Konstantopoulos v R and M Beechey Carriers Pty Ltd

[2010] NSWSC 753

CITATION:	Konstantopoulos v R & M Beechey Carriers Pty Ltd [2010] NSWSC 753
HEARING DATE(S):	15 February 2010; 16 February 2010; 17 February 2010; 18 February 2010; 19 February 2010; 25 February 2010
JUDGMENT DATE :	9 July 2010
JURISDICTION:	Common Law
JUDGMENT OF:	Simpson J
DECISION:	Verdict for the defendants.
CATCHWORDS:	CONTRACTS – construction and interpretation of lease – whether lessees liable for damage caused to premises - TORTS – negligence - whether lessees owed the plaintiffs a duty of care – whether damage caused to premises in breach of duty – use of premises within the permitted use specified in lease does not give rise to liability in negligence - CONTRACTS – claim for unpaid rent – no submissions directed to claim – evidence limited – plaintiffs given further opportunity to establish claim on evidence already adduced
CATEGORY:	Principal judgment
PARTIES:	Steve Konstantopoulos (First Plaintiff) Rosa Konstantopoulos (Second Plaintiff) R & M Beechey Carriers Pty Ltd (First Defendant) Ratcliffe & Polly Pty Ltd (Second Defendant) Matthew Beechey (Third Defendant) Benjamin Joseph Beechey (Fourth Defendant)
FILE NUMBER(S):	SC 2008/283086; 2008/289517
COUNSEL:	E Cohen (Plaintiffs) G Carolan (1st & 3rd Defendants) M S White/R Gration (2nd & 4th Defendants)
SOLICITORS:	S Naris (Plaintiffs) Frank Legal (1st & 3rd Defendants) Diamond Conway Lawyers (2nd & 4th Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Simpson J

9 July 2010

2008/283086 Steve Konstantopoulos & Anor v R & M Beechey Carriers Pty Ltd & Ors

2008/289517 Steve Konstantopoulos & Anor v R & M Beechey Carriers Pty Ltd & Ors

JUDGMENT

1 HER HONOUR: These proceedings were commenced by Statement of Claim filed in the District Court on 27 February 2006. They were subsequently transferred to this Court. The operative initiating process is a Further Amended Statement of Claim (“the FASOC”) filed on 27 March 2009.

2 The FASOC pleads causes of action in contract and in tort (negligence).

3 The plaintiffs are Steve and Rosa Konstantopoulos. The first defendant is R & M Beechey Carriers Pty Ltd (“Beechey”). The third defendant is Mr Matthew Beechey, the director of Beechey. The second defendant is Ratcliffe & Polly Pty Ltd (“Ratcliffe”). The fourth defendant is Benjamin Ratcliffe, a director of Ratcliffe. Matthew Beechey and Benjamin Ratcliffe are sued as guarantors of the contractual obligations of, respectively, Beechey and Ratcliffe.

4 Beechey was a transport company that, inter alia, collected shipping containers from Sydney wharves and stored and/or delivered them.

5 Ratcliffe operated a custom and warehousing business. It specialised in waterfront work involving cartage of full containers of goods from wharves.

6 The contract upon which the plaintiffs sue is a lease of part of commercial and industrial premises situated at 25 Fairfield Road, Fairfield, of which Beechey and Ratcliffe jointly were the Lessee.

7 The plaintiffs allege that, during the course of their occupation of the premises pursuant to the lease, Beechey and Ratcliffe caused damage to the premises, and that they are liable for the cost of repairs. The plaintiffs also allege that Beechey and Ratcliffe owed the plaintiffs a duty of care and that, in breach of that duty, they caused damage to the property. There is a further claim for rent alleged to be owing.

Background

8 As at 23 November 2002, the registered proprietor of the Fairfield premises was Corpcode No 7 Pty Ltd (“Corpcode”).

9 The Fairfield premises extended over a little more than 3 hectares, on six certificates of title. Erected thereon were six separate freestanding buildings (known as Buildings A, B, C, D, E and F). These were occupied by various different entities. The main frontage, to the south, was on Fairfield Road, from where there was a substantial driveway entrance. This provided access to the premises to the various occupants, and was known as “the common area” or “the common property”. The western boundary was on Donald Street, roughly perpendicular to Fairfield Street. There was a rear access gate from Donald Street.

10 On 23 November 2001 Corpcode leased part of the Fairfield premises to Beechey and Ratcliffe as tenants in common in equal shares. The term of the lease was three years, with an option to renew for a further three years. Although it will be necessary in due course to pay more attention to the terms of the lease, it is sufficient at this point to say that the part of the premises the subject of the lease was that identified as “Building F”. Building F was on the north-west corner of the premises and consisted of office and warehouse accommodation. Building F faced towards Donald Street, on the west. Access was gained to Building F by the driveway (the common property) that led from Fairfield Road. Surrounding the building on three sides was a concrete surfaced apron known as “the hardstand” area. A plan annexed to the lease identifies the hardstand area. In part the hardstand area adjoined the driveway. Running parallel with the eastern border of the hardstand area was a fence, a gateway which provided access to the hardstand area, and to Building F. Theoretically, the fence marked the boundary of the hardstand area. However, whether that was so is questionable. The evidence suggests that the fence was constructed a little to the west of what is truly the boundary.

