Ali v Hazim [2002] VCAT 274

For the Applicant: Mr Hamilton of Counsel, instructed by Starnet Legal Pty Ltd

For the Respondent: Mr Best of Counsel, instructed by Ross Privitelli, Solicitor.

1. The Dhodaan Café is operated from three premises in Pinoak Crescent, Flemington, numbers 28, 30 and 32. The utility and useability of these three premises for the café's purposes is one of the matters in dispute in this proceeding. The applicant, Mr Mohamed Ali is the proprietor of the café, as tenant of Ms Leila Hazim, the respondent.

2. The history of the tenancy is complex. The parties executed a lease of real estate in the Law Institute of Victoria copyright form (December 1993 revision) dated 30 May 1996. This lease related to the premises at 32 Pinoak Crescent, Flemington and created a tenancy with a term of two years commencing 1 April 1996. The lease reserved an option for one further term of two years which option was exercisable according to the terms of the lease no later than 31st December 1997. In addition to the standard printed terms, the variables in the schedule, the lease included two special additional covenants in the schedule under Item 22 as follows:

"1. The Landlord makes no warranties to the tenant regarding suitability of the premises for its use as a restaurant. The Landlord makes no warranties regarding town planning requirements, health requirements, fire brigade requirements.

2. The tenant agrees to fit out the premises for a restaurant, at the tenant's own cost."

"The landlord must give the tenant quiet possession of the premises without any interruption by the landlord or anyone connected with the landlord as long as the tenant does what it must under this lease."

4. The lease imposed no obligations on the landlord to carry out any works or repairs. Clause 3.2 imposed the customary obligation of repair, cleaning and maintenance on the tenant "except for fair wear and tear". Clause 3.3 included in the range of obligations imposed upon the tenant including specific repair, maintenance and cleaning obligations. Clause 3.4 stated:

3.4.1 to repair damage against which the landlord must insure under Clause 6.2 unless the landlord loses the benefit of the insurance because of acts or omissions by the tenant or the tenant's employees, agents, contractors, customers or visitors.

3.4.2 to carry out structural repairs or make payments of a capital nature unless the need for them results from:

(a) negligence by the tenant or the tenant's employees, agents, contractors, customers or visitors; or

(b) failure by the tenant to perform its obligations under this lease; or

5. Sometime after July 1998 the parties executed a further lease which remains undated extending to 32 and 30 Pinoak Crescent. This lease was once again a Law Institute standard for commercial property, this time the July 1998 revision. Whilst some of the standard terms have been re-worded it has not been suggested that the significant terms differ materially from those which were to be found in the 1996 lease and which I have already quoted. The 1996 lease stipulated a permitted use of "restaurant". The 1998 lease referred to the permitted use as "restaurant/food shop". The lease was for a term of three years commencing 1 December 1998 and provided for options to renew for a further two terms of three years each. Item 22 "Additional Provisions" included Special Conditions 1 and 2 in the same terms as in the 1996 lease and the following additional clauses:

"3. THE Landlord agrees to the following works at the Landlord's expense:

(a) toilet door at 30 Pinoak Crescent Flemington to be repaired

(b) hand basin outside toilet at 30 Pinoak Crescent Flemington to be installed

(c) hot water service unit at 30 Pinoak Crescent Flemington to be moved from inside to outside premises

(d) exhaust/ceiling fan at 30 Pinoak Crescent Flemington to be repaired

(e) external doors and door locks to be repaired at 30 Pinoak Crescent Flemington

(f) gas space heater at 30 Pinoak Crescent Flemington to be repaired

4. UPON the tenant exercising his option for further term or terms, it is agreed that the rental shall be for each year of the further term or terms, increased at the rate of 4 per centum on the anniversary date of the 1 December of each year."

6. By a letter from Ms Hazim dated 9 March 1999 and subscribed both by her and Mr Ali, the parties agreed that Mr Ali would also become tenant of 28 Pinoak Crescent Flemington commencing from August 1999.

7. On 28 November 2000 the parties signed an agreement to lease with respect to all three premises, that is, 32, 30 and 28 Pinoak Crescent. This agreement to lease included a general release between the parties. Apparently the landlord's solicitors submitted a standard Law Institute lease form said to be in conformity with the agreement to lease of November 2000 for execution by the tenant but Mr Ali has declined to execute this document. According to affidavits and pleadings filed on his behalf, his refusal is based upon the view that he executed the agreement of 28 November 2000 only because of threats of eviction and because he received advice from a business agent to the effect that his continued occupation of the premises at 32 and 30 Pinoak Crescent "was at risk without a lease". He says the landlord and her solicitors refused to provide him with a copy of the 1998 lease. On the other hand the landlord alleges that the tenant failed to pay the stamp duty for the 1998 lease.

