is a part of or associated with another chattel, thing or power source, for example, light fittings or a gas facility or a wood hopper. The plaintiff further submits that whether items such as partitioning, water, gas or electrical equipment, air-conditioning, cooling, heating or ventilating apparatus, are to be characterised as fixtures or fittings depends upon the application of general principles, with the exception of partitions which are treated under Clause 4.4(d) as fittings. “Floor coverings”, the plaintiff submits is a word of ordinary speech and means any covering to the floors of premises such as carpet or vinyl.
Gimtak P/L v. Cathie & Anor 22 JUDGMENT
The defendants challenge the categorisation of partitions. They submit that internal partitioning does not come within the definition of fixtures and fittings in clause 8.2(b). They submit that the internal partitioning comes within the expression “buildings and other structural improvements” in clause 4.5 (above). Reliance is placed on an earlier draft of clause 4.5 which had provided that "the property in all partitioning, equipment and appliances installed by the lessee shall unless otherwise agreed in writing remain the property of the lessee". In that draft the reference to partitioning had been deleted. It should be noted that the clause was further refined subsequently to that earlier draft. The relevant part of clause 4.5 appeared to distinguish only between equipment and appliances on the one hand and buildings and other structural improvements in setting out a statement as to where the property lay. In its terms it does not purport to deal with all matters and things that might have been installed on the property. In the face of the treatment in clause 4.4(d) of partitions as a type of fitting, I am unable to accept the proposition that partitions would not come within the phrase “fixtures, fittings ...” in clause 8.2(b).
The next expression to consider is the expression “prior to the term” in
Clause 8.2(b).
Interpretation Clause 8.2(b) - “Prior to the term”
It is common ground that the expression “prior to the term” in Clause 8.2(b)” means prior to the commencement of the term of the second lease. The defendants argue that the term commenced on 18 December 1985. It seems to me however that having regard to Clause 1.1 which defines the period of the demise, the commencement of the term was 1 August 1984. Clause 1.1 provides that the period of the demise is “for the term of year specified in the said schedule ... commencing on the commencement date specified in the schedule”. The schedule states the following that is relevant:
"Term: ten (10) years. The commencement date: 1 day of August 1984.”
The meaning of “original condition” is more difficult to determine.
Interpretation of Clause 8.2(b) - “Original condition”
Gimtak P/L v. Cathie & Anor 23 JUDGMENT
The plaintiff submits that “original condition” in clause 8.2(b) refers to the condition of the premises as at 1 August 1974. It submits that the provision was contained in the first draft of the lease prepared in May 1984 sent to the Department in August 1984. The plaintiff submits that at that stage it could only have the meaning for which it contends. It submits the word “original” should be given its ordinary meaning and that as between the relevant parties, the original condition was that which pertained as at 1 August 1974 when the entire premises were leased to the Institute.
The plaintiff further submits that the expression as it appears in the second lease should be construed in the context of the condition of the premises that it was agreed in the first lease should be the subject of that lease and that that defines the “original condition”. In particular, the plaintiff submits that Clause 19 of that lease must be borne in mind. It provides:
"19. The Lessor agrees at its own cost and expense to demolish the old house and sheds not required by the Lessee, to repair the structure, roof, walls, windows, floor, ceiling, lighting, power of the small wooden building known as the canteen building and to repaint the said canteen building internally and externally before the 1st day of August 1974 and restore the northern and southern walls of the main factory area in strammit or some other similar building material and to renovate and upgrade the toilets to the satisfaction of the Maintenance Officer of the Preston Institute of Technology on or before the 1st day of January 1975.”
The plaintiff further submits that the evidence reveals that Clause 19 was varied by mutual agreement between the lessor and the then lessee and that the lessor did not carry out the works but made a financial contribution to work carried out by the Institute, which included the agreed work.
The plaintiff submits that in determining what was the “original condition” of the premises as at 1 August 1974 the assumption is to be made that the relevant works carried out by the Institute and to which the lessor contributed, are to be treated as part of the original condition of the premises. Alternatively, it is put that it should be assumed that the lessor complied with its obligations. Thus, for example, the condition of the original premises would refer to the premises as they existed on 1 August 1974 but without, for example, the caretaker's house and the sheds which were removed as part of the mutual agreement.
Gimtak P/L v. Cathie & Anor 24 JUDGMENT
I accept that by August 1974 the buildings known as the north and south buildings had been restored to a substantially sound state of repair and were clean and clear of obstructions. The painted surfaces were in good condition and repainted. The walls had no holes in them. Internally there were no partitions other than existing masonry walls and some offices towards the western wall of the southern building. The documents in the Court Book suggest that an amount of approximately $45,000 was paid to the Institute in respect of the Clause 19 works. The correspondence reveals however, that there was an issue that emerged after entry into the lease as to the state of the roof. In a letter of 6 February 1975 the solicitors for the Institute wrote to the plaintiff advising that the buildings handed over were not structurally sound weatherproof neat and painted in that a significant part of the roof of the premises was in a state of disrepair. Reference was made to an undertaking given by letter dated 10 June 1974 by the plaintiff to the Institute that the buildings handed over would be in such a condition on January 1 1975. Clause 5 of the lease also required the lessor to attend to any defects in the roof of the premises. The issue was resolved by 26 March 1975 on the basis that the plaintiff met the cost of repairing the roof and to that end paid the sum of $8,000 on account of roof repairs to the Institute. Agreement included the proposition that the cost of those repairs was not to be taken into account so far as the company’s responsibilities under Clause 19 were concerned. The question of who was ultimately responsible appears to have been left in abeyance.
