WILDE and SMITH

[2010] WASAT 9

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)

CITATION:   WILDE and SMITH [2010] WASAT 9

MEMBER:   MR C RAYMOND (SENIOR MEMBER)

MR A EDNIE-BROWN (SENIOR SESSIONAL MEMBER)

HEARD:   30 NOVEMBER AND 1 ­ 3 DECEMBER 2009

DELIVERED          :   29 JANUARY 2010

FILE NO/S:   CC 825 of 2007

CC 704 of 2008

BETWEEN:   ANNE MARIA WILDE

Applicant

AND

BARRY SMITH
LYNN SMITH
Respondents

Catchwords:

Commercial tenancy ­ Hearing of separate issues relating to liability ­ Whether landlord validly terminated lease and, if not, whether tenant accepted repudiation and entitled to damages ­ Whether landlord in default of obligation to carry out structural repairs ­ What constitutes a structural repair ­ Whether landlord liable to repay outgoings ­ Whether landlord entitled to recover arrear rental and outgoings to date of termination and damages

Legislation:

Builders' Registration Act 1939 (WA), s 12A, s 12A(1aa)
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 12, s 16, s 16(1)
Local Government (Miscellaneous Provisions) Act 1960 (WA), s 403
State Administrative Tribunal Act 2004 (WA), s 9, s 77(2)

Result:

Applicant's claim successful to a limited extent and otherwise dismissed
Counterclaim by respondents upheld - quantum of claim to be determined at subsequent hearing

Category:    B

Representation:

Counsel:

Applicant:     Mr H Christie

Respondents                 :     Mr JCW Skinner

Solicitors:

Applicant:     Mr H Christie

Respondents                 :     Jackson McDonald

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

Adami v Lincoln Grange Management [1998] 1 EGLR 58

Advance Fitness Corp Pty Ltd v Bondi Diggers Memorial and Sporting Club Ltd [1999] NSWSC 264

Carbure Pty Ltd v Brile Pty Ltd [2002] VSC 272

Casey & Anor v Aldous BC9400885 SCSA (unreported, decision dated 20 December 1994)

Cleverdon v Townsend (1894) 16 ALT 69

Glasshouse Investments Pty Ltd v MPJ Holdings Pty Ltd [2005] NSWSC 456

Granada Theatres Ltd v Freehold Investments (Leytonstone) Ltd [1958] 2 All ER 551; [1958] 1 WLR 845

Gregg v Goodall (1895) 17 ALT 231

Justelle Nominees Pty Ltd v Martin [3] [2009] WASC 264

McCarrick v Liverpool Corporation [1947] AC 219

Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313

Wilde and Smith [2008] WASAT 310

REASONS FOR DECISION OF THE TRIBUNAL: 

Summary of Tribunal's decision

1. In consolidated proceedings, the Tribunal determined a claim made by the applicant, as tenant of a retail shop, against the respondents, as landlord, and a counterclaim by the landlord against the tenant.  By consent, the hearing dealt only with the merits of the respective claims with the quantum to be determined as a separate issue at a later hearing.

2. Whether or not the respondents had validly terminated the lease, or had repudiated it, turned partially on whether or not the respondents had failed to meet their obligations under the lease to carry out structural repairs.  The Tribunal determined that, in the context of the lease, 'structural repairs' referred to repair of the structural elements of the building which had to resist actions to which the building might be reasonably subjected, such as permanent actions (dead loads) or imposed actions (live loads arising from occupancy and use) and other natural actions such as wind, groundwater and rainwater action.  The applicant, as lessee, was responsible for all building repairs subject to certain express exceptions in the lease.

3. After examining all of the occasions on which it was alleged that the applicant had given the respondents notice of required structural repairs, the Tribunal concluded in all cases that the repairs required were not of a structural nature and therefore that the respondents had not failed in their obligation under the lease.  If the repair to one floorboard was to be regarded as a structural repair, the Tribunal held that, in any event, the nature and extent of repair required, and which the respondents had not carried out until after termination of the lease, was insufficient to constitute a repudiation of the lease.

4. A claim that Mr and Mrs Smith had breached a covenant of quiet enjoyment by not carrying out structural repairs was consequently also rejected.

5. The Tribunal held that the respondents had validly terminated the lease by serving a Notice to Quit, by leaving it at the leased premises at a time when the applicant was absent and the business had not been conducted for some unspecified length of time.  While service of the Notice to Quit was, in itself, sufficient to constitute an act of re-entry, any doubt was removed by the respondents changing the locks to the premises two days later.

6. Consequently, the Tribunal held that the landlord was entitled to recover any arrear rental accrued as at the date of the termination of the lease, together with damages arising from the termination of the lease, the quantum of which was to be determined at a subsequent hearing.  The Tribunal found that the landlord was not entitled to recover as part of their damages the costs of an annual termite inspection.  The applicant's contention that the respondents were not entitled to recover outgoings which had accrued as at the date of termination of the lease until such time as an operating expenses statement was furnished was also upheld.

7. Insofar as the applicant had sought to recover outgoings paid during the term of the lease, that claim was based solely on the failure of the respondents to furnish an operating expenses statement.  There was no suggestion that the amounts charged and paid to the respondents was wrong.  As the legislation only precluded recovery from the date when the operating expenses statement was due, which was three months after the end of each accounting period, and payment had been made prior thereto, the Tribunal held that the applicant was not entitled to recover such amounts.

The application and cross-application

1. On 24 May 2007, the applicant, Ms Anne Marie Wilde, lodged an application with the Tribunal under s 16(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (CT(RS)A Act) seeking various remedies against the respondents, Mr Barry Smith and Mrs Lynn Smith. This application became the lead proceeding in consolidated proceedings following a cross­application by the respondents in matter CC 704/2008.

2. For convenience, unless the context otherwise requires, we refer to the applicant in the lead proceedings and the respondent in matter CC 704/2008 as Ms Wilde, and to the respondents in the lead proceeding and the applicants in matter CC 704/2008 as Mr and Mrs Smith.

3. The lease terms governing the relationship between the parties are to be found in a lease agreement (original lease) between Mr and Mrs Smith and former tenants dated 24 September 1992, which has been renewed from time to time and assigned, and a final agreement of renewal, variation and assignment to which Ms Wilde is a party as assignee dated 15 April 2005 (renewed lease).  When it is not necessary to refer particularly to the original or renewed lease, we will simply refer to the documentation recording the lease terms as 'the lease'.  It is common cause that the leased premises are a retail shop subject to the CT(RS)A Act.

4. Ms Wilde was not initially legally represented and the application was defective in that it did not refer any particular questions to the Tribunal for its determination. After Ms Wilde engaged solicitors, the questions referred and the matters in dispute were finally reflected in a document headed 'Applicant's Statement of Re­amended Questions Arising Under A Lease' (referral document) which was filed on 7 May 2008. That reflects a considerable delay occasioned by Ms Wilde's absence, as she had returned to live in Tasmania, the initial lack of legal representation and difficulties, not all apparent to the Tribunal, in formulating her claim. These difficulties led to the Tribunal making an order that the issues be defined by pleadings, which is an unusual course in the Tribunal. The matters referred to the Tribunal are set out in [2] and [3] of the referral document as follows:

   2.Pursuant to subsection (3) of the Commercial Tenancies (Retail Shops) Agreements Act 1985 as amended ('the Act'), the following questions arise under the retail shop lease herein:

   i)Pursuant to subsection 3(3)(a) of the Act, a question whether or not the Lease has been validly or alternatively wrongfully terminated, whether by the conduct of the Applicant or alternatively by the conduct of the Respondents;

   ii)Pursuant to subsection 3(3)(ii) of the Act, a question whether the Respondents is [sic] liable to repay outgoings paid to it by the Applicant under the Lease because of the Respondent's [sic] contravention of subsection 12(1d) of the Act (being moneys paid by reason of a mistake of fact or alternatively law)[.]

   3.Further or alternatively, the following matters in dispute have arisen under section 12 of the Act:

   i)Pursuant to subsection 3(3)(d)(i) of the Act, in relation to the operating expenses payable to the landlord under the retain shop lease herein;

   ii)Pursuant to subsection 3(3)(e) of the Act, in relation to the landlord and the tenant in connection with the retail shop lease (being actions for breach of covenant or terms of the said lease and damages for the Respondant's [sic] repudiation and/or wrongful termination of the said lease), as detailed in the Applicant's particulars of claim filed on 15 February 2008.

5. On 9 May 2008, Mr and Mrs Smith filed a cross­application, under which the following questions were referred to the Tribunal.

   1.Whether the Respondent is liable to the Applicants for various specified amounts under the terms of a lease agreement entered into between the Applicants and the Respondent on 15 August 2005 (further extending and varying a previously-extended and assigned lease agreement, originally dated 24 September 1992).

   2.Whether the Applicants validly and lawfully terminated the lease agreement referred to above by a Notice to Quit dated 21 August 2007.