8. In the most recent amended version of his points of claim filed on 11 February 2001 Mr Ali seeks some 12 heads of relief including a declaration that the agreement for lease dated 28 November 2000 "is null and void or voidable in part or whole". He also seeks a declaration that "the lease of 1998 as varied by agreement dated 19 December 1998 subsists at the option of the applicant". [my emphasis] He then seeks various remittances of rent and "overhead costs" and compensation for lost profits "currently estimated at $315,000 before tax (but subject to any revision and forensic accountant's witness statement)". He also seeks reimbursement for costs associated "with rectification of safety and structural deficiencies at 32, 30 and 28 Pinoak Crescent currently estimated at $58,600 (but subject to any revision in forensic accountant's witness statement)". He seeks orders for rectification of "remaining safety and structural deficiencies in the premises at 32, 30 and 28 Pinoak Crescent" to be paid for by the landlord together with unspecified damages.

9. In the face of a threat of eviction Mr Ali sought an interim injunction on 28 February 2002 which was granted subject to the usual undertaking and a further undertaking to pay the rent reserved by the relevant tenancy arrangement "without deduction".

10. This proceeding has been pendent in the Tribunal since as long ago as April 2001. It was fixed for hearing in December last year but the hearing date was vacated because the matter was not ready to proceed. In declining to make a summary dismissal of Mr Ali's claim under Section 75 of the Victorian Civil and Administrative Tribunal Act 1998 on 25 January this year I nevertheless struck out Mr Ali's "further, further amended points of claim". At the time of that hearing the matter stood fixed for trial in March. At paragraph 24 of my reasons on 25 January I stated:

"...this claim is for several hundreds of thousands of dollars by the tenant and for the most part this relates to trading losses. Mr Hamilton [Counsel for the applicant tenant] admits that no discovery has been made of any of the financial records of the applicant even though they have apparently been made available to an accountant [presumably the forensic accountant referred to in the prayer for relief] to draw certain conclusions as to what the losses may be. No explanation was given as to this egregious default. Mr Privitelli [solicitor for the landlord] asserted that he has been complaining about this deficiency [in discovery] from the very start. There was no denial that he made those complaints. I find the conduct of the applicant and his legal advisers in this regard extraordinary ..."

11. I began to despair of ever being able to bring this matter on for final hearing. It was for this reason that I acceded to a suggestion made by Counsel for the applicant, Mr Hamilton, that the matter be fixed for a separate hearing "to determine the question whether the respondent is or was obliged to carry out any and if so what capital works to the premises at 28, 30 and 32 Pinoak Crescent Flemington". As quotation from the prayer for relief indicates, the applicant tenant's complaints about the fitness of the premises are the gravamen of this claim. His attack upon the agreement for lease of 28 November 2000 is aimed at removing the general release which it contains which if effective would be destructive of most or all of his claims pertaining to the fitness of the premises. There is also a claim for the "remittance" of rent as provided for in the 1998 lease on the ground that part of it is to be regarded as "key money". This alleged key money represents the cancellation of rent concession given under the 1996 leave according to the tenant on the basis of the unsatisfactory state of the premises. A determination of the separate question in favour of the tenant would pave the way for the tenant's obtaining much of the relief which he seeks (subject of course to issues of quantum). Determination of the preliminary question wholly or substantially in favour of the respondent lessor would seem to dispose of most or all of the applicant's grounds.

12. Mr Best, Counsel for the respondent landlord relied upon a number of general statements negating any obligation upon landlords in the absence of express covenant to be responsible for the fitness or repair of leased premises. Redfern and Cassidy Australian Tenancy Practice and Precedents states:

"It is one of the least satisfactory features of the law of real property that it contains almost no provision for the implication of terms as to reasonable fitness. In this it compares unfavourably with the law as to goods and services. ... with perhaps three exceptions to be dealt with in the next paragraph, no term as to fitness of the premises is implied against the landlord." paragraph [27 40] page 2975 (Service 52)

"The landlord is, in the absence of an express covenant or statutory provision requiring it to repair, generally under no obligation to do so there is no warranty that the premises are in a reasonable state of repair at the commencement of the term, nor that they should be kept so. Neither the existence of an abatement clause nor the exception from the tenant's covenant to repair of fair wear and tear, justify the implication of a landlord's covenant to repair."

13. Mr Hamilton, Counsel for the applicant tenant, however, relied upon a series of arguments which he said created obligations upon the landlord to carry out repairs or capital improvements or more generally, cast a responsibility upon the landlord to be responsible for the fitness of the premises in the present circumstances. I will deal with those various matters in turn. With respect to the 1996 lease, the latest version of Mr Ali's points of claim in the particulars sub-joined to Paragraph 10 thereof allege the following "implied undertakings":

"(i) The applicant would enjoy quite (sic) possession of the premises.

(ii) The premises were structurally safe and sound for residential accommodation.

(iii) The premises were structurally safe and sound for use as a restaurant/ café and take-away food bar.

(iv) The applicant would not be put to any expense associated with necessary rectification of existing deficiencies in the safety or structure of the residential or retail areas of the premises.

