IPL Medical Pty Ltd v Charmen Pty Ltd

[2019] NSWSC 1824

Supreme Court

New South Wales

Medium Neutral Citation:	IPL Medical Pty Ltd v Charmen Pty Ltd [2019] NSWSC 1824
Hearing dates:	25, 26 & 27 November 2019
Decision date:	18 December 2019
Jurisdiction:	Equity - Commercial List
Before:	Hammerschlag J
Decision:	Plaintiff entitled to judgment for $361,347 and to delivery up forthwith of the bank guarantee. Cross-claim dismissed.
Catchwords:	LANDLORD AND TENANT – construction of leases – extent of tenant’s obligation to repair damage to premises – construction and operation of provisions requiring tenant to pay outgoings – whether amounts charged by the landlord to the tenant were incurred for capital or structural works – entitlement of tenant to return of a bank guarantee provided to landlord as security for tenant’s obligations – entitlement of tenant to damages for landlord wrongfully making demand under the bank guarantee.
Legislation Cited:	Environmental Planning and Assessment Regulation 2000 (NSW)
Cases Cited:	Graham v Markets Hotel Pty Ltd (1943) 67 CLR 567 Hampton Court Ltd v Crooks (1957) 97 CLR 367
Category:	Principal judgment
Parties:	IPL Medical Pty Ltd - Plaintiff Charmen Pty Ltd - Defendant
Representation:	Counsel: M.A. Ashhurst SC with L.D. Corbett - Plaintiff/Cross-Defendant A.R. Zahra - Defendant/Cross-Claimant   Solicitors: Thomson Geer - Plaintiff/Cross-Defendant YPOL Lawyers - Defendant/Cross-Claimant
File Number(s):	2018/92975

Judgment

Introduction

1. HIS HONOUR:   A landlord and its former tenant are in dispute. The tenant claims:

• return from the landlord of a bank guarantee provided by the tenant as security for its obligations;

• damages for the landlord having earlier wrongly made a partial call on the bank guarantee; and

• sundry other amounts.

2. The total of the tenant’s money claims (exclusive of GST and interest) is $393,901, well within the jurisdiction of the District Court. The largest of them is $181,965, the smallest is $358. The hearing of this dispute occupied three Court days.

3. The only concession which the landlord was prepared to make was that it wrongly took $4950 from the bank guarantee for lift maintenance work which was not needed and not done. The landlord waited until the Friday before the hearing before attempting to pay some (not all) of this money back. The tenant justifiably rebuffed the attempt. The landlord, over the tenant’s objections, took various other amounts from the bank guarantee to which it was not entitled. I think it is apt to describe its conduct as rapacious.

4. The landlord cross-claims, relying on a clause which provides that the tenant will pay its costs (including legal costs as between solicitor and client) in relation to any litigation involving the landlord commenced by or against the tenant in which no judgment is recorded against the landlord. This provision has no application, not least of all because the tenant is entitled to judgment against the landlord. The cross-claim will be dismissed.

5. Unless otherwise stated, all amounts referred to in this judgment are exclusive of GST and cents are omitted.

background

6. I shall refer to the plaintiff as IPL, the Lessee or the Tenant. IPL operates a cosmetic surgery medical practice.

7. The defendant owns the four-story building which stands at 263 George Street Sydney (the Building). I shall refer to the defendant as Charmen, the Lessee or the Landlord.

8. The ground floor is conventional retail space. The three upper levels consist of commercial suites.

9. From 1 July 2008 to 30 June 2018, IPL was Charmen’s tenant of the Building. For that period, IPL operated under the business name “Facial Rejuvenation Clinic”.

10. On 13 December 2007, the parties entered into an Agreement for Lease which contemplated the entry into two formal leases, one covering the ground floor and one covering the remainder of the space to be let.

11. The Agreement for Lease was superseded by two ten-year leases, each commencing on 1 July 2008, entered into on 29 February 2008. The leases contained extension options which were not exercised. They terminated on 30 June 2018 and IPL vacated the Building.

12. One lease, which the parties referred to as the Retail Lease, covered the ground floor. It provided for a starting rent of $540,000 per annum. The other lease, which the parties referred to as the Commercial Lease, covered the commercial suites. It provided for a starting rent of $342,930 per annum. The total starting annual rental was thus nearly $900,000.

13. As well as the leases, the parties entered into a deed (the Deed) to which a builder (BBR) was a party. It recorded that BBR would renovate and upgrade the façade and construct a basement fire exit and awning. It recorded that the total contract sum payable by IPL was $530,636 including GST. In the Deed, IPL was referred to as FJC. The Deed recorded that:

In consideration for the works performed by BBR, FJC agrees to pay the Total Contract Sum and Charmen agrees to provide FJC $470,000.00 plus GST for the works.

14. In their mutual dealings, IPL was represented principally by Dr Garry Cussell. Charmen was represented by Mr Charles Mendel. Both swore affidavits and both were cross-examined, Mr Mendel briefly.

15. Charmen also had Colliers International Pty Ltd (Colliers) acting as its agent.

The agreement for lease, the leases and the deed

The Agreement for Lease

16. The Agreement for Lease stated that “[o]nce accepted the parties agree that they are bound by the terms of this agreement and will enter into formal leases reflecting this agreement as soon as practical.”

17. The Agreement for Lease recorded that the rental was inclusive of all outgoings, but the Lessee was required to pay all consumption charges including but not limited to relevant utilities such as electricity, gas, water and telephone. It recorded that:

The Lessee is required to pay any increase on outgoings based on the base year ending 30 June 2008. A break down [sic] of outgoings has been provided.

18. The Agreement for Lease provided that the Lessee would arrange, implement and manage the design and build of the façade and fitout depicted in identified plans.

19. Clause 14 of the Agreement for Lease provided, relevantly:

The Lessee will arrange, implement and manage the design and build of the façade and related works and fit out depicted and referred to in the images and base plans attached to this agreement and those provided to the Lessor including all stonework, glasswork, awnings, structural and finishes thereto. These are the Façade Works. The Lessee will engage for such purpose a reputable builder (likely to be The Builder Construction Group International or another builder reasonably acceptable to the Lessor) and reputable project manager each having in force professional indemnity insurance of a standard and amount commensurate with the quality and nature of the works for which they are engaged. The design is to be approved in writing by the Lessor acting through its architect. Such approvals to be sought and provided prior to Façade Works commencement including for materials and finishes (eg limestone cladding as per the Lessor’s original concept) and all documentation as and when available (including scope of works, materials and finishes schedule and construction methodology) and council submissions / applications and at a level of detail reasonably required to enable approval to be given promptly.