11 Included in the lease was an exclusive licence to Beechey and Ratcliffe, coextensive in time to the lease of Building F, to use the hardstand area. The terms of the licence were identical to those of the lease.

12 The lease permitted Beechey and Ratcliffe to use the premises as a transport depot for receiving and storing shipping containers. Because of the nature of the business, Beechey and Ratcliffe took the precaution of having inserted into the lease certain provisions that protected them against the consequences of any damage to the concrete surface. There was some evidence of the pre-lease negotiations that led to the insertion of these provisions. The use that can be made of this evidence is limited.

13 Also included in the lease provisions were guarantees and indemnities provided by Matthew Beechey and Benjamin Ratcliffe (and another person who is not a party to the proceedings).

14 What was an authorised (by the local council) use of the premises was resolved after an appeal in the Land and Environment Court in November 1990. Development consent was granted for the use of Building F for:

“… the storage of goods, general merchandise and materials …” (Ex 1D12)

15 Conditions were attached to the consent, and certain of those conditions feature in the present dispute. The conditions limit the hours of operation; condition 6 requires “works and storage” to be contained within Building F, with specified exceptions. One exception, contained in condition 6(i), permitted storage of a maximum of 40 containers associated with the use of Building F, to a maximum height of 2 containers, in a specifically designated portion of the hardstand area. Condition 6(iii) identified an area designated for loading and unloading containers. To be noted for present purposes, the conditions required all vehicle egress to be via Donald Street, and, accordingly, that the security gates to that street remain open during business hours.

16 In or about May 2003, during the currency of the lease and licence, the Fairfield premises were purchased by the plaintiffs. Thereafter, two of the buildings (Buildings C and E) were occupied by companies associated with the plaintiffs. One of these was a company called H & O Pharmaceuticals Pty Ltd, which imported, in containers, health and beauty products.

17 Upon execution of the lease, Beechey took up occupation. The arrangements between Beechey and Ratcliffe are not clear, but it seems that, for a substantial part of the lease term, Ratcliffe also occupied or used the premises. It seems reasonably clear that the premises were predominantly occupied and used by Beechey for the purpose of its transport and storage business.

18 Beechey’s business involved picking up containers from Sydney wharves, transporting them to the warehouse, storing containers, opening containers and storing goods, and delivering goods throughout Australia. On occasions Beechey used its machinery for the purpose of moving containers belonging to other occupants of the Fairfield premises, including H & O Pharmaceuticals.

19 At the commencement of the lease, Beechey had approximately eight trucks and 15 trailers, of varying sizes. Two of the trucks were of the variety known as “B-doubles”, consisting of a prime mover and two trailers. One of the vehicles was a Luxford forklift used for moving containers.

20 Beechey’s practice was to pick up laden containers from the wharves, transport them to the Fairfield premises, and store them at those premises. In some cases, its employees unpacked the containers for the customers. Some containers were then transported to customers, others were stored at the premises. It was the practice to store loaded containers on the hardstand area. It became (at a time not clear on the evidence) the practice for Beechey’s trucks to enter and exit the premises via the Fairfield Road driveway. The Donald Street gate was not used. This was because it did not have the capacity to carry vehicles of the dimensions, or weight, of the B-doubles.

21 Initially, unpacked containers were also stored, empty, on the hardstand area. However, in later times, as the business expanded, a practice developed of storing empty containers along the fence line, on either side of the fence. In order to do this, it was necessary for a forklift to travel on the concrete driveway, outside the fence.

22 Goods that had been unpacked from containers were stored in the warehouse. Containers, whether unpacked or not, were not stored in the warehouse.

23 A significant amount of evidence was directed to the condition of the hardstand area at the time of the commencement of the lease. There was considerable photographic evidence of the condition of the hardstand, at various times. The earliest of the photographs appear to be those brought into existence for the purpose of a valuation of the property at the time the plaintiffs were considering purchase. That valuation is dated April 2003, after Beechey and Ratcliffe had been in occupation for about 16 months. So far as can be gauged from the photographs, the hardstand area appears to have been in reasonable condition. Mr Konstantopoulos claimed that there were only a few small cracks in the surface, and what he identified as some small holes. That was not the view of Matthew Beechey, who described the condition of the hardstand area at the commencement of the lease as “badly cracked and in generally poor condition”. I have not found it necessary to resolve this dispute. However, I note that the author of the valuation report, even after 16 months’ occupation by Beechey and Ratcliffe, made no adverse comment about the condition of the concrete.

