Taylor Woodrow Property Co of Australia Pty Ltd v Coles Myer Ltd

The dispute before the Court of Appeal of New South Wales involved Taylor Woodrow Property Co of Australia Pty Ltd (the tenant) and Coles Myer Ltd (the landlord). The tenant sought to recover damages from the landlord for losses incurred when a customer slipped on water that had entered the tenant's store through the roof. The tenant alleged the landlord had breached its duty of care to the customer and had also breached a covenant in the lease requiring the landlord to keep the roof weatherproof. The tenant also sought to rely on release and indemnity provisions within the lease.

The court was required to determine whether the landlord owed a duty of care to the tenant's customers and, if so, whether that duty had been breached. It also had to consider whether the landlord had breached its covenant to maintain a weatherproof roof. Furthermore, the court needed to interpret the release and indemnity provisions of the lease to ascertain whether they operated to indemnify the landlord against the tenant's claim for breach of covenant.

In relation to the negligence claim, the court applied the principles established in *Wyong Shire Council v Shirt*, undertaking a balancing exercise to assess the foreseeability of the risk and the burden of taking precautions. The court found that, on the facts, the landlord was not required to incur extraordinary expense to implement a system to detect and rectify water entry before it occurred. Moreover, it was not demonstrated that such a system would have prevented the specific water entry that caused the incident. Regarding the lease covenant, the court determined that the water entry, originating from a cooling tower rather than rain, meant the roof was not weatherproof, constituting a breach of the landlord's covenant. However, the court found the release and indemnity provisions to be poorly drafted and not to be construed as indemnifying the landlord for the tenant's claim arising from the landlord's breach of covenant.

The appeal was dismissed, and the landlord was ordered to pay the tenant's costs.