   3.Whether the Respondent is liable to the Applicants for damages under the terms of the above lease agreement following the termination of the lease agreement and, if so, the amount of those damages.

   These questions are referred by way of counterclaim to the Respondent's application to the State Administrative Tribunal in proceedings CC 825/2008.

6. Subsequently, with the consent of the parties, the application and cross­application were consolidated and orders were made that matter CC 825/2007 would be the lead proceeding.

7. While, ultimately, the Tribunal must answer the questions which have been referred to it under s 16 of the CT(RS)A Act and determine the dispute referred by Ms Wilde under s 12 thereof, the manner in which the issues have been defined must be gleaned from the pleadings. However, the manner in which the case was conducted has resulted in some variation in the issues to be determined.

8. Firstly, there are some claims advanced in the particulars of claim which are dependent upon particular terms being implied into the lease.  It is pleaded that it must be implied that the premises were reasonably fit for the purposes of conducting Ms Wilde's business, which was a bakery, café and tearoom.  It is further pleaded that it must be implied that the premises would be structurally sound and in good repair at the commencement of the lease.

9. Counsel for Ms Wilde did not press these claims in closing submissions and indicated it was not necessary for counsel for Mr and Mrs Smith to address them, and we consider that he was clearly correct in adopting this course.  The pleading of those terms survived a strike out application, only because of the possibility that the evidence might disclose some background to the variation and extension of the lease, which might support the implication of the terms: see Wilde and Smith [2008] WASAT 310 at [31] and [35] (Wilde and Smith (1)).  No evidence was produced which could possibly support those terms, in the face of the authorities referred to in Wilde and Smith (1).

10. Secondly, evidence was heard from Ms Wilde, without objection, about various occasions when oral notice was alleged to have been given of structural defects, and also some written communications said to constitute such notice beyond the only written notice identified in the pleadings.  As we are obliged to deal with the substantial merits of the dispute between the parties (s 9 of the State Administrative Tribunal Act 2004 (WA)) (SAT Act), we shall determine those matters.

11. Thirdly, the evidence of Mrs Smith, at [80] of her written statement, refers to a written notice received from Ms Wilde dated 24 December 2005.  In closing submissions, counsel for Ms Wilde also identified other specific written communications which were relied on as giving notice to Mr and Mrs Smith to carry out structural repairs.  Again, in order to deal with the substantial merits, we shall deal with such notices.

The issues for determination

1. On the above basis, the issues for determination are as follows.

   1)Whether or not Ms Wilde gave Mr and Mrs Smith any oral or written notices of matters which required structural repair.

   2)Whether Mr and Mrs Smith failed or refused to carry out structural maintenance and repairs.

   3)What under the lease constitutes:

   (a)structural maintenance and repair for which Mr and Mrs Smith are responsible; and

   (b)building repairs not being of a structural nature, for which Ms Wilde is responsible.

   4)Whether Mr and Mrs Smith breached the covenant for quiet enjoyment.

   5)Whether Mr and Mrs Smith recovered outgoings that were not expenses incurred by Mr and Mrs Smith in operating, repairing or maintaining the premises.

   6)Whether Mr and Mrs Smith recovered outgoings from Ms Wilde without giving written operating expense statements for the financial years ending 30 June 2005, 30 June 2006, 30 June 2007 and for the period up to termination of the lease, and if so, what consequences flow therefrom.

   7)Whether or not Mr and Mrs Smith validly terminated the lease by Notice to Quit dated 21 August 2007, and if not, whether any breaches of the lease and the unlawful termination of the lease constituted a repudiation, which Ms Wilde elected to accept, and terminated the lease by vacating the premises on or about 28 October 2007.

   8)Whether arising from Mr and Mrs Smith's counterclaim, Ms Wilde is liable to Mr and Mrs Smith for arrear rental, outgoings up to the date of termination, interest under the lease, costs of making good the premises after termination and damages for lost rental.

Background

1. Before proceeding to examine the relevant evidence and determine the above issues, it will be useful to set out some background, most of which is not in dispute.  Where there is any controversy, we shall make clear that the facts stated constitute our findings.

2. The leased premises are known as No 80 ­ 82 Avon Terrace, York.  There are effectively two shops comprised within the premises which take up part of a building owned by Mr and Mrs Smith.  Also included within the building is an antique shop, a solicitor's office and a shop occupied by the Royal Society for the Prevention of Cruelty to Animals (RSPCA).  The lawyer's office abuts the front section of the leased premises, which overlap the back of the lawyer's office so that the eastern wall of the office is common with the western part of the rear section of the premises.  The RSPCA shop is to the south of the lawyer's office, but because it runs the full width of the building, the southern wall of the rear of the premises is common with that shop.  Abutting the eastern wall of the RSPCA shop is a wash trough and toilet area.  This is not part of the leased premises, but it appears that Ms Wilde and her staff were entitled to the use thereof.

3. The main portion of the building was constructed in the early 1900s, whereas the rear section, described as the back skillion, was added in or about 1985.

4. The building was purchased by Mr and Mrs Smith in the early 1980s, and at that time, and at all relevant times up to the termination of Ms Wilde's lease, had been used as a bakery.  The rear extension was added by the tenant who was in occupation at that time.

5. While the exterior walls of the main portion of the building have been described as single leaf brick walls, it was accepted during the hearing that their thickness is such that there must be more than one leaf, although there is no cavity within the wall as has been the usual construction method for some time.

6. No witness could refer to any evidence of the existence of a waterproof membrane under the slab of the building, and we find that it is most likely that there is no such membrane.  As opined by Ms Wilde's expert witness, Mr Wallis, it is likely, and we find, that some rising damp would have become evident in the wall within a relatively short period after construction of the building.  It would have become more manifest with the passage of time.

7. Ms Wilde became interested in purchasing the bakery, café and tearoom business operating at the premises in or about February 2005.  She travelled from Tasmania in February 2005 to inspect the business with the vendor's representative, Mr Michael Bawden.  She inspected the premises again during March 2005.

8. On the first day of the hearing, the Tribunal conducted a view of the premises.  Coincidentally, the premises are now occupied by Mr Bawden, who conducts a real estate agency business from the front area of the two shops.  He has closed off and does not use the rear extension, which was cleaned up after the occupancy by Ms Wilde came to an end.  Carpets have been laid in part of the front area of the shop and linoleum has been laid over the remainder of the front floor area.  Customorb metal cladding has been placed over the northern wall of the front section in a colouring which formed part of the theme used by the franchise operation which Mr Bawden conducted at the time he took over the lease.  The front section is presentable and obviously suitable for use as a real estate agency.  The rear section, as inspected, and allowing that it was free of all fixtures and fittings, presents as a rather rough­and­ready building.  The floors are not even in areas.  Gyprock attached to the walls is in a deteriorated condition and there is evidence of considerable patching of walls.  The building could not possibly have presented as well as this when inspected by Ms Wilde when the bakery, café and tearoom were in operation.

9. In a statement made to the Magistrate's Court, when Ms Wilde was successfully prosecuted for a number of breaches of health regulations, she stated that it had been necessary to cart away rubbish and contaminated flour which had accumulated over years, that weeks had been spent scraping the floor of ground-in dirt, and carting rubbish bin loads of dirt to the dump (applicant's bundle (AB) at 146). While there may be some exaggeration in these statements, they support our finding that the premises were in anything but clean condition at the time of purchase of the business and that, in our view, there must have been obvious signs of repairs to walls due to rising damp. It appears that Ms Wilde's only concern prior to purchase was that there were no major work orders issued by the local council which were outstanding (statement Exhibit 5 at [5]).

10. We conclude that Ms Wilde did not carry out any proper inspection of the premises, or if she did, she was happy to take the premises as they were.  Most of the issues of which she subsequently complained, or which were raised as issues in these proceedings, would have been self­evident by any reasonable inspection.  Examples are the repairs to the walls due to rising damp, evidence of leaking plumbing, a hole in the floor near the storage area and the obvious deficiencies in the storage area, including the opening near the eaves.

The evidence and determination of issues

1. It was agreed at the commencement of the hearing that the parties' respective bundles of documents would be regarded as being in evidence before the Tribunal, subject to any proper objection to any documents therein.  A similar approach was agreed in relation to the witness statements which would be tendered in evidence.

2. Counsel for Mr and Mrs Smith objected to [82] ­ [85] of Ms Wilde's statement, in that she there reported matters said to have been noted, and various observations, said to have been made by Mr Duperouzil, who carried out certain repairs to the premises on the instructions of Ms Wilde.  The objection was on the basis that the evidence was firstly hearsay, and in any event, purported to report opinion evidence, of a person who was not established to be an expert.  An objection was also taken on the latter basis to a document appearing at AB 143, which purports to be a report from Mr Duperouzil, addressed to whom it may concern, relating to the repairs carried out.  The Tribunal ruled that, as it was not bound by the rules of evidence, it would admit the evidence subject to weight.  The weight to be given to that evidence is dealt with further in these reasons.