…

The Retail Lease

20. Clause 1.1 of the Retail Lease contains the following definitions:

Base Year means the year ending 30 June 2008;

...

Building Outgoings means the items of expense in relation to the Building properly incurred by the Lessor in relation to statutory or regulatory rates and taxes including Land Tax, insurances, refuse or garbage disposal, pest control, security, caretaking, operating, air conditioning, repairs and maintenance, light fuel or power costs, labour costs, management and general expenditure of any nature incurred in the maintenance or operation of the Building but excluding the costs of lift maintenance and commercial office Common Area cleaning and any costs properly recovered from any other tenant of the Building;

…

Increase in Building Outgoings means the annual increase in Building Outgoings over the Building Outgoings in the Base Year.

…

21. Clause 3, entitled “The Costs of Preparation”. Clause 3.2 provides:

The Lessee will pay to the Lessor its reasonable costs in connection with any application for the consent of the Lessor under this Lease and will pay to the Lessor’s solicitor the Lessor’s reasonable legal costs of and incidental to the exercise or attempted exercise of any right power privilege authority or remedy of the Lessor under or by virtue of this Lease or in connection with any breach or default by the Lessee under this Lease.

22. Clause 6, entitled “Services and Other Charges”, provides:

SERVICES

6.1   The Lessee will punctually pay for all power, utility services, water, gas, electricity, telephone, waste and garbage removal and other services to the Premises (including any connection and hiring charges, meter installation costs, rents and bonds) and, the Lessee must, at its own cost, immediately install separate meters for all such services.

6.2   The Lessee must pay to the Lessor the Lessee’s Proportion of Increase in Building Outgoings [effectively 100%].

…

AIR CONDITIONING

6.5   The Lessee will at its own cost install new air-conditioning in the Premises as and if necessary to enable it to comply with this Lease and the Permitted Use. Lessee will pay when due all costs of installing and operating the air-conditioning including but not limited to electricity, fuel, wages and overheads, maintenance, running costs, costs of replacing major parts, insurance and repairs of the air-conditioning equipment used to air-condition the premises. Despite any other provision of this Lease and subject to all applicable equipment being safe and in good working order and repair, the Lessee may elect to lease in the Premises or building any air-conditioning equipment installed under this clause at the end or sooner determination of this Lease.

23. Clause 8.5, entitled “Make Good Damage”, provides:

8.5   The Lessee will immediately repair and make good any damage caused to the Premises, the Adjoining Areas, any other premises or to the Building or the services or any part of them caused by any act, omission or neglect of the Lessee.

24. Clause 18, entitled “Lessee’s Works, Lessor’s Works and Lessor’s Contribution to Lessee’s Works, provides, relevantly:

18.1   The Lessee must as soon as practicable after the commencement of this Lease effect and complete the Lessee’s Works and, in so doing, must attend to the preparation of the Lessee’s Design Documents, the preparation and lodgement of the Development Application and the attainment of the required Consent and such tasks are at the Lessee’s cost (although the Lessee may use the financial contribution provided by the Lessor pursuant to this clause towards such costs or for such other purposes as the Lessee sees fit).

18.2   The Lessee’s Design Documents will include all necessary detail to enable construction of the Lessee’s Works including but not limited to a scope of works, timeframe and work schedule, measures to minimise interference to other tenants of the Building and schedule of finishes and materials. The Lessee’s Design Documents and the Development Application must be approved in writing by the Lessor prior to lodgement and commencement of the Lessee’s Works. Any alteration to the Lessee’s Design Documents proposed once they have been submitted as part of the Development Application and during the Consent proves must be approved in writing by the Lessor and the Lessor will co-operate with the Lessee to minimise any such alterations including by representation to council or any other relevant consent authority as required.

…

18.4   The Lessee must ensure the Lessee’s Works are affected in the manner represented by the Lessee’s Design Documents and to a standard and finish acceptable to the Lessor as approved by the Lessor’s architect. The Lessee’s Works must be effected by competent contractors in a proper and workmanlike manner free of faults or defects (or if that is not the case that any faults or defects to them are remedied as soon as practicable and at the cost of the Lessee). The Lessee will enter into contracts with the project manager and builder to ensure completion of the Lessee Works. Each of the Lessee’s project manager and builder will indemnify the Lessor (or otherwise be accountable to the Lessor in a way reasonably satisfactory to the Lessor) for the Façade Works and the lessee will ensure that the Lessor is a party to each relevant Lessee Works contract but only for such purpose as set out in this clause and the Lessor must be noted as an interested party under the applicable insurances by the counterparty project manager and builder(s) and must be provided with certificate of currency evidencing same obtained from those counterparties by the Lessee.

18.5   In carrying out the Lessee’s Works, the Lessee will ensure that its contractors and all subcontractors comply with the requirements of the Consent and that the Lessee’s Works are carried out in a manner which causes as little disruption as possible to other tenants of the Building and that access to the building is not restricted or limited. During the Lessee’s Works and once they are complete, the Lessee will ensure that the Building is free from all rubbish and debris resulting from the Lessee’s Works. The Lessee indemnifies the Lessor in respect of all costs, fees, or demands associated with or arising from the Lessee’s Works.

18.6   If it has not already been paid by the Lessor under the Agreement for Lease, the Lessor will contribute an amount of $470,000.00 (plus GST) towards the cost of the Façade’s Works pursuant to clause 14 of the Agreement for Lease (‘Lessor’s Contribution’).

18.7   The Lessee will provide the Lessor with a list of the items comprising the Façade’s Works and the dollar value and useful life of each of them (either stated as inclusive or exclusive of GST in the Lessee’s discretion). Regardless of their total cost below or above the Lessor’s contribution the whole of the Façade Works are to be purchased by the Lessor with the Lessor’s Contribution and will therefore be and remain the Lessor’s property and will be depreciable by the Lessor.

18.8   The Lessee’s contractors must issue directly to the Lessor, and in the name of the Lessor, a valid tax invoice (or valid tax invoices as the case may be) for and specifying such items to the Lessor’s satisfaction including with sufficient details to allow the Lessor to calculate the depreciable values and useful life of the relevant items of the Façade Works and claim input tax credits and at such time(s) the Lessor will pay the Lessor’s Contribution in accordance with all such invoices and up to the total amount of $470,000.00 (plus GST) within 14 days of receipt of such an invoice. The Lessee acknowledges that the Lessor is entitled to claim depreciation deductions for the whole of the Façade’s Works.

