J.J. HAWKINS AND CO PTY LTD -v- INTERNATIONAL RAW MATERIALS PTY LTD [No 2] [2026] WASC 80 (25 March 2026)

Contract - Claims by plaintiff lessor that defendant lessee breached insurance obligations in the lease

Contract - Claims by plaintiff lessor against defendant lessee for rent not paid by the defendant during period of holding over - Proper construction of holding over provisions in the lease - Whether defendant entitled to abate rent under the lease

Damages - Proper basis for assessment of damages in context of covenant in lease to maintain and repair - Whether appropriate to assess damages by reference to rectification costs of the warehouse - Whether there is a basis to find that a unit in the warehouse should be demolished given extent of property damage - Whether conduct of plaintiff unreasonable such that a failure to mitigate might be found

Tort - Claim by plaintiff lessor that defendant lessee negligently caused damage to the warehouse - Whether defendant lessee liable for damage to the warehouse - Whether plaintiff lessor estopped from asserting claim - Whether plaintiff lessor concurrent wrongdoer - Whether plaintiff lessor contributorily negligent - Whether plaintiff lessor failed to mitigate its loss

Contract - Claims in contract by defendant lessee against plaintiff lessor by counterclaim - Claims for costs of the repairs to the warehouse - Claims for loss in value of the defendant's product - Claims for the costs of reconditioning the product once damages - Costs of relocating the product to other premises

Estoppel - Defendant pleads conventional estoppel in response to both contract and tortious claims - Whether pleaded assumption was mutual and bilateral

Limitation periods - Whether plaintiff lessor's claims subject to six year limitation in Limitation Act 2005 (WA) - Whether obligations of a continuing nature - Whether successive claims arose - Whether contract and tort claims statute barred in whole or in part

Evidence - Admissibility rulings under s 79C(2a) of the Evidence Act 1906 (WA)

Building Regulations 1989 (WA)

Civil Liability Act 2002 (WA), s 5B, s 5C, s 5AI, s 5AK, s 5K

Commercial Arbitration Act 1985 (WA)

Commercial Arbitration Act 2012 (WA)

Environmental Protection Act 1986 (WA), s 56, s 57

Environmental Protection Regulations 1987 (WA), reg 5, sch 1

Evidence Act 1906 (WA), s 79C

Law Reform (Contributory Negligence and Tortfeasor Contribution) Act 1947 (WA), s 4(1)

Limitation Act 2005 (WA), s 13

Local Government (Miscellaneous Provisions) Act 1960 (WA)

Property Law Act 1969 (WA), s 71

Supreme Court Act 1935 (WA), s 32

Transfer of Land Act 1893 (WA), s 92

Trans-Tasman Proceedings Act 2010 (Cth), s 30, s 31

Judgment to be entered for the plaintiff in the terms set out in Part XII of the reasons.

PART I - OVERVIEW A. A broad outline of the matter

1. The subject matter of this action concerns a large industrial warehouse and an acidic, hygroscopic, corrosive fertiliser, namely ammonium sulphate[1] or (NH4) 2SO4, which was stored within the warehouse.
2. The warehouse is situated on premises in an industrial precinct in the Kwinana Beach area in Western Australia (the Warehouse), near to the rail lines which service the area and around two kilometres from the coastline. The Warehouse is owned by the plaintiff, J.J. Hawkins & Co Pty Ltd (the plaintiff or JJH). The Warehouse consists of three units which are adjacent to each other. I will refer to the units collectively as the Units, and individually as Unit 1, Unit 2 and Unit 3. Unit 1 is the largest, and the oldest, of the three Units. A plan of the Warehouse, showing the relative size of the Units and the access points, is included as Attachment B to these reasons.
3. The Warehouse was leased over the course of many years to the defendant, International Raw Materials Pty Ltd (the defendant or IRM), an Australian subsidiary of a global fertiliser distribution company which has its headquarters in Philadelphia, in the United States of America. The initial lease to the defendant for Unit 1 commenced in around March 2005, with the lease later being varied to include the lease for Units 2 and 3, from 2007.
4. Where it is necessary to distinguish between the leases, I will refer to the original lease for Unit 1 as the Original Lease and the lease as varied in 2007, covering all three Units, as the Varied Lease.[2]
5. During the course of its tenancy, the defendant stored the ammonium sulphate within the Warehouse, which was subjected to a screening process using a shaker table. The ammonium sulphate was stored in bulk, largely uncovered, on the floor of the Warehouse, having been supplied to the defendant as a byproduct from the nearby nickel refinery in Kwinana operated by a subsidiary of BHP Limited.[3]
6. Ammonium sulphate is mildly acidic when exposed to moisture, which then has a corrosive, rusting effect on metals and concrete. Ammonium sulphate is hygroscopic, meaning that it tends to absorb moisture from the air, and should be kept away from moisture. During the course of the defendant's tenancy, there was water ingress into the Warehouse on a relatively regular basis, through leaks in the roof, through the large external doorways, as well as from the day to day operations of the business which involved trucks entering the Warehouse. The loading, unloading, storage and screening of the ammonium sulphate led to ammonium sulphate dust spreading within, and outside, the Warehouse.
7. Over the course of the defendant's lease of the Warehouse, the building suffered from extensive, destructive and continuous corrosion, all of which was visible and known to the senior representatives of the plaintiff and the defendant. The Warehouse has, over time, also been impacted by storm damage and the elements.
8. Significantly, the parties have been in dispute as to the effect of the contractual obligations in the lease instruments, as to which party bore the legal responsibility to repair and maintain the Warehouse, and as to which party is liable to repair the damage which has resulted. As will be seen, the proper construction of the lease instruments was a central point of dispute in these proceedings.
9. The photographs below, which are extracted from valuation reports tendered in evidence, show some of the deterioration of the Warehouse during the course of the defendant's tenancy. The photographs on the left were taken in 2004, prior to the defendant's tenancy and the photographs on the right were taken in 2015, prior to the defendant vacating the warehouse in November 2016. I have also incorporated into these reasons, as Attachment C, various photographs of the premises which were taken between 2004 and 2015.

1. Whilst the parties were in their state of disagreement as to the legal responsibility for the repair work to the Warehouse, which disagreement occurred over many years, the corrosive effects on the building itself continued. The president and chief executive officer of the defendant was ultimately driven to express some frustration with the plaintiff's apparent intransigence on this issue, writing to the plaintiff in the following terms in mid-2016:[4]

When one is in a burning movie theatre, I expect that only a few would look at the fine print on the back of the ticket stub before acting.

... I would expect that all of my Australian friends over the last 40 years would clearly understand and respond properly respond to the outcry of "Fire" even with an American accent.

1. The defendant ultimately vacated the premises in November 2016, following a lengthy period of holding over under the Varied Lease. At this point, the Units were all in an advanced, dilapidated state, showing significant signs of corrosion.

1. In January 2017, following the defendant's departure from the premises, the plaintiff filed proceedings against the defendant, seeking relief associated with the damage to the Warehouse.
2. The plaintiff contended that the value of its asset had been severely diminished. The plaintiff brought claims in contract and in tort for damages to cover the costs of remediation works and lost rental income from the premises since the defendant vacated them. The plaintiff also advanced claims for the defendant to make good alterations that it had made to the walls between the units. Finally, the plaintiff claimed for outstanding rent due by the defendant under the lease instruments.[5]
3. The plaintiff originally pleaded a claim which alleged breaches of the Building Regulations 1989 (WA) and the Local Government (Miscellaneous Provisions) Act 1960 (WA). That claim was not pressed by the plaintiff at trial.[6]
4. The defendant wholly denies it has any liability for the damage or the other claims.[7]
5. The defendant maintains that the lease with the plaintiff expressly permitted the storage and value-adding of a corrosive fertiliser by the defendant as the tenant, and required the plaintiff as the lessor to prevent the ingress of water. The defendant contends that the plaintiff's failure to maintain the building and the failure to prevent water ingress was the material cause of the corrosion and damage. The defendant also submits that it is not liable to 'make good' the premises, because the effect of the corrosion constitutes 'fair wear and tear', for which it was not legally responsible under the lease.
6. The terms of the lease instruments are examined in more detail later in these reasons. As will be seen, there is an immediate degree of tension between the first and second paragraphs of cl 3.9(a), the former being directed at the defendant lessee's repair obligations and the latter establishing an obligation on the plaintiff lessor. It should also be observed that the text of the lease instrument includes a number of drafting infelicities which has complicated the process of construing the contract. Further, while I would not describe the lease as having employed the 'torrential style' of drafting,[8] many of the clauses are not well expressed or are cumbersome in their use of language and lack of structure.
7. The plaintiff's claims in contract can conveniently be described by reference to two broad categories as outlined below.[9]
8. First, the plaintiff advances claims against the defendant associated with the damage to the Warehouse alleged to have been caused by the activities of the defendant. These claims include alleged failures to repair the premises and to yield up the premises in good and substantial repair. The claims cover remediation works and the lost rental income from the premises while rectification works were being conducted, as well the non-renewal of insurance cover for the Warehouse. In summary, the plaintiff pleads the following breaches:

(a) breach of cl 3.9(a) of the Varied Lease, which incorporates a covenant to repair, causing permanent and serious structural damage to the Warehouse (see [11.1], [12], [13] and [14] of the SOC);

(b) breach of cl 3.23 of the Varied Lease, which obliged the defendant to yield up the Warehouse in good and substantial repair, being a breach directed at the failure to repair the damage to the Units (see 17A(b), [18] and [19] of the SOC);[10]

(c) breach of cl 3.23 of the Varied Lease, which is directed at the defendant's failure to repair the access holes in the walls to the Warehouse (see [14A], [17A(a)], [18] and [19] of the SOC);

(d) breach of cl 3.9(a) of the Varied Lease causing the non-renewal of insurance coverage of the Warehouse (see [11.2] and [12] of the SOC); and

(e) breaches of cl 3.10(a), cl 3.10(b), cl 3.15(a) and cl 5.23 of the Varied Lease, which obliged the defendant to comply with the law and with all relevant statutory obligations - the plaintiff specifically relies on alleged breaches of s 56 of the Environmental Protection Act 1986 (WA) (the EP Act) and the matters prescribed in the Environmental Protection Regulations 1987 (WA) (the EP Regulations) (see [12A] to [12G] of the SOC).

1. The above claims, and the pleaded defences and responses, are addressed in Part VII of the reasons. The damages and other amounts payable by the defendant are addressed in Part VIII of these reasons. The plaintiff's claims for relief are pleaded together with a claim for interest pursuant to s 32 of the Supreme Court Act 1935 (WA) (SCA) at the rate of 6% p.a.[11]
2. Second, the plaintiff advances a claim for unpaid rent against the defendant, together with interest at 6% p.a. pursuant to s 32 of the SCA, it being alleged in the SOC at [9] and [10] that the defendant failed to pay rent during the period it was in possession of the premises.[12] The plaintiff pleads a breach of cl 3.1 of the Varied Lease. I have addressed this claim in Part IX below.
3. The plaintiff also advances a claim in negligence, and pleads that the defendant owed it a duty of care to handle, store and/or process ammonium sulphate in such a manner so as to prevent any damage being caused to the Units and the building on the property, and to take action to mitigate the damage which could be caused by the defendant's method of delivering and storing the ammonium sulphate in the Units.[13] The duty is pleaded to have been a continuing duty throughout the terms of the leases.[14] The loss and damage pleaded by the plaintiff is the cost to repair the Units and the loss of rental income.[15] I have addressed the negligence claim in Part X below.
4. The defendant pleads a contractual counterclaim at [24] to [35] of the Defence, arising from the weather damage caused to the premises and its product (i.e. the ammonium sulphate) during its occupancy. There are several heads of claim, namely the cost of repairs to the premises, the loss of value of the defendant's product, the costs of reconditioning the defendant's product, and the costs of relocating the product.[16] I have addressed the contractual counterclaims in Part XI below.
5. The parties proceeded to trial on the basis of the claims, defences and counterclaim articulated in the SOC and the Defence.[17] The other relevant pleadings which frame the issues for determination are the Plaintiff's Reply and the Defendant's Reply.[18]

1. The trial of the action was conducted over the course of 13 days in April and May 2024.
2. The evidence led at the trial was extensive and highly detailed. The parties collectively called 12 lay witnesses, together with four expert witnesses.
3. The plaintiff called nine witnesses at the trial, with the principal witnesses being Mr Joseph Hawkins, Ms Julie Bosch (Ms Bosch), Mr Andrew Donkin (Mr Donkin), and Mr David Hawkins, each of whom gave their evidence in chief viva voce. The plaintiff also tendered the statements of six further witnesses by consent.
4. The plaintiff called expert evidence across three different disciplines, namely from a registered builder (Mr Neville Harrison), from a licensed valuer (Mr Richard Hagon), and from a scientific consultant as to corrosion issues (Dr Armand Zurhaar).
5. For its part, the defendant called three witnesses at the trial being Mr William O'Neill Junior, Mr Frank O'Neill, and Mr David Goodwin (Mr Goodwin), who also gave their evidence in chief viva voce. Consistent with the manner in which Mr William O'Neill was referred to in the oral and documentary evidence, I will refer to him as Mr Tip O'Neill to distinguish him from his cousin, Frank.
6. The defendant also called expert evidence from a specialist corrosion engineer (Dr Peter Farinha). The scientific experts called by the parties, Dr Zurhaar and Dr Farinha, gave their evidence at trial concurrently. There was, ultimately a high degree of agreement between these experts as to their opinions on the effect of the ammonium sulphate on the premises and the precautions which could have been adopted.
7. A large number of documentary exhibits were tendered by the parties at trial, such as photographs, sketches and diagrams, inspection reports, valuation reports, lease instruments, invoices, emails and other correspondence, relating to the course of events which transpired, and as to the physical state of the Warehouse, over the period from around 2004 to around 2016.
8. The parties, in their closing submissions, challenged the reliability and credibility of several of the witnesses. The matters in respect of which the witnesses gave evidence stretched back many years, with the chronological narrative largely commencing in around 2004. Additionally, hundreds of documentary exhibits were tendered by the parties.
9. It is therefore necessary to address the evidence of each of the witnesses who gave evidence and record the court's findings as to issues of credibility and reliability. The court has been assisted in this task by the detailed submissions filed by the parties, coupled with the court's thorough review of the transcript of the trial proceedings, listening again to the portions of the transcript which recorded the contentious evidence of particular witnesses, as well as the notes taken by the court during the course of the trial.
10. These are my reasons in relation to the action and the defendant's counterclaim. My conclusions as to the relief which should be granted is summarised in Part XII of these reasons.

PART II - BACKGROUND MATTERS A. The parties and their personnel

1. The plaintiff operates a bulk haulage and general freight transport business, and also owns a number of commercial properties which it leases to third parties for bulk storage. One of those commercial properties is the Warehouse.
2. The founder and managing director of the plaintiff is Mr Joseph Hawkins, who has had a lengthy history of working in the transport logistics sector in Western Australia, stretching over many decades.
3. In his business, Mr Joseph Hawkins received support from Mr Peter Burns (Mr Burns) over many years. Mr Burns is an accountant. He had been a director of the plaintiff between 1984 and 2013, as well as the company secretary of the plaintiff for many years. He also operated his own accounting business, Burns and Baker. Mr Burns was not called at trial.
4. Mr Joseph Hawkins employed his son, Mr David Hawkins, within the business. Mr David Hawkins had three decades of experience in the transport logistics sector and had a role to manage the haulage and general freight transport business of the plaintiff. The precise extent of his role in relation to the Warehouse was the subject of some debate at the trial, but he at least had a role in chasing tenants for unpaid rent. Importantly, Mr David Hawkins held an appointment as a director of the plaintiff from 2004 until 2016.
5. Mr Joseph Hawkins also employed his daughter, Ms Bosch, as an administrative manager within his business. Ms Bosch worked for Mr Joseph Hawkins for around 20 years until 2022. Ms Bosch had responsibility for attending to the invoicing process and operated the computer accounting software used by the plaintiff for its accounts. Ms Bosch was also responsible for communicating with tenants in relation to rent and rent reviews.
6. As earlier noted, Mr Joseph Hawkins, Mr David Hawkins and Ms Bosch all testified at the trial of the action. Mr Burns was not called to give evidence.
7. The global entity International Raw Materials Limited was founded in 1979 in the United States by Mr Tip O'Neill. That business has, over many years, marketed and distributed fertilisers and other commodities through a global distribution system. It has operations in the United States, Canada, Singapore, Australia, Mauritius, and Madagascar. It has a head office in Philadelphia, Pennsylvania.
8. The defendant is the Australian subsidiary of International Raw Materials Limited.
9. The defendant relevantly had operations in Kwinana Beach, which is the subject of the present proceedings, as well as in Victoria, in South Australia, and in New South Wales. The Australian operations were all similar in nature, consisting of the storage, processing and distribution of a fertilizer, specifically ammonium sulphate.
10. Mr Frank O'Neill worked as the Operations Manager of the defendant's business, based at the Warehouse, from around 2010 through to mid-2014. He had no specific job title, but he accepted that his typical role and duties over that period were appropriately described using the title Operations Manager. That title fairly describes his role, in my view, having regard to the evidence he gave.
11. Mr Goodwin worked at the Warehouse for the defendant as well. He was a general labourer to begin with, and then later took on the role as Senior Manager of the Warehouse.
12. Another employee of the defendant, based at the Warehouse, was Mr Ross Syminton (Mr Syminton). He held the role of General Manager of the defendant, and he had responsibility for developing the Australian business of the defendant. Mr Syminton regularly reported to Mr Tip O'Neill. He worked for the defendant from 1999 until around mid-2010. Mr Syminton was not called at trial.
13. I also mention Mr Donkin, who was the National Sales Manager for IRM in Australia between March 2008 and around 2016. He reported to the General Manager of the business, initially Mr Syminton and then later Mr Dale Thompson who succeeded Mr Syminton in that role.
14. As earlier noted, Mr Donkin was called by the plaintiff to testify at the trial, with the defendant calling Mr Tip O'Neill, Mr Frank O'Neill and Mr Goodwin as witnesses.

1. The Warehouse consists of three Units. Each of the Units were constructed at different times. Unit 1 was the first of the units constructed by the plaintiff, in 1990. In 2000, a decade after Unit 1 was constructed, Units 2 and 3 were constructed by the plaintiff.
2. The Units have been constructed of concrete, steel and Colorbond cladding. The Warehouse is not a purpose built facility for the storage of fertilisers, and certainly not for corrosive fertilisers.
3. Unit 1 is a separate building, relative to Units 2 and 3 which form their own building. Unit 1 also has a separate roof structure.
4. Unit 1 has a floor area of 2,400m2. The unit was constructed with a concrete foundation of around 150mm thickness, with concrete 'dado' walls on three sides and its northern wall being a complete concrete wall.[19] The outside dado walls extend some two metres in height on the inside of the structure, comprised of concrete, with the external structure thereafter consisting of Colorbond steel-clad sheets. The structure was supported by Zincalume steelwork with supporting beams, girts and purlins. The internal walls were concrete. The roof of Unit 1 was made of Zincalume metal sheeting with strips of translucent panels to provide light. The Unit had external access roller doors.
5. Units 2 and 3 were constructed in a similar manner to Unit 1, and were designed by the same architectural firm, namely M Rodic & Associates. I note that the original architect, Mr Milorad Rodic, was called to give evidence at the trial. Units 2 and 3 have a combined floor area of 2,400m2.
6. Within the premises on which the Units are located, but outside the main structure, a weighbridge had been constructed, together with some small structures including a toilet block and an office.
7. In mid-2004, a valuation of the Warehouse was undertaken on behalf of the National Australia Bank. The valuation report included the following description of the structure, which I consider to be accurate, and refers to Unit 1 as Warehouse 1, and Units 2 and 3 as Warehouse 2:[20]

Construction of the warehouses comprises reinforced concrete footings and floor slabs, heavy steel framing, concrete (to 2 metres) and Colorbond wall cladding, steel trusses supporting metal deck roof sheeting with clearlight panels, and metal gutters and downpipes. Truss height is 9 to l0 metres.

Access to Warehouse l is provided by two 7 metre wide sliding doors at the western end and to Warehouse 2 by two 7 metre sliding doors at the western and eastern ends.

Three toilet blocks are provided, each containing two WCs and hand basins. Construction is of concrete panel walls with a metal deck roof and concrete floors. Plasterboard ceilings are provided in two.

Along the southern side of Warehouse is a 60 tonne weighbridge with a small transportable office adjacent.

1. A site plan of the three Units is included in Attachment B to these reasons. The site plan depicts the location of the doors providing access to the individual units (marked in blue), both on the exterior and the interior walls.
2. Over the years, the Units have been used for bulk storage of loose product, principally fertilisers, with the fertilisers being unloaded and loaded using trucks which entered the Warehouse.
3. It is uncontroversial that the plaintiff initially leased Unit 1 to two other companies prior to leasing the unit to the defendant. Both of the previous lessee companies stored a different fertiliser (namely, soda ash) in Unit 1 during their leases. This was the case for the period from 1990 through until February 2005.
4. Units 2 and 3 were also leased to a fertiliser company for the first seven years of their commercial life, being from 2000 to 2007. The tenant company used the premises to store bulk fertiliser, namely mono-ammonium phosphate (often referred to as MAP), diammonium phosphate (often referred to as DAP), and also urea. It was not in dispute that these products were separately stored at the premises over this period, with only one product stored at any particular time.
5. As will be seen, the defendant commenced leasing Unit 1 in March 2005, and then acquired a further lease for Units 2 and 3 which commenced in September 2007.
6. The evidence at trial included numerous photographs of the Warehouse, taken over the period from 2004 to 2016. I have assembled examples of those photographs in Attachment C to these reasons, showing the size and scale of the Warehouse over this period and, importantly, its deterioration. These photographs are only a sample of the evidence led at the trial showing the state of the Warehouse. These photographs may be summarised as follows:

These images were taken by the bank's valuer, Mr Gordon Jeanes, and were included in his valuation report for Unit 1 dated July 2004 (Exhibit 10).

These images were taken by the bank's valuer and were included in his valuation report dated 20 December 2005 (Exhibit 47).

These images were taken by the bank's valuer and were included in his valuation report dated 20 December 2005 (Exhibit 261).

These images were taken by the bank's valuer, but were not included in his valuation report dated 28 May 2012, which is Exhibit 335 (Exhibit 326).

These images were taken by the same valuer and were included in his valuation report dated 2 July 2015 (Exhibit 548).

These are the photographs referred to in the evidence of Mr Goodwin, taken between 2008 and 2013 (Exhibit 168).

1. Mr Frank O'Neill gave evidence as to the general process employed at the premises during his time as the Operations Manager. That process was consistent with the explanation given by Mr David Goodwin in his evidence. The descriptions of the process given by Mr Joseph Hawkins and Mr David Hawkins were not dissimilar to the description given by Mr Frank O'Neill, but I accept the descriptions given by Mr Frank O'Neill and Mr Goodwin are likely to be a more accurate explanation given they worked in the warehouse on a regular basis.
2. The defendant operated Units 1 and 3 as the main storage warehouses for the standard product. Unit 2 was used as the loadout warehouse.
3. The standard ammonium sulphate was a 'fine' product. The other type of ammonium sulphate is described as being more granular in nature and larger than the fine product, around half a centimetre in diameter.
4. Two employees of the defendant, Mr David Goodwin and Mr Jason Little, typically ran the terminal. In general terms, loads of ammonium sulphate would be delivered to the premises on trucks by BHP. The loads would be signed in and weighed on the trucks as they arrived, using the weighbridge. One of the defendant's employees would supervise that process.
5. The arrival of the trucks was scheduled by the defendant, to arrive in a relatively orderly manner with BHP deliveries assigned to particular days. The other employees of the defendant would then supervise the unloading of the aluminium sulphate from the trucks into the units, where it was tipped on to the warehouse floor, at around 25 tonnes per truck. The defendant's employee would operate the front-end loader to push the product into a high pile, typically against the walls of the units and usually no higher than the two metre concrete wall at the edge. The piles of ammonium sulphate would be quite high at its apex, around five or more metres.
6. The trucks would drive into the units for this purpose. The trucks would then be signed out by the first employee, again using the weighbridge. The weighbridge process allowed the business to obtain a full weight and an empty weight, allowing the weight of the product delivered to be determined.
7. As to the loading out process, farmers would attend at the premises and a similar process would be undertaken by the defendant's employees, using the weighbridge to determine the weight of product taken by the customer. One of the employees would be in the warehouse and the other would be manning the weighbridge and office area. The defendant would schedule when customers were to arrive to take delivery of product. Outbound trucks, that is customers taking deliveries, would enter and exit through Units 2 and 3.
8. The defendant's employee supervising the unloading and loading processes would communicate with the driver of the truck using a two way radio system. The defendant would undertake a screening activity within the warehouses. This was done in Unit 2 and was undertaken with a large screening machine, which would separate out the fine product from the granular product, using three decks with three difference sized screens. The oversized product would come off the top screen. The perfectly sized granules would come out from the middle screen, and the fine product would come off the bottom screen.
9. The defendant would then add the fine product into the piles of standard ammonium sulphate. The oversized product was added to the waste product, which sold for much less, and was typically described as 'sweepings'. The granular product would be separately stored within the warehouses, usually at the end of the hopper ready for delivery to customers.
10. The process for loading products into outbound trucks was undertaken using a 12 ½ tonne hopper machine, which was remotely controlled. The ammonium sulphate would be loaded into the top of the hopper and pass through plastic paddles, to be deposited through a chute (through an extended sock) into the trucks.
11. Mr Donkin gave evidence regarding the operations at the Warehouse, which I have referred to above. Mr Frank O'Neill gave evidence regarding the loading process and the operations at the Warehouse. He explained the general practice adopted in relation to the exterior doors to the Warehouse. He testified as follows:

THARBY, MR: When they [the trucks] were coming through, were the doors open or closed?

O'NEILL, MR: Well, what - it depended on the - on the weather. If the weather was nice and there - it wasn't raining, typically, we would leave the door - we would open the doors. They would pull in. If it was raining, we would close the door to unit 3 and then - unless there was a truck right behind it. If there was a constant flow, we would leave the doors open while they were pulling through. Once they were in, we would open the door. When they - when they were full, if it was raining out and the door to unit 2 - the exterior door was closed, we would open it once they were - they were loaded - fully loaded. And then, once they departed - again, if there was no truck waiting to be loaded, we would close the doors. If it was raining, if it was - if the weather was nice and it wasn't raining, we would usually leave the doors open.

THARBY, MR: If it was windy, would you leave the doors open?

O'NEILL, MR: No, we would close the doors if it was windy. If the wind was blowing in such a way that it was coming into the building, we would close the doors - which, typically, it was. So, yes, if it was windy, we would close the doors.

THARBY, MR: If there were trucks coming through and it was windy, you would open the doors for the trucks?

O'NEILL, MR: Correct.

THARBY, MR: Would you - - -?---

O'NEILL, MR: And then we would close the doors.

THARBY, MR: Would you still close the doors if there were trucks waiting to come through after that?

O'NEILL, MR: Yes. If - if there - if there was - and - and we would only have one truck in - depending on what was going on - but for the most part, we would only have one truck in the two units at one time. So if the wind was - was really blowing hard, we would close the doors.

THARBY, MR: Yes?

O'NEILL, MR: When the truck pulled in, we would close the door to unit 3 and then - once the truck was clear and in the building. And then we would close the door to unit 2 until - the extra door until the truck was loaded. Then we would open it and let them exit.

1. The defendant sourced all of the ammonium sulphate stored within the premises from BHP. Over the relevant period, formal distribution agreements were entered into by the defendant with BHP for this purpose.
2. Initially, in July 2004, a Distribution Services Agreement (the BHP DSA) was entered into by the defendant and BHP, with a term of 12 months commencing on 1 January 2004.[21] The contract stated it would be extended in 12 month increments unless terminated.[22] Pursuant to the terms of the BHP DSA, IRM agreed to provide the following services to BHP, namely storage and screening of ammonium sulphate, transporting ammonium sulphate to BHP's customers and subsidiaries, and selling ammonium sulphate.
3. The BHP DSA described the product to be supplied by BHP as:

Granular sulphate of ammonia with the following typical specification:

Nitrogen (N): 21%

Sulphur (S): 24%

Moisture (H2O): less than 0.5%

Size of 2-4mm (Note: the Contractor may be required to screen the product to conform to specifications).

1. The BHP DSA was later varied by the parties, on more than one occasion. It is only necessary to refer to the variation which was effected in February 2010, which I will refer to as the Varied BHP DSA.[23] The term of the Varied BHP DSA was from 1 January 2010 to 30 June 2013, with the parties noting they would endeavour to agree an extension, which they expected to be for a further 3 year term,[24] with the product to be supplied in the same terms as noted in the preceding paragraph of these reasons.

1. The defendant has sought to rely on the Australian Fertiliser Services Association Code of Practice for Members (AFSA Code of Practice) as part of its response to the plaintiff's claims.[25] That document is dated August 2008. I have ruled that a later document, titled 'Fertilizer Handling Code of Practice', dated 14 March 2013, which appears to have been prepared by an entity styled as 'Fertilizer Australia Incorporated', should not be admitted, as explained in Attachment E to these reasons.
2. In my view, the defendant's reliance on the AFSA Code of Practice was misplaced, and I agree with the submissions made by the plaintiff in this regard.[26] The purpose of that document is to establish 'benchmarks for operators and standards of service aimed at enhancing the confidence of clients in the service they can expect to receive from an AFSA member'.[27] The AFSA Code of Practice is directed at preventing or minimising 'harm to the health and safety of human beings, and the broader environment'.[28] The potential for fertiliser use to cause environmental harm, particularly to water quality, is emphasised in the document.[29] Compliance with the AFSA Code of Practice by its members is said be able to 'assist farmers to optimise productivity and minimise environmental degradation'.[30]
3. The AFSA Code of Practice covers the areas of product knowledge, spreading, transport, storage and business ethics. The first three identified areas, and the last, are not relevant to the matters in issue in this proceeding. To the extent to which the 'storage' aspects of the document are relevant, they are limited in scope on my assessment. The AFSA Code of Practice states, as a key principle of 'storage', that:[31]

Members will ensure that all fertilizer products are confined within dedicated storage perimeters, so as to minimize the uncontrolled loss of any products.

1. In furtherance of this principle, the AFSA Code of Practice promotes the practice of having storage facilities located and constructed to 'avoid any loss of fertiliser products to waterways, wetlands and groundwater', and to 'minimise the risk of drift from prevailing winds'.[32] Further, under the heading 'housekeeping', the Code requires that its members 'ensure any spilled fertilizer is contained and disposed of in an approved manner, and where facilities and equipment are washed, all wastewater must also be collected and disposed of in an approved manner'.
2. The defendant observes that the AFSA Code of Practice does not mandate the storage of fertiliser in sealed containers.
3. Ultimately, I consider the AFSA Code of Practice is irrelevant to the contractual obligations owed by the defendant in respect of the repair and maintenance of the Warehouse. Such matters are simply not addressed within the Code. Nor does it seem to me the Code has relevance to the tortious duty pleaded by the plaintiff, given the subject matter of the document.

1. The relationship between the plaintiff and the defendant first began in late 2004, when discussions commenced for the defendant to lease Unit 1 for the purpose of its fertiliser business. As explained below, the parties entered into a formal lease on 14 October 2005 in respect of Unit 1 (being the Original Lease) and, subsequently, in September 2007, the parties varied the Original Lease to include a further arrangement for the lease of Units 2 and 3.
2. It was Mr Syminton who negotiated the lease of Unit 1 on behalf of the defendant. Mr Syminton sent a fax to Mr Joseph Hawkins on 14 October 2004, which followed a discussion between them, which indicated the defendant was interested in receiving an offer from the plaintiff for the lease of a storage facility.
3. The fax sent by Mr Syminton relevantly described the storage requirements of the defendant and its proposed operations, in the following terms, which includes an express reference to the corrosive nature of the fertiliser:[33]

As discussed IRM is interested in an offer from you as follows:

STORAGE

• 2 x 1,200 sq meter units (with an option on a third unit)
• The term should be 2 years with IRM's option to extend two times (ie 2 years + 2 years + 2 years)
• Access to metered 3 phase, clean 100 amp circuits.
• An awning extension to enable loading containers directly outside unit doors.

• The primary product would be ammonium sulphate, a corrosive fertilizer.
• IRM would relocate their skid and wheel mounted equipment and where necessary use contractor equipment to perform activities.
• Use of weighbridge (remotely/manned?)
• Potential use of a loader (with loadrite) for receiving, loading out and screening operations on part and full time basis.
• Use of a pusher bar for high piling
• We anticipate need to tram product from one unit to the next

We could be in position to commence the lease as early as January 2005 however this depends on many factors, not in the least negotiation of commercial terms and conditions for the lease. (underlining added)

1. A document described as an 'Offer to Lease' for Unit 1 was thereafter executed by the parties (Offer to Lease).[34] The Offer to Lease document was:

(a) prepared by the defendant;

(b) initially sent by Mr Syminton to Mr Burns of the plaintiff on 18 January 2005;[35]

(c) revised by Mr Syminton on 21 January 2005 including to include the phrase 'value adding and' before the reference to 'storage of corrosive fertiliser';[36]

(d) executed by Mr Syminton on 4 February 2005; and

(e) then accepted by Mr Joseph Hawkins on 9 February 2005.

1. Clause 2 of the Offer to Lease, as executed, identified the use of the premises as follows, including a reference to the corrosive nature of the fertiliser:
   1. Use of Premises

The Lessee shall use the Premises for the purposes of value adding and storage of corrosive fertiliser, and shall obtain all necessary approvals to comply with all laws, by-laws and regulations from all relevant authorities relating to the permitted use. (underlining added)

1. As will be seen, the phrase 'value adding and storage of corrosive fertiliser' was subsequently incorporated into the formal lease documentation, and appeared in the draft lease documentation prior to that as well.[37]
2. The premises were inspected by the defendant's representatives on 3 March 2005. The inspection was undertaken by Mr Syminton and Mr Steve Parks. It appears as though one inspection was undertaken, although there is a reference to an additional inspection occurring on 13 March 2005, but nothing turns on this issue.
3. In any event, two separate inspection reports were prepared.[38]
4. The first report is dated 3 March 2005 and is presented as a 15 page landscape document with numerous photographs of the premises. The second report is dated 13 March 2005 and is a three page report containing more fulsome descriptions by the authors.
5. The inspection was undertaken to perform a visual examination of the storage facility for any existing damage, areas of concern and to catalogue the results of the examination with the owners of the premises.
6. Both reports identified defects with the property and the building, in the interior, the exterior, the concrete base, roller doors, and the support structure. The defects included, for example:

(a) 'concrete coming away from metal beam at top of retaining wall in corner' in the southwest corner of Unit 1;

(b) 'some metal supports from beam are missing and the corner concrete is badly chipped' in the southwest corner;

(c) 'many small hairline cracks in the wall' along the south wall;

(d) support beams were badly bent;

(e) 'the wall is separated/broken away from metal tab/beam supporting wall in corner' on the southeast corner; and

(f) 'large crack where floor has separated from remainder of floor in [northeast] corner' and 'foundation is slightly washed out'.

1. The substance of the information as to the state of Unit 1, as contained in the inspection report prepared by the defendant, is far more detailed than the valuation report prepared by Mr Jeanes some three or four months before. I have earlier referred to Mr Jeanes' report prepared in December 2004 (Exhibit 10), which was the subject of cross-examination during his evidence.
2. I accept that the assessment of the state of Unit 1 in the defendant's inspection report is more comprehensive than that undertaken by Mr Jeanes, who was admittedly undertaking a broader and more wide-ranging assessment of the premises from a valuation perspective. The detail in the defendant's report is likely to be more accurate than Mr Jeanes' assessment, given the differing purposes for which these assessments were being undertaken.
3. There is some limited documentary evidence that the issues identified in the inspection report were fixed.[39] Mr Joseph Hawkins also gave evidence that all necessary repairs and defects were attended to by the plaintiff before the defendant commenced its tenancy.[40] He gave evidence in chief that the plaintiff 'rectified them all' (meaning all the identified defects), and further explained this during cross-examination, referring to the repairs of some of the beams, girders and purlins within the building, and the replacement of two of the main stanchions. However, I do not find that the evidence demonstrates the defects were wholly remedied before the defendant commenced the lease given that, at the very least, there remained cracks in the concrete.
4. In around March 2005, and prior to the formal execution of a lease, the defendant took possession of Unit 1 and commenced paying rent to the plaintiff.
5. Ultimately, a formal lease instrument was executed by the parties on 14 October 2005, which I have referred to as the Original Lease.[41]
6. The 'Commencement Date' as defined in the Original Lease was 1 March 2005, with an initial term of three years, and so an expiry date of 29 February 2008.[42] The initial annual rent for Unit 1 was $182,400 plus GST, payable by a monthly amount of $15,200 plus GST.[43]
7. On 22 January 2008, the defendant informed the plaintiff that it would exercise the first option to extend the Original Lease for a further term, being from 1 March 2008 to 28 February 2011.[44]
8. The relevant terms of the Original Lease are extracted in Attachment A to these reasons. I mention for now the following aspects of the Original Lease which were the focus of the parties' submissions at trial.
9. Pursuant to cl 3.1 and cl 3.3 of the Original Lease respectively, the lessee was required to pay the 'Rent' at the times prescribed in schedule 1 and pay the 'Outgoings' in respect of the premises. The term 'Outgoings' is defined in cl 1.1(i) of the Original Lease. It includes the following sub-paragraph:

(x) Nothing in this lease shall mean that the lessee is liable to contribute to the cost of the repair of any inherent defect or any structural repairs or any repair or replacement which is of a capital nature.

1. The terms of this sub-paragraph were the subject of some submissions during the trial. It may be observed that the placement of that sub-paragraph as a final provision in the definition of 'Outgoings' is a somewhat unusual drafting approach.
2. The definition clause in the Original Lease also included a final paragraph which did not define any term as such, but expressed a broad statement as to the party which bears the costs of 'lifting the standard of the premises and land'. The paragraph states:

(t) Any and all costs related to lifting the standard of the premises and land to an acceptable standard including site clean up and compliance to existing permits are entirely for the lessors account.

1. Clause 3 is headed 'Lessee's Covenants'. Clause 3.9 is headed 'Maintain and Repair Premises'. Clauses 3.9(a), (b) and (c), which were the subject of submissions from the parties during the trial, expressly state as follows:
   1. LESSEE'S COVENANTS

...

3.9 Maintain and Repair Premises

The Lessee must maintain and keep the Premises in good and substantial repair, order and condition except in the event of damage by explosion, earthquake, aircraft, riot, civil commotion, fire, flood, lightning, storm, tempest, act of God, war, fair wear and tear and any other risk insured against by the Lessor PROVIDED THAT this exception shall not apply if the damage is caused by the neglect, default or misconduct of the Lessee and the Lessor's insurances are invalidated by an act, neglect or default of the Lessee.

The Lessor must maintain and repair the Premises to prevent water ingress.

Any cleaning performed must be to a commercial standard.

The Lessee shall repair and make good any damage (regardless of how minor) which may be caused to the Premises at any time by the installation or removal by the Lessee of any fixtures, fittings, plant or equipment supplied and fitted by the Lessee or on behalf of the Lessor.