(v) The rectification of any existing deficiencies in the safety or structure of the residential or retail areas of the premises would be completed without delay.

(vi) The applicant would use part of the premises for residential accommodation and part of the premises for retail trading as restaurant/café and take-away food bar.

(viii). The respondent would compensate the applicant for any action or inaction on the part of the respondent that would substantially alter or inhibit the flow of customers to the premises."

14. Even despite all the re-pleading that has taken place it is difficult to relate the submissions which Mr Hamilton made to the pleadings. In his written submission relied upon on 13 March he referred to the following "express lease terms (at odds with existence of dilapidations)":

"(a) Lease Schedule Item 10, the tenant to pay public liability insurance;

(b) Lease Clause 2.2.7 the tenant must not, and must not let anyone else, do anything which might lead to an insurance policy becoming void or being rejected;

(c) Lease Clause 3.2 the tenant must keep the premises in the same condition as at the start of the lease and at Clause 3.3.8(b) permit the landlord to carry out repairs or agreed alterations;

(d) Lease Clause 3.4.2, tenant not obliged to carry out structural repairs or make repairs of a capital nature;

(e) Lease Clause 6.1 the tenant must have quiet possession;

(f) Lease Clause 8.1.1, if the premises damaged so that they cannot be used for a permitted use, a fair portion of the rent or outgoings to be suspended."

15. I was not clear as to the precise manner in which these various clauses were relied upon. Certainly the assumption that the provisions of Clause 3.4 which specifically exclude the tenant from any liability to carry out capital repairs does not as a matter of logic imply that the landlord as the passage from Redfern and Cassidy already quoted is in the teeth of such a view. To consider a hypothetical lease in which there is simply no covenant to repair at all by either party, the non-existence of such a covenant cannot be taken as implying that either the landlord or the tenant is contractually obliged to the other to carry out necessary repairs. If a repair is necessary then either it will not be carried out at all or the one party or the other party will, consulting its commercial interest, carry out the repair; but the existence of the impasse viz. the need for a repair which neither party is contractually obliged to undertake does not imply an obligation upon either party to do it, so the absence of a covenant by the landlord to repair or carry out any capital works and the existence of a covenant by the tenant to repair, but not to carry out capital works, simply means that neither party is obliged to carry out the capital works, nor in my view is Clause 8.1 of the lease relevant. It provides for the suspension of "a fair portion of the rent and outgoings" "if the premises are damaged so that they cannot be used for the permitted use". This clause is part of an entire section dealing with "destruction or damage". This section in my view is intended to cope with the rule presumed for many years that a lease of real estate could not be frustrated or at any rate that it was frustrated only in the most extraordinary of circumstances. Generally a lease of real estate would not be regarded as frustrated merely because the buildings on the land were destroyed. This accords with the heading "destruction or damage". In context the entire section and Clause 8.1 is intended to deal with destruction or damage which supervenes after the lease. Here the complaint is that the premises were unfit from the start. Admittedly, the words of the clause being "if the premises are damaged". They could grammatically refer to damage which occurred before the commencement of the lease and persists as at the commencement of the lease. In context however I believe that is an unlikely construction. In any event, there is no complaint that these premises have been "damaged", merely that they are unfit. The general complaint has been described by Mr Hamilton as "dilapidation". The thrust of the complaint is that the premises were either not constructed adequately for use as a restaurant or whatever their initial adequacy they have in effect worn out and fallen into disrepair. Without conceding that the other boiler plate clauses relied upon by Mr Hamilton would on their own imply an obligation of repair or improvement upon the landlord and the argument to that effect is in my view negated by the special covenants contained in the 1996 lease which in my view cast the burden of seeing to the fitness of the premises for a restaurant upon the tenant. They do this in two ways, first, by obliging the tenant to "fit-out" the premises as a restaurant and secondly, by negating any responsibility on the part of the landlord for a series of statutory requirements.

16. Mr Hamilton submitted "that it was reasonable and equitable that dilapidation be rectified by respondent to give business efficacy to the lease". He referred to BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 52 ALJR 20, 26; Barrett v Lounova [1990] 1 QB 348; Alcatel Australia Limited v Scarcella [1998] NSWSC 483; (1998) 44 NSWLR 349 and Byrnes v Australian Airlines (1995) 185 CLR 410, 450. The classic modern exposition of the implication of terms to give business efficacy to contracts is to be found in the advice of the majority of their Lordships of the Judicial Committee of the Privy Council in the BP (Westernport) case. The passage is as follows:

"Their Lordships do not think it necessary to review exhaustively the authorities on the implication of the term in a contract which parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied:

2. it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

3. it must be so obvious that it `goes without saying';

5. it must not contradict any express term of the contract."