The defendants submit that the words “original condition” refer to the state of the premises as at the commencement of the second lease. They submit that that date is either 18 December 1985 or 1 August 1984. I have indicated that I favour the latter as the date of commencement of the second lease..
The defendants raise a number of matters in support of their construction. I am persuaded that the arguments that they advance support the conclusion that “original condition” refers to the condition on 1 August 1984.
The expression needs to be construed within the context of the surrounding factual matrix. It could on the face of it, refer to a variety of times; 1938 when the buildings were constructed by the original owner, 1973 when the Institute first occupied part of the site, 1974 when the first lease was entered into or 1984 when the second lease of the whole premises commenced. It seems to me that 1938 and 1973 can be disregarded as relevant times in that the concept imports the notion of
Gimtak P/L v. Cathie & Anor 25 JUDGMENT
original condition of the entire premises as between relevant parties. In 1938 none of the present parties were involved and in 1973 the Institute was occupying only part of the site. The issue is whether “original condition” refers to the state of the premises as at 1 August 1974 or 1 August 1984.
Bearing in mind that the institution was to remain in occupancy and that it might be said that the letting to the Minister was more a matter of legal choice than factual reality, the plaintiff can argue that the “original condition” between the relevant parties was that which existed at the time when the institution, in its original guise funded by government revenues provided by the Minister of the day, entered into occupation in 1973. There are several considerations, however, that militate against such a conclusion.
Firstly, it would impose a very heavy and unreasonable burden on the
lessee, one that it was unlikely the parties intended.
(a) The first lease contained no power to require the lessee to re-alter alterations back to their original condition. There was nothing in the first lease requiring the lessee to realter anything and it was not suggested before any works were carried out and the substantial expenditure incurred during the first term that Gimtak might require the tenant to tear them down. (Note the proposed maintenance department building was approved by the plaintiff on 15 September 1980 and the sheetmetal and drain laying facility approved on 30 June 1981
(b) Accepting that "alterations" means a change to the structure or form of existing buildings and the construction of additional buildings, the plaintiff’s interpretation of "original condition" would entitle the plaintiff to require the defendants to pull down the drain-laying building, the sheetmetal building and other structures erected by the institution at very considerable expense. These buildings were significantly more modern in construction than the other buildings on the site and replaced old buildings.
(c) The plaintiff's interpretation would also have the effect that the lessor would be entitled to require the defendant, in compliance with its obligation to realter, to restore buildings that were previously
Gimtak P/L v. Cathie & Anor 26 JUDGMENT
demolished; namely, the caretaker’s house, the canteen and other sheds and a maintenance building that was pulled down to provide car-parking space. An obligation to realter, of course involves, in many cases, the replacement of something that has seen better days with a new construction. But, on the plaintiff’s interpretation, the lessor would be entitled to require substantial new buildings to be erected which would be significantly better than those that existed on 1 August 1974 and significantly better than anything that might still have existed if those buildings had not been demolished prior to 1984. Counsel for the plaintiff submits that that issue can be dealt with on a case by case basis by having regard to what was reasonable in assessing damages. That may be so. Nonetheless, it is relevant in considering the construction of the expression to have regard to the extent to which it is said the lessor would be entitled to require the lessee to go in complying with the obligation applying the construction in question.
(d) It should also be borne in mind that the major building works to which I have referred were carried out during the term of the first lease and it is common ground that the parties entered into the second lease on the basis that ownership of those substantial building works was vested in the plaintiff. The issue was expressly dealt with in the second lease (cl.4.5). It was also agreed between the parties that all improvements previously carried out by the lessee would need to be taken into account for the purpose of evaluation of the property for sale to the Education Department and for rental purposes. Clause 4.5 went on to provide that any improvements made by the lessee after the commencement of the term should not be taken into consideration in any future rental assessments. While there is nothing to stop a lessor requiring a lessee to remove structural alterations which have become its property, one would want to find reasons to support the construction proffered before adopting it.
The reason that the plaintiff advances is that it included the clause to enable it to call upon the lessee to make whatever changes might be necessary to render the premises re-lettable after the highly specialised use of a technical school had been completed. Such a reason, however,
Gimtak P/L v. Cathie & Anor 27 JUDGMENT
does not support the particular interpretation of the plaintiff any more than
that advanced by the defendants.Bearing in mind that the lessor was well aware of the state of the premises in 1984 and 1985, and that the lessor had decided to proceed on the basis of its ownership of the prior structural changes, the suggested reason in fact supports the defendants’ construction; that the lessor was happy in 1985 to accept the structures built but wanted the power to have removed any future structural changes. As to internal fixtures and fittings, the other part of the clause gave the lessor the power to have the warehouse or factory shells restored as empty spaces.
(e) It is significant, in my view, that retrospective operation to a time prior to the commencement of the lease was clearly envisaged and clearly stated in respect of "fixtures fittings and floor coverings" by the use of the expression "prior to the term" in close proximity to the phrase in question in the same clause. This raises the question why a similar clear statement in similar language was not used in relation to alterations if that was the intention. It is, I suggest, significant that the person drafting the clause used the expression “original condition” rather than “prior to the term”.
(f) A further consideration supporting the defendant’s construction is that the parties were in a reasonable position to determine what the state of the premises was on 1 August 1984 when they entered into the terms of Clause 8.2(a)(b). They would have had great difficulty, however, in establishing the “original condition” of the premises on 1 August 1974. There would be room for conflict and disagreement and the task is not a simple one because, even on the plaintiff’s own case, it involves making allowance for Clause 19 of the original lease and its impact on the question what was the original condition of the lease. Further, the lessee in making any decisions to alter the premises after 1 August 1984 would do so in the knowledge that it might be required to remove the alterations made and could address the issue with the lessor before making any alterations.
