Volley Investments Pty Ltd v Coles Myer Ltd - [2005] WASCA 52

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: VOLLEY INVESTMENTS PTY LTD -v- COLES MYER LTD [2005] WASCA 52

CORAM: MURRAY J
BARKER J

HEARD: 16 SEPTEMBER 2004

DELIVERED : 16 SEPTEMBER 2004

PUBLISHED : 24 MARCH 2005

FILE NO/S: FUL 2 of 2004

BETWEEN: VOLLEY INVESTMENTS PTY LTD (ACN 055 797 085)
Applicant
AND
COLES MYER LTD (ACN 004 089 936)
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :MASTER SANDERSON
Citation  :COLES MYER LTD -v- VOLLEY INVESTMENTS PTY LTD [2003] WASC 254
File No  :CIV 2029 of 2003

Catchwords:

Landlord and tenant - Collapse of ceiling in shopping centre - Lessor had arranged for a competent contractor to carry out work on the roof - Cause of collapse unknown - Whether collapse constituted a breach by the lessor of the covenant of quiet enjoyment in the lease

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Leave to appeal granted
Appeal allowed
Leave to defend granted
Respondent to pay applicant's costs of appeal to be taxed

Category: B

Representation:

Counsel:

Applicant: Mr G H Murphy
Respondent: Mr I R Freeman

Solicitors:

Applicant: Srdarov Richards Burton
Respondent: Phillips Fox

Case(s) referred to in judgment(s):

Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1
Harrison, Ainslie & Co v Lord Muncaster [1891] 2 QB 680
JC Berndt Pty Ltd v Walsh [1969] SASR 34

Case(s) also cited:

Briggs v Glentham Property Ltd (1992) 8 WAR 339
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Hunt v Knabe (No 2) (1992) 8 WAR 96
Malzy v Eichholz [1916] 2 KB 308
Sanderson v Mayor of Berwick‑upon‑Tweed (1884) 13 QBD 547

