"Structural" repairs
39 This conclusion as to the scope of clause 5.1, construed in light of the definition of "Demised Premises", makes unnecessary to the resolution of the proceedings consideration of the question whether restoration of cracked and holed pavements in Areas 1 to 3 would be within the words "structural maintenance replacement or repair". I proceed nevertheless to address that question as if those pavements did form part of the "Demised Premises". The first thing to be said is that, as I view matters, maintenance, replacement or repair that is "structural" can be undertaken only in relation to something that is a "structure" although, of course, not everything done by way of maintenance, replacement or repair in relation to a "structure" is properly classified as "structural". I regard as apposite, in this connection, a passage in the judgment of Brereton J in Hampson v Clyne (1967) 86 WN (NSW) 321:
"'Structure' of course is a word of which the meaning varies considerably according to the context, and the phrase 'structural character' or 'defect of a structural character' varies correspondingly. Literally 'structure' means something which has been constructed and 'defect of a structural character' means either a fault in putting the structure together or some subsequent failure on the part of the structure to remain satisfactorily put together. With particular reference to buildings in common parlance we refer to the bare building as the structure. We refer to fixtures and fittings attached to the structure although these may themselves as individual units be technically 'structures'. We refer also to installations, such as gas and water piping and electrical circuits. Each of these may, however, independently be in certain contexts regarded as a 'structure' in that it is something which has been constructed within another structure."
40 Applying the same concepts, maintenance, replacement or repair is "structural" when its purpose and effect are to remedy some "failure on the part of the structure to remain satisfactorily put together". This is, I think, consistent with the approach taken to the meaning of "structural repairs" in relation to buildings as such in cases such as Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd [1959] 1 Ch 592 and Advance Fitness Corporation Pty Ltd v Bondi Diggers Memorial & Sporting Club Ltd [1999] NSWSC 264 to which counsel for both parties referred. Reference may also be made to what was said by Balmford J - again in relation to a building - in Carbure Pty Ltd v Brile Pty Ltd [2002] VSC 272:
"'the structure' is that part of the total building that supports the loads and stops the building falling down. It should be emphasised that a building may be structurally sound notwithstanding that it shows signs of movement; as by the opening of cracks. Unless such cracks indicate a real and present threat to load bearing integrity, of building failure or collapse, they may be treated as simply cosmetic defect - susceptible of patching, painting or other straight-forward repair."
41 Also instructive, in this connection, is the decision of the Full Court of the Supreme Court of South Australia in J F Hillam Pty Ltd v Mooney (1988) 48 SASR 381. That case concerned an indoor swimming centre which included two heated pools built into the ground but inside a building. They had on their inside surfaces a particular coating akin to concrete (described as "marblesheen") to "make them safe and acceptable to swimmers". The marblesheen deteriorated and one of the issues for determination was whether its replacement was "a major repair of a structural nature to the premises". King CJ (with whom Jacobs and von Doussa JJ agreed on this aspect) answered the question in the affirmative:
"The swimming pools were undoubtedly part of the structure of the premises. The marblesheen which rendered them usable as swimming pools by providing an appropriate surface must be regarded, to my mind, as part of the structure. The repair or replacement of that marblesheen is therefore a repair of a structural nature."
42 Returning to the particular case of the pavements, I am satisfied that they are properly to be regarded as "structures". They were put upon the land by a process of construction. Their character, as consisting of a skin or coating of asphalt placed upon a prepared land surface to which a basecourse of aggregate or blue metal had first been added, makes them similar to, although lesser in degree than, the "low attractive brick fence" considered in Durkin v Commonwealth Savings Bank of Australia (unreported, Full Court of the Supreme Court of South Australia, 30 November 1990) where a fence "in which the bricks are cemented to a cement base and to one another by mortar" was held to be a "permanent domestic improvement of a structural nature". In the same way pavements constructed in the way I have described should be characterised as being improvements "of a structural nature". Furthermore, the replacement of the asphalt skin and any missing basecourse that, to adapt the words in the JF Hillam case, made them usable as pavements by providing the necessary hard surface and its support, and, as stated in Hampson v Clyne, was necessary for them to "remain satisfactorily put together", must, in my judgment, amount to maintenance, replacement or repair that is "structural".
Clause 5.3(b)
43 I consider next the contention of Alamdo that AWF was liable to repair the paving on Areas 1 to 3 because of 5.3(b). That clause is seen as relevant because of the referee's finding that damage to that paving was caused by a combination of excessive weight on the surface and water penetration of that surface. There were also findings that the entry of water was not sufficient to constituted "flood" and was caused, or contributed to, by blockage of drainage pipes on land owned by the local authority lying a short distance outside the boundary of the land the subject of the lease.