Gimtak P/L v. Cathie & Anor 28 JUDGMENT
I note that the defendants also submit that the plaintiff’s interpretation of the expression "original condition" introduces significant inconsistencies between Clause 8.2(a) and 8.2(b). It is put that one would expect both sub paragraphs to relate to the same period unless expressly stated, otherwise para (a) would require a yielding up of the premises in a condition consistent with the 1984 condition and paragraph (b) requires realtering to the 1974 condition.
It would mean, it is said, that at the end of the second ten year term the lessee was to carry out all of the work required for repainting, and re-wallpapering under Clause 8.2(a) only to find that the lessor required all of that work to be pulled down under the power to require the premises to be realtered to deal with any alterations made in the first term by the lessee. The defendants submit that it would be nonsensical to adopt a construction that required the spending of moneys for a futile purpose. It is said that at the end of the second lease the lessor would have a choice. The lessor could require the tenant to comply with Clause 8.2(a) and deliver up the premises in the same condition as they were as at 1 August 1984. Alternatively, the lessor could also under Clause 8.2(b) require the lessee to realter the premises back to the situation that existed also on 1 August 1984.
In my view the defendant’s construction does not remove the alleged inconsistency but reduces the area of potential conflict. On the defendant’s own construction a circumstance could exist where the lessee spent considerable sums of money complying with the requirements of Clause 8.2(a) in repainting and repairing various features of the premises but could find itself required to demolish such work where it was done in relation to alterations and additions that had been made during the term of the second lease. Some force remains in the argument, however, because at least such a result is confined to alterations made as and from 1 August 1984
Taking the foregoing matters into consideration it seems to me that the better view is that by “original condition,” the parties intended to refer to the condition of the premises at the commencement of the second term - 1 August 1984. It is unnecessary, therefore, to resolve the question of the application of clause 19 of the first lease and what was the "original condition" of the premises under the first lease.
Construction Of Clause 8.2(b) - Pre-conditions to Lessor’s Entitlement To
Compensation
Gimtak P/L v. Cathie & Anor 29 JUDGMENT
The defendants submit that the parties agreed upon a regime to deal with the consequences of the failure of the lessee to remove fixtures and fittings or to realter alterations when requested to do so under Clause 8.2(b). They argue that the plaintiff could require the lessee to undertake such works and that, if it did not, the plaintiff could undertake the works itself and recover the cost as a liquidated debt from the lessees. The defendants submit that as a matter of construction the plaintiff was obliged to incur the cost before it was entitled to recover any compensation from them.
It seems to me that the plaintiff’s response to this argument is correct. Clause 8.2(b) gives the lessor an option, which the lessor may or may not exercise, to remove the fixtures, fittings and floor coverings and realter the alterations. The lessor does not have to do so. If the lessor chooses to do so then the consequences are set out in the words that follow - the plaintiff may recover the costs incurred as a liquidated debt payable on demand. If the plaintiff chooses not to exercise that option the plaintiff is left with its rights under Clause 8.2(b) to seek damages for breach of the obligations set out in that clause.
Construction of Clause 8.2(a)
The Plaintiff submits that Cl.8.2(a) requires that the lessee deliver up the premises in a state of repair, order and condition consistent with, inter alia, the covenants set out in Cl.4.7, and in particular 4.7(a) and (b) (see above). The plaintiff submits that the relevant date for ascertainment of the state or repair, order and condition with which comparison is to be made is the date of commencement of the second lease under each Clause. The defendants accept these propositions. The defendants also agree that the obligation under Cl.8.2(a) applied to all additions referred to in Cl.4.7(a) being all changes to the structure and the form of existing buildings on the demised premises on and from 1 August 1984 and the construction of any additional buildings on the premises. There is also agreement between the parties that the obligation under cl.4.7(a) to keep in substantial repair did not apply to work of a structural nature unless it was “occasioned by the act neglect or default of the lessee or by its use or occupancy of the demised premises”. The plaintiff submits and the defendant agrees that the phrase “work of a structural nature” means work which affects the structure or form of any building on the premises and any additional buildings constructed on the demised premises.
Gimtak P/L v. Cathie & Anor 30 JUDGMENT
The Sample
I propose now to deal with each of the items in the sample put forward by the parties to test the construction of the lease. I will apply to each of those items the conclusions I have reached to this point and introduce where appropriate further comment on matters of construction that may arise.
1. Demolition of Caretaker Residence
The plaintiff argues that the demolition of the caretaker’s residence was an alteration and that, therefore, the obligation to realter by restoring that residence applies. The caretaker residence was situated on the premises when first let to the Institute in 1974. It was demolished and a portion of the so-called drain laying building was built over the site at a later date. To require the College to re-build the caretaker’s residence (estimated cost $110,000) would be to require the premises to be realtered. I have indicated that I accept the construction that “original condition” means the condition as at 1 August 1984. At that time there was no caretaker’s residence in existence and thus the obligation to realter did not require its reconstruction.
2. Erection of a drain laying and sheetmetal workshop building including all internal structures such as walls to drain laying pit, three level platforms for drainlaying area, two levels of offices and classrooms, store-rooms and all associated services and the like.
