Allied Pinnacle Pty Ltd v G R Mailman & Associates Pty Ltd [2026] NSWSC 87 | Case summary | Zoe

NSWNSWSC

Allied Pinnacle Pty Ltd v G R Mailman & Associates Pty Ltd

[2026] NSWSC 87

Supreme Court of NSW|2026-02-17|Before: Muston J

View on NSW Caselaw

At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2026-02-17

Before

Muston J

Catchwords

LEASES AND TENANCIES – proper construction of make good obligations
under a commercial lease – whether extrinsic material
can be used in
construing a lease – whether lessor engaged in unconscionable conduct in

Source

Original judgment source is linked above.

Catchwords

LEASES AND TENANCIES – proper construction of make good obligationsunder a commercial lease – whether extrinsic materialcan be used inconstruing a lease – whether lessor engaged in unconscionable conduct inasserting obligation to make good.

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Medium Neutral Citation: Allied Pinnacle Pty Ltd v G R Mailman & Associates Pty Ltd [2026] NSWSC 87

Hearing dates: 9 – 10 December 2025

Date of orders: 17 February 2026

Decision date: 17 February 2026

Jurisdiction: Equity

Before: Muston J

Decision: I direct the parties to confer and, by no later than 4pm 23 February 2026, forward to my Associate agreed short minutes containing the orders required to facilitate the assessment of damages by a referee.
In the event that agreement cannot be reached on the orders required to facilitate the assessment of damages by a referee:
(1) I direct that, by 4pm 23 February 2026, the parties forward to my Associate:
(a) a single set of draft orders, which clearly identifies any area of disagreement;
(b) their respective submissions addressing those areas of disagreement (not exceeding three pages per party); and
(2) the dispute regarding these orders will be determined on the papers.

Catchwords: LEASES AND TENANCIES – proper construction of make good obligations under a commercial lease – whether extrinsic material can be used in construing a lease – whether lessor engaged in unconscionable conduct in asserting obligation to make good.

At the heart of this matter lies a dispute over the nature and extent of what might loosely be described as the make good obligations arising at the conclusion of a registered lease over commercial premises located in the Western Sydney suburb of Huntingwood.
The plaintiff, Allied Pinnacle Pty Ltd, is the lessee; albeit referred to in the lease by its former name, Pinnacle Food Group Pty Ltd. The lessor named in the lease is Liberty Drive Pty Ltd. Although undated, the lease commenced on 15 August 2015 and is likely to have been signed on or about that date.
The defendant, GR Mailman & Associates Pty Ltd, purchased the premises from Liberty Drive in late 2017. Following the transfer of title in the premises to GR Mailman in December 2017, it assumed the lessor’s obligations and benefits under the lease by operation of s 51 of the Real Property Act 1900 (NSW).
The lease contemplated an initial term of 10 years, terminating on 14 August 2025, with an option to extend that period for two further terms of five years each. Allied did not exercise that option. By 14 August 2025, Allied had vacated the premises.
When Allied vacated the premises, it left in situ substantial internal fit out works that it had undertaken upon the commencement of its tenancy in 2015; these works have been described by the parties as the 2015 f****it out and I will adopt the same term when referring to them.
Allied contends that, properly construed, the terms of the lease did not require it to remove the 2015 fit out prior to vacating the premises at the conclusion of its tenancy. Separately, Allied says that it was not required by the lease to repaint the exterior of the premises as part of its make good obligations. GR Mailman takes the opposite position; contending that, before vacating the premises, Allied was obliged by the lease to:
remove the 2015 fit out and, thereby, restore the premises to the state it was in before those works were undertaken; and/or
repaint the exterior of the premises.
These are the central issues in dispute between the parties. They turn principally on the proper construction of the lease and its application to a largely uncontroversial series of facts. As I have already noted, Allied accepted that it has not removed the 2015 fit out. Allied further accepted that it did not repaint the exterior of the premises at or prior to the conclusion of the term of the lease.
A number of subsidiary issues arise for determination in these proceedings, which I will identify and address in their relevant context.
There is no issue between the parties that the lease required Allied to complete certain works prior to vacating the premises; I will again adopt the parties’ nomenclature and describe these works collectively as the redecoration works.
Allied said that some of the redecoration works were carried out before it vacated the premises, namely:
the removal of internal and external signage, including mounted signs, deckles, logos and associated fixings;
the removal of a racking system and associated fixtures in that part of the premises which comprises a warehouse, including the removal of certain Dyna bolt fixings;
the repainting of floor markings in the car park at the premises; and
such other works as were necessary – at least in Allied’s view – to leave the premises in a “clean and tidy condition”.
GR Mailman admitted that Allied undertook works of the kind generally described in (1) to (4) above but denies that the works set out in (1) were undertaken in compliance with industry standards. This issue was not developed by GR Mailman or addressed in the evidence. In these circumstances, I accept that the aspects of the redecoration works identified at [10] above have been adequately completed by Allied.
Allied conceded that aspects of the redecoration works have not been carried out, namely:
the removal from the premises of loose furniture and equipment, including chairs, cabinets, couches and shelving;
the repainting of internal wall surfaces, plasterboard ceilings, and internal doors; and
the cleaning of carpets and replacement of any carpet tiles in areas where existing floor coverings are sufficiently worn.
I will refer to this subset of the redecoration works as the outstanding redecoration works.
Allied said that it is not liable to GR Mailman for its failure to have undertaken the outstanding redecoration works for any, or a combination of, what is said to be:
a failure by GR Mailman to have mitigated its loss;
a breach by GR Mailman of duties of cooperation and good faith implied in the lease;
a repudiation of the lease by GR Mailman;
an estoppel; and/or
a waiver by GR Mailman of its right to require that Allied complete the redecoration works.
Finally, it was said by Allied that GR Mailman had engaged in statutory unconscionable conduct in the sense contemplated by s 21 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law (ACL). Allied’s Amended Points of Claim suggested that the allegation of unconscionability is raised in support of claims for both damages and orders under ss 232, 236, 237 and/or 243 of the ACL, relieving it from any residual obligation it might have under the lease to remove the 2015 fit out. However, in his closing submissions, Mr Castle SC, who, with Ms Erian appeared for Allied, made clear that this aspect of the case arises only if I find that, properly construed, the lease required Allied to remove the 2015 fit out and, even then, Allied contended only that the alleged unconscionability enlivens the Court’s power to relieve it of that contractual obligation.
GR Mailman brought a cross claim, broadly alleging that Allied has failed to comply with its make good obligations and that, consequently, it has suffered loss and damage. It sought to recover that loss and damage from Allied as a debt due and payable.