44 I am satisfied that clause 5.3(b) imposed no relevant obligation on Alamdo referable to the water penetration that played a part in the damage to the pavement on Areas 1 to 3. The terms of clause 5.3(b) are set out in paragraph 15 above. The clause does not impose any obligation. Its effect is to give added meaning and content to the separately existing provisions with respect to repair. It does so by identifying or defining a specific aspect of the relevant concept of "repair". That concept is stated by clause 5.3(b) to include, in addition to whatever it includes according to the ordinary meaning of "repair", certain specific activities. One of these is "the cleaning and keeping free from chokage of all drain and water pipes and sewerage pipes".
45 Read alone and in isolation, this specification refers to all drain, water and sewerage pipes in the world. But, as I have said, clause 5.3(b) is not to be read alone and in isolation. It is to be read as injecting further or additional meaning into the provisions dealing with repair - specifically, for present purposes, clause 5.1. This means that the activities making up "repair", for the purposes of clause 5.1, are to be understood as extending to the activities of cleaning drainage, water and sewerage pipes and keeping them unchoked. The relevant pipes thus in contemplation for the purposes of clause 5.1 are, of necessity, those forming part of the "Demised Premises", since the clause 5.1 covenant is concerned only with repair of the "Demised Premises". The specifically injected ingredient of the "repair" concept concerning cleaning and unchoking pipes that results from clause 5.3(b) is not made, by that clause or otherwise, to operate beyond the scope of clause 5.1. There is therefore no available construction that causes the lessee to be under an obligation to deal with blockages of pipes on land outside the parcel on which the "Demised Premises" are positioned.
46 I therefore accept AWF's submission that the repair covenants did not require it to deal with such blockages of pipes on the local authority's land as were found by the referee to have caused or contributed to the damage to the pavement on Areas 1 and 3.
Clause 7.1(c)
47 Alamdo seeks to rely on clause 7.1(c) in relation to the damage to the pavement in Areas 1 to 3 to the extent that that damage arose from the placing of excessive weight on the pavements by AWF's sub-lessee. AWF resists that claim, in the first place, because it was not raised before the referee and cannot be pursued without amendment of the summons. I leave that argument to one side because I am firmly of the opinion that, having regard to AWF's alternative argument, the claim is not sustainable in any event.
48 By clause 7.1(c), AWF indemnifies Alamdo "from and against" certain "actions, claims, demands, losses, damages, costs and expenses for which the Lessor may become liable in respect of or arising from" certain defined matters. Even if it is accepted that the placing of excessive weight on the pavement is such a defined matter, the circumstance that the pavement is thereby damaged so as to be in need of repair does not mean that the indemnity operates in favour of Alamdo. For the indemnity to operate, it must be found that the defined matter in question is one producing (or capable of producing) a liability on the part of Alamdo. The actions, claims, damages and the like in respect of which the indemnity clause provides protection to Alamdo are those for which Alamdo "may become liable" by reason of any of the defined matters.
49 If property of mine falls into disrepair, no liability results for me unless and until someone else validly asserts some legally enforceable right against me referable to that state of affairs. In the absence of such a legally enforceable right in a third party, I am free to leave the property in its state of disrepair or to repair it if I see fit. The choice is entirely mine. And if I do choose to make repairs, my decision is in no way referable to any liability to which the need for repair has subjected me.
50 In the present case, Alamdo does not point to any legally enforceable obligation to which it became subject (or to any legally enforceable right that accrued against it and in favour of someone else) because of the state of the pavements in Areas 1 to 3. There is nothing to suggest that Alamdo was compelled (or could have been compelled) to restore the damaged pavement and thereby to incur any liability for the expense of restoration or otherwise. It follows that no occasion for the operation of clause 7.1(c) has been shown to have arisen.
51 Thus, even though AWF's sub-lessee is a person "claiming through or under the Lessee" and the pavements are no doubt "facilities of the Demised Premises", clause 7.1(c) is not the source of obligation on the part of AWF and in favour of Alamdo with respect to the repair of pavements or the cost of their repair.
Areas 4 to 7 - "reasonable wear and tear"
52 The damage to the pavements in Areas 4 to 7 is not, in its nature, different from that in Areas 1 to 3. There is, however, a difference in the cause of deterioration, in that placing of heavy weights played no part in Areas 4 to 7.