…

The Commercial Lease

25. Clause 1.1 of the Commercial Lease contains the following definitions:

(a)   ‘ACCESSORIES’ means all wires, cables, ducts, plant, machinery, fixtures, fittings, equipment, kitchens, toilets, grease traps, wash basins, water, gas and electrical fittings and equipment, pipes, drains, sewers and other services in or to the Premises or the Building owned or controlled by the Landlord other than the Tenant’s Goods;

…

(e)   ‘BUILDING’ means the land and buildings described in Item 4 and includes all improvements in or on the Building owned or controlled by the Landlord, the Accessories, the Fire Equipment, the Landlord’s Airconditioning Equipment and any extensions or alterations to the Building and any part of the Building;

…

(ee)   ‘OPERATING EXPENSES’ means the total of all the Landlord’s costs and expenses paid or payable (without any discount for the amount of GST (if any) payable on the supply and without regard to any input tax credit) or payable in relation to the Building and includes without limitation:

…

(ii)   the cost of providing and maintaining services to the Building including light, power, air-conditioning, ventilation, lifts, escalators, security, supervision, waste removal and the cleaning and lighting of Common Areas;

(iii)   the cost of operating, repairing and maintaining the Building, the Accessories, the Fire Equipment and the Landlord’s Airconditioning Equipment (but not including structural or capital works) [emphasis added];

(iv)   the cost of the management, control and administration of the Building including wages, on costs and consultancy fees;

…

…

(ff)   ‘OPERATING EXPENSES BASE AMOUNT’ means [the amount being the Operating Expenses payable for the calendar year ending 2008].

…

(hh)   ‘OUTGOINGS’ means the total of the Council Rates, Land Tax, Water Rates and Operating Expenses;

(ii)   ‘OUTGOINGS INCREASES’:

(i)   for any period of 1 year during this Lease means the total of the amounts by which

•   the Operating Expenses for that year exceed the Operating Expenses Base Amount;

…

…

26. Clause 3.6 is entitled “Outgoings Increases”. Clause 3.6.1 provides:

3.6.1   The Tenant will pay the Tenant’s Proportion of Outgoings Increases.

27. Clause 5 is entitled “Other Costs”, within which Clause 5.1 is entitled “Stamp Duty and Landlord’s Costs”. Clause 5.1.1 provides, relevantly:

5.1   The tenant will pay the Landlord’s costs (including legal costs as between solicitor and client) in relation to:

…

(c)   any litigation involving the Landlord commenced by or against the Tenant in which no judgment is recorded against the Landlord.

28. Clause 11 is entitled “Works and Overloading”. Clause 11.1.3 relevantly provides:

11.1.3   If the Landlord approves the Works:

…

(b)   in undertaking the Works the Tenant must comply with the requirements of, the law and the relevant public authorities and any reasonable requirements of the landlord; and

…

The bank Guarantee

29. Clause 5 of the Retail Lease required IPL to provide a security deposit for the due and punctual observance and performance of its obligations. [1] It provides:

    1. The Commercial Lease also contained provisions requiring IPL to establish a bank guarantee. It was not suggested that these provisions have any bearing in this dispute separate from or different to that pertinent to the bank guarantee established under the Retail Lease.

5.1

(a)   On the signing of this Lease the Lessee will deposit with the Lessor the sums specified in Item 3 and prior to commencing the Lessee’s Works the sum specified in Item 3A (together called ‘the Deposit’) as security for the due and punctual observance and performance of the Lessee’s obligations under this Lease. The Deposit may be provided by way of a Bank Guarantee. Any cash Deposit paid will be held by the Lessor on behalf of the Lessee in an account bearing interest.

(b)   If the Lessee fails duly and punctually to observe and perform its obligations under this Lease, then the Lessor may in its discretion at any time appropriate and apply so much of the Deposit necessary to compensate it for loss or damage sustained or suffered because of such breach by the lessee. Any appropriation by the Lessor will not waive the Lessee’s breach and will not prejudice any other right of the Lessor arising from such breach.

(c)   If the Deposit or any part of it is appropriated by the Lessor, then within five (5) business days after the date of any demand by the Lessor, the Lessee will reinstate the Deposit by paying to the Lessor he [sic] amount appropriated or by extending or renewing the Bank Guarantee for the amount appropriated.

(d)   If the Lessor assigns or transfers its interest in the Premises, it must pay or transfer to the assignee or transferee the deposit or the balance of the Deposit and any Bank Guarantee then held by it and after doing so will be discharged from all liability to the Lessee or any other person with respect to the Deposit and the Bank Guarantee.

(e)   The Lessor must return the Deposit to the Lessee, to the extent not appropriated by the Lessor under this clause 5.1, on the later of:

(i)   the Termination Date (or, if applicable, the end of any period of holding over);

(ii)   the date that the Lessee complies with all its obligations under this Lease; and

(iii)   the date that the Lessee vacates the Premises.

(f)   The Lessor must return the portion of the Deposit pursuant to Item 3A (the Façade Deposit) on 1 July 2013, to the extent not appropriated by the Lessor on termination of the Lease prior to July 2013 for the purpose of returning the Building Façade and ground floor to a configuration with separate entrances to the commercial portions of the Building and the retail portion of the Building pursuant to the Agreement for Lease and clause 15.1(d) and clause 18.9 of this Lease.

30. IPL duly established a bank guarantee with the Commonwealth Bank of Australia (CBA).

31. On 4 July 2013, Charmen called on the bank guarantee to effect payment to it of $18,254 for fees paid by it to its own architects to supervise the fitout. IPL denies Charmen’s entitlement to this payment.

32. On 15 October 2018, Charmen made a further call on the bank guarantee for $270,115. At the time, the bank guarantee was for $706,833. Charmen required a new guarantee in the amount of $436,717, which was established on 17 October 2018. IPL seeks delivery up of this guarantee.

33. As detailed below, IPL claims $13,430 being an alleged short payment by Charmen of the $470,000 contribution under the Deed. It also claims repayment of $20,700 said to be an overpayment of outgoings. Its other claims are for damages representing amounts demanded by Charmen and paid by CBA under the bank guarantee in circumstances where IPL asserts that Charmen had no entitlement to payment.

34. There was a question as to which party bears the general onus with respect to the question of entitlement or non-entitlement on Charmen’s part to the monies received by it. A claimant generally bears the onus to make out the elements of its claim. An element of IPL’s claims for damages is that Charmen had no right to call on the bank guarantee. Although clause 5.1(b) of the Retail Lease gave Charmen the entitlement to appropriate and apply the deposit only as was necessary to compensate it for loss or damage suffered because of the lessee’s breach, it is IPL that is asserting the lack of entitlement.