24 In September 2003, after the purchase by the plaintiffs, Matthew Beechey requested, of Mr Konstantopoulos, that repairs to the hardstand be effected. Mr Konstantopoulos agreed, and repairs were effected, at his expense. Matthew Beechey was unimpressed with the quality of the repair work done.

25 In December 2004, Matthew Beechey again complained of damage to the concrete and requested further amelioration work. Mr Konstantopoulos paid for repair work, although, on this occasion, the contractors were organised by Matthew Beechey.

26 In April 2004, Beechey replaced the Luxford forklift with another, larger, forklift, a Mitsubishi. There is dispute over certain aspects of the purchase and use of this vehicle. It is, however, common ground that this was a significantly larger and heavier vehicle than the Luxford. A good deal of attention was directed to establishing the weight and operation of the Mitsubishi, in an attempt to compare it with the Luxford. This attempt was frustrated by the absence of any real information about the size or weight or operation of the Luxford, which Beechey had disposed of. One matter that might be mentioned here, because of the relevance placed upon it on behalf of the plaintiffs, is that its height exceeded that of the entrance to the warehouse, which it could therefore not enter.

27 It was Mr Konstantopoulos’ evidence that he protested to Matthew Beechey about the use of the Mitsubishi, telling him that the newly repaired concrete surface would not tolerate the pressure imposed by it, but that Mr Beechey insisted on continuing to use it. This conversation was denied by Mr Beechey. It is unnecessary to resolve this disputed issue of fact.

28 At the same time, according to Mr Konstantopoulos, he observed an increase in the level of activity on the Beechey site. He also said that, at that time, he observed that the concrete driveway on the common area was being damaged and broken. He claims that he asked both Matthew Beechey, and his father, Ronald Beechey, to ensure that trucks were not unloaded on the common area because the machine was breaking up the concrete. He said that they ignored these requests. This, too, was denied by both Matthew Beechey and Ronald Beechey. Again, it is unnecessary to make findings with respect to this disputed evidence.

29 Mr Konstantopoulos, and others, gave evidence that they observed the Mitsubishi’s wheels spinning, the tyres sinking into the concrete surface, and clouds of dust. This, also, was denied by Matthew Beechey. As with other disputed issues of fact, it is unnecessary to make findings as to where the truth lies.

30 Mr Konstantopoulos also gave evidence that chain-wire fences on the eastern and western sides of Building F were damaged and that Mr Ronald Beechey accepted responsibility for repairs. He said that one of the fences (the eastern fence) was repaired, but the other was not, and that the plaintiffs had had the fence repaired at the cost of $6120. The evidence of Ronald Beechey was that the fence on the western side “was always in disrepair”, and was of about 8-9 metres in length. Again, there is no adverse comment in the valuation report with respect to the condition of the fence.

31 Mr Konstantopoulos gave evidence, also, that on his purchase of the property, a roller door on the eastern side of Building F was working and in good condition, but that when Beechey vacated, it was broken. He said that he had had the door repaired, but replacement would cost $3500.

32 Finally, he said that, on purchase, there was a garden area on the western side of Building F on common property but that, when Beechey vacated, the garden had been destroyed and the area was covered with tyre tread marks. A similar position applied in relation to a garden area on the southern side of Building F.

33 The lease expired on 22 November 2004. Beechey and Ratcliffe did not exercise their option to renew. Beechey remained in occupation, on a monthly tenancy, until 20 July 2005, when it vacated. (It is not clear, on the evidence, to what extent, or for how long, Ratcliffe occupied the premises.)

34 Evidence of the condition of the property following vacation by Beechey is to be found in photographs taken by Mr Costa Konstantopoulos, the son of the plaintiffs. These photographs clearly show considerable damage both to the hardstand area and to the common property. That there was such damage was not disputed.

35 A good deal of evidence was given about the cause, and location, of this damage. A survey of the area, prepared by Mr Eric Brown, a surveyor, maps out areas of “cracked” and “destroyed” concrete. The survey, however, does not delineate between the hardstand area and the common areas. Nevertheless, this can, up to a point at least, be determined by deduction.

36 A number of structural engineers provided reports for the plaintiffs. The effect of the report of Mr Emil Jankulovski is that the use of the Luxford, unladen, would not have caused significant permanent damage to the slab, but that, laden with a 20 foot container, it would be expected to produce some permanent cracks to the slab which, on repetition, would be visible as cracks, spalling, and breaking up of the surface. Use of the Mitsubishi, unladen, would be expected to cause some permanent damage, and when laden with a 40 foot container, would “unquestionably” cause major permanent and irreversible damage to the concrete slab. This damage would consist of larger cracks, spalling and breaking up of the surface with permanent settlements of up to 10 millimetres to 20 millimetres.