53 AWF's primary submission in relation to Areas 4 to 7 is that, because the referee did not deal with them at all, consideration of them should be remitted to the referee. Alamdo says that the court has sufficient before it to enable it to determine the questions relevant to Areas 4 to 7. As I have already indicated, I agree with the latter submission and proceed to the issues.
54 The first thing to say is that, on the basis of what I have already said, the repairs to Areas 4 to 7 were within the description "structural maintenance replacement or repair" and were not "rendered necessary by … the Lessee's use … of the Demised Premises". The proviso to clause 5.1 therefore operates to the benefit of AWF.
55 I nevertheless proceed to consider whether the "reasonable wear and tear" exception in clause 5.1 also operated to AWF's benefit, that being the matter raised by Question 2 at paragraph 14 above. The evidence of the respective experts indicates that the deterioration of the pavements in Areas 4 to 7 began in the form of cracking and became more pronounced when the cracking was not treated, so that water ran in under the asphalt skin and undermined both it and the basecourse. This led to greater deterioration in the form of "crocodile cracking" and potholes.
56 Alamdo says that this deterioration is not put beyond the lessee's responsibility by the "reasonable wear and tear" exception. Its contention, in summary, is that a tenant having the benefit of such an exception is not free simply to stand by and see the demised premises reduced to rack and ruin by the compounded effects of normal wear and tear - that there is a point at which the tenant must step in and put an end to the downwards slide. In this respect, Alamdo relies on a passage in the judgment of Talbot J in Haskell v Marlow [1928] 2 KB 45 which was first rejected by the Court of Appeal in Taylor v Webb [1937] 2 KB 283 but later reinstated as authoritative by the House of Lords in Regis Property Co Ltd v Dudley [1959] AC 370. The passage is as follows:
"The meaning is that the tenant (for life or years) is bound to keep the house in good repair and condition, but is not liable for what is due to reasonable wear and tear. That is to say, his obligation to keep in good repair is subject to that exception. If any want of repair is alleged and proved in fact, it lies on the tenant to show that it comes within the exception. Reasonable wear and tear means the reasonable use of the house by the tenant and the ordinary operation of natural forces. The exception of want to repair due to wear and tear must be construed as limited to what is directly due to wear and tear, reasonable conduct on the part of the tenant being assumed. It does not mean that if there is a defect originally proceeding from reasonable wear and tear the tenant is released from his obligation to keep in good repair and condition everything which it may be possible to trace ultimately to that defect. He is bound to do such repairs as may be required to prevent the consequences flowing originally from wear and tear from producing others which wear and tear would not directly 'produce'."
57 Talbot J then gave examples:
"For example, if a tile falls off the roof, the tenant is not liable for the immediate consequences; but, if he does nothing and in the result more and more water gets in, the roof and walls decay and ultimately the top floor, or the whole house, becomes uninhabitable, he cannot say that it is due to reasonable wear and tear, and that therefore he is not liable under his obligation to keep the house in good repair and condition. In such a case the want of repair is not in truth caused by wear and tear. Far the greater part of it is caused by the failure of the tenant to prevent what was originally caused by wear and tear from producing results altogether beyond what was so caused. On the other hand, take the gradual wearing away of a stone floor or staircase by ordinary use. This may in time produce a considerable defect in condition, but the whole of the defect is caused by reasonable wear and tear, and the tenant is not liable in respect of it."
58 I am not persuaded that the situation with the pavement in Areas 4 to 7 is in any way analogous with the example of the broken roof tile. The evidence is that the pavement was at the end of its useful and expected life. It had, over time, got to a state where "crocodile cracking" occurred. This is symptomatic of decomposition or deterioration inherent in asphalt paving and to be expected in the ordinary course. It leads on to rutting and potholing. The expert evidence shows, in my view, that the process by which this pavement fell into a holed and rutted state was no more or less than a working out of the forces of nature upon the kind of material concerned.
59 Even allowing for the fullest effect of the principles stated by the House of Lords, it cannot be the case that, despite an exception for reasonable wear and tear, a tenant must continually scan an asphalt pavement for the first signs of any crack and then immediately act to repair it in case it becomes larger or lets water through into the basecourse. That would set at nought the exception for reasonable wear and tear. The pavement must, in my view, be seen as a whole and as subject to the ordinary processes of deterioration to which such a pavement, viewed as a whole, is susceptible. I view it as akin to the stone step referred to in Haskell v Marlow.
60 The exception for reasonable wear and tear in clause 5 therefore operates in relation to the repairs to the Areas 4 to 7 pavements as described in the evidence of the two experts.