1. The second paragraph in cl 3.9(a), as to the prevention of water ingress, was included in the Original Lease at the insistence of Mr Syminton. Mr Joseph Hawkins accepted as much in his evidence.[45] He gave evidence that Mr Syminton informed him that he did not want the ammonium sulphate to get wet.
2. Clause 3.10 is headed 'Use of Premises'. Clause 3.10(a) provides as follows:

Not to use nor permit to be used the Premises for any purpose other than the use stated in Schedule 1 unless otherwise agreed in writing nor to permit nor suffer the use of the Premises for any residential purpose whether temporary or permanent and the use of the Premises shall conform to all laws and local authority laws, lay-laws, regulations or requirements and the Lessee shall obtain and maintain all necessary approval, consents, permits and licences from all relevant authorities for its use of the Premises that are not already in place. (underlining added)

1. Within sch 1 to the Original Lease, item 4 described the 'Use of Premises' as 'Value adding and storage of corrosive fertiliser'. Thus the expressly stated purpose for which the defendant leased the premises was to store not only a fertiliser, but a corrosive fertiliser, and to engage in 'value adding'. This latter concept referred to the process of screening the product on the premises, which I will explain below.
2. Clause 3.17 is headed 'Not to Invalidate Insurance', and provides as follows:

3.17 Not to Invalidate Insurance

Not to do nor suffer to be done any act, matter or thing upon the Premises nor bring nor keep anything therein whereby the insurance on the Premises against damage by fire and other insured risks might be rendered void or voidable or whereby the rate of premium is or is liable to be increased and if the Lessor approves in writing any proposal of the Lessee to add to or increase any insured risk, to pay all additional premiums of insurance on the Premises required on account of the additional or increased risk caused by the use to which the Premises are put by the Lessee and the Lessor shall provide the Lessee with copies of all insurance policies to enable the Lessee to comply with this Clause 3.15 of this Lease.

1. Clause 3.23 is headed 'Yielding Up', and provides that:

3.23 Yielding Up

Upon the expiry or sooner determination of the Term the Lessee must:

(a) Peaceably to surrender and yield up to the Lessor the Premises subject to the other provisions of this Lease, clean and free from rubbish and in good and substantial repair and condition as nearly as possible in the same condition as at the commencement of the Term fair wear and tear excepted; and

(b) Surrender to the Lessor all keys belonging to the Premises including security access cards held by the Lessee whether provided by the Lessor or made or procured by the Lessee for his own use and not to permit these to come into the possession or control of any person other than responsible persons authorised by the Lessee and to use his best endeavours to protect and keep safe the Premises and any property contained therein and to keep all doors and windows securely fastened when not in use.

1. Returning to the use of the premises, cl 5.23 stipulates that the lessor gives no warranty as to the use to which the premises may be put. Clause 5.23 states:

5.23 No Warranty by Lessor as To Use

The Lessor gives no warranty as to the use to which the Premises may be put other than the Premises may be lawfully used as commercial and medical offices and the Lessee accepts the Premises for the Term with full knowledge of and subject to any prohibition or restriction on the use thereof under or pursuant to any law or other statutory authority and if the business carried on by the Lessee at the Premises is permissible only with consent pursuant to any Act or other statutory authority the Lessee shall obtain that consent at his own expense.

1. The defendant took possession of Unit 1 on around 1 March 2005 and commenced paying rent from that point.
2. A review of the rent was undertaken in 2008. On 15 September 2008, the parties executed a short deed in respect of Unit 1, which varied the rental increase provisions in the Original Lease.[46] Mr Joseph Hawkins testified that he executed this deed.[47]
3. The deed included the following material terms, with the 'First Term' being stated to be 1 March 2008 to 28 February 2011:

In the FIRST TERM it has been agreed between the parties that the rental increase is to be phased in over four (4) years as follows:

1. From 1st March 2008 to 28th February 2009, rental of $199,800 per annum plus GST and [sic] plus outgoings,
2. From 1st March 2009 to 28th February 2010, rental of $217,200 per annum plus GST and [sic] plus outgoings,
3. From 1st March 2010 to 28th February 2011, rental of $234,600 per annum plus GST plus outgoings,
4. From 1st March 2011 to 28th February 2012, rental of $252,000 per annum plus GST plus outgoings
5. The covering communication from Mr Syminton indicated that the defendant had not agreed to accept the second further term from 1 March 2011 to 28 February 2014 at that time.

1. The defendant initially approached the plaintiff in late June 2007 to discuss taking the lease over the additional units.[48] Units 2 and 3 were ultimately leased to the defendant from September 2007, with an initial term of five years.
2. No formal lease agreement was executed by the parties in relation to Units 2 and 3. The absence of a formal lease for these units requires some further examination of the evidence.
3. On 10 August 2007, Mr Syminton informed Mr Burns by email that the defendant would not be able to commence payment of the rent 'until such time as the lease is drawn up, agreed and signed therefore would you please act on this as soon as possible'.[49]
4. On 16 August 2007, Mr Burns responded to the effect that he saw no point in having the terms of the lease agreed 'all over again', given the time spent on the initial lease for Unit 1. He indicated that the only changes needed will be in schedule 1 of the lease, which deals with the specifics.[50]
5. Mr Syminton replied on 28 August 2007 to indicate that the defendant was agreeable to using the existing lease and asked that the draft addendum be forwarded for their review.[51]
6. The draft addendum was later supplied to Mr Syminton by Mr Burns on 31 August 2007, being in effect a schedule of the specific terms for the proposed lease.[52] Some months later, Mr Syminton sent a revised copy of the schedule to Mr Burns, on 17 April 2008.[53] Prior to that, in March 2008, the parties had an email exchange about a rent increase.
7. There were further email exchanges between Mr Burns and Mr Syminton in April, May and September 2008, regarding the terms of the lease and the schedule.[54]
8. The final schedule, described as Schedule 3, was initialled by representatives of the parties on around 1 October 2008.[55]
9. Mr Syminton initialled the document for the defendant.
10. There is a further set of initials which appears to be that of Mr Joseph Hawkins. He was, however, somewhat coy in his evidence as to whether the initials are his and his evidence fluctuated on the point. He was initially unsure about this in his evidence in chief,[56] appeared to then accept he signed the document when cross-examined about the issue,[57] but later retreated to again merely accepting the possibility it was his signature.[58]
11. It is certainly clear that Mr Joseph Hawkins received a copy of Schedule 3 in advance from Mr Burns (see Exhibit 175), and that Mr Burns sent further queries to Mr Syminton on 1 October 2008, possibly as a result of a phone discussion between Mr Burns and Mr Joseph Hawkins about the document (see Exhibit 176).[59]
12. It is highly probable, in these circumstances and sequence of events, that Mr Joseph Hawkins then signed the document and it was returned to the defendant.
13. No other lease document appears to have been signed by the parties in relation to the lease of Units 2 and 3, other than Schedule 3, although the communications between the parties make reference to the prospect of a further document being prepared. The schedule in question is a single page document, which addresses the specifics for the 'Land', the 'Premises', the 'Term', the 'Use of Premises', the 'Rent', 'Rent Review Dates', and the 'Further Term'. There is evidence of further negotiations for lease terms, including the exchange of formal lease instruments, later in the chronology, but no further lease was agreed or executed by the parties.
14. In summary, the lease for the relevant premises, being 'Units 2 and 3, 30 Butcher Street, Kwinana Beach', was expressed to be for a five year term commencing on 1 September 2007 and expiring on 31 August 2012, with a further term of five years from 1 September 2012 to 31 August 2017.
15. The use of the premises was expressly described as 'value adding and storage of corrosive fertilisers', being the same terms used for Unit 1.
16. The rent was to be paid monthly in advance at the rate of $105 per square metre plus GST per annum, which equates to consecutive monthly payments of $21,000 plus GST commencing on 1 September 2007 until 31 August 2008. The parties expressly agreed a reduced rent while the premises were vacant from 1 September 2007 to 31 August 2008, at a rate of $90 per square metre.
17. The rent was to be reviewed each year by reference to Australian CPI. The rent review date was expressed to be 1 September 2008 and annually each year on that date.
18. The evidence is that the defendant took possession of Units 2 and 3 from September 2007, but did not occupy the premises until the end of August 2008. During this initial period, the defendant paid the discounted rate of rent, as indicated above.[60]

1. I find that the lease of Units 2 and 3 was governed by the same contract as the lease for Unit 1, as modified by Schedule 3 signed by the parties. It is apparent from the email sent by Mr Syminton on 28 August 2007 that the defendant was agreeable to the lease being governed by the same terms as the existing lease.[61]
2. Undoubtedly, it would have been preferable for all concerned for a formal lease to be executed, but the communications between the parties evidence a consensus that the same terms would apply, as modified by the newly created schedule, initialled by the parties on 1 October 2008.
3. In effect, this amounted to a variation at law of the Original Lease, to extend its terms to encompass all three of the Units within the Warehouse. There are several matters which support the objective characterisation of the arrangement as a variation of the original arrangement, including:

(a) the delineation of the additional document as 'Schedule 3', noting the Original Lease incorporates a 'Schedule 1' and a 'Schedule 2';

(b) the premises were owned by the same entity (i.e. the plaintiff),

(c) the tenant was to be the same (i.e. the defendant),

(d) the same operations were being conducted by the defendant from each of the Units;

(e) the Units form part of the same Warehouse; and

(f) the lease for Unit 1 was continuing, with some years left to run.

1. These matters support a conclusion that the objective intention of the parties was to vary the pre-existing contractual arrangement, not to terminate it, and for that varied arrangement to continue going forward.
2. The foregoing analysis accords with the following observations of the plurality in Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Australia) Pty Limited, which allow for the possibility that an original contract continues in force subject to any variation:[62]

When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts. For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alteration.

1. The determining factor is the intention of the parties as disclosed by the second agreement.[63]
2. I therefore accept the primary characterisation of the leases as pleaded at [6] and [7] of the SOC, and I do not accept the alternative characterisation pleaded by the plaintiff at [8] of the SOC, that there was a separate lease in place for Units 2 and 3. Had that been the case, though, I would accept the plaintiff's contention that a term was implied at law in that separate lease, by force of s 92(b) of the Transfer of Land Act 1893 (WA) (TLA). I accept that such a term would be implied at law in the separate lease, being a covenant that the lessor will keep and yield up the leased property in good and tenantable repair, accidents and damage from storm and tempest and reasonable wear and tear excepted. Given the presence of cl 3.23 in the Varied Lease, and the conclusion I have reached that the lease was varied, it is unnecessary for such a term to be implied, in my view.

1. The evidence discloses there was a policy of insurance in place with Zurich Australian Insurance Limited, being an 'Industrial Special Risks' policy, which identified the plaintiff as one of the insured.[64]
2. The policy with Zurich Australian Insurance Limited covered premises owned by the plaintiff, including the Warehouse, as well as other property owned by the other insured entities named in the policy.[65]
3. The policy was renewed from year to year, relevantly over the period from 2012 to 2016. The policies referred to in the evidence are referred to below, and should be read with the terms of the document entitled 'Insurance Policy Mark IV (Modified)' which contains the wording for Zurich's Industrial Special Risks Insurance (Exhibit 775):

(a) an Industrial Special Risks policy issued by Zurich Australian Insurance Limited for the period 28 February 2012 to 28 February 2013, covering material loss and damage of the insured's property and consequential loss (Exhibit 328);

(b) an Industrial Special Risks policy issued by Zurich Australian Insurance Limited for the period 28 February 2013 to 28 February 2014, covering material loss and damage of the insured's property and consequential loss (Exhibit 367); and

(b) an Industrial Special Risks policy issued by Zurich Australian Insurance Limited for the period 28 February 2015 to 28 February 2016, covering material loss and damage of the insured's property and consequential loss (Exhibit 531).

1. The terms of the policy are extensive but appear to provide coverage for the types of perils identified in cl 3.19(a) of the Varied Lease, such as fire, storms, lightning, explosions and riots.

PART III - EVIDENCE A. Approach to fact finding and inferences

1. I will turn next to the evidence of the witnesses. Before doing so, it is appropriate to say something about the court's approach to fact finding, and the drawing of inferences.
2. In undertaking an assessment of the disputed factual issues arising in the present action, I have necessarily been conscious that the principal events occurred well before the trial of the proceedings, which was conducted in April and May 2024. The principal events took place between 2004 and 2016. This lapse of time became particularly evident when hearing the recollections of some of the witnesses, who were seeking to recall their statements and their personal observations which had been made over a decade before.
3. In order for the court to find that a particular fact has been proven, it is necessary for the court to feel an actual persuasion of the occurrence or existence of that fact before it can be found. Importantly, mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the court.[66]
4. The fallibility of human memory increases with the passage of time, and this may be exacerbated where the parties are drawn into litigation.[67] McLelland CJ in Eq made the following pertinent observation in this regard:[68]

... human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

1. Accordingly, in undertaking the assessment of evidence in this matter to the extent it relies upon the recollection of events which occurred many years ago, I have considered it appropriate to place significant weight on the contemporaneous documents and objective conduct, and upon inferences which can properly be drawn from that evidence: Fazio v Fazio.[69]
2. As Smith J observed in Siah v Wong,[70] contemporaneous, or near contemporaneous documents provide more valuable and revealing information than what may be flawed attempts at recollection of those facts by witnesses, in particular those witnesses with an interest in the outcome of the litigation.
3. However, the foregoing does not equate to an assessment that the oral evidence of the witnesses serves no utility. Such evidence remains relevant, as explained in general terms by Leggatt J (as he then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd:[71]

...the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose - though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.

1. Two persons, who featured in many of the events identified by the parties, and authored several important pieces of correspondence, were not called to give evidence at trial. I refer to Mr Burns and Mr Syminton. The plaintiff invited the court to draw a Jones v Dunkel[72] inference in respect of the defendant's failure to call Mr Syminton at trial.[73] Similarly, the defendant invited the court to draw such an inference as a result of the plaintiff's failure to call Mr Burns.[74]
2. It must be remembered that the rule in Jones v Dunkel cannot be used to fill gaps in the evidence or to convert conjecture into suspicion. The rule permits an inference to be drawn that the evidence of the witness would not have assisted the party - not that the evidence would have been adverse to the party. The rule also operates to enable an unfavourable inference to be drawn more comfortably where the uncalled witness appears to be in a position to cast light on whether the inference should be drawn.[75]
3. The rule was explained by Pritchard and Vaughan JJA in Knell v QAV Pty Ltd[76] as follows:

[96] Two consequences may flow from the unexplained failure of a party to call a witness who that party may be expected to call. First, the court may infer that the evidence of the absent witness would not assist the case of the party. Second, the court may draw an inference unfavourable to the party with greater confidence. In the latter case the inference must already be available on the evidence. Also, the uncalled witness must be one who appears to be in a position to cast light on the facts relied on as the ground for the inference. However, the rule in Jones v Dunkel does not permit an adverse inference that the uncalled evidence would have been positively damaging to the party. The absence of the witness cannot be used to make up any deficiency of evidence.

[97] Accordingly, the rule in Jones v Dunkel is accepted to be an application of the maxim that evidence is to be weighed according to the proof which it was within the power of one side to have produced and in the power of the other to have contradicted. (citations and footnotes omitted)

1. Mr Syminton was not called by the defendant to give evidence. It will be recalled that he held the role of General Manager of the defendant from 1999 until around mid-2010, and regularly reported to Mr Tip O'Neill. The plaintiff invited the court to infer that the evidence of Mr Syminton would not have assisted the defendant's case.[77]
2. The evidence led at trial was to the effect that Mr Syminton is a resident of New Zealand and presently works for a competitor of the defendant. That said, Mr Tip O'Neill accepted in cross-examination there was nothing to prevent Mr Syminton from being called to give evidence.[78] It was open to the defendant to call Mr Syminton, even though he was a resident of New Zealand. There is facility to serve a subpoena in New Zealand with the leave of the court.[79]
3. I accept that Mr Syminton had an important role in the events which were the subject of these proceedings. He was the principal representative of the defendant during the negotiations with the plaintiff concerning the leases and during a substantial period of the defendant's occupation of the premises. I accept the submission of the plaintiff that the failure to call Mr Syminton has not been explained and this is a case in which it would have been appropriate for him to be called as a witness at trial.
4. Mr Burns was not called by the plaintiff at trial. He was a director of the plaintiff for many years, from May 1984 to March 2013. He was also company secretary from 1991 to March 2013. He had a role as the accountant for the business as well.
5. I accept the defendant's submission that Mr Burns is apparently alive and well, that he still speaks to Mr Joseph Hawkins, and remains a witness who may fairly be said to be in the plaintiff's camp.[80] I also accept that Mr Burns could well have given evidence in relation to material matters in the proceedings, in particular the letter from the defendant to the plaintiff dated 14 October 2004, the negotiations for the lease for Unit 1, the circumstances leading to the preparation of the document entitled Schedule 3 for Units 2 and 3, and the request sent to the defendant by Mr Burns in July 2006 for the chemical specifications for ammonium sulphate.
6. I accept the submission of the plaintiff that the failure to call Mr Burns has not been explained and, given the positions held by him and the evidence pointing to his role in material matters, this is a case in which it would have been appropriate for him to be called as a witness at trial. The failure to call Mr Burns renders it appropriate to infer his evidence would not have assisted the plaintiff on the matters I have identified and that any inference that may arise may be more comfortably drawn. I take the same approach in relation to the evidence of Mr Syminton.

1. Mr Joseph Hawkins is an elderly man, who gave his evidence at trial when he was approaching 79 years of age. During the course of the principal events which occurred in this matter, which took place between 2004 and 2016, Mr Hawkins was between 59 and 71 years of age.
2. Mr Joseph Hawkins has been a businessman for many decades, operating in the transport, haulage and property sectors. No evidence was led as to his qualifications and so I proceed on the basis that he holds no tertiary qualifications. He proudly observed on several occasions he was no 'bookworm person'.
3. The impression I obtained from seeing Mr Joseph Hawkins give his evidence, and from the contemporaneous communications he sent at the relevant time, is that he was, and is, a dogmatic and forthright businessman. I did not form the impression that he was overbearing in any way, as to the manner in which he conducted himself in business, but he certainly held strong views about issues concerning the Warehouse from which he would not have easily been shaken. One of these issues was the matter of liability for maintenance of the building itself.
4. From an early point in time, Mr Joseph Hawkins formed the view that it was wholly the responsibility of the defendant to maintain and repair the building, and not the responsibility of the plaintiff owner to assume liability for any such matters, including those matters connected with water ingress into the building.
5. One of the file notes taken by the defendant's personnel at the time recorded an observation made by Mr Joseph Hawkins to them, which I accept, to the effect that he was emotionally attached to the building. If that was so, and Mr Hawkins accepted as much in his evidence,[81] it was curious indeed that he nonetheless seemed wholly unprepared to take appropriate steps himself to repair the building in a manner which would extend its commercial life, and was concerned to minimise his own expenditure on the Warehouse. His conduct after 2008 is consistent with a man who intended to stick to his guns to ensure the defendant paid for all repairs to the building on the basis he attributed fault to them, whether or not by virtue of the contractual obligations.
6. Further, Mr Joseph Hawkins displayed a disinclination or reluctance to pay certain costs associated with the ownership and management of the Warehouse. For example, in his evidence, he questioned the need to spend money obtaining a valuation of the property, although that would be quite a usual required step.[82] Mr Hawkins did not apply the insurance payout funds he received in 2016 towards the maintenance or repair of the property, at least not at the time he received those funds.[83]
7. It is also curious that Mr Joseph Hawkins took no steps, at almost any stage, to further acquaint or inform himself as to the nature of ammonium sulphate and the possible extent of the corrosive effects of that product. He was plainly on notice from the communications from the defendant in 2004/2005 that the product to be stored by the defendant was corrosive. He refrained from making any enquiries about this issue until 2006, when he asked for the chemical composition and the material safety data sheet (MSDS), which appears to have been because of some corrosion damage observed to the concrete in Unit 1. He was promptly provided with information by the defendant, but took no steps thereafter to take advice on the basis of that information. He proclaimed in evidence he was not a 'chemist'. Thereafter, knowing these matters and not having taken the additional steps to which I have referred, Mr Joseph Hawkins then permitted the lease to be extended to Units 2 and 3, from around September 2007.
8. Unfortunately, Mr Joseph Hawkins had a tendency to lapse into broad generalisations regarding matters and offer speeches in his evidence, rather than listen to and answer the question. The court had to remind him several times to give responsive evidence. I did not attribute this to any deliberate dishonesty on his part but rather a lack of care with his evidence, and a desire to tell his story in the witness box.
9. It must also be noted that his memory was relatively poor, and without the aid of documents before him, and being reoriented as to dates, he was unable to accurately recall dates and events. The combination of poor memory and over generalisation meant there were occasions where he was required to correct his evidence once his attention was drawn to specific matters.
10. Overall, it is necessary to treat Mr Joseph Hawkins' recollections of matters with some care and to recognise that his evidence on several matters has been clouded by his dogmatic attitude to the defendant's liability and the antagonism he had towards the defendant and its representatives, which only grew over time.

1. Mr David Hawkins is the son of Mr Joseph Hawkins.
2. He has some 35 years' experience in the transport logistics sector in Western Australia, including around 20 years' experience working with the plaintiff as a manager, primarily in the bulk haulage and logistics side of the business.
3. He also held an appointment as a director of the plaintiff for a considerable period, from 16 July 2004 to 18 May 2016.[84] The period of his appointment as a director spans almost the entirety of the period in which the defendant was the lessee of the Units in the Warehouse.
4. During the trial, the plaintiff gave notice it intended to lead additional evidence from Mr David Hawkins, beyond those evidentiary matters identified in the outline of evidence filed by the plaintiff which is dated 7 December 2022. The defendant objected to this course. The court resolved that objection on 23 April 2024 (ts 607 - 609), indicating in part that the court was reluctant to shut out the plaintiff from leading such evidence if there were mechanisms by which any prejudice to the defendant could be reduced. The mechanisms which were implemented by the court, in these circumstances, were to require the plaintiff to serve on the defendant all documents to which reference would be made during the evidence of Mr David Hawkins, and also to delay the taking of evidence from Mr David Hawkins until a later point in the trial.
5. Mr David Hawkins ultimately gave evidence on 29 April 2024, and was cross-examined for less than an hour and half. The cross-examination was not lengthy by any means, but it exposed significant shortcomings in the credibility and reliability of his evidence. Indeed, in its closing submissions, the plaintiff conceded that Mr David Hawkins' evidence during cross-examination was 'less than satisfactory', although the plaintiff further submitted that his evidence was largely immaterial.[85]
6. On my assessment, Mr David Hawkins was a most unreliable historian and I would not accept his evidence on contested matters unless specifically corroborated by contemporaneous documentary material. Even accepting that Mr David Hawkins did not have particular responsibility for the leasing side of the family business, he did not make a genuine effort when giving evidence to answer the questions posed to him which were likely to be within his knowledge, or which can reasonably be expected to be of importance to him, given his role as a director.
7. Additionally, I do not regard him as a credible witness. He was prone to giving answers in a non-responsive fashion, preferred to lapse into giving a speech about matters, and was combative and argumentative. During Mr David Hawkins' evidence, it was necessary, more than once, for the court to remind him to listen to the question and answer that question. Further, as the defendant correctly submitted, Mr David Hawkins also gave unprompted and self-serving evidence which was intended to assist the plaintiff's case.[86]
8. The interchange at ts 870 is one of several examples of Mr David Hawkins' desire to offer his own opinion, rather than respond to a proper question asked in cross-examination, but the transcript is littered with other examples:

THARBY, MR: Can the witness be shown exhibit 53, please. This is an email sent to Mr Ross Syminton at IRM copied to [Mr Joseph Hawkins], so it wasn't sent to you. Mr Burns writes:

Ross, so that we can assess the effect it is having on the concrete floor at the above site, would you please provide the chemical composition specifications of the fertiliser that is being stored there.

It continues. Do you recall seeing - - -?

D HAWKINS, MR: Well, I haven't seen - I haven't seen the email or didn't - it wasn't addressed to me, but I would - - -

THARBY, MR: No. Were you aware of - - -?

D HAWKINS, MR: I would assume by what they've written there is they're trying to protect the concrete, or make sure it's not going to be eaten away.

THARBY, MR: You weren't aware of this email at the time. Were you aware of the inquiry generally?

D HAWKINS, MR: No.

THARBY, MR: Were you aware of IRM's - - response?

D HAWKINS, MR: I understand that the - the fertiliser was eating the concrete and the steel away from my visits.

THARBY, MR: That's not what I asked, Mr Hawkins. Were you aware of any response from IRM?-

D HAWKINS, MR: No.

1. Mr David Hawkins harboured a strong opinion that the defendant company was legally responsible for the corrosion damage to the Warehouse, despite purportedly having no knowledge of the terms of the lease instruments. In his own words, he described his memory as being 'pretty sour from the building',[87] which I took to mean he held rather negative views about the conduct of the defendant, arising from the damage to the building.
2. It was also evident that Mr David Hawkins had a strong bias against the American representatives of the defendant , seeing a real divide between the Australians on the one hand, and the Americans on the other. This was particularly evident from the brief email exchange with Mr Tip O'Neill on 1 July 2016,[88] in respect of which he was cross-examined.
3. For example, in his email to Mr Tip O'Neill, Mr David Hawkins stated that 'Australians don't like being taken advantage of, especially when it comes from so called allies' and he rhetorically asked Mr O'Neill, 'How stupid do you think Australians are?'. Mr David Hawkins also stated in that email, 'I personally believe you deserve to be prosecuted for the environmental damage you are doing'.
4. That email exchange resulted from a demand from Mr Tip O'Neill that the plaintiff should not bring farm waste onto the site, given the contamination risk to the fertiliser. This demand was borne out of a mistaken understanding on Mr O'Neill's behalf. As events transpired, Mr Tip O'Neill appreciated this was a false alarm, and he extended an apology to Mr David Hawkins to 'repair transpacific diplomatic damage'. However, the reaction from Mr David Hawkins in his email exchanges is revealing, demonstrating the strong degree of animosity Mr David Hawkins held towards the American representatives of the defendant.
5. As to the substance of his evidence, although Mr David Hawkins was a director of the plaintiff for almost 12 years, he sought to distance himself from any particular knowledge of the affairs of the plaintiff's business and tended to speak in generalisations. He was plainly a director of the business for a lengthy period, but displayed a selective recollection of matters when cross-examined, which reflected poorly on him.
6. In the email exchange on 1 July 2016, Mr David Hawkins expressly stated that he had 'no authority to discuss J.J. Hawkins & Co Pty Ltd affairs' with Mr Tip O'Neill, which is somewhat curious, given he had been in communication with the defendants about collecting rent in March 2016 and had been a long-serving director until May 2016.
7. Mr David Hawkins testified that he was not a regular visitor to the Warehouse, but did observe the premises at different times over the material period.
8. While Mr David Hawkins explained that he was not involved in the arrangement for the leasing of the Warehouse to the defendant, he certainly accepted he had an involvement in the leasing of the Warehouse after the defendant had left the premises. He gave evidence as to the arrangements between the plaintiff and the business 'Dirty Deeds Bin Hire', in respect of which the plaintiff received lease payments of $16,390 over the period from 30 June 2018 to 31 December 2019.[89]
9. Similarly, Mr David Hawkins had an involvement in the lease arrangements between the plaintiff and CBH (WA) Pty Ltd (CBH), which he testified were entered into in around February 2024. The two leases, which are undated and unexecuted, were entered into in respect of Units 2 and 3.[90] The instruments, which are detailed and lengthy, indicate the lease periods for Units 2 and 3 were from 1 February 2024 to 30 June 2024.
10. I should say that, ultimately, I did not regard the fact of entry into the leases with CBH, or the terms of the leases, as material to the resolution of the issues in dispute in this proceeding.
11. At the time of trial, the leases had not been executed, but it is evident that CBH had taken possession of Units 2 and 3.
12. Mr David Hawkins explained that the leases were taken by CBH to enable the storage of fertiliser products in the Units, which he described as 'NPK' and 'DAP'. These fertilisers are 'NPK CZ (Compound)' and 'Diammonium Phosphate' according to the terms of the unexecuted leases. The volumes stored by CBH were around 20% of the capacity of Units 2 and 3, according to Mr David Hawkins.
13. During Mr David Hawkins' evidence in chief, a copy of an email from CBH to Mr David Hawkins dated 19 April 2024 was sought to be tendered.[91] There was objection to the hearsay nature of the content of the email, although the defendant accepted the email could be admitted as evidence that it was received. The court has ruled the document could be admitted as a business record, notwithstanding the hearsay objection.
14. Mr David Hawkins' evidence as to his knowledge of the corrosive nature of ammonium sulphate was self-serving, in my view, to the extent he sought to testify that he did not know of its corrosive nature until 2016.[92] Mr David Hawkins testified that ammonium sulphate was, to his knowledge, 'highly corrosive',[93] but he rejected the contention he had known this for the best part of 35 years.
15. Mr David Hawkins' evidence (at ts 870) regarding the concrete 'being eaten away' and his attempt to distance himself from the email sent by Mr Peter Burns to the defendant on 16 July 2006 (Exhibit 53), a time at which Mr David Hawkins was a director, cast real doubt on his insistence he did not know of the corrosive effect of the fertiliser until years later. His evidence in this regard is highly implausible, in my view. Towards the end of his evidence, he testified that 'all fertiliser is corrosive', the real question is the 'extent' of the corrosive nature, although he corrected that by observing that urea was not corrosive.[94]
16. Mr David Hawkins accepted that the plaintiff had trucked ammonium sulphate for another customer on three or four occasions, although his evidence on this issue was vague at best.[95]
17. Mr David Hawkins gave evidence regarding the storm damage to the Warehouse. He testified he was aware there had been damage to the premises from a storm in around May 2015, and initially testified that he did not personally attend the premises to inspect that damage. His evidence that the damage shown in Exhibit 535 was not 'storm damage' was hard to fathom - one of the photographs clearly shows several panels missing from the northern side of the building.
18. He was cross-examined in relation to an insurance claim made by the plaintiff following the damage from the storm. Initially, Mr David Hawkins sought to distance himself from any knowledge of that insurance claim. I do not accept his evidence in this regard. He gave his evidence on this issue in a combative style. He had some involvement, albeit on the periphery, and indeed he met one of the engineers on site to inspect the premises on 8 May 2015, and was asked by his father to obtain a quote for repairs. This is evident from the email chain between Mr Joseph Hawkins and the representatives from Fremantle Engineering (Exhibit 547), which was later on-forwarded to Mr David Hawkins. That chain begins on 8 May 2015, with the following advice to Mr Joseph Hawkins from Fremantle Engineering:

Hi Joe, I went to Butcher Street this morning and met Dave onsite and talked through the issues and looked around the building.

It seems that the current condition is from 20 years of use and that the deteriation [sic] has sped up in recent years as water has been getting inside more and more. I would not expect the building to survive another 20 years without massive expenditure and I would not think that would be sensible.

My recommendation is to replace like for like with a few low cost improvements. So my description of what to do on the North face (and progressively around the rest of the building) is

1. Remove existing cladding and girts and replace like for like
2. Spot rust repairs as needed to main frame- chip off rust and paint with rust killer and zinc primer (epoxy if you specify)
3. Replace gutter with a more appropriate profile and with flutes on the front to stop any overflow into the building
4. Increase the number of downpipes to 10 but change to 100mm plastic, clip to building at each girt (5 per downpipe)
5. Flashing from the bottom girt over the concrete panel inside to stop any settling on top of the panel
6. Simple flashing on top of each girt to give a small angle to stop product/water settling on each girt- this is not a perfect solution but will significantly reduce volume of product/water.

My estimation on pricing is between $7k and $10k per bay (plus GST) on the North face - 10 bays in total.

If you would like to discuss this further I would be happy to meet you at Butcher Street and work out a plan to suit everyone concerned. if you have any advice or previous experience that would improve the plan I would be happy to hear it.

1. A subsequent email from Fremantle Engineering to Mr Joseph Hawkins, on 25 May 2015, included a rough pricing for the repairs.

Hi Joe, The pricing for repairs at 30 Butcher Street Kwinana is as follows

Remove all external cladding, gutters, flashings, girts, etc and replace with similar materials - $550k

Remove and replace all roof sheeting, support purlins, etc and replace with similar materials· $1.3 million

Sand blast core structure and repaint with appropriate paint $300k

Total $2,150,000 plus GST

This pricing comes with a large dose of qualification as the structure is almost certainly in a worse condition than is possible to evaluate until the claddings are removed so it would be sensible to budget for a 25 % increase to allow for and serious structural repairs that may be necessary.

1. Mr Joseph Hawkins forwarded the above emails to his son on 19 June 2015 and asked him to contact Fremantle Engineering to obtain a quote for the 'storm damage'. Mr David Hawkins testified he could not recall whether he contacted Fremantle Engineering in response to the email from his father.
2. Mr David Hawkins was also cross-examined about the correspondence from the defendant's solicitors concerning the withholding of rent, and related correspondence, which commenced in around July 2015. His evidence on these matters was not given in a fulsome manner - he was focused on asserting the plaintiff's position in response to counsel's questions, rather than providing a direct answer to the questions.[96] I do not accept Mr David Hawkins' evidence that he had not seen the correspondence from the defendant's solicitors - that is highly implausible in the circumstances. His evidence that he was unaware there was a dispute between the parties as to who was liable for repairing the premises is also highly implausible, and I do not accept his evidence to this effect.[97]
3. At one point, in March 2016, Mr David Hawkins emailed Mr Tip O'Neill regarding the damage to the premises, describing both Tip and Mr Joseph Hawkins as 'being ostriches with heads in the sand'.[98] The email reveals that Mr David Hawkins was aware there was a dispute between the parties. In that email, he said that the ammonium sulphate 'no doubt caused the problem with the building' and then said:

...whilst you and Joe are adamant that there is no solution, it makes it hard to find an amicable outcome.

1. At the time, Mr David Hawkins was evidently frustrated that the parties (including his father) were not willing to negotiate and find a way forward.
2. Mr David Hawkins testified that he understood BHP had paid for or reimbursed the defendant for the expenses it incurred in relation to the Warehouse, which understanding appeared to be based on a draft document prepared by the defendant. He was cross-examined about this issue, and was shown correspondence between the solicitors which indicated that the draft document contained a typographical error.[99] I accept the document contained an error. When shown the documentation, Mr David Hawkins dissembled on the issue.[100] His evidence on this issue should be given no weight, and undermined his credibility generally.

1. Ms Bosch was the administration manager for the plaintiff. She was employed by the plaintiff from 2002 through until March 2022, roughly for a period of around 20 years. Ms Bosch is the daughter of Mr Joseph Hawkins. Her primary responsibility was invoicing the customers of the business, working with a team of around five staff members, which included responsibility for invoicing the defendant in respect of the lease arrangements for the Warehouse.
2. Ms Bosch's evidence was limited in scope. She gave her evidence in a clear manner and sought to assist the court. I accept her evidence.
3. Ms Bosch gave evidence in respect of the outstanding accounts schedule (Exhibit 818) which was generated by the accounting system maintained by the plaintiff.[101] That schedule records, according to the plaintiff's accounting system, the rental periods in respect of which the defendant had failed to pay rent to the plaintiff. The schedule commences in January 2014 and runs through to October 2016. The schedule includes a total of $565,158.07 in outstanding rental payments.
4. An annotated version of the outstanding accounts schedule was created by Ms Bosch (Exhibit 687), which was updated on 9 August 2018. The total of outstanding payments in the annotated schedule is $543,255.30. The amounts included GST.
5. In her evidence in chief, Ms Bosch explained that she calculated a rental increase for the rent due by the defendant in respect of the Warehouse. She explained that was a flat increase of 5%. The defendant objected to that increase, after which Ms Bosch applied a CPI increase.[102] Ms Bosch prepared rental increase schedules for the three Units, being Exhibits 765, 766 and 767.
6. During cross-examination, Ms Bosch testified that she used both the Australian CPI and the Perth CPI when calculating the rent increase, as she did not have a copy of the lease at the time she performed the calculation. Ms Bosch did not attempt to calculate the market rent at any point in time.
7. Ms Bosch had responsibility for producing a schedule of the repair costs paid by the plaintiff in respect of the Warehouse, current as at 24 February 2022 (Exhibit 718), and a schedule of the capital works paid for by the plaintiff (Exhibit 719). The capital works identified in the schedule are new items of equipment installed on the property, as well as some repairs and electrical work.
8. The repair costs schedule records a total of $91,960.37 (inclusive of GST) and the capital works schedule records a total of $72,666.80 (inclusive of GST).
9. One of the invoices included in the repair costs schedule was issued by the Onsite Rental Group dated 19 March 2019 (Exhibit 694). The invoice is for an amount of $457.09, stated to be for the hire of a scissor lift which was delivered to the Kwinana Beach address in 2019. The invoice itself does not explain the purpose for which the scissor lift was used, but there is a handwritten notation on the invoice from Ms Bosch, which states 'Used to secure sheeting'. During cross-examination, Ms Bosch accepted she had no personal knowledge of the purpose for which the scissor lift was hired.[103] Ultimately, I have given little weight to the handwritten statement, but in the end, this invoice has not proven to be critical to the conclusions I have reached in this action.

1. Mr Donkin was the National Sales Manager for the defendant in Australia, from March 2008 to around 2016. He was called as a witness by the plaintiff. He gave his evidence in a clear and precise manner, and he recognised that his recollection of events stretching back a decade was not precise. On my assessment, Mr Donkin sought to assist the court with his evidence as best he could and provided fulsome responses to counsel's questions. I accept his evidence.
2. Mr Donkin has a qualification equivalent to a Bachelor of Agricultural Science degree, together with an Associate Diploma in Business Management.
3. In his capacity as the National Sales Manager, Mr Donkin reported to the defendant's General Manager. In his role, he travelled to the sites operated by the defendant in Australia, in New South Wales (located at Parkes), in Victoria (at Lara, near Geelong), in South Australia (located at Port Adelaide), and the premises in Kwinana Beach, Western Australia. He was based in Western Australia, in close proximity to the Warehouse. Mr Donkin was responsible for dealing with the customers who purchased ammonium sulphate from the defendant, who then sold the product to farmers.
4. In relation to the ammonium sulphate, Mr Donkin testified that IRM purchased that product in Western Australia from BHP under a contract.
5. On a regular basis, Mr Donkin would travel to the Warehouse to inspect the premises. He indicated that he would try to do this about once every month. He wanted to see the quality of the product coming in and how it was being handled, given he was the conduit dealing with the customers and the farmers. Mr Donkin provided some general evidence as to his recollections of attending the Warehouse and inspecting the premises, which may be summarised as follows:

(a) the doors to the Warehouse were kept open while the premises were in operation;

(b) he attended at the Warehouse on occasions when it was raining and observed the wheels of the trucks would bring the water inside the Warehouse;

(c) if the rain was coming from the southwest, the rain would also come into the Warehouse around 2 to 3 feet inside, but not much more than that usually;

(d) the defendant had a contract with BHP, for BHP to deliver ammonium sulphate to the premises by trucks as a bulk product in crystal form (which was effectively a waste product from BHP);

(e) the trucks, which were 25 tonne tipping semitrailers, would dump the ammonium sulphate on the floor of the Warehouse upon delivery;

(f) the ammonium sulphate was often at an ambient temperature but could be delivered at a hotter temperature, up to 40 degrees Celsius;

(g) the product is quite fine, and would be crushed down further by the Caterpillar front-end loader moving across it in the Warehouse, and quite often the dust would move around the Warehouse behind the loader or as a result of the wind coming through the Warehouse, and he observed occasions on which the dust would exit the Warehouse and head to the nearby railway lines;

(h) the dust was not created through the dumping process on to the Warehouse floor, but rather from the process of being crushed when the loader was moving around, when the ammonium sulphate was being lifted or scooped off the floor by the loader, and through the use of the screening process;

(i) Mr Donkin described his recollection of the dust in the Warehouse in the following terms:[104]

Well, by the end of each day's activities, especially when it was high production, like the screener was going, trucks moving in and out constantly and product moving from Unit 1 to be processed, the level of dust could rise quite high. And you could end up with a film on top of the screener or the elevator or the loader up to two or three mils thick.