37 I interpret Mr Jankulovski’s report to be referring, at least principally, to the hardstand area. It is not impossible, however, that by referring to “the concrete slab” Mr Jankulovski also intended to include the common area driveway, which may be seen to be a continuation of the hardstand area.

38 The other structural engineer who reported for the plaintiff was Mr Edward Bennett. In fact, Mr Bennett provided at least three reports. I did not find them very useful. Mr Bennett appeared to regard himself as speaking for (rather than advising) the plaintiffs.

39 In a letter of 3 May 2007, the plaintiffs’ solicitors asked Mr Bennett to report on:

“… whether the use of the Mitsubishi forklift on the hardstand and the common areas could have caused the damage to the respective areas.”

They told Mr Bennett that he could:

“… assume only the Mitsubishi forklift was used in the common area.”

40 Mr Bennett interpreted this to be a request for a report:

“… that determines the cause and effect of the damaged slabs and a cost estimate for its replacement. … [and to] comment on damages caused to the roller-door, chain-wire fencing and reconstruction of landscaping items …”

It may be, of course, that Mr Bennett’s written instructions were supplemented orally.

41 Mr Bennett referred to the damage as depicted in a “photographic record” and advised:

“The damage is magnified dramatically in that a major re-construction of the slabs in th[e] area nominated as the ‘hardstand area’, which is approx. one third (1/3) of the total area, cost the client in the order of $100,000.00 in early 2004, and has now been rendered destroyed by the negligence of the equipment operators. There are slab areas in the older common areas that have been completely destroyed by this negligence.”

(It was not part of Mr Bennett’s role to determine, or comment on, whether the damage was caused as a result of negligence on the part of Beechey’s employees.)

42 In a later report (22 October 2008) Mr Bennett recorded that, on 10 October 2008, he had attended at premises at Villawood then occupied by Beechey. There he observed a Mitsubishi container loader in operation under the supervision of, he believed, Matthew Beechey. In a report dated 22 October 2008, following that inspection, Mr Bennett said that he observed that the concrete and sub-grade at those premises had already suffered extreme damage. He therefore assumed that the damage had occurred as a result of the operation of the Mitsubishi. Just what use Mr Bennett put these observations to is not clear, although it may be inferred that he extrapolated from his observations at Villawood that the Mitsubishi had caused damage at the Fairfield premises. If that is what he intended, I find his reasoning process unpersuasive. One other circumstance casting doubt on Mr Bennett’s observations and reasoning is that other evidence establishes that, at the Villawood premises, the ground surface is of compacted dirt, and not concrete.

43 In this report, Mr Bennett also recorded having observed another container yard pavement of the same design as the Fairfield premises, at which he observed no cracking within the yard. He stated his belief that:

“… this well maintained machinery and organized operation of a container yard with trained operators would not have caused damage to [the Fairfield premises] from normal operations.”

This was plainly intended to cast aspersions on the Beechey operation, on the flimsiest of bases. I take a view of this reasoning process similar to that earlier expressed.

44 Mr Ian Duncan, an electro-hydraulic engineer, was asked to comment on reports provided on behalf of Beechey. In an affidavit, he said that he received “further instructions”, but it is not clear precisely what his instructions were.

45 In any event, he proceeded on the assumption that damage occurred after the commencement of the use of the Mitsubishi, damage that had not occurred during the operation of the Luxford. He therefore theorised that the damage could only have been caused by one or more of the following factors:

● the Mitsubishi was heavier.
● the wheel loading of the Mitsubishi was greater.
● the manner in which the Mitsubishi manipulated shipping containers was different.

46 Unfortunately, he then proceeded to comment upon the value to Beechey of the purchase of the Mitsubishi. He asked, rhetorically:

“as such what was to be gained by replacing the Luxford if it was rated for 29T[onnes]?”

That is, he appears to have considered his role to be to comment on whether the Mitsubishi was necessary to Beechey’s operation. That is not correct.

47 In a report prepared at the request of Beechey’s solicitors, Mr Robert Munn, also a civil engineer, expressed the view that “most of the damage” had been caused by:

“normal operation of the Luxford and Mitsubishi forklifts in loading and unloading containers at [the Fairfield premises]”.

48 It is unnecessary to analyse any further the reasoning of the various experts.

49 There is, undoubtedly, some damage caused to the hardstand area, and I have no difficulty in concluding that it was caused by the operations of Beechey in using the premises for the purpose for which they were leased. So much, it is clear, was anticipated before the lease was entered. I also consider it likely that, whatever damage (if any) was caused when the Luxford was in operation, the introduction of the Mitsubishi significantly magnified the damage. The question, however, is whether Beechey is liable for the cost of repair of either or both of the hardstand area and the common property. The simple answer made on behalf of Beechey to the plaintiffs’ claim is that, by reason of the terms of the lease, it is not so liable.