Painting of the roof
61 Alamdo contends that AWF was obliged to repaint the roof of the premises. This matter arises in the context of clause 5.2 of the lease which is set out in paragraph 15 above and raises issues quite distinct from those already considered in relation to clause 5.1. The central issue here is that posed by Question 3 at paragraph 14 above, namely, how one determines what is "usual" within the meaning of clause 5.2.
62 The referee found that the roof was of galvanised steel of a type expected to be maintenance free during its expected serviceable life. He also found that it was coated in the course of manufacture and is not usually painted during its normal service life; also that, because it was not designed to be painted on a periodic basis and was supposed to be a paint-free product, it did not fall within clause 5.2. The referee noted that some previous owners had sought to extend the life of the roof beyond its normal service life by overcoating. He then referred to competing submissions: viz, the submission of AWF that, in view of the matters mentioned and the fact that the roof was beyond painting, the surface was not one that was "usually" painted or otherwise coated; and the submission of Alamdo that the test to be applied is an objective one. The matter appears to have been disposed of by the referee in accordance with AWF's submissions, so far as clause 5.2 is concerned. The referee also referred to "the structural maintenance exception" and the exception for "reasonable wear and tear", but as they are relevant to clause 5.1 and not to clause 5.2, his findings on them may be disregarded. The real issue in this context is as to the operation of clause 5.2 alone.
63 Alamdo submits and I accept that the only real issue under clause 5.2, so far as the roof is concerned, is that arising from the words "usually so treated". This is because the question at hand relates to the last year of the term where the liability the clause imposes is otherwise strict.
64 Provisions generally similar to clause 5.2 are common in leases. The covenants in items 9 and 10 of Part II of Schedule IV to the Conveyancing Act 1919 are in some respects similar to clause 5.2, although each uses the words "now or usually painted". Submissions do not refer to any decided cases in which words such as "usually so treated" in covenants of this kind have been considered. Nor have my researches found any. On the basis that - surprisingly, I think - there is no guidance to be had from case law, I proceed to construe the clause by reference to its words and its context.
65 The parties have made competing submissions as to the meaning of "such part of the Demised Premises usually so treated", noting that "so treated" refers back to the words "paint, repaint, clean or otherwise appropriately treat". Both "paint" and "repaint" appear here.
66 The controversy is whether "usually so treated" directs attention to what has historically been done at the particular premises under consideration or whether the relevant standard is one that has regard to the generality of premises and what people habitually do at or in relation to premises of the relevant kind. If the first possibility represents the correct construction, the scope of "usually so treated" will be fixed by what was in fact done to these particular premises at inception. Nothing will be "usual" that was not done originally. The second possibility, by contrast, imports an objective standard that has regard to the treatment of buildings generally.
67 One factor in particular persuades me that the latter construction is to be preferred so far as this particular provision is concerned. I refer to the inclusion of both "paint" and "repaint". If the first meaning were accepted, there would be no work to be done by the word "paint", as distinct from "repaint". The latter word must be taken to refer to the process of applying new paint to something previously painted. It cannot refer to the application of paint for the first time. "Paint" (as a verb), on the other hand, encompasses the application of paint to either a surface that has been painted before or to one that has never been painted. It is this last aspect that, to my mind, rules out the history of treatment of the particular premises as the determinant of what is "usual". If that standard applied and everything were judged according to what was done to the particular premises at their inception, the only parts to which paint was to be applied in conformity with clause 5.2 would be those painted at inception. And that would, in every case, be properly described as "repainting", so that the concept of "paint" - encompassing the application of paint for the first time - would never be capable of coming into play.
68 Accepting, as I do (and as did the referee), the objective test of what is "usual" for the purposes of clause 5.2, I turn to the referee's conclusion on the application of clause 5.2 to the repainting of the roof. The referee appears to have taken the relevant question to be whether someone responsible for a building with a roof of the particular material in question (galvanised steel coated during manufacture and expected to be maintenance free during its serviceable life without painting) would, as a matter of upkeep according to the generally applicable objective standard, either "paint" or "repaint" that roof. He answered that question in the negative.
