Spotlight Pty Ltd v Fatseas Investments Pty Ltd

In *Spotlight Pty Ltd v Fatseas Investments Pty Ltd*, the Court of Appeal of New South Wales considered an appeal and cross-appeal arising from a dispute concerning a registered lease. The primary dispute involved damage to the leased premises caused by water overflowing from box gutters on the roof. The lessee, Spotlight Pty Ltd, had covenanted to maintain and repair the premises and to regularly clean the gutters. The lessor, Fatseas Investments Pty Ltd, alleged that the installation of decorative grates and gauze in the box gutters by the lessee constituted a breach of these covenants, leading to the damage.

The legal issues before the Court of Appeal included whether the primary judge erred in inferring that the lessee installed the grates and gauze, and whether such an installation breached the lessee's covenants under the lease. The court was also required to determine if the lessor was entitled to indemnity for the damage. Furthermore, the court considered an application by the lessee to amend its cross-claim on appeal to add a liquidated claim for breach of covenant to pay rent, and whether the lessor was entitled to contractual interest on a component of the judgment sum referable to an unliquidated claim for damages or indemnity, as well as the appropriate date for the accrual of prejudgment interest.

The Court of Appeal reviewed the evidence and found that the installation of the grates and gauze was a probable cause of the damage, and that the lessee was responsible for this installation and the resulting breach of its covenants. The court affirmed the primary judge's findings on liability and damages. Crucially, the court refused the lessee's application to amend its cross-claim on appeal, noting that no leave had been sought at trial and that the lessee was bound by the conduct of its case at that stage. Regarding interest, the court determined that the lessor was entitled to contractual interest on the unliquidated claim and supplemented the primary judge's orders to reflect this, specifying the amount and period for prejudgment interest.

The appeal and cross-appeal were dismissed. Spotlight Pty Ltd was ordered to pay Fatseas Investments Pty Ltd's costs of the appeal. Leave to amend the cross-claim was refused, and Spotlight Pty Ltd was ordered to pay Fatseas Investments Pty Ltd's costs of the cross-appeal, including the costs of the amendment application. The costs orders were to be set off. The primary judge's order was supplemented to include an award of $104,923 in interest on the judgment sum for a specified period.