The lease

50 Specific clauses of the lease, of present relevance, are:

“7.1 The Lessor acknowledges and accepts that the Lessee’s permitted use of the Premises includes the regular passing and re-passing of the Land by the Lessee’s trucks and the loading and unloading of shipping containers therefrom and the use of a large container forklift for moving containers from outside to undercover and vice versa.

7.2 The Lessor accepts that any damage requiring repair arising from the Lessee’s use of the concrete hardstand area under the Licence referred to in clause 8 for the purposes aforesaid will fall within the ‘reasonable wear and tear’ exception referred to in Clause 5.1. The Lessor covenants with the Lessee that the Lessor will, promptly and as soon as practicable after the Lessee shall notify the Lessor of the need to repair the hardstand area affected by fair wear and tear, cause the hardstand area affected by fair wear and tear to be repaired.

7.3 Subject to Clause 7.2, the Lessee shall maintain and repair the concrete hardstand area having regard to the state of repair at the Commencement Date.

7.4 …

8.1 … The Lessor hereby grants to the Lessee the right and licence (‘the Licence’), for the period commencing on and from the date referred to in Item 5 of the Reference Schedule [23 November 2001] and terminating on the date referred to in Item 6 of the Reference Schedule [22 November 2004], to use that portion of the Land being the area hatched on the plan annexed hereto marked ‘A’ (the ‘licensed area’) to the exclusion of all other persons except the Lessor its successors and assigns (and in exercising its rights as Lessor hereunder the Lessor shall do so in such manner as not to prevent the operation of the Licence) for the permitted use … If the Lessee continues in occupation of the demised premises with the consent of the Lessor after [23 November 2001] then the Lessee shall in respect of the licensed area become a monthly licensee only of the Lessor upon and subject to the terms conditions and covenants contained in this Lease so far as the same are capable of application in respect of a holding over by the Lessee in respect of the Licence.

8.4 The terms, conditions and covenants of the Lease and the rules and regulations thereunder shall apply to this Licence so far as the same are capable of application to the licence and the Lessee shall observe and perform such terms, conditions and covenants on the part of the Lessee to be observed and performed so far as the same are capable of application to the Licence.”

51 “Land” (see cl 7.1) is not defined in the Lease. It is defined in the Memorandum in such a way as to mean the whole of the Fairfield premises.

52 Specific provisions of the Memorandum, of present relevance, are:

“Part 5 – Maintenance repair and alterations

Lessee to maintain and repair

5.1 The Lessee will during the whole of the Term and otherwise so long as the Lessee may remain in possession or occupation … maintain, replace, repair and keep the whole of the Demised Premises in good and substantial repair working order and condition … (having regard to their condition at the commencement of the Lease) … This covenant shall not impose on the Lessee any obligation in respect of any structural maintenance replacement or repair except when the same is rendered necessary by any act neglect default omission or misconduct on the part of the Lessee … The Lessee acknowledges that the Demised Premises were in good and substantial repair order and condition at the commencement of the Term.

Compliance with requirements of authorities

6.7 The Lessee will at all times forthwith comply with and observe at the Lessee’s own expense all statutes, ordinances, proclamations, orders and regulations present or future affecting or relating to the Demised Premises …

…

PART 13 – MISCELLANEOUS

Suitability of Premises

13.1 The Lessee acknowledges and declares that no promise representation warranty or undertaking has been given by or on behalf of the Lessor in respect of the suitability or adequacy of the Demised Premises for any use purpose or business to which the Demised Premises may be put … The Lessee accepts the demised premises in their present state of repair and condition and will make no objection to any matter arising therefrom.

…

Necessary Consents

13.14 The Lessee shall at its own cost and expense take such steps and do all such acts matters and things and shall be responsible for obtaining all such consents or approvals of any competent authority as shall or may be necessary or desirable to enable the Demised Premises to be used by the Lessee for the purposes for which they are leased to the Lessee …

…

Maintain Licences and Permits

13.28 The Lessee shall maintain and renew from time to time all registrations licences permits and consents required for the conduct of the Lessee’s business in or upon the demised premises and shall at all times comply in all respects with the requirements or conditions in respect of any industrial, local government or other legislation … in regard to the conduct of the said business and shall indemnify and keep the Lessor indemnified in respect thereof.”

53 Central to the plaintiffs’ claims, and the key to the resolution of the principal part of the proceedings, are cl 7.1 and cl 7.2 of the lease.

54 By cl 7.1 the Lessor acknowledged and accepted that the Lessee’s business involved “the regular passing and repassing of ‘the Land’” by their trucks, and the loading and unloading of shipping containers therefrom, and the use of a large container forklift for moving containers from outside to undercover, and vice versa.