17. In Barrett v Lounova (1982) Ltd [1990] 1 QB 348 the Court of Appeal, Kerr LJ and Swinton Thomas J considered the obligations of a landlord and tenant with respect to a lease of a flat where the tenant had covenanted to repair the inside of the premises. The Court held that there was an implied obligation on the landlord to repair the outside of the premises. Kerr LJ said that he found the question "difficult and on the borderline". He said:

"The considerations which lead me to that conclusion [viz. that the landlord was under an implied obligation to repair the outside of the premises] are the following. It is obvious, as shown by this case itself, that sooner or later the covenant imposed on the tenant in respect of the inside can no longer be complied with unless the outside has been kept in repair. Moreover, it is also clear that the covenant imposed on the tenant was intended to be enforceable throughout the tenancy. For instance it could not possibly be contended that it would cease to be enforceable if the outside fell into disrepair. In my view it is therefore necessary, as a matter of business efficacy to make this agreement workable, that an obligation to keep the outside in repair must be imposed on someone. For myself, I would reject the persuasive submission of Mr Pryor on behalf of the landlord, that both parties may have thought that in practice the landlord - or possibly the tenant - would do the necessary repairs, so that no problem would arise. In my view that is not a businesslike construction of a tenancy agreement." [1990] 1 QB 348, 358

18. In Alcatel Australia Limited v Scarcella [1998] NSWSC 483; (1998) 44 NSWLR 349, Alcatel as it later became, leased premises for 50 years from 15 December 1969. The lease required the tenant to keep the premises in good and substantial repair. The Court of Appeal held that the covenant to keep the premises in good and substantial repair is a double covenant having both a qualitative obligation good and a quantitative obligation substantially. The tenant was therefore obliged "to undertake repair to such a degree as to put the building in the condition it would have been in if good and substantial repair had been undertaken the duty of good faith both in performing obligations and exercising rights may by implication be imposed upon parties as part of a contract further the tenant complained about the landlord's conduct with respect to compliance with a Council fire order which the tenant was being required to expend substantial amounts of money to meet." The Court rejected this contention. Sheller JA said:

"unchallenged, the law requires that a Council fire order be complied with. There is no evidence to suggest that the order was unreasonable in a way which might have led, on an appropriate application of administrative law, to its being struck down. The evidence was that its terms fell within the recommendations of Mr McMonnies, a qualified fire engineer with 28 years experience. His report was not challenged either by cross-examination or the evidence of some other expert." [1998] NSWSC 483; (1998) 44 NSWLR 349, 369

"Because the respondents had pressured the Council into imposing stricter and unreasonable fire requirements, it was not obliged to comply with [the relevant covenant] of the lease. This result flowed [it was said] from an implied term of good faith or reasonableness in the respondents' performance of their lease obligations or exercise of their lease rights which bound them to co-operate in a reasonable way to ensure that the appellant was not subjected to the expense and impact of an unreasonable fire order." [1998] NSWSC 483; (1998) 44 NSWLR 349, 364

20. Mr Hamilton's reference to Byrnes v Australian Airlines Ltd was confined to the reference to a passage quoted by Sheller JA at [1998] NSWSC 483; (1998) 44 NSWLR 349, 366 in his judgment in the Alcatel case from a joint judgement of McHugh and Gummow JJ as follows:

"Many of the terms now said to be implied by law in various categories of case reflect the concern of the courts that, unless such a term be implied, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined. Hence the reference in the decisions to `necessity' ... This notion of `necessity' has been crucial in the modern cases in which the courts have implied for the first time a new term as a matter of law."

21. Whether or not in Victoria one should regard there to be an implied obligation of good faith in performa may perhaps be open to debate. Certainly Gummow J in Service Station Association Limited v Berg Bennett and Associates Pty Ltd [1993] FCA 445; (1993) 117 ALR 393 was dismissive of such an idea, I accept for the purposes of the argument that such a term should be implied in the present lease but accepting that such a term is to be regarded as part of the relevant leases takes this dispute no further. The facts of the Alcatel case show that the proper scope for such a provision would be the restraint of one party from taking action which would damage the other party, as for instance by procuring the issue of fire brigade notices etc. against the other party There is nothing in the Alcatel case or any of the other authorities supporting the existence of the "good faith" obligation to suggest that it would introduce a landlord's covenant to repair or rectify dilapidations by a side wind, nor in my view is there any thing in Alcatel which could or should be regarded as modifying the principles enunciated by their Lordships in the BP Westernport case.

22. What then do the BP Westernport principles yield when applied to the present circumstances? It may be accepted that it would be "reasonable" for the landlord to undertake an upgrading of the premises; but is it so obvious that it goes without saying? The general rule is that the landlord accepts no such obligation for the state of the premises. Why would it "go without saying" that this prima facie legal situation would be turned on its head? More pertinently when the landlord in a special condition specifically declined to accept responsibility for various statutory compliances, the implication of some term along the lines of the ones alleged in the particulars to Paragraph 10 of the latest version of the points of claim would be inconsistent with the express terms of the lease.

