Ryals Hotel Pty Ltd v Zhaos Pty Ltd

In the matter of Ryals Hotel Pty Ltd v Zhaos Pty Ltd, the dispute arose from a breach of lease by the landlord, Zhaos Pty Ltd, who failed to install a new lift in the hotel property as required by the lease agreement. This resulted in the hotel being without a functioning lift for a six-month period during which lift works were also undertaken. The primary issue before the court was the assessment of damages for the tenant's loss of profitability due to the breach and whether the tenant was entitled to an abatement of rent under the lease.

The court examined the effect of the landlord's breach on the hotel's profitability, focusing on the impact of the lift being out of service and the interruption caused by the lift works. The tenant sought damages for the non-use of the basement during the lift installation period, which was not a profit-generating venue. The court held that no damages should be awarded for the inability to use the basement as it did not contribute to the hotel's profitability. Regarding the abatement of rent, the lease provided for an abatement if the premises or building were damaged or destroyed. The court found that the carrying out of lift works did not constitute damage within the meaning of the abatement provision, and thus, the tenant was not entitled to an abatement of rent.

The court's decision was that the tenant, Ryals Hotel Pty Ltd, was not entitled to damages for the non-use of the basement or an abatement of rent due to the landlord's breach of the lease. The court emphasised that damages should only be awarded for losses directly attributable to the breach, and in this case, the non-use of the basement did not result in a quantifiable loss. The final order was that the tenant was not entitled to any damages or abatement of rent in relation to the landlord's failure to install the lift as required by the lease.