3. For the sake of clarity, the Tribunal also raised with the parties the status, if any, to be given to a document which had been filed by Ms Wilde on 2 September 2009, at a time shortly after her then solicitors had notified the Tribunal that they were no longer acting for her and before she engaged the services of Mr Christie.  The document was headed 'A Response to the Witness Statements of the Respondents by the Applicant in Conjunction with the Pictorial Evidence of the state of the York Village Bakery and Tearooms'.

4. At the next directions hearing, when Mr Christie was engaged, the Tribunal raised with counsel the difficulty which the Tribunal had in attempting to make sense of the document.  The Tribunal indicated that, if it was intended to rely on the document, it should be revised into some coherent format.  In the result, no amended document or any other document in substitution for it was filed.  In the circumstances, the Tribunal held that it would have no regard to that document.

5. The Tribunal received evidence from 13 witnesses, in addition to the evidence of Ms Wilde and Mr and Mrs Smith.  The witnesses for the applicant were Ms Marion Smith, Ms Rhonda Livingstone, Mr Paul Leahy, Mr Malcolm Stronach, Mr Morris Mildon, who were all lay witnesses, and Mr Robert Wallis, a building consultant and registered builder, who gave expert evidence.

6. The respondents' witnesses were their son, Mr Haydn Smith, Mr Charles Strawbridge, and Mr Michael Bawden, together with expert witnesses, Mr Callum Neil, a professional structural engineer, and registered builders, Mr Wallis, Mr Gibbs, Mr Robert Swann, and the Shire of York's principal environmental health officer and building surveyor, Mr Peter Stevens.

7. The Tribunal has given careful regard to all of the above evidence, but in accordance with s 77(2) of the SAT Act, these reasons will include only the Tribunal's findings on material questions of fact and the evidence or other material on which those findings are based.

8. We turn now to address the issues for determination and it is convenient to address, firstly, what constitutes structural maintenance and repair for which Mr and Mrs Smith are responsible.

Structural maintenance and repair

1. The following provisions of the lease are relevant to the maintenance issue.  We refer firstly to the terms of the original lease.

2. Clause 2 of the lease sets out the following lessee's covenants.

   (e)Repairs ­ To keep the Leased Premises in good and tenantable repair and condition (fair wear and tear, damage by fire, storm, tempest, earthquake explosion excepted … ) and to keep the Leased Premises in safe condition so as to avoid any injury to any person occupying entering or being in or upon the said premises.

   …

   (i)Repair of Electrical Installations ­ At all times to permit the Lessor and any servants agents and workmen of the Lessor to enter upon the Leased Premises or any part thereof with or without tools implements and materials and there make in effect any repairs restorations alterations and additions to any electric light water sewerage and other wires pipes and fittings relating to the building in which the Leased Premises are situated.

   …

   (p)Compliance with Legislation and Notices ­ To comply with and observe at his own expense all present and future legislation regulations by-laws or orders of any competent authority affecting the use or cleanliness of the Leased Premises by the Lessee and with all notices received either by the Lessor or the Lessee from any statutory or public authority including notices requiring the carrying out of any repairs alterations or works and will keep the Lessor indemnified in respect of such matters PROVIDED THAT the Lessee shall not be obliged to carry out any work of a structural nature except as may be required or necessary by reason of the nature of the Lessee's business or the Lessee's use of the Leased Premises …

3. Clause 4 of the renewed lease varied the original lease by inserting the following new relevant clauses within cl 2 of the lease, which, as stated, sets out the lessee's covenants.

   (oo)Floors ­ all internal floors and windows within the Leased Premises are to be kept clean.  Any sealing, polishing or repairs to flooring (except of a structural nature) is to be at the Lessee's [sic] expense and in any event the condition of the floors is to be no less than that at the commencement of the Lease;

   …

   (ss)Building Repairs not being of [a] structural nature are to be the responsibility of the Lessee.

4. The following was inserted as new subclauses to cl 3 of the lease.

   (a)Structural Repairs ­ The Lessor is responsible for all structural maintenance and repairs of the Leased Premises.

   (b)Painting ­ The Lessor's cost and expense will paint and maintain the exterior of the Leased Premises.

5. The evidence discloses that neither party requested the above amendments to the lease.  The inference is that Mr and Mrs Smith's solicitors thought it prudent to attempt to define in more detail what the parties' responsibilities would be under the lease.

6. Mrs Smith gave evidence that, whenever there had been a problem with maintenance issues with tenants prior to Ms Wilde, they had treated any difficulty on its merits and endeavoured to reach an agreement as to what was or was not their responsibility.  Ms Livingstone and Mr Leahy were the tenants prior to Ms Wilde.  By consent, their statements were admitted without them having to attend for cross­examination.  They testified that during the approximate 10 years when they ran the business, work orders from the health inspector 'concerning structural maintenance' were a major issue and that, during this time, it was also difficult to engage or receive acknowledgement from Mr and Mrs Smith as to their responsibility for structural maintenance.

7. The room for disagreement as to what constitutes structural maintenance is obvious.  Mrs Smith did not think it was correct to suggest it was difficult to engage with her and her husband.

8. We can make little of Miss Livingstone's and Mr Leahy's evidence other than that it reflects that there was disagreement at unidentified times about who had what responsibility.  We place no weight on the reference in the evidence to their characterisation of the maintenance as being structural.  A proper characterisation of what is a structural repair is the task of the Tribunal.

9. In our view, until cl 3(a) of the lease was introduced, there was arguably no obligation on Mr and Mrs Smith to carry out repairs.  Even cl 2(i) of the lease did not impose such an obligation: see Adami v Lincoln Grange Management [1998] 1 EGLR 58 (Adami) and Carbure Pty Ltd v Brile Pty Ltd [2002] VSC 272 at [23] ­ [25] (Carbure).  It may be that cl 2(p) of the lease would support an argument that the landlord was obliged to carry out structural repairs unless the work required by the relevant statutory or public authority was required or necessary by nature of the lessee's business.  On the other hand, there is no express covenant requiring the landlord to carry out repairs.

10. In any event, cl 2(e) of the lease imposed a general repair obligation on the lessee.  The introduction of cl 3(a) of the lease qualifies that obligation and must be taken to exclude structural repairs from the repairs required to be undertaken by the lessee.  Clause 2(e) of the lease makes it clear that the landlord is obliged to carry out structural repairs.

11. As a matter of ordinary language, we would understand 'structural', which is the adverb of the corresponding noun (structure), to mean no more when used to describe 'structural repairs' than to speak of 'repairs to the structure'.  But the true meaning of the phrase 'structural repairs' depends on its context and must be construed within the lease read as a whole.  Clause 2(ss) and cl 3(a) of the lease must be reconciled within that context.  Building repairs are the responsibility of the lessee, but excluded from that are:

    ­electric, light, water and sewerage pipes all installations (which the landlord is nevertheless not bound to carry out on the principles discussed in the Adami and Carbure decisions); and

    ­structural repairs.

12. If the landlord is obliged to carry out all repairs to the structure in the ordinary sense to which we have referred, it is not clear what building repairs would be the responsibility of the lessee.  Both parties called expert witnesses to express views as to what constituted structural repairs, indicating that both accept that something other than the ordinary meaning applies.

13. Ms Wilde's expert witness, Mr Wallis, a building consultant and registered builder, regarded as structural repair any repair to the building for which a remedy could be granted by the Registration Board 'under the six year structural warranty applicable'.  We take that to be a reference to the remedies which may be granted by the Building Disputes Tribunal under the Builders' Registration Act 1939 (WA) (BR Act).

14. Mr and Mrs Smith's expert witness, Mr Callum Neil, a professionally qualified structural engineer, was called as an expert witness.  He expressed the view that:

    For a building of this nature 'structurally sound' means that it has sufficient factors of safety against collapse under the loads defined in the Building Code of Australia. …

    On the basis that a building structure of this nature comprises roof, load bearing walls, floors and foundations, any maintenance or repairs required in relation to the structural nature of these items (as opposed to, for example, their cosmetic appearance) would be considered 'structural maintenance or repairs'.

15. We reject Mr Wallis' characterisation of structural repairs. Section 12A of the BR Act grants the Building Disputes Tribunal power to order a remedy in respect of any faulty or unsatisfactory building work, or building work which has not been carried out in a proper and workmanlike manner (other than it being faulty or unsatisfactory). No distinction is made between structural defects or non-structural defects. There is no six year structural warranty provided. Section 12A(1aa) of the BR Act provides that the Building Disputes Tribunal shall not have power to make an order unless complaint is made within six years from when the building work was completed (being from when the building is fit for occupation in a free and uninterrupted manner). That limitation applies to any building work complaint.