23. The Lounova case might be thought to be the strongest one in favour of the tenant's contention. One must however see this decision in its context. It reached the Court of Appeal in June 1988. The tenancy agreement had been entered into on 5 April 1941 for a period of one year thereafter but in the knowledge and expectation that in accordance with the provisions of the Rent Act it would become effectively perpetual thereafter. The implication of such a covenant to repair seems both more reasonable and more necessary where the leasing arrangements would go on for perhaps 50 years. Where a building is let as individual flats it would be difficult and perhaps impracticable for any individual tenant to see to the maintenance of the outside of the building. The immediate outside of any one flat is but a part of a whole which it may be impracticable to maintain on its own. The only party with the ability to maintain the outside in its totality is the landlord. The exterior might be regarded as analogous to the common property which the landlord in Liverpool City Council v Irwin [1976] UKHL 1; [1977] AC 239 was held bound to keep and repair as part of the obligation to give quiet possession to its tenant. Even allowing for these considerations I am troubled by the Court's willingness to imply an obligation to do something viz. repair the exterior of the premises which the lease creates as an obligation on neither party. The Court of Appeal consisted of but two Judges and the decision seems to be extempore. Barrett's case as a decision of a two judge English Court of Appeal is not binding upon me and if on its proper construction it were to be regarded as supporting the tenant's contentions here, I would respectfully decline to follow it. Kerr LJ found the case near the borderline. Swinton Thomas J said that his mind had wavered. Reference to the following passage from Sir Anthony Mason's judgment in Codelfa Constructions v State Rail Authority of New South Wales (1982) 149 CLR 337, 346 might have led their Lordships to accept the landlord's submission. His Honour said:

"For obvious reasons the courts are slow to imply a term. In many cases, what the parties have actually agreed upon represents the totality of their willingness to agree; each may be prepared to take his chance in relation to an eventuality for which no provision is made. The more detailed and comprehensive the contract the less ground there is for supposing that the parties have failed to address their minds to the question at issue. And then there is the difficulty of identifying with any degree of certainty the term which the parties would have settled upon had they considered the question.

Accordingly, the courts have been at pains to emphasize that it is not enough that is reasonable to imply a term; it must be necessary to do so to give business efficacy to the contract."

24. Despite Swinton Thomas J's statement to the contrary [1990] 1 QB 348, 360 the term which their Lordships implied does not seem in my respectful opinion to be so obvious that "it goes without saying".

25. Next, Mr Hamilton submitted that the obligation on the part of the landlord to give the tenant quiet possession obliged the landlord to carry out the works which the tenant required. He referred to a decision of the Queensland Court of Appeal in the matter of Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd. R1. In that case Aussie Traveller Pty Ltd was the tenant of Marklea Pty Ltd. Aussie Traveller Pty Ltd conducted a business of manufacture and sale of new and repaired canvas goods such as awnings and camping equipment from the leased premises. Adjacent to it in the same complex Top Flight Pty Ltd took up a tenancy from the same landlord Marklea. This business was the manufacture of timber staircases and in the course of that business its employees used power saws, sanders and spindle planers. The wall between the two demised premises did not reach entirely to the ceiling. Aussie Traveller Pty Ltd complained that its manufacturing processes were disrupted by dust from Top Flight's operation and that conversation was impossible because of the noise created by the spindle plainer when it was in operation. The Court of Appeal Fitzgerald P, McPherson JA and Thomas J held that the landlord was in these circumstances liable for breach of the covenant for quiet possession. Traditionally a landlord has only been held liable for breach of this covenant where the tenant has been disturbed in quiet possession by the acts of he landlord, his servants or agents. See for instance Malzy v Eicholz [1916] 2 KB 308. McPherson JA said:

"The law, however, has moved someway since those decisions were given. A person may now be liable for acts done on his land creating a nuisance, even though they were done by the trespasser or resulted from natural courses, if he fails to take steps to eliminate or prevent them. See Sedleigh-Denfield v O'Callaghan [1940] UKHL 2; [1940] AC 880, applied in Hargrave v Goldman [1963] HCA 56; (1963) 110 CLR 40, Wilkinson v Joyceman [1985] 1 Qd. R 567 and R. v Shorrock [1994] QB 279."

26. The Court found that the landlord could have exercised its powers under the Top Flight lease, for instance, the clause which prohibited Top Flight from activities which created a nuisance so as to protect the quiet enjoyment of the premises by Aussie Traveller. Mr Hamilton submitted this was analogous to the present circumstance. One of the other actions which Marklea could have taken was to sound proof Aussie Traveller's premises and complete the partition to the ceiling so as to exclude both noise and sawdust. Here the landlord should rectify the "dilapidations" so as to enable Mr Ali fully to enjoy his tenancy.

27. In my view Aussie Traveller is about active disturbance of a tenant by one of the landlord's other tenants. This is made clear by the reference by McPherson JA to Sedleigh-Denfield's case and Hargrave v Goldman. It is not and was not intended to be a rationale for introducing an implied obligation to repair it or carry out capital works by landlords.