(j) at the end of the day, the workers in the Warehouse would sweep up the fines product to the extent they could, and within reach, which meant that the dust on certain areas was not swept at the end of the day, such as on top of the screeners or high up in the Warehouse;

(k) the Warehouse would be very busy from February through to the end of July each year, selling ammonium sulphate from the Warehouse, with there being low stock by the end of this period;

(l) the business would then begin building stock back up in August, September and October when the demand from farmers was fairly low;

(m) the defendant had imported a large gravity shaker table, which operated using electric motors and was used within the Warehouse to screen the ammonium sulphate, with the larger product staying above the screen, and the finer product falling below to the ground;

(n) he described the screening process as quite slow; and

(o) following the screening process, the granular product would be stored in one area of the Warehouse (usually at the end of Unit 3), with the finer product being stored elsewhere (usually in Unit 1 or Unit 2).

1. Mr Donkin recalled that he had noticed rust forming on beams and other areas of the Warehouse within years of commencing with the defendant. He explained that water would come into the Warehouse through small holes in the roof and side walls, which would damage the product and lead to puddles of water forming on the floor. His evidence was that the holes had themselves been caused by corrosion. During cross-examination, Mr Donkin recalled the circumstance in around July 2008 in which rain leaked through holes in the roof, creating wet patches on the floor of the Warehouse, which led to a request from the defendant to Mr Joseph Hawkins to have the roof repaired.[105]
2. The photographs taken at the time show around 12 separate instances of water leakage into the Warehouse, creating wet patches on the concrete floor. In the written communication from the defendant to Mr Hawkins, a plan of the Warehouse was included, headed 'Map of holes in roof of 30 Butcher Street, Kwinana Beach', showing a multitude of holes in the Warehouse roof.
3. Mr Donkin testified that the north end of the Warehouse had a significant number of panels missing in the period before he left the business, which he estimated was in around May 2015. This was clearly evident from a photograph he took at the time (Exhibit 776) which he verified in his evidence in chief. During cross-examination, Mr Donkin recalled that the panel sheets fell off in winds 'because of the rust' and also during a storm that came through the area just before the photographs were taken.[106]
4. As to the storm in May 2015, Mr Donkin made personal observations of the Warehouse consistent with the photographs forming part of Exhibit 541, which was an internal email sent on 18 May 2015 from Mr Dale Thompson at the defendant, the then general manager, copied to Mr Donkin, describing the 'second winter storm of the season'. The email explained:

We had our second winter storm of the season on the weekend and we lost more sheets off the North wall. Pictures enclosed.

We had up to 4 inches of rain on Sat and Sun. The heavy rain twisted the gutter and a large amount of water was diverted into the shed.

Unit 2 was flooded with 2 inches of water standing in some parts of the shed. The screened WP has sustained some water damage. Luckily we had 400 mt of screened product in unit 3, so we were able to load out today. We had a vacuum truck in and sucked up about 6000 liters [sic] of water, so the shed is now drying up. Once the bottom of the pile has dried out we will decide how much needs to be conditioned or even rescreened. There will likely be upwards of 20 mt that has sustained water damage.

Unit 1 and 3 survived this storm ok as the wind was from the North West.

We have removed the damaged guttering and loose sheets, but now have an issue where water will be running off the roof and possibly inside the walls each time it rains as most of the wall near the T2 is now non-existent.

I'm not sure how long we can continue operating in these conditions before we have a major incident. It's getting to the point that we may have to stop load outs during rain events as product will get wet while filling trucks. Working on top of containers while it's raining will also become dangerous when the winds pick up through the opening in the wall and the tops of the containers are slippery.

Please advise on our plan to rectify this issue that has been dragging on too long.

1. The photographs attached to the email show significant water spread across the floor of the Warehouse and the missing panels on the side of the Warehouse. Mr Donkin testified that the water damage affected the quality of the ammonium sulphate, it being important to keep the product dry.[107] Mr Donkin also gave evidence that in late 2016, further product held in the Warehouse was damaged by water ingress, which could only be sold at a reduced rate because of the lower grade.[108] Documentary evidence of the sales made by the defendant at the time show that the standard ammonium sulphate was being sold at the time for $165 per metric tonne (which appears to have been a discount from a standard price of $185 per metric tonne),[109] while ammonium sulphate sweeps (being the lower grade product) was sold for $90 or $40 per metric tonne.[110] Mr Donkin testified that the lower price for the sweeps was a result of the product being damaged.[111]
2. Mr Donkin gave some general evidence as to the differences in the structures at the defendant's premises in Australia, and the level of maintenance at the premises.
3. Mr Donkin was asked about the use of tarpaulins to cover the ammonium sulphate in the Warehouse. Mr Donkin's evidence was that tarpaulins were not used by the defendant nor by other businesses which stored ammonium sulphate, based on his experience and observations. He explained that this was because it was a bulk product[112] and because the product was being handled every day.[113] Indeed, Mr Donkin's observation and experience was that tarpaulins were not used by fertiliser companies to cover any types of fertilisers, except perhaps when used on a farm by a farmer for long term storage to protect from moisture.[114]

1. Mr Rodic is a registered architect and an architectural consultant. He prepared the initial architectural drawings for Unit 1 and gave evidence that he has done work for Mr Joseph Hawkins for more than 20 years.
2. The substance of Mr Rodic's evidence was that, in August 2019, he provided a written quote to Mr Harrison, the plaintiff's building expert, for his services as an architect to prepare drawings and to attend to approvals and permits for the proposed reconstruction of Unit 1 and to remediate Units 2 and 3 and the ablution building on the premises.[115] Mr Rodic also provided an estimated timeframe for the project and subsequently provided Mr Harrison with a revision of his fees for Unit 1.[116] He testified that his quote was reasonable, in his opinion.
3. During cross-examination, Mr Rodic's attention was drawn to Exhibit 746 and the difference in his updated quote in November 2023, relative to the initial quote in August 2019. The initial quote for the preparation of a demolition site plan and the preparation for architectural working drawings for Units 1, 2 and 3 was $28,750 plus GST. Some four years later, his quote for the preparation of a demolition site plan and the preparation for architectural working drawings solely for Unit 1 (not Units 2 or 3) was $28,500 plus GST.
4. Mr Rodic's explanation for the difference was that this revised quote was predicated on him redrawing the plans for Unit 1 on a separate document, such that the preparation of plans for Unit 1 and separate plans for Units 2 and 3 would cost significantly more than one set of plans for all three units. He also testified that prices had gone up over this period, accounting for some of the increase.[117]

1. Mr Jeanes is a certified practising valuer who had been employed with the business Egan National Valuers, which later became known as 'm3property'. He is now retired. Mr Jeanes undertook several valuations of the premises and prepared detailed reports on each occasion.
2. His evidence was narrow in scope. I generally accept his evidence, although his recollection of matters beyond the information stated in his contemporaneous reports was poor.
3. Mr Jeanes undertook the valuations of the Warehouse on various dates between 2004 and 2015, on each occasion personally attending at the site and then producing a lengthy report of the valuation. The first four valuations were undertaken for the purposes of advising the current market value for 'mortgage security lending purposes', and the final valuation was undertaken on instructions from Ms Bosch, on behalf of the plaintiff.
4. I have incorporated photographs taken by Mr Jeanes of the Warehouse into these reasons, in Attachment C. Those photographs show both the external state of the premises and the internal operations within the Warehouse, depicting a front loader on one occasion and the heaped piles of ammonium sulphate on the floor. The dust within the Warehouse is also evident in the photographs.
5. It is evident that, although the valuation reports are not formulaic, the language used in each is rather similar.
6. In Mr Jeanes' assessment conducted in July 2004 (Exhibit 10), he described Unit 1 as being 15 to 20 years old and presenting in a 'fair to reasonable condition'. Units 2 and 3 were described as being approximately 5 years old and presenting in a 'good condition'. Mr Jeanes described the Warehouse as being in a 'fair structural condition' and he assumed the buildings were free from 'any rot or structural damage', not having had the benefit of a survey by a structural engineer. At the time of this valuation, the premises were leased to Penrice Soda Products and Summit Fertilisers.
7. In Mr Jeanes' assessment conducted in December 2005 (Exhibit 47), he described Unit 1 as being 15 to 20 years old and presenting in a 'fair to reasonable condition'. Units 2 and 3 were described as being approximately 6 years old and presenting in a 'good condition'. Mr Jeanes described the Warehouse as being in a 'fair structural condition' and he assumed the buildings were free from 'any rot or structural damage', not having had the benefit of a survey by a structural engineer. At the time of the valuation, Unit 1 was being leased by the defendant and Units 2 and 3 were being leased by Summit Rural (WA) Pty Ltd.
8. As part of Mr Jeanes' assessment conducted in November 2009 (Exhibit 261), he described Unit 1 as being approximately 20 years old and presenting in a 'fair to reasonable condition'. Units 2 and 3 were described as being approximately 10 years old and presenting in a 'good condition'. Mr Jeanes described the Warehouse as being in a 'fair structural condition' and he assumed the buildings were free from 'any rot or structural damage', not having had the benefit of a survey by a structural engineer. At the time of the valuation, the Warehouse was being leased by the defendant.
9. In Mr Jeanes' assessment conducted in May 2012 (Exhibit 335), Unit 1 was described as being approximately 20 years old and presenting in a 'fair to reasonable condition', with 'some rusting Colorbond wall panels'. Units 2 and 3 were described as being approximately 10 years old and presenting in a 'good condition'. Mr Jeanes described the Warehouse as being in a 'fair average condition relative to their age and use' and he assumed the buildings were free from 'any rot or structural damage', not having had the benefit of a survey by a structural engineer. At the time of this valuation, the premises were being leased by the defendant.
10. In his report prepared for the plaintiff in July 2015 (Exhibit 548), Mr Jeanes described the buildings as being 'currently in poor condition and require significant repairs'. He referred to one of the weaknesses in his SWOT analysis as being 'significant repair necessary to building'. He described two of the threats in his SWOT analysis as being 'repair cost increases' and 'liability due to poor condition of buildings'.
11. Further, Mr Jeanes described the Units as being in a 'poor condition with major corrosion evident'. He included in his report an indicative cost to repair the Units, which had been provided by Fremantle Engineering, in the amount of $2.15m plus GST, with a 25% contingency factor, taking the overall indicative cost to $2.6875m plus GST. The repair estimate indicated it covered the following works:

(a) remove all external cladding, gutters, flashing, girts etc, and replace with similar materials;

(b) remove and replace all roof sheeting, support purlins etc and replace with similar materials; and

(c) sand blast core structure and repaint with appropriate paint.

1. At the time of this final valuation, the premises were being leased by the defendant.
2. Mr Jeanes expanded on the terms and descriptions used in his reports during the course of his evidence.
3. In his evidence in chief, Mr Jeanes explained that the term 'poor condition' was intended to convey that the property is 'not fit for purpose' and 'needs major repairs or re-building or renovation'.[118] This may be appropriate where there is damage to the property, for example.
4. Mr Jeanes described 'fair' as being in a better condition than 'poor', being a description appropriate where there are factors present which may impact the value of the property. It is intended to convey that the property is in a below average condition.[119]
5. Mr Jeanes next explained that the description 'reasonable condition' is intended to convey that the property is 'typical of what you would expect in a building' having regard to 'normal wear and tear'.[120]
6. The final description is 'good condition', intending to convey that the property is 'attractive in a marketplace for sale, for leasing, for insurance, those sorts of aspects, without... any significant or, maybe, no repairs required on the property'.[121]
7. In cross-examination, Mr Jeanes gave evidence that, in the course of his assessment in 2004, he had not observed any hairline cracks in the concrete walls or floor, although his recollection on this issue was far from strong. In general terms, beyond the written report he prepared, he had a very limited recollection of the state of the Warehouse stretching back to 2004.
8. Nonetheless, Mr Jeanes was challenged as to why his assessment of Unit 1 was 'fair to reasonable' at that time when he could not say whether there were cracks, rust, dents or other damage to the structure. In substance, Mr Jeanes explained this assessment on the basis that a 'fair to reasonable' assessment does not necessarily equate to a 'bad' assessment.[122]
9. Mr Jeanes observed in his evidence that Unit 1 was already 20 years old at that time, having been constructed in 1990, and it was a basic, industrial storage facility. His assessment was that 'there didn't appear to be any major issues' with the Unit at that time (i.e. in 2004). This assessment was partially based on the age of the structure.
10. In comparison, Mr Jeanes testified that Units 2 and 3 had only had a five year life span at that stage, and he regarded their condition as 'good'.

1. Mr Noordewier is a registered insurance broker employed by Insurance Broking Services Pty Ltd. He gave evidence by video link from Denmark, Western Australia. His evidence was brief and he was not cross-examined. I accept his evidence.
2. Mr Noordewier has acted as the insurance broker for the plaintiff since around 2001. The Warehouse was one of the buildings for which Mr Noordewier arranged insurance coverage, via an Industrial Special Risks Policy issued by Zurich Australian Insurance Limited. I have referred to the details of this policy in Part II above.
3. The plaintiff sought to rely on an email sent by Zurich Financial to Mr Noordewier concerning the apparent refusal by the insurer to provide insurance cover for the Warehouse. That email was sent in February 2016. The court has ruled (see Attachment E to these reasons) that the email may be received as evidence that a decision was made by the insurer to refuse to provide ongoing coverage for the Warehouse from that time, but is not evidence as to the reasons for that refusal.

1. Mr Lucchesi is a structural engineer and a director of Cenit Group Pty Ltd, which is an engineering company. He was called by the plaintiff to give evidence in relation to a quotation he provided to Mr Harrison.[123]
2. The strength of Mr Lucchesi's evidence was not challenged in any respect, and I accept his evidence.
3. Mr Lucchesi attended at the Warehouse site in September 2023, together with Mr Joseph Hawkins and Mr Harrison, to inspect and review the premises and the structure. In essence, Mr Lucchesi prepared drawings of the works required and put together a fee proposal for Mr Harrison, focused on the foundations and the columns of the Units, including the columns contained within the concrete walls. Mr Lucchesi explained that he needed to inspect the existing foundations to assess if they were adequate in terms of present day building standards, and to assess the 'deterioration at the base of the columns due to their encasement within the concrete, and the exposure to whatever materials had been stored in that facility'.[124]
4. On the basis of his inspection, Mr Lucchesi observed 'considerable deterioration' to the Warehouse, including 'concrete degradation to floors and walls, damage to columns from impact, damage to columns from exposure to storage, corrosion to main structure and secondary structure and claddings'.[125]
5. Following the inspection, Mr Lucchesi's team prepared a quotation or price estimate, which he approved, which is contained in an email sent by Cenit Group Pty Ltd to both Mr Joseph Hawkins and Mr Harrison on 16 October 2023 (Exhibit 742). The quotation encompasses the structural design work for three stages, being a stage 1 design review, a stage 2 review of the existing structure and steelwork on site, and a stage 3 design and documentation of new/remedial works.
6. As explained in the quotation, in the event Mr Lucchesi assessed the existing building design as being structurally adequate, stage 2 of the quotation would apply. In the event he assessed the existing building design as being structurally inadequate, stage 3 of the quotation would apply rather than stage 2, and a new building design would be prepared.
7. The quotation approved by Mr Lucchesi included some general commentary, in the following terms:

We have conducted a high-level initial review of the current structure. Our initial calculations suggest that the current structure is on its limits for both strength and serviceability, we will further investigate this in our complete design review as per stage 1 above.

Based on the above initial high-level review, and observed deterioration of the major structural members, we anticipate that extensive remedial works will be required to bring the existing structure up to the strength and serviceability requirements of today's relevant codes.

1. Further evidence was sought to be led orally from Mr Lucchesi regarding the quotation, as to the limits of both strength and serviceability of the structure, which elicited an objection from counsel for the defendant. I upheld that objection.[126] The evidence from Mr Lucchesi on this issue was ultimately confined to the statements he made within the quotation, there having been no notice of expert evidence beyond this document.
2. In cross-examination, Mr Lucchesi confirmed that one of his invoices issued to the plaintiff (being Exhibit 754) included charges for work undertaken in connection with the process of Mr Lucchesi giving evidence in court, including his communications with the plaintiff's solicitor.[127] I took that to have been an innocent error on his part, and have adjusted the plaintiff's claim for damages accordingly.

1. Mr Valkenstrom is the owner of Alltype Roof Repairs, which is a roof repair business. He has worked in the roofing industry for approximately 30 years. His business undertakes residential roof repairs in the main, but also commercial roofs.
2. His business undertook roofing repair works at the Warehouse on occasions from around 2008 through until 2016, having been called out to do that work by both the plaintiff and the defendant on different occasions. His assessment was that the defendant called him out to undertake work on more occasions than the plaintiff.[128] His recollection was that his business was called out to patch up leaks, not to undertake 'additional preventative work'.[129]
3. Mr Valkenstrom described the work his business undertook on the Warehouse in somewhat general terms, including patching the roof over the entire complex (which extended from small patches to changing roof sheets), replacing a central box gutter, and replacing corner flashings.
4. On the occasions Mr Valkenstrom attended the premises, he observed the external doors to the Warehouse being open 'most of the time', although he cautioned that he did not see much given he was up on the roof. He described the premises as having 'dust everywhere' including on the purlins, in the box gutters, some on top of the roof, but more inside the Warehouse. He described seeing corrosion or rust in the areas he worked on at the Warehouse, including on purlins and roof sheets.[130]
5. Mr Valkenstrom testified that he declined to work on the roof from 2016 onwards because the building had deteriorated such that he did not feel safe in doing so.[131]
6. Under cross-examination, Mr Valkenstrom was taken to Exhibit 168 which includes a quotation from Alltype Roof Repairs to the defendant dated 23 September 2008. The quotation identified three options, referred to as option 1, 2 and 3, with each option involving additional work relative to the earlier option. Option 1 was described as 'Clean, patch and re-seal box gutter and deck sections'. Option 1 also included 'sleave gutter inserts' with a special press box gutter, and option 3 included a 'new box line gutter'.
7. Subsequently, in January 2009, Alltype Roof Repairs prepared a brief report which was provided to the defendant (Exhibit 204). The report stated:

Roof decking, guttering, purlins and framing all show signs of corrosion and are in need of some attention. Some of the roof sheeting needs replacing and is or will allow water ingress and in turn will corrode purlins. This is due to environment and normal wear and tear. Product stored in sheds is believed to be corrosive to metal and will have a bearing on life of steel as will a close proximity to water bodies such as the ocean. Recommendations and warranties for various coated steel products are available on Bluescope steels website. Standard zincalume is not recommended for this application. Colourbond Ultra steel deck would be more suitable, however all warranties are subject to environment. We have used this product in places such as Alcoa Kwinana with good results.

Scews [sic] and neo seals also show signs of corrosion, Skylight roof sheets are of a low quality 1800gsm and are worn by weather exposing fibres with splits to some screw fixings. A higher grade such as Fibrelite 2400gsm longlife sheets are recommended. These have a U.V. jell coat and are industrial grade with a full 25 year warranty. Please note aprox [sic] half of the skylights on the roof will require replacement in the near future. As they wear thin they become weak and are prone to lifting and breaking in high wind.

Gutter and internal box gutter are rusted and have had numerous patch jobs in the past. Some of these will require replacement also. We recommend Ultra .55 Heavy duty steel pressed to suit.

Please note prices for any of these jobs are available on request or if you require any further information please call ... or refer to Bluescope steel for tech advice.

1. Mr Valkenstrom gave evidence that when he came to repatch the roof he was not requested by Mr Joseph Hawkins to use the Colorbond Ultra product to repair the Warehouse, despite having recommended that product. He explained that Colorbond Ultra was better than the standard Colorbond product, having a thicker coating which was recommended in coastal areas.[132]

1. Mr Richard Hagon is a certified practicing (and licensed) valuer with more than 25 years of experience. Mr Hagon has a Bachelor of Business majoring in Valuation and Land Economy from Curtin University, and is a director of Property Valuation and Advisory (WA).
2. Mr Hagon was instructed to prepare a report for the purposes of the proceedings, which is Exhibit 710. The report is dated 24 September 2020 (with a date of valuation of 15 November 2016). The plaintiff relied upon Mr Hagon's evidence in relation to the quantum of its claim for loss of rental income following the departure of the defendant from the premises in late 2016. I accept Mr Hagon had expertise to opine on these matters.
3. There was limited cross-examination of Mr Hagon. I generally accept his evidence and the reasonableness of the opinions he expressed, the effect of which I will address when considering the quantum of the plaintiff's claims later in these reasons.

1. Mr Neville Harrison is a registered builder, with over 64 years' experience in the construction industry. I will address Mr Harrison's evidence, and the submissions made by the parties, when dealing with the quantum of the plaintiff's claim later in these reasons.

1. Mr Tip O'Neill is a director of the defendant, and the founder, president and chief executive officer of the defendant's parent company, International Raw Materials Limited. He is also a shareholder of the parent company. Mr Tip O'Neill was based in Philadelphia during the period which is relevant to these proceedings, although he travelled extensively for the business. In broad terms, he visited the operations of the business in Australia around twice each year.
2. Mr Tip O'Neill was approaching 80 years of age when he gave evidence at trial. He testified that he had been in the fertiliser industry since about 1970, so for over five decades. Prior to working in the industry, he had served in the United States military and had been the Vice President of an international wholesale distribution company, operating in South Korea and elsewhere.
3. He holds a Bachelor of Science in Economics from the University of Pennsylvania Wharton School, as well as having completed advanced management programs with that School. At the time of the trial, Mr Tip O'Neill sat on the board of the International Fertiliser Association and the executive committee of the International Fertiliser Development Centre, and had held those positions for some years.
4. Mr Tip O'Neill described the business of International Raw Materials Limited as an international wholesaler and distributer of fertilisers and industrial chemicals. The business includes an industrial chemicals business which ships sulphuric acid, it operates a 600 to 700 car rail fleet, and has a development business in in Africa. The business has offices in the United States, Canada, Singapore, Australia, Mauritius, and Madagascar.
5. Mr Tip O'Neill testified that the business was a significant global distributor of ammonium sulphate, which is a widely used fertiliser, and it established its operations in Western Australia to take advantage of the relationship with BHP which was producing ammonium sulphate as a by-product of its nickel refinery operations. The defendant established an arrangement as an agent or contractor to BHP. Mr Tip O'Neill explained that the defendant would pass the variable costs of storage, including rent, back to BHP as part of the arrangement.
6. Mr Tip O'Neill was not directly involved in the negotiations for the Original Lease for Unit 1, or the lease for Units 2 and 3. Those negotiations were largely handled by Mr Syminton, as the general manager of the defendant. Mr Tip O'Neill testified that Mr Syminton no longer works for the defendant - he now works for a competitor of the defendant in New Zealand.
7. Mr Tip O'Neill had attended the premises in 2005. His observations of the premises were consistent with the descriptions included in the initial inspection reports prepared by representatives of the defendant in March 2005 (Exhibits 21 and 757), which noted various defects and cracks in Unit 1.
8. Mr Tip O'Neill was kept informed of the problems the defendant was experiencing with the premises during the currency of the defendant's lease. He gave evidence in general terms of the matters which were reported to him, including the quality of the roof and the gutters, cracking in the foundations which was identified earlier on in the tenancy, the storm damage, damage to roof panels, and the water ingress issues. His evidence in this regard was largely hearsay, as he was only infrequently present in Perth, and not led for its testimonial effect.
9. Mr Tip O'Neill authorised expenditure to be incurred by the defendant to undertaken certain repairs at the Warehouse, such as the repair of a pipe underneath the back foundation, roof patching and repair, recladding of the building, repairs to the door on Unit 1, and repairs to a damaged column in the Warehouse. He gave evidence that the repairs and associated work undertaken by the defendant were those set out in the two schedules described as:

(a) 'Butcher St Warehouse Costs incurred by IRM as of March 03, 2014', being Exhibit 490; and

(b) 'Butcher St Warehouse Costs incurred by IRM after 04 August 2015', being part of Exhibit 671.

1. The total amount of the repairs in the first schedule, over the period from around August 2010 through to around February 2014 was $224,210.77 excluding GST. That document, which forms part of Exhibit 490, was tendered by the defendant together with the supporting invoices for each of the components.
2. Among the repair work described in the first schedule is the 'Repair works - west facing wall'. Those costs were incurred in February 2014, in the amount of $53,313. In November 2011, repair works in the amount of $36,937.70 were undertaken for 'Replacement of Concrete at Butcher St Terminal'.
3. The second schedule encompasses repair work from around September 2015 through to October 2016, totalling $7,523.05 excluding GST. This repair work included 'Re-Roof Office Demountable' and the costs for an elevated lift to undertake repair and maintenance, among other matters.
4. Mr Tip O'Neill gave evidence that the defendant requested that the plaintiff pay for some of the repairs which had been effected to the Warehouse, as set out in the schedule in Exhibit 460 (which relates to repair costs as of 23 January 2014). The plaintiff refused to pay for those repair costs.[133] However, pursuant to the contractual arrangements with BHP, around a third of the costs were paid for by BHP.[134]
5. Mr Tip O'Neill testified that there had been discussions with the plaintiff to resolve the dispute between the parties as to the repairs to the Warehouse but no resolution was achieved. He gave evidence that, had the building been maintained, the defendant would have desired to remain in occupation of the building. As one pathway to resolve the issue, Mr Tip O'Neill authorised an offer to be made to the plaintiff to purchase the Warehouse, which was made late in the course of the relationship between the parties. The offer was rejected.
6. Mr Tip O'Neill was not present in Perth when the storm damage occurred in May 2015, but personally saw the effects of the damage on a visit to the premises sometime thereafter. He was provided with updates from his staff about the damage when it occurred.
7. Mr Tip O'Neill was involved in the decision to vacate the premises in November 2016. He described the building at that point as having 'exposed electrical wiring' which had become a safety hazard for the staff, and that he was also concerned about the damage to the ammonium sulphate being stored in the Warehouse. As explained below, I do not accept that the electrical wiring issues were a proximate reason for the decision to vacate the premises, it being apparent that the wiring issues had emerged many months before the defendant vacated the premises.
8. Mr Tip O'Neill testified that the defendant incurred costs in re-conditioning the product which had become damages, and in moving the product once they vacated the premises.[135]
9. Mr Tip O'Neill was cross-examined at some length by counsel for the plaintiff. During that cross-examination, the witness became quite argumentative with counsel and was evasive on occasions. The cross-examination exposed some concerns with the reliability of Mr Tip O'Neill's evidence, on my assessment, and led me to conclude that he had, in certain respects, overstated his evidence in order to better support the position of the defendant. I would emphasise that I did not assess Mr Tip O'Neill as lacking credibility - my principal concern with his evidence was that it lacked precision and was overly generalised, and he was over-confident on important and contentious issues.
10. Most significantly, Mr Tip O'Neill sought to downplay the corrosive properties of ammonium sulphate,[136] he sought to downplay the dust generated at the premises,[137] he suggested that rust stains were apparent in Unit 1 prior to the defendant taking possession,[138] gave evidence that dust curtains had been installed in the Units after a complaint about dust had been received (when the more reliable evidence on the issue indicated that no curtains of that nature were ever installed),[139] and overstated the impact of the exposed safety wires on the defendant's decision to vacate the premises.[140]
11. Further, Mr Tip O'Neill was an infrequent visitor to the premises and so much of his knowledge of the day to day operations at the Warehouse, and the issues arising from the defendant's business, were reported to him by others in the business. He did not have direct knowledge of many of these matters, as became apparent during his cross-examination.
12. The plaintiff's submissions as to the reliability of Mr Tip O'Neill's evidence at [39] to [46] of their closing submissions should generally be accepted, such that I would give little weight to the evidence of Mr O'Neill where it was disputed, unless corroborated by other evidence.

1. Mr Frank O'Neill, who is a cousin of Mr Tip O'Neill, was the Operations Manager of the defendant's business in Western Australia. He worked at the Warehouse from around 2010 through to around July 2014.
2. Prior to working for the defendant, Mr Frank O'Neill was in the United States Marine Corps, retiring with the rank of Major after a lengthy period of service. He then held a position as a special agent with the Federal Bureau of Investigation, and also worked in the area of commercial real estate. Mr Frank O'Neill is also a certified flight instructor and obtained a degree in aeronautical science. Since leaving the employ of the defendant, he has obtained a law degree and at the time of the trial was a licensed attorney in Pennsylvania and Florida.
3. On any view, Mr Frank O'Neill is a man of broad and considerable experience and expertise.
4. Mr Frank O'Neill gave his evidence by video link from Florida, and gave evidence in a clear and direct manner and sought to assist the court. He recognised that his recollection was not accurate on occasions and he was prepared to defer to other witnesses who might be better placed to address an issue. I accept his evidence.
5. I have had particular regard to the evidence of Mr Frank O'Neill in summarising the general process employed by the defendant in the unloading and loading of product at the Warehouse.

1. Mr Goodwin was employed by the defendant as a general labourer and later held the role of Senior Manager of the Warehouse. He was employed by the defendant from February 2008 through to March 2018.
2. Mr Goodwin gave his evidence in a clear manner and sought to assist the court. I accept his evidence. I do not accept the criticisms of Mr Goodwin's evidence which were advanced by the plaintiff in its closing submissions.
3. In the course of his evidence, Mr Goodwin explained the operations of the defendant within the Warehouse, gave evidence as to the state of the Units, and also gave evidence about the damage which occurred to the ammonium sulphate. As with the evidence of Mr Frank O'Neill, I have had regard to Mr Goodwin's evidence in summarising the general process employed by the defendant in the unloading and loading of product at the Warehouse.

1. During the course of the trial, it proved necessary for the court to rule on objections to the tender of various documentary exhibits. The objections were largely from the defendant, to the plaintiff's tender of documents.
2. The first set of objections is set out in the defendant's schedule dated 12 April 2024. The schedule identifies the objections raised by the defendant to the plaintiff's tender of various documents. Following argument on the objections, on 30 April 2024, the court issued to the parties an amended schedule of the documentary objections and the court's evidentiary rulings in relation thereto. Although a number of objections fell away during the course of argument, it remained necessary for the court to rule on several disputed matters.
3. A second set of objections was dealt with on 1 and 2 May 2024. To put these objections in context, on 1 May 2024, after the oral evidence in the trial had concluded, the plaintiff attempted to tender an additional 430 documents (approximately) as part of the trial bundle. This tender was the subject of interchanges between counsel and the court. Counsel for the defendant strongly objected to this course (ts 1070), given the tender was made on the eve of closing addresses. The court also expressed its surprise that so many additional documents remained in dispute, at such a late stage in the trial.
4. Following further conferral between the parties, the number of documents which remained the subject of this second set of objections was mercifully reduced to seven (see ts 1109 - 1143). The court ruled on those documents on 2 May 2024 following submissions from both counsel (ts 1143), indicating that reasons would be provided in due course. There were, additionally, other documentary objections dealt with during the trial.
5. To the extent required, the court's rulings and associated short reasons in relation to the above objections are set out in Attachment E to these reasons.

PART IV - FACTUAL CHRONOLOGY

1. I turn now to set out the evidence as to the material course of events from 2007 onwards, to the extent relevant to the pleaded claims and defences. I have earlier addressed the material events before this time, concerning the initial lease for Unit 1 and the variation of the lease to extend to Units 2 and 3.

A. The creation of access holes and inspection of Units 2 & 3 in 2007

1. Prior to the commencement of the Varied Lease, the defendant raised with the plaintiff its desire to create access ways or holes between all of the Units. On terms, the plaintiff gave its consent to the construction of these access ways.[141] Without the access holes, it was necessary to go outside the building in order to access each Unit - there was otherwise no means of moving between the Units.
2. The access ways were ultimately constructed in around 2009, with the plans for the construction being approved in 2008.
3. In his email to Mr Syminton sent on 9 August 2007, Mr Burns explained the terms on which the plaintiff agreed to the alteration of the dividing walls:[142]

We agree to you removing or altering the dividing wall between units 2 & 3 provided that:

Any changes are made under the supervision of a civil engineer who has designed and certified that the changes are structurally sound and comply with all building and engineering codes required in Australia. At the expiration of the lease the walls are to be replaced so that they are in accordance with how they were when the lease of units 2 & 3 commenced. Any costs incurred in changing or removing the walls or replacing walls are to be at your cost.

1. This communication refers to creation of an access way in the dividing wall between Units 2 and 3, but the agreement in relation to the creation of access ways from Unit 1 was subject to the same terms.
2. The access ways which were constructed allowed access from Unit 1 into Unit 2 or 3, and access between Units 2 and 3. The access holes were large enough to permit trucks to drive through them - they were approximately 5 metres in height and 5 metres wide.[143] The access ways can be seen on the internal walls shown on the site plan included at Attachment B to these reasons.
3. An inspection of Units 2 and 3 was conducted by Mr Jeremy Liddle and Ms Claire Green on 22 August 2007. They were both representatives of the defendant.
4. The details of the inspection were compiled into a short report, running to six pages of substantive information, which included numerous photographs of the premises.[144] The report was emailed to Mr Joseph Hawkins and others at the plaintiff, including Mr David Hawkins, by Mr Syminton, on 29 August 2007.[145]
5. Mr Joseph Hawkins received and reviewed the report.[146]
6. Mr David Hawkins was argumentative when cross-examined about receipt of the report.[147] His evidence is unsatisfactory on this issue. He said he could not 'guarantee' he opened the attachment to the email. He was a director of the plaintiff at the time, and the email was an important one which was sent directly to him. He testified that the leasing of the units was not 'his area' at the time, but he then testified he may have taken photos at the premises. On my assessment, it is more probable than not, as a director of the company and given the importance of the issue, he reviewed the report, despite his evasive testimony on the point.
7. The report states that:

The purpose of the inspection was to perform a visual examination of the storage facility for any existing damage, areas of concern and general commentary, and to catalogue the results of the examination with the owners of the facility.

1. In summary, the report noted the following matters:

(a) a rust line was apparent on the external sheets of Unit 2 although the sheets were stated to be 'generally okay' and the colour was in a reasonable condition;

(b) as to the internal walls and structure of Unit 2, they were described as being 'generally in reasonable condition with only product contamination being the main issue. Concrete has the occasional chip on the support walls and there is [sic] obvious hairline cracks in the surfaces of all concrete walls';

(c) a pole on the western wall of Unit 2 was noted as being bent, concrete was observed to be breaking away with a steel support slightly damaged and bent, and corrosion was evident on sheets on the western wall;

(d) as to Unit 3, it was described as being generally 'in reasonable condition except for the wetness of the floor for which we could see no obvious leaks to explain the condition' and there was 'still product contamination around all the walls and on the door that needs to be properly cleaned up', with the 'majority of the surrounding concrete walls had chips taken out ... and small hair-line fractures in most walls';

(e) as to the internal walls and structure of Unit 3, they were described as being in a 'similar condition to unit 2, however the floor was much wetter than expected for no apparent reason other than moisture absorption through remnants of product' and it was noted there were 'still obvious signs of product [from the previous tenant] that need to be removed and the reasons for the wet floor investigated';

(f) the report included a comment that there was 'obvious corrosion of steel supports as well as the support being bent from impact' in Unit 3; and

(g) the concrete walls in Unit 3 were described as being 'well chipped from general use' and being 'generally full of hair line cracks'.

1. The report included a short summary that the two units were in a reasonable condition with the matters noted being described as 'minor details'. The authors stated that, in their view, 'the main work that needs to be completed before the commencement of the new lease is for both units to be thoroughly decontaminated of all remaining fertilizer product'.[148]
2. Mr Joseph Hawkins initially testified that the images in the above report showing water on the floor of Units 2 and 3 did not in fact show any water.[149] His evidence was to the effect there 'was absolutely no water in the building whatsoever'. He repeated that evidence when initially cross-examined about the report, describing the shine on the floor as being due to the finish on the concrete.[150] Mr Hawkins gave evidence that the shine on the floor was 'still there today', but conceded that could not be right, given the concrete floor in those units has since been repoured.[151]
3. Mr Joseph Hawkins then suggested that he had responded to Mr Syminton at the time that there was no moisture on the floor in Units 2 and 3.[152]
4. Mr Hawkins' evidence that there was no water on the floor of Units 2 and 3 at the time is difficult to align with the terms of the contemporaneous observations in the report prepared in August 2007, and in the photographic images in that report. The observation that the floor was 'wetter than expected' cannot be attributed solely to the shine of the concrete floor. It may be that Mr Hawkins' evidence was to the effect there were no pools of water present, but it cannot be doubted, in my view, that the concrete floor of the units was wet when the defendant's representatives inspected it in August 2007.

1. In July 2008, Mr Liddle (who was the then general manager of the defendant) emailed Mr Joseph Hawkins regarding the leaks in the roof of the Units.[153] In his email, Mr Liddle stated:

We had the opportunity to witness the extent of leakage in the roof (as per attached) at 30 Butcher street today as it rained all day long. Can we please have the holes in the roof repaired as it is becoming very wet in some patches as shown.

1. With that email, Mr Liddle sent to Mr Hawkins a report following his inspection, which included a diagram showing the various locations of the leakages and marked up photographs showing the water on the concrete floor of Units 1, 2 and 3.[154] The diagram is extracted below, depicting several big holes and numerous smaller holes:[155]

1. Having received no response to that email, on 24 September 2008 Mr Liddle again emailed Mr Joseph Hawkins. He had by this time organised for a roof repairer to undertake the necessary repairs, which included work to 'clean, patch and re-seal box gutter'. The email from Mr Liddle stated as follows:

Attached is a copy of the report on the extent of the roof leaks at the 30 Butcher street, Kwinana Beach which was sent approximately 2 months ago and to which we have received no official response. As such we have organized Alltype Roof Restorations to perform the necessary repairs (See attached quote - option1) to the roof and guttering which we will then on charge to JJ Hawkins Pty Ltd.

1. Mr Joseph Hawkins received and reviewed the report from Mr Liddle, although initially his evidence on this issue was vague and somewhat defensive.[156] He was driven to accept that he had reviewed the report during cross-examination, given the contents of Mr Hawkins' own emails to Mr Syminton and to Mr Burns.[157]
2. In August 2008, a registered builder with some familiarity with the Units, Mr Wally Hughes, undertook a detailed inspection of the Warehouse and prepared a report. He provide that report to Mr Joseph Hawkins who forwarded it to Mr Syminton on 3 October 2008.[158]
3. In his covering email to Mr Syminton, Mr Joseph Hawkins stated:

I acknowledge receipt of your email dated 3rd October 2008. Attached is a copy of a report prepared by Mr Wally Hughes of Beton Contractors as to the condition of the premises and the reason for the problem. Mr Hughes is a registered builder.

I have already referred the matter to our lawyers and am awaiting their advice.

