See also Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516 and British American Tobacco Australia Ltd v The State of Western Australia (2003) 217 CLR 30 at 53.
29 It cannot be said that any of the payments of amounts exceeding the rent that was due caused the defendant to refrain from taking the appropriate steps to increase the rent, so as to raise some equity in its favour. That would be to reverse the current of causation that actually flowed, for the payments were made because of the defendant's own insistence that everything necessary to impose an obligation to make them had already occurred. In any case, the claim of Pub Oz Pty Limited that the whole procedure was not in accordance with the legal rights of the parties was made before the end of the lease, and so before it could be said to be too late for the defendant to invoke the proper procedure (it will be recalled that clause 6(b) remained available, while the lease was in force, "at any time thereafter"). That the defendant did not respond to the claim by taking any step under clause 6(b) is powerful evidence in favour of the view that it knew an expert determination under clause 6(c) would not justify its retention of at least a large part of the payments, and I do not find that any part has been shown to be an amount it would, had the proper steps been taken, have been entitled to retain. On that issue, the onus is on the defendant: David Securities Pty Limited v Commonwealth Bank of Australia at 384.
30 Counsel for the defendant raised the contention that clause 6(e) of the lease provided a defence to the extent of 80 per centum of the overpayments made. But it seems to me there are several answers to this proposition. In the first place, clause 6 (e) is an interim provision to operate pending resolution of the question whether the amount "fixed by the Lessor pursuant to sub-clause (b) … or clause 4" is to be varied. I have already held that the purported notice under clause 6(b) was not valid, so it must follow that clause 6(e) never became available. Secondly, assuming a valid notice under clause 6(b), clause 6(e) looks to the giving by the lessee of a notice under clause 6 (c) or the lessee's failure to accept in writing within 14 days after being notified thereof that the "annual rent so fixed by the Lessor [ie in a valid notice under clause 6(b)] is the current market rent". In either case, clause 6(e) then requires the further step expressed by the words "the Lessee shall if requested in writing by the Lessor from the review date in addition to continuing to pay the monthly rent instalments at the rate applying immediately prior to the review date pay by equal monthly instalments in advance eighty (80) per centum of the increase in annual rent sought by the Lessor and fixed in its notice to the Lessee pursuant to sub-clause (b)". The lessor, which absolutely refused to recognise that the lessee had given or could give a notice under clause 6(c) has never been in a position to avail itself of this provision, and in fact no request in writing to make the payments specified in clause 6(e) has ever been made. Finally, clause 6(e) contemplates either a "determination of the rent in accordance with sub-clause (c)" or alternatively "the increased annual rent otherwise being agreed", whereupon the interim measure provided for by clause 6(e) would resolve into an "appropriate adjustment and payment or repayment as the case may be" which "shall forthwith be made between the Lessor and the Lessee to ensure that as from the review date the Lessee had paid and the lessor has received the appropriate amount in respect of the annual rent as agreed between the Lessor and the lessee or otherwise as determined in accordance with sub-clause (c)". Plainly, this part of the clause has also never been applicable, as there has never been any contemplation by the lessor of either a determination under clause 6(c) or any such agreement as clause 6(e) envisages. I reject the contention that now, long after the lease has been terminated, the defendant can avail itself in any way of clause 6(e).
31 For these reasons, at the time Pub Oz Pty Limited went into liquidation it was entitled to recover the overpayments of rent together with interest thereon but the plaintiff, in consideration of a payment of $10,000 plus $1,000 goods and services tax totalling $11,000, took an assignment from the liquidators and was substituted for the company as plaintiff. The liquidators duly gave notice in writing to the defendant of the assignment on 23 June 2003. There was some dispute about the effectiveness of this assignment, but I do not see any reason to doubt that it was, at least, a good assignment in equity. If so, the company as legal owner having gone out of existence, there is no reason why the equitable assignee should not "prosecute the action to finality and obtain a judgment without joining the assignor as a party": Weddell v Pearce [1988] 1 Ch 26 at 43; Jennings v Credit Corp Australia Pty Ltd (2000) 48 NSWLR 709 at 719-722. In any event, in order to make doubly sure, the plaintiff has since taken a further assignment, in reliance on s 601AD of the Corporations Act, from the Australian Securities and Investments Commission. In my opinion, the plaintiff is entitled to succeed in his action. The parties have calculated the overpaid rent, with adjustments for indexation, at $383,967.36 on which interest is to be allowed at the appropriate rates, the amount of interest being $145,655.09 as at 11 August 2005.