28. In viva voce submission Mr Hamilton made reference to the decision of the High Court of Australia in O'Keefe v Williams [1910] HCA 40; (1910) 11 CLR 171. In O'Keefe's case his testators were held entitled to recover damages from the Crown for breach of the obligation to give him quiet possession of land leased under the Crown Lands Act where the Crown had granted or purported to grant a lease of part of the land to a third person. It has nothing to do with repairs or dilapidations.

29. It follows in my view that the dilapidations or capital works sought are not within the scope of the landlord's obligation to give quiet possession.

30. Next, Mr Hamilton submitted that the decision of the High Court of Australia Northern Sandblasting Pty Ltd v Harris (1997) 108 CLR 313 supported his contentions. In Harris's case a nine year old child received profound brain damage when she was electrocuted whilst operating a garden tap at premises leased by her parents. The electrocution occurred because of negligent wiring work carried out by an electrician engaged by the landlord. The Court by majority held that the landlord was liable for breach of a duty of care owed to the child. Mr Hamilton relied upon the following dictum of Brennan CJ where His Honour said:

"I would hold a landlord to be under a duty of care in respect of the demised premises requiring the sane standard or care as is required of occupiers towards those who enter occupied premises by consent and for reward, the landlord's duty of care being:

(i) limited to defects in the premises at the time when the tenant is let into possession;

(ii) owed to the tenant and to those who, to the knowledge of the landlord, intended to occupy the premises under and for the purposes of the tenancy. The standard required of the landlord is the standard stated by McCardie J in Maclenan v Segar. The duty does not extend to defects in the premises that are discoverable only after the landlord parts with possession.

In accordance with this principle, I would hold the landlord in the present case to have owed a duty of care to the tenants and to their children to see that the premises at the time the tenants went into possession were as safe for their habitation as reasonable care and skill on the part of anyone could make them, excluding defects which could not have been discovered by reasonable care or spill on the part of any person concerned with the construction, alteration, repair or maintenance of the premises." (1997) 188 CLR 313, 340

31. That decision was applied in two later cases before the New South Wales Court of Appeal in Assaf v Kostreviski (unreported 30 September 1998 BC 9805010). The Court, Mason P, Priestley JA and Sheppard AJA held that where the tenant and his wife suffered electrocution from an extension wire which they used to provide light in the laundry of premises leased from the defendant the landlord was liable in damages for personal injury. The ceiling light was defective and inoperative. In State of New South Wales v Watton (unreported 7 December 1998 BC 9806562) the Court again held a landlord liable for injuries suffered by electrocution by a tenant where the wiring in the premises was defective.

32. Mr Best on behalf of the respondent referred to Jones v Bartlett (2000) 75 ALJR 1 where a number of the High Court Justices observed that no ratio decidendi could be extrapolated from the Northern Sandblasting case. Moreover, Mr Best observed that the formulation adopted by Brennan CJ in the Northern Sandblasting case did not command the support of a majority of their Honours.

33. It would be an interesting jurisprudential task to attempt to ascertain a correct statement of the law as to the liability of a landlord for personal injury suffered due to defects in leased premises by the tenant or licensee of the tenant having regard to the Northern Sandblasting case and Jones v Bartlett. In my view however, such a task is unnecessary and inappropriate in the present case. All these authorities were concerned with duty of care in tort and damage by way of personal injury. There is no claim for any personal injury before me. Merely to show that one person is under a duty of care to another and may be liable in damages if that other person is injured by breach of that duty does not bestow on the potentially injured person any right to contractual relief. These cases as to duty of care in tort are not in point for a claim for compensation for the cost of repair of dilapidations and loss of profits.

34. Next Mr Hamilton referred to the Retail Tenancies Act 1986. That statute governed the 1996 lease. He observed that Section 7 "states that the landlord must prepare and give a disclosure statement". He also referred to Section 17 which he said "provides that if the landlord inhibits access of the tenant to the retail premises in any substantial way or substantially alters or inhibits flow of customers to the retail premises, the landlord will rectify the matter within a reasonably practicable time, or pay the tenant reasonable compensation". Mr Hamilton continued:

"It could be argued that the actual and expected result of not undertaking capital works as required, if the applicant not to void (sic) his public liability insurance, will necessarily inhibit flow of customers. So also would the undertaking of these works by the tenant applicant who cannot serve his customers."

I am unable to see what the requirement in Section 7 of the Act as to disclosure statements has to do with the present matter, at least so far as the 1996 lease is concerned. Section 17 was in my view intended to deal with circumstances in which flows of customers within shopping centres are impeded either by permanent changes in layout or by temporary works. The section will also have application where the landlord carried out works on nearby property owned by him or erected structures which inhibited pedestrian flow. In my view it does not by a side wind create an obligation to repair or remedy dilapidations. If these works were to be undertaken at the expense of the tenant, since there is nothing to suggest that he himself holds any building trade qualifications, the works would be carried out by contracting tradesmen. There would be no need for Mr Ali himself to divert from the performance of his tasks as a restaurateur.