I will not be responding to you by the 7th October 2008. I do not agree to have either my contractors or your own appointed to correct the problem and I do not accept any responsibility for the problem that has arisen.

I believe that the problem is of IRM's doing and as such is their responsibility under the normal "maintain and repair" conditions of a commercial lease.

I propose that a meeting be held on site so that the matter can be addressed and the responsibility for the damage that has occurred be identified. Then, and only then, can we proceed to having the problem rectified.

1. The report prepared by Mr Hughes is lengthy. Within the report, Mr Hughes notes that he considered it appropriate to prepare a preliminary report before having an independent third party report commissioned on the state of the Warehouse. Mr Hughes had been asked to repair the leaks on the roof, noting that the leaks highlight the acceleration in deterioration of the structure in two areas: concrete and metalwork.
2. Although Mr Hughes had a long association with Mr Joseph Hawkins, there is no reason to conclude that Mr Hughes approached his work concerning the Warehouse in anything other than an objective manner, and I would generally accept the accuracy of the findings he made in his report, which were based on his contemporaneous, personal inspection of the premises.
3. Mr Hughes provides a rather pessimistic assessment of the state of the Warehouse, which included the following statement:[159]

Regardless any assessment [by an independent third party assessor] will come up with the same answer. "The roof of unit 1 will require a reroof". This answer is a covering answer to protect the assessor from any liability. The answer is that the roof will require a re-roof in the near future. In fact that unless the present rust treatment includes the purlins and girts and the rust prevention program that has started is maintained, then the building will not only require a re-roof it will also require at the very least the replacement of all girts and purlins.

1. Mr Hughes suggested the principal causes of the leaks were physical damage to the roof, environmental damage given the area is an industrial area, climatic damage from the wind, sealant breakdown, design and accelerated deterioration of the roof sheeting. Mr Hughes expressed the following assessment in relation to the deterioration of the roof sheeting:

The ammonium sulphate is attacking the zinc coatings within and outside the building. This includes airborne ammonium sulphate dust and vapour. As the product is moved dust is caused and this is being deposited everywhere. Three main problems are presented.

(i) The dust settles on the gilts and the purlins where once the humidity exceeds 60% it attacks the zinc coating and leaves the steel exposed for further corrosion.

(ii) The dust settles onto the condensation on the metal sheeting.

(iii) The wind blowing over the building sucks the dust out through any openings. This is prevalent in the eastern side. As the wind blows over the building a vacuum results on the leeward side. This vacuum sucks out more dust. This dust is drawn to any moisture on the external face of the sheets. The external sheets display a patina of rust.

It appears that the dust mixed with moisture is rapidly accelerating the corrosion process. The area in the south eastern corner of unit one seems to be the worst affected by this accelerated corrosion. This area has held product the longest period. It is also where airflow meets the most resistance. To a lesser degree the roof above the load out area is badly affected.

1. Further, Mr Hughes stated there was, in his opinion:

...a serious question in the suitability of the property to store ammonium sulphate. In fact, the product should be stored in a site specific building. In such a building, corrosion control would be built in at construction. Sulphate resisting concretes would be used, the use of steel limited and where steel is used it would be coated to withstand the aggressive nature of ammonium sulphate. There would also be humidity reduction systems in place. In fact very few existing buildings in Perth, if any, would be suitable for the storage of ammonium sulphate.

1. The accelerated action caused by the ammonium sulphate was detailed by Mr Hughes as follows (in terms which largely accords with the expert evidence given at trial by scientific experts):

Several actions are occurring simultaneously. The ammonium sulphate dust and vapour are settling on the metallic parts of the shed and is corroding the zinc coatings. This action is prevalent at normal temperatures, at normal pressures when the relative humidity exceeds 60%.

Ammonium Sulphate is hygroscopic, drawing moisture from the air. It is also highly water soluble. Both the ammonia and the sulphate dissolve in the presence of water. When the sulphate dissolves in water it becomes acidic. In the normal course of events the ammonium sulphate that has either been stored against the steelwork or is a result of dust settling or being sucked out of the building or from the vapour in the air, meets with the moisture and dissolves.

The acid that forms as the ammonium sulphate dissolves either stays where it formed or moves to the lowest point. It remains due to surface tension or by capillary action. Either way it remains in a position where it attacks the metal. Traces of the acid remain after it has evaporated to be reformed with the next formation of moisture. This is evident throughout the building.

In short the ammonium sulphate dissolves in water forming a sulphuric acid which eats firstly the protective coatings then the steel metal.

1. Mr Hughes provided an indication of the repair work which might be undertaken and the approximate cost. His comments were directed to Unit 1, as he held that view that Units 2 and 3 could be readily protected and maintained, which 'should be done before it deteriorates to the condition of unit 1'.
2. Mr Hughes stated that the cost to completely demolish Unit 1 and replace it with a similar building would be $2.5 million, and the cost to re-roof that unit would be $280,000. To re-purlin and re-girt, and then re-roof the unit after wet-blasting the steel work and coating it, would cost around $500,000. Mr Hughes emphasised these were estimates only and a proper estimation would require a quantity surveyor to undertake an assessment.
3. Mr Hughes pointed to a number of steps which could be taken and identified the further deterioration in the Warehouse which would likely follow if no steps, or no adequate steps were promptly taken. He expressed the view that the following steps must be done:

The purlins and girts must have their protective coating reinstated with a coating that will not be attacked by ammonium sulphate.

Units 2 and 3 should have all the steel work and sheeting coated with a protective coating.

Existing and future leaks must be fixed.

A decision whether to re-roof now and protect the new sheeting. Or protect the existing purlins and girts and sheeting now and re-roof in the future. Or maintain the implemented prevention system and see how long you can go without any remedial work. In the later case the purlins and the girts will definitely require replacing.

Once any remedial or replacement work is done it should be protected.

Or at the very least put some sort of coating over the current prevention system to prevent further corrosion.

Water ingress to be limited. Humidity to be reduced.

1. Mr Hughes ultimate recommendation was 'to stop the deterioration immediately by a rust prevention program', to 'rehabilitate the sheeting where needed', to 'put a system in place to maintain a lower humidity within the building', and 'use a protective coating system to protect the metalwork'. This approach would enable the plaintiff around 10 years of further life before a re-roof was required.
2. This rather sober assessment of the state of the Warehouse, prepared by Mr Hughes in August 2008, did not stir Mr Joseph Hawkins into action to undertaken any remedial work on the Warehouse. His dogmatic view remained that it was 'not his responsibility' to do so.[160]
3. On 27 November 2008, Mr Syminton, Mr Joseph Hawkins and Mr Burns held a telephone meeting, at which their respective lawyers were also present. A note of the meeting was prepared by the plaintiff's solicitors following the meeting.[161] I accept that note is an accurate summary of the meeting.
4. The meeting focused on the deterioration of the premises, specifically as to corrosion and roof leaks, and the dispute between the parties over the liability for repairs. The parties aired their differing views as to who bore liability for the deterioration of the Warehouse.
5. During the discussion, the plaintiff's lawyer described ammonium sulphate as an aggressive corrosive product which is destroying the premises, the roof, the walls and the structure of the building. He stated that the structural repairs which are now required are a direct consequence of the failure to take steps to minimise damage. The defendant's lawyer emphasised the provisions of the Original Lease in response.
6. Mr Joseph Hawkins expressed the view at the meeting that he was appalled at how the building had deteriorated. He talked about a deal being 'thrashed out' between the parties which Mr Syminton described as his preferred option. Mr Syminton indicated that IRM would consider a prevention program and then Mr Hawkins could 'come back to us regarding his proposal to deal with the existing damage'. Mr Hawkins appeared to accept the reality that, if something was not done to repair the building, then it would need to be demolished.

1. As I have earlier noted, during 2009 the defendant constructed the access holes between the Units, which had been the subject of communication and agreement with Mr Burns in August 2007, and which had been approved by the City of Kwinana in July 2008.
2. Some months after the meeting between the parties and their lawyers in November 2008, Mr Hughes prepared two further reports concerning the state of Unit 1 and the rate of corrosion. Those reports are both dated February 2009 and were provided by Mr Joseph Hawkins to Mr Syminton on 3 March 2009.[162] Mr Hawkins proposed that the parties meet to discuss the reports.
3. Mr Hughes identified several options to repair the component parts of Unit 1.
4. In relation to the structural steel, Mr Hughes identified three options, being to: '(1) Leave as is. This is short lived'; '(2) Blast clean and protective coat'; and '(3) Continue putting Fertan on'. Fertan is a rust inhibitor which the defendant had been applying to the steel in some areas, according to Mr Hughes.
5. In relation to the sheeting, the girts, the purlins, the walls and the roofing, Mr Hughes identified six options. The sixth option, which he referred to as a 'practical solution', was described as follows:

Clean down everything, patch as required then etch and protective coat all surfaces. After this a maintenance program is implemented to monitor and keep all coatings current. It will be impossible to coat everything properly however with periodical touch ups the accelerated corrosion can be controlled. This may be the most practical solution. In other situations this would get a 5 year guarantee. In this case no guarantee would be given.

1. Mr Hughes' cost estimate for the sixth option was between $250,000 and $300,000, which included the structural steel and concrete protection. Alternatively, Mr Hughes estimated the costs for the total replacement of sheeting, purlins and the steel and concrete protection in the order of $500,000.
2. The parties met again on 23 March 2009. It was a face to face meeting. Mr Syminton and Mr Frank O'Neill attending for the defendant, together with a lawyer, and Mr Joseph Hawkins, Mr Burns and Mr David Hawkins attended for the plaintiff.
3. The plaintiff did not bring their lawyer to the meeting. The defendant's decision to bring their lawyer displeased Mr Joseph Hawkins, who voiced his discontent at the outset.
4. The representatives discussed the contractual liability for the damage to the Warehouse. Mr Joseph Hawkins stated at the meeting that his insurance would not pay for some of the damage and he complained about the overall cost to replace the sheeting at the Warehouse, which he described as being around $500,000.
5. Mr Syminton emphasised that this was a 'unique problem' which IRM had not encountered in its other sites in Australia or internationally, and he queried whether the quality of the building materials was part of the issue. Mr Syminton said he would organise competitive quotes for the specific work needed on the property which he would provide to the plaintiff.
6. There was further discussion at the meeting concerning the terms of the lease for Units 2 and 3, given that the plaintiff had circulated draft terms for the formal lease for those units which differed from the terms in place over Unit 1. The defendant's representatives expressed their disquiet at the proposal for a new set of terms to govern the lease for Units 2 and 3.
7. In April 2009, a contractor (Rooftop Repair Solutions) was engaged by the defendant to attend at the site and undertake repair work on the roof to Unit 1. In around May 2009, additional leaks in the roof were detected and repaired by the same contractor. From around the middle of 2009 through to early 2010, it is apparent there were intermittent repairs required to the roof and the premises generally, which were attended to by contractors.
8. Mr Syminton provided Mr Joseph Hawkins with an update on the maintenance work in his email sent on 24 September 2009.[163] Mr Syminton also indicated in that email that he had previously offered to perform 'additional maintenance in the off season', and was proposing to 'scrape down external sheeting from ground only, coat with anti-rust and paint', and recorded his understanding that Mr Joseph Hawkins was content with this approach. Mr Syminton also stated:

While there is no immediate cause for concern however small leaks have appeared around new box gutter, probably lack of sealant between the old and new gutter. You would ask alltype [being the contractor] to patch when going past next.

1. Moving into 2010, the parties remained in dispute as to which of them bore contractual liability for the repairs and maintenance work.
2. In the last few months of 2010, the parties also had discussions about changing the end date for the lease on Unit 1, to coincide with the end date for Units 2 and 3, being 31 August 2012. This issue reached an impasse in November 2010, as is evident from Mr Syminton's internal email concerning the discussion he had had with Mr Joseph Hawkins, which dealt with the corrosion issues and responsibility for maintenance of the Warehouse:[164]
   • Hawkins want the new lease for U 2 & U 3 signed, then they will change the timing on U 1. The previously circulated lease for U 2 & U 3 has the onus on IRM for building deterioration. We have a schedule for U 2 & U 3 associated to the signed U 1 lease so have no intention of signing another.
   • They consider due to excessive corrosion from our product U1 will need to be progressively re-roofed from next winter which is much earlier than what they had anticipated (15 years ... ). If I am not mistaken the new lease they provided for U 2 & U 3 has IRM paying for capital works.
   • Bottom line is that Hawkins does not want to pay for the re-roof all by themselves, they want IRM to pay or contribute.
   • If we cannot reach an agreement Hawkins suggests involving a mediator.
3. In the notes prepared by Mr Garbellini, following an earlier meeting with Mr Joseph Hawkins on site in September 2010, Mr Garbellini recorded the following matters, among others:

1. Leaking and corroded water pipe on the east side (Butcher St side) of Unit 1.

Joe advised that he was prepared to replace the water pipe along the front of the building and that he would also look at replacing the fire water line at the same time. If necessary, he would replace the pipes along the south side of the building at a later date.

Joe advised that he had sampled the soil in the vicinity of the recent leaks and that the unqualified test result had shown that the soil was contaminated and highly acidic.

BJG advised that we had received quotes for the work and we offered to forward these to Joe. RJS suggested that a major part of the cost was the labour to dig the trenches and we offered the use of our operators to assist with this to help reduce the costs.

1. Corroded/ pushed out doorway on west side of Unit 3.

We advised that we were trying to arrange replacement of the door and frame, but Joe was not overly concerned about this and advised that he would be happy if we simply boarded it up from the inside. We could repair it at a later date if necessary.

Joe advised that he could provide the details of a supplier of plastic/fibreglass boxes, if we wished to replace any of them.

Joe advised that he would instruct his roof plumber visit the site and attempt to rectify to various leaks. There are some obvious areas of corrosion in the roof sheets and support steel. Joe suggested that he would need to start planning to replace some of the sheeting and he also suggested that he could look at replacing some of the steel purlins with timber. He made the comment that if we were to continue leasing the sheds for the long term, then it would be worth starting a program of replacing the damaged sheeting and steel work.

1. The issue concerning the alignment of lease end dates remained unresolved into April 2011.[165] Mr Joseph Hawkins and Mr Syminton met at the site on 6 April 2011 to discuss this issue and also the repair work to the Warehouse. Mr Syminton made notes of that meeting in which he described the meeting as cordial and frank. His notes record the following matters:[166]
   • Hawkins has received advice from his roofer saying there is still life in the cladding, it seems the IRM team does not dispute that nor has the building been tested recently because of the lack of rain over the summer. Hawkins does not intend on doing anything except patch work which it seems the IRM Kwinana team seems comfortable with. He may start replacing the box gutter with stainless if it continues to leak.
   • He is seeking advice on status of the lease paperwork- in respect to IRM's view the schedule adding unit's 2 & 3 to the original unit 1 lease as against the Hawkins view of a new lease we never signed and refuted as irrelevant as have agreement by way of schedule.
   • He knows we have engaged lawyers to prepare a change to the timing of renewal but has not explicitly agreed to the change, because of the preceding issue.
   • If we were to commit for a long term he would get started on recladding or rebuilding. I suggest we get a quote or two on recladding at least to put perspective to cost in case we want to head down this track.
   • He is happy we are doing a fine job with the site and payment. His only concern is when we leave he is left with a useless building until rebuilt. He certainly agrees we did not mislead him, his issue is "nobody told him how corrosive the product is". This is a clear warning.
   • He asked for confirmation in writing that the fireboxes are working to comply with his insurers requirements (FTO).
   • CSBP may sign up to use their radio tower.
   • Joe Hawkins claims to be emotionally attached to the building and does not want anymore because of the buildings deterioration. (emphasis added)
2. Within Mr Syminton's notes, he recorded his observations of the state of the Warehouse, which he said he did not 'purposefully' discuss with Mr Hawkins. Mr Syminton observed 'on-going deterioration of the cladding' to the Warehouse, which he described as continuing 'to get worse but appears to be watertight'. He noted he was surprised about the concrete deterioration, particularly to the north entrance to Unit 1. He recorded his view that the concrete wire mesh to this section of concrete would need replacing. He observed another section of concrete crumbling just inside the door, and indicated that both of these were sources for the concrete contamination in the defendant's product (which had apparently led to complaints from customers). Mr Syminton noted that the concrete walls of Unit 1 have appeared to be rotting in patches and his 'guess' was that 'water was taking ammonium sulphate through causing rot'.
3. In June 2011, there were further leaks identified in the roof to the Warehouse, primarily to Unit 1. Alltype Roof Repairs was engaged to fix the leaks.[167] Mr Frank O'Neill raised the significance of the roof leaks with Mr Joseph Hawkins by email on 2 July 2011, attaching a detailed report the defendant had prepared regarding the leaks.[168] In his covering email, Mr Frank O'Neill noted that:

I hope business is good and you are doing well. The main purpose for this email is to update you on the status of the roof on shed 1. All Type Roof came out and patched the roof several weeks ago but unfortunately, the roof is in bad shape and it is nearly impossible to find, let alone repair all of the leaks. During the past week we had several days of heavy rainfall and there were leaks throughout shed 1 as well as on both sides of the wall that separates shed 1 from shed 2 and 3.

Please see the attached report, all of the photos in the presentation were taken on June 30, 2011 during a very heavy rainfall. The report shows many, though not all of the leaks in the roof and the damage that some of the leaks are causing to the concrete slab.

1. The report prepared by the defendant includes numerous colour photographs showing the leaks in the premises during a period of heavy rain, holes in the concrete slabs said to be caused by the leaks, and water ingress in each of the Units. The report states, in part, that the 'roof in shed 1 has deteriorated to the point that the number of leaks is significance and is causing structural damage to the walls and the slab within the shed'. The report further states that the 'worst areas' are along the south wall of Unit 1 and along both sides of the north wall of Unit 1 which separates it from Units 2 and 3. Further, 'a large portion of the South wall and sections of the North wall of [Unit 1] were covered with water from leaks in the roof'. The author of the report notes that, with the exception of the dividing wall between Units 2 and 3 and Unit 1, the roof in Units 2 and 3 was in 'good shape'.
2. Representatives of the defendant continued to discuss the situation with the plaintiff and the state of the Warehouse, as is evident from the internal emails and notes circulated and prepared in August 2011.[169] These internal notes record that BHP had accepted the defendant's proposal concerning concrete repairs at the Warehouse, in respect of which BHP would meet the costs. The internal emails also record Mr Syminton's view at the time regarding the damage to the concrete, in the following terms:

Concrete

There are two areas inside both exterior doors to Unit 1 at 30 Butcher street that are severely damaged and need to be repaired immediately. Each area is approximately 15 meters long x 10 meters wide. [Frank O'Neill] advised the damage is the result of water mixing with the ammonium sulphate and causing the concrete to erode and eventually crumble under the weight of heavy truck and loader operations. The erosion of both areas has been accelerated by the pooling of water in the lowest areas where the concrete is completely eroded. There are good pictures if you want them.

The concrete damage is the direct result of ongoing operations and not normal wear and tear. The area in front of both doors is heavily trafficked during inbound operations and when the shed is full. Furthermore, during normal operations, the loader blade will occasionally scrape the damaged area causing greater damage and contaminating the product with loose stones and concrete chips.

My view is that because the required repairs as not "normal" wear and tear therefore for IRM (NiW) account. If we all agree I would take this to NiW for them to decide how to process the cost, as a one off invoice being my preferred methodology. We would also need to advise Hawkins of the remedial work being done, seeking his approval of works (as per the lease) being especially careful with the language when advising him of the issue.

1. I pause to note that the subjective views of the parties as to the proper construction and meaning of the contractual instruments are irrelevant and can be put to one side.
2. At a meeting on site on 1 September 2011, Mr Joseph Hawkins and Mr Frank O'Neill discussed the state of the Warehouse, the roof to Unit 1, and the repair works which had been proposed. Mr Frank O'Neill made notes of that meeting, which record the following matters and which I accept to be an accurate account of the meeting:[170]

FTO [Frank O'Neill] then discussed the issue of the roof and the necessity of replacing the roof. The point was made to JH [Joseph Hawkins] that the roof has deteriorated to such an extent that IRM is no longer able to store product in shed 1.

JH acknowledged that the roof and the walls are in bad shape and need to be replaced. JH then spoke for 10 minutes about how corrosive our product is and how it is the cause of most, if not all of the damage to the roof and walls. JH claimed that he never would have agreed to the language in the lease that made the Landlord responsible for the total cost of repairing and replacing the roof if he knew how corrosive the product was. FTO made no comment other than to point out that the lease does state that the product is corrosive to which JH replied that it does not state HOW corrosive the product is. (emphasis added)

JH said that he is willing to pay a portion of the cost of the roof but he won't pay the full cost, IRM must share the cost. JH further added that if he has to pay the full cost, he will not do anything but continue to patch the roof and when IRM vacates, he will demolish shed 1 and rebuild it and never lease it to a tenant who will store corrosive products again. FTO asked JH to make a proposal to IRM. JH responded that he hadn't given it any thought but he would and get back to us (NOTE: This is the same thing JH told RJS during our meeting in March). FTO informed JH that we needed to move quickly on this because the busy season has recently ended and we have a 3 month window of opportunity to get all of the work completed.

In response to JH's comment about demolishing the building, FTO replied that IRM will not be willing to repair the concrete if JH chooses to demolish the building.

JH then made a comment that he wasn't sure when the lease for shed 1 was due to expire and he understood and appreciated our concern (the terminal operators at Kwinana and FTO in particular) to have the shed repaired so that we can conduct our business. FTO responded that he understood that the lease for shed 1 has expired and a new lease is currently being negotiated. JH said that he would get back to us with a proposal and that he would have his preferred contractor come in and look at what needs to be done to replace the roof and the walls in such a way so that there wouldn't be the same issue with corrosion in the future.

1. Mr Frank O'Neill also recorded his thoughts following the meeting, including that he appreciated the roof in Unit 1 needed to be replaced but, he considered that, the defendant could continue to use Unit 1 through until 2012 if the parties could not reach a solution to the issue.
2. Mr Frank O'Neill spoke with Mr Valkenstrom from Alltype Roof Repairs after the meeting, who apparently indicated to him that the roof could last 'another year or more with some major patching', but Mr Valkenstrom recommended that a sleeve be placed on the box gutter and some of the sky lights be replaced.
3. Mr Frank O'Neill considered at the time, as he noted in his internal email, that the plaintiff would not be able to lease Unit 1 to another tenant in its current condition, and he felt that Mr Hawkins would not want to lose the rent money which the defendant was paying.
4. On 26 September 2011, further leaks occurred in the roof to Unit 1, which Mr Frank O'Neill reported to the plaintiff.[171] Mr Frank O'Neill also raised with Mr Joseph Hawkins in his email the timing of a proposal from the plaintiff regarding the 'allocation of cost of replacing the roof'.
5. Some days later, on 28 September 2011, an emergency situation arose following the door to Unit 3 becoming detached, as a result of the collapse of the 'channel guide' to the door.[172] The incident was documented in photographs taken by the defendant.

1. The Warehouse suffered storm damage on 10 June 2012, which Mr Syminton recorded in an email the following day.[173] The damage meant one of the truck doors was not operational, but the defendant was able to continuing operating at the site. Mr Syminton noted there was a need for roof repairers to be engaged to repair the damage. Photographs of the damage show sheets to the external walls of the Warehouse had been torn off by the storm, roof panels had come loose, and other parts of the Warehouse had been torn off.

1. In around March 2013, an incident occurred at the Warehouse by which a truck caused non-structural damage to the roof, which was repaired by Alltype Roof Repairs. Mr Frank O'Neill engaged the contractor and updated the plaintiff about the incident by email.[174]
2. Between July 2012 and March 2013, discussions between the parties continued as to the extension of the leases, and a detailed draft lease for the three Units was provided by the defendant to the plaintiff for its consideration.[175] Those discussions included debates about the parties' respective responsibility for water ingress into the Warehouse, their responsibility for repairs, and their liability for make good obligations. In one of the meetings, which occurred on 26 March 2013, Mr Frank O'Neill recorded Mr Joseph Hawkins stating that if the defendant did improve the building and the building was intact when the lease ultimately came to an end, 'there would be no need to worry about him [i.e. the plaintiff] coming after IRM for replacement because the building will still be in good shape'.[176]
3. These lease discussions did not lead to any agreed position.
4. In July 2013, the defendant correspondence with BHP regarding the agreement between them, and addressing the state of the Warehouse. In a letter sent by Mr Syminton to BHP on 16 July 2013, Mr Syminton provided the following summary of the state of the premises:[177]

Cladding and structural steel of the Butcher Street buildings (4,800m2 covered floor space) are corroding, and quite quickly. BHPB NiW's ammonium sulphate is not at significant risk of contamination however should there be no building refurbishment the risk profile will change.

IRM has been in discussion with the landlord for years over this issue. The landlord is reluctant to spend anything on the property as in their view ammonium sulphate is so corrosive that any expenditure is a wasted investment. For reference in the lease the material to be stored and handled is stated to be "corrosive" and it is the landlord's responsibility to keep the buildings watertight. The reality is we have a reluctant landlord so IRM takes the lead in all cases to protect ammonium sulphate.

IRM and the landlord are trying to establish mutual grounds for moving forward refurbishment. One option was that over a long period (10 years) the Landlord funds 50% of the refurbishment. Refurbishment estimates are high. One estimate was $829,500 or around $5.00/mt over three years of throughput.

Several years back three concrete walls were cut to provide for FEL access without needing to go outside. Indirectly BHPB paid for this work, by rights when (if) IRM leaves the property the walls should be made good. Our estimate is that, if we were forced to make good the walls, the cost would be between $100-150,000 ($0.60-0.90/mt over three years throughput).

In both circumstances under the existing Distribution Services Agreement BHPB NiW is responsible for the cost. We consider liability rolls forward under that Agreement, as these issues arise from the period of that Agreement, but will be outside the new agreements. IRM will ensure BHPB NiW is consulted on any major works that will need to be carried out.

1. As is evident from the above letter, the defendant had received quotations in June and July 2013 from various contractors for the reroofing of the Warehouse. One of the contractors provided an estimate for the work of $829,500.
2. There was no progress between August and October 2013 regarding the discussions as to the lease terms. That position continued into September and October 2013, with Ms Bosch complaining that they were now 'well past a reasonable time frame' for the defendant to assume the previous lease terms would continue to apply.[178] Ms Bosch regularly followed up the issue with the defendant by email, in polite terms although it is apparent the issue was a frustrating one for her. Ultimately, no agreed position was reached in relation to the revised lease terms.
3. Following heavy rains in September 2013, holes in the ground surrounding the Warehouse were identified by the defendant. The issue was raised with Mr Joseph Hawkins by email on 18 September 2013, with photographs attached.[179] Mr Frank O'Neill proposed that a contractor attend to repair the holes, providing a quotation to the plaintiff for $4,200. The repair work was undertaken by the defendant.
4. During 2013, complaints were received by a government department and the local council concerning the Warehouse. The court admitted into evidence, over the defendant's objection, documents from the DEC and the City of Kwinana, which recorded contemporaneous complaints from members of the public about emissions from the Warehouse premises, in early 2013.[180]
5. On 17 January 2013, an anonymous complaint was made by a member of the public concerning sulphate residue emanating from the Warehouse premises and a dust plume.[181] On 21 January 2013, another complaint was made, this time not anonymously but by a neighbour. The complaints were investigated by the City of Kwinana, and photographs were taken of the area on 17 January 2013. Indeed, the City of Kwinana raised the complaints directly with the defendant, specifically with Mr Frank O'Neill.[182]
6. Mr Donkin testified that he was made aware of complaints from persons in the neighbourhood, concerning a time when dust was going out through the side of the building.[183] It is not clear on the evidence if Mr Donkin was referring to the complaints which were made in early 2013 and, following an objection, that course of evidence was not pursued further with Mr Donkin.
7. Having examined the photographs which were taken by the City of Kwinana investigator, I am not persuaded that the 'dust plume' was in fact coming from the Warehouse premises. However, the photographs show residue being left on the pathway and the road immediately outside the Warehouse premises. It can reasonably be inferred from the photograph that the residue is ammonium sulphate. Mr Frank O'Neill confirmed this when he communicated by email with the City of Kwinana on the day of the first complaint, in response to the City's enquiry.[184] He referred to the inadvertent spilling of ammonium sulphate on Butcher Street. Mr Frank O'Neill informed the City of Kwinana that the defendant had, as a result of the complaint, conducted a 'full sweep' of Butcher Street and the ammonium sulphate had been 'cleaned up'. He also said:

We will continue to monitor all trucks exiting the site to ensure that all product is contained on site and in the shed.

1. Ms Chui from the City of Kwinana raised the second complaint with Mr Frank O'Neill on 29 January 2013.[185] In her email to Mr Frank O'Neill, Ms Chui stated:

I have received another complaint regarding the dust (ammonium sulphate) coming from 30 Butcher St.

Specially [sic - specifically], the complainant alleges that the dust is coming from the warehouse itself as the doors are not closed and dust is being blown over to their property.

I was hoping to meet onsite this Thursday or Friday to discuss this matter further.

1. Ms Chui and Mr Frank O'Neill then met onsite. Ms Chui summarised the meeting as follows, in her further email to the defendant:

Hi Frank,

Thank you for meeting with me onsite yesterday morning to discuss about the dust complaint.

I support that your business install curtains in the front and back doors of the warehouse to minimise the release of dust outside the boundary of your property, while ensuring adequate ventilation is provided for the building.

I have provided your contact details to the complainant and I believe that the complainant may contact you directly.

Please keep me informed for any progress made towards resolving the complaint.

Thank you.

1. Mr Frank O'Neill indicated in reply that he would keep the City of Kwinana advised of the steps the defendant takes in response to the complaints.
2. There is no documentary evidence to the effect that the defendant informed the City of Kwinana that it installed dust curtains within the Warehouse. Mr Frank O'Neill was cross-examined on this issue and, while he initially gave evidence that dust curtains were installed, he retreated from that evidence when pressed.[186] Had the defendant installed the dust curtains, it is likely that it would have informed the City of Kwinana, given the complaint which had been made and given the recommendation made by the City of Kwinana in this regard. As I have elsewhere noted, I do not accept the evidence of Mr Tip O'Neill's to the effect that the defendant had undertaken the installation of dust curtains.
3. I therefore consider it more probable than not that the defendant did not install any dust curtains within the premises, notwithstanding these complaints which were made in early 2013 and notwithstanding the recommendation made by the City of Kwinana.

1. In January 2014, the defendant obtained quotes for further roof repairs at the Warehouse and the repair work was undertaken. At the time, the defendant's representatives were considering the more substantial renovations required to the Warehouse, particularly to the west wall. In February 2014, repair work was undertaken to the entire western wall and to portions of the south wall.
2. In May 2015, the Warehouse suffered significant damage from winter storms. It appears there were two separate storms during this period which tore sheets off the northern wall of the Warehouse. A large amount of rain water was diverted into the shed during the storms. Unit 2 was flooded with around two inches of water in parts of the shed, while Units 1 and 3 fared somewhat better given the direction of the winds. Guttering on the Warehouse was damaged and had to be removed. As can be seen from the photographs taken at the time, huge gaps in the wall to the Warehouse resulted from the storm, exposing the product to the elements and impacting operations during any rain events.[187]
3. The storm damage to the Warehouse precipitated the defendant to instruct its solicitors to issue a notice of default to the plaintiff. I refer to the notice of default issued on 17 June 2015.[188] The notice attached photographs of the storm damage, taken on 18 May 2015 in respect of the storm damage which occurred on 16 May 2015.
4. In the notice, the defendant's solicitors identified several contraventions of the lease by the plaintiff, focused on the failure to prevent water ingress, the dilapidated state of the premises, the dangers posed by loose corrugated iron, and damage to the ammonium sulphate. The notice required that the plaintiff comply with the terms of the lease immediately, provide a schedule of repair works satisfactory to the defendant, take necessary action remedy the danger and compensate the defendant for damage to the product. Various deadlines were set out in the notice.
5. In late June 2015, further rain led to additional damage to the Warehouse. It appears the gutter on the south side had fallen down and sheets of tin had been blow off the door to Unit 3, further sheets were removed from the north side due to safety reasons, and rain had come through the hole in the north wall.
6. No steps were taken at this point by the plaintiff to rectify the storm damage.
7. The defendant's solicitor followed up the notice of default by letter dated 6 July 2015, providing additional photographs showing the further damage to the Warehouse.[189] The letter gave notice that the defendant would be withholding rent, in the following terms:

Given your client's failure to meet any of the Deadlines referred to in the Notice of Default dated 17 June 2015 I have advised my client to withhold the payment of Rent on the basis that:

1. your client has and continues to cause my client to suffer loss and damage;
2. your client has acknowledged receipt of but failed to respond to the Notice of Default (other than your phone call which merely confirmed you intended to act), despite reasonable time afforded);
3. your client has failed to materially act on the matters raised in the Notice of Default;
4. the Premises are so damaged as to require major rebuilding and/or reconstruction;
5. the Premises are now dangerous, unfit for occupation or use; and
6. the influx of rain into the Premises continues to get worse.

Failure to remedy the Lessor's Contraventions in the Notice of Default may result in my client withholding a further months' rent or such further rent as reasonably required to remedy the Lessor's Contraventions identified by the Notice of Default.

1. The plaintiff's solicitors responded on 9 July 2015.[190] The solicitor stated:

I am instructed that my client is requesting quotes for the storm damage for submission with its insurer. I will keep you advised of all developments in that regard.

My client denies that it is responsible for the damage to the Premises and says that the damage to the Premises was caused by your client and the method in which it stored its fertiliser.

Pursuant to the terms of leases, you r client must pay all rent without any set off. My client reserves all of its rights should your client fail to pay the rent when it falls due.

1. Further photographs of the damage to the site from water ingress were taken by the defendant's representatives in late July 2015.[191] The photographs show water damage to the walls, said to be from water ingress over the two month period following the storms in May 2015. The defendant estimated it would lose around 2,000 mt of storage space within the Warehouse given the water damage.
2. Following receipt of the correspondence from the defendant on 6 July 2015, once again, no steps were taken by the plaintiff to rectify the damage.
3. On 29 July 2015, the defendant's solicitors wrote to the plaintiff's solicitors regarding the notice of default (now for a third time), asserting that the defaults had not been remedied in the six week period since the notice had been issued.[192] The solicitors raised queries regarding the nature of the insurance claim which had been mentioned, and asserted that the:

...Lessor's ongoing failure to mitigate the Lessor's Contraventions means that the whole Premises is now dangerous and circa 70% of Unit 2 is unfit for purpose. Substantial losses are accruing daily for which my client continues to make account and will provide these to your client for reconciliation purposes.

1. A letter of demand was then issued by the defendant's solicitors, sent on 7 August 2015.[193] That letter, which was sent to the plaintiff's solicitors, stated in part as follows:

Given that the use of the Premises under the Lease is value adding and storage of corrosive fertiliser ... and clause 3.9(a) of the Lease expressly provides that the Lessor must maintain and repair the Premises to prevent water ingress, the costs of curing the past and present dilapidation of the Premises is wholly and properly payable by the Lessor. (original emphasis)

As a consequence of the Lessor's Contraventions, the Lessee has incurred costs and expenses for the account of the Lessor maintaining and repairing the Premises to prevent water ingress and other structural repairs properly for the account of the Lessor under the Lease.

These costs and expenses were paid for by the Lessee in good faith and in reliance of the rights and obligations under the Lease that the Lessor would make good these sums. These sums are now outstanding beyond reasonable or acceptable trading terms.

1. The letter from the defendant's solicitors demanded payment of the sum of $206,267.34 (which was itemised in a schedule attached to the letter) for the maintenance and repairs effected by the Lessee in carrying out the Lessor's obligations under and during the term of the Lease'.
2. In around July or August 2015, Mr Joseph Hawkins attended at the premises and observed the product had been piled higher than the allowable levels against the walls of the Warehouse.[194] Mr Hawkins' recollection, albeit somewhat vague on this point, was that the ammonium sulphate was piled against the interior walls of the Warehouse, higher than the two metre limit, and up to four to five metres high. I did not understand the defendant to dispute that this had occurred, although the frequency and extent to which this occurred appeared to be in dispute.
3. On 12 December 2015, Mr Joseph Hawkins emailed Mr Tip O'Neill to advise him that he had a buyer interested in purchasing the property, and queried with the defendant whether it was interested in purchasing the premises.[195] It appears the defendant did make an offer to purchase the property in response, but it was below the plaintiff's expectations. When discussing the possible sale with Mr Goodwin on 17 December 2015, Mr Joseph Hawkins likely said words to the effect that 'he doesn't care what he gets offered he will cut his own throat until we [i.e. the defendant] fix the whole site to his standard'.[196]
4. Mr Goodwin recorded the discussion with Mr Joseph Hawkins in an email he sent on the day of the discussion. I accept the email is accurate. Within that email, Mr Goodwin also recorded a statement by Mr Hawkins to the effect - 'He made it quite clear to me he wants to drag his feet and he is under the impression that all repairs will be down [sic - done] over time by IRM'.

1. In March 2016, Mr David Hawkins took steps to follow up the defendant regarding the failure to pay rent. The enquiries in this regard were met with a strong response from the defendant, with Mr Tip O'Neill stating:[197]

As you are aware the condition of the facility is impaired and deteriorating due to its age and a lack of maintenance. In good faith we have made over AUD 200,000 in repairs, which are not required in our lease. There has been no recognition or acknowledgement of this. Because of the building's condition we have lost DAFF certification, and the large openings in the walls will expose our product to coming winter conditions.

This situation is unacceptable, so we are in the process of making other arrangements. We have been prepared to undertake contingent lease discussions with a new owner to possibly enhance the value of the property in a sale, but we have given up on possibility reaching a reasonable arrangement with Joe.

1. This email prompted the 'ostriches in the sand' email from Mr David Hawkins on 3 March 2016:[198]

Thanks for the reply. I guess you know the product well, because of its highly corrosive manner the shed has sustained accelerated wear to the building.

I believe that with both yourself and Joe being ostriches with heads in the sand there won't be an outcome. Your product no doubt caused the problem with the building, but I think whilst you and Joe are adamant that there is no solution it makes it hard to find an amicable outcome.

The maintenance you mention, to me there is no such maintenance to a metal wall in normal circumstances, but the product being highly corrosive then precautions should have been taken to protect the building, during the normal coarse [sic] of business, you know what I mean as you are well converse with the product you are storing in the shed, therefore with your intimate knowledge, you are a lot better placed to know what damage can occur due to the product nature if nothing is done to prevent corrosion attacking the shed.

I guess I see both sides, but maybe both of you need to look at the other side to realize it's not such a huge problem and should have been sorted out by now.

I was actually chasing the rental payments that are now overdue.

At this point you owe money and that must be paid. Can you please advise when the payments will be made.

Thanks for the reply I appreciate your valuable time.