16. Consistent with Mr Neil's view, the Building Code of Australia (2008 ed) (BCA) contains structural provisions which address the structural performance requirements for buildings, which we drew to the attention of the parties.  Section BP 1.1 of the BCA provides:

    (a)A building or structure, to the degree necessary, must ­

    (i)remain stable and not collapse; and

    (ii)prevent progressive collapse; and

    (iii)minimise local damage and loss of amenity through excessive deformation, vibration or degradation; and

    (iv)avoid causing damage to other properties,

    by resisting the actions to which it may reasonably be subjected.

    (b)The actions to be considered to satisfy (a) include but are not limited to ­

    (i)permanent actions (dead loads); and

    (ii)imposed actions (live loads arising from occupancy and use); and

    (iii)wind action; and

    …

    (vii)groundwater action; and

    (viii)rainwater action (including ponding action);

    …

17. Counsel for Ms Wilde relied upon Justelle Nominees Pty Ltd v Martin [No 3] [2009] WASC 264 (Justelle) where a wider view was taken of the landlord's responsibilities.  There was, as in this case, a clause imposing a general repair obligation on the lessee and a clause imposing an obligation on the landlord to maintain the premises in a sound structural condition.

18. The decision is, however, not particularly helpful to Ms Wilde, because all the court did was find that the plaintiff (landlord) was under an obligation to maintain the roof of the main building, the stonework walls, the terracotta sewerage pipes, and the electrical system which his Honour considered to be part of the structure, in a sound structural condition (at [69]). The case turned on its own facts.

19. The above conclusion is not startling and, with one exception, is consistent with Mr Neil's hypothesis.  The nature of the complaints was that there was significant cracking of the stonework walls, that the roof was in poor condition and leaked during heavy rains, and that there were frequent blockings of the sewerage system which could be cleared only temporarily.  The court held that this led to an inference of collapse or deterioration of the terracotta sewerage pipes.  It was further held that the electrical faults were due to the age of the electrical system, as well as water leaking from the roof, causing the circuit breaker to trip.

20. The exception to which we have referred relates to the electrical issue.  Applying the Neil hypothesis and the approach in Carbure would, it appears, result in exclusion of such repairs.  We note in Justelle that the court relied on Granada Theatres Ltd v Freehold Investments (Leytonstone) Ltd [1958] 2 All ER 551; [1958] 1 WLR 845 (Granada).  In Granada, the court took structural repairs to mean not only those that interfere with the framework of the building but also, more widely, to mean repairs of or to a structure, and that repairs are always either structural or decorative.  That may have influenced the court in Justelle, because electrical repairs are certainly not decorative.  The court in Justelle did not refer to Carbure or to Advance Fitness Corp Pty Ltd v Bondi Diggers Memorial and Sporting Club Ltd [1999] NSWSC 264 (Advance) in which the 'structural' versus 'decorative' distinction was criticised.  The court, in Advance, nevertheless accepted, consistent with Granada, that it was necessary to make a practical judgment as to whether the work, having regard to its nature and extent, interferes with or alters the framework or structure of the building.

21. We understand the reference to the framework or the structure of the building to refer to those structural elements which are load bearing or must resist actions of the type to which we have referred.  We find, on our construction of the lease, that the landlords' obligation is to carry our any repairs necessary to the structural elements of the building, being those elements which are load bearing or must resist the type of action as described in the BCA.  The obligation is, however, subject to the specific provisions of the lease, such as cl 2(oo), in terms of which the lessee is still liable to carry out repairs to a structural element, the floor, provided the repairs are not, in themselves, of a structural nature, for example, such as re-screwing a floorboard which has become loose.

Did Ms Wilde give notice to Mr and Mrs Smith of matters which required structural repair?

1. The authorities establish that a landlord is not in breach of a covenant to repair unless notice of a defect requiring repair is given: McCarrick v Liverpool Corporation [1947] AC 219; Casey & Anor v Aldous BC9400885 SCSA (unreported, decision dated 20 December 1994).

2. As submitted for Mr and Mrs Smith, what is required is for the landlords to have information as to the existence of the defect such as would put the landlord on enquiry as to whether repairs are required: Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 370. The pleadings identified only one written notice, being a letter dated 25 July 2005 (RB11). Counsel for Ms Wilde also relied on:

   i)evidence establishing that the letter of 25 July 2005 was re­sent on 28 November 2005 (RB12);

   ii)an undated note which Ms Wilde testified was sent on 19 September 2006 (RB41);

   iii)a letter dated 21 March 2007; and

   iv)a letter dated 7 May 2007.

3. Mrs Smith also referred in her evidence, at [80] of her written statement, to a handwritten note which was dated 24 December 2005 (RB15).

4. Various unspecified oral communications were relied upon.

5. As previously indicated, we shall address all the alleged forms of notice to ensure that we have dealt with the substantial merits of the matter.

The letter of 25 July 2005

1. To avoid unnecessary repetition, we incorporate the letter by reference.

2. In our view, excluding for the present, a reference to a crack in the archway in Shop 82, none of the matters raised are structural in nature, and were not identified by Mr Wallis in his report as being structural defects.  On the approach taken in the Justelle case, the electrical or plumbing complaints might have potential to be as a result of a structural failure.  Ms Wilde attributed the fire in the electrical power board to water ingress from the allegedly leaking roof.  Mrs Smith said that it was caused by too many power leads being taken from it.  Neither had personal knowledge and, in both cases, their source was allegedly from the electrician who carried out the repairs.  No evidence was given by the electrician and, in the circumstances, we can make no finding as to the cause of the fire.  In any event, the letter advises that the power board caught fire, but has been repaired without any reference being made to the cause attributed by Ms Wilde.  It cannot therefore constitute any notice of a defect requiring repair by Mr and Mrs Smith.  There was also no evidence of any general structural failure which might have affected the plumbing.

3. In relation to the crack in the arch, Mrs Smith testified that a builder engaged by her and husband inspected the crack and advised that it was only a surface crack.  She thought the builder was Mr Gary McNamara, but his evidence makes no reference to inspecting this crack, although he referred to other inspections and work undertaken by him.

4. In any event, Mrs Smith testified that she informed Ms Wilde that they would fill the crack when Ms Wilde came to paint that part of the interior of the premises, which suggests it was likely that it was communicated to Ms Wilde that advice had been received that the crack was not structural.

5. Mr Charles Strawbridge, a handyman, testified that he carried out general maintenance after Ms Wilde had left the premises.  The subsequent tenant, Mr Michael Bawden, testified as to the works he undertook to present the premises in a way suitable for the conduct of a real estate business, which included painting.

6. During the view on the first day of the hearing, no crack in the archway was observed.  Mr Wallis did not identify this as a defect during his inspection on 3 October 2007 ­ despite close attention and considerable discussion in his report to the condition of the walls.

7. As no structural repairs had been carried out and the crack is no longer evident, we accept that the reference to the crack in the archway did not necessitate any structural repairs being carried out.

1. It follows that the above letter does not constitute a notice requiring Mr and Mrs Smith to meet their obligations to carry out structural repairs.

Re­sending the letter on 28 November 2005

1. For the same reasons as given above in relation to the original letter of 25 July 2005, the letter of 28 November 2005 is not a notice requiring Mr and Mrs Smith to meet their obligations to carry out structural repairs.

Undated note sent on 19 September 2006

1. The note appears at AB91 and we incorporate it by reference.

2. It refers to roof repairs already completed by Ms Wilde, and therefore cannot constitute the requisite notice in respect thereof.

3. The thrust of the letter appears to be to implore Mr and Mrs Smith to accept what is seen by Ms Wilde as their responsibility under the lease, which is to carry out whatever repairs are necessary to the building to ensure that it is fit for the purpose of operating a bakery.  In that context, it is suggested that the building should not have a leaking roof, nor crumbling walls with rising damp.  However, in the context of the advice that Ms Wilde had spent $3,526 repairing the building and, in particular, the reference to work having been carried out on the roof, we do not consider that this is a sufficiently clear notice to put Mr and Mrs Smith on their enquiry as to whether any particular repairs were still needed.

4. The note then later makes reference to the arch in the dining room needing repair and enquires whether Mr and Mrs Smith wanted to fix it or not.  That, we consider, is a sufficient notice of a defect, but for the reasons given above, we do not consider that it relates to a structural matter.

5. We accordingly find that the undated note does not constitute requisite notice.

The letter of 21 March 2007

1. This letter appears at RB37 and again we incorporate it by reference.

2. In the main, the letter refers to the past condition of the premises, for example, roof and ceiling repairs carried out by Ms Wilde.  Reference is made to the common wall with the adjacent RSPCA shop to the south of the premises which 'had almost crumbled away' and which 'stayed in that condition for months' which conveys that it was repaired by Mr and Mrs Smith.

3. Attached to the letter is a schedule setting out 'Building Costs', that is, costs incurred by Ms Wilde in repairing the building, and a claim for compensation for stress caused by reason of the alleged failure to maintain the building, and a claim for further compensation by reduction of rent or payment of $30,000.  Save for some complaints identified in the body of the letter which appear to be current, all the complaints seem to be of past issues.