35. As to the 1998 lease, Mr Hamilton referred to the same matters which he relied upon with respect to the 1996 lease. Moreover, he referred to the works referred to in Special Condition 3 and Item 22 in the Schedule to the lease. He said:

"Respondent had an obligation to complete the works set out in Schedule Item 22.3 and in a reasonable time, notwithstanding they could not be effected without additional expense of making capital improvements."

36. He referred to a passage from Commercial Leases in Australia by W.D. Duncan (3rd Edition 1998) at page 141 where the learned author stated:

"A covenant to repair does not place upon a covenantee an obligation to make improvements, but if the covenantee cannot perform the covenant to repair without making improvements, the expense of improvements will be incurred."

37. Mr Hamilton asserted from the bar table that there had been attempts by his client to engage tradesmen to do the works referred to in the relevant special condition but that tradesmen had been unwilling to "sign off" on the work because more extensive capital works were needed to enable these works to be done.

38. At the previous hearing Mr Privitelli (solicitor for the landlord) said that a provision in the 28 November 2000 agreement to lease for the landlord to pay $8,000 to the tenant in association with the general release was intended in effect to "cash out" the relevant obligation.

39. Mr Best submitted that the very "banality" of the list in the relevant special condition told against the landlord's being under any wider obligation to carry out capital works, repair dilapidations etc.

40. In my view, Mr Best's submission on this point is correct and lends weight to the views that I have already expressed.

41. The relevant special condition undoubtedly did impose an obligation upon the landlord either to carry out or to pay for certain work. The agreement for lease of the year 2000 and its general release would negate that obligation. The validity of the general release was not a matter to be determined at the present hearing, moreover, the question which was fixed for determination was whether the landlord is or was under an obligation to carry out any capital works. It may be open to debate whether the items in Clause 3 of Item 22 of the 1998 lease are to be regarded as capital items. In my view the landlord certainly was under an obligation to carry out those works. Whether that obligation persists, it being common ground that those works have not been done, is a question for determination another day. The covenant in question is not strictly a covenant to "repair" except in so far as some of the items refer specifically to repair. The logic in the passage quoted from Mr Duncan's work indicates to my mind that in undertaking this obligation the landlord was obliged to do "whatever it took" to complete the work.

42. Next, Mr Hamilton took me to the Retail Tenancies Reform Act 1998 and Section 8. That section as is well known, creates a mandatory obligation upon a landlord entering into a retail tenancies lease to provide a disclosure statement in the statutory form. Failure to provide the statement leads to a forfeiture of the landlord's entitlement to rent for the period during which the statement was not provided. A disclosure statement was furnished in association with the 1998 lease. Mr Hamilton refers to the section towards the end of the statement which provides "the following circumstances affecting, or likely to adversely affect the trading or trading profits of the proposed business have arisen". The relevant box includes the word "nil".

43. Mr Hamilton took me to a number of statements by the Minister responsible for the introduction of the 1998 Act, the Hon. Louise Asher MLA (as she then was) and various commentators. These statements emphasised the all embracing character of the disclosure statement, its central importance to the reforms of the 1998 Act and so on. He referred me to Section 26 of the Act which in his submission "makes the landlord liable in compensation for more false or misleading statements or misrepresentations [in the disclosure statement]".

44. In Mr Hamilton's submission the box which included the words "nil" should have included an exhaustive statement of the condition of the demised premises and the degree to which those dilapidations would adversely affect the profitability of Mr Ali's café. Mr Hamilton took me at some length to a passage from the commentary given by Mr Michael Redfern, a distinguished commentator on retail tenancy and general tenancy matters in a publication entitled Retail Tenancies Reform (Leo Cussen Institute 1999). He did not take me to the passage at page 32 of the work where the learned author deals specifically with the section of the disclosure statement which he attacks as misleading and deceptive. Mr Redfern states:

"It will be noted that under the heading `general disclosures' the schedule only appears to require a very general response for this purpose as follows:

the tenancy mix or use of mix of the shopping centre will/will not/may change over the term of the lease

In the light of the requirements of the Act and the effect of disclosure upon compensation rights it may be arguable that far more detail will be required if those rights are to be lost altogether."