35. I have approached the matter on the footing that it is IPL’s onus to establish its case. In considering whether IPL has discharged this onus, it is of course appropriate to assess the evidence according to the ability of each party to bring it. Although a plaintiff is not relieved of offering evidence to support the findings it seeks, slight evidence may be enough where material circumstances are peculiarly within the knowledge of the defendant and the defendant does not explain the evidence away: see Hampton Court Ltd v Crooks (1957) 97 CLR 367 at 371-2 per Dixon CJ.

The façade claim

36. IPL claims $181,965.

37. IPL affixed a sign to the upper façade of the Building, which stated “Facial Rejuvenation Clinic”. It consisted of separate metal letters, each bolted into the surface. It also installed two lighting boxes on the façade, just above the ground floor, to light up the face of the Building. The façade is finished with a screed which one of the parties referred to as “pebblecrete”.

38. When IPL left, it removed the sign and the lighting boxes. The sign was removed by abseilers who descended over the top of the Building.

39. The bolt-holes were filled in and sealed and the section of the façade, where the sign was, was high-pressure-cleaned and acid-washed. The lighting boxes were also removed and the surface repaired.

40. Charmen claims that IPL was obliged to re-screed the whole façade. In effect, it wants a new façade at IPL’s cost. IPL says that it has repaired the damage.

41. Charmen took $181,965 from the bank guarantee for this claim on the footing that this is the cost of re-screeding. However, it failed to lead admissible evidence proving that this is the cost of that exercise. Its alleged quantum is based on a document purporting to be a quote.

42. On 22 November 2019, the last business day before the hearing, Charmen served an affidavit sworn that day by Mr Mendel (the 22 November affidavit), which it sought to read at the hearing to rectify this and other deficiencies in its evidence. The case had been set down for trial on 24 May 2019. Orders had been made for Charmen to serve its evidence by 18 April 2019. I rejected significant parts of the affidavit, having regard to the plain prejudice its admission would have caused IPL. Also, no satisfactory explanation for Charmen’s failure to adduce evidence, which was available a lot earlier, was provided. The time, if ever there was one, when it was permissible for a well-resourced party to conduct litigation in this fashion, has passed.

43. A number of provisions in the leases make IPL responsible for repairing damage to the Building. The principal one relied upon by Charmen is clause 8.5 of the Retail Lease.

44. It is common cause that IPL was obliged to repair the damage. However, IPL argued that its obligation did not stem from any provision in the leases, but was a common law obligation. If this were correct, it would be arguable that its liability to repair would not be secured by the bank guarantee which only secures its contractual obligations. It is not necessary to determine this question because if Charmen’s claim was valid, but it had wrongly called on the guarantee to cover it, IPL would have a claim for damages against Charmen but Charmen would have a co-extensive claim for damages against IPL, which claims I consider would, in equity, be set off against each other.

45. Leaving aside Charmen’s failure to establish the quantum of this claim in circumstances where it had the ability to bring the evidence to establish it, I find that IPL has repaired the façade in any event.

46. I have seen the façade in its repaired state.

47. On the joint application of the parties, I inspected it on 10 September 2019. The façade appears as undamaged, albeit generally grubby. The repairs are invisible to the naked eye from street level.

48. Charmen produced high resolution telephoto photographs on which some dots, where the bolt-holes were, can be seen, and some minimal “shadowing” is discernible where the sign shielded the façade from the sun. Such shadowing as there is will undoubtedly disappear in time in any event. These imperfections are de minimis.

49. Charmen is seeking perfection, not repair. Its position is not that of a reasonable owner. It is not entitled to a new and perfect thing at IPL’s expense. It is not entitled to renewal of the whole: see Graham v Markets Hotel Pty Ltd (1943) 67 CLR 567.

50. Charmen wrongly demanded and received $181,965 under the bank guarantee. IPL is entitled to a verdict for damages against Charmen for this amount.

Fire services:

51. IPL claims $4950.

52. Colliers wrote to IPL on 11 October 2018 (the Colliers letter). They described this claim as “Fire Services – Rassco Services – Makegood of outstanding items to meet compliance requirements”.

53. Charmen demanded and received this amount from the bank guarantee on 15 October 2018.

54. To establish fire services compliance (and displace any suggestion of non-compliance), IPL produced a Fire Contractor Final Safety Certificate, under the Environmental Planning and Assessment Regulation 2000 (NSW), issued on 1 June 2018, certifying the effectiveness of the fire protection system. The certificate recorded that date as the date of the fire protection assessment. The certificate establishes that the fire services met compliance requirements.

55. An earlier certificate, dated 5 May 2018, had been issued which referred to a fire protection assessment of 1 June 2018. This was a plain error. Colliers took the point in the Colliers letter, which led to the issue of a corrected certificate showing 1 June 2018, which IPL gave Charmen on 25 October 2018. Nevertheless, Charmen kept the money.

56. Charmen tried unsuccessfully to support this claim (indeed increase it by $1001) by the 22 November affidavit. The consequence is that IPL provided evidence of compliance and Charmen led no evidence supporting its entitlement.

57. I find that Charmen was not entitled to this money.

58. IPL is entitled to a verdict for damages against Charmen for $4950.

Lift services

59. IPL claims $6610.

60. The Colliers letter described this claim as “Lift Services – Electra Lift Co. – Rebalancing following make good of lift car interior and cleaning lift shaft”.

61. Charmen took this amount, avowedly for lift services. As mentioned earlier, Charmen concedes that $4950 was wrongly taken.

62. Dr Cussell gave evidence, which I accept, of observing that the lift was working properly when IPL left the Building and that a routine service was carried out on 13 June 2018. The only fault noted was that the equipment was dirty due to renovation work.

63. On the other hand, leaving aside its concession, Charmen led no admissible evidence supporting its entitlement.

64. Again, it tried support this claim by its late evidence, which was rejected. It also sought to argue that it was entitled to reduce the amount wrongly taken by an asserted but unproved increase of $1001 for fire services. This explains why it offered to repay IPL only $3949.

65. I find that Charmen was not entitled to this money.

66. IPL is entitled to a verdict for damages against Charmen for $6610.

Repairs to ground floor automatic doors

67. IPL claims $4500.

68. The Colliers letter described this claim as “Automatic entry doors, Ground Floor – Assa Abloy – Repairs to door controller due to lack of regular maintenance”.

69. Dr Cussell gave evidence, which I accept, that on 29 June 2018, he observed the doors being tested by the builder and that they were in good working order when IPL vacated.