1. Mr Tip O'Neill's reply came later that week, on 4 March 2016.[199] He commented that the plaintiff had not replaced the steel cladding on Warehouse, observing that the building was approaching the end of its useful life. He felt the plaintiff was giving the defendant 'no choice' but to move. Mr David Hawkins sent a reply indicating his belief that the ammonium sulphate had a 'very corrosive nature', and referencing the structural damage caused to the concrete when hit by a loader.[200] Mr Hawkins reiterated his demand for payment of the outstanding rent.
2. In March 2016, Mr Joseph Hawkins received $26,462 from his insurer, Zurich Australian Insurance Limited, in respect of the claim for repairs caused by the storm damage in 2015.[201] It is not in dispute that Mr Hawkins did not apply that money to the repair of the Warehouse.
3. In considering the evidence of Mr David Hawkins, I have earlier discussed the email exchanges between him and Mr Tip O'Neill in July 2016 concerning the suggestion that 'farm waste' had been brought on to the property, which proved to be inaccurate. There was a heated exchange by email between the men, which opened up the continuing concern of Mr David Hawkins that the defendant's product had 'destroyed the building'. Mr Tip O'Neill responded in the following manner:[202]

When one is in a burning movie theatre, I expect that only a few would look at the fine print on the back of the ticket stub before acting. Similar, I would expect that all of my Australian friends over the last 40 years would clearly understand and respond properly respond to the outcry of "Fire" even with an American accent.

1. In July 2016, the plaintiff engaged Marocchi Engineering to inspect the Warehouse and provide a report on its condition. A report was prepared in August 2016 which noted the extensive corrosion to the premises including the roof sheeting, fixings to roof purlins, the wall sheeting and girts.[203]
2. The report identified damage to the dado walls and surface corrosion to the main structural steelwork, and included photographs showing the ammonium sulphate stored above the recommended line on the dado walls. The recommendations for remedial work were extensive, and required to 'prolong the building lifespan'. Among other things, the author of the report, Mr Marocchi, a structural engineer, recommended replacing the entire roof cladding and roof purlins, replacing the wall girts and wall cladding, replacing the damaged roof and wall cladding to ablution block, blast cleaning the structural steelwork, and blasting and cleaning all dado walls.
3. Photographs were taken of the Warehouse in August 2016 which showed the extensive number of panels missing from the storm damaged wall of the Warehouse, which had not been replaced.[204] The photographs also show the heaped ammonium sulphate in the Warehouse, partially covered by tarpaulins. One of the photographs is extracted below:

1. In October 2016, water damage to the ammonium sulphate occurred within the Warehouse, following water ingress.[205] It is apparent from the photographic evidence that a large volume of the product was damaged as a result of the water ingress. The defendant arranged to move a large amount of the product to another location as a result.[206]
2. In November 2016, the defendant left the Warehouse and moved its entire operation to another location.[207] Before doing so, representatives of the defendant removed the bulk ammonium sulphate from the Warehouse and cleaned the premises, which included sweeping internally and externally. Photographs taken in November 2018 still show, however, the presence of some ammonium sulphate in the premises, attached to the walls and steel beams and in other places.[208]
3. The defendant caused its solicitors to give notice of the termination of the leases on 18 November 2016.[209] In that letter, the solicitors referred to the notices of default issued on 17 June 2015, 6 July 2015 and 29 July 2015, as well as the letter of demand dated 7 August 2015. The solicitors stated in the letter:

The Lessor's Contraventions constitute breaches by the Lessor of fundamental terms under the Lease.

The Lessor has failed, despite written notice and reasonable time provided by the Lessee, to remedy the Lessor's Contraventions or pay the sums due to the Lessee by the Deadlines provided, in whole or in part.

The Lessor's failure to remedy the Lessor's Contraventions and unwillingness to remedy the Lessor's Contraventions constitutes (among other things) repudiation of the Lease.

As a result of the Lessor's failure to remedy the Lessor's Contraventions the Premises are no longer safe to occupy for the intended use and are a hazard to human life and the Lessee's business and property.

Accordingly:

TAKE NOTICE THAT the Lessee is lawfully entitled to terminate the Lease and by this notice the Lessee confirms its termination of the lease, Friday 18 November 2016. (original emphasis)

The Premises are now vacant and available for re-entry by the Lessor.

1. Subsequently, on 4 January 2017, the defendant's solicitors gave notice of its claims against the plaintiff for the cost of repairs to the Warehouse, loss and damage to the defendant's product, and disruption to its business.
2. The solicitors for the plaintiff promptly responded to this letter, asserting that the defendant had breached the leases, as a result of which the plaintiff was terminating the leases based on the repudiatory conduct by the defendant, and was demanding payment of outstanding rent and a potential claim for damages.
3. Given the conclusions as to the proper construction of the Varied Lease I have reached in these reasons, outlined in Part VII below, I would also conclude that the plaintiff was entitled to terminate the lease in the manner it did.
4. Later that year, in October 2017, the plaintiff received correspondence from the City of Kwinana regarding complaints the Warehouse was in a 'state of disrepair and dangerous'.[210] The City of Kwinana representative who attended on site observed 'large portions of wall cladding flapping in the strong wind' and the 'whole front door...had blown off the building'. The plaintiff was requested to explain how it would rectify the issues. Mr Rodney Molyneux from the City of Kwinana, in June 2018, attended the site to inspect the Warehouse, and took numerous photographs of the premises (and video footage), showing the corrosion and missing wall panels, among other things.[211]
5. On 4 September 2018, the City of Kwinana issued the plaintiff with a building order, pursuant to the Building Act 2011 (WA).[212] The building order stated that the Warehouse was in a 'ruinous and dilapidated' state, which the council 'reasonably believed ... [to] be in a dangerous state, and constitutes an extreme risk to people, property or the environment'. The building order included directions to the plaintiff to renovate the repair the building.
6. In response to the City of Kwinana's building order, the plaintiff was required to undertake certain works to remediate the Warehouse. Mr Joseph Hawkins confirmed in his evidence that work was undertaken by the plaintiff in late 2018 in response to the building order, to clean up the site and secure the building.[213]
7. The building order required the plaintiff to obtain a report from a structural engineer, with which the plaintiff complied. Mr Joseph Hawkins engaged Zedcon Scientific Services, who in turn engaged RSA, to undertake a structural inspection of the building. Zedcon Scientific Services is a company controlled by Dr Zurhaar, although nothing in this case turns on that association. A report dated 3 March 2020 was prepared following this inspection, signed by Mr Salter who is stated to be a civil and structural engineer (RSA Report).[214] As required, Mr Hawkins supplied a copy of the RSA Report to Mr Molyneux at the City of Kwinana, on 11 March 2020.
8. Mr Hawkins was cross-examined about the RSA Report, after being given an extended period to review the document while in the witness box.
9. There are some observations and conclusions in the RSA Report which should be noted. Mr Salter recorded his findings as to the state of the Warehouse in the following terms:

The buildings are in a dilapidated state is [sic] generally and there is clear evidence of corrosion and erosion due to the materials previously stored in the buildings.

Most of the wall cladding has been removed prior to our inspection. While there was a easterly breeze at the time of the inspection we noted no cladding that was adrift.

A detailed report is in Section 3.2, the dilapidation report. The buildings and grounds were found to be relatively clean of any stored product.

1. Mr Salter examined nine different aspects of the Warehouse by reference to a risk matrix and risk exposure assessment framework, noting there was largely a 'low risk exposure' on most locations, and a 'medium risk exposure' in two areas. He observed that the northern shed column was 'dry packed with corrosive product' and recommended the level of corrosion be monitored. He made a recommendation for installing a cross brace to assist the roof purlins against wind loads, and ultimately concluded that the 'building in its current form is safe from collapse and [his] inspection did not show any reasonable risk to the surrounding properties'.
2. Mr Salter stated in the RSA Report that RSA was:

... structurally certify the buildings located at 30 Butcher Street, Kwinana Beach, with the modifications proposed in the above is valid [sic] for two years from the date of this report. RSA will need to reinspect the building in two years to extend this certification.

PART V- EXPERT EVIDENCE AS TO CORROSION A. Introduction

1. The plaintiff relied on the expert evidence of Dr Zurhaar, who is a scientific consultant with expertise in corrosion issues. The defendant called expert evidence from Dr Farinha, who is a specialist corrosion engineer. The experts expressed their opinions as to a number of matters including as to:

(a) their findings from the inspections which have been undertaken including the level of corrosion identified;

(b) whether the method or storage and handling of ammonium sulphate at the premises was an acceptable practice in the fertiliser industry;

(c) the connection between any material damage and the past storage of ammonium sulphate;

(d) the effects if any which water, humidity and moisture have on the corrosive nature of ammonium sulphate on building materials;

(e) the extent water ingress arising from damage caused by storms could increase the corrosive nature of ammonium sulphate and the damage to the building materials and units;

(f) the suitability of the premises for storage of ammonium sulphate; and

(g) maintenance and other steps which could mitigate the corrosive effects.

1. The experts gave their evidence at trial concurrently, only once all relevant lay evidence had been called, for the reasons explained by the court in the interlocutory reasons given prior to the trial.[215]

1. The plaintiff called Dr Zurhaar to give expert evidence as to the effects of ammonium sulphate on the structure of the Warehouse, and as to how those effects could be mitigated. A detailed expert report from Dr Zurhaar dated 1 November 2019 was relied upon at trial by the plaintiff,[216] together with a supplementary report dated 26 October 2020.[217]
2. Dr Zurhaar has a Bachelor of Applied Science (in Applied Chemistry), a Graduate Diploma in Chemistry from the WA Institute of Technology, together with a Masters of Applied Science and a Doctor of Philosophy, both from Curtin University . He has extensive experience in relation to fertilisers, corrosion and construction materials, having assessed many such installations over the course of the past 30 years.
3. Dr Zurhaar has also developed material specifications for fertiliser storage facilities in the past, and acted as an independent materials specialist and chemist to assess chemical and fertiliser interactions with structures. He is engaged as a Principal Scientific Consultant to the Western Australian Government and routinely provides expert corrosion prevention and materials science services to a number of government agencies.
4. I accept Dr Zurhaar had the appropriate and relevant expertise and extensive experience in order to express the opinions contained in his report. He gave his evidence in a clear manner and there is no reason not to accept his opinion evidence. The defendant submitted that less weight should be applied to Dr Zurhaar's evidence given his findings were based in part on instructions which were not borne out by the evidence at trial.[218] For example, he was instructed the doors to the Warehouse were always left open and the defendant would drive 'soaking wet' trucks into the premises. He was also instructed that there was an extremely high volume of product screened in the Warehouse, and that dust which was screened emanated from the building.
5. I accept that not all of these matters were not demonstrated on the evidence, but I do not regard the discrepancies as having a material impact on the overall force of Dr Zurhaar's opinions. There was also some mild criticism of Dr Zurhaar's independence in closing submissions from counsel for the defendant, which I do not accept.[219] One of the bases for the criticism was the evidence he gave regarding the state of the premises as between 2017 and 2019. For the purposes of preparing his report, Dr Zurhaar had attended at the premises on several occasions over the period from June 2017 to July 2019, which also included an inspection of the premises in 2019 using a scissor lift to access the high level areas to undertake an examination and sampling activities. He did not use the scissor lift in 2017. As I will explain, I consider this weakens the strength of his comparative assessment, and I prefer Dr Farinha's assessment of the deterioration, but it does not otherwise impact Dr Zurhaar's evidence.

1. Dr Farinha prepared a detailed expert report which is dated 30 September 2021, which was tendered at trial.[220]
2. Dr Farinha is an engineer in a specialist corrosion engineering consulting group which has been in operation since 1991. He is a specialist qualified Corrosion Engineer, holding both a Masters in Science and PhD in Corrosion Engineering. He is a past president of the Australasian Corrosion Authority which is the Australasian professional industry group for Corrosion Engineers.
3. Dr Farinha was made a Fellow of the Institute of Corrosion in the United Kingdom in 1992, and appointed an Adjunct Research Fellow at Curtin University in 1993.
4. Dr Farinha has been involved in identification and problem solving of corrosion related issues in steel corrosion and reinforced concrete including inspection, identification, failure analysis, materials selections, coatings, coating specification and repair methodology for over 30 years.
5. As with Dr Zurhaar, I accept that Dr Farinha had the appropriate and relevant expertise and extensive experience in order to express the opinions contained in his report. He gave his evidence in a clear manner and there is no reason not to accept his opinion evidence.

1. The experts prepared a Joint Statement which is dated 9 February 2022 (JSE), which reveals a high degree of commonality and agreement between them. The Joint Statement renders it unnecessary to traverse in these reasons all of the details within the experts' reports.
2. The Joint Statement incorporated some background factual information in the following terms, recording their conclusions as to the structure of the Warehouse and the composition of the materials used:
   1. The three-unit structure located at Butcher Street, Kwinana was built in two stages.
   2. Unit 1 was built in 1990 and consisted of mild structural steel columns and roof trusses coated at time of construction with zinc phosphate (red oxide) primer. At some point prior to IRM's occupation some steel columns received a supplemental paint coat of alkyd enamel paint. The roof purlins were unpainted Z350 grade zinc galvanised steel. The roof sheets were uncoated AZ150 grade zincalume sheet. The west, east and south walls were XRW Grade Colorbond sheet from 2m upwards fixed to zinc galvanised steel wall girts. The walls to 2m height were 20 MPa grade 100mm thick concrete infill panels. The north wall was full height (approx. 6.5m) concrete panel and subsequently became the party wall to Units 2 and 3. The floor was 20 MPa grade 100mm thick concrete.
   3. Units 2 and 3 were built in 2000 and consisted of mild structural steel columns and roof trusses coated at time of construction with inorganic zinc silicate (IZS) primer. The roof purlins were unpainted Z350 grade zinc galvanised steel. The roof sheets were uncoated AZ150 grade zincalume sheet. The west, east and north walls were XRW Grade Colorbond sheet from 2m upwards fixed to zinc galvanised steel wall girts. The walls to 2m height were 20 MPa grade 100mm thick concrete infill panels. The south wall was full height (approx. 6.5m) concrete panel and was the party wall to Unit 1. The floor was 20 MPa grade 100mm thick concrete
   4. Unit 1 was approximately 15 years old when it was leased to IRM in mid-October 2005. Unit 2 and 3 were approximately 7 years old when leased to IRM in September 2007.
   5. The Units are located approximately 2.12 km from breaking surf in the Kwinana which places the structure in a C3:medium corrosivity category according to AS 2312.
   6. The parts of the structure that would be exposed to fertiliser storage, and particularly ammonium sulphate, would be classified as experiencing a C5-I Very High Industrial level of corrosion exposure according to AS 2312.
   7. The method of construction and type of materials used at the time of construction of all three Units were not suitable for a C5-I corrosivity category and accordingly not appropriate for the unpackaged bulk storage of fertilisers.
   8. No supplemental corrosion protection was provided to any of the Units, either before or during the lease, to make the construction materials suitable for fertiliser exposure, with the exception of storm damage repairs made to the southwest section of Unit 1.
3. The evidence of Dr Zurhaar and Dr Farinha supports the following findings as to the nature of ammonium sulphate and its properties:

(a) Ammonium sulphate, which is also called diammonium sulfate or sulfuric acid diammonium salt, is a white crystalline solid with no smell. It contains 21% nitrogen in the form of ammonium ions and 24% sulphur as sulfate ions. The compound is slightly hygroscopic, absorbing water from the air at relative humidity above 81% (at about 20°C).

(b) The product dissolves easily in water and it readily absorbs water, so if it is exposed to moist air, it will 'crust' on damp surfaces.

(c) The primary use of ammonium sulphate is as a fertilizer for alkaline soils. In damp soil, the ammonium ion is released and forms a small amount of acid, lowering the pH balance of the soil, while providing nitrogen for plant growth.

(d) Ammonium sulphate in the presence of moisture is acidic and it is the acidic nature of the compound which makes it corrosive to metals (steel, zinc, aluminium etc) and concrete.

(e) Ammonium sulphate, when exposed to moisture or water will produce a mildly acidic solution which is corrosive to metals and whilst less so to mild steel than zinc coated or alloyed materials, corrosion will still occur in fertiliser storage circumstances, especially in the absence of appropriate protective coating protection.[221]

1. The experts agreed that, given the properties of the ammonium sulphate, water ingress into the Warehouse arising from damage caused by storms would increase the corrosive nature of the product, particularly in the specific locations affected by the building damage.[222]
2. As noted above, the experts agreed on a number of matters, with the majority of the disagreement being confined to matters on the periphery, in my view. It is convenient to summarise the effect of their evidence by reference to the matters included in the Joint Statement.
3. Both experts agreed that the construction materials in all three Units were extensively exposed to unpackaged bulk ammonium sulphate powder during the period of the leases to the defendant, and that there was still extensive presence of ammonium sulphate contamination to the structures.[223] The experts also agreed that ammonium sulphate was the only corrosive compound found present in all samples which were subjected to laboratory analyses by them.[224]
4. Dr Zurhaar formed the view that the extent of corrosion did not change significantly in the 10 month period following the departure of the defendant from the premises, in November 2016. Dr Farinha expressed a contrary view, observing that the facility still contained ammonium sulphate on steel members and the premises experienced a further winter, which provided more water ingress to the premises.[225]
5. For my part, it is difficult to accept, and I do not conclude, that the extent of the corrosion in the Warehouse remained static after November 2016. It is more likely than not, as had been the case over the preceding years, that the effects of the corrosion on the premises continued to increase as time went on, and as further water entered the premises, particularly in a period in which there were fewer personnel in the premises. Of course, after November 2016, it was no longer the case that large volumes of ammonium sulphate were being stored in the premises, nor was there ammonium sulphate dust spreading through the Units. Nonetheless, there is evidence that ammonium sulphate remained present in the premises including compacted into the steel supports.
6. The experts were asked to express an opinion as to the defendant's method of storage and handling of ammonium sulphate at the premises, and whether that was an acceptable practice in the fertiliser industry.[226] Both experts agreed that there were limitations in the storage of ammonium sulphate during the tenancy period. Both experts agreed that ammonium sulphate is hygroscopic, as noted above, and should be kept away from moisture. The product should also be protected from adverse weather and covered with tarpaulins where appropriate.
7. That said, the experts agreed that the absence of plastic coverings in respect of the bulk storage of fertilisers is common practice in Western Australia. This has, however, resulted in damage in other locations, similar to that observed at the plaintiff's Warehouse.
8. The experts also agreed that images showing dust coming from the units indicates screening activities which would have contributed greatly to ammonium sulphate deposition on horizontal surfaces in and around all of the Units.
9. The experts agreed that allowing ammonium sulphate to come into contact with primed steel is not recommended. Primed steel did not provide sufficient corrosion protection. A robust polymeric barrier coating was recommended, in their view, for all metal and concrete components within the Units.[227]
10. The experts agreed that action could have been taken to mitigate damage to the Units, namely ensuring the concrete floors, walls and structural steel were protected from chemical attack by applying a polymeric coating, ensuring adequate ventilation to reduce humidity and 'reduce airborne dust accumulation and deposition on surfaces', prevent contact of fertiliser mounds with wall girts and wall sheets to avoid corrosion, keep the mounds low or install protective barriers in front of the walls to avoid contact, and freshwater washdown of trucks and loading areas to reduce spread of fertiliser spills to susceptible areas.[228]
11. The experts were not agreed on the appropriateness of a fresh water wash down of high level steel such as the roof trusses and roof purlins, as a mitigation step. Dr Zurhaar recommended this, but Dr Farinha was of the opinion that it could be problematic and he preferred high pressure air cleaning methods.
12. On the basis of their instructions, Dr Zurhaar opined that none of the preventative measures had been implemented. Dr Farinha noted there had been some maintenance coating to Unit 1 following the storm damage in 2015.
13. Both experts agreed that the level of deterioration that occurred to the Units is more severe than that which would have been expected at other fertiliser storage facilities in Western Australia which contain appropriate steel protection measures.[229] For these Units to have been considered suitable for the storage of ammonium sulphate, both experts agreed the following works ought to have occurred:[230]

(a) the repair of the building envelope to minimise water ingress to storage areas;

(b) all metals should have been coated with a robust polymer coating as a minimum, and the coating systems used should comply with an AS2312 C5-I classification;[231]

(c) separators should have been installed between piles to corral the product in a logical and sequential manner for transport; and

(d) screening activities should be minimised and dust removal or ventilation facilities ought to have been installed within the Warehouse.

1. Further, the experts agreed that maintenance works should have been carried out during the tenancy, including periodic cleaning by compressed air blowdowns to dislodge and remove the ammonium sulphate deposits from between column flanges and on horizontal surfaces, and periodic inspection of all building components ought to have been undertaken, including steel, sheet metal walls and roofs, concrete walls, and floors, to assess any damage requiring repair.[232]
2. The experts agreed that additional corrosion management options should have been explored and implemented by the stakeholders for any long-term lease arrangement at the Warehouse, with the storage of ammonium sulphate.[233]
3. The experts agreed on the expected service life of the building products used in the construction of the Warehouse. The expected life span of the Zincalume roof sheets was about 30 years to perforation in this particular location, assuming no chemical attack. The expected life span of the Colorbond wall sheets was about 25 years. The lifespan of structural steel was indefinite if appropriately protected. The design life of concrete structures is about 50 years but the actual lifespan of concrete floors and walls is much longer and can be as long as 75 to 100 years, depending upon the type and extent of maintenance carried out. Typically, floors have a lower life span than walls, especially when subjected to traffic by heavy trucks.[234]
4. The experts agreed that, with the storage of ammonium sulphate starting in 2005 for a 10 year period in the manner it was stored, a 30 year life span to perforation of the steel roof purlins (being the typical life span for zinc galvanised steel roof purlins) was not achievable.[235]
5. The experts noted the structural steel in Unit 1 had been coated with red oxide primer paint in 1990. In this location, absent chemical attack, the primer would require re-application every 3 to 5 years, in their view. However, they jointly expressed the view that it would require an upgrade to a more robust coating product given the storage of ammonium sulphate within the Warehouse.[236] The experts agreed the primer used in Units 2 and 3 was preferable to the red oxide primer, but also considered that a more robust coating product should be used.[237]
6. With respect to the building products used in Units 1, 2 and 3, the experts were largely agreed as to the initial expected life span of the components before the exposure to ammonium sulphate, and the likely life span upon the defendant's departure from the premises, assuming there had been no exposure to the product.
7. Based on the manufacturer's service life spans, both experts considered the Zincalume roof sheets and zinc galvanised purlins in Unit 1 were about 50% expired before they were exposed to ammonium sulphate in 2005, and would have been about 80% expired upon the defendant leaving the premises in late 2016 under normal conditions of wear and tear. [238]
8. Again, based on the manufacturer's service life spans, both experts considered the Colorbond wall sheets in Unit 1 were 60% expired before they were exposed to ammonium sulphate, and would have reached or be within a few years of the end of their service life upon vacation of the site by the defendant, under normal conditions of wear and tear.[239] Dr Farinha noted, in this regard and in relation to the zincalume roof sheets, that the manufacturer's life spans did not take into account the actual physical condition and exposure environment of the asset.
9. In relation to the structural steel in Unit 1, which no longer had significant paint protection, both experts agreed it would have had a long service life, in excess of 30 years, if the depleted paint protection had been reinstated and upgraded to an epoxy coating.[240]
10. The experts agreed the concrete floor in Unit 1 (which had a thickness of 150mm) had a remaining service life in excess of 35 years before bulk transport truck use in the premises and before ammonium sulphate exposure.[241] The floor would have had a remaining service life of at least 25 years following the defendant's departure, absent ammonium sulphate exposure.
11. The experts agreed the concrete walls in Unit 1 had a remaining service life in excess of 35 years before exposure to ammonium sulphate, and upon the defendant's departure from the premises would have had a remaining service life of at least 25 years, but for the exposure to ammonium sulphate.[242]
12. In relation to Units 2 and 3, the experts agreed as to the remaining service life of the building components, being the Zincalume roof sheets, the Colorbond wall sheets, the structural steel, the concrete floor and the concrete walls.[243] The roof sheets were about 23% expired before exposure to ammonium sulphate and would have been about 53% expired under normal conditions of wear and tear upon the defendant's departure from the premises. The wall sheets were 28% expired before exposure, and would have been about 64% expired upon the defendant's departure, under normal conditions. The structural steel was in varying stages of disrepair due to the ammonium sulphate exposure and showed advanced corrosion. Some of the steel needed replacing and other portions could have been remediated with blasting and painting. The concrete floor in these Units had a remaining life of 43 years before bulk transport truck use and exposure to the product. At the conclusion of the tenancy, in the absence of ammonium sulphate exposure, the floor had an approximate life span of at least 25 years. The concrete walls had a remaining service life at the outset of the tenancy of another 43 years and would have had a remaining life span, under normal wear and tear, of around 34 years.
13. On the basis of their inspections, the experts agreed that, in Unit 1, there was evidence of advanced corrosion to the structural steel columns due to inadequate surface protection from the red oxide primer against corrosion.[244] In Unit 1, the experts also agreed that the structural steel columns at the concrete wall level were 'very severely corroded' and the concrete walls showed severe ammonium sulphate attack and staining from where mounds of the product had been placed against the wall, which had caused the product to spill and come into contact with the bottom of the wall sheets and tops of the concrete walls.[245]
14. There was a point of disagreement here, with Dr Farinha disagreeing that the extent of corrosion in Unit 1, particularly at the baseplate level, had compromised the structure from an engineering aspect.
15. The experts agreed that none of the Units need to be replaced in their entirety but all Units need to have 'significant maintenance and repair/replacement of components affected by the presence' of ammonium sulphate. Dr Zurhaar did observe in this regard that some components of the Units might be in a state that is beyond economic repair making replacement more prudent despite repair still being technically possible.[246] I will return to this issue later in the reasons.
16. More generally, the experts agreed that the interaction of Colorbond with ammonium sulphate would cause corrosion of the steel such that Colorbond was not considered to be a compatible building material to the storage of acidic chemicals such as this. Further, and in contrast, the experts agreed that the interaction of Colorbond with soda ash did not produce the same corrosion issues as contact with ammonium sulphate does given that soda ash is an alkaline fertiliser and did not create an acidic environment.[247]
17. Ultimately, the experts agreed that the Warehouse was suitable for the storage of benign chemicals but not for bulk unpackaged corrosive fertilisers unless the building components were upgraded and adequately protected against chemical attack by application of suitable protective coatings as a corrosion management option.[248]

PART VI - KEY FACTUAL FINDINGS

1. Having regard to the above review of the oral evidence at trial, the court's assessment of the credibility and reliability of the witnesses, the documentary record and the expert evidence concerning the causes of the corrosion and damage to the Warehouse, a number of important factual findings can now be stated. Additionally, it will be necessary to record additional factual findings within the latter parts of these reasons, which relate to some of the specific issues raised on the pleadings.
   1. The ammonium sulphate received, stored, screened and then on-sold from the Warehouse by the defendant was obtained solely by the defendant from BHP. The ammonium sulphate was supplied in bulk, as a by-product of the chemical reactions involved in the nickel refinery process conducted by BHP. These matters were firmly established on the evidence at trial, including the evidence given by Mr Tip O'Neill and Mr Donkin as to the source of the product,[249] and from the various agreements entered into between the defendant and BHP, including the initial agreement in 2004 (being the BHP DSA).
   2. The ammonium sulphate was supplied by BHP to the defendant in both granular form and in standard form. The granular product was referred to by the defendant as the premium or higher grade product for which the defendant charged a higher price to its customers. The granular product would typically be stored in Unit 2, where the product would be screened using the screening machine or shaker table, which essentially involves a gravity separation process. The standard ammonium sulphate was referred to as the fine product, which was much smaller than the granular product.
   3. The evidence of the chemical experts is that ammonium sulphate is a highly corrosive product. It is slightly hygroscopic in that it readily absorbs water including from moisture in the air. If exposed to moist air, it will crust on damp surfaces. In the presence of moisture, the product is acidic in nature, which makes the compound corrosive to metals such as steel, zinc and aluminium, as well as concrete. Corrosion will occur in fertiliser storage circumstances, but especially in the absence of an appropriate protective coating of surfaces.
   4. Unit 1 was constructed in 1990 and was in a reasonable condition prior to the defendant entering possession in around March 2005, relative to its 15 year life span at that point. Dr Zurhaar expressed an opinion to this effect.[250] Prior to the defendant entering into possession of Unit 1, there were defects identified in relation to the concrete, metal supports, floor and walls, but these were largely minor in nature and were substantially remedied by the time the defendant took possession.
   5. Units 2 and 3, which had been constructed in 2000, were in a reasonable structural condition before the defendant entered possession of those Units in around September 2007, which Dr Zurhaar accepted in his evidence,[251] although there was wetness on the concrete floor when it was inspected and there was evidence of the corrosion of steel supports, among other defects to those units. Those defects were not significant, and were not structural, on my assessment of the evidence.
   6. The Units were constructed with a concrete foundation, with concrete dado walls on their sides around two metres in height, with the middle wall (being the northern wall to Unit 1) being a complete concrete wall. The external structure consisted of Colorbond steel clad sheets as the wall panels, with uncoated Zincalume steel sheets as the roof panels. The structure was supported by steelwork, with supporting beams, wall girts, roof purlins and roof trusses. The steelwork was largely zinc galvanised steel or mild structural steel with red oxide coating in the case of Unit 1, or inorganic zinc silicate coating in the case of Units 2 and 3.
   7. The products which had been stored in the Units prior to the defendant taking possession were bulk fertilisers, of various types, including urea. While urea itself is not corrosive to mild steel, the scientific experts agreed that bulk urea is hygroscopic and would 'collect moisture onto the surface of the steel, which indirectly promotes corrosion due to the presence of a conductive aqueous environment, regardless of any presence of the IZS primer'. There is no evidence, however, that urea was as corrosive as ammonium sulphate.
   8. I accept the evidence of Dr Zurhaar and Dr Farinha that the storage of ammonium sulphate in the Warehouse placed the premises in the C5-I category, being a 'very high industrial environment', within the meaning of the applicable Australian Standard, being AS 2312.[252] That was described as an 'aggressive corrosion environment'.[253]
   9. The parties entered into the Original Lease on 14 October 2005 in respect of Unit 1, with the defendant entering into possession of the premises prior to that time. The court finds that the parties agreed to vary this lease to extend the tenancy to Units 2 and 3, by executing the document described as 'Schedule 3' on 1 October 2008, again with the defendant taking possession of those additional Units prior to the execution of the formal document.
   10. As to the term of the lease for Unit 1, that was for a five year period from 1 March 2005 to 28 February 2011. The parties did not formally extend the lease term for Unit 1, such that the defendant was holding over in respect of Unit 1 from 1 March 2011 until it vacated the premises in November 2016.
   11. As to the term of the lease for Units 2 and 3, that was for a five year period from 1 September 2007 to 31 August 2012. The parties did not formally extend the lease term for Units 2 and 3 either, such that the defendant was holding over in respect of those Units from 1 September 2012 until it vacated the premises.
   12. The court has concluded that the Original Lease for Unit 1 was varied by the parties in 2007 such that the lease for Units 2 and 3 was governed by the same terms as the lease for Unit 1, modified by the Schedule 3 document.
   13. There were oral and written negotiations between the parties in 2011 and thereafter which were directed at aligning the end dates for the lease across the three Units, rather than having them staggered. Ultimately, the parties did not each any agreement in this regard, leaving the end dates for the lease term for Unit 1 as 28 February 2011 and the end date for the lease term for Units 2 and 3 as 31 August 2012, as just indicated.
   14. The operations of the defendant involved the storage of the ammonium sulphate in bulk within the Warehouse, typically uncovered. The defendant conducted its operations within the Warehouse in a largely consistent manner over the course of its tenancy, from 2005 through to November 2016, being a period of in excess of 11 years in Unit 1 and around nine years in Units 2 and 3.
   15. As a bulk product, the ammonium sulphate would be tipped from trucks when unloaded and would be pushed into piles using a front-end loader. Large trucks would enter and exit the Warehouse to deliver and pick up the product. The product would be piled very high, around five metres, although relative to the dado walls, the product was usually piled no higher than the two metre concrete walls at the edge of the Warehouse floor. There is some evidence, albeit sparse, that the ammonium sulphate was piled higher than this limit on occasions. There is some evidence that, on occasions, the ammonium sulphate was also stored close to the open doors of the Warehouse.
   16. The defendant's personnel would regularly operate the screening machine in Unit 2 of the premises (also described as a shaker table), to separate out the fine product from the granular product, using three decks with three different sized screens. This process would create a considerable volume of dust from the ammonium product within the Warehouse, which would settle on the structure of the premises in due course, including on the beams, girts and purlins, and also on the roof sheeting. To be clear, the defendant did not otherwise 'process' or 'produce' ammonium sulphate in the Warehouse.
   17. It was necessary on occasions for workers in the Warehouse to use respiratory masks given the dust in the premises, according to the evidence of Mr Goodwin, which I accept as reliable on this issue, and to whom Mr Frank O'Neill deferred on this point. I accept the evidence of both Mr Goodwin and Mr Donkin to the effect that ammonium sulphate is a 'dusty product' and without any wind, the Warehouse would get 'pretty dusty'. There was no proper ventilation system within the Warehouse to deal with dust.
   18. There were suggestions in the evidence that the dust dispersed outside the Warehouse itself, perhaps as a cloud. I do not consider the evidence is sufficiently cogent to support any positive finding of 'dust clouds' or 'plumes' coming from the Warehouse. For example, the photographic evidence taken by the City of Kwinana personnel showed a dust plume from a different location - not from the Warehouse. Mr Frank O'Neill rejected the notion there was a dust cloud coming from the premises. The evidence supports a finding there was some dust which emanated from the building on occasions, given the dusty nature of the product and the fact the wind could push the dust outside the building. Additionally, ammonium sulphate residue was being trailed out of the Warehouse by the vehicles which accessed the premises.
   19. While addressing the subject of dust, it should be clarified that I do not accept that the defendant ever erected or put in place 'dust curtains' within the Warehouse. According to Mr Frank O'Neill, the issue was discussed internally following the complaints from neighbours and the council, but never progressed. To the extent Mr Tip O'Neill recalls dust curtains being installed, I consider he was mistaken.
   20. The defendant's personnel would need to open the external doors to the Warehouse when trucks were entering and exiting. I accept Mr Frank O'Neill's evidence that the doors were typically closed when it was raining or windy outside.
   21. As to whether the external doors were 'typically left open' or not when it was not raining or windy, it is difficult to express a precise factual finding in this regard which captures the entirety of the defendant's tenancy of the Warehouse. It must be remembered that the tenancy ran for many years. On the balance of probabilities, it seems implausible that the external doors were always left open by the defendant's personnel and to the extent to which Mr Joseph Hawkins and Mr David Hawkins gave evidence to that effect, I do not accept it. Their evidence on this issue is not likely to be reliable - they may have observed the doors being open, but that evidence has limited force given the infrequency with which those persons attended the premises. Their evidence is also likely to be tainted by the negative view they had reached regarding the defendant and its personnel, particularly in the case of Mr David Hawkins. In my view, the most reliable evidence on this issue is that of Mr Donkin and Mr Frank O'Neill, the collective effect of which is that the doors to the Warehouse were often left open by the defendant's personnel when the weather was fine, and while the premises were in operation. As noted above, the defendant's personnel adopted a more protective approach when it was raining or windy outside, opting to close the doors once trucks had entered.
   22. There is some limited evidence of tarpaulins being used by the defendant to cover the ammonium sulphate, which was done later in the chronology of the matter, likely from 2014 onwards. An example can be seen in Exhibit 641, being a collection of photographs of the internal area of the Warehouse taken by Mr Joseph Hawkins in August 2016. The photograph is partially extracted below:

1. The use of tarpaulins was intended to protect the product from exposure to moisture, rather than to prevent the dispersal of dust from the product. Mr Goodwin gave some evidence to this effect, as did Mr Valkenstrom, which I accept. The ammonium sulphate was not covered while the defendant was loading or unloading the product, for example, as Mr Goodwin explained.
2. So, in general terms, it is apparent that the defendant did not cover the ammonium sulphate with tarpaulins for most of the duration of its tenancy at the Warehouse. That finding can be made on the basis of the collective recollections of Mr Donkin and Mr Tip O'Neill. It is also supported by the evidence of Mr Joseph Hawkins, based on his occasional attendance at the premises.
3. Indeed, Mr Tip O'Neill was quite firm on this point in his evidence, in response to a direct question from counsel for the plaintiff in cross-examination. His evidence was that the defendant did not cover the product with tarpaulins and that such a step was 'not best practice'. Curiously, Mr Tip O'Neill also gave evidence that ammonium sulphate was not hydroscopic, which he later sought to clarify, but which is inconsistent with the expert evidence on the issue. Mr Tip O'Neill's evidence was as follows:[254]

SCHOOMBEE, DR: I have put to you before that you didn't cover the ammonium sulphate with tarpaulins and you said, 'No, we didn't do that'. And you say now that that's not best practice. Now, when you say it's not best practice, on what do you base that?

T O'NEILL, MR: The fact that we ship 600,000 tonnes a year of ammonium sulphate throughout the world to a number of different terminals and warehouses. And we don't cover and different environments to include the jungles of Madagascar. And we don't cover the product with tarpaulins because the product is not hydroscopic.

1. To the extent Mr O'Neill suggested ammonium sulphate was not hygroscopic, there was a strong attack on Mr Tip O'Neill's credibility in closing by plaintiff's counsel (at ts 1238). Although I would not agree with the epithets employed, I certainly agree that the interchange reflected poorly on Mr Tip O'Neill given his experience in the industry. I should observe that the terms hydroscopic and hygroscopic were used interchangeably by counsel and the witness and I did not understand anything to turn on the distinction.
2. However, Mr Tip O'Neill's evidence that the use of tarpaulins was not best practice was consistent with the expert evidence of both Dr Zurhaar[255] and Dr Farinha,[256] and the observations made by Mr Donkin from his time in the industry.[257] I therefore find that the use of tarpaulins to cover ammonium sulphate was not industry practice.
3. I therefore accept that the defendant did not cover the ammonium sulphate with tarpaulins for most of the duration of its tenancy at the Warehouse, only using them in a limited fashion towards the end of its tenancy to protect the product from moisture, and tarpaulins were not employed by the defendant when the product was being loaded for shipment from the Warehouse. The loading activity, as noted above, produced considerable dust in the premises.
4. The plaintiff, through Mr Joseph Hawkins, was well aware the defendant intended to store ammonium sulphate in the Warehouse before the Original Lease for Unit 1 was executed in 2005. The plaintiff, through Mr Joseph Hawkins, was also well aware that ammonium sulphate is a fertiliser. Indeed, the defendant's sole intended business use of the premises was to store this product. It follows that the plaintiff was similarly aware of these facts by the time it entered into the Varied Lease to include Units 2 and 3 in 2007.
5. Of course, the defendant and its senior personnel were, at all times, well aware of the nature of the product it intended to store at the premises and its corrosive properties, including its effect on steel structures and on concrete walls and floors. The defendant operated a global business over the period in question, in respect of which ammonium sulphate was a central focus. The defendant's personnel would have been well aware of the need for protective steps to be taken within a structure such as the Warehouse to prevent or mitigate the corrosive effects arising from the storage of ammonium sulphate.
6. The evidence also demonstrates that Mr Joseph Hawkins had a good understanding of the defendant's business operations within the Warehouse. Mr Joseph Hawkins was aware of the manner in which the product was being stored and that a front-end loader was being used to load and move the product. He was aware that trucks were used to deliver and then remove the product. He shied away from accepting that he had seen the screening machine within the Warehouse, but I accept he was aware that a screening machine was being used by the defendant. Mr David Hawkins visited the Warehouse on several occasions and had direct knowledge of the defendant's business operations within the Warehouse. The trail of correspondence between the parties over the course of the defendant's tenancy also records the substance of the defendant's business operation.
7. The court finds that the plaintiff, through Mr Joseph Hawkins, was aware, prior to the defendant taking possession of Unit 1 in 2005, that ammonium sulphate was a corrosive fertiliser. The same conclusion can be reached in relation to Mr David Hawkins. The terms of the proposal letter to the plaintiff from the defendant, sent in October 2004, referred to the product as a 'corrosive fertiliser'. The Offer to Lease document similarly described the product as a 'corrosive fertiliser'. Thereafter, the Original Lease for Unit 1, and Schedule 3 prepared in relation to Units 2 and 3, made reference to the product as being a 'corrosive fertiliser'. The inclusion of this description put the plaintiff's representatives on notice that the product was corrosive in nature.
8. Despite the foregoing, Mr Joseph Hawkins did not make any enquiries prior to the Original Lease being executed, to inform himself of the extent of the corrosive nature of the fertiliser, or its chemical properties.[258] The defendant's submission to this effect should be accepted.[259] Mr Joseph Hawkins regarded it as being incumbent on the defendant to inform him of the corrosive properties of the product. As already noted, Mr Joseph Hawkins and therefore the plaintiff was aware, prior to the lease with the defendant being executed, that the defendant's intention was to store a fertiliser product in the premises which was corrosive in nature. Mr Joseph Hawkins accepted as much in his evidence.[260]
9. From about July 2006, and prior to agreeing with the defendant to the Varied Lease for Units 2 and 3 in 2007, the plaintiff identified an issue with corrosion at Unit 1 of the Warehouse. This is apparent from the email sent by Mr Burns to Mr Syminton on 16 July 2006, which read as follows:[261]

So that we can assess the effect it is having on the concrete floor at the above site, would you please provide the chemical composition specifications of the fertiliser that is being stored there.