45. What I take Mr Redfern to be there saying is that a more expansive description of the tenancy mix or usage and proposed tenancy mix and usage within a shopping centre would be required before a landlord could be confident that no compensation claim could be mounted against him under Section 26. The context as to these general disclosures indicates to my mind that it is to proposed changes of mix and usage within a shopping centre, that the relevant part of the disclosure statement directs itself. The landlord here would be entitled to say, since these are strip shops, no shopping centre at all is involved. Without going to the rather complex definitions of shopping centre even if the three premises were to be regarded as a "shopping centre" or the two premises as they were at the time of the initial grant of the 1998 lease, there is demonstrated to be no proposal to change the usage or mix, clearly the state and fitness of leased premises is a very important matter. If Parliament had intended there to be a full disclosure of the precise state and fitness of leased premises it would have made specific provision in the form of disclosure statement for this to be done. There might be much to be said for a building surveyor's report being attached to the disclosure statement as a precise description of the state of the premises and signed off as agreed by the parties. None of this has been provided for and I cannot accept that the "general disclosures" section of the statement is intended to be the vehicle for such a form of disclosure particularly in light of the second paragraph which appears under the heading "general disclosures" and which is commented upon by Mr Redfern in the passage which I have already quoted. It follows therefore that I reject the contention that this part of the disclosure statement constitutes misleading and deceptive conduct. Moreover since it is not demonstrated that this section was misleading or deceptive there is no occasion for any compensation to be granted under Section 26 of the Retail Tenancies Reform Act.

46. Mr Hamilton then referred to a number of provisions of the Fair Trading Act 1985 and the Fair Trading Act 1999. He referred to the prohibitions on misleading and deceptive conduct and unconscionable conduct. In my view at least in so far as the issue of capital works and dilapidations are concerned, the rejection of the contention that the 1998 disclosure statement was misleading or deceptive by reason of the material under the heading "general disclosures" disposes of the contention that the landlord has been guilty of misleading and deceptive conduct. How the alleged unconscionable conduct is relevant to the question before me today I am not clear. Mr Hamilton in his written submission on these matters said:

"Examples of unconscionable conduct by the respondent associated with the 1998 lease includes failure to carry out specifically agreed repair work at Schedule Item 22.3 and ongoing failure to address safety and capital improvements at the demised premises. Misleading conduct arises from failure to provide an adequate disclosure statement. Failure to provide a copy of the lease and failure to address safety and trading dilemmas faced by applicant amount to harassment and coercion."

47. Nowhere in Mr Hamilton's submissions does he explain what "unconscionable" conduct might be. The flavour of the passage which I have just quoted suggests that anything which is in a general sense "unfair" is for that reason alone unconscionable. The recent decision of the Full Court of the Federal Court of Australia in C.G. Berbatis Holdings v Australian Competition and Consumer Commission [2001] FCA 757; (2001) 185 ALR 555 shows that conduct is not unconscionable merely because it "drives a hard bargain". In Berbatis' case a tenant was in dispute with the landlord of a shopping centre. The tenant had no option to renew its lease and was therefore in a very weak position. It would be unable to sell the goodwill of its business without an ongoing lease. The landlord stipulated as the price of the grant of a new lease, which it was not obliged to give, that the tenant should discontinue its claims against the landlord. The Full Court held that there was a distinction between acting unconscionably and merely driving a hard bargain and found that the landlord had not acted unconscionably. Whilst the matter did not arise specifically for decision by the Court in this way, it was implicit that the landlord was not acting unconscionably merely in relying upon its legal rights, viz. that it had no obligation to grant a new lease. Here similarly, if the landlord was under no obligation to carry out most of the works demanded by the tenant, she was not acting unconscionably in failing "to address safety and trading dilemmas faced by applicant". If the landlord remains liable to carry out the works referred to in the 1998 lease, that is a contractual obligation and there is no authority for the view that breach of contract in itself amounts to unconscionable conduct, at least under Section 51AA of the Trade Practices Act 1974 or Section 7 of the Fair Trading Act 1999.

48. In his written submission Mr Hamilton made reference to Section 14B of the Wrongs Act 1958. This deals with the standard of care owed by persons described as "occupiers" to those injured on the land occupied by them. The definition of occupier is wide enough to encompass the present landlord as well of course, as Mr Ali. Since this is concerned with personal injury claims, it is irrelevant for the same reasons as the Northern Sandblasting line of cases was irrelevant.

49. Finally, Mr Hamilton made reference to the agreement for lease entered into in the year 2000. At a previous hearing Mr Hamilton said that his client placed no reliance whatsoever on this document. The prayer for relief in the latest points of claim seeks to attack its validity. The real wish of the tenant seems to be to be able to take the benefit of the year 2000 agreement for lease but disclaim the general release which it contains. I heard no detailed submissions as to whether the tenant would be permitted to acerbate and recribate with respect to the agreement for lease in this fashion, at any rate, even if the tenant could, I am unable to see that any different consideration would arise from this document than from the 1996 and 1998 lease.

50. It follows therefore that in my view the only works, capital or otherwise which the landlord was obliged to carry out were those to be found in Special Condition 3 in Item 22 of the 1998 lease. Whether that liability persists or not in light of the agreement to lease of 28 November 2000, I have not been asked to decide at this stage.

51. I will direct the parties within seven days to bring in short minutes to give effect to these reasons.

52. I have heard no submissions as to costs and so I will reserve that question.