The evidence before me consisted primarily of a bundle of documents tendered by the parties without objection. As will be apparent when I come to address that evidence and the arguments raised by the parties, there is some dispute between them as to the inferences that I should draw from those documents.
In addition to this documentary tender, evidence was given by Mr Dean Sappey, who, since January 2023, has been Allied’s Chief Financial Officer and Company Secretary. Three affidavits affirmed by Mr Sappey were read and he was cross-examined by Mr Giles SC, who, with Mr Puttick, appeared for GR Mailman.
I found Mr Sappey to be an honest witness and am satisfied that he did his best to provide frank answers to the questions asked of him in cross-examination. I do not doubt that the evidence contained in his affidavits represents his genuine recollection of those aspects of it that were within his personal knowledge. I accept his evidence, contextualised to the extent necessary by the contemporaneous documents and the concessions he properly made under cross-examination.
I summarise below the facts which emerge from the evidence. In doing so, I do not intend to provide a comprehensive account of the background information it discloses but, rather, to identify the sentinel facts against which the legal issues raised by the parties fall to be determined.
On around 23 June 2015, Allied provided Liberty Drive with a document entitled “Leasing Proposal”, signed by its then chief executive officer. On its face, the Leasing Proposal represents an offer by Allied to rent the premises on certain terms. Four things relevantly emerge from this document.
First, several of the conditions proposed by Allied in the Leasing Proposal differ from those ultimately contained in the lease; although other than that which I address in the paragraph below, the differences are of no particular significance in the context of the dispute which subsequently emerged.
Secondly, it proposed the following:

The letter went on to make an offer to purchase the premises; albeit at that stage it was proposed that Louise Developments Pty Ltd would be the purchaser. It is not clear what, if anything, happened in response to this offer.
On 19 October 2017, Jordan Mailman was again contacted by Link Property Services; this time through an email from another partner of that firm, Matthew Herrett. In his email, Mr Herrett raised the possibility of the premises becoming available for purchase and discussed a number of its features; my attention has been drawn specifically to his reference to the fact that it had “recently benefited from … [a] circa $2m internal fit out and amenities upgrade, including lift installation”.
On 24 October 2017, Greg Mailman sent an email to Mr Cadman referring to discussions between them that day and noting that he had “thoroughly investigated” the premises two years earlier and understood what was being offered in terms of structure and lease terms; he again offered to purchase the premises for a sum which is not presently relevant.
In early November 2017, following a further exchange of emails, Mr Cadman provided confirmation to Greg Mailman that the fit out works undertaken at the premises by Allied were accurately reflected in the Occupation Certificate which had been issued. Shortly thereafter, GR Mailman entered into a contract to purchase the premises from Liberty Drive; the contract completed on 18 December 2017.
Several months later, for reasons associated with changes to its own business operations, Allied sublet the premises to a company known as Goodson Imports Pty Ltd. For present purposes, this fact is of no particular relevance. However, I note that, strictly speaking, it was Goodson and not Allied that physically vacated the premises at the conclusion of the lease and certain arrangements for the completion of the make good works required under the lease were made between those organisations.
The next relevant development did not occur until 21 August 2024, by which time it had become clear to GR Mailman that Allied would not be exercising its option to extend the lease beyond the initial 10 year term. At this time, Jordan Mailman sent an email to Nick Brooks of letting agents Cushman & Wakefield. In his email Jordan Mailman described the attributes of the premises and including “a circa $2m refurbishment of the offices, amenities etc in 2015” and “[c]orporate head office space with high quality fit out”.
Allied invited me to infer from this email that GR Mailman was in some way explicitly seeking to benefit from the 2015 fit out; I do not accept that the inference goes that far. Given the initial term of the lease still had almost a year to run and Allied (or, more accurately, its sub-tenant, Goodson) was still in possession of the premises, I do not infer that Jordan Mailman was doing anything more than describing the premises to Mr Brooks and seeking to give him a sense of what he understood to be the attributes of it in its then state, which may – or may not – be of interest to prospective tenants.
On 29 October 2024, Jordan Mailman sent Mr Brooks a further email attaching a non-binding leasing proposal which contemplated a lease of the premises to Wilrich Pty Ltd, being a company which operates under the business name Sticky Foods.
In March 2025, discussions took place between Greg Mailman and a representative of MBM Pty Ltd, a quantity surveying and building consultancy firm. GR Mailman was seeking to have MBM prepare a report setting out its estimate of the likely cost to complete what GR Mailman considered to be the make good works required by the lease. Allied suggested that GR Mailman requested that MBM increase aspects of its costings.
It is true that the ultimate costings included in the final form of MBM’s report were greater than those reflected in what I was told was an earlier version of the report contained in the evidence.
Contemporaneous email correspondence between Greg Mailman and Callum Webb of MBM makes clear that the cost estimates contained in the earlier version of MBM’s report were “nearly 12 months old” and were thought by Greg Mailman to be in need of updating. I have been shown a version of the MBM report on which someone on behalf of GR Mailman is said to have made several handwritten annotations, including an increase in MBM’s original costings.
Allied invited me to infer some impropriety from this sequence of events. I draw no such inference.
Mr Webb expressly requested that GR Mailman provide its views on the updated costings. It likely did so. The costings ultimately included in MBM’s final report do not align perfectly with the handwritten annotations to which my attention has been drawn. There is no basis for concluding that the costings contained in the final version of the MBM report represent anything other than that organisation’s genuine view as to the likely cost of completing what GR Mailman had identified as the make good works required by the terms of the lease.
In any event, the form of MBM’s report which was provided to Allied by GR Mailman on 15 April 2025 did not actually contain any costings. Jordan Mailman’s accompanying email indicated that GR Mailman had:

Contrary to what is suggested by the emphasised portion in Mr Sappey’s email, he had no intention of causing Allied to complete the outstanding redecoration works whilst it remained in dispute with GR Mailman regarding the scope of the make good obligations.
Mr Sappey understood that Allied was obliged by the lease to complete, at least, the redecoration works. He was also aware that at least a proportion of the redecoration works would need to be re-done if, after they were completed, Allied was required to return and remove the 2015 fit out. He knew that GR Mailman was advancing the position that the lease required Allied to remove the 2015 fit out and recognised at least the possibility that a court may reach a similar view.
Against this background, Mr Sappey made a unilateral decision not to cause Allied to complete these works, or request that Goodson do so, because he believed it was not in Allied’s commercial interest to incur the cost of completing the redecoration works while there remained a risk that some of those costs would need to be incurred again if GR Mailman was correct and the lease required Allied to remove the 2015 fit out. However, this decision was not communicated to GR Mailman. Rather, the emphasised portion of Mr Sappey’s 17 July 2025 email suggested to GR Mailman that Allied was proposing to commence the redecoration works.
On 17 July 2025, Jordan Mailman responded to Mr Sappey’s email. He repeated his view that GR Mailman was under no obligation to provide any further breakdown of the S & S Services costings and purported to reject any offer to resolve the dispute regarding Allied’s make good obligations for $100,000. Although Allied had not actually offered to pay GR Mailman $100,000 to resolve the dispute, Jordan Mailman’s email would have made it clear to Allied that he had no interest in taking up the invitation to discuss the prospective settlement of this dispute for a payment of up to that figure.
Thereafter, correspondence regarding the dispute about the scope of Allied’s make good obligations commenced between solicitors retained by Allied and GR Mailman respectively and continued until the commencement of these proceedings on 18 August 2025.