3. Erection of a Maintenance Workshop Building and all Internal Partitions, Fittings and Services
The plaintiff claims that the above should be removed. The drain laying and sheet metal workshop building was erected at the southern end of the block and over, in part, the original caretaker’s residence. The work was done in 1982. Because the drain laying and sheetmetal workshop buildings were erected prior to 1984, they did not require realtering to bring the premises back to their original condition as at 1 August 1984. On the other hand, it seems to me, that the internal structures were encompassed by the obligation to remove all fixtures fittings and floor coverings installed prior to the term. I refer in particular to the drain laying pit, the platforms rising three levels above the floor area, the offices and classrooms, storerooms and associated services.
Gimtak P/L v. Cathie & Anor 31 JUDGMENT
The plaintiff claims that the defendants were obliged to remove the maintenance workshop. It was constructed with a steel frame and brick walls prior to 1981. There is no evidence of alterations after 1984. There was, therefore, no obligation to remove the maintenance workshop building it being erected prior to 1 August 1984. On the other hand, all internal fixtures fittings and floor coverings should have been removed.
4. Alteration and Installation of Electrical Wiring including Switchboards and Light Fittings within the North and South Building
Extensive re-wiring was carried out on the premises. It would appear to have been done prior to 1984 but some may have occurred subsequently. The defendants submit that the installation of electrical wiring switchboards and light fittings constituted improvements within the meaning of Clause 4.5 (see above) and therefore come within the concept of alterations and not the concept of “fixtures fittings”. For reasons given above the concept of "alterations" is confined under the lease to changes to structure and form of existing buildings and the erection of new buildings. Thus such items were not alterations but constituted fixtures and fittings and were, therefore, items which the lessor could require to be removed even though they were installed prior to the second term.
5. Installation of Air-conditioning Ducts, Fitting and the Like within the North and South Building
Air-conditioning and heating and all associated ducts and fittings were installed. Again ,the defendants submit that they come within the expression “improvements” in Clause 4.5 and within the expression “alterations” in Clause 8.2(b). In my view they do not. They come within expression “fixtures, fittings”. Notwithstanding that most if not all of the work was carried out between 1974 and 1984 the lessor was entitled to require their removal and the making good of any damage consequent upon their removal.
6. Various Alterations to the Sprinkler System (South Building)
The sprinkler system existed in the South building. It had to be adjusted because of ceiling panels installed to provide insulation, to hide the corrugated iron roof and to provide ceilings for the various internal rooms that were constructed. As a result the sprinkler systems had to be lowered. Again most if not all of the work was done
Gimtak P/L v. Cathie & Anor 32 JUDGMENT
prior to 1984. Again we are here concerned with fixtures and fittings. The defendants seek to rely upon the argument that they constituted improvements for the purpose of Clause 4.5 and therefore alterations. I have indicated my reasons for rejecting that argument. The lessor was entitled to require these items to be removed.
7. Installation of Timber, Steel and Masonry Partitions, Offices and Classroom and other internal structures within the North and South Buildings and Drainlaying Buildings
It seems that most, if not all, of the installation of partitions occurred prior to 1984. The partitions and internal structures within the buildings mentioned appear to me to be clearly fixtures or fittings or both. As noted above, in clause 4.4(d), partitions are treated as fittings. The defendants sought to rely again upon the argument that they were improvements and therefore, alterations. Particular emphasis was placed upon the fact that in an earlier draft of the second lease dealing with the issue of property remaining with the lessee, the draft had included a reference to partitioning as being an item in respect of which property would remain with the lessee and that the plaintiff had insisted that that reference be deleted, indicated the desire to have the property in any partitioning. This may be so but the property in fixtures passes to the lessor unless they can be classified as tenant’s fixtures and the lease confers a right upon the lessor to have fixtures and fittings removed that were erected during the 1974 lease by the “lessee”.
8. Erection of Chain Wire Mesh Fences, Erection of Double and Single Gates
It was not entirely clear what fencing was being referred to. The clearest statement was given by the plaintiff’s witness, Mr Feder, (p.449) when he was asked to identify where the fencing was that the plaintiff was saying should be replaced. He said it was on the western boundary where it was damaged and neglected and in a very bad condition when the premises were delivered up. He also was concerned about some fencing in front of the drain laying building that had been removed and not restored. He thought that the fence was altered by the College in about 1981 or 1982. He marked an area on the south-west corner of the site where a section of the fence was missing. Referred to photos of the east wall of the north building he said that the gates shown there needed replacing because they provided a security risk. He said some of them were in a state of disrepair. For present purposes I will confine my comments to those sections of fencing. The complaints appear to be two-fold. One concerns the condition
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of the fence and the other is alterations that were made which are now useless for the
general purpose of the site.
It seems to me that these items come within the description of fixtures
and fittings and also come within the repair obligation imposed by Cl.8.2(a).
9. Installation of Large Gas-Fired Room Heaters Complete with Large Diameter Flues
There were large floor mounted and fixed gas heaters that blew hot air into the general open areas. Mr Feder described them as being eight or nine feet high, four feet wide and four feet deep. They had large flues going through the ceilings. He also thought they extended to other areas. Mr Feder acknowledged that they were installed prior to 1984. The defendants again argue that these items constituted improvements within the meaning of Cl.4.5 and so were alterations. If they were alterations it is said that they occurred prior to 1984 and therefore no obligation arose to remove them. To the extent that the defendants seek to rely on Cl.4.5, I refer to my views expressed above. It seems to me that these items come within the description of fixtures and fittings and, not withstanding that they were installed prior to 1984, they are items which the lessor was entitled to have removed as fixtures and fittings.