70. Charmen led no admissible evidence supporting its entitlement. Again, it attempted to do so by its late evidence which was rejected.

71. I find that Charmen was not entitled to this money.

72. IPL is entitled to a verdict for damages against Charmen for $4500.

The base year dispute claim

73. IPL claims $27,700.

74. As referred to earlier, Charmen provided a breakdown of the base year outgoings as at 30 June 2008. [2]

    2. The Commercial Lease base year was actually the calendar year 2008. No one put that this makes any difference to this claim.

75. The breakdown provided was an estimation. It was provided earlier than the Agreement for Lease, and long before final figures were known.

76. On 27 October 2009, Colliers wrote to Dr Cussell setting out the total outgoings figure for the financial year ending 30 June 2008 totalling $161,628 (being the breakdown figure) and providing details of the 2009 increase in outgoings over the 2008 year. The amount payable by IPL was stated to be $28,628.

77. On 13 January 2010, Ron Dixon of Colliers sent an email to IPL, which stated: “The attached 2008 Base Year Summary I understand reflect the figures provided at the time of the Lease Negotiations with the Leasing Agent.” However, this email apparently did not attach the summary. The summary was provided on 22 January 2010.

78. IPL made payment in accordance with the information provided by Colliers, on behalf of Charmen.

79. IPL contends that the base year figure of $161,628 was an understatement by $2770, so that for each year of the lease, the increase in outgoings claimed by Charmen was excessive to this extent. Over ten years, this would yield $27,700. IPL’s claim is for moneys had and received.

80. IPL says that the alleged understatement was caused by Charmen not including in the Base Year Outgoings certain amounts that were incurred by it in the year ended 30 June 2008. They are:

• invoice from Sydney Fire Protection dated 28 April 2008 for servicing fire alarm – $191;

• an invoice from Sydney Fire Protection dated 29 April 2008 for servicing fire alarm – $191;

• invoice from Electra Lift Co. dated 1 May 2008 for quarterly lift maintenance, paid in advance on 21 June 2008, for July, August and September 2008 – $1072

• invoice from Johnson Controls for draining cooling tower due to risk of legionnaire’s disease – $616; and

• invoice from John Neale Plumbing for work on the sewer line on the ground floor. The invoice is dated 13 June 2008 and payment was on 23 June 2008 – $700.

81. Charmen’s primary answer to this claim is that the 2008 breakdown provided (as recorded in the Agreement for Lease) was an agreed figure which binds IPL and from which it cannot depart, even if it is wrong. This contention was made for the first time by an amendment to Charmen’s List Response, which I allowed during the hearing because it involved no new evidence or prejudice to IPL. The agreement is said to arise from the provision of the breakdown and its use between the parties in calculating amounts which were claimed by Charmen and paid by IPL.

82. At the hearing, Charmen also sought leave to amend to plead an estoppel. I refused leave. To have granted it would have necessitated IPL making unpredicted factual inquiries and no satisfactory explanation for the delay in bringing it forward was given.

83. To the extent that IPL overpaid because the base year figure is wrong, it relied on wrong information given by Charmen.

84. Charmen’s contention that there is an agreement precluding IPL from reclaiming money to which Charmen was not entitled, is rejected.

85. The Agreement for Lease was superseded by the Retail Lease and the Commercial Lease. The obligation of the tenant under the express terms of those instruments was to pay actual increases over actual outgoings incurred in the Base Year. Neither of the instruments refers to the earlier breakdown. When Charmen came to claim increases in outgoings, its entitlement depended on a comparison between the 2008 reality and subsequent years’ reality, not on a comparison between an estimation for 2008 provided by it before the Agreement for Lease and the reality in subsequent years.

86. Charmen had no entitlement to receive and keep more than the actual increase in outgoings. The dealings between the parties do not disclose any outward manifestation that the breakdown would bind their relationship under the leases.

87. As to the Electra Lift Co. invoice, Charmen made the point that the invoice related to lift maintenance after 30 June 2008, and should not be included in the base figure, although it was paid before 30 June 2008. I uphold this contention. This amount should properly have been included in the outgoings for the 2009 financial year.

88. In relation to the Sydney Fire Protection tax invoices, Charmen argued that they were properly excluded from the breakdown because they were paid after 30 June 2008, although the services and the invoice pertained to a date earlier than that. I reject this contention. Under the definition of Building Outgoings, items of expense are included if they are properly incurred. These expenses were properly incurred. It was not open to Charmen to affect the Base Year Outgoings by paying an invoice rendered well before the end of the financial year, after the financial year and not in accordance with the terms of payment. The invoices provide that payment terms are 7 Days from Invoice Date.

89. The result is that the base year figure was, on my calculation, effectively understated by $1698, which, over ten years, would reflect an overpayment by IPL of $16,980.

90. IPL is entitled to judgment accordingly.

Architects’ Fees

91. IPL claims $18,254.

92. Blainey North & Associates Pty Ltd (the Architects) were engaged by Charmen as project manager to supervise and approve IPL’s fitout.

93. On 26 August 2008 and 22 April 2009, the Architects issued invoices to Charmen for amounts of $15,400 and $2,590. Charmen paid these invoices and claimed reimbursement from IPL, which declined to pay. On 4 July 2013, Charmen called on the bank guarantee and was paid, amongst others, $18,254 in respect of the Architects’ fees carried forward. The precise relationship between the total of the invoices and the amount drawn down is not clear.

94. IPL argues that Charmen had no contractual entitlement to be paid fees charged by its own architects. Charmen argued that one or more of clause 14 of the Agreement for Lease, clauses 3.2, 18.4 and 18.5 of the Retail Lease and clause 11.1.3(b) of the Commercial Lease give it that entitlement.

95. I do not think that clause 14 of the Agreement for Lease applies. Save where the Leases make express provision for the Agreement for Lease to apply (such as clause 18.6 of the Retail Lease), the formal leases now embody the rights and obligations of the parties. Clause 15.6(a) of the Retail Lease provides that “[t]his document embodies the whole transaction of leasing made by this Lease…”

96. But even if it does apply, Clause 14 of the Agreement for Lease does not provide for any such entitlement. It provides for the design to be approved in writing by the Lessor acting through its architect and is silent on the question of who bears the cost of the Architects. Absent express provision, this cost is the Lessor’s.

97. Clause 3.2 of the Retail Lease has no application either. The costs which the clause contemplates concern the Lessor dealing with an application for consent. These costs were not incurred in connection with any such application. They were paid to supervise a fitout for which consent had already been given. They were spent to monitor performance.

98. Clause 18.4 also does not provide for any such entitlement. It merely provides for approval by the Lessor’s architect.