69 There is an argument that, once the material in question reaches the end of its life, painting becomes "usual" because the hypothetical building owner or manager following generally adopted procedures would then resort to painting in order to secure some extension of the roof's life. I do not accept that argument. Given the inclusion in clause 5.2 of the words "or otherwise appropriately treat", acceptance of the argument would mean that, once the roof reached the end of its serviceable life or was about to do so, clause 5.2 caused to come into play an obligation not only to paint so as to postpone renewal but also to effect other treatments to that end - perhaps to the extent of applying some bituminous coating or sticking on some form of plastic sheeting, assuming one could find examples of other cases in the ordinary run of building management where those steps were taken in order to extend the life of the roofing metal or, at all events, the effectiveness of the roof made of the old and worn out metal.
70 In my judgment, the relevant criterion of what is "usual", for the purposes of clause 5.2, is to be approached by reference to what is habitually done by way of painting and other "treatment" of the particular material in the ordinary course as that material proceeds towards the end of its useful life. A clause such as clause 5.2 does not have in contemplation the taking of steps of a new and different kind with a specific purpose of prolonging life beyond the conclusion it would have in the ordinary course of deterioration.
71 I therefore do not accept the contention of Alamdo that the referee wrongly construed clause 5.2 in concluding that AWF was not required to repaint the roof during the last year of the term.
Crane services
72 This aspect of the referee's report relates to a sum of $7,375 for work done by Southern Cross Crane Service on the cranes on the property. Question 4 at paragraph 14 above refers to this. The sum of $7,375 is said by Alamdo to be recoverable by it under one or both of clauses 5.4 and 9.5 of the lease on the basis that the work was done to bring the cranes up to WorkCover Authority standards.
73 The referee took the view that work to bring the cranes up to WorkCover standards would be "a true item of repair" (and thus within the lease provisions), as distinct from mere maintenance. I do not understand either party to disagree with this. The referee's conclusion was that, on the evidence, he could not say whether the work accounting for $7,375 was to achieve WorkCover standards, with the result that Alamdo's claims based on breach of the lease provisions failed.
74 The referee referred to various parts of the evidence. He noted that Mr Bollard said the cranes had been serviced during the term of the lease and were in working order at its expiration. He said that this was "supported by Mr Krueger" - a puzzling statement as no one called Krueger gave evidence and no such statement can be found by the parties in the evidence of any other witness. It appears likely that the referee misunderstood a reference in written submissions to "Krueger" (being Krueger Transport Equipment Pty Limited, a sub-lessee) having given certain contractual promises in relation to cranes. The referee also said:
"No one gave evidence that the work [ie, the work costing $7,375] was required to cranes which, on the evidence, were in working order."
75 Alamdo says that the referee appears to have overlooked the evidence of Mr Maurici, its principal, in this context. Alamdo points to the following passage in Mr Maurici's evidence:
"I asked them to come in, inspect the cranes, and bring them up to WorkCover Authority requirements. So they inspected the cranes, determined what wasn't complying and what was broken and carried out repairs. I'm not a specialist in crane operations; these people are. There was no servicing taken out. There was repairs taken out."
76 Alamdo also points to two relevant invoices from Southern Cross Crane Service, each of which refers to "service and repairs" and to items which include stop button, realigned brake shoes, repaired fluid coupling, brake spline, brake linings and bottom block hook. These descriptions are said to confirm the nature of the work as concerned with safety matters.
77 AWF says that the passage from Mr Maurici's evidence set out above on which Alamdo relies occurred in a context which must be specially noted because it affects the meaning of the particular answer. AWF says, and accept, that the context was not such as to indicate an acceptance implicit in the cross-examiner's questioning of the purposes for which the work was sought. Of particular significance, in my view, is the following exchange between Mr Maurici and the referee upon which AWF now relies:
"THE REFEREE: Q. Putting aside the crane that was not working properly, you have just told us a few minutes ago that you are not really equipped to determine whether a crane is or is not performing in accordance with WorkCover Authority requirements; right?
A. That's correct.
Q. Then, how can you say that the cranes were in that condition when you purchased the premises?
A. When I purchased the premises?
Q. Yes.
A. I can't.
Q. So they may not have been conforming with WorkCover requirements right through the period of the lease?
A. I can't comment on that. I wasn't in charge of them."
78 The statement of Mr Maurici on which Alamdo places particular reliance and the other matters in the evidence to which Alamdo points cannot, in my view, be regarded as warranting a conclusion other than that reached by the referee. The invoice descriptions are equivocal. The submission based on the context in which the selected statement appears is valid. And the exchange between the referee and Mr Maurici cements the result the referee reached, namely, that the evidence did not allow a conclusion to be drawn that the $7,375 related to work to bring the cranes up to WorkCover standards.
79 I do not consider the referee's findings and decision on the matter of crane services to warrant rejection or variation of any part of the interim report dealing with that subject.