GR Mailman contended that the word “condition” should be construed as a reference to the physical state or configuration of the premises and observes that the 2015 fit out had not been installed at the commencement of the lease. As a result, it was said that the clause required Allied to have restored the premises to its pre 2015 fit out state or configuration at the conclusion of the lease.
Allied took a different approach to the word “condition”, contending that it should be construed as a reference to the standard of the premises and not their configuration. Allied’s approach is more in line with the meaning conveyed through the use of the same word in the composite phrase “good repair and working conditions”, which appears earlier in the text of cl A2.1, noting that the use of the plural “conditions” in this particular context was generally accepted by the parties to have been unintended.
I am persuaded that Allied’s approach to the word “condition” more likely reflects the objective intention of the parties to the lease and will briefly explain my reasons for having reached this this conclusion.
Where the word “condition” appears elsewhere in cl A2.1 and in cll A2.2(c) and A24.5, the textual context clearly indicates that it was intended by the parties to refer to the standard of the premises and not its configuration. I note again the loose presumption that the parties intended to convey the same concept when utilising the word “condition” in the final sentence of cl A2.1.
GR Mailman said that the fact that the word “condition” is not used in the final sentence of cl A2.1 as part of a composite phrase such as “good repair and working condition” or “condition or state of repair” is contextually important; as is the fact that the final sentence of cl A2.1 addresses a different temporal period, at least to that being addressed by the earlier instances of the word “condition” in that clause.
Whilst there is some force in these arguments, they ultimately do little more than reveal why it cannot simply be presumed that the parties intended to convey the same concept in every instance that the word “condition” has been used. Beyond this, the arguments do not positively advance the construction of cl A2.1 put forward by GR Mailman. The textual context does not otherwise point to the parties having chosen to use the word “condition” in a different sense in the final sentence of cl A2.1. To the contrary, reading the lease as a whole lends support to Allied’s construction.
Clause A24 articulates in greater detail the nature of what, on their face, the maintenance and make good obligations imposed upon the lessee are. When read in the context of Item 6 in the Reference Schedule, it is clear that the works contemplated by this clause must be completed at various points in time, relevantly including immediately prior to vacating the premises. There is nothing in cl A24 which points to a requirement that the lessee undo any works which might have been approved by the lessor under cl A3, or otherwise return the premises to the same state or configuration it was in prior to any such works taking place. In the absence of clear words to that effect, it is unlikely the parties intended that cl A2.1 impose any greater obligation upon a lessee in the position of Allied.
This conclusion finds support in the general principle that where a contract contains general provisions (here, cl A2.1) and specific provisions (here, cl 24), the specific provisions “will be given greater weight than the general provisions where the facts to which the contract is to be applied fall within the scope of the specific provisions”: Lewison and Hughes, The Interpretation of Contracts in Australia (Thomas Reuters, 2nd ed, 2025) at [7.05] and the authorities cited therein. Further, to the extent that there is inconsistency between the two provisions, the specific provision will prevail: see Herzfeld and Prince, Interpretation (Thomas Reuters, 3rd ed, 2024) at [24.40] and the authorities cited therein. Accordingly, to the extent that GR Mailman contends for a construction of cl A2.1 that imposes obligations that are broader and more onerous than those specified in cl A24, primacy should be given to the specific obligations enumerated in cl A24.
In any case, I am satisfied that the parties did not intend cl A2.1 to impose any greater obligation upon a lessee than the obligations specifically imposed in cl A24.
In order to construe cl A2.1, the words contained in the definition of “demised premises” (reproduced at [30] above) must be read into its operative text: see Gispac Pty Ltd v Michael Hill Jeweller (Australia) Pty Ltd [2024] NSWSC 18 at [107] and the cases cited therein. Approached in this way, the final sentence of the clause becomes:

As such, any fixtures “from time to time installed” in the premises – including the 2015 fit out – will be taken to be part of the “demised premises”, unless the context of cl A2.1 does not permit recourse to this aspect of the definition.
GR Mailman said that – on its preferred construction – the immediate textual context provided by cl A2.1 permits this aspect of the definition to be ignored. While that might be so if GR Mailman’s construction of cl A2.1 were to be accepted, pointing to the outcome of the contested question of construction as the contextual basis for ignoring those words in the definition (which are inconsistent with that construction) has an air of circularity to it. Ultimately, the interplay between cl A2.1 and the definition of “demised premises” is, at best, supportive of Allied’s construction and, at worst, neutral. But in my view, the wider text of the lease and the legal context in which it was intended to operate comfortably permit the adoption by cl A2.1 of the entire definition of “demised premises”, at least on the first occasion where the term is deployed in that clause.
Clause B1(22) gives Allied a right, at or prior to the expiration of the lease, to remove what I will loosely describe as its “tenant’s fixtures”; GR Mailman accepted that the component parts of the 2015 fit out are tenant’s fixtures. It would be wholly unnecessary for Allied to have been given this right – with the word “may” in the clause indicating that the exercise of this right was understood by the parties to be at Allied’s election – if cl A2.1 already required it to remove all tenant’s fixtures prior to vacating the premises as part of its make good obligations.
Contrary to the position advanced by GR Mailman, B1(22) is not mere surplusage or an example of the “torrential” style of drafting discussed by Hoffmann J in Norwich Union Life Insurance Society v British Railways Board [1987] 2 EGLR 137 at 138. The clause reflects an important aspect of the legal context in which the lease came to exist, which the original parties to it may be taken to have been well aware of. As was noted by Campbell JA in Phoenix (at [176]), Westfield Management does not prevent me from having regard to this legal context in construing the terms of the lease.
The history of the principle that dictates when a fixture becomes part of a particular property was outlined by the Court of Appeal in Agripower Barraba Pty Ltd v Blomfield (2015) 317 ALR 202; [2015] NSWCA 30 at [74]-[81]. This principle historically extended to fixtures attached to leased premises by a tenant, which thereupon became the property of the landlord: North Shore Gas Co Ltd v Cmr of Stamp Duties (NSW) (1940) 63 CLR 52 at 67-68 per Dixon J; TEC Desert Pty Ltd v Cmr of State Revenue (2010) 241 CLR 576; [2010] HCA 49 at [25]-[26]. However, the law has come to recognise the right of a tenant – at its election – to remove its “tenants fixtures” during a tenancy or within a reasonable time after the conclusion of that tenancy: see generally the discussion of this principle in TEC Desert Pty Ltd v Cmr of State Revenue (2010) 241 CLR 576; [2010] HCA 49 at [22]-[26]; Chief Commissioner of State Revenue v Shell Energy Operations [2023] NSWCA 113 at [13]-[14] per Kirk JA.
On its face, cl B1(22) reflects the parties’ attempt to incorporate this principle as an express term of their agreement. Importantly, the perceived need to do so proceeds on an anterior assumption that Allied’s “tenants fixtures” – including the 2015 fit out – would become a part of the premises once installed and, unless Allied exercised its right to remove them, would remain the property of the lessor. Against this background, it might be expected that clear words would have been used by the parties had they intended to require the removal – at the end of the tenancy – of what was, by that time, the property of the lessor.
GR Mailman submitted that Allied’s construction “would have the curious result the lessee could entirely reconfigure premises by undertaking substantial building and other such works and leave the new configuration as is so long as it leaves it clean and in good repair”; I disagree.
Clause A3 (reproduced at [32] above) expressly prevents the lessee from reconfiguring the premises without the written consent of the lessor (and an architect nominated by the lessor). Once this is recognised, the result of Allied’s construction of cl A2.1 becomes less “curious”. Whilst it is true that the lessor cannot unreasonably withhold its consent to any reconfiguration works that a lessee might wish to undertake, this is unlikely to prevent the lessor from making that consent conditional upon an undertaking by the lessee to return the premises to its original configuration at the conclusion of the lease should the lessor reasonably consider that to be commercially advantageous.
Allied placed reliance on the Leasing Proposal and Heads of Agreement which, it said, makes clear that the original parties to the lease intended that the removal of the 2015 fit out was expressly excluded from Allied’s make good obligations. It is said that the reference to “Appendix 1” in the definition of “Lessee’s Fitout” (reproduced at [30] above) provides a basis to look back into the genesis of the lease. More specifically, it was said, referring to Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [49], that where there is a “constructional choice” one can look at the genesis or commercial purpose of the relevant agreement in seeking to resolve it. Here it was said by Allied:

In my view, that question does not properly arise in seeking to resolve the constructional choice presented by cl A2.1.
As I have already noted, there was no document described as “Appendix 1” attached to the lease. On this basis – and in the absence of a rectification case, which was foreshadowed by Thomson Geer in a letter of 15 August 2025 but not ultimately brought by Allied – the lease should properly be read on the basis that the defined term “Lessee’s Fitout” is an empty vessel and refers to nothing where it is used in the lease; noting that it does not appear in cl B1(22).
While I have concluded that Westfield Management precludes recourse to the Leasing Proposal or Heads of Agreement when construing the lease, I think there is a more fundamental problem with Allied’s reliance on these documents. The evidence does not establish that the form of Appendix 1 contained in the Leasing Proposal ultimately formed part of any concluded agreement between the parties, let alone that which is reflected in the lease. In these circumstances, there is no proper basis to go back into the course of negotiations and seek to incorporate into the lease – via a process of construction – something which may never have been the subject of agreement between the parties. In any case, the outcome of this issue does not rest on Allied’s argument regarding Appendix 1 or require recourse to be had to either the Leasing Proposal or the Heads of Agreement.
Finally, Allied referred to the definition of the word “condition” provided by the Macquarie Dictionary, 9th ed (2023) in support of its preferred construction of cl A2.1. For two reasons, I have not relied on this dictionary definition in reaching my conclusion on the proper construction of cl A2.1. First, due to the significant body of authority that warns against placing reliance on dictionaries when resolving questions of contractual construction: see TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [80]. Secondly, the meaning attributed to the word “condition” by that publication is sufficiently broad to comfortably accommodate either party’s approach to that word in the context of cl A2.1.
For the reasons I have given above, Allied was not required by cl A2.1 to have removed the 2015 fit out prior to vacating the premises at the conclusion of the lease and did not breach the lease by failing to do so.

The issue of exterior painting turns on the proper construction of cl A24.3(b) (reproduced at [32] above) and can be dealt with relatively briefly.
Allied contended that the clause only requires it to repaint the internal painted surfaces. In doing so invited me to accept that the “painted surfaces” referred to in the opening words of the clause are, in effect, a subset of the “internal surfaces” referred to later the clause.
In support of its construction, Allied pointed to cl A24.5, which, it said, provides that it “was not required to improve the landlord’s property”. Allied also pointed to cl A2.2(d), which makes clear that Allied is not responsible for any fair wear and tear arising after the commencement of the lease. Allied went on to say that “repainting the exterior of the premises would be an improvement to the property … and not a matter arising from the use of the premises by Allied (or its sub-tenant).” On this basis, Allied said that the wider textual context of the lease favoured its construction.
Clause 24.5 does relevantly provide that Allied is not required to “bring the demised premises into a better condition or state of repair than the demised premises were in” when the lease commenced. However, repainting the premises, a decade after having commenced occupation, does not obviously bring about a situation in which the premises are placed in a better condition or state of repair than they were when the lease commenced.
The exclusion of fair wear and tear from Allied’s responsibilities by cl A2.2(d) was clearly not intended to override the express obligation to repaint imposed upon Allied by cl A24.3(b). If it were, the same logic would relieve Allied of its obligation to repaint the internal surfaces of the premises, which Allied accepts cl A24.3 requires it must do.
Allied invited me to draw what it characterised as a reasonable businessperson’s distinction between the internal and external painting, asserting that any decline in the external paintwork would not have been caused by its use of the premises “because we don’t use the external of the building in the same way we do the internal”. In my view this distinction is wholly artificial, particularly when regard is had to cl A14, which makes clear that the lease contemplated Allied making at least some use of the exterior of the premises.
On the other hand, GR Mailman pointed to the very clear distinction drawn in cl A24.3(b) between “all painted surfaces” and “all internal surfaces” and submitted that on a fair reading of the clause the latter qualifies only the obligation to wallpaper, stain, varnish, and polish contemplated by the clause. I agree.
There is nothing in the text of cl A24.3(b) which suggests the parties’ reference to “all painted surfaces” was not intended to extend to those which are located on the exterior of the premises. Properly construed, that clause required Allied to paint the exterior surfaces of the premises with at least two coats of first quality paint prior to vacating the premises; Allied has not done this. Allied’s failure to have repainted the premises’ exterior painted surfaces amounts to a breach of cl A24.3(b) of the lease.

Allied first said that it should be relieved of its obligation to compensate GR Mailman for its failure to complete the outstanding redecoration works by reason of GR Mailman’s alleged failure to mitigate its loss.
The requirement that GR Mailman mitigate any loss suffered as a result of Allied’s failure to have completed the outstanding redecoration works was said by Allied to arise both as a matter of law and, more specifically, under cl C6(v) of the lease (reproduced at [35] above).
Clause C6(v) is cast in clear terms. It is directed to a situation in which a lessee vacates the premises prior to the expiration of the term of the lease. It seeks to impose upon the lessor an obligation to mitigate its damage in these circumstances, principally by taking steps to re-lease the premises on reasonable terms to minimise any damage suffered through a loss of rent. Further, it is protective of the lessor insofar as it makes clear that any attempts made to re-lease the premises in such circumstances will not amount to a repudiation of its own obligations under the lease.
Whatever construction might be applied to cl C6(v), it is unlikely to relevantly alter the position which arises under the general law. When assessing the loss that can be recovered for the breach of contractual promise, that which is due to unreasonable or improvident actions of the wronged party is generally disregarded by application of the rules of mitigation of loss: Cessnock City Council v 123 259 932 Pty Ltd (2024) 281 CLR 39; [2024] HCA 17 at [120(3)].
The onus of establishing that a party has failed to take reasonable steps to mitigate loss rests with the party asserting that there has been a relevant failure; here, Allied: Ceerose Pty Ltd v The Owners – Strata Plan No 89074 [2025] NSWCA 235 at [28].
To discharge its onus, Allied needed to establish that GR Mailman acted unreasonably in some respect, including by failing to take some step that reasonably should have been taken by GR Mailman to reduce its loss.
To this end, it was said by Allied that GR Mailman should have issued a notice under cl A24.4 of the lease, requiring that Allied commence the redecorating works within 30 days, and that by not doing so GR Mailman failed to take a step that should reasonably have been taken to reduce the loss referable to Allied’s failure to complete the redecoration works. As the argument was put by Mr Castle:

There are three problems with this argument.
First, it was accepted by Allied that it was not incumbent upon GR Mailman to have issued a notice under cl A24.4 in order to recover the costs of itself carrying out the works; that is, a failure to have issued a notice under this clause was not said to be a contractual barrier to recovery.
Secondly, at a factual level, GR Mailman had made clear to Allied what it believed to be the full extent of the make good obligations, and that it required this work to be completed by Allied. Allied disagreed. The evidence of Mr Sappey makes clear that – contrary to what was suggested in his 17 July email – Allied was not willing to complete the outstanding redecoration works whilst it remained in dispute with GR Mailman about the extent of the make good obligations. He did not suggest in his evidence that receipt of a notice issued under cl A24.4 would have changed his attitude on this matter. I infer from this that, had GR Mailman issued a notice under cl A24.4, it would not have resulted in the redecoration works being completed by Allied unless the notice was accompanied by an unreserved acceptance by GR Mailman of what Allied claimed to be the extent of its make good obligations.
Thirdly, the dispute between the parties about the extent of the make good obligations was genuine. I have no reason to doubt that either party’s view as to the proper construction of cl A2.1 was genuinely held. While I have ultimately preferred the construction advanced by Allied, the contrary view was reasonably available. Although confident in his position, even Mr Sappey believed that there was a possibility that a court might ultimately agree with GR Mailman’s approach to the clause. It was this possibility that underpinned Mr Sappey’s decision not to cause Allied to complete the redecoration works. In these circumstances, it was entirely reasonable for GR Mailman to have maintained its position on that issue; particularly in circumstances where, in his 17 July 2025 email, Mr Sappey had indicated that Allied was proposing to undertake those of the redecoration works it agreed were required by the combined operation of cll A2.1 and A24.
It was suggested by Mr Castle that the reason GR Mailman chose not to issue a notice under cl A24.4 was because, by doing so, it would have been making an election inconsistent with the maintenance of its claim that cl A2.1 required Allied to remove the 2015 fit out as part of its make good obligations. There is nothing in the evidence from which I can properly infer that to have been a thought process engaged in by GR Mailman. I’m also not satisfied that – as a matter of law – it is correct. But, in any case, I note that the possibility that issuing a notice may have amounted to an election which would defeat the claim genuinely and reasonably made by GR Mailman about the make good obligations only reinforces my view that it was reasonable for it not to have done so.