10. Laying External Concrete Paving
The plaintiff seeks the cost of repairing the concrete paving in two areas. This issue is somewhat confused but in the end it appeared that the plaintiff sought to test the construction of the lease in respect of two areas of concrete. The first was shown in the photograph on p.27 of the plaintiff’s photographs. This was the area between the North and South buildings. It showed a rough looking area which, as I understand it, had been the location of the old amenities building. The other area was shown in photograph 40 of the plaintiff’s photographs showing the roller door entry to the drain laying building where the concrete was said to be badly damaged, possibly by heavy trucks removing sand from the building. There is a conflict of evidence between Mr Feder and Mr Coxon as to the precise condition of the premises. That evidence does not appear to me to be focused on the critical question and that is the state of the concrete at the time when the second lease commenced - 1st August 1984. Subject to it being demonstrated that there has been a deterioration of those surfaces since that date of a kind covered by clause 4.7, then compensation would be payable. Mr Coxon in particular conceded that nothing had been done in respect of the ageing and
Gimtak P/L v. Cathie & Anor 34 JUDGMENT
weathering of the concrete surfaces shown in photograph 40 between the North and
South building.11. Installation of Various Gas Service Pipes
It seems that the institution had pipes installed progressively in both the North and South buildings for the delivery of gas to gas heaters, welding stands and other appliances. There were also some external arrangements made between buildings. The defendant again rely on the arguments based upon Cl.4.5. I reject those arguments for reasons previously given. It seems to me that these pipes are fixtures and fittings and subject to removal under Cl.8.2(b).
12. Installation of Vinyl Floor Coverings to the South Building and North Building
The defendant concedes that this item is floor coverings within the meaning of Cl.8.2(b). No argument is advanced against the obligation upon the defendants to remove them if requested.
13. Laying of 100mm Thick Concrete Slab on Concrete Floor
There is again some confusion as to precisely what is involved in this sample item. It emerged that what the plaintiff wants considered is two areas where 100mm concrete slabs had been placed on top of an existing concrete slab. Photograph 25 of the plaintiff’s photographs was an example, it showing a concrete slab erected within welding stands that were constructed within the building. The plaintiff argues that the welding stands should have been removed and with them the 100mm slab and it says that the defendants got the building with a flat floor and it wants a flat floor back again for the next tenant in this hypothetical exercise. It seems that the areas were in the North and the South building. In my view these two items come within the concept of alterations not fixtures and fittings as those concepts are used in the lease. Mr Feder conceded that the work was done prior to 1984. In those circumstances the lessee could not be compelled to remove these sections of flooring.
14. Installation of Toilet Pan Seat and Urinal and Cisterns including all Services (in the South Building)
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This item concerns toilets installed in the South building pursuant to the arrangement entered into between the Institute and the plaintiff during the 1974 lease under which the Institute carried out works which the plaintiff had undertaken to carry out pursuant to Cl.19. What occurred was that the Institute renovated and upgraded the toilets in the building and the plaintiff compensated the Institute for the cost. On the evidence presently before me it cannot be demonstrated that the installation of those items can be characterised as an installation by the lessee. On that basis Cl.8.2(b) has no application.
15. Digging of Trenches in Concrete Floor in North and South Buildings
Again there was some misunderstanding as to the works with which the plaintiff is concerned. I proceed on the basis that they are the trenches shown in photographs 24 and 25 cut into concrete floors into which gas pipes were placed. The trenches were then covered with metal plates. Mr Feder for the plaintiff agreed that the work was done between 1974 and 1984. Mr Feder said that his concern was about the strength of the floor. He regarded the digging of the trenches in the concrete as an alteration. Steel plates were not fixed.
As alterations, it appears to me that they, having occurred prior to 1 August 1984 are not alteration to which cl.8.2(b) applies and therefore the lessor could not require their realtering.
As to the trenches dug for drainage from the cutting machines and storm water drainage which were the subject of evidence, I proceed on the basis that the plaintiff is not seeking their hypothetical removal. That is as I read the evidence of Mr Feder.
16. Internal and External Windows, Doors and Openings
This item concerns windows and doors installed in the North and South buildings and some minor ventilation outlets. Mr Feder conceded the work was done between 1974 and 1984. What the plaintiff would notionally seek is reinstatement of the walls for the premises to be used as a factory or warehouse. It seems to me that these items come within the description of “alterations”. Having been carried out prior to 1 August 1984, Cl.8.2(b) has no application and, therefore, the lessor could not require their realtering.
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17. Installation of Flues, Chimneys etc through the Roof of North and South Buildings
It seems that flues were installed for ventilating furnaces and were required for that purpose by the EPA. The flues passed through the roof thus causing structural damage to the roof. The heating that was installed which required the flues was necessary for use of the premises as a Technical College but was superfluous for use of the building as a general warehouse. There were ducts also associated with the heating systems. What the Plaintiff required was removal of the ducts and flues and reinstatement of the roof. The lessee did not remove the heaters or the flues or ducts when requested. There were also chimneys servicing the gas welding and electric arch welding areas. There was also a flue for sawdust extraction. There was a large variety of apparatus installed which needed ventilation to the outside. Mr Feder believed that there were some works done in the later period to existing flues and chimneys and to wood extraction. The photographs reveal flues attached to equipment and flues with the relevant equipment removed and simply dangling from the roofs. The defendant relies upon its arguments under Cl.4.5. I refer to my reasons for rejecting those arguments above.. It seems to me that generally flues and chimneys related to heating and cooling systems and systems for extracting noxious fumes from welding area and the like come within the description of fixtures and fittings and therefore are items which the lessor was entitled to ask the lessee to remove whether they were installed prior to 1 August 1984 or after that date. The defendants concede, however, that insofar as chimneys and flues were left in the roof after the attached fixtures and fittings have been removed by them, then the cost of rectification of the roof should be borne by them.