JUDGMENT OF THE COURT: The respondent operates a supermarket at the Phoenix Shopping Centre in Spearwood. The applicant owns the shopping centre and leased the supermarket premises to the respondent.
The lease contains a covenant by the applicant for the quiet enjoyment of the leased premises in the usual form, as follows:
"11.04Quiet Enjoyment: On the Lessee paying the rent herein provided and observing and performing all the covenants terms and conditions on the Lessee's part to be observed and performed the Lessee shall and may peaceable possess and enjoy the premises without any interruption or disturbance from the Lessor or any person or persons lawfully claiming by or from or under it subject nevertheless to the terms and conditions of this Lease."
On 22 April 2002 a section of the roof of the shopping centre over the food court, a part of the leased premises, collapsed. The evidence thus far available does not reveal the cause of the collapse but the respondent asserts that as a result of the collapse the entire shopping centre was closed for a time. It was unable to resume retail trade for a period, and even then, access to its supermarket was restricted and reduced while repairs were undertaken. Water damage to the premises and the respondent's fixtures and fittings occurred.
The respondent sued for damages, relevantly for present purposes, for breach of the covenant of quiet enjoyment.
The statement of claim does not plead the cause of the collapse of the roof. It pleads merely, and there is affidavit evidence to support the pleading, that immediately prior to the collapse of the roof, as part of the refurbishment of the shopping centre, the applicant accepted a tender from a building company and entered into a building works contract, one component of which was to replace the glass in the skylights in the food court area of the shopping centre. In the statement of claim that work is described as "the installation of skylights in the roof of the food court area". That work was apparently completed in the late afternoon of 21 April 2002. It was probably in the early hours of 22 April 2002 that this section of the roof collapsed. The statement of claim does not plead that the collapse was caused by anything done or omitted by the applicant's contractor in the course of carrying out work authorised under its contract.
The applicant having entered an appearance in the action, the respondent as plaintiff, made an application for summary judgment on the ground that the applicant had no defence to the claim except as to damages, pursuant to the Rules of the Supreme Court 1971 (WA) O 14 r 1. The application was supported by affidavit verifying the facts in the way required by O 14 r 2. The application was heard by a Master who entered judgment for the respondent for damages to be assessed.
The applicant sought leave to appeal from that interlocutory order, contending that the Master erred in holding that upon the evidence available the covenant for quiet enjoyment had been breached. The grounds were expressed in the form of argument. They need not be repeated here. In substance they invite the conclusion that the Master erred in the meaning or effect he gave to the relevant covenant and in respect of the question whether the respondent brought itself within it. We granted leave to appeal, allowed the appeal, set aside the judgment of the Master and granted the applicant leave to defend unconditionally. These are our reasons for those orders.
The Master observed that there was no question that the respondent had in any way acquiesced in a process of refurbishment which might involve any diminution in its right under the lease to quiet enjoyment of the premises. On the other hand the Master found that, "there was no evidence at all as to what caused the collapse of the ceiling". The Master went on to note that there was no suggestion of the unauthorised intervention of a third party. He said:
"All that can be said is that refurbishments were being undertaken on the shopping centre premises and during the course of those refurbishments, the ceiling collapsed."
In the end, however, the Master observed that:
"The issue here concerns whether or not the covenant has been breached when a third party engaged by the landlord has been responsible for the interference with the tenant's right of quiet enjoyment."
It will be seen that to formulate the question in that way assumes that the collapse of the roof was caused by the activities of the applicant's contractor in replacing the glass in the skylights. That view of the case was re‑enforced when the Master observed that this was not to apply the covenant in a way that might be equated with strict liability, but liability could not be escaped because the execution of works was entrusted to a competent contractor. Rather, the Master said, the applicant:
"…is liable for any act of interruption caused by a person whom it expressly authorised to do an act. The act here is the act of refurbishment. The interruption to the plaintiff's business has resulted from the process of refurbishment. For that reason, the defendant is liable to the plaintiff."
We have remarked that the clause is expressed in traditional terms, used in leases for well over 100 years. The clause is not in terms a covenant by the lessor to strictly warrant the exercise by the lessee of its possession and enjoyment of the premises. In terms, the covenant will be breached when the interruption or disturbance of the quiet enjoyment of the premises is caused by the lessor "or any person or persons lawfully claiming by or from or under it". Putting to one side the fact that the lessor is defined to include its successors and assigns: cl 1.01(d), the covenant will be breached where, as a matter of fact, the interruption or disturbance is caused by any conduct of the lessor or its agents.
Further, if the act in question was not that of the lessor it may nonetheless constitute a breach of the covenant if it is caused by some person or persons lawfully claiming by or from or under the lessor. That is construed to mean those who claim under the lessor the right to do the act or acts in question which are said to be the cause of the relevant interruption or disturbance: Harrison, Ainslie & Co v Lord Muncaster [1891] 2 QB 680, 685, 689.
A contractor engaged by the lessor may, of course, be a person claiming under the lessor the authority to do the work for which it has been contracted. In that case, it will matter not that the contractor entrusted with the work was competent and, as an independent contractor, proceeded to do the work without the exercise of control by the lessor, provided that the thing done to cause the interruption to the lessee's quiet enjoyment of the leased premises falls within the scope of the work, so that there is either express or implied authority conferred by the lessor to do the act in question: JC Berndt Pty Ltd v Walsh [1969] SASR 34, 38.
The authorities also show that, in some instances, the lessor will not be liable for a breach of the covenant although the interruption of the lessee's quiet enjoyment of the premises has been caused by the lessor or some person for whose conduct the lessor is, under the covenant, responsible if the consequence of the conduct was an entirely surprising, unforeseen and reasonably unforeseeable event: Muncaster at 686, 689; Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1, 12.
In this case, if it was the respondent's case that the roof fell in because of acts or omissions of the applicant's contractor working on the skylights, that had to be alleged and, in support of the summary judgment application, evidence on affidavit to support the pleading was required. Neither requirement was met and, with respect to the Master, that seems to have been overlooked.
More particularly, in the circumstances of this case, it seemed to us that the pleading would need to allege what was the work done by the contractor, or the omission made by the contractor, which caused the roof to collapse with the consequent interference with the quiet enjoyment of the premises by the respondent. It had to appear that the respondent undertook to prove a breach of the covenant by a contractor claiming under the lessor, performing work authorised by the lessor, the circumstances being such that the event constituting the alleged breach of the covenant was reasonably foreseeable in all the circumstances. It was for those reasons that we granted leave and allowed the appeal, making the consequential orders to which we have referred above.