We know that corrosive fertilisers are being stored but need to know how corrosive so that we can match against the data against the concrete floor specifications to determine whether or not there is or are going to be problems.

1. Mr Burns was a director of the plaintiff at the time. In the above email, Mr Burns was seeking information from the defendant to determine 'whether or not there is or are going to be problems'.
2. By way of response, a material safety data sheet was provided to the plaintiff by the defendant, together with a specification sheet for the fertiliser, which Mr Burns duly forwarded to Mr Joseph Hawkins on 20 July 2006.[262] This information had been sourced by the defendant from BHP. The material safety data sheet included a section on 'safe handling' of the product, recommending that the fertiliser be stored as follows:

Store tightly sealed in cool, dry, well-ventilated area, removed from oxidising agents and foodstuffs...

1. Mr Joseph Hawkins accepted in his evidence that he had received this information. He stated that he did not require this information to tell him how corrosive the product was, from which it is further evident he was aware the product was corrosive before this time. Following receipt of the specifications, he spoke to a 'concrete guy' who undertook an inspection of the floor in the Warehouse. That person informed Mr Joseph Hawkins that the floor 'was getting corroded away' and needed replacing, which Mr Joseph Hawkins eventually did.
2. Mr Joseph Hawkins did not thereafter undertake any investigation in relation to the specifications or nature of the fertiliser. He did not follow up the defendant about these matters, nor did he contact the individual named in the email which accompanied the material safety data sheet and the specification sheet, although the contact details for that person were provided.
3. Mr Joseph Hawkins' explanation as to why he took no further steps at this point is not one I can accept. He gave evidence that he understood this was a 'one-off' problem. That is simply implausible. The following interchange with counsel records his evidence in this regard:[263]

THARBY, MR: Is it your evidence that you didn't take any steps to determine whether there are going to be problems?

J HAWKINS, MR: Well, there already was problems. That's why I asked for it.

LUNDBERG J: Mr Hawkins, I think I understand your answer, but you should listen to the question and just try and answer the precise question?

J HAWKINS, MR: Right.

LUNDBERG J: And if the question is capable of a yes or a no, you re able to just simply say a yes or a no rather than make a statement, but I think I understand what you're saying. Mr Tharby.

THARBY, MR: ... Mr Burns is requesting the chemical composition specifications of ammonium sulphate being stored in unit 1. He is asking on behalf of J.J. Hawkins and Co for that information so that J.J. Hawkins can determine whether or not there is or are going to be problems. Now, as I understand your evidence, there were at that time problems; is that correct?

J HAWKINS, MR: That's correct.

THARBY, MR: You wanted to know whether there were going to be problems in the future; is that correct?

J HAWKINS, MR: Well, I didn't write the email, so it's debatable.

THARBY, MR: So you didn't want to know if there were going to be problems in the future?

J HAWKINS, MR: Well, I assume once they fixed the problem, that that was the end of it, you know.

THARBY, MR: Thought that would be a one-off problem?

J HAWKINS, MR: Yes.

THARBY, MR: The corrosion caused by the products stored in unit 1 damaged the concrete once and once only. That's not correct, is it, Mr Hawkins?

J HAWKINS, MR: Well, there was just one spot where there was a problem.

THARBY, MR: Were there any other problems at this time?-

J HAWKINS, MR: Not that I know of, no.

1. During the course of further cross-examination, Mr Joseph Hawkins refused to accept his previous statement to the effect he agreed he had not been misled by IRM when leasing the premises, in relation to the proposed use of the Warehouse.[264] However, he accepted that he was well aware that fertilisers were corrosive and, after some resistance in his evidence, he accepted that he knew in 2004 and 2005 that some fertilisers were more corrosive than others.[265]
2. Having regard to the foregoing evidence, I find that Mr Joseph Hawkins was aware, by no later than July 2006, that ammonium sulphate was in fact a highly corrosive substance and should be stored in dry conditions. The plaintiff's failure to call Mr Burns at trial, who it can reasonably be concluded would have been able to give evidence about these matters, is significant. I consider the inference can be drawn that Mr Burn's evidence on these matters would not have assisted the plaintiff's case.
3. The storing and handling of ammonium sulphate within the Warehouse, as an integral part of the defendant's operations, was the predominant cause of the corrosive damage to the concrete slab, the steel structure, the steel cladding and the structure generally, by reason of the corrosive properties of the product when exposed to water or moisture. The court thus makes the 'foundational finding' proposed by the plaintiff in its closing submissions.[266]
4. The foregoing finding is made having regard to the expert evidence of both Dr Zurhaar and Dr Farinha, in respect of which they were in considerable agreement, as well as the voluminous photographic evidence of the state of the Warehouse over the period from 2005 to 2017, and the lay observations of the personnel from both parties who attended the site. The deterioration in the building over this period is self-evident from the photographic evidence, in particular, but the expert evidence explains how the deterioration occurred.
5. The presence of the ammonium sulphate within the Warehouse, and the loading, unloading and screening operations undertaken by the defendant's personnel, created significant amounts of dust which settled on horizontal surfaces. This includes the girts and purlins to which, respectively, the wall panels and the roof sheets were fixed. The ammonium sulphate was exposed to moisture on a regular basis, became acidic, and had a corrosive effect on the steel, zinc and concrete within the premises. The effects of the corrosion were pronounced, and had a significant effect on the service life of the Zincalume roof sheets, the Colorbond wall sheets, the structural steel, the concrete floor and the concrete walls. The senior representatives of the plaintiff and the defendant were all well aware of the damage being caused to the Warehouse over the course of the defendant's tenancy. Again, the trail of correspondence between the parties over the course of the defendant's tenancy records the damage being caused to the Warehouse.
6. Allied to the foregoing, the evidence demonstrates that environmental factors had a minimal effect on the Warehouse, relative to the effects of corrosion caused by the ammonium sulphate. Undoubtedly water ingress occurred. Further, there was storm damage. The storm damage obviously produced visibly significant effects on the walls and other parts of the building, but the root cause of the damage must be seen as the corrosive effects on structure and on the fixings, which allowed the roof and wall sheets to become brittle and easily dislodged from the purlins, girts and beams.
7. From as early as July 2008, leaks had begun to appear in the separate roofs to the Warehouse. I accept the submission advanced by the plaintiff that the evidence shows 'tell-tale Tek screw rows of leaks' in the roofs at this point in time, which are typical of the pattern of corrosion caused by prolonged contact with ammonium sulphate dust.[267] This corrosion could not be explained by exposure to 'salty air'. The concrete floor in Unit 1 was also becoming corroded as the water leaked into the premises. The expert evidence supports these findings. The effects of the corrosion became further pronounced in 2009, a point to which Mr Goodwin testified. Certainly by the time Mr Frank O'Neill commenced with the defendant in Perth, which was in 2010, there were constant leaks being reported in the roof of the Warehouse, particularly in Unit 1 and leaking along the corroded gutter which divided the roofs. He described the process of dealing with the leaks as an 'ongoing battle'.
8. By around 2012 the Warehouse show a marked onset of serious corrosion. The corrosion to the Colorbond wall panels had become concentrated around the Tek screws which fastened the panels to the girts, and which made the wall panels susceptible to falling away from the structure. Mr Goodwin's evidence, which I accept, is that the roof leaks which occurred followed the lines of the purlins and the holes appeared around the Tek screws which were used to fasten the roof sheets to the purlins. The plaintiff's description of the Warehouse at this point and through to 2015, which is as follows, is accurate and accords with the evidence:[268]

2012 marked the onset of serious corrosion. The wall panels had begun to experience serious corrosion and were no longer securely fixed to the structure. Panels began to fall off the building in the wind. This corrosion continued to accelerate in 2013 and 2014. By May 2015, some of the girts, to which wall panels are fixed, had become so corroded that parts of them had broken and fallen down. Large sections of wall panels fell off in the wind. Significantly, those sections of wall panels were on the northern wall of the Premises, being the exterior of units 2 and 3, which were only 15 years old at this point. This was immediately adjacent to the area where trucks were loaded with ammonium sulphate and drove through the Premises, and where screening of product occurred in unit 3.

1. Over time, rain would fall on the external Colorbond walls of the Warehouse and drip into the gap between the Colorbond walls and concrete which would expose the Colorbond and the concrete. Where there was a significant amount of water ingress, the ammonium sulphate stored near the walls would be affected. This position also obtained in relation to any leaks in the premises, with the ammonium sulphate on the structure travelling down the columns and into the foundations and the baseplates of the Warehouse.
2. The corrosion to the Warehouse had become so marked by 2016 that Mr Valkenstrom of Alltype Roof Repairs declined to work on the roof of the Warehouse given the potential safety issues.
3. The court finds that, from 2008 through to 2016, the corrosion and damage to the Warehouse progressed and the impacts became more severe as time went on. As the damage progressed, the wall sheets, purlins and concrete began to further corrode. The damage was exacerbated in stormy weather and in high winds. The evidence reveals that, on some occasions, entire wall sheets were blown off the building, which was rendered possible because the fixings were corroding and could no longer hold the wall sheets in place. By around September 2013, the steal girts and structural beams across all three Units had become heavily corroded and the corrosion of the wall panels was visibly concentrated where they were fixed to the girts. The submission of the plaintiff in its closing address, that there is no plausible explanation for this degree of deterioration other than the accelerated corrosive effects of ammonium sulphate dust accumulating on the girts, purlins and other structural elements of the premises, accords with the weight of the evidence and should be accepted.[269]
4. It should be accepted that the defendant took steps to ensure that the ammonium sulphate did not come into contact with water or moisture. It was, after all, in the defendant's interest to do so given the reduced price it could obtain for water damaged product. I have already mentioned the limited use of tarpaulins by the defendant, in this regard. Additionally, the evidence demonstrates that the defendant would engage repairers to undertake repair work on the roof and walls when required, particularly when leaks were identified, which was a regular occurrence. Most of the repair work was undertaken by Alltype Roof Repairs and I accept the evidence of Mr Valkenstrom that he was more often called out to undertake repair work at the request of the defendant's personnel, than the plaintiff. That said, much of the work he performed was in the nature of 'patching' leaks rather than undertaking 'preventative work'.
5. Fundamentally, the defendant was focused on taking limited preventative measures during its tenancy to protect the ammonium product from water damage, not to protect the building. The defendant made some efforts to clean the premises from dust, but the plaintiff's characterisation of that as 'sporadic, inefficient and not thorough' is correct, on the evidence.[270] The cleaning of the roof structure was occasional, at best.
6. Further, except on one limited occasion, the defendant did not take steps to apply a corrosion arresting or protective coating to the structure, or a polymeric coating. It is reasonable to conclude on the evidence that such a protective paint was available and could have been obtained and applied by the defendant. It did not do so. The application of such a paint would have had a considerable and beneficial protective effect on the structure.
7. The evidence of Dr Zurhaar should be accepted that the manner in which the defendant stored the ammonium sulphate in the Warehouse was not consistent with good practice.[271]
8. The representatives of both the plaintiff and the defendant were well aware of the damage to the Warehouse and the evidence of corrosion, and of the need for repair work to be undertaken. Mr Joseph Hawkins received a sober assessment of the state of the premises and the repair work needed, in August 2008, but took no steps in response. The builder engaged by Mr Hawkins in 2008 and 2009 laid out various options for repair and remedial work, which went unheeded by the plaintiff. The prospect of more substantial remediation work remained on the agenda, being discussed again by the parties in September 2011, for example. While the parties continued to disagree about which of them bore liability under the lease to attend to the remedial work, the corrosive effects of the ammonium sulphate and the defendant's operations generally continued to cause a deterioration in the Warehouse.
9. The stalemate between the parties continued thereafter, with only reactive remedial work being undertaken over the period from 2008 to late 2016. While the defendant adopted a commercial approach to the dispute and was prepared on occasion to propose and consider solutions to the impasse, Mr Joseph Hawkins adopted an emotional and strident position, borne out of a deeply held view that the defendant was contractually liable for remedying the damage to the premises which he believed it had caused through storage of its corrosive product. I accept that Mr Joseph Hawkins at one point said words to the effect that he 'would cut his own throat until [the defendant fixed] the whole site to his standard'.[272]
10. The Warehouse suffered from significant storm damage on more than one occasion, including in the middle of 2015. The storm caused several panels from the external walls of the premises to be torn loose, leaving a large gap in the wall and further exposing the internal parts of the Warehouse to water ingress. Neither party took remedial steps to repair the wall at this point, notwithstanding the obvious need to undertake that work. The plaintiff made an insurance claim at one point to obtain an indemnity for damage to the property, which he received from Zurich Australian Insurance Limited. Although the amount in question was relatively modest, it is surprising that the plaintiff took no steps at this point to apply the funds to any repair work.
11. The defendant's representatives made proposals to the plaintiff which would have involved, on terms, the roof to the Warehouse being replaced, together with other remediation work. Given Mr Joseph Hawkins' strident view as to the parties' respective obligations under the lease instruments, Mr Hawkins was adamant that he would not agree to the replacement of the roof or to the more fundamental remediation work which was proposed on several occasions over the course of the tenancy.
12. Mr Joseph Hawkins did not consider it was his role to tell the defendant how to run its business, even though he harboured strong concerns about the impact of its operations on the Warehouse. Mr Hawkins did not request that the defendant refrain from dumping ammonium sulphate on the floor to the Units, and did not tell them to refrain from piling the product too high. He did not give the defendant directions in relation to the closing of the external doors to the Warehouse. Nor did he ask the defendant to refrain from using the screening equipment. He did not request that the defendant apply a polymeric sealer or any coating to the inside surfaces of the Warehouse and did not request that they use a high-pressure hose to remove dust. He testified that he assumed the Warehouse was adequately ventilated because of a ventilation channel on the roof. He did not request that the defendant use tarpaulins to cover the ammonium sulphate.[273] Ultimately, it seemed that Mr Joseph Hawkins considered it was for the defendant to run its own business.
13. Dr Zurhaar's assessment, which I accept is reasonable, is that it would have been foolhardy or misguided, in the absence of some preventative measures being taken, to expect to store ammonium sulphate bulk fertiliser in a facility such as this Warehouse, for the lengthy period in question, and not expect the damage which resulted.
14. During the course of its tenancy, the defendant failed to ensure the Warehouse was properly ventilated, did not install dust curtains, did not apply a robust polymeric barrier coating for the metal and concrete components within the Warehouse, did not undertake regular cleaning processes (whether using fresh water wash down or high pressure air cleaning methods), undertook only reactive repair work to the building to prevent water ingress, allowed the ammonium sulphate to regularly come into contact with the concrete floors and walls, allowed the ammonium sulphate to come into contact with water in the Warehouse, and operated the business in a manner in which the ammonium sulphate dust would be blown through the premises.
15. The defendant left the Warehouse in November 2016 and moved its operations to another location. The defendant's personnel cleaned the premises but it is evident that ammonium sulphate remained in places, attached to the walls and steel beams, among other locations. Some of the ammonium sulphate had in fact become compacted into the steel beams, which can be seen in the photographs forming Exhibit 695, which were taken in November 2018.
16. Upon the defendant's departure from the premises in late 2016, it may safely be concluded that the Warehouse was in a dilapidated state, such that the plaintiff was unable to lease the premises, although the premises were the subject of a limited lease some time later. To some extent, the state of the premises is evident from the photographs taken by Mr Jeanes in July 2015, which was prior to the defendant's departure.[274] The significant rusting and corrosion can be seen in these photographs. To a similar effect, the photographs attached to the letter from Bennett & Co sent to the plaintiff's solicitor in July 2015 showing the missing wall panels and corrosion.[275]
17. Following the defendant's departure, the plaintiff undertook very little by way of remediation work to the premises, other than the work taken in late 2018 in response to a building order issued by the City of Kwinana in September 2018.
18. It is reasonable to conclude, on the entirety of the evidence, that the condition of the Warehouse continued to deteriorate after the defendant's departure. The observations of the site made by Dr Zurhaar in March 2019, which included an inspection of the roof purlins and girts using a scissor lift, are not likely to accurately reflect the same state of the premises as existed in early 2017. The defendant's submissions in this regard should be accepted,[276] although in doing so I make no criticism of Dr Zurhaar.

PART VII - THE CONTRACTUAL CLAIMS ARISING FROM DAMAGE TO THE WAREHOUSE A. Overview

1. The plaintiff's claims give rise to disputed questions as to the proper construction of the Varied Lease. The lease instrument appears to have been drafted in an organic manner, without a keen eye for consistency between each clause. The plaintiff accepted in its submissions that cl 3.9(a) of the Varied Lease, one of the principal provisions in the proceeding, was a 'somewhat awkward provision' which was 'not so easily construed'.[277]
2. The process of construing the instrument is therefore not straightforward. The parties presented diametrically opposed positions as to how the lease ought be interpreted. Before I address the competing arguments, it is appropriate to identify the applicable principles which must guide the court's task in construing the contractual provisions which are the subject of the claims.

B. Relevant principles as to contractual construction

1. The principles of contractual construction, which apply to the construction of lease instruments,[278] are well-understood and were not in dispute between the parties.
2. The following summary of the principles will suffice for present purposes, drawn from the High Court's decisions in Electricity Generation Corporation trading as Verve Energy v Woodside Energy Ltd[279] and the Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd,[280] as well as the Court of Appeal's decision in Mineralogy Pty Ltd v The State of Western Australia:[281]
   1. The construction of a contractual clause involves an objective determination of the meaning of the words of the contract by reference to text, context (the entire text of the contract) and purpose. Evidence of the parties' statements and actions reflecting their actual intentions and expectations are inadmissible.
   2. The starting point for the proper construction of a contractual clause is the language used in the clause - one must identify the possible meanings that the words chosen by the parties can bear.
   3. In determining the meaning of the terms of a commercial contract it is necessary to ask what a reasonable business person would have understood the terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract. The instrument must be read as a whole.
   4. Absent a contrary intention in the contract, the court approaches the task of giving a commercial contract an interpretation on the assumption that the parties intended to produce a commercial result - one that makes commercial sense. This requires that the construction be consistent with the commercial object of the agreement. Similarly, a commercial contract should be construed so as to avoid it making commercial nonsense or working commercial inconvenience. However, it must be recognised that business common sense is a topic on which reasonable minds may differ.
   5. If the words used are unambiguous the court must give effect to them. The court has no power to remake or amend a contract for the purpose of avoiding a result that is considered to be inconvenient or unjust.
   6. Finally, a contract should be construed practically so as to give better effect to its commercial purpose. The law seeks to uphold commercial contractual obligations and the expectations that derive from them. The court should not adopt a narrow or pedantic approach to construction, particularly in the case of commercial arrangements.
3. As earlier noted, these general principles apply to the construction of commercial leases: Royal Botanic Gardens and Domain Trust v South Sydney City Council.[282] Further, with particular reference to the construction of lease instruments, Barrett AJA in Papantoniou v Stonewall Hotel Pty Ltd[283] made the following observations with which I respectfully agree:

The words of [the lease] must, of course, be construed in the whole of the context in which they are found. The lease embodies a commercial contract. It is well established that the terms of such a contract are to be understood objectively, according to what a reasonable businessperson would have understood them to mean; and that, in a practical sense, this requires that the reasonable businessperson be placed in the position of the parties, with the court considering, from that perspective, the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it: Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 91 ALJR 486 (at [16]); Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 (at [35]).

1. On occasions, it is sometimes suggested that a particular term should be construed otherwise than according to its literal meaning, by reason of 'absurdity'. That term, in this context, means something opposed to reason or which is irrational. It is legitimate to resolve internal inconsistencies within an instrument using this approach, or to give commercial sense to the express language of a contract which would otherwise be meaningless in a practical sense.[284]
2. However, the test for absurdity is not easily satisfied and it ought be remembered that a court has no mandate to rewrite agreements, so as to depart from the language used by the parties, merely to give a provision an operation which, as it appears to the court, might make more commercial sense.[285]
3. The foregoing point was made by Neuberger LJ, in Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd,[286] in the following passage:

[T]he court must be careful before departing from the natural meaning of the provision in the contract merely because it may conflict with its notions of commercial common sense of what the parties may, must or should have thought or intended. Judges are not always the most commercially-minded, let alone the most commercially experienced, of people, and should, I think, avoid arrogating to themselves overconfidently the role of arbiter of commercial reasonableness or likelihood.

1. Further, I accept some care is needed before a court attributes a commercial purpose to the parties and there are limits in the process by which a court might identify such a purpose and construe the contract to achieve that purpose and produce a commercial result. The construction must be reasonably open.[287]
2. I will apply the above principles to the construction issues raised in this proceeding.

C. Relevant principles as to covenants to maintain, repair and yield up

1. There are two principal repair covenants in the Varied Lease. They are found in cl 3.9(a) and cl 3.23, forming part of cl 3 which is headed 'Lessee's Covenants'. Before examining the contentious issues raised by the parties insofar as these clauses are concerned, there are some orthodox principles which can be stated.
2. First, it is to be noted that the covenants in cl 3.9(a) and cl 3.23 of the Varied Lease both employ the language of 'good and substantial repair'. This is a double covenant having both a qualitative obligation (i.e. good) and a quantitative obligation (i.e. substantial): Alcatel Australia Ltd v Scarcella.[288]
3. Second, the phrase 'good and substantial repair' does not mean 'substantially good repair'. It requires the covenantor, not to make the premises as new, but 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 during the period of the lease: Alcatel.[289]
4. Third, it is accepted that where a lessee is obliged to keep the leased premises in good repair, and there is a failure to undertake repairs, the onus lies on the lessee to demonstrate that the damage comes within the 'fair wear and tear' exception: Brown v Davies.[290]
5. Fourth, 'fair wear and tear' exceptions are generally construed only to cover changes to the premises brought about by reasonable use by the tenant and the ordinary operation of natural forces. The point is explained in the following statements of Talbot J in the well-known decision of Haskell v Marlow:[291]

Reasonable wear and tear means the reasonable use of the house by the tenant and the ordinary operation of natural forces. The exception of want of repair due to wear and tear must be construed as limited to what is directly due to wear and tear, reasonable conduct on the part of the tenant being assumed. It does not mean that if there is a defect originally proceeding from reasonable wear and tear the tenant is released from his obligation to keep in good repair and condition as to everything which it may be possible to trace ultimately to that defect. He is bound to do such repairs as may be required to prevent the consequences flowing originally from wear and tear from producing others which wear and tear would not directly produce.

1. The principle has been adopted by the House of Lords,[292] and followed in Australia. The statement was examined by the Victorian Court of Appeal in Agtan Pty Ltd v Caltex Australia Petroleum Pty Ltd.[293] Santamaria JA described the passage as being important for two reasons. First, the statement explains what is meant by the term 'reasonable fair wear and tear'. Second, the statement 'makes clear that a tenant (or the person on whom the obligation to repair is imposed) has an obligation to carry out repairs to prevent the consequences that flow originally from wear and tear from producing other consequences that would otherwise not flow directly from wear and tear'.[294]
2. The second aspect of Talbot J's statement is of particular significance in the present case, which was explained by his Honour using a now oft-quoted example:[295]

[I]f a tile falls off the roof, the tenant is not liable for the immediate consequences; but, if he does nothing and in the result more and more water gets in, the roof and walls decay and ultimately the top floor, or the whole house, becomes uninhabitable, he cannot say that it is due to reasonable wear and tear, and that therefore he is not liable under his obligation to keep the house in good repair and condition. In such a case the want of repair is not in truth caused by wear and tear. Far the greater part of it is caused by the failure of the tenant to prevent what was originally caused by wear and tear from producing results altogether beyond what was so caused. On the other hand, take the gradual wearing away of a stone floor or staircase by ordinary use. This may in time produce a considerable defect in condition, but the whole of the defect is caused by reasonable wear and tear, and the tenant is not liable in respect of it.

1. The principle in Haskell v Marlow was examined by the New South Wales Court of Appeal in Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd.[296] Hodgson JA explained in that case that the principle applies where the ordinary operation of natural forces results in a condition which could be regarded as something to be dealt with by ordinary maintenance, and which would, if not attended to, cause damage going substantially beyond what could reasonably be considered reasonable wear and tear.
2. His Honour further observed that:[297]

In such cases, a tenant who has covenanted to maintain and repair, reasonable wear and tear excepted, will be required to carry out normal maintenance so as to prevent this kind of damage, even though the initial condition could fall within the term "reasonable wear and tear". I do not think the existence of surface cracking and a small amount of potholes which could in time lead to further deterioration meant that the existence of such features demonstrates either a failure to maintain or a condition that exceeds reasonable wear and tear so as to demonstrate error by the primary judge.

1. Fifth, the fact that a tenant has covenanted to repair subject to a 'fair wear and tear' exception, does not imply a covenant on the part of the landlord to make good such fair wear and tear: Re Leisure Resort Holdings Pty Ltd.[298]
2. Sixth, the application of these principles will be fact sensitive and require some degree of practical judgment. Reasonable minds may differ as to the characterisation of damage as constituting reasonable wear and tear, as is demonstrated by the differences of opinion of the judges in Alamdo Holdings. For example, Basten JA disagreed with Hodgson JA (with whom McLellan CJ at CL agreed) in at least one respect, as is evident from the following passages concerning the cracking of concrete:[299]

[118] In relation to areas 4-7, [Hodgson JA] has concluded that the damage involved no more than reasonable wear and tear, for which AWF was not liable: issue (1B).

[119] In relation to this issue, I am inclined to reach a different conclusion. The cracking of the concrete may well have constituted reasonable wear and tear, but the failure to repair the cracks led, according to the experts, to the intrusion of water into the sub-stratum, which resulted in further damage. On its face, the failure to rectify the initial problem before the greater damage resulted is closely analogous to the example of the tile, dislodged from the roof of a house, adverted to by Talbot J in Haskell v Marlow [1928] 2 KB 45. To say, as the primary judge did at [58], that cracking was to be expected in the ordinary course of events, is to say no more than might be said of the tile, namely that as a roof ages, the possibility that tiles will become dislodged will increase. The fact that the dislodgment of the tile may have an element of reasonable wear and tear does not mean that the tenant can stand by and allow the intrusion of water to inflict serious consequential damage inside the building. The requirement to repair the tile does not "set at nought the exception for reasonable wear and tear" (primary judge at [59]); nor does the imposition of responsibility on the lessee to ensure that cracking in the bitumen was rectified.

1. Seventh, it follows from the foregoing principles that a tenant who has covenanted to keep premises in repair, or surrender the premises in good and substantial repair and condition, will be liable for any substantial damage that occurs due to a failure to repair relatively minor or trivial damage (which itself would fall within the 'fair wear and tear' exception), where that damage or defect leads to substantial further damage. The example given by Talbot J is apposite in the present case, namely, material water damage which is caused by penetration through a missing tile or hole in a roof which is left unrepaired for an extended period of time.
2. Putting this another way, while the premises need not be improved, a lessee must take steps to ensure deterioration of the premises does not exacerbate other problems: Bunyip Buildings Pty Ltd v Gestetner Pty Ltd.[300]
3. Eighth, the agreement of the parties may, of course, override the bare principles of the law of landlord and tenant.[301] Accordingly, the scope of the 'fair wear and tear' exception may be effected by the presence of express covenants or warranties in the lease concerning the fitness for purpose of the premises.
4. A relevant example of this can be seen in the decision of her Honour Judge Lewitan in the Victorian County Court in AWH Pty Ltd v Impact Fertilisers Australia Pty Ltd.[302] In that case, the landlord had covenanted that the leased premises were in a fit condition for the storage and handling of non-hazardous fertiliser, including the blending and bagging of bulk fertiliser and ancillary use. Both parties had agreed that the use of the leased premises by the tenant was reasonable and within the permitted use. The corrosion damage which occurred in that case was brought about by the activities of the tenant in the course of the reasonable use of the premises for the purposes for which they were let.
5. Lewitan J concluded that:

[163] [The landlord] knew and agreed that [the tenant] could use the leased premises to store and handle fertiliser. The corrosion damage was caused by [the tenant] when it acted reasonably.

[164] Having regard to the matters set out ... and the terms of the lease as a whole, the corrosion damage to the leased premises falls within the fair wear and tear exception to [the tenant's] covenant to repair contained in clause 2.5(a) of each of the sub-leases. [The tenant] is not obliged to repair the corrosion damage to the leased premises.

1. In the present case, the defendant submits that the facts in AWH are directly analogous, and the same conclusion ought be reached in this case.[303] In contrast, the plaintiff submits that the defendant has mischaracterised the decision of Judge Lewitan.[304] The plaintiff submits as follows:

The key finding was a warranty by the landlord - it had 'covenanted that the sub-lease premises were in a fit condition for the storage and handling of non-hazardous fertiliser, including the blending and bagging of bulk fertiliser and ancillary use' [referring to AWH at [163]). So [the tenant in AWH] could move in and start using it without more. (Compare the evidence of Dr Zurhaar on facilities specially designed for [ammonium sulphate] application.) Importantly, there was no allegation in that case that there was any unreasonable use of the premises. See at [163] and [131]. In our present case, the Lease contains no such covenant or warranty and unreasonable use is the main issue. The only covenant given by [the plaintiff] in the Lease is the covenant of quiet enjoyment.

1. Ninth, the obligation in cl 3.23 of the Varied Lease to yield up the premises is not a continuing one. The obligation typically comes into operation only when possession is restored to the lessor, including after any period in which the lessee is holding over: Dowse v Wynyard Holdings Ltd.[305]
2. Tenth, as a corollary to the first point, time will not run, for a cause of action based on cl 3.23 for the purposes of limitation statutes, until the lease comes to an end, as opposed to when the damage occurs (a point which is in effect conceded by the defendant in the present case). Further, there is only one claim for damages relating to the state of the premises upon possession being restored to the lessor: Waterways Authority of New South Wales v Coal and Allied Operations Pty Ltd.[306]
3. Eleventh, the state of repair required by a covenant to yield and deliver up premises in good repair depends primarily upon the words used: Graham v Markets Hotel Pty Ltd.[307] On the basis of the covenant in Graham v Markets Hotel, the High Court concluded that the obligation was to 'yield and deliver up the premises in such a state of repair as that in which they would be found if managed by a reasonably minded owner having regard to their age, their character, their ordinary use and the requirements of the tenants likely to take them at the time of the demise or subletting'.[308] This explication of the obligation was more recently endorsed by the New South Wales Court of Appeal in Alcatel Australia Ltd v Scarcella.[309]
4. Twelfth, the use of the word 'condition' in a yielding up clause may, on a proper construction, point to the imposition of a higher standard of obligation than the use of the term 'repair' only, although the terms may well overlap: Welsh v Greenwich London Borough Council.[310] The word 'condition' is used in cl 3.23 of the Varied Lease.
5. Thirteenth, where a covenant by a lessee to leave the leased property in a particular condition is not performed by the lessee, a right to sue for damages at common law will accrue to the lessor: Waterways Authority.[311] The measure of damages at common law is such a sum as will put the premises into the state of repair in which the tenant was bound to leave them: Graham v Markets Hotel.[312] Further, it is the case that if the law requires that repairs shall be effected in a particular manner, then the repairs must be effected in that manner, but it does not follow, because premises must be properly repaired, that the nature and character of the structure in whole or in part must be altered and a totally different structure erected: Graham v Markets Hotel.[313] The question is one of degree and of fact. For example, in a particular case it may be that, although the covenant does not oblige the lessee to make improvements, nevertheless the lessee may be obliged to make improvements if the covenant to repair cannot otherwise be performed: Cugg Pty Ltd v Gibo Pty Ltd.[314]
6. The measure of damages at common law has also been stated as the expenditure to be necessarily incurred by a reasonable landlord to put the premises into the state of repair contracted for, whether the actual landlord does those repairs or not: Telecom & CPS Community Credit Cooperative Ltd v Heberg Pty Ltd.[315]
7. The facts, and outcome, in Graham v Markets Hotel provide a useful example of the application of the principles. The sub-lessee dismantled a lavatory which had been in place on the premises at the commencement of the lease, and then erected a new lavatory on other premises to which the landlord had no title. The High Court held that the dismantling of the lavatory and the failure to yield up the demised premises with a lavatory was a breach of the covenant to maintain and to yield up the demised premises in repair. Further, the court held that the appropriate measure of damages for the breach was the cost of providing sanitary accommodation of the capacity and quality as originally formed part of the premises, including the cost of consequential alterations and applications. However, the damages did not include the cost of improvements unconnected with the re-establishment of sanitary accommodation of that capacity and quality.

1. The primary contractual claim advanced by the plaintiff focuses on the conduct of the defendant which is said to have caused 'permanent and serious structural damage to the building', and rests on a breach of the maintenance and repair provision in the first paragraph of cl 3.9(a) of the Varied Lease.[316]
2. The relevant provision upon which the plaintiff places considerable emphasis is the first paragraph to cl 3.9(a) of the Varied Lease. It is convenient to set out cl 3.9(a) of the Varied Lease again at this point:

The Lessee must maintain and keep the Premises in good and substantial repair, order and condition except in the event of damage by explosion, earthquake, aircraft, riot, civil commotion, fire, flood, lightning, storm, tempest, act of God, war, fair wear and tear and any other risk insured against by the Lessor PROVIDED THAT this exception shall not apply if the damage is caused by the neglect, default or misconduct of the Lessee and the Lessor's insurances are invalidated by an act, neglect or default of the Lessee.

The Lessor must maintain and repair the Premises to prevent water ingress.

1. As is evident from the text, cl 3.9(a) imposes a general obligation on the defendant as the lessee to 'maintain and keep' the premises 'in good and substantial repair, order and condition'. The clause then sets out various exceptions to that obligation, including the exception of 'fair wear and tear'. The 'premises' is a defined term within the Varied Lease, being in effect the Units themselves.[317] I accept that it does not extend to other buildings on the property such as the toilet blocks, the weighbridge, or the weighbridge office. That does not mean the lessee is absolved from liability for damage which is caused by the lessee to these other structures through its conduct.
2. A proviso then follows, being a 'true proviso',[318] which limits or qualifies the exception where two matters are demonstrated (at least on the face of the clause), namely where the damage is caused by the 'neglect, default or misconduct of the Lessee' and 'the Lessor's insurances are invalidated by an act, neglect or default of the Lessee'. The parties are in disagreement as to whether both matters must be demonstrated.
3. As will be seen, the defendant places particular reliance on the 'fair wear and tear' exception in cl 3.9(a) of the Original Lease, and on the plaintiff's obligations (at least according to the defendant's construction) to prevent water ingress, found in the second paragraph of cl 3.9(a).
4. The plaintiff's claim is focused on the defendant's alleged conduct which is pleaded in [12] and [12A] of the SOC. At [12] of the SOC, the plaintiff pleads:

(a) the defendant failed and neglected to 'handle, store and/or process' the ammonium sulphate (including for the production and then storage of fertiliser containing that product) properly or in a reasonable manner in the Units, and

(b) neglected to take action to mitigate the risk of damage which could be caused by the defendant's method of delivering and storing ammonium sulphate in the Units.[319]

1. The specific conduct on the part of the defendant which is particularised as being a failure and neglect to act in a proper or reasonable manner is as follows:[320]

(a) First, it is pleaded that ammonium sulphate is a corrosive, hygroscopic substance which should and can be contained through proper handling and storage. Ammonium sulphate is pleaded to react when brought into contact with water, also in the form of moisture on steel beams or in the form of vapour, to form a corrosive substance. It is alleged that the corrosive effects of the ammonium sulphate caused the structural damage pleaded by the plaintiff. These matters have been established on the evidence.

(b) Next, it is asserted that delivery of ammonium sulphate was taken by dumping it from trucks on the floor of the Units and leaving it there open and uncovered for some time. This accords with the evidence.

(c) Further, it is asserted that the ammonium sulphate was not stored adequately to avoid contact with water in any form, including vapour. The defendant is alleged to have failed to keep the ammonium sulphate in containers which were securely sealed. While the use of 'containers' to store the product has not been demonstrated to be best practice or a reasonable step, the evidence supports the conclusion that the product was not stored adequately.

(d) Further, during operating hours, the defendant is alleged to have kept the access doors of the Units open, allowing wind and rain to enter the Units, causing the dispersal of ammonium sulphate within and out of the Units, and causing ammonium sulphate to come into contact with water. I have elsewhere explained the manner in which the doors were kept open. Certainly, it is apparent there was a dispersal of ammonium sulphate throughout the premises and regular contact with water.

(e) Further, the defendant is alleged to have processed the ammonium sulphate by screening it using a shaker table and gravity separation process, which caused dispersal of ammonium sulphate dust within and out of the Units. This accords with the evidence.

(f) Further, the defendant is alleged to have failed to store the ammonium sulphate in a cool, dry, well-ventilated area protected from environmental extremes and exposure to moisture, as required by industry standards. The lack of proper ventilation has been established.

(g) Further, the defendant is alleged to have failed to store the ammonium sulphate away from incompatible materials like exposed metal beams in the building on the property. This has largely been established on the evidence.

(h) Finally, the defendant is said to have failed to store the ammonium sulphate in bunded areas. On the evidence, such a step would likely have reduced the damaging effects of the product. That said, there is evidence that the defendant's personnel created a 'bung' on occasions, using the ammonium sulphate itself, being the sweepings in particular.[321] So, there is at least some evidence that a system was used to limit the further ingress of water into the Warehouse.

1. The plaintiff expressly pleads, as action to mitigate the damage, the manner in which the defendant could and should have conducted the business in the Units, namely:[322]

(a) applied a polymeric sealer/coating such as high build epoxy paints to the concrete floors, concrete walls and structural steel to form a barrier between the ammonium sulphate and the concrete and structural steel, for protection in the event of the ammonium sulphate becoming moist or wet;

(b) frequently cleaned the high level steel such as the roof trusses and roof purlins with a high-pressure air hose, to remove airborne deposits of ammonium sulphate dust;

(c) ensured (by modification if necessary) that the building was adequately ventilated to reduce humidity and airborne dust accumulation and deposition on surfaces;

(d) kept the height of the ammonium sulphate heaps in the building sufficiently low, to prevent contact with Colourbond wall sheeting and thereby prevent corrosion;

(e) used tarpaulins to cover the ammonium sulphate heaps and reduce airborne corrosive dust; and

(f) frequently washed down with fresh water (and dried off) the trucks and loading areas to reduce the spread of ammonium sulphate spills to susceptible surfaces.