18. Installation of False Ceilings in North and South Buildings
The false ceilings comprised ceilings placed on the inside of the corrugated cement or corrugated irons roofs and ceilings placed on top of partitions for internal classrooms in offices. In relation to the ceilings attached to the corrugated roofing, the defendants rely upon their arguments based on Cl.4.5. I refer above to my reasons for rejecting those arguments. As to the false ceilings placed on top of partitions for internal offices and classrooms, the defendants rely upon their arguments relating to partitions (see above). In my view the ceilings came within the category of
Gimtak P/L v. Cathie & Anor 37 JUDGMENT
fixtures and fittings and the lessor was entitled to require the lessee to remove them
whether they were installed prior to 1 August 1984 or subsequently to that date.19. Erection of Coolrooms and Steel Storage area between North and South Buildings
This item concerns two rooms added in the student amenity area for keeping food cool. They were in the area between the North & South buildings. They were built between 1974 and 1984. The defendants submit that these items constituted structural improvements and were, therefore, alterations. By that I take it the defendants to be seeking to rely on Cl.4.5. I have rejected those arguments and refer to my reasons above. The defendants also submit that the works carried out were carried out on behalf of Gimtak because it was obliged under Cl.19 of the Agreement to upgrade the canteen. It is submitted that, therefore, the work that was done was not done by the lessee within the meaning of Cl.8.2(b). In this instance, however, the canteen was not upgraded but rather was set up in a different area and, on the evidence so far presented to me, I am not persuaded that it was carried out on behalf of Gimtak by the College. The more difficult question is whether these items constituted fixtures and fittings or alterations. Further evidence may be required. On the basis that a building was constructed into which the coolroom was placed, it may be that the external structure should be regarded as an alteration but the internal walls and the equipment should be regarded as fixtures and fittings. I express no concluded view on this matter.
20. Removal of Sand from Drainlaying Building
It seems that sand was installed in the drainlaying building in the large brick pit. That pit was used to train students in drainlaying techniques. Shortly prior to vacating the premises it seems that the sand was removed. It is difficult to see any basis upon which the plaintiff can seek compensation from the defendants for the removal of this sand. It is not apparent to me that ownership ever passed to the plaintiff and I am unable to see any way in which the terms of the lease would have entitled the plaintiff to compensation.
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21. Installation of carpet, floor-covering, including underlay and edge fixing in North and South Buildings
The defendants concede that this item is a floor covering and within the
meaning and operation of Cl.8.2(b) .
22. Installation of Gas Welding Stand and Exhaust Hoods, Ducts and Extraction Equipment in North and South Buildings
The defendants concede that these items constituted fixtures and fittings. The defendants also sought to rely upon the argument that Gimtak can only recover damages if it has the items removed and incurs costs in doing so. I have already indicated that I reject that argument. Compensation is recoverable for these items pursuant to Cl.8.2(b).
23. Removal of Various Items of Plant Machinery and Equipment at End of Lease - as particularised on page 2 of document headed “Fixtures, Fittings and Floor-coverings 1984-1994”
The defendants concede that the items removed were fixtures and fittings
and thus any damage caused by their removal must be paid for by the defendants.
24. Installation of Elevated Pipe Works across the front of the Buildings Including Support Columns
This item concerns two overhead conduits supported on columns outside
and between the North and South Buildings carrying electric wiring and gas pipes
Mr Feder conceded that one of the structures existed prior to the letting of the premises to the College. I am not persuaded on the evidence that the other structure was erected after the 1 August 1974. The structures were, therefore, not erected by the lessee. In those circumstances the lessor was not entitled to require the removal of these items.
25. Installation of Steel Columns and Frames and Support Structures and Beams
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The plaintiff here is referring to steel support structures for welding stands and for various items of equipment in the North and South Buildings. Inside the North building, there had also been built support structures for concrete shelving, the storing of bricks and for heavy equipment mounted up in the air. Most of the structures were built during the first lease period.
It seems to me that such steel columns, frames and support structures of that kind may properly be categorised as fixtures and fittings and would therefore be subject to the operation of Cl.8.2(b).
26. Installation of Elevated Offices, Platforms and Access Stairs
In my view internal elevated offices, platforms and access stairs constituted fixtures and fittings for the purpose of Cl.8.2(b). There is an issue as to whether a mezzanine floor area alleged by the plaintiff to have been installed in the North Building between 1974 and 1984 had existed prior to that date. Mr Coxon gave evidence that on his arrival there was a mezzanine floor in that area. He did not arrive at the premises until 1975. He asserted that there was an appearance of apparent age so far as that was concerned. The plaintiff relies upon a plan which has not been challenged which does not support Mr Coxon’s evidence on that point. On balance I am persuaded that that mezzanine structure was also erected by the institution and would be subject to Cl.8.2(b).
27. Replacement of Roofing Including Guttering, Flashing, Capping and the like
The plaintiff claims compensation in this instance under Cl.8.2(a). Little attention has been given to this item and it would be a matter of evidence as to whether work was required to restore the roofing including guttering, flashing and capping and like matters to the condition they were in on 1 August 1984. Accordingly, I express no concluded view on this item.
28. Installation of Sheet Wall Lining
This item appears to concern a stramit wall section installed by the
institution or during the first lease. It is unclear to me the precise basis upon which it is
Gimtak P/L v. Cathie & Anor 40 JUDGMENT
sought to have this item addressed. The criticism made by the plaintiff appeared to be that the material used did not match the existing wall material that remained. I express no concluded view on this item.