99. I do not think that clause 18.5 provides for it either. Clause 18.5 contains an indemnity as part of a larger clause dealing with a specific situation where the Lessor incurs liability because of the conduct of others. I do not think that the clause concerns the situation where the Lessor, of its own volition, incurs a contractual liability in respect of services it obtained for its own benefit.

100. Finally, I also do not consider that the Architects’ fees fall within 11.1.3(b) of the Commercial Lease. They do not represent costs and expenses incurred in connection with the approval of the Works but in connection with the carrying out of the approved Works.

101. The parties are sophisticated and the Leases legislate for their relationship comprehensively.

102. If they had intended that the Lessee should be liable for this expense, they could and would have said so.

103. IPL has established that Charmen wrongly demanded and received $18,254 under the bank guarantee. IPL is entitled to a verdict for damages against Charmen for this amount.

Balance of Fitout costs

104. IPL claims $14,774. [3]

     3. IPL has given differing numbers for this claim.

105. Under clause 14 of the Agreement for Lease and clauses 18.6, 18.7 and 18.8 of the Retail Lease, Charmen was to contribute $470,000 to IPL’s fitout costs. It is common cause that Charmen has short paid IPL. IPL claims this amount. IPL rendered an invoice for it to Charmen on 18 July 2013.

106. Read in combination with each other, the Agreement for Lease and the Retail Lease with respect to this item are infelicitous documents. On the one hand, the Agreement for Lease, read with Clause 18.6 of the Retail Lease, appear to contemplate that this amount will be paid in advance. On the other hand, Clause 18.8 says that the amount is to be paid on presentation of invoices from the Lessee’s contractors, within 14 days. Clause 18 of the Retail Lease must have primacy over the Agreement for Lease. IPL has not complied with the invoice condition in relation to the outstanding balance claimed. The 18 July 2013 invoice does not suffice.

107. It follows that IPL has not made out an entitlement to this claim, and it fails.

outgoings

108. IPL seeks to recover a series of charges claimed by, and paid to, Charmen as Building Outgoings under the Retail Lease or as Operating Expenses under the Commercial Lease. IPL disputes that these charges come within the definitions of Outgoings and Operating Expenses. The items in question total $136,489.

Air conditioning cooling tower – $35,056

109. In June 2014, Charmen replaced the cooling tower for the air conditioning system, reflected in three invoices from Inter-Chillers Pty Ltd (Inter-Chillers) at a cost of $35,056.

110. Charmen recovered this amount from the bank guarantee as an Operating Expense.

111. It was not entitled to do so. The definition of Operating Expenses excludes structural or capital works. I take this to mean the, or a significant part of the, structure or capital asset which generates the rent as opposed to a cost of running it, which includes maintaining it.

112. The cooling tower, as the below photographs (Figures 1 and 2) reveal, is a significant part of the air conditioning system, which is a significant part of the structure of the Building. I find it to be structural or capital works. The expense in installing it is not of the nature of a running cost. It is not an Operating Expense.

113. Charmen’s written submissions articulate the issue as being “whether an upgrade to a cooling tower is capital works”. These works may have represented an upgrade, but it was achieved by replacement.

114. IPL has established that Charmen wrongly demanded and received $35,056 under the bank guarantee. IPL is entitled to a verdict for damages against Charmen for this amount.

Figure 1

Figure 2

115. Charmen sought to rely on clause 7.1.1(f) of the Commercial Lease, which provides that “the Tenant will ensure that any airconditioning equipment in the Premises including, but not limited to, the Landlord’s Airconditioning Equipment is used to its best advantage and that unconditioned air does not filter into any airconditioned part of the Premises”. This provision does not entitle Charmen to recover the cost of structural or capital works.

Replacing electrical switchboards and replacing other air conditioning equipment

116. IPL claims $10,854 and $25,080 respectively.

117. In January 2016, Colliers on behalf of Charmen obtained from Inter-Chillers a Mechanical Services Condition Report. The introductory section of the report refers to Inter-Chillers’ engagement in October 2015 to commence a maintenance programme which included a full site assessment and condition report of all heating, ventilation and air conditioning plant (HVAC) to ascertain the remaining life, condition and outstanding issues.

118. The section then states:

This condition report is to assist in the short and long term planning of operational needs and capital expenditure of the equipment.

119. The report goes on to deal with the economic life expectancy of the HVAC.

120. Colliers provided the report to IPL on 28 January 2016. The report identified that what are referred to as “package” or “PAC” units, had reached their life expectancy, and recommended replacement. These are water cooled units located on each floor. The report also identified poor and dangerous internal wiring in switchboards.

121. Charmen also obtained a report from CJ Air Pty Ltd (CJ Air) which included costings.

122. Charmen engaged a firm called Micron to do work on the electrical switchboards. Micron rendered an invoice on 9 June 2016 for $11,940 for “After hours work to make good of 3 x mechanical switchboards".

123. It is not in dispute that Colliers (on behalf of Charmen) invoiced IPL in an amount of $25,080 in respect of replacement of PAC units.

124. Charmen argued that this work is best characterised as “routine repairs” and included inspection and testing and is recoverable as outgoings.

125. However, the Inter-Chiller and CJ Air reports reveal that the air conditioning system as a whole (except for the cooling tower, which had recently been replaced) had reached the end of its life expectancy and needed to be replaced. The PAC units and mechanical switchboards were part of this process. This replacement of significant air conditioning plant, which had reached its economic life expectancy, was capital or structural works.

126. Charmen was not entitled to recover from IPL the cost of, in effect, replacing the air conditioning system for the whole Building.

127. On 1 September 2016, Colliers wrote to IPL informing it that if it did not pay for these charges, Charmen would make demand under the bank guarantee. Charmen made such a demand and was paid.

128. I find that Charmen wrongly demanded and received sums of $10,854 and $25,080 under the bank guarantee. IPL is entitled to a verdict for damages against Charmen for these amounts.

Building supervisor’s wages

129. IPL claims $35,038.

130. On about 5 September 2016, for the first time during the life of the leases, Colliers on behalf of Charmen rendered an invoice of expense details for the previous financial year which claimed as an outgoing, payable by IPL, “Building Supervisors Wages”, totalling $11,660. The invoice detailed a monthly amount, apparently calculated at an hourly rate. Colliers went on to charge $13,780 for the year ending 30 June 2017 and $13,102 for the year ending 30 June 2018 for this head. [4]

     4. These invoices, ex GST, total $38,542. IPL appears to have deducted GST from a figure which already excludes it to reach the figure claimed.