1. At [12A] of the SOC, it is alleged the defendant took delivery of ammonium sulphate at the Units, unloaded the ammonium sulphate from delivery trucks, processed the ammonium sulphate by screening it using a shaker table and gravity separation process, stored the ammonium sulphate and then re-loaded the ammonium sulphate onto trucks.
2. On the basis of this alleged conduct, it is asserted that the defendant failed to maintain and keep the Units and the building on the property in good and substantial repair, order and condition, in circumstances in which the damage to the Units and the building was caused by the neglect, default or misconduct of the defendant.[323]
3. The plaintiff claims loss and damage was suffered as a result, being the cost to repair the Units, which may involve demolition and rebuilding, and the loss of rental income while those repairs are being undertaken.[324]

1. The defendant pleads that it conducted a business in purchasing, storing and using ammonium sulphate for the production of fertiliser, and had used the property for the storage for its ammonium sulphate product. The defendant denied that it had ever produced or processed fertiliser, as such, in the property.[325]
2. In pleading its response to the plaintiff's claims, the defendant pleads additional terms contained in the original lease. The defendant also pleads the offer to lease entered into by the parties on 4 February 2005, and the terms of that document.[326] Those terms, in the Offer to Lease document, are pleaded to include:

(a) that the lessee shall use the premises for the purposes of value adding and storage of corrosive fertiliser (cl 2);

(b) that the lessor's solicitors shall prepare the lease incorporating all the details and agreements set out in the 'Offer to Lease' and such other further terms, conditions or covenants as the lessor's solicitors consider reasonable, adequate and necessary in the circumstances to protect the lessor having regard to the nature of the premises (cl 9); and

(c) that the lessor will ensure the external appearance of the premises is maintained to a high standard, fair wear and tear not excepted (cl 11.4).

1. As to the allegations by the plaintiff that the defendant's business caused damage to the premises, the defendant contends that it conducted its business in a manner which was expressly permitted by the lease, and at all material times the plaintiff knew precisely the manner in which the defendant was conducting its business and using the premises.[327]
2. Further, the defendant pleads that any damage to the property from the manner in which the defendant conducted its business was:[328]

(a) caused by fair wear and tear, in the proper permitted conduct of the business;

(b) alternatively, caused by the plaintiff's breaches in failing to maintain and repair the premises including, among other things:

(i) to prevent water ingress into the premises;

(ii) to prevent wind into the premises which moved the defendant's product around the premises off designated stacks;

(iii) to ensure that the external appearance of the premises was maintained to a high standard; and

(iv) to ensure that the standard of the premises and land was lifted to an acceptable standard.

1. These matters are further emphasised in the Defence at [12], in response to the plaintiff's criticisms of the manner in which the defendant conducted its business. The defendant pleads:[329]

(a) the lease permitted it to handle and store the ammonium sulphate in the premises in the manner it did;

(b) there was no express or implied obligation in the lease for the defendant to store the ammonium sulphate in the manner the plaintiff claims;

(c) any damage occasioned to the premises during occupation by the defendant was not caused by the conduct or neglect of the defendant, but was caused by the conduct of the plaintiff in failing to maintain and repair the Warehouse to prevent water ingress to the premises in breach of the lease, failing to ensure the external appearance of the premises was maintained to a high standard in breach of the lease, and failing to ensure that the standard of the premises and land was lifted to an acceptable standard in breach of the lease;

(d) alternatively, any damage to the premises was fair wear and tear; and

(e) at all times, it complied with the AFSA Code of Practice, of which it was a member, in relation to the handling and storage of ammonium sulphate. I have already addressed this point, and concluded that I do not regard the AFSA Code of Practice as relevant to the determination of the issues in this proceeding.

(3) The proper construction of cl 3.9(a) of the Varied Lease

1. The submissions advanced by the parties as to the proper construction of cl 3.9(a) of the Varied Lease yield different conclusions. Both parties made reference to the terms of cl 3.9(a), as well as sub-paragraph (x) to the definition of 'Outgoings' in cl 1.1(i) and the terms of cl 1.1(t), among other provisions in the Varied Lease.
2. Special term 8.3 of sch 1 to the Varied Lease should also be mentioned for completeness, which imposes an obligation on the plaintiff to ensure the external appearance of the premises is maintained in a 'high standard', although this provision was not given much attention by the parties. The passing reference to the provision was appropriate, in my view, because the provision is not directed to the subject matter of repairs and maintenance.
3. It is immediately apparent there is a degree of tension between the first paragraph of cl 3.9(a) and the second paragraph thereof, as well as the terms of cl 1.1(i) and cl 1.1(t), all of which appear to address to some extent the question of the parties' obligations to repair or maintain the premises. A close analysis of the provisions is required.
4. Establishing the proper construction of an instrument such as this, which includes clauses in apparent tension with each other and which appears to have been drafted or developed in an organic fashion, is not straightforward. In the end, it is important to approach the task in an effort to arrive at an objective determination of the meaning of the provisions, giving meaning to the language which has been used, asking what a reasonable business person would have understood the terms to mean, and being guided by whether the provisions as construed make commercial sense or not.

1. The plaintiff's detailed submissions as to construction are detailed in both its opening and closing submissions, and were further developed in the oral closing address.[330] The following is only a brief summary of those submissions.
2. As I will explain below, I am in general agreement with the plaintiff's preferred construction of the covenants in the Varied Lease, which was persuasively developed by counsel for the plaintiff in opening and in closing.
3. In essence, the plaintiff submitted that the first paragraph of cl 3.9(a), which it styled as casting the primary obligation on the lessee, was to be construed in a distributive manner. The plaintiff submitted that, in order to escape liability, the lessee must bring itself within at least one of the two categories of the exception clause, in respect of damage or loss for which it would otherwise be liable.
4. As for the second paragraph of cl 3.9(a), the plaintiff submitted that it should be interpreted sensibly to exclude responsibility on the part of the lessor where water ingress is brought about by the neglect, default or misconduct of the lessee.
5. As to the 'fair wear and tear exception' in the lease, the plaintiff submitted that the damage went far beyond that concept and the defendant cannot invoke that exception by reason of its own deleterious conduct.
6. The plaintiff's submissions further explained that the provisions contained in the definition section of the Varied Lease (in cl 1.1) had no effect on the proper construction of cl 3.9(a).
7. To explicate the plaintiff's position a little further, it can be said that the plaintiff's preferred construction is more complicated than the approach adopted by the defendant, and involves the first paragraph of cl 3.9(a) being construed by reference to the maxim of construction, reddendo singula singulis.[331]
8. This maxim was explained by the House of Lords in AIB Group (UK) Plc v Martin.[332] In that matter, Lord Millett explained that a 'distributive construction is commonly adopted when a plural subject is followed by a plural predicate and the plurals are broken down into their component singulars'. His Lordship described the principle as 'a well-established principle of construction' which often paraded under the Latin maxim to which I have just referred, and which 'often, and perhaps usually, gives the words their most natural meaning'.
9. The construction 'simply means that, when plurals are broken down, each singular component must be attributed to its respective singular and not to every other possible singular'. Further, Lord Millett described it as a 'broad and general principle which departs from the literal and grammatical meaning and does not depend upon minutiae of language'.
10. Adopting this approach, the clause would be construed as follows, establishing two categories within the provision, which are correlated between the exception and the proviso:[333]

The Lessee must maintain and keep the Premises in good and substantial repair, order and condition except in the event of:

(1) damage by explosion, earthquake, aircraft, riot, civil commotion, fire, flood, lightning, storm, tempest, act of God, war, fair wear and tear, and

(2) any other risk insured against by the Lessor [eventuating].

PROVIDED THAT this exception shall not apply:

(3) if the damage is caused by the neglect, default or misconduct of the Lessee, and

(4) [where] the Lessor's insurances are invalidated by an act, neglect or default of the Lessee.

1. When read in this manner, the primary obligation is cast by cl 3.9(a) upon the lessee. To avoid or escape liability, the lessee must then bring itself within at least one of the two categories of the exception clause, in respect of damage or loss for which it would otherwise be liable.
2. The first category of exception relates to events and circumstances generally not within the lessee's control or which may well not be within its control (such as explosion and fire), or which may occur incidentally, in the normal course of events, such as fair wear and tear.
3. The second category upon which the lessee can rely is where the damage is covered by insurance. As the plaintiff correctly observed, by cl 3.16 of the Varied Lease the lessee is responsible for paying for insurance in the name of the lessor, which I can accept would typically be an industrial special risk indemnity policy. Thus, if property damage occurs for which the lessee would be prima facie liable, it can rely on an insurance contract if that is covered. If the lessor is paid out by the insurance company, it cannot again recover from the lessee.
4. The two categories of exception each has its own relevant proviso, as set out respectively in items (3) and (4) above.
5. So, for the first category of exception in (1), the above construction has the effect that a lessee cannot rely on it even if, say, the damage was caused by explosion, fire or 'fair wear and tear', if the related damage was caused by its neglect, default or misconduct. It can be seen that the reference to 'damage' in the first category of the exception is picked up by the word 'the damage' in (3).
6. Further, on this construction, the lessee cannot rely on the insurance cover exception if an act, neglect or default of the lessee invalidates the policy. It may be noticed here, as the plaintiff has observed, that the term 'invalidated' is somewhat curious but should properly bear the meaning of 'negated' cover under the policy.
7. The defendant's contention against the above is that the exception does not apply unless the matters in both (3) and (4) apply.

1. The defendant's submissions were as detailed and thorough as those presented by the plaintiff.[334] The defendant maintains the proviso to cl 3.9(a) has no application because it relates only to 'any other risk insured against by the Lessor'. In any event, the defendant says the plaintiff adduced no evidence that its insurances were invalidated by any act, neglect or default on the part of the defendant.
2. Ultimately, the defendant invites the court to read the first paragraph of cl 3.9(a) together with the second paragraph, the latter being stated in absolute terms with no exceptions or proviso. The defendant also seeks to give some effect to the terms of the definition provisions to which I have earlier referred. The defendant submits the court should interpret the terms of the Varied Lease objectively, based on the totality of the provisions (including the permitted use) and being mindful of the nature of the defendant's intended and stated use of the Warehouse.
3. The defendant submits the court should hold that the corrosion caused by the handling and storing of corrosive fertiliser during a lease constituted 'fair wear and tear' given the use of premises was for this known and anticipated use.[335] On this basis, there would be no breach by the defendant of the repair obligation in the first paragraph of cl 3.9(a), and the damage to the premises should be found to have been caused by the plaintiff's own breach of its obligation in the second paragraph of cl 3.9(a) of the Varied Lease.
4. The defendant's preferred construction of the provision has the merit of being straightforward. To summarise, it appears to cast the proviso as being a composite provision, having two components which must be satisfied, which operates only in respect of the final exception in the paragraph, being 'any other risk insured against by the Lessor'. The proviso would not have application to the 'fair, wear and tear' exception. The two components to the proviso are that, first, the damage was caused by the neglect, default or misconduct of the lessee and, second, this conduct invalidated the lessor's insurance. The defendant says the singular reference to 'this exception' provides support for this construction.

1. In approaching the construction task, I have not been assisted by the evidence, sparse as it is,[336] as to the drafting of the Varied Lease and the subjective reasons for the inclusion or removal of any terms. The evidence adduced on the issue provided little in the way of insight into the purposes of the clauses. Additionally, the respective principal negotiators of the terms of the lease, as far as can be discerned on the evidence, being Mr Burns and Mr Syminton, did not give evidence at trial. I have earlier found that the court might reasonably expect them to have been called by the parties.
2. I therefore do not consider the construction exercise is assisted in any material way by the subjective statements of the parties made in 2004 or 2005, other than to recognise that the second paragraph to cl 3.9(a) was inserted at the request of the defendant.
3. In my view, the language of the instrument, having regard to the context of the instrument as a whole and its purpose, are the critical matters to examine for present purposes.

The effect of the provisions in the definition section

1. Turning to the text of the Varied Lease, it is useful to start with an examination of the definitions within cl 1.1 which have been mentioned. In this regard, there is the final sub-paragraph to the definition of 'Outgoings' in cl 1.1(i) and the 'lifting the standard provision' found in cl 1.1(t).
2. In my view, these provisions do not materially assist in the construction exercise required in this case, and do not impact the scope of cl 3.9, for the following reasons.
3. First, these provisions are found within the 'interpretation' section of the Varied Lease, rather than the substantive and operative parts of the instrument. That is a curious place to site these provisions if they were intended to have operative effect in a manner which limited cl 3.9, which expressly addresses the subject matter of maintenance and repairs. Objectively, the provisions would have more constructional significance if cited within the covenants provision.
4. Second, the terms of cl 1.1(i)(x) and cl 1.1(t) are subject to the chapeau to cl 1.1, which provides that 'unless the contrary intention appears'. In this sense, the clause is subservient to the operation of cl 3.9, as construed.
5. Third, the terms of cl 1.1(i)(x) are not well expressed, grammatically unclear, and have been drafted as though out of an abundance of caution. As I discussed with counsel for the defendant in closing, there may be two or three categories of cost within the paragraph. To the extent to which it avoids the defendant bearing the costs of 'inherent defects', I do not see the provision having relevance to the present circumstances. Insofar as the provision is directed at 'structural repairs' or repairs or replacement which is of a 'capital nature', I do not consider the provision assists the defendant's cause. The covenant upon which the plaintiff relies in this case, in cl 3.9(a), does not in its terms require the defendant to contribute to 'structural repairs' or repairs of a 'capital nature', but is directed at proper maintenance and the undertaking of proper preventative action, so as to avoid such repairs.
6. Fourth, the terms of sub-paragraph (x) must be seen as forming part of the definition of the term 'Outgoings' under the Varied Lease, and operate to clarify that expenditure of a 'capital nature' is not to be characterised as an 'Outgoing'. As the plaintiff correctly submitted, it does not follow that if the defendant's conduct causes damage to the Warehouse that requires repairs that are of a capital nature, the defendant is necessarily excused from liability solely because the repairs are more extensive than 'maintenance' in the ordinary and natural meaning of that term.
7. Fifth, the terms of cl 1.1(t) should be construed as confined to the work to be undertaken at the commencement of the lease period, rather than as imposing some obligation on the lessor during the course of the lease concerning maintenance. The provision refers to the 'lifting' of the standard of the premises to 'an acceptable standard', and refers to the 'existing permits'. None of the language employed in the provision is capable of reasonably operating to impose a continuing obligation on the lessor to repair and maintain the premises during the life of the tenancy.
8. Taking these points together, I consider it would not have been objectively intended that these vaguely worded provisions should supplant the operation of the covenants in cl 3 of the Varied Lease, particularly the maintain and repair covenant, and the yielding up covenant.

The significance of the permitted use in the lease

1. The Original Lease expressly refers to the use of the premises for 'value adding and storage of corrosive fertilisers' (see item 4 in sch 1).
2. The existence of this express stipulation of use was emphasised by the defendant in the course of the trial and closing submissions. Further, the objective fact known to both parties that the premises were to be used for the storage of a corrosive fertiliser, is said by the defendant to inform the construction exercise.
3. In my view, the express stipulation does not have the effect for which the defendant contended, when construing the covenants in cl 3.9 and in particular the 'fair wear and tear' exception in the lease (and does not alter the conclusions as to proper construction I have reached below).
4. The following statement in a leading text on the subject, which is supported by authority, makes this clear:[337]

With respect to the physical suitability, the rule is clearly 'caveat emptor'. It is ultimately a matter for the lessee to be satisfied, through the employment of engineers or architects prior to execution of the lease, that the premises are physically fit for the purpose for which they are being let and for which the lessee desires to use them. This is so notwithstanding the absence of an express covenant as to fitness and, further, the fact that the lessor is aware of the exclusive purpose for which the lessee desires the premises.

1. Further to this, I accept that, in the absence of an express warranty by a lessor as to fitness for purpose of leased premises, the lessor does not impliedly represent or guarantee that the leased premises are fit for the purpose or use for which it is being leased.[338] Accordingly:[339]

It is the business of the lessee, if there is no express warranty by the lessor in the lease, to be satisfied that the premises are fit for the purpose for which the lessee wishes to use them, whether that fitness depends on the state of the structure, the state of the law or any other relevant circumstances.

1. The plaintiff submitted at trial that the absence of any express covenant or warranty in the present case (see cl 5.23 of the Varied Lease), is significant to the construction of the Varied Lease. I respectfully agree. Counsel for the plaintiff distinguished the terms of the present lease from the facts in the AWH case, to which I have earlier referred. In AWH, the landlord covenanted that the sub-lease premises were in a 'fit condition for the storage and handling of non-hazardous fertiliser, including the blending and bagging of bulk fertiliser and ancillary use'.[340]
2. The plaintiff submitted that, in the present case, it was for the defendant to ensure that the Units were suitable for its activities, which included taking preventative steps, such as protective coating for exposed metal. In my view, the plaintiff's approach to the construction of the Varied Lease in this respect should be accepted.

1. There are intersecting constructional exercises to be addressed when construing this clause. Both paragraphs of cl 3.9(a) must be construed having regard to their terms, and their interaction as part of the one sub-clause. Further, the operation of the two paragraphs must also be examined within the broader context of the lease. I do not suggest these exercises are to be compartmentalised. There is a need for a holistic assessment of the provision, and of the scope of the parties' obligations to repair and maintain the premises, within the wider context of this instrument.
2. Commencing with the first paragraph of cl 3.9(a), it is evident the provision casts a primary obligation on the lessee to maintain and repair the premises in a particular manner, and erects some 14 exceptions thereto, one being the 'fair, wear and tear' exception. All of the exceptions are quite common to repair obligations in commercial leases, having regard to the clauses which can be found in reported decisions in this country. The last of the exceptions, which I will refer to as the 'insurance exception', is understandable in the present context given the insurance obligations in cl 3.16.
3. To escape liability in respect of damage or loss for which it would otherwise be liable, the lessee must then bring itself within one of the exceptions. Doing so will evade the primary obligation to maintain and keep in good and substantial repair.
4. Turning then to consider the second paragraph of cl 3.9(a) of the Varied Lease, it is notable that this paragraph is bereft of any limitation or nuance, does not expressly signify its interrelationship with the first paragraph, and broadly provides that the lessor 'must maintain and repair the premises to prevent water ingress'.
5. In my view, the distributive interpretation of the first paragraph to cl 3.9(a), which was asserted by the plaintiff should be accepted. Further, the broader obligation in the first paragraph, which operates as a central repair obligation in the Varied Lease, ought be regarded as qualifying or limiting the scope of the second paragraph. My reasons for reaching these conclusions are out below.
6. First, although there are several provisions which touch upon issues of repair, there are two principal repair obligations in the Varied Lease. They are found in cl 3.9 and cl 3.23. Ultimately, those provisions should be construed harmoniously, but recognising that the former obligation is a continuing one, and the latter arose only at the point of possession being restored to the plaintiff lessor.
7. Second, the natural and ordinary meaning of the language employed in the first paragraph of cl 3.9 establishes several exceptions to the primary obligation to 'maintain and keep' the premises in appropriate repair, which obligation rests on the lessee. Some difficulty arises when seeking to give meaningful effect to the language used in the proviso, to ensure the provision has a business-like meaning.
8. Third, there are textual and contextual indications in the first paragraph of cl 3.9 which suggest that the distributive interpretation is the preferred construction, being a construction which makes the best sense of the language used in the exception portion of the provision and within the proviso.
9. In particular, there appear to be two categories of exception, the first relating to events and circumstances generally not within the lessee's control or which may well not be within its control (such as explosion and fire), or which may occur in the normal course of events, such as fair wear and tear. The second category is where the damage is covered by insurance. The text used in the proviso suggests a link to the two categories of exception. The reference to 'damage' in the first category of the exception is picked up by the word 'the damage' in the first part of the proviso. More directly, the subject matter of the second category of exception, which concerns insurance, is picked up by the language used in the second part of the proviso. Thus, it can be seen that the two categories of exception each has its own relevant proviso.
10. Further, the language used within the proviso connotes the existence of two separate provisions, rather than one proviso with two components. Specifically, the first part of the proviso referring to damage caused by the lessee would be an unnecessary overlay to the second part of the proviso, which is capable of working on its own, independently of the first part. Further still, the quality of the conduct identified in the two parts to the proviso is described in different terms ('neglect, default or misconduct' compared to 'act, neglect or default'), although within an instrument which contains several infelicities, I do not wish to overemphasise this point.
11. So, for the first category of the exceptions, the first part to the proviso would operate to preclude the lessee from invoking those exceptions where the related damage was caused by its neglect, default or misconduct. This includes the exception for 'fair wear and tear'.
12. For the second category of the exceptions, being the 'insurance exception', the lessee cannot rely on that exception if an act, neglect or default on its part has the effect of 'invalidating' the plaintiff's 'insurances'. As discussed later in these reasons, I consider the term 'invalidated' in this context has the same meaning as void or voidable. The reference in cl 3.9(a) is not to a 'claim' being invalidated or 'negated', but to the 'insurances', which I take to mean the 'policy of insurance'.
13. I recognise the opening words of the proviso refer to a singular 'exception', rather than adopting the plural term, when describing the proviso. This language may tend to suggest that the delineation of the exception into two categories, in the manner proposed by the plaintiff, was not objectively intended. It may also tend to suggest that the proviso is intended to refer only to the 'insurance exception'. Ultimately, if read in the distributive manner, the use of the singular language makes sense in that each of the exceptions is given a proviso.
14. Fourth, within cl 3.9, there are two maintain and repair obligations, one imposed on the lessee by the first paragraph, and one imposed on the lessor by the second paragraph. There is considerable force in the plaintiff's concerns regarding the adoption of a wide and unrestricted reading of the second paragraph.[341] In my view, the second paragraph should be interpreted sensibly to ensure it is read subject to the first paragraph, and subject to the yielding up covenant in cl 3.23, and so to avoid the second paragraph destroying the effect achieved by the first paragraph and by cl 3.23.
15. Some further points should be made in this regard.
16. The second paragraph must be construed as forming part of cl 3.9 as a whole, and recognising that cl 3 of the Varied Lease is directed to the covenants given by the lessee to the lessor. The opening obligation in the first paragraph places a maintenance and repair obligation on the lessee, limited by the term 'good and substantial' and introduces a regime to deal with exceptions as well as default on the part of the lessee. In this context, adopting an unrestricted reading of the second paragraph would tend to seriously undermine the operation of the first paragraph. I refer, in this regard, to the observations of Gibbs J (as his Honour then was) in Australian Broadcasting Commission v Australasian Performing Right Association Ltd.[342] His Honour there commented that 'it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument'.
17. It is well-recognised that a conflict between apparently inconsistent provisions should be resolved on the basis that one provision qualifies the other, and so both provisions are given meaning and effect: Re Media, Entertainment and Arts Alliance; Ex parte Hoyts Corporation Pty Ltd.[343] This is an aspect of the general rule that a commercial instrument must be read as a whole. Thus where a later clause can be read as qualifying rather than destroying the effect of an earlier clause, the two should be read together and effect given to both: Tsolon Investments Pty Ltd v Waffle Pod Footing Systems NSW Pty Ltd.[344]
18. Resolving inconsistencies in this sense might also involve casting the second paragraph as being a 'specific provision', such that it should somehow prevail over the 'general provision' found in the first paragraph, in the manner identified in, for example, Hume Steel Ltd v Attorney-General (Vic).[345]
19. However, where a clause in a contract is followed by a later clause which destroys the effect of the first clause, the latter clause may be rejected as repugnant and the earlier clause permitted to prevail: Tsolon Investments.[346]
20. In the present context, I favour the view that the broader obligation in the first paragraph, which operates as a central repair obligation in the Varied Lease, ought be regarded as qualifying or limiting the scope of the second paragraph. In essence, the 12 words which appear in the second paragraph should be read to exclude responsibility on the part of the lessor where water ingress is brought about by the neglect, default or misconduct of the lessee, but will render the lessor liable for repair and maintenance which forms part of the fair wear and tear of the building. That represents a harmonious reading of the clause as a whole, and gives both provisions work to do.
21. Fifth, the apparent breadth of the second paragraph of cl 3.9(a) must also be seen in the context of the yielding up provision in cl 3.23 of the Original Lease. By reason of cl 3.23, the lessee is obliged to peaceably surrender and yield up the premises to the lessor 'in good and substantial repair and condition as nearly as possible in the same condition as the commencement' of the lease, subject to the usual exception for fair wear and tear. There is a real tension between this obligation on the lessee, and a literal reading of the second paragraph of cl 3.9(a) to the extent it might be read as placing an unconstrained obligation on the lessor.
22. Sixth, the application of the contra proferentum rule should be considered. Although it is generally regarded as a doctrine of last resort, it remains a useful constructional device. It is apparent on the evidence that the second paragraph to cl 3.9(a) was inserted at the request of Mr Syminton. The author of the clause is a relevant factor in the construction exercise, although as I have noted above, the reasons in this case for the inclusion are not. The defendant inserted the second paragraph and seeks to benefit from doing so. In construing the paragraph, given what I have said above as to the ambiguity created when it is read with the first paragraph, the second paragraph should be construed contra proferentum, that is against the interests of the defendant.
23. The justification for the contra proferentum rule is that the party drafting the words is in the best position to look after its own interests, and has had the opportunity to do so by clear words. The rule ought only be applied for the purpose of removing a doubt, and not for the purpose of creating a doubt, or magnifying an ambiguity.[347] The application of the rule is appropriate in the present case given the tension between the paragraphs.
24. Seventh, the proper construction of this provision should give recognition to the principle that a party to a contract should not be allowed to benefit from its own misconduct. In the present context, this supports the identification of a sensible and commercial interpretation of the clause, to read down the second paragraph of cl 3.9(a) so that it is at least subject to the first proviso in cl 3.9(a), namely where the damage is caused by the neglect, default or misconduct of the lessee.
25. The construction I have preferred makes considerable sense when examples are postulated as to its operation.
26. In this regard, in its submissions, the plaintiff rhetorically asks why the lessor should be liable under the second paragraph where it is the lessee who damages the premises, causing water ingress, such as by damaging the roof with a front end loader or by reason of dust emissions brought about by the defendant's conduct.
27. A further example given by the plaintiff is worth mentioning here. In the event a fire is caused at the Warehouse by the conduct of the lessee, through its neglect, would the lessor be liable to repair all damage caused by the fire to the roof and the wall panels if that damage allowed water to enter the premises? As the plaintiff submitted, it would not make commercial sense for the plaintiff to be burdened with an unqualified obligation in this scenario.
28. What work does the second paragraph of cl 3.9(a) do, on the above construction? A suitable example is that the provision would be engaged if roof sheeting was dislodged in circumstances not attributable to the corrosive effects of the ammonium sulphate, such as in high winds. The lessor's responsibility to maintain and repair the premises to prevent water ingress would require it to engage contractors to replace the sheeting.
29. A further point can be made here. The day to day operation of the defendant's business allowed for the ingress of water into the Warehouse, given that trucks would drive into the Warehouse on a regular basis. Imposing a wide obligation on the plaintiff to 'maintain' and keep the premises to prevent the effects flowing from this conduct would be wholly unrealistic and unworkable, unless that obligation was limited in some manner.
30. In my respectful view, it cannot have been objectively intended by the parties to this long term lease that the plaintiff would bear the obligation to maintain and keep the Warehouse in good repair so as to wholly avoid any water ingress to the premises, in an unconditional sense. The approach suggested by the defendant in this regard is described by the plaintiff as an 'absolute and literalist interpretation', which should not be accepted. I agree. In my view, although the language of the second paragraph to cl 3.9(a) is unambiguous, and this court would ordinarily give effect to that language, it is not required to do so if that would give the contract an uncommercial or objectively unintended operation.
31. When construed in context, the commercial contract which these parties entered into in 2005 should be approached so as to adopt a commercial and sensible interpretation. In my view, this includes adopting an approach which avoid the imposition of a strict or absolute liability on the lessor to undertake maintenance and repairs to prevent water ingress, and to adopt a construction which, harmoniously with the first paragraph of cl 3.9(a), limits that obligation where the relevant damage is caused by the neglect, default or misconduct of the lessee. Put another way, to construe cl 3.9(a) of the Varied Lease as meaning that the lessor is liable to repair damage caused by the lessee, where the lessee's neglect or default caused the damage, would not be a business-like interpretation of the lease in my view, in that it would not make commercial sense to put the risk of the lessee damaging the premises on the lessor. The plaintiff's submission to this effect should be accepted.[348]
32. I recognise there can be pitfalls associated with the judicial imposition of concepts of commerciality when construing agreements, as observed by Bell CJ in J & P Marlow, to which I have earlier referred. Those pitfalls are less pronounced when the commercial instruments are not complex and where the court is dealing with a common place business arrangement, such as the commercial lease in the present case.
33. Accordingly, the plaintiff's approach to the construction of cl 3.9(a), in the broader context of the lease, is to be preferred and should be accepted.

1. The defendant as the lessee had a contractual obligation under the first paragraph of cl 3.9(a) of the Original Lease, and then the Varied Lease, at all times to 'maintain and keep' the Units in 'good and substantial repair, order and condition'. It is important to note the covenant was not only to 'repair' but to 'maintain'. That obligation was subject to the 'fair, wear and tear' exception. This exception did not extend to a failure to repair relatively minor or trivial damage or defects where the damage or defects led to substantial further damage, in accordance with orthodox principles.
2. In any event, on the proper construction of the clause, the defendant could not avail itself of the exception if the damage was caused by its own neglect, default or misconduct. I note the insurance exception does not arise in the present case.
3. The plaintiff as lessor had a contractual obligation arising under the second paragraph of cl 3.9(a) of the Original Lease, and then the Varied Lease, at all times to 'maintain and repair' the Units 'to prevent water ingress'. On its proper construction, that obligation did not require the plaintiff to improve the premises relative to its original condition. Further, as a matter of construction, the obligation did not require the plaintiff to maintain or repair damage caused by the defendant's neglect, default or misconduct.
4. Importantly, the defendant was in any event obliged by reason of cl 3.23 of the Original Lease, and then the Varied Lease, to 'surrender and yield up' the Units to the plaintiff in 'good and substantial repair and condition as nearly as possible in the same condition as at the commencement' of the lease, subject to a 'fair, wear and tear' exception. That exception, as noted above on the basis of orthodox principles, did not extend to a failure to repair relatively minor or trivial damage, nor did to extend to defects where the damage or defects led to substantial further damage.

1. The breach of cl 3.9(a) of the Varied Lease pleaded by the plaintiff rests on a construction of the lease which I have accepted.
2. There are three broad aspects to consider. First, whether the defendant has failed to maintain and keep the premises in good and substantial repair. Second, whether the defendant has demonstrated that the damage in question resulted from 'fair, wear and tear', such that the first category of exception has been made out. Third, whether it has been demonstrated that the damage was caused by the neglect, default or misconduct of the defendant such that the protection of the exception has been lost.
3. As to the first of these matters, it is clear on the evidence that the Warehouse has not been maintained or kept in good and substantial repair. The evidence of the experts, together with the photographic evidence, reveals the aggressive effects of the corrosion over the length of the defendant's tenancy. The issues which were the subject of greater debate at trial were the second and third issues.
4. In this case, the defendant relies upon the first category of exception, which excludes liability for 'fair wear and tear'. Indeed, this was the primary defence of the defendant during the trial. The defendant does not rely on the second exception, as to insurance cover.[349] The defendant bears the onus to demonstrate that the 'fair wear and tear' exception has application on the facts.
5. It is thus necessary to assess whether the damage in this case falls within the concept of 'fair wear and tear'. In my view it does not. In any event, the damage which occurred was caused by the defendant's neglect, default or misconduct. These conclusions are, with respect, apparent from the key factual findings which are set out in Part VI of these reasons, and the expert evidence summarised in Part V, as explained below.
6. As to the scope of the term 'fair, wear and tear', I have earlier addressed the principles in this regard. The damage to the Warehouse in this case went far beyond 'fair wear and tear', in my view. The significant corrosion and other damage to the premises cannot be characterised as flowing from the reasonable use of the premises by the defendant and from the ordinary operation of natural forces. I say this because the damage to the Warehouse fundamentally had its source in the presence of ammonium sulphate within the premises, and the manner in which the defendant stored and dealt with that product as part of its operations.
7. As I have found, the defendant's operations produced considerable dust from the product within the premises, which settled on the horizontal surfaces. When exposed to moisture, this had an acidic and corrosive effect. The repair work and steps which were required on a regular basis to repair leaks in the roof of the Warehouse, and to prevent water ingress through other means into the Warehouse, cannot be characterised as minor or trivial in nature when it is apparent that this work or these steps, if not properly undertaken, would lead to substantial further damage with the Warehouse. The missing tile example referred to in Haskell v Marlow is apposite, in my view.
8. If I am wrong in my above conclusion, and the defendant can demonstrate the damage was caused through 'fair, wear and tear', I consider the evidence nonetheless demonstrates that the damage was caused by the neglect, default or misconduct of the defendant, being the first proviso to cl 3.9(a). On this basis, the 'protection' of the exception would be lost where the damage has been caused by the 'neglect, default or misconduct' of the defendant. This concept extents to a failure to act with reasonable care.
9. I have found that the defendant undertook, or engaged contractors to undertake, some repair work during the course of its tenancy. That work was largely directed at patching leaks rather than constituting preventative work, as such. It was reactive. This work did not resolve the underlying problem that the ammonium sulphate was having a corrosive effect on the concrete, metal supports, floors and walls, and the fixings.
10. The defendant's operations involved the storing of uncovered ammonium sulphate, and the screening of that product in a manner which created considerable dust within the premises. The Warehouse was not protected in the manner which the experts opined should have been done, and no dust curtains were installed by the defendant, although that step was recommended by the City of Kwinana. As earlier found, the defendant used tarpaulins on limited occasions to cover the ammonium sulphate, but that was fundamentally designed to protect the product, not the building. It may be accepted that the use of tarpaulins was not best practice in any event, so this aspect of the plaintiff's challenge to the conduct of the defendant is relatively less significant.
11. It may be accepted that the damage to the Units was ultimately caused by a combination of the following matters, which I consider were established on the evidence:

(a) the defendant's storage of ammonium sulphate within the premises;

(b) the defendant's failure from the commencement of its tenancy to treat the exposed surfaces within the Warehouse with a protective coating, such as a robust polymeric coating;

(c) the defendant's screening of the ammonium sulphate within the premises, without implementing any measures to minimise the dispersal of dust from the product, including the absence of any ventilation system, which dust then came into contact with surfaces within the premises and adhered to those surfaces;

(d) the defendant's failure to implement regular and systematic cleaning practices;

(e) the defendant's operations allowed the ammonium sulphate to come into contact with the concrete floor as well as the concrete walls;

(f) the defendant's operations involved trucks bringing water into the premises during wet weather, with the ammonium sulphate being unloaded onto wet floors on occasions; and

(g) the absence of dust curtains, and the fact the main doors to the Units would be left open on occasions (in the particular manner I have earlier found) such that the ammonium sulphate dust would be blown through the premises and through gaps in the walls, settling on the roof and the steel structures under the roof.[350]

1. I accept the broad contentions pleaded by the plaintiff at [12(a)] and [12(b)] of the SOC have been established on the evidence. That is, the defendant failed to handle, store and screen the ammonium sulphate properly or in a reasonable manner within the Warehouse, and neglected to take action to mitigate the damage. With the exception of the contention that the product should have been stored in contained, that tarpaulins should have been used, and the overstatement of the manner in which the doors were left open,[351] the particularised allegations to [12(a)] and [12(b)] of the SOC have been made out, in my opinion.
2. For the reasons I have earlier explained, the fact the Varied Lease permitted the defendant to store corrosive fertiliser within the Warehouse, does not provide the defendant with an escape from contractual liability under cl 3.9(a) of the Varied Lease. I accept the plaintiff's submission that this does not provide 'an excuse for letting severe but preventable corrosion occur'. Fundamentally, it was for the defendant to ensure the Units were suitable for the intended use and that it conducted its operations to prevent damaging corrosion resulting from ammonium sulphate.
3. Almost none of the preventative measures recommended by the experts were implemented by the defendant during the course of its long tenancy in the Warehouse. As a result, the deterioration which occurred to the Warehouse is more severe than that which would have been expected at other fertiliser storage facilities which had appropriate steel protection measures. That was the collective opinion of the two experts on the subject, which I have accepted. The service life of the building products used in the construction of the Warehouse was, as a combined result of the presence of the ammonium sulphate, the manner of operations of the defendant, and the lack of proper preventative measures, dramatically reduced in the manner explained by both experts.
4. In my view, the plaintiff has positively demonstrated, on the balance of probabilities, that the defendant was obliged at all times during its tenancy under the Original Lease (and later the Varied Lease) to maintain and keep these premises in good and substantial repair, order and condition. It failed in that obligation. It must be emphasised here that the obligation was not only to repair but to 'maintain' the premises. Further, the exception to that obligation, for 'fair wear and tear', has not been demonstrated by the defendant on the evidence, and it bore the onus on that issue.
5. In the event I had concluded the exception was made out, the evidence demonstrates that the defendant would not be able to avail itself of the benefit of the exception given the core cause of the damage was its own neglect, default or misconduct in failing to implement the types of preventative measures outlined by the experts.
6. Putting in general terms, the defendant operated its business throughout the tenancy without regard to the integrity of the premises and failed to implement protective or repair steps when required, other than on a reactive basis. Not having taken those protective steps, it is not possible for the defendant to fall back on an argument that the effects of its corrosive product on the building and its structure was a permitted consequence, or natural outworking, of its tenancy. That would expand the concept of 'fair, wear and tear' well beyond its accepted and conventional meaning, in my view.
7. The defendant's failure resulted in significant damage to the Warehouse, in the manner I have earlier set out. The evidence at trial, including the photographic evidence which I have included in Attachment C to these reasons, shows the significant degradation of the premises over the course of the defendant's tenancy. This includes the storm damage caused to the Warehouse - the building having been rendered more susceptible to such damage because of the effects of corrosion.
8. One comparison which is quite telling, in the circumstances of this case, is the contrast between the condition of Units 2 and 3 as they stood in 2015, and the condition of Unit 1 in 2005 (when all of the Units were approximately 15 years old). This contrast, described as 'striking' in the plaintiff's closing submissions,[352] is a telling indication as to the differences between the effect of natural forces on the building (which Unit 1 may be said to have experienced between 1990 and 2005) and the damage which resulted to Units 2 and 3 from the business operations of the defendant between 2005 and 2015.
9. The failures on the part of the defendant might be characterised as differences in the manner of operating its business within the premises, taking preventative maintenance steps, or undertaking repairs or other work to ameliorate the effects of the storage and screening of the ammonium sulphate. To the extent to which any of the repair work or steps identified by the plaintiff might also be characterised as structural upgrades or works of a capital nature, such as the polymeric coating, the ventilation, adding new roof sheeting, and the dust curtains, it does not follow that the work falls outside the defendant's contractual obligations expressed in cl 3.9(a), given the construction of the lease I prefer, particularly given the absence of any express covenant or warranty as to fitness for purpose.
10. In any event, I would not regard the more significant steps identified by the plaintiff, which I have mentioned above, as representing structural or capital works. The work would not give the plaintiff something different from that which was leased - the structure would remain the same. This is important to remember in the analysis. In the end, the repair of a structure may involve the renewal or rebuilding of part of it, and to some extent I accept that all repairs involve a renewal to some extent.[353]

1. The plaintiff's claim for breach of cl 3.9(a) of the Varied Lease should therefore be upheld, subject to a consideration of the conventional estoppel defence pleaded by the defendant, the asserted failure on the part of the plaintiff to mitigate its loss, and the limitation defence.