4. The following appears to refer to matters that were then current:

   The building is crumbling.  The power sockets are falling off the wall as the masonry does not support them.  You pull a plug and a cloud of red dust descends.

   One wall is so weak that it no longer supports the gas fittings.  The floor is in poor state of repair, rough and uneven and not impervious.  Cracks are appearing in the floor and the masonry is crumbling.

5. That, on the face of it, is sufficient to constitute the required notice.  It is, however, necessary to determine whether the matters raised in fact relate to defects the remedying of which involve repair to the structural elements of the building.

The building is crumbling

1. Mr Wallis, in the second paragraph of his report dated 9 October 2007, states:

   This very old single brick and corrugated iron roofed building was found to be in poor condition both internally and externally although the structure as a whole could not in my view be classified as structurally unsound, ie in imminent danger of partial or total collapse.

2. The evidence of Ms Wilde and Mr Wallis establishes that the internal render was in places fretting due to rising damp.  That finding does not apply to the common wall with the RSPCA shop, which is addressed further by us when considering the note of 24 December 2005, which was not specifically relied upon by Ms Wilde's counsel.

3. It is, in our opinion, a matter of fact and degree as to when a complaint of this nature calls for a structural repair.  We accept Mr Wallis' opinion that the building walls have no cavity and no apparent or effective damp course.  That is not unusual with old buildings.  As a result, from time to time, any internal or external render will delaminate, or fret, and will require repair.  That does not affect in any way the actions to which the wall itself is subject and which, structurally, it must resist.  A point will be reached when the extent of damp to the core structure of the wall is such that repair to the render will be ineffective and will be doomed to early failure.  When that point is reached, some repair to the structure is required, for example, by injection of waterproofing product to prevent or slow the rising of damp.  In our view, the evidence does not establish that this stage had been reached.

Power sockets falling off the wall

1. Ms Wilde referred to photograph 12, at AB114, which depicts one power point fixed by screwing, presumably into a wall plug.  The upper point of the power point has come away from the wall.  It has not fallen off the wall.  Another power point is fixed immediately adjacent to the loose point.  Mr Wallis did not comment on this photograph.  Mr Neil did express the view that it is of no structural significance.

2. In the absence of any expert evidence to support Ms Wilde, we cannot find that the refixing of the power point is a structural repair and the notice is therefore of no consequence in this respect.

One wall is so weak that it does not support gas fittings

1. Ms Wilde referred to photograph 8, at AB112, which she testified shows that the gas pipes were loose.

2. Mr Neil did not regard this as indicating any structural repairs and the matter was not addressed by Mr Wallis.

3. Accordingly, for the same reasons as in respect of the power socket issue, we find refixing of the gas pipes to the wall is not a structural repair and the notice is of no effect in this respect.

The floor is uneven, not impervious and cracks are appearing in the floor

1. The floor here referred to, in context, is clearly the concrete floor.  A considerable amount of oral evidence addressed the timber tongue and groove flooring referred to in Mr Wallis' report, which is in the section of the shop to which the public had access.  The concrete floor is in the rear section.

2. Exhibit 9 is a plan prepared by and tendered by Ms Wilde.  It refers to a section of 'uneven and cracked concrete' in the skillion area at the rear.  This is an extension to the original building.

3. Exhibit 10, tendered by Ms Wilde, includes photograph 46, said to depict pitted concrete and large open cracks in the concrete floor. Mr Wallis addressed the concrete floor in Pt S9 of his report. He supports the above description of the floor and specifically refers to holes in the concrete floor near the entry to what he refers to as a coolroom ­ but which all parties accepted was a storeroom. The holes were said to be above a disused or redundant cellar.

4. None of Mr Wallis' evidence suggests that the structural performance of the floor is impaired.  When regard is had to subclause 2(oo) of the lease, we consider that the obligation to seal and repair the floor lay with Ms Wilde.

5. In this respect, the notice has therefore no effect.

Masonry is crumbling

1. We understand that this is a reference to the brickwork.  This is clearly a matter potentially requiring structural repairs and, to this extent, the notice is effective.  However, none of the expert evidence supports the assertion made by Ms Wilde.  Mr Wallis specifically addressed the condition of the walls, but referred only to the effect of rising damp on the render finish and gyprock lining (Pt S5 of his report).  Mr Wallis also expressly stated that the building could not be regarded as structurally unsound.

2. We find that no repairs were required to the brickwork or masonry.

The letter dated 7 May 2007

1. This letter appears at RB41 and we incorporate it by reference.  It also deals with past issues, but there are some references to the then current state of the premises as set out in the following paragraph of the letter:

   By the terms of the act the landlord is suppose [sic] to have a duty of care and supply a safe and secure environment.  So far this has not happened.  There are cracks in the archway in the dining room.  The doors are ill fitting and easily opened from the outside.  The gas fittings are coming adrift from the wall as the wall is not stable enough to hold the pipes.  The plumbing over the industrial sink leaked for months under the electric oven and under the bread prover before the landlord called in a registered plumber.  The floor boards in the shop are in no way safe.  There is no firewall between the two premises.  The building is showing years of absolute neglect.  The toilets are an absolute disgrace as the roof leaks profusely the toilet paper gets soaked and your feet are paddling in water.  There are no lights in the toilets.  …

2. With the exception of the reference to the floorboards, we do not consider any of the other matters raised relate to structural repairs.  That is for the reasons we have already given in relation to the references to the cracks in the archway and the gas fittings coming adrift.  The toilet is not part of the leased premises.

The floorboards

1. The Wallis report referred, in Pt S9, to the tongue and groove floorboards in the main entrance area to the shop, which he stated 'is unsightly and could lead to customers tripping'. Mr Wallis provided no evidence that the floor was unable to resist the loads to which it was subject in order to perform structurally. The problem he identified was that the sides of the timber which constituted the upper side of the groove, into which the tongue fits, were broken off to some unspecified degree, but sufficient for it to look unsightly and, in his view, to constitute a danger to customers.

2. Mr Stevens, the principal environmental health officer and building surveyor for the Shire of York, gave evidence for Mr and Mrs Smith.  He had not regarded the condition of the floor as representing any risk to customers.  Mr Smith testified that after Ms Wilde vacated the premises, a single 18 inch length of flooring was replaced because it had split.  Mr Morris Mildon, whose witness statement was submitted by Ms Wilde, gave evidence as to his observation of the repairs carried out.  He referred to the replacement of a 'loose and rotten floorboard'.  No other witness referred to the floorboard as having been rotten.  Both Mr Smith and Mr Strawbridge stated it was cracked, and Mr Swan, who carried out an inspection in November 2007, said that he had jumped on the floor and found that there was no movement.  It was, as he described it, solid on its stumps.

3. As the Shire of York's building surveyor, Mr Stevens had responsibility for enforcing the provisions of the Local Government (Miscellaneous Provisions) Act 1960 (WA) (LG(MP) Act), and he was aware that there were grooves missing from some of the floorboards, yet he did not regard the condition of the floor as constituting a danger. If he had thought so, there are provisions of the LG(MP) Act which would have enabled Mr Stevens to ensure that the situation was remedied (s 403 of the LG(MP) Act). We bear in mind that Ms Wilde complained that Mr Stevens was overzealous in the performance of his duties. She had lodged a formal complaint against him in October 2006 which was investigated by a senior officer of the Environmental Health Directorate of the Department of Health. The report from Dr Andrew Robinson, the divisional director of the health protection group, dated 21 November 2006 (RB83) exonerated Mr Stevens.

4. We were impressed with the professional manner in which Mr Stevens gave his evidence and we accept it in its entirety.  That is not to say that he necessarily always acted in a professional manner in his dealings with Ms Wilde.  She alleges he did not, and the statement of Ms Marion Smith, which was admitted by consent and without the witness being required to attend for cross­examination, corroborates Ms Wilde.  No allegations of his acting in an unprofessional way were put to Mr Stevens when he gave evidence.  It is not necessary, nor in the circumstances is it appropriate, for us to make any finding on this matter one way or the other.  We can properly only deal with the way in which Mr Stevens gave evidence before the Tribunal.

5. In any event, it is clear to us that Mr Stevens endeavoured to carry out his duties in a conscientious way, and we think that if the floorboards were rotten, or any part of them was rotten, or if they presented a danger to the public because of the number of grooves which were broken off, we think it is probable that he would have taken action to address the issue, which he did not.  He regarded the floor as safe.

6. It is also evident from Mr Wallis' evidence that the structural integrity of the floor was not an issue when he inspected.  When regard is had to cl 2(oo) of the lease, we consider the obligation to replace a single floorboard lay with Ms Wilde.

7. In our view, the notice of 7 May 2007 is therefore of no effect in relation to this issue.  If we are wrong in this conclusion, any breach by Mr and Mrs Smith of their obligation to carry out structural repairs, by failing to repair one cracked floorboard, which did not render the floor unsafe, is so minor that it could not constitute a repudiation of the lease.