32 That leaves the cross claim to be considered.
33 The cross claim is pleaded in reliance on three particular clauses of the lease which are set out below:
"7. The Lessee takes subject to the full effect of the covenants next hereinafter shortly noted as the same are set forth in words at length in the second column of Part 2 of the Fourth Schedule to the Conveyancing Act, 1919:-
…
(4) And to maintain and leave the premises in good repair (having regard to their condition at the commencement of the lease), reasonable wear and tear, war damage, and damage by fire, lightning, flood and tempest excepted;"
(The "words at length in the … Fourth Schedule to the Conveyancing Act" referred to in this clause are:
"And also that the lessee will during the term, when, where, and so often as the need shall be, but having regard to the condition of the demised premises at the commencement of the lease and excepting reasonable wear and tear, war damage, and damage by fire, lightning, flood and tempest, occurring within the term -
(a) well and sufficiently maintain, amend, and keep, and
(b) at the expiration or sooner determination of the term peaceably surrender and yield up unto the lessor,
in good and substantial repair the demised premises, including all appurtenances, buildings, erections and fixtures belonging to the demised premises, or at any time within the term lawfully made or erected by the lessor upon or within the demised premises.")
"24. (c) The lessee does hereby covenant with the lessor:-
(i) At all times during the continuance of this lease to keep the fittings plant and chattels now and from time to time on the said premises in a proper state of repair working order and condition and will replace the same or such part or parts or items thereof as shall become broken worn out destroyed damaged or obsolete with fittings plant and chattels of a like nature and equal value so that the same are in a proper state of repair working order and condition at the expiration or sooner determination of this lease or any extension or renewal of it."
"25. (a) The lessee hereby acknowledges that the fixtures, fittings and equipment as listed in Annexure 'A' hereto belong to and are the property of the Lessor.
(b) The lessee accepts these fixtures, fittings and equipment in their present condition and state of repair and shall return the same to the lessor upon the termination of this lease in a condition as near to their existing condition at the commencement of this lease (reasonable wear and tear excepted). [ Sic ] The lessee shall maintain the same and be responsible for their repair during the continuance of this lease and any option period granted pursuant to this lease."
34 Perusal of these clauses reveals that clause 7 is concerned with the repair of the premises, including the appurtenances and fixtures belonging to them, "having regard to the condition of the demised premises at the commencement of the lease and excepting reasonable wear and tear." Because the measure of the obligation imposed by this covenant is the condition of the demised premises at the commencement of the lease, it may be important to know when that time was. In the present case, it will be recalled, Pub Oz Pty Limited only purchased the business of the hotel as the original term of the lease was drawing to a close; indeed, it was on the very same day that the option of renewal was exercised, an option only exercisable pursuant to clause 4 of the lease "if the Lessee shall not then be in breach of any of the covenants and agreements by and on the part of the Lessee contained in this lease". It was not suggested the lessee was so in breach and a renewed lease was entered into. It was the renewed lease which then governed the relationship between the lessor and the lessee and clause 7 of that lease, when it referred to "the commencement of the lease", could hardly mean anything but the date 21 July 1998 when the lease commenced: Halsbury's Laws of Australia vol 16 (1997) 245-3610; Gerraty v McGavin (1914) 18 CLR 152 at 163, where Isaacs J said:
"Now, what is the position of a lease obtained by the exercise of an option to renew? Clearly it is a new lease, a new demise."
35 A further matter should be noted about clause 7. Counsel for the cross-claimant referred me to Lurcott v Wakely & Wheeler [1911] 1 KB 905, an authoritative decision as to the effect of covenants to repair. In that case, Fletcher Moulton LJ said (at 919):
"[I]t is settled law that when a man undertakes to keep a thing in good condition or in thorough repair, and it is not in that condition when the demise commences, the covenant implies that he is to put it in that state as well as to keep it in that state."