29. Painting of Internal and External Surfaces
The defendants accept an obligation to paint external and internal surfaces (cl.8.2(a) and 4.7(g)). The issue is what is meant by the phrase “as before”. This involves construction of Cl.4.7(g). I accept the plaintiff’s submission that the phrase “as before” requires reference back to the condition that the painted surfaces were in after the last painting, there being an obligation to paint the surfaces within the last three months of every third year of the term as well as within the last three months of the final year of the term.
30. Repairing, Cleaning of Concrete Floors to Remove Grease, Oil and the Like The plaintiff relies on Cl.8.2(a) to seek compensation for alleged failures to clean concrete floors. I am satisfied that the photographs show evidence of staining caused by grease and oil and the plaintiff is entitled to compensation which would be determined in light of further evidence.
31. Repair to Window Panels
The plaintiff again relies on Cl.8.2(a). The defendants comment on the paucity of evidence. It is true that there was little evidence adduced but to the extent that it can be demonstrated that there were window panels that were broken at the time possession was given by the lessee and to the extent that it can be shown that such windows were not broken as at 1 August 1984, the defendants would be liable to compensate the plaintiffs.
32. Removal of Rubbish at End of Lease
The plaintiff again relies on Cl.8.2(a) to argue that compensation should
be paid for the cost of removing rubbish. Mr Feder gave evidence of a general nature
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which pointed to the reality that there was rubbish to be removed. Quantification of any
claim would be dependent upon more detailed evidence.
Answers to Questions
I turn to the questions ordered to be tried. I provide the following answers.
1.1 What is meant by the words "alterations" in clause 8.2(b) of the lease? 1.1 A change to the structure or form of existing buildings on the demised premises and the construction of any additional buildings on the demised premises. 1.2 Does "alterations" in clause 8.2(b) of the lease include or exclude: (a) the erection of buildings on the land of the demised premises;
(b) other structural improvements erected on the land of the demised premises;
(c) additions;
(d) installations
as referred to in clause 4.5 of the lease?
1.2 (a) Include (b) Include (c) Include (d)
Include, if installations involve a change to the structural form of existing buildings of the demised premises or construction of additional buildings on the demised premises.
1.3 What is the meaning of "fixtures fittings and floor coverings" in clause
8.2(b) of the lease?1.3
Any chattel affixed to the improvements on the property, and fittings and floor coverings including partitioning, water, gas or electrical equipment, air-conditioning, cooling, heating or ventilating equipment and other appliances and equipment. Fittings include partitions. Floor coverings include carpet or vinyl flooring.
1.4 Does “alterations” in clause 8.2(b) of the lease include or exclude
fixtures, fittings and floor coverings?1.4 "Alterations" & "fixtures, fittings & floor coverings" are to be given the
meanings set out above.1.5 Were any and what fixtures, fittings and floor coverings erected or
installed in the demised premises by the lessee during or prior to the
term of the lease?1.5 Yes. On the evidence it is inappropriate to attempt to give an exhaustive
list. Some are identified in the sample analysis.1.6 Were any and what fixtures, fittings and floor coverings erected or
installed by the lessee abandoned by the defendants or one or other of
them within the meaning of clause 8.2(c) of the lease?1.6 Yes, but that does not affect the operation of Cl.8.2(b). On the evidence it
is inappropriate to attempt to give an exhaustive list.
Gimtak P/L v. Cathie & Anor 42 JUDGMENT
1.7 What is meant by the term "lessee" in clause 8.2(b) of the lease? 1.7
The word lessee where it appears in lines 1, 2 and 15 of Cl.8.2(b) means the first defendant and in lines 6 and 10 the first defendant and also the institution known at the time of the second lease as the Preston College for Technical and Further Education and its successors. and any other invitee of the first defendants.
1.8 What is meant by the words "original condition" in clause 8.2(b) of the lease? 1.8 The condition of the premises as at 1 August 1984. 1.9 Does the term "alterations" include or exclude alterations to the
demised premises made prior to:(a) the entry into the lease on 18 December, 1985?
(b) the commencement date referred to in the schedule to the lease (1 August, 1984)?
1.9 (a) Alterations made prior to 1 August 1984 are excluded by the expression (b) “original condition in Clause 8.2(b) 1.10 What alterations were made within the meaning of clause 8.2(b) of the
lease as determined by the answers to the preceding questions?1.10
An exhaustive answer cannot be given on the basis the evidence so far tendered in the case but examples may be found in the analysis of the samples.
1.11 Did the defendants or one or other of them breach clause 8.2(b) of the
lease by failing to realter the alterations required by the plaintiff to be
realtered?1.11
If it be demonstrated that alterations were made after 1 August 1984 by the Minister or the institution and were not realtered when requested then the defendants are in breach of Cl8.2(b).
1.12 What is the measure of damages for the breach of clause 8.2(b) of the
lease referred to in question 1 .11 hereof?1.12
The difference between the value of the premises as yielded up and the value of the premises if the lessee had complied with the requirements of Cl.8.2(b) provided that no more compensation is allowed than would be required to produce an amount equal to the difference between the value of the premises if it had been reinstated to the condition of lettable warehouse areas as at 1st August 1984 and the value of the premises as yielded up by the lessee. In addition the plantiff would be entitled to compensation for the loss of rentals that would have been earned by the plaintiff if the premises had been so reinstated until the date upon which they might reasonably have been expected to be let.
1.13 Did the plaintiff suffer any and what damage as a result of the breach of
clause 8.2(b) of the lease referred to in Question 1.1.1 hereof?1.13 This issue cannot be answered until all evidence is received. 1.14
Is the plaintiff's right to recover damages for breach of clause 8.2(b) of the lease referred to in Question 1.11 hereof limited to the costs actually incurred by the plaintiff in realtering alterations?