131. Unsurprisingly, Dr Cussell queried this charge. He wrote as follows to Julia Batterly of Colliers:

Hi Julia,

Please explain why we are required to pay an additional “building supervision fee” when we are already paying Colliers over $31K to manage this small building, which is already an increase from the $13k when you started to manage the same building in 2009.

How can you justify this amazing increase from $13k to $44K over 7 years? This is a 238% increase.

Our rental increase has only been 4% per year.

Please try to justify this.

Thanks.

Garry Cussell

132. Julia Batterly responded:

Hi Garry,

It was agreed with the Lessor that due to the ongoing maintenance issues and increasing WH&S requirements, that we required some FM assistance on the property.

In regards to the management fees, these are charged as a percentage of income, so only increase in line with the rental charges.

Kind regards,

Julia Batterley

133. Mr Mendel gave the following affidavit evidence:

In about May 2015, Colliers recommended an allocation for ongoing facilities management support on the property of 2 hours per week, which equates to the monthly fee of $1,060. Colliers recommended this fee because of increasing regulatory and risk management requirements and as a result of the frequency of complaints by the plaintiff that maintenance issues were not being dealt with promptly.

134. This evidence paints an incomplete picture.

135. There had been earlier correspondence between Mr Mendel and Colliers about this charge. On 27 May 2015, Julia Batterly had written to Mr Mendel as follows:

Hi Charles

I will make the amendments and resend the draft shortly.

We would also like to recommend we include an allocation for ongoing Facilities Management support of the property. We propose an allocation of 2 hours per week, which equates to $1060 per month.

Given the ever increasing WH&S requirements, including annual property risk assessments and the associated ongoing risk mitigation programs, it is becoming essential that we have a specially trained Facilities Manager assigned to every property to ensure we are meeting all of our regulatory requirements. Given the ongoing HVAC issues and the tenant’s constant complaints that maintenance issues aren’t dealt with properly / contractors don’t show up etc, we will also be able to provide a better service to the tenant with a higher time allocation to the property, and will be able to spend more time onsite managing the contractors and the tenant.

Please let me know if this is something the Lessor would be amenable to.

Kind regards

Julia Batterley

136. The same day, Mr Mendel replied:

Can you confirm please Julia that what you are proposing is unambiguously a recoverable outgoing under the lease doc’s?

137. Ms Batterly responded:

Yes, it will be 100% recoverable under the lease agreement as it forms part of the management fee

138. Mr Mendel responded:

In that case it should be included as you suggested thank you Julia.

139. The facts and circumstances giving rise to this alleged outgoing are peculiarly within the knowledge of Charmen and its agent Colliers.

140. IPL correctly challenged this new impost, pointing out that it was already paying a significant amount of money for Colliers’ management.

141. Beyond asserting an agreement with its own agent, Charmen did not adduce evidence justifying it. It made no attempt to show that the services were necessary and were provided or to establish how the amount was arrived at and that it was reasonable. The invoice refers to a salary. It did not explain why salaries paid by it were not simply part of its own overhead. It did not identify the beneficiary of the salary. These are matters peculiarly within the knowledge of its own camp.

142. Part of the justification for the charge was an asserted increase in the work required to deal with IPL itself, no doubt as a result of the antagonistic relationship which then existed.

143. More importantly, however, it is plain that Colliers suggested the levy and Charmen agreed to it on the assumption that it was IPL that would have to pay for it. This further calls into question justification for the charges. The inference is plainly available that had the view not been taken that IPL was liable for it, the charge would not have been agreed.

144. I am satisfied that IPL has sufficiently proved a lack of entitlement on Charmen’s part to have levied these charges.

145. I find that Charmen wrongly demanded and received $35,038 under the bank guarantee. IPL is entitled to a verdict for damages against Charmen for this amount.

Other disputed charges

146. There are 16 other charges, each the subject of an invoice, most of which IPL contends are capital works or otherwise not Building Outgoings or Operating Expenses.

147. The extent of Charmen’s final written submissions on this aspect was:

125.   Once again, IPL bears the onus of establishing that each of those invoices were not payable by it.

126.   Prima facie, the content of each of the invoices supports a finding that the expenses were properly charged as outgoings and payable by IPL.

Servo motor

148. Apparently in April 2009, Liftronic Pty Limited rendered an invoice to Charmen in the following terms:

OH&S S SYDNEY

DTZ PURCHASE ORDER # 2709/1

SUPPLY NEW SERVO MOTOR AS REQUESTED BY RON DIXON

149. The invoice is for $665.

150. The invoice is the only evidence justifying the charge. But it does not explain what a servo motor is, what it was to be used for and why it was needed. These are matters within the knowledge of Charmen and its agent.

151. There is thus evidence of a payment for reasons which on their face are not shown to be recoverable against IPL under the lease, with no explanation from those having actual knowledge. Charmen has chosen to rely only on onus.

152. In the circumstances, IPL has sufficiently proved that Charmen was not entitled to this money.

153. IPL is entitled to a verdict for damages against Charmen for this amount.

Water leak

154. IPL claims $1995.

155. On 5 June 2009, CBD Building Services Pty Ltd rendered an invoice to Charmen for locating and repairing a water leak. The invoice provides details of the work done and goods supplied. Part of it is clearly Operating Expenses. But it includes “supplying and installing waterproof ductwork over end of fresh air intake”, which I think is of the nature of capital works. The invoice, however, does not apportion amounts to various items. In the circumstances I am not satisfied that IPL has established an entitlement to be repaid a particular amount. The claim fails.

Replacement of cooling tower fan

156. IPL claims $1500.

157. On 15 March 2010, Johnson Controls Pty Ltd (Johnson Controls) rendered an invoice for “replacement of cooling tower fan”.

158. This is part of the replacement of the cooling tower, which I have found is capital or structural works. Charmen was not entitled to recover this amount from IPL, and IPL is entitled to judgment for $1500 accordingly.

Replace condenser water pump

159. IPL claims $4000.

160. On 15 March 2010, Johnson Controls rendered an invoice for “replace condenser water pump”.

161. This is part of the replacement of the air conditioning system, which I have found is capital or structural works. Charmen was not entitled to recover this amount from IPL, and IPL is entitled to judgment for $4000 accordingly.

Replacement of faulty probe on conductivity controller

162. IPL claims $358.

163. On 2 June 2010, John Controls rendered an invoice for “replacement of faulty probe on conductivity controller”.

164. There is insufficient to conclude that this account, which concerns rectification of a single fault, is not appropriately to be viewed as an Operating Expense. I am not satisfied that IPL has established an entitlement to a refund.