55 By cl 7.2, the Lessor accepted that any damage requiring repair arising from the Lessee’s use of the concrete hardstand area would be accepted as “reasonable wear and tear”, and be excepted from the Lessee’s obligation to repair damage, as provided by cl 5.1 of the Memorandum.

56 The defendants’ position is, simply, that cl 7.1 and cl 7.2 afford a complete defence to the plaintiffs’ claim concerning damage to the hardstand area and also to their claim concerning damage to the common property.

57 Counsel for the plaintiffs advanced a number of arguments in contradiction of that conclusion.

58 I will deal with each of the plaintiffs’ arguments in turn.

(i) Is damage caused by Beechey’s use of the premises within the exception provided by cl 5.1 of the Memorandum, to Beechey’s obligation to repair?

It was firstly argued that any damage to the hardstand area caused by Beechey’s business activities does not come within the “reasonable wear and tear” exception to the repair clause contained in cl 5.1 of the Memorandum; that is because of the terminology in cl 7.2 of the lease. To repeat, so far as relevant, by that clause the Lessor acknowledged that such damage will fall within the cl 5.1 exception. However, the argument went, cl 5.1 of the lease (as distinct from cl 5.1 of the Memorandum) makes no mention of “reasonable wear and tear” or of an obligation to repair

59 The plaintiffs’ position in this respect fluctuated. In opening, counsel pointed out that cl 5.1 of the lease does not mention “reasonable wear and tear” but acknowledged that the reference in cl 7.2 was plainly a reference to cl 5.1 of the Memorandum, which explicitly contains the “reasonable wear and tear” exception; she said that the plaintiffs did not “take issue” with that.

60 Notwithstanding that, in supplementary written submissions, and in final oral submissions, the point was taken. It was submitted that, because cl 5.1 of the lease does not contain a “reasonable wear and tear” exception, cl 7.2 of the lease is ineffective.

61 In my opinion, the plaintiffs ought to be held to the concession made in opening. It was made explicitly. Not the least reason for taking the course I propose is that the concession made was a proper one. Lest there be any doubt about it I reject the contention that cl 7.2 of the lease fails to achieve its obvious purpose, of incorporating damage to the concrete hardstand area caused by the use of a large forklift within the “reasonable wear and tear” exception in cl 5.1 of the Memorandum. The two documents are to be read together – the Memorandum is expressly incorporated into the lease – and there is not the slightest doubt that the parties intended cl 7.2 to extend the “reasonable wear and tear” exception to damage caused to the hardstand area as a result of the permitted use, which explicitly included the use of a large forklift.

(ii) Was Beechey’s use of the premises outside the use permitted by the lease?

It was secondly argued that Beechey’s business exceeded what was comprehended by the permitted use. That was because, in addition to “receiving” and “unloading” shipping containers, it also stored and redelivered them.

62 The argument is untenable. The “permitted use” identifies “transport depot” as the generic nature of the business. The Macquarie Dictionary defines “depot” as “a depository” or “storehouse”. Dictionary definitions apart, the common notion of “depot” is a storage facility.

63 The argument progressed to the suggestion that “unloading” meant “unpacking” of the shipping containers, storing the contents thereof in Building F, and returning the empty containers.

64 I am satisfied that the definition of “permitted use” cannot be so confined. “Unloading” shipping containers (from trucks that delivered them to the premises) is different from “unpacking” containers and storing their contents. The language of the definition would permit either construction, but is more compatible with the former than the latter. There is nothing in Beechey’s use of the premises for storage of full containers that is outside the permitted use. In any event, there is no evidence that storage of containers, full or empty (as distinct from unloading containers) caused damage to the concrete.

(iii) Was Beechey’s use of the premises reasonable?

As an alternative to the argument set out in (i) above, the plaintiffs submitted that Beechey’s use of the premises was required to be reasonable, and that it was not.

65 One contention advanced in support of this was that the use did not comply with the terms of the development consent. It is hardly necessary to say that even if non-compliance with the conditions of development consent is established, for that circumstance to avail the plaintiffs, there must also be established a causal connection between the non-compliance and the damage. There were three ways in which it may be that there was non-compliance. These concerned:

● where containers were stored;
● where containers were loaded and unloaded;
● egress, which was effected, not via Donald Street, but by Fairfield Road.

66 As to the first of these, reliance was placed upon condition 6 of that consent, which was said (in written submissions) to require:

“All works and storage shall be contained in [Building] F.”

That is an incomplete version of the development consent. Included in condition 6 were three exceptions, the first of which permitted storage of 40 containers in an identified area, and loading and unloading. It may be that (the evidence is not very clear), to a limited extent, the defendants exceeded the maximum storage provided in condition 6(i). If so, I would find that the excess had no, or miniscule, causal connection with the damage done to the concrete.

67 As to the second (the location of loading and unloading) the evidence does not permit any clear conclusion that Beechey did not comply.