Gimtak P/L v. Cathie & Anor 43 JUDGMENT
1.14 No 1.15 In circumstances in which:
(a) fixtures, fittings and floor coverings; and/or (b)
buildings and other structural improvements erected on the land of the demised premises have become the property of the plaintiff, is the plaintiff nevertheless entitled pursuant to the provisions of clause 8.2(b) to require -
(i) the removal of such fixtures, fittings and floor coverings; and/or (ii) the re-alteration of any such buildings and other structural improvements?
1.15 Yes 2.1
What is meant by the "state of repair, order and condition which is in all respects consistent with the covenant on the part of the lessee herein contained", as referred to in clause 8.2(a) of the lease?
2.1
The phrase had the effect that the lessee was required to yield up to the plaintiff the whole of the premises including alterations, fixtures, fittings and floor coverings in the state of repair, order and condition consistent with the covenants of the second lease and in particular Cl.4.7(a) and Cl.4.7(b).
2.2 Is the relevant date for ascertainment or assessment of the "state of repair order and condition" for the purpose of construction of clause 8.2(a) of the lease:
(a) 1 August 1974; or (b) the "commencement of the lease"
2.2 (a) No (b) 1 August 1994 2.3
Does the "state of repair, order and condition" in clause 8.2(a) of the lease include the state of any additions referred to in clause 4.7(a) of the lease?
2.3 Yes 2.4
Does the "state of repair, order and condition" in clause 8.2(a) of the lease include or exclude "work of a structural nature other than work of a structural nature occasioned by the act of neglect or default of the first defendant by its use or occupancy of the demised premises" referred to in clause 4.7(a) of the lease?
2.4 Include 2.4.1 What is the meaning of the phrase “as at the commencement hereof” in
line 2 of clause 4.7(a)?2.4.1 1 August 1984 2.4.2 What is the meaning of the phrase “all additions [sic.] made thereto” in
line 3 of clause 4.7(a)?2.4.2
All changes to the structure and form of the existing buildings of the demised premises and the construction of any additional buildings on the demised premises.
Gimtak P/L v. Cathie & Anor 44 JUDGMENT
2.4.3 What is the meaning of the phrase “structural nature” in line 7 of clause
4.7(a)?2.4.3 Work which affects the structure or form of any building on the premises
and any additional buildings constructed on the demised premises.2.5
Has the lessee in breach of clause 8.2(a) of the lease failed to yield up the demised premises in the state of repair order and condition the demised premises were in at the relevant date referred to in Question 2.2 hereof?
2.5 Yes 2.6 What is the measure of damage for the breach of clause 8.2(a) of the
lease referred to in Question 2.5 hereof?2.6 The cost of carrying out the repairs. 2.7 Has the plaintiff suffered any and what damages by reason of any breach
of clause 8.2(a) of the lease referred to in Question 2.5 hereof?2.7 This question must await answering until all evidence is received. 3.1 As at 31 July 1994 was there any defect or damage to the demised
premises occasioned by
(a)
Any act neglect, want of care, misuse or abuse on the part of the lessee or its employees, agents or contractors, customers, invitees or persons claiming through or under the lease;
(b) Any breach or default of the lessee under the lease? 3.1 Yes 3.1.1 What is the meaning of the phrase “defects or damage to the demised
premises” in line 1 of clause 4.7(b)?3.1.1 Any fault or imperfection in the premises. 3.1.2 What is the meaning of the phrase “the lessee” in line 5 of clause 4.7(b)? 3.1.2
The first defendant and the institution known as at 1.8.1984 as the Preston College for Technical and Further Education and its successors and other invitees of the first defendant.
3.1.3
Does the phrase “invitees or persons claiming through or under the Lessee” in lines 6 and 7d of clause 4.7(b) include the Preston Institute of Technology, its successors and the servants, agents and invitees of the Institute?
3.1.3 Yes 3.2 As at 31 July 1994 had the lessee failed to make good any defect or
damage to the demised premises occasioned by:
(a)
any act, neglect, want of care, misuse or abuse on the part of the lessee or its employees, agents or contractors, customers, invitees or persons claiming through or under the lessee; or
(b) any breach or default of the lessee under the lease? 3.2 Yes 3.4 Has the plaintiff suffered any and what damage as the result of a breach
of clause 4.7(b) of the lease referred to in question 3.2 hereof?
Gimtak P/L v. Cathie & Anor 45 JUDGMENT
3.4 It is premature to answer this question until all evidence has been
received.4.1
What external and internal portions of the demised premises were painted or papered or otherwise treated or decorated as at the commencement of the lease?
4.1 Insufficient evidence has been placed before the Court to enable this
question to be answered.4.1.1 What is the meaning of the phrase “as before” in line 6 of clause 4.7(g) 4.1.1 The last time the portions were painted, papered or otherwise treated or
decorated.4.2
Did the first defendant fail in the last three months to repaint, repaper, treat or decorate any and what internal and external portions of the demised premises as before?
4.2 Yes. A complete answer must await complete investigation of the facts. 4.3 What is the measure of damages for breach of clause 4.7(g) of the lease
referred to in question 4.2 hereof?4.3 Cost of painting or papering, decorating or treating. 4.4 Did the plaintiff suffer any and what damages as a result of the breach of
clause 4.7(g) of the lease referred to in question 4.2 hereof?4.5 Insufficient evidence has been placed before the Court to enable this
question to be answered.After the parties have considered these reasons, I will hear submissions about the making of any orders and the future conduct of the matter.
Gimtak P/L v. Cathie & Anor 46 JUDGMENT
1