Replacement of mechanical isolation

165. On 28 March 2012, Johnson Controls rendered an invoice for $2250 for “replacement of main mechanical isolation”.

166. The invoice itself does not provide information to explain the nature of the claim. IPL justifiably questioned this charge.

167. The invoice appears to be for the replacement of a significant piece of capital works equipment. Charmen did not produce evidence of the basis for the charge.

168. In the circumstances, IPL has sufficiently proved, on the probabilities, that Charmen was not entitled to this money. IPL is entitled to judgment for $2250 accordingly.

Replacement of cooling tower fan controller, replacement cooling tower fan motor, installation of new condenser water strainer and replacement of faulty isolator for mechanical board

169. Johson Controls rendered invoices for these items on 28 August 2013 ($1281), 25 September 2013 ($2670), 1 May 2014 ($1156) and 16 October 2014 ($941) respectively.

170. IPL submits that these amounts are capital or structural works.

171. On their face, the invoices may reflect legitimate Operating Expenses. There is insufficient to conclude that they are not appropriately to be so viewed.

172. These claims fail.

Project management fee for cooling tower replacement

173. On 27 August 2014, Colliers rendered an invoice to Charmen for $4000 in the following terms:

Fee Calculation

Project Management Fee for Cooling Tower Replacement

174. I have already found that the replacement of the cooling tower was not properly for IPL’s account. A fortiori, a fee of $4000 agreed between Charmen and Colliers (also presumably on the footing that IPL would pay for it) to manage that project was not a legitimate charge.

175. IPL is entitled to judgment for this amount.

Property risk assessment

176. IPL claims $925.

177. On 9 October 2014, an organisation called Australian Essential Services Compliance rendered an invoice to Charmen, care of Colliers, for the above amount for “Property Risk Assessment conducted on 12/09/2014 and provision of report as per your work order: PO87836”.

178. On its face, this charge appears to relate to a report assessing risks in connection with Charmen’s ownership of the Building, for its own benefit or protection, which is not a Building Outgoing or Operating Expense.

179. Charmen led no evidence to justify this charge.

180. The Court was not taken to the work order, or to the report.

181. IPL is entitled to judgment for this amount.

Essential safety measures audit

182. IPL claims $500.

183. On 24 February 2015, Australian Essential Services Compliance rendered an invoice to Charmen, care of Colliers, for:

Essential Safety Measures Audit conducted on 20/02/2015 and provision of Status Report

Essential Safety Measures Stage 2: Resolution management of non-compliant issues and compliance certification

-    Assistance to implement an action plan to resolve any identified ESM non-compliant issues

-   Seek compliance certification documentation from appointed contractors

-   Provide Compliance certification in accordance with statutory requirements

184. On its face, this charge appears to relate to an audit of safety for Charmen in connection with its ownership of the Building, for its own protection, which is not a Building Outgoing or Operating Expense.

185. Charmen led no evidence to justify this charge.

186. The Court was not taken to any Status Report. What compliance certification was required or provided was not explained.

187. IPL is entitled to judgment for this amount.

Replacement of box gutter

188. IPL claims $2180.

189. On 29 February 2016, John Neil Plumbing rendered an invoice to Charmen, care of Colliers, for “Replaced approx 4 metres of box gutter, as per quotation”.

190. Charmen lead no evidence to justify this charge.

191. In my view, gutters are an essential part of the structure of the Building, and replacement of metres of it is structural.

192. IPL is entitled to judgment for this amount.

Make good report

193. IPL claims $3200.

194. On 31 July 2016, Colliers rendered an invoice to Charmen for the above amount for “263 George St Commercial Make Good Report”.

195. The report is in evidence. It records that the report “is analysing the two leases that capture the four floors of 263 George St.” It records that Colliers had reviewed the relevant portion of the lease for reference and have identified and had regard to the comprehensive clauses and provisions which require make good and the associated obligations. It records that the report is based on assumptions, which seek to detail the level of works, compliance and adherence to typical industry standards for commercial/fitout works. It includes as Appendix A a cost estimate, and as Appendix B a comprehensive set of plans.

196. The cost of this report is not a cost legitimately for the account of IPL. IPL’s obligations to make good are set out in the leases. Charmen’s cost of advice and counsel obtained from its agent as to the extent of these obligations and the cost of complying with them is its own.

197. IPL is entitled to judgment for this amount.

Removal and disposal of redundant duct

198. IPL claims $2840.

199. On 10 March 2017, CJ Air invoiced Charmen, care of Colliers, for: “Removed and disposed of redundant duct from side of building.”

200. This is not a repair or maintenance. It is structural.

201. This is not a cost legitimately for the account of IPL.

202. IPL is entitled to judgment for this amount.

Return of the bank guarantee

203. The leases have not been on foot for some 18 months and IPL has vacated the Building. There is no evidence that persuades me that IPL is in any way in breach of them or has not complied with its obligations. To the contrary, it is Charmen who has breached the leases by calling on the bank guarantee to effect payment to itself of amounts to which it was and is not entitled.

204. The only defence to delivery up of the bank guarantee is a contention by Charmen that it is entitled to hold on to it pending it being compensated for its costs under the indemnity contained in clause 5.1.1(c) of the Commercial Lease. I have already dealt with why it has no such claim.

205. There will accordingly be an order that Charmen forthwith deliver up to IPL the bank guarantee.

conclusion

206. Subject to any arithmetical adjustments to correct any errors, including ones I am revealed to have made, and the calculation of pre-judgment interest, IPL is entitled to judgment against Charmen for $361,347 made up as follows:

Description	Amount
Façade reinstatement	$181,965
Fire services	$4950
Lift services	$6610
Automatic door repairs	$4500
Base Year Outgoings dispute	$16,980
Architects’ fees	$18,254
Cooling tower	$35,056
Replacing electrical switchboards and other air conditioning equipment	$35,934 [5]
Building supervisor wages	$35,038
Servo motor	$665
Replacement of cooling tower fan	$1500
Replacement of condenser water pump	$4000
Replacement of mechanical isolation	$2250
Project management fee for cooling tower replacement	$4000
Property risk assessment	$925
Safety measures audit	$500
Replacement of box gutter	$2180
Make good report	$3200
Removal and disposal of redundant duct	$2840

5. $10,854 + 25,080.

207. I will stand the matter over to enable the parties to bring in short minutes, to draw to my attention any arithmetical errors and to draw to my attention any further issue that requires to be dealt with, including costs and how GST is to be dealt with.

207. The exhibits are to be returned.

**********

Endnotes

Decision last updated: 18 December 2019