The note dated 24 December 2005

1. We refer to the note (RB15) which we incorporate by reference.

2. The note refers to the 'wall between the RSPCA shop and the premises "collapsing"'.

3. The area, which was subsequently repaired by Mr and Mrs Smith, was in the middle of the height of the wall: see photograph 14 forming part of Exhibit 10.  It reflects an area of render, either removed for repair or the extent of render which had fretted away.  It is not clear to us which is the case.  The lowest part of the affected render is at least a few feet above the floor level.

4. This raises a real question as to whether this repair or fault was caused by rising damp.  We note that a commercial chiller was located in this vicinity.  We can make no finding as to the cause of render failure in this location.  In any event, as the letter of 21 March 2007 (RB37) establishes, Mr and Mrs Smith repaired the wall.  It is questionable whether Mr and Mrs Smith were obliged to do so and we make no positive finding to that effect.  Further evidence would be required to show what work was undertaken affecting the structural elements, namely, the bricks and mortar of the wall rather than the patching of render, to enable such a finding to be made.

5. If we are wrong in that conclusion, nothing turns on it, as the work was carried out some months after 24 December 2005 and well before the termination of the lease.  It might be possible for Ms Wilde to rely on a delay in carrying out structural repairs such as this when it is but one of a number of similar failures.  But we have not found any other failures to have occurred.

Oral complaints

1. In her witness statement, at [39], Ms Wilde outlined the occasion on which she alleges oral notice of required repairs was given to Mr and Mrs Smith.  Reference is made to leaking plumbing for the industrial sink, damage caused to the hot water system, the guttering at the rear of the skillion area and the lack of guttering on the south­east wall of the premises and rear wall of the adjoining RSPCA shop, which allegedly allowed water ingress to the toilets.

2. We do not understand it to be in dispute that the guttering on the eastern wall of the shop was replaced during approximately July to November 2005.  As the plan prepared by Ms Wilde (Exhibit 9) shows, the toilets are at the rear of the RSPCA shop and are not part of the leased premises.  The hot water system repair and plumbing repairs were not of a structural nature.  These oral notices, if given, would accordingly be of no relevant effect.

3. As appears in the following discussion, the circumstances in which oral communications occurred between the parties became volatile.  We accept the evidence of Mrs Smith that, with the exception of one later oral complaint about water leaking into the premises, none of the other oral communications were understood to have conveyed notice of any structural defect.

4. We accept the evidence of Mr and Mrs Smith that Ms Wilde was emotional on these occasions and abusive towards them.  She was under financial strain and was stressed by her ongoing difficulties with the local authority over health issues.  This appears self-evidently from Ms Wilde's submission filed in the Magistrate's Court when prosecuted by the local authority under the Health Regulations (AB144).  That emotional strain is evident in many of the written communications from Ms Wilde which were put into evidence.  It is understandable that complaints, if raised, may not have been sufficiently clear to have been taken as notice of existing defects requiring repairs to be undertaken by Mr and Mrs Smith.

5. Ms Wilde provided additional oral testimony that about once a week, she complained to Mr and Mrs Smith about the roof leaking, the guttering at the back of the building and, on some unspecified occasions, about rising damp.  Mr and Mrs Smith deny that any oral notification was given of these matters.

6. The relationship between the parties deteriorated rapidly.  Mr and Mrs Smith say they responded to the written complaints made in July and November 2005 and also to the complaint made in the note referred to above dated 24 December 2005.  However, by the latter date, the relationship between the parties was very poor, and on the same date, Ms Wilde gave Mr and Mrs Smith a note that accused them of trespassing on the premises.

7. Mr and Mrs Smith were then attending the premises on the 21st day of each month to collect the rent because of difficulties in getting payment.  There is a dispute on the evidence of the manner in which those meetings were conducted.  As we have found, Ms Wilde was abusive towards Mr and Mrs Smith.  Ultimately, in about May 2006, Ms Wilde applied for a misconduct restraining order against Mr Smith, and later in June 2006, against Mrs Smith, based on what they were alleged to have said during visits to the premises.

8. Mr and Mrs Smith filed responses in the Magistrate's Court denying the allegations and making counter-allegations against Ms Wilde.  Ultimately, no decision was made on the merits because the matter was settled by Mr and Mrs Smith giving a written undertaking not to enter the premises.  Thereafter, their son, Mr Haydn Smith, collected the rent.

9. Mrs Smith remembers only one occasion when Ms Wilde complained about the state of the premises when she and Mr Smith had called to collect the rent.  Mrs Smith stated, at [53] of her statement:

   I recall one occasion in particular when Anne Wilde did complain about the state of the premises when Barry and I went there to collect the rent.  Anne Wilde initially refused to come to the front of the Premises and see us, although we had seen her in the back of the premises and had overheard her instruct the staff member we had spoken to, to tell us to 'go away' (words to that effect) and that she 'hated our guts'.  Shortly afterwards Anne Wilde did come to the front of the premises, where we were, and shouted a torrent of abuse at us relating to the collection of rent and other matters.  During the course of that, Anne Wilde made reference to general faults with the premises and I do recall specific reference to 'leaks'.

10. As we understand Mrs Smith's evidence, in response to this complaint, an investigation indicated that the pipes from the air conditioning units on the roof were leaking.

11. Mr Smith testified that the complaint, as he understood it, was about leaking in the work area and that it was the air conditioner that was the problem.  Mr Haydn Smith climbed on the roof and reported that water was leaking from the air conditioning pipes.  The air conditioner was the property of Ms Wilde and had been purchased with the business.  This was recorded in cl 4(d) of the Renewed Lease and, further, that Ms Wilde was responsible for the repair and maintenance of the air conditioner.  Mr Smith said that no complaint was made about the roof leaking.

1. It is not clear on the evidence when the result of this investigation was communicated to Ms Wilde, but at [40] of Ms Wilde's written statement, she refers to having been informed by Mr and Mrs Smith that the cause of the various leaks was the air conditioner.

2. The schedule to the letter of 21 March 2007, dealt with above, refers to the cost of repairs to comply with the health inspector's requirements.  These requirements are set out in Mr Stevens' Assessment Form dated 28 March 2006 (RB73).  The only relevant requirement was a reference to the need to repair 'ceiling cracking paint'.

3. In her oral evidence, Ms Wilde contradicted herself, first saying Mr Duperouzil was engaged to fix the roof, and then saying, no, he was not asked to fix the roof - it was the ceiling he was to fix, as the roof was not her responsibility.

4. We find it more likely than not that Ms Wilde's initial complaint about leaking was a complaint that the roof was leaking and was understood, or should have been understood, by Mr and Mrs Smith, as such.  But, once investigated and the air conditioner was reported to be the cause, it appears that Ms Wilde accepted that to be the case.  While Mr Duperouzil did carry out repairs to the roof, the extent of such repairs is not clear.  Exhibit 8 is a piece of tin which Ms Wilde says was removed from the roof.  But it does not appear to have come from the area of the roof in which the section has been replaced: see Exhibit 10, photograph 3.  It was common cause that an approximately 6 inch (12.5 centimetre) diameter chimney had protruded from the roof in this area.  The widest sections of the holes in Exhibit 8 are approximately 5 centimetres.

5. In the absence of oral evidence from Mr Duperouzil and the opportunity for him to be cross­examined, it is not possible to make findings as to the condition of the roof and whether it was the cause of the leaking into the premises.  Ms Wilde referred only to a written report said to be signed by Mr Duperouzil (AB143).  Mr Duperouzil does not state his qualifications and makes observations about structural repairs carried out by him.  We can place no weight on his classification of the type of repairs.  He says the roof was the major cause of leaking, which conveys that there was another, or more than one, cause.  That raises whether the air conditioner was a cause of water ingress into the building.  We note that Ms Wilde states, at [84] of her written statement, in referring to Mr Duperouzil's report, that he concluded that there was no leaking problem caused by the air conditioner.  But Mr Duperouzil does not say that in his report.  He attributes the way in which the ceiling 'hung low' to water damage.  But Mr Wallis indicated that green timbers were used in the roof construction, which was a common practice, and would have caused the ceiling to bow, but it was not a structural concern.

6. It is nevertheless evident that the repairs were not sufficient to satisfy Mr Wallis who thought the roof sheets would leak between the end and side laps.  Yet there is no evidence of continuing leaks during Ms Wilde's tenancy.

7. In the circumstances, we find that no sufficient notice was given to Mr and Mrs Smith that the roof was leaking and needed repair after Ms Wilde was informed by Mr and Mrs Smith that the air conditioner was the cause, or in the immediate period before Mr Duperouzil carried out repairs.

Did Mr and Mrs Smith fail or refuse to carry out structural repairs?

1. It follows from the above findings that this question must be answered in the negative.

Did Mr and Mrs Smith breach the covenant of quiet enjoyment?