Repudiation, waiver, estoppel, and an alleged breach of the duty to act in good faith and co-operate were each alluded to by Allied in response to GR Mailman’s claim for damages arising out of the outstanding redecoration works. Each was addressed very briefly in Allied’s written submissions and not well developed during the hearing. I understand Allied’s argument invoking these principles to involve the following propositions:
implied within the lease was a duty to act in good faith and co-operate;
GR Mailman is said to have repudiated this implied obligation by wrongfully asserting that Allied was required to remove the 2015 fit out as part of its make good obligations;
GR Mailman’s repudiation was not accepted by Allied, which itself remained ready willing and able to meet its obligations under the lease;
in the circumstances Allied is excused from performance of its obligations either through waiver or estoppel, citing Foran v Wight (1989) 168 CLR 385; [1989] HCA 51 (“Foran v Wight”) in support of this conclusion; and
separately, Allied argued that GR Mailman’s contention regarding the scope of Allied’s make good obligations amounted to a breach of the lease which “materially contributed to [Allied’s] breach” and, therefore, GR Mailman is precluded from recovering damages from Allied on account of that breach.
It may be accepted, at least as a general proposition, that implicit in the lease was an obligation that both GR Mailman and Allied respectively do all things necessary to enable one another to have the benefit of the contract: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607; [1979] HCA 51. However, care must always be taken to identify both the content and operation of that implied duty: Campbell v Backoffice Investments (2009) 238 CLR 304; [2009] HCA 25 at [168]. Allied made no real attempt to do so. Instead, it merely asserted that, by maintaining that cl A2.1 of the lease required Allied to remove the 2015 fit out, GR Mailman acted in breach of that implied duty; I disagree.
The principles governing repudiation were recently summarised in Interslice Pty Ltd v CCA Investments – Bass Hill [2025] NSWCA 175 at [210]. Adopting that summary, I am not satisfied that GR Mailman repudiated any express or implied obligation by maintaining that Allied was required by cl A2.1 to remove the 2015 fit out.
Although ultimately incorrect in so far as the 2015 fit out is concerned, GR Mailman’s understanding of Allied’s contractual obligations was genuinely held and reasonably open; there is nothing in the evidence leads me to infer that this was not the case. More importantly, by advancing its understanding GR Mailman did not evince an unwillingness or inability to perform any obligation imposed upon it by the lease. Nor did it actively prevent Allied from enjoying the benefit of the lease or performing its uncontentious obligations in so far as the redecoration works were concerned.
Rather, Allied made a unilateral decision not to perform the outstanding redecoration works. It took this approach because it perceived this to be in its commercial interest for so long as there remained a possibility that it might subsequently be required to remove the 2015 fit out. Importantly, Allied did not inform GR Mailman of this decision; to the contrary, Mr Sappey’s email of 17 July 2025 gave GR Mailman no reason to think that its approach to the construction of cl A2.1 presented any impediment to the completion of the uncontentious redecoration works.
Despite the apparent link between Allied’s decision not to complete the outstanding redecoration works and the position being advanced by GR Mailman in relation to cl A2.1, it cannot properly be said that any breach of the lease by GR Mailman “materially contributed to” what Allied accepts was a breach of its own obligation to complete those works.
In these circumstances, Allied is not assisted by the principles in Foran v Wight. The same process of reasoning is sufficient to defeat Allied’s reliance on any implied duty of good faith of the type discussed in Burger King Corporation v Hungary Jack’s Pty Ltd (2001) 69 NSWLR 558; [2001] NSWCA 187 at [141]-[187].

As has been emphasised by the Full Federal Court, statutory unconscionable conduct does not authorise a dilution of the gravity of the equitable concept of unconscionable conduct: Unique International College Pty Ltd v ACCC (2018) 266 FCR 631; [2018] FCAFC 155 at [155] (Allsop CJ, Middleton and Mortimer JJ); ACCC v Quantum Housing Group Pty Ltd (2021) 285 FCR 133; [2021] FCAFC 40 at [88] (Allsop CJ, Besanko and McKerracher JJ).
Applying these principles in the context of the present case, I am not satisfied that Allied’s claim that GR Mailman has engaged in unconscionable conduct is made out.
As to the first matter Allied relied upon, the 2015 fit out has not been removed and did form part of the premises when it was rented by Wilrich. However, the evidence does not establish that GR Mailman positively intended to retain the 2015 fit out whilst, at the same time, asserting that Allied was contractually bound to remove it; I have addressed that evidence above. The mere fact that the 2015 fit out has not been removed and is now presumably being used by Wilrich is insufficient to render unconscionable GR Mailman’s assertion of a contractual right to have it removed or recover from Allied the costs associated with its removal.
Additionally, the evidence does not establish that GR Mailman is benefiting from the 2015 fit out in any relevant sense. Implicit in Allied’s “double dipping” argument is an assumption that the increased rent payable under the new lease can be attributed to the presence of the 2015 fit out. This assumption is not established by the evidence, which is largely silent on what might be the fair market rent payable in relation to the premises, with or without the 2015 fit out.
The difficulty with the second matter Allied relied upon lies in the fact that the evidence is also silent on the issue of whether the omission, from the lease, of a term to the effect of that appearing under the heading “Make Good” in the Heads of Agreement was unintentional or the result of a deliberate choice made by the original parties to the lease. There is certainly no evidence which points to GR Mailman seeking to take advantage of what it knew or believed to have been an unintentional failure by those original parties to reflect their true agreement in the terms of the lease. As such, this aspect of Allied’s unconscionability case fails for want of evidence.

Allied Pinnacle Pty Ltd v G R Mailman & Associates Pty Ltd

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment

JUDGMENT

The evidence

The proper construction of the lease

The applicable principles of construction

Clause A2.1

Exterior painting

The outstanding redecoration works

Failure to mitigate

Repudiation, waiver, estoppel, and an alleged breach of the implied duty to act in good faith and co-operate

The unconscionability case

Conclusion

Orders

Parties

Legislation Cited (6)

Cases Cited (21)

Cited By (2)