68 The final asserted breach concerned the contravention of the condition that egress be through the Donald Street gate.

69 Initially, this appeared to be the most troubling of the arguments raised on behalf of the plaintiffs. On reflection, however, the concern was misplaced. It is true that Beechey’s decision to have the B-double trucks exit the premises via Fairfield Street instead of Donald Street appears to be a clear breach of the conditions of the development consent, and therefore a breach of the terms of cl 13.14 and cl 13.28 of the Memorandum.

70 What is lacking is a causal connection between any such breach and the damage to the hardstand and/or the common property.

71 In an addendum to the written submissions provided on behalf of the plaintiffs, it was asserted that:

“… the evidence of the experts say that damage to the hardstand and the common property is by reason of trucks turning around to exit by way of Fairfield Street.”

72 No expert evidence, either documentary or oral, was cited to support this assertion. I have been unable to find any. Mr Ian Duncan, an electro-hydraulic engineer (who emphasised that his expertise is not in concrete) gave as his opinion that impact damage to the concrete was caused by containers being dropped on the concrete.

73 The reliance on the asserted breaches of the development consent condition gave every indication of having been a late afterthought. No breach of development consent conditions was pleaded in the FASOC. Indeed, no mention was made in the FASOC of cl 13.14 or cl 13.28, requiring compliance with the conditions of development consent. No plea was made that any of the damage either to the hardstand or to the common property was caused by the use of the B-doubles exiting the premises via Fairfield Road. As a consequence, no experts addressed that question. There was no evidence of the weight of the B-doubles, or the possible impact they may have had. During the course of concurrent evidence given by civil and structural engineers, one, Mr Robert Munn, gave some evidence, of, on his inspection of the premises, having observed trucks turning in the common area. This was no more than anecdotal evidence. As his affidavit evidence makes clear, Mr Munn became involved in the investigation of these matters in February 2007, long after Beechey had departed. What he observed on that occasion is of no relevance to Beechey’s use of the premises.

74 As a matter of commonsense, logic, and reasoning, it could be concluded that the necessity for the B-doubles to drive onto the hardstand, turn, and exit by the same route as they had entered, would put some additional pressure on the hardstand area. But there is nothing in the evidence that permits the further conclusion that this additional use (that is, additional to what was permitted by the development consent and the lease) was the cause of damage to the concrete. Indeed, in my (lay) view, it is highly unlikely that that was what made the difference.

75 There was also evidence that, on occasions, the business operated outside the permitted hours. Again, there is no evidence that this resulted in damage to the concrete.

(iv) Was the use of the Mitsubishi (as distinct from the Luxford) forklift outside the permitted use?

The next argument concerned the use of the Mitsubishi forklift as distinct from the Luxford forklift. The argument put on behalf of the plaintiffs acknowledged that cl 7.1 expressly accepted that the permitted use of the premises included the use of “a large container forklift”. However, it was argued, the Mitsubishi was of a size that exceeded what was contemplated in the clause, and its use was therefore unreasonable. This was because the clause contained (by implication) a limitation on the size of the forklift that was permissible. The limitation was said to be derived from the final words of the clause, that the forklift could move containers from outside to undercover, and vice versa. In other words, the argument ran, the forklift was required to be of dimensions (especially height) that could enter Building F. The Mitsubishi exceeded that height, and, accordingly, was larger than the clause permitted.

76 I do not accept this construction of cl 7.2. Clause 7.2 imposes no limitation, express or implied, on the size of the forklift that was permitted. The only description of the permitted forklift is “large”.

77 Moreover, there are a number of segments to cl 7.2. The Lessor acknowledged that the permitted use includes:

● regular passing and repassing of the Land (that is, including the common area) by the Lessee’s trucks;

● loading and unloading therefrom – that is, shipping containers from the defendants’ trucks; and

● the use of a large container forklift for moving containers from outside to undercover and vice versa.

78 That the Mitsubishi may have been too high to permit Beechey to use it to move containers in and out of Building F does not affect Beechey’s right to load and unload containers from its trucks, including to use a forklift for that purpose. I do not read “and the use of a large container forklift” as limiting the use of the forklift to movements to and from Building F.

79 In any event, the argument could only succeed if it were shown that all, or most, of the damage was caused by the Mitsubishi.

80 Counsel for the plaintiffs pointed to evidence that the larger forklift was acquired because Beechey’s business had doubled in size since the commencement of the lease, and that the Mitsubishi moved containers more quickly. The Mitsubishi, it was submitted, was “unnecessarily large” and constituted an unreasonable use of the premises.

81 I reject this. It is a common feature of businesses that they hope to expand. There is nothing in the lease that confines Beechey’s business to the size it was at the time of the commencement of the lease, or inhibits the use of forklifts of increased size to accommodate an expanding business. There is nothing in the lease documents that limits the number of movements that Beechey could make or the size of the forklift that it could use.