1. Counsel for Ms Wilde relied on the principles referred to in Glasshouse Investments Pty Ltd v MPJ Holdings Pty Ltd [2005] NSWSC 456 at [14] ­ [16]. Those principles are to the effect that the covenant for quiet enjoyment operates to secure the tenant, not merely in the possession, but in the enjoyment of the subject premises and that, where the ordinary and lawful enjoyment of the premises or of the rights appurtenant thereto is substantially interfered with by the acts or omissions of the landlord or those lawfully claiming under him, the covenant is broken, even if neither title to, nor the possession of the demised premises, or of those rights, is otherwise affected.

2. The case pleaded by Ms Wilde is particularised in Further and Better Particulars of Claim filed on 4 September 2008 at (C) and complains of conduct concerning the prosecution of Ms Wilde by the local authority and the conduct of the environmental health inspector.  Ms Wilde's counsel accepted that the inspector and local authority were not the agents of Mr and Mrs Smith and endeavoured to press a case that it was Mr and Mrs Smith's failure to carry out the necessary repairs which constituted the interference with Ms Wilde's enjoyment of the premises.  Counsel expressly abandoned the case as pleaded.  Counsel for Mr and Mrs Smith objected to the widening of the case in this way, but given the manner in which the case had been conducted, the Tribunal indicated that it would deal with the matter on this basis.

3. In view of our findings that Mr and Mrs Smith were not given notice of structural defects requiring them to carry out structural repairs for which they were responsible, it follows that the claim, on this new basis, must, in any event, fail.

4. We observe that, as pleaded, the claim was doomed to fail.  Mr Stevens, the environmental health inspector, testified that it was Ms Wilde's poor food management skills which led to action being taken against her.  She was successfully prosecuted for six breaches of the Health Regulations.  The condition of the premises improved remarkably in Ms Wilde's absence when Ms Marion Smith was appointed as manager.  This is part of the evidence of Mr Stevens which we have indicated we accept.

Did Mr and Mrs Smith recover outgoings not incurred in operating, repairing and maintaining the premises?

1. The costs referred to are particularised at (D) of Ms Wilde's Further and Better Particulars of Claim and are also detailed in Mr and Mrs Smith's Further and Better Particulars of Counterclaim.  Those costs are for cleaning the premises, baiting for rodents, an annual termite inspection, removal of sign­writing, replacement of a flyscreen, removal of perishable goods, costs associated with the removal of Ms Wilde's equipment, storage costs, repairs to cracked floorboards, repairs to the doorway of the disused coolroom (presumably a reference to the storeroom) and repairs to the front entry doors.  All costs are pleaded to have been incurred after the purported termination of the lease by Mr and Mrs Smith on 21 August 2007.

2. On any basis, these are not costs which Mr and Mrs Smith are attempting to recover as the ordinary costs of maintaining and operating the premises.  As pleaded in [26] ­ [32] of Mr and Mrs Smith's counterclaim, these are costs arising from alleged breaches of the lease by Ms Wilde.

3. Based on our above findings, we consider all heads of cost, except the termite inspection, to be costs for matters which Ms Wilde was obliged to undertake on Mr and Mrs Smith's case, but recovery also depends on whether or not Mr and Mrs Smith validly terminated the lease.  If liability attaches to Ms Wilde, then the quantum of those costs is to be determined at a subsequent hearing.

4. In relation to the termite inspection costs, we do not consider that Ms Wilde was obliged under the lease to carry out an annual termite inspection.  Clause 2(n) of the lease obliged Ms Wilde to keep the premises free of, inter alia, insects and pests, and if she failed to do so, Mr and Mrs Smith are entitled to employ pest exterminators at the cost of Ms Wilde pursuant to that provision.

5. Ms Wilde presented evidence that photograph 29, at AB122, depicted a 'brown line evidencing white ant damage to a beam' and that photograph 30 depicted 'termite damage to (other) wooden beams'.

6. Mrs Smith dealt with Ms Wilde's complaints to the extent known to her.  No reference was made to any termite damage.  Reference was made to arrangements made to carry out works to have the premises ready to be re­leased.  Mrs Smith said that most of the work was 'simply cleaning, including the removal of mould from the walls and the removal of layers of dirt from the walls, floors and ceilings'.

7. The handyman who carried out that work, Mr Strawbridge, testified that he had not removed 'any white ant trails'.

8. If termites were present, it was Ms Wilde's responsibility to have prevented that occurring, and she would be liable for Mr and Mrs Smith's costs in removing them.  If termite damage occurred, it would be as a result of Ms Wilde's breach of her obligations under the lease to keep the premises free of insects and pests, and she would be liable to damages flowing therefrom.

9. We do not consider the photographs to be sufficient to establish that termite damage had occurred, particularly as there is no corroborating evidence of any type, and no claim has been made by Mr and Mrs Smith in respect thereof.  That Ms Wilde advanced this as a complaint demonstrates her failure to understand her obligations under the lease.  It is apparent from the correspondence that she was of the view that Mr and Mrs Smith were obliged to keep the premises in a state which was fit for the conduct of her business, which is contrary to the usual obligations under the law of landlord and tenant, in the absence of an express provision of the lease so providing.

10. It would have been in Ms Wilde's interest to arrange an annual termite inspection, but she was not obliged to do so.  If she did not, she ran the risk of a damages claim.  But, as there is no sufficient evidence of the presence of termites, Ms Wilde is not in breach of the lease in this respect.

11. We find that the cost of the termite inspection arranged by Mr and Mrs Smith is not recoverable against Ms Wilde.

Whether Mr and Mrs Smith recovered outgoings without providing a written operating expense statement for the financial years ending 30 June 2005, 30 June 2006 and 30 June 2007 and at the termination of the lease, and if so, what consequences flow therefrom

1. It is common cause that at no time had Mr and Mrs Smith provided an operating expense statement to Ms Wilde. Section 12(1)(d)(ii) of the CT(RS)A Act provides that a retail shop lease shall be taken to provide that the landlord is required to give the tenant an operating expense statement that details all expenditure by the landlord in each accounting period of the landlord during the term of the lease on account of operating expenses to which the tenant is required to contribute. Section 12(1d) of the CT(RS)A Act provides that if a landlord does not comply with the requirement referred to in subsection 12(1)(d)(ii) of the Act, the tenant is not obliged to pay, and the landlord is not entitled to recover, operating expenses from the date of that non­compliance until the landlord complies with that requirement. Under the section, the operating statement must be provided within three months after the end of the accounting period to which it relates.

2. The outgoings in respect of the financial years ending on 30 June 2005, 2006 and 2007 have been paid. Section 12(1d) of the CT(RS)A Act therefore has no operation. The liability is not extinguished by the failure to provide an operating expense statement; there is simply a statutory moratorium which operates on the obligation to pay. There is no suggestion that the amounts charged were incorrectly charged.

3. We find that Mr and Mrs Smith are technically in breach of the implied terms as pleaded by Ms Wilde, but we find that Ms Wilde is not entitled to any relief as no loss has been suffered in respect of the financial years concerned to the extent of the amounts paid and payment was due at the time it was made.  Counsel for Mr and Mrs Smith conceded that they were not entitled to recover outgoings in respect of the period prior to termination of the lease until such time as an operating expense statement had been provided.  We take that to include the 2007/08 water rates of $492.80, which were unpaid and referred to in the notice of default dated 6 August 2007 (AB129).

Did Mr and Mrs Smith validly terminate the lease, and if not, did they repudiate the lease and was that repudiation accepted by Ms Wilde?

1. A Notice to Quit was left by Mr Haydn Smith at the leased premises on 21 August 2007 (AB132) together with a letter of that date from Mr and Mrs Smith's solicitors advising that Mr and Mrs Smith would retake possession of the premises.  The Notice to Quit required Ms Wilde to quit the premises immediately and to provide vacant possession and the keys to Mr and Mrs Smith.  It also stated that Mr and Mrs Smith would retake possession if Ms Wilde did not vacate.

2. Ms Wilde was not residing in York at the time.  The covering letter stated that it appeared that Ms Wilde had abandoned the property and the business was not open for trading.  Mr Haydn Smith noticed that other mail was visible on the floor of the shop and had not been collected.

3. On 23 August 2007, Mr Haydn Smith attended at the leased premises and changed the locks to the premises.

4. Ms Wilde pleads that the purported termination was invalid because:

   i)Ms Wilde was not in breach of the obligation to pay outgoings; and

   ii)the Notice to Quit, and a notice of demand dated 6 August 2007, were not served on Ms Wilde, and in particular, were not sufficiently served by prepaid certified mail as required by cl 5(b) of the lease.

5. By Mr and Mrs Smith not providing an operating expense statement by 30 September 2007, Ms Wilde was, from that date, not obliged to make payment of outgoings in respect of the preceding financial year.  However, as at August 2007, Ms Wilde was obliged to pay the outgoings.

