Pourzand v Telstra Corporation Ltd

The case of Pourzand v Telstra Corporation Ltd involved a dispute between the tenant, Pourzand, and the landlord, Telstra Corporation Ltd, concerning the performance of major works on demised premises. The works, which were undertaken by Telstra without the knowledge or consent of Pourzand, took at least five months to complete and rendered it impossible for Pourzand to sublease the premises. Pourzand sought to terminate the lease on the basis that the major works amounted to a renunciation of the lease or a serious breach of an intermediate term. The case was heard in the Supreme Court of Western Australia.

The primary legal issues for the court to decide were whether the major works constituted a renunciation of the lease or a serious breach of an intermediate term, and whether Pourzand's 'make good' obligation operated before the expiry of the lease term if the lease was terminated for breach or renunciation by Telstra. The court also had to consider whether Pourzand was entitled to substantial damages for the alleged breach of a repair covenant in the absence of financial loss.

The court held that the major works did not amount to a renunciation of the lease, as Telstra had not demonstrated an intention to bring the lease to an end. However, the court found that the major works did amount to a serious breach of an intermediate term, entitling Pourzand to terminate the lease. The court also found that Pourzand's 'make good' obligation did not operate before the expiry of the lease term when the lease was terminated for breach or renunciation by Telstra. The court held that Telstra had failed to comply with a precondition of notice to Pourzand, and that their conduct in removing ceilings entirely deprived Pourzand of the opportunity to repair them. Finally, the court held that substantial damages were not available to Pourzand for the alleged breach of a repair covenant in the absence of financial loss, as the obligation was to perform or to provide a substitute for performance, not to compensate for consequential losses.

The court ordered Telstra to pay Pourzand compensation for the serious breach of an intermediate term, and to compensate Pourzand for the removal of the ceilings. The court declined to award substantial damages for the alleged breach of a repair covenant.