82 The plaintiffs’ claim for damages to compensate them for damage to the hardstand area fails.

Common Property

83 The acceptance by the Lessor in cl 7.2 of potential damage, and that such damage would be treated as reasonable wear and tear, is limited to the hardstand area. A question therefore arises whether the defendants are liable for damage to the common property.

84 I have concluded that they are not. Firstly, it is not established that the forklift operated (at least to any significant extent) on the common property. Clause 7.1 is an acknowledgment that Beechey’s trucks will operate on the common property. Implicit in this is an acknowledgment that some damage may be caused thereby. That has the necessary consequence that such damage will be treated as an incident of occupation pursuant to the lease.

85 Secondly, there was evidence (as would be expected, having regard to the term “common property”) that other tenants accessed the driveway using trucks. It is not at all clear that all of the damage to the common property is attributed to Beechey (or to Beechey and Ratcliffe).

86 For the purpose of the construction of the lease terms, no argument was directed to differentiating between what was, in the Lessee’s favour, protected by cl 7.1 and cl 7.2. it was not argued (but may have been open to the plaintiff to argue) that the express acknowledgment in cl 7.2 that damage to the concrete on the hardstand caused by Beechey’s use of machinery and equipment would be treated as reasonable wear and tear, and the absence of any corresponding express provision concerning damage to the common property, is indicative that the parties did not intend to extend the exception so far. In the absence of having heard full argument on this question, it is difficult to be definitive. However, in my view, such an argument would fail. Clause 7.1 must have some operation; it is not merely introductory to cl 7.2. It is significant that the acknowledgment in cl 7.1 is as to the Lessee’s use of the “Land” – the entirety of the premises. And cl 7.2 not only specifies that damage to the hardstand will come within the reasonable wear and tear exception – it also imposes an obligation on the Lessor promptly to repair any such damage, on notification by the Lessee. No corresponding obligation is imposed with respect to the common property, of which the Lessee did not have exclusive use.

87 I conclude, therefore, that, by reason of the correct construction of the lease provisions, the defendants are not liable to the plaintiffs for damage to the common property. They are also not liable because it has not been shown that they were responsible, or solely or principally responsible, for that damage.

Tort: negligence

88 The plaintiffs pleaded their claims both in contract and in tort. However, no separate argument was directed to the issue of negligence. I have difficulty seeing how it could be said that, Beechey and Ratcliffe having used the premises within the permitted use specified in the lease, they could be liable in negligence. Perhaps that is why no alternative argument was addressed.

The ancillary claims

Unpaid rent

89 No submissions were directed to this claim. The evidence relevant to the question is limited. Mr Konstantopoulos gave evidence in his affidavit that, from about November 2004, by arrangement with Matthew Beechey, Beechey sought and was granted occupation of Buildings E and B1 “for a couple of months”. He said that they agreed upon a rent, and Beechey was invoiced for rent at $4335.82 per month until 11 May 2005. He said that the invoices in respect of Building B1 were paid, but that, although Beechey remained in occupation of Building E until 20 June 2005, it had not paid rent. Annexed to Mr Konstantopoulos’ affidavit were what were said to be “the unpaid invoices” in respect of rent for Building E. One of the invoices annexed clearly states that it was rendered in respect of rent on “Building F”. Another identifies its subject as “Sale”, on three occasions, to Beechey. One identifies its subject “Rental on Building E”, for the period 12 May 2005 to 11 June 2005 (together with GST) in the amount of $4335.82. The remaining invoice is also expressed to be in relation to “Rental on Building E”, for the period of 12 June 2005 to 20 June 2005 – a period of less than two weeks – but purports to charge an amount of $1300.75.

90 In an affidavit sworn on 27 August 2008, specifically in response to various affidavits filed on behalf of the plaintiffs, Ronald Beechey referred to and responded to certain parts of the affidavit of Mr Konstantopoulos to which I have referred. He made no reference to the paragraph concerning unpaid rent.

91 The claim for unpaid rent was made in the FASOC. In the defence filed on behalf of Beechey, the only reply made to this claim was that it was “not admitted”.

92 It seems to me that it is very possible that Beechey does in fact owe rent in respect of its occupation of Building E. On the present state of the evidence I am unable to determine the quantum. Reluctantly, I will afford the plaintiffs a further opportunity to establish this claim, confined to the evidence already adduced.

Gardens, fence and roller door

93 The evidence in respect of this asserted damage is inadequate to sustain the claims. They are rejected.

94 In the FASOC, claims were also made for loss of rent from other buildings, said to be attributable to the condition of the concrete which renders the buildings untenantable. No evidence, and no submissions, were directed to these claims. They are rejected.

95 Subject to the question of rent, there will be a verdict for the defendants.

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