6. The above notice of demand is addressed to Ms Wilde at the leased premises.  Mrs Smith stated in her evidence that she asked her son to hand­deliver it to the premises and that she also asked him to hand­deliver the Notice to Quit.

7. Mr Haydn Smith, in his statement, refers only to service of the Notice to Quit.

8. We find that Ms Wilde was absent from York and did not receive either notice.  Copies were later provided to her solicitors.

9. In the circumstances, no proof of delivery of the notice of demand is established.  That does not invalidate the Notice to Quit insofar as it was also based on non­payment of the July rental of $1,430, because cl 6 of the lease provides that the lessor may re­enter if rental is in arrear for seven days after it became due, whether or not demand has been made.  The conduct of Mr and Mrs Smith, by their son serving the Notice to Quit on 21 August 2007 and by his changing the locks on 23 August 2007, is unequivocal and consistent only with termination of the lease.  Subsequent correspondence between the parties' solicitors records an unequivocal and constant stance by Mr and Mrs Smith that they had terminated the lease and taken possession of the premises.  Ms Wilde had to obtain a key from Mr and Mrs Smith in October 2007 to gain access and remove equipment.

10. The second cl 5 in the lease (obviously incorrectly numbered) deals with service of notice.  It expressly provides that any notice shall be sufficiently served if left on the premises by the party to be served.

11. We find that the Notice to Quit was validly served and that had effect to terminate the lease on 21 August 2007, but also in itself, is sufficient to constitute a determination of the lease by re­entry: see Commercial Tenancy Law in Australia, (2nd ed, 1997) at [17.10] where reference is made to Gregg v Goodall (1895) 17 ALT 231. In that case, the complainant's solicitor's clerk served on the defendant personally at the demised premises a notice requiring him forthwith to quit and deliver up the premises. The defendant argued that there should have been an actual entry by the landlord or his duly authorised agent. The court held:

    The authorities show that a landlord is bound to make it perfectly clear to his tenant that in consequence of a breach of a covenant in the lease he intends to put an end to the tenancy, and that no special form of ceremony is requisite.  The evidence shows that there was a sufficient re­entry … The lease is properly determined if the tenant gets all the information that can be substantially of use to him.

    In any event, if there was any doubt, the subsequent conduct of changing the locks on 23 August 2007 clearly perfected that re­entry: see Cleverdon v Townsend (1894) 16 ALT 69.

12. It follows that Ms Wilde could not have accepted Mr and Mrs Smith's conduct as a repudiation of the lease and is therefore not entitled to any damages as claimed.  Conversely, Mr and Mrs Smith, having terminated the lease based on Ms Wilde's failure to pay rent, are entitled to such damages flowing therefrom as they may be able to prove.

13. We should mention that Ms Wilde tendered the witness statement of Mr Malcolm Stronach which was admitted by consent without Mr Stronach having to attend for cross­examination.  Mr Stronach's witness statement explains his role in assisting Ms Wilde to clean up the premises after she had uplifted the keys from Mr and Mrs Smith for that purpose.  He also stated that the owners 'said that they had changed the locks but had not entered the premises' but Ms Wilde's case was not run on that basis.  It is not clear who spoke to Mr Stronach and any such statement is, in our view, insufficient to rebut the clear statements contained in the correspondence between the parties' solicitors.  Prior to Ms Wilde being given access to the premises to remove her equipment and clean up, Mr and Mrs Smith's solicitors stated in a letter dated 4 September 2007 that Ms Wilde had been informed that Mr and Mrs Smith would repossess the premises and terminate the lease and, subsequently, a Notice to Quit was issued on 21 August 2007.  The letter concluded with the statement that Mr and Mrs Smith were quite prepared to allow Ms Wilde access to the property to remove her items at a mutually agreed time.

Is Ms Wilde liable to Mr and Mrs Smith for arrear rental, outgoings up to the date of termination, interest under the lease, costs of making good the premises after termination and damages for lost rental as set out in the counterclaim?

1. It is not disputed that Ms Wilde did not pay the July and August 2007 rental, which had accrued as at the date on which the Notice to Quit was served, and Mr and Mrs Smith are entitled to pursue the claim therefor at the contemplated further hearing to determine quantum.  For the reasons given, Mr and Mrs Smith are not entitled to recover any outgoings outstanding as at the date of termination of the lease.

2. Clause 5(j) (the first cl 5) of the lease provides for recovery of interest on payments not made on the due date at the rate of 15% per annum, and Mr and Mrs Smith are entitled to pursue a claim for interest.

3. The lease makes provision for the lessee to keep the premises clean and to deliver the premises up in a completely clean and tidy condition at the end or sooner determination of the lease (cl 2(m) of the lease).  We find the premises were not clean on determination based on the evidence of Mrs Smith to that effect and the photographs tendered of the condition of the premises in September 2007, and that Ms Wilde was in breach of the lease in that respect.

4. The lease also makes provision for the lessee to remove fixtures, fittings, plant and machinery (cl 2(g) of the lease).  It was not disputed that an old oven was left behind.  Ms Wilde was accordingly in breach of the lease.

5. At the conclusion of the lease, various repairs were carried out to the premises.  None of the repairs were of a structural nature, being repairs to cracks to the archway to which reference has been made above, the filling of cracks and holes in the concrete floor, the replacement of a short length of a wooden floorboard, and replacement of a flyscreen.  These are repairs which we find Ms Wilde was obliged to undertake under the lease for the reasons given above in dealing with the various repair issues.

1. We find that the heads of damages particularised in [31] of Mr and Mrs Smith's Further and Better Particulars of Response (and counterclaim) filed on 11 August 2008, which we incorporated by reference, arise from the above breaches, save for the termite inspection claim, together with the claims for loss of rental after termination, and damages flowing from the various breaches of the lease by Ms Wilde which we have found.

2. The first cl 5 of the lease permits the lessor to recover legal costs incurred in consequence of or in connection with the lessee's default under the lease which is claimed as part of Mr and Mrs Smith's loss and damages ([33] of the Response and Counterclaim filed on 20 March 2008).

3. Mr and Mrs Smith are entitled to pursue their claims in respect of the above, the quantum of which will be determined at a subsequent hearing.

Orders

1. The Tribunal will issue orders consistent with its above findings.  The Tribunal will also list the matter for a directions hearing to address all matters necessary to conclude the proceedings.

   The Tribunal will accordingly order as follows:

   1.In these orders, the applicant in matter CC 825/2007 and respondent in matter CC 704/2008, Anne Maria Wilde, is referred to as the applicant; and the respondent in matter CC 825/2007 and applicants in matter CC 704/2008, Barry Smith and Lynn Smith, are referred to as the respondents.

   2.As to the questions referred by the applicant in matter CC 825/2007:

   Q1.Pursuant to s 3(3)(a) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), a question whether or not the lease has been validly or alternatively wrongfully terminated, whether by the conduct of the applicant or alternatively by the conduct of the respondents.

   A.The lease has been validly terminated by the respondents.

   Q2.Pursuant to s 3(3)(c)(ii) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), a question whether the respondents are liable to repay outgoings paid to them by the applicant under the lease because of the respondent's contravention of s 12(1d) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (being moneys paid by reason of a mistake of fact or alternatively law).

   A.No.

   3.As to the questions referred by the respondents in matter CC 704/2008:

   Q1.Whether the applicant is liable to the respondents for various specified amounts under the terms of a lease agreement entered into between the respondents and the applicant on 15 August 2005 (further extending and varying a previously extended assigned lease agreement, originally dated 24 September 1992).

   A.Yes, for arrear rental and outgoings accrued to the date of termination of the lease on 21 August 2007, or alternatively 23 August 2007, but the outgoings then outstanding cannot be recovered until after the respondents have furnished the applicant with an operating expense statement in compliance with s 12(1d)(ii) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).

   Q2.Whether the respondents validly and lawfully terminated the lease agreement referred to above by a Notice to Quit dated 21 August 2007.

   A.Yes.

   Q3.Whether the applicant is liable to the respondents for damages under the terms of the above lease agreement following the termination of the lease agreement and, if so, the amount of those damages.

   A.Yes.  The respondents are entitled to damages in respect of the various claims advanced in the respondents' counterclaim, save in respect of the costs of the annual termite inspection.  The amount of the damages to which the respondents are entitled is to be determined in a subsequent hearing for that purpose.

   4.The applicant's application is upheld insofar as the respondents are not entitled to recover outgoings, or operating expenses, which had accrued but which were unpaid as at the date of termination of the lease, but otherwise, the application is dismissed.

   5.The respondents' counterclaim is upheld, save in respect of the claim for recovery of the annual termite inspection costs, which is dismissed, but the quantum to which the respondents are entitled is to be determined at a later hearing.

   6.The matter be listed for directions on 25 February 2010 in order to address all steps necessary for the final determination of the proceedings.

I certify that this and the preceding [170] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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MR C RAYMOND, SENIOR MEMBER