1. I next turn to the components of the plaintiff's claims which allege a breach of cl 3.23 of the Varied Lease. I will first address the more wide ranging of the claims which asserts a breach of cl 3.23, and then address the alleged failure to repair the access holes in the Warehouse.

(1) Alleged failure to yield up in good and substantial repair and condition

1. The plaintiff alleges a breach of cl 3.23 of the Varied Lease by reference to the defendant's asserted failure to repair the damage to the Units, alleged to have been caused by the defendant's use of the premises to handle, store and process ammonium sulphate: see [17A(b)], [18] and [19] of the SOC.
2. As the lessee, the defendant was obliged by reason of cl 3.23 of the Varied Lease to surrender and yield up the premises to the plaintiff 'in good and substantial repair and condition as nearly as possible in the same condition as at the commencement' of the lease, subject to a fair, wear and tear exception.
3. The plaintiff carries the onus to demonstrate this breach. The breach is denied by the defendant, on largely the same bases as the alleged breach of cl 3.9(a) of the Varied Lease and the parties' submissions tended to address these breaches in a collective fashion.[354]
4. I have set out earlier in these reasons the general principles of law relevant to the scope and construction of clauses such as cl 3.23 of the Varied Lease.
5. The contractual obligation upon the defendant to yield up in the manner required by cl 3.23 of the Varied Lease arose upon it ceasing to hold over the premises, being in late 2016. The contention put by the defendant that the obligation arose at the conclusion of the express term of the lease, in February 2014, must be rejected.[355] The reliance on this temporal limitation in the chapeau to cl 3.23 of the Varied Lease is misplaced, and the clause must be read subject to any holding over period. I refer to the principle and authority identified at [500] above.
6. Upon the defendant ceasing to hold over, it was obliged to yield and deliver up the premises (including the Warehouse) in such a state of repair as that in which the premises would be found if managed by a reasonably minded owner having regard to the age, character and ordinary use of the premises, and the requirements of the tenants likely to take them at the time the defendant originally took the lease. This is what was required by the language the parties chose to use in cl 3.23, being 'good and substantial repair as nearly as possible in the same condition as at the commencement' of the lease.
7. The obligation was expressly subject to the fair, wear and tear exception, which must be construed in the manner I have earlier indicated.
8. The obligation was more than simply handing over premises which were fit for human habitation, or which were clean and safe. The obligation travelled well beyond this. It required the premises to be handed over in a 'good and substantial repair and condition', with the inclusion of the term 'condition' emphasising the extent of the defendant's obligation, in my view.
9. For the reasons I have expressed in relation to the plaintiff's claim in respect of cl 3.9(a) of the Varied Lease, I find that the premises and the Warehouse were not surrendered by the defendant to the plaintiff in a manner consistent with the obligation in cl 3.23 of the Varied Lease.
10. Far from it.
11. The premises were left in a state of dilapidation by the defendant, caused by the corrosive and other effects arising from the storage of ammonium sulphate in the Units over a lengthy period without proper steps being taken by the defendant to prevent or minimise the damage. The state of repair (or lack thereof) of the Warehouse is evident from the photographs taken of the premises around the time the defendant ceased the holding over. The state of the premises in November 2016 cannot reasonably be attributed to the fair, wear and tear on the premises over the life of the defendant's tenancy. As I have indicated above, such a conclusion would not be consistent with the evidence of the experts, who were in general agreement as to the impact on the building components arising from the ammonium sulphate and who both opined as to the shortened service life of those components.
12. The plaintiff has established, on the balance of probabilities, a breach of cl 3.23 of the Varied Lease.

1. This contractual claim focuses on the defendant's asserted failure to repair the access holes in the walls to the Warehouse upon termination of the lease.[356]
2. The defendant's response to this claim was thin, at best.
3. It was contended by the defendant that the plaintiff did not formally request that the defendant repair the access holes. It was further asserted, although not with much vigour, that the access holes may have been of benefit to a subsequent tenant using the premises.
4. On the evidence, the court has found that, in August 2007 and prior to the commencement of the lease for Units 2 and 3, the defendant raised with the plaintiff its desire to create access ways or holes between all of the Units.
5. The plaintiff consented to this occurring, but did so on certain terms.
6. One of those terms, which was expressly included in an email sent by Mr Burns to Mr Syminton on 9 August 2007, which was applicable to each of the access holes, was that:

At the expiration of the lease the walls are to be replaced so that they are in accordance with how they were when the lease of units 2 & 3 commenced. Any costs incurred in changing or removing the walls or replacing walls are to be at your cost.

1. The court has found that the access holes were constructed in around 2009. The holes were significant in size, being approximately 5 metres in height and 5 metres wide. The holes allowed access from Unit 1 into Unit 2 or 3, and access between Units 2 and 3, and were large enough to permit trucks and front end loaders to drive through them.
2. When the defendant vacated the premises in late 2016, it did not repair the access holes. Mr Tip O'Neill accept as much during his evidence.[357] The repair work was in fact undertaken by contractors engaged by the plaintiff, namely Go2 Group Pty Ltd, at the plaintiff's cost.
3. It is evident the defendant well understood it had an obligation to make good the access holes upon its departure from the premises. Mr Syminton, who was not called by the defendant at trial, expressly acknowledged this in one of his letters to BHP, sent on 16 July 2013.[358] He stated as follows:

Several years back three concrete walls were cut to provide for FEL access without needing to go outside. Indirectly BHPB paid for this work, by rights when (if) IRM leaves the property the walls should be made good. Our estimate is that, if we were forced to make good the walls, the cost would be between $100-150,000 ($0.60-0.90/mt over three years throughput.

1. It is irrelevant to the contractual obligation in cl 3.23(a) whether or not, at the time the defendant vacated the premises, the plaintiff formally requested that the defendant repair the access holes. The obligation in the lease arose upon the 'expiry' of the 'Term', which occurred upon the defendant's termination of the lease. The obligation in cl 3.23(a) was, at that point, for the plaintiff:

Peaceably to surrender and yield up to the Lessor the Premises, subject to the other provisions in the Lease, clean and free from rubbish and in good and substantial repair and condition as nearly as possible in the same condition as at the commencement of the Term [with fair wear and tear excepted].

1. The defendant was obliged to repair the access holes to return the premises to the same condition it had been in at the commencement of the lease, 'as nearly as possible'. Whether a subsequent tenant in the Warehouse might have used the access holes is irrelevant, in my view.
2. I therefore find the plaintiff has demonstrated, on the balance of probabilities, its claim pleaded at [17A(a)] of the SOC, that the defendant breached cl 3.23(a) of the Varied Lease in respect of the three Units. The term of the lease required the defendant to yield up the premises in good and tenantable repair, which it failed to do in this respect.
3. The specific cost of repairing the access holes was not delineated in the evidence. As Mr Joseph Hawkins explained in his evidence, and I accept, this repair work formed part of the overall scope of the remediation works undertaken by the contractor engaged by the plaintiff, being Go2 Group.[359] The damages for the breach of cl 3.23 of the Varied Lease in relation to the repair of the access holes thus falls to be assessed as part of the overall damages claim.

1. The plaintiff alleges a breach by the defendant of cl 3.17 and cl 5.3 of the Varied Lease, but there is no specific correlative claim for loss and damage.[360] The complete terms of those clauses are set out in Attachment A to these reasons. It should be accepted that the reference in cl 5.3(e) to 'Clause 3.16' ought be read as a reference to 'Clause 3.17'. That is an obvious error in the drafting of the provision, and another infelicity in the drafting of the instrument.
2. In essence, the plaintiff alleges that the conduct of the defendant in storing and handling the ammonium sulphate within the Warehouse, as earlier described in these reasons, breached these provisions and led to the 'non-renewal of insurance cover for the building and the conduct rendered the building effectively uninsurable'.
3. As the case was presented, the arguments concerning cl 3.17 were closely tied to the second proviso which appears in cl 3.9(a). That proviso is engaged if the lessor's insurance is 'invalidated by an act, neglect or default' of the lessee.

(2) The obligations as to insurance under the Varied Lease

1. The Varied Lease placed obligations on the defendant to put insurance coverage in place dealing with public risk, and in respect of the plaintiff's fixtures, fittings, materials, goods and furniture on the premises.
2. Pursuant to cl 3.16(a) of the Varied Lease, the defendant as the lessee was obliged to effect and maintain adequate public risk insurance in respect of the premises, on the terms stipulated therein.
3. Pursuant to cl 3.19(b) of the Varied Lease, the defendant as the lessee was obliged to insure and keep insured 'to the full insurable value on a replacement or reinstatement basis' the lessee's 'fixtures, fittings, materials, goods, furniture and partitions' in the premises. The coverage was to extend to:

...fire, storm, tempest, earthquake, civil commotion, extraneous risks including rain water and other water damage, flood, riots, strikes, malicious damage, explosion, impact by vehicles or aircraft, articles dropped from aircraft and all other risks reasonably required by the Lessor...

1. Allied to these obligations, by the terms of cl 3.17 of the Varied Lease, which is headed 'Not to invalidate insurance', the defendant lessee covenanted not to do or suffer to be done any act, matter or thing upon the premises (nor bring nor keep anything on the premises) whereby the 'insurance against damage by fire and other insured risks might be rendered void or voidable or whereby the rate of premium is or is liable to be increased'.
2. By cl 5.3(e) of the Varied Lease, the obligation in cl 3.17 is deemed to be an essential term of the contract.
3. The use of the phrase 'void or voidable' in cl 3.17 is to be compared with the language employed in cl 3.9(a), which refers to the insurance being 'invalidated'. I understood the plaintiff to contend that the term 'invalidated' did not refer only to circumstances of non-disclosure or fraud, whereby a policy of insurance would be invalidated by an insurer, but extended also to include concepts such as 'non-applicable', 'non-renewal', and 'rendered uninsurable'.[361] Similarly, the terms 'void' and 'voidable' were argued to extend to these further circumstances.
4. The defendant submitted that these terms, in their ordinary and natural meaning, were not apt to be given such extended meanings, and should properly be confined to circumstances in which the insurance policy has truly been invalidated, such as by reason of a circumstance of non-disclosure, through arson on the part of the insured, or by reason of fraud.[362]
5. In my view, the ordinary and natural meaning of the terms 'invalidated', 'void' and 'voidable' is coterminous - those words should be interpreted consistently across the Varied Lease. Further, the words should be confined in the manner submitted by the defendant. These words do not easily lend themselves to capture the broader circumstances identified by the plaintiff, such as 'non-renewal'. In my view, where an insurance policy is said to be invalidated it will have been rendered void or ineffective from the commencement of the policy as against the relevant insured, not simply cancelled going forward, or not further renewed by the insurer. By analogy, I observe that the term 'avoid' in the Insurance Contracts Act 1984 (Cth) (ICA) means, in relation to a contract of insurance, to 'avoid from its inception'. That statutory language, and the scheme of the ICA, provides some support by analogy for adopting a precise and confined meaning to the language in the Varied Lease, rather than construing the language in the general manner proposed by the plaintiff.
6. It is relevant that cl 3.17 prohibits the lessee from not only acting so as to render the insurance policy void or voidable, it also precludes the lessee from acting so as to cause the premium for the policy to be increased. The first aspect of the clause (which refers to 'void or voidable') is directed to the serious circumstances by which the policy is wholly invalidated. The second aspect of the clause will capture those circumstances which lead to something less than invalidation of the policy, but which impact the insurer's risk profile and the designated premium. The plaintiff does not base its case on the second aspect of cl 3.17 of the Varied Lease - its case on the pleadings and at trial was confined to the first aspect.

(3) Factual findings to the insurance arrangements

1. I have set out the details of the insurance arrangements in Part II of these reasons. The evidence discloses there was a policy of insurance in place with Zurich Australian Insurance Limited, being an 'Industrial Special Risks' policy which identified the plaintiff as one of the insured.
2. On 9 February 2016, a written communication was received by Mr Noordewier from Zurich Financial concerning these insurance arrangements.[363] I ruled during the trial that the communication may be admitted only on the basis that, on or about 9 February 2016, the insurer (and Zurich Financial) had reached a decision to decline to further insure the plaintiff, and that this decision was communicated to the plaintiff's broker. The reasons for that decision, as stated within the communication, were inadmissible.
3. The evidence thus discloses that, from 9 February 2016, the insurer had made a decision that the insurance policy in favour of the plaintiff, insofar as it insured the Warehouse, would not be renewed. It is plain from the communication that this was a forward looking decision by the insurer - there is no indication in the communication that the relevant policy of insurance was being invalidated or rendered void as against this plaintiff as one of the insured under the policy.
4. It is further apparent that the insurance policy was not wholly invalidated by Zurich Australian Insurance Limited given the evidence as to the later payout made to the plaintiff by the insurer. That occurred in around March 2016.[364] Had the policy of insurance been rendered void, it is most unlikely that such a payout would have been made to the plaintiff.

1. Given the interpretation of cl 3.17 of the Varied Lease I have settled on, which applies equally to the insurance proviso in cl 3.9(a), and having regard to the limited nature of the evidence concerning the insurance arrangements, namely that the policy was not invalidated but a decision was taken by the insurer not to renew the policy insofar as it concerned the Warehouse, the plaintiff's claim for breach of cl 3.17 and cl 5.3(e) of the Varied Lease must fail.
2. Similarly, the evidence does not support a conclusion that the insurance policy was invalidated within the language of cl 3.9(a) of the Varied Lease.

G. Alleged contravention of the EPA and the regulations

1. I will now address the claims pleaded in the SOC at [12B] to [12G], which arise from alleged contraventions of s 56 of the EP Act, and are thereby pleaded to be breaches of cl 3.10(a), cl 3.10(b), cl 3.15(a) and cl 5.23 of the Varied Lease.
2. The conduct which the plaintiff focuses upon in this regard is the screening activity undertaken by the defendant's personnel within the Warehouse. The breach in this regard focuses on the classification of the premises as 'prescribed premises' for the purposes of the legislation, given the quantity of product screened, sized or separated on the premises.
3. The conduct of the defendant is said to have caused emissions of dust of ammonium sulphate from the Units throughout the term of the lease, in circumstances in which the defendant was not the holder of a licence or works approval in respect of the Units under s 56 or s 57 of the EP Act.[365] Such licences are granted by the Chief Executive Officer of the Environmental Protection Authority, under s 57 of the EP Act.
4. The defendant's breaches are alleged to have caused the plaintiff to suffer loss and damage, being the matters pleaded at [12] of the SOC.[366] Further, the plaintiff contends the emission of ammonium sulphate dust in and around the Units caused that dust to come into contact with the walls, beams and roofs of the Units.[367] Further still, the plaintiff pleads that the corrosive effects of the ammonium sulphate, by coming into contact with water, caused the permanent and serious structural damage pleaded at [11] of the SOC.[368]
5. I note, in passing, that the plaintiff did not plead that the above clauses of the Original Lease also formed part of the lease for Units 2 and 3 (in the event that lease was found to be a separate lease).[369] However, as I have concluded there was a varied lease arrangement, this pleading point does not have any consequences in terms of my reasoning process.
6. In the substance, although expressed in different ways, the pleaded clauses of the Varied Lease required the defendant to use the premises in a manner which conformed with, and did not contravene, the applicable statutes and regulations, and required the defendant to obtain all necessary approvals, permits and licences.[370]

1. The defendant admits that it did not hold any relevant licence, permit or approval under the EP Act.[371] The defendant denied that it had breached s 56 of the EP Act and, in particular, contended that the Warehouse did not meet the statutory description of 'prescribed premises' under the legislation.

1. Section 56 of the EP Act is found within pt V of the legislation, which is headed 'Environmental regulation'. Section 56 provides as follows:
   1. Occupiers of prescribed premises to be licensed for emissions etc.

(1) Subject to this Act, the occupier of any prescribed premises who:

(a) causes or increases, or permits to be caused or increased, an emission; or

(b) alters or permits to be altered the nature of the waste, noise, odour or electromagnetic radiation emitted,

from the prescribed premises commits an offence unless he is the holder of a licence issued in respect of the prescribed premises and so causes, increases, permits or alters in accordance with any conditions to which that licence is subject.

(2) Subsection (1) does not apply if the emission is caused, increased or altered -

(a) as a result of anything done in accordance with a works approval; and

(b) while the works approval is in force.

1. For the purposes of pt V, the EP Regulations specify in sch 1 thereof the premises which are so prescribed.[372] This regime was conveniently described by the Court of Appeal in Eclipse Resources Pty Ltd v The Minister for Environment [No 2] in the following terms: [373]

Regulation 5 of the EP Regulations provides that the premises specified in sch 1 are prescribed premises for the purposes of pt V of the EP Act. Schedule 1 of the EP Regulations sets out numbered categories of premises. Each category is identified by reference to the activities carried out on the premises and, in some cases, by reference to the 'production or design capacity' of the premises. Having regard to the definitions in the EP Act and the EP Regulations, 'prescribed premises' means premises on or at which any prescribed activity (ie, one coming within the description and production/design capacity in sch 1 of the EP Regulations) is conducted.

1. The plaintiff in the present case expressly relies on categories 12 and 70 in sch 1 to the EP Regulations, alleging that the defendant's screening of ammonium sulphate engaged those categories. Categories 12 and 70, which provide as follows, are in substantially the same terms save for the volume thresholds which apply:

Screening etc. of material: premises (other than premises within category 5 or 8) on which material extracted from the ground is screened, washed, crushed, ground, milled, sized or separated.[374]

Screening etc. of material: premises on which material extracted from the ground is screened, washed, crushed, ground, milled, sized or separated.

More than 5,000 but less than 50,000 tonnes per year

(4) The matters which must be established by the plaintiff

1. In order to demonstrate a breach of s 56 of the EP Act, and thus a contravention of the lease provisions, the plaintiff bears the onus of establishing the following matters:

(a) that the screening of ammonium sulphate within the Warehouse constituted the screening, crushing, grinding, milling, sizing or separation of 'material extracted from the ground';

(b) that the production or design capacity of the screening apparatus used by the defendant at least exceeds 5,000 tonnes per annum (being the lower volume limit found in category 70);

(c) that the defendant was the occupier of the premises;

(d) that the defendant's activities caused an emission from the premises; and

(e) that the defendant did not hold a relevant licence or work approval as required under the EP Act.

1. The defendant was the occupier of the premises (which satisfies the point at (c)) and admits it did not hold a relevant licence or work approval (which satisfies the point at (e)). So, only the matters in (a), (b) and (d) were ultimately in issue at trial. I will address these matters below.
2. Before doing so, I should mention the causation argument which was raised by the defendant. It was contended that, even if the plaintiff established the defendant was required to hold a licence or permit, no specific loss or damage had been demonstrated as flowing from that breach.[375] The defendant submitted that the mere failure to hold a licence or permit was not causative of any damage in that, had the defendant held a licence or permit, the same physical screening processes would have been undertaken within the premises, leading to the same impacts for those premises.
3. This causation argument can be swiftly dealt with, and rejected, given its false premise.
4. Had the defendant been required to apply for a licence or permit in respect of this activity on the premises, it cannot be assumed that the Environmental Protection Authority would have simply permitted the activity, or permitted it to occur in the manner in which it did. There is facility within the legislation for the Environmental Protection Authority to refuse to grant the licence,[376] and to impose conditions on any grant of a licence or permit.[377] In circumstances involving activities which create dust, it may reasonably be inferred that conditions concerning dust suppression may have been considered (and imposed) by the Environmental Protection Authority.
5. The defendant's causation argument assumes, wrongly in my view, that the defendant would have been permitted to undertake the same screening activities which in fact took place over the relevant period.

(5) Is ammonium sulphate 'extracted from the ground'?

1. The defendant disputes that the ammonium sulphate screened by the defendant is properly characterised as 'material extracted from the ground'.[378]
2. That phrase is not further defined in the EP Act or the EP Regulations.
3. No authority was cited by either party as to the scope of this phrase.
4. The defendant asserts that the ammonium sulphate it screened was a by-product of the chemical reactions involved in the nickel refinery process conducted by BHP and, as such, the defendant says the product is not extracted from the ground.[379] I have set out, in Part VI of these reasons, the evidence which supports the defendant's assertion.[380]
5. There was no forceful argument to the contrary, with respect.
6. In my view, the plaintiff has failed to demonstrate that the screening of ammonium sulphate by the defendant, as pleaded, involved the screening of 'material extracted from the ground'. The evidence simply does not rise to any level sufficient to make a finding of fact in favour of the plaintiff on this point. Accordingly, it follows that the plaintiff has failed to demonstrate the Warehouse falls within the definition of 'prescribed premises' for the purposes of s 56 of the EP Act.
7. This conclusion is fatal to the alleged breach of s 56 of the EP Act, and thus the alleged breaches of the clauses of the leases identified at [669] above.

(6) Has the 'production or design capacity' threshold been demonstrated?

1. In respect of each category within sch 1 to the EP Regulations, where applicable, there is a stipulation of the 'production or design capacity' for that category.
2. This composite phrase is not defined within the EP Regulations, nor are the components within the phrase: 'production capacity' and 'design capacity'.
3. The parties did not address whether the 'design capacity' of the screening apparatus employed by the defendant fell within the EP Regulations, and no evidence was adduced as to that 'design capacity'. Although not argued, on its natural meaning it appears the term 'design capacity' is a reference to the potential volume of throughput of which the identified apparatus, or the identified operation in sch 1, is capable.
4. Instead, both parties directed their submissions to the actual volume of product screened by the defendant, which I took to be a reference to the 'production capacity' of the screening machine. Given the submissions made by the parties and the manner in which the cases were framed at trial, I will approach the matter on the basis that the regulations are relevantly engaged if the screening operation in fact exceeded the 5,000 tonne threshold, being the minimum 'production capacity' requirement.
5. Counsel for the plaintiff submitted the volume threshold was demonstrated on the evidence, pointing to, at least, the total volume of ammonium sulphate sold by the defendant in June 2011 as appears from the monthly report submitted to BHP.[381]
6. For its part, the defendant denied that it screened sufficient product to meet the 5,000 tonne minimum threshold in any given year. The defendant says the focus must be on the volume of the material actually screened, not merely the volume of overall product in the Warehouse. I accept the threshold for 'production capacity' must operate by reference to the volume which is screened, being the relevant activity identified in the category.
7. The defendant submitted that it only used the screening machine to screen the granular product (i.e. the premium grade product). I accept this submission is supported by the evidence of both Mr Goodwin and Mr Donkin.[382]
8. The defendant next submitted that the amount it screened equated to approximately 10% of the overall product received at the Warehouse. I accept this submission, which is supported by the evidence. This can be seen in the letter sent by Mr Liddle of the defendant to the Fire and Emergency Services Authority on 1 April 2008, which Mr Frank O'Neill also confirmed in his evidence at trial.[383] In that letter, Mr Liddle states:

We screen approximately ten percent of our total output through this unit per annum [referring to the screening machine].

1. The estimate of 10% is, naturally, only an approximation.
2. The defendant next submitted that the evidence demonstrated the maximum amount of ammonium sulphate stored in any given year at the Warehouse was less than 50,000 tonnes. Accordingly, the volume of ammonium sulphate actually screened was necessarily less than 5,000 tonnes annually, based on the 10% approximation.
3. The overall volume stored at the premises during the defendant's tenancy, in any given year, was not easily identified in the evidence. Both parties made reference to the monthly reports submitted to BHP by the defendant in this regard, which recorded monthly sales and, on occasions, annual sales.[384]
4. Having reviewed the monthly reports which were identified by the parties, I could not readily discern with any level of confidence a total annual volume of product sold by the defendant which was in excess of 50,000 tonnes. In the 2010/2011 financial year, it appears annual sales were 41,057 tonnes.[385] In one particular month, October 2010, granular sales were admittedly 775 tonnes, which could be extrapolated to an annual volume of 5,000 tonnes of granular product, but that assumes a consistent volume throughout the year, which is not supported by the evidence.[386]
5. However, on further examination by the court, it can be said that the monthly report provided to BHP for June 2013 evidences an annual volume of ammonium sulphate in excess of 50,000 tonnes.[387] The cover letter prepared by Mr Syminton and Mr Donkin refers to the sale of 54,725 metric tonnes of ammonium sulphate for the year to date. To break this down further, at pg 20 of the report, the summary of monthly results for fiscal year 2013 refers to the sale of 8,921 tonnes of premium product and 44,816 tonnes of standard product during the year.[388] The volume of premium product would, I accept, have been screened by the defendant during the fiscal year.
6. It is open to find, and I do find, on the basis of this monthly report, that the defendant screened in excess of 5,000 tonnes of ammonium sulphate in that particular year. That is evident from the overall volume sold, when the 10% approximation is applied, and also from the volume of granular product sold in that year (which itself exceeds 5,000 tonnes, without having to engage in the approximation exercise).
7. I am therefore able to make a finding, on the balance of probabilities, that the defendant's activities involved the screening of at least 5,000 tonnes of product in a given year. Accordingly, this element of the definition of 'prescribed premises' is satisfied for the purposes of s 56 of the EP Act, at least in respect of the year I have identified.
8. Given the adverse conclusion above as to whether the product was 'extracted from the ground', it is unnecessary to further consider whether a finding of 'production capacity' in excess of 5,000 tonnes for one year has the consequence that the premises were 'prescribed premises' for each year between 2005 and 2016. For my part, the evidence is not sufficient to make such a finding for each year in this period. This is a further deficiency in the plaintiff's case in respect of this claim.

1. I next turn to the 'emissions' requirement.
2. Section 56 of the EP Act applies if one of the circumstances in s 56(1)(a) or s 56(1)(b) is engaged. I understood the plaintiff to rely only on s 56(1)(a), asserting that the occupier had caused, or permitted to be caused, an 'emission' from the premises.
3. The term 'emission' is defined in s 3(1) of the EP Act to include a 'discharge of waste', and the term 'waste' is relevantly defined to include matter whether 'liquid, solid, gaseous or radioactive and whether useful or useless, which is discharged into the environment'.
4. The plaintiff submits that, having regard to these definitions, whenever any matter is discharged into the environment, that will constitute an emission of waste.
5. The plaintiff contends that the screening activities that were carried out at the premises, as well as the other activities which occurred at the premises, including the way the ammonium sulphate was loaded and unloaded inside the buildings, resulted in 'large levels of dispersal of dust of ammonium sulphate throughout the building' and 'also caused emission of that dust outside of the building as well, and, therefore, it was discharged into the environment'.[389]
6. The court has found that some dust emanated from the Warehouse on occasions. Mr Donkin gave evidence to this effect, which I have accepted. However, I have not found that large 'dust plumes' emanated from the Warehouse, such as the 'plume' which was the subject of the particular complaint to the local council. It is sufficient for the purposes of s 56(1)(a) of the EP Act to find that dust was produced by the defendant's screening activities, and that dust would on occasions travel outside the Warehouse. That constitutes an emission of waste from the premises in question, which engages s 56(1)(a) of the legislation. Further, given the nature of the operations of the defendant, it may reasonably be inferred that this is likely to have occurred in each year of the defendant's occupation of the Warehouse.

1. The plaintiff has failed to demonstrate the matter in (a) as described in [679] of these reasons, and so the Warehouse cannot be characterised as 'prescribed premises' for the purposes of pt V of the EP Act. Further, the plaintiff has failed to demonstrate the matter in (b) as described in [679] of these reasons, other than in respect of one fiscal year.
2. Accordingly, the plaintiff has not made out the allegation that s 56 of the EP Act was contravened by the defendant, and so the claims based on the pleaded breaches of cl 3.10(a), cl 3.10(b), cl 3.15(a) and cl 5.23 of the Varied Lease must fail, in my view.

1. The defendant pleads an estoppel defence at Defence [22A.6.1], which is responsive to the contractual claims, and appears also to be a response to the claim in tort, although the former is more orthodox. The defendant asserts this is an estoppel by convention.[390]
2. The essence of the plea is that the plaintiff is said to be estopped from asserting that the defendant is liable for the alleged loss and damage because:

(a) the defendant knew that the plaintiff was aware of the matters pleaded in [22A.1] of the Defence, which I have referred to above;

(b) by reason of the plaintiff's failures to maintain and repair the premises to prevent water ingress or rectify the storm damage, among other things, the defendant assumed that the plaintiff consented to the manner in which the defendant was operating its business including the storing and screening of ammonium sulphate, and not applying polymeric coating to the structure, among other matters;

(c) in reliance upon that assumption, the defendant did not take any of the steps pleaded in the SOC at [12(b)]; and

(d) the defendant would suffer detriment if the plaintiff were permitted to resile from the assumption to the extent the defendant would otherwise be liable to the plaintiff for the alleged loss and damage.

1. In essence, the defendant submits that, despite significant and ongoing problems with the premises during the defendant's occupancy, the plaintiff took no substantive steps to establish how corrosive the fertiliser was or to address the problems, whether by repairing the damage itself or by taking preventative measures or by terminating the lease.[391]
2. Further, the defendant submits that, given the matters known to the plaintiff, including the permitted use under the Lease, that ammonium sulphate was corrosive and the manner in which the defendant was handling, storing and screening ammonium sulphate when it leased the Units to the defendant, the fact the plaintiff did not raise any concerns with the defendant about the conduct of its business means the defendant was entitled to assume that the plaintiff consented to the manner in which it was handling, storing and screening the ammonium sulphate within the Units.[392]
3. The factual contentions raised by this defence are largely addressed elsewhere in these reasons, including in Part VI. It is not necessary to address all of these matters again in the context of the estoppel plea. Rather, the pleaded estoppel defence can be addressed in the following manner.
4. As to the relevant principles, I did not understand them to be in contest between the parties. An estoppel by convention is not founded on a representation of fact. It is founded on the conduct of relations between the parties on the basis of an agreed or assumed state of affairs, whether as to a matter of fact or a matter of legal effect, which both parties will be estopped from denying: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd.[393] The assumed state of affairs takes as a given the terms of the contract between the parties, but from which the parties have departed in the course of furthering their relationship under the contract.
5. Typically, then, in order for a plaintiff to establish a conventional estoppel, it must be demonstrated that:[394]

(a) the defendant has adopted an assumption as to the terms of its legal relationship with the plaintiff;

(b) the plaintiff has adopted the same assumption (the assumption must be mutual and bilateral);

(c) both parties have conducted their relationship on the basis of that mutual assumption;

(d) each party knows or intends that the other will act on that basis; and

(e) departure from the assumption will cause detriment to the defendant.

1. The fundamental vice with this plea is that the evidence undermines any contention of a shared or mutual assumption between the parties. Instead, the evidence demonstrates a series of complaints emanating from the plaintiff to the defendant, over the course of the tenancy, that the building was suffering because of the storage and handling of ammonium sulphate within the Warehouse.
2. The parties spoke on many occasions about this problem. The senior representatives of the parties exchanged numerous emails and other communications about the problems caused by the ammonium sulphate. The isolated instance in which Mr Joseph Hawkins appears to have expressed some happiness with the 'job' being performed by the defendant is, at best, an aberration in the otherwise persistent position adopted by the plaintiff that the defendant was conducting its business in a manner which was deleterious to the premises.[395]
3. The evidence undercuts the pleaded assumption, which is central to the estoppel by convention plea, that the defendant 'assumed that the plaintiff 'consented' to the matters pleaded in [22A.1.1] to [22A.1.6], other than [22A.1.3], which are, in essence:

(a) the defendant's intended use of the premises for the value adding and storage of ammonium sulphate at the premises;

(b) the defendant's places and modes of storage of the ammonium sulphate at the premises;

(c) the defendant's use of a shaker table to sort ammonium sulphate at the Premises; and

(d) the ventilation of the premises and that the defendant often kept the access doors of the premises open during operating hours.

1. Further, the contention that, in reliance on the assumption the defendant did not take the steps pleaded by the plaintiff at [12(b)] of the SOC cannot be sustained on the evidence. Those steps include applying a polymeric coating, frequent cleaning of the high level steel, ensuring adequate ventilation, maintaining lower heights for the heaped product, using tarpaulins, and the frequent washdowns with fresh water. There is no direct evidence to this effect, nor can it otherwise be inferred from the available evidence.
2. In my view, the plaintiff's submissions in response to this plea must be accepted. Specifically, I accept there is no cogent evidence the defendant would have acted to 'take any of the steps' requested by the plaintiff. In fact, the defendant consistently denied that it was responsible for the damage, and maintained that it was a 'unique problem' not attributable to the ammonium sulphate.[396] This is the phrase used by Mr Syminton when he spoke with the plaintiff's representatives in November 2008 and March 2009, which he used to describe the isolated nature of the problem in the context of the defendant's worldwide business.[397]
3. The true position is that the parties were in an impasse during almost the entire length of their contractual relationship, as to which party bore legal responsibility for the problem and which party was obliged to undertake the more fulsome repair work.
4. For those reasons, the conventional estoppel defence fails on the facts, both as a pleaded response to the contractual claims and as a pleaded response to the tortious claim.

1. The defendant pleads a failure to mitigate on the part of the plaintiff which should be reflected in a reduction of any damages assessed as being payable to the plaintiff. I have addressed this issue under Part VIII below.

J. Limitation Act defence

1. The limitation period for claims in contract is six years, by virtue of s 13(1) of the Limitation Act. The writ of summons in this action was filed on 20 January 2017. The defendant has pleaded a defence under the Limitation Act in respect of certain of the contractual claims advanced by the plaintiff (see [13.3] of the Defence), in respect of damage suffered prior to 20 January 2011.
2. Section 13 of the Limitation Act, which sets out the general limitation period, relevantly provides:
   1. General limitation period - 6 years

(1) An action on any cause of action cannot be commenced if 6 years have elapsed since the cause of action accrued.

1. The defendant carries the onus of establishing this defence.
2. The defendant contends that, by reason of the six year limitation period, the plaintiff's cause of action in contract for a breach of cl 3.9(a) of the Original Lease, and then the Varied Lease, for damage to the premises which occurred prior to 20 January 2011, is statute barred.[398] The defendant points to the evidence that signs of corrosion were observed in Unit 1 as far back as 2006, and in Units 2 and 3 in around August 2008.[399] I have accepted that signs of corrosion were apparent at these times.
3. The defendant submits that the plaintiff's cause of action for breach of cl 3.9(a), being a claim in contract, accrued from the date of breach, and that time begins to run for limitation purposes from that date, irrespective of the accrual of any damage.
4. The defendant concedes that this defence does not affect the plaintiff's claim in contract in respect of damage which occurred after 20 January 2011, nor does it affect the plaintiff's claim under cl 3.23 of the Varied Lease.[400] The latter claim arose upon the termination of the Varied Lease, in late 2016, and was brought within time. The defendant's concession in this regard was well made, given the principles I have earlier set out in these reasons as to when a cause of action for a breach of a 'yielding up' clause arises.
5. Given these concessions, the plaintiff submitted in closing that there seemed to be 'very little left of this defence'.[401] More substantively, the plaintiff submitted in opening that the breaches of contract were continuing while the defendant was in occupation under the leases, and so the six year limitation period commenced towards the end of the defendant's occupancy.[402]
6. Whether the defence is established requires a consideration as to when the cause of action accrued, which itself involves an analysis of the cause of action asserted by the plaintiff, and whether the obligation imposed by the lease on the defendant was continuing in nature.
7. On one approach, it might be said the defendant's breach occurred once and for all when the ingredients for a contractual cause of action accrued upon the observance of some damage to the Warehouse in mid-2006. This would bar the claim entirely.
8. Alternatively, it might be concluded that the defendant's obligation was a continuing one, such that the cause of action accrued within the six year period prior to the commencement of proceedings, but that the damage suffered before that time is not compensable.
9. Further, it might be asserted, as the plaintiff does, that the defendant's obligation was a continuing one, and that all damage suffered by the Warehouse throughout the course of the defendant's occupancy falls to be assessed as part of the contractual claim and is therefore compensable.
10. Some general propositions should be stated at this point, to assist in the analysis.
11. First, in the case of an action founded on contract, it is well accepted that the relevant event which attracts the operation of the limitation period is the breach of the contract, not when the damage is suffered.[403] That simple proposition does not supply the immediate answer to the limitation question in the present case, because the defendant was in occupation of the Warehouse as a tenant for an extended period of time from 2005 to 2016, and damage was suffered to the Warehouse commencing in about mid-2006.
12. Second, a 'cause of action' for present purposes is a 'factual situation the existence of which entitles one person to obtain from the court a remedy against another person'.[404] However, every fact is not a separate cause of action, and the extent to which facts must differ so as to give rise to a separate cause of action is a question of degree, as Santow JA recognised in Argyropoulos.[405] In developing this proposition further, Santow JA made reference to Priestley JA's analysis in Sheldon v McBeath,[406] observing that:

Moreover, one cause of action is rendered distinct from another, if there is any ingredient of the respective causes of action which is distinctive, though that ingredient be simply the repetition of a continuing breach by a negligent architect on successive days; Sheldon v McBeath (1993) ATPR 81-209 at 62,073. The mere fact that the ingredient comprising "damage" might be similar or that "each cause of action may be identical for practical purposes" does not preclude the inference that the causes of action are distinct (per Priestley JA).

1. Third, reference should be made to the decision of Dixon J (as his Honour then was) in Larking v Great Western (Nepean) Gravel Ltd[407] and, in particular, to his Honour's analysis as to whether a continuing duty in contract ought be found in a given case. The plaintiff placed some reliance on this analysis, which has been approved on numerous occasions since. Indeed, the decision was the subject of some detailed examination by Martin CJ in the Court of Appeal in The Minister for Transport v James Point Pty Ltd.[408]
2. It is not necessary for present purposes to descend into the facts in Larking to any significant extent, other than to note the question before the court was whether an obligation within a licence to erect and maintain certain fences and a gate was an obligation to do a specific act within a limited time, or a continuing obligation. The High Court accepted the proposition that the failure to erect the fences and gate within a reasonable time was not a continuing breach, but was a breach once and for all. It was an obligation to do a specific act within a limited time, with the specific act being the erection of the fences and gate, and the limited time being a reasonable time within the commencement of operations of extracting sand and gravel under the licence.
3. Dixon J held as follows, drawing a distinction between the covenant in the case before him and a covenant to repair in a lease:[409]

Upon these facts, the first question for consideration is whether the covenants contained in clauses 12 and 15 operated to impose a continuing duty upon the respondent company so that a failure to fence involved new breaches for every day of default, thus including the period after 31st October 1939. If a covenantor undertakes that he will do a definite act and omits to do it within the time allowed for the purpose, he has broken his covenant finally and his continued failure to do the act is nothing but a failure to remedy his past breach and not the commission of any further breach of his covenant. His duty is not considered as persisting and, so to speak, being for ever renewed until he actually does that which he promised. On the other hand, if his covenant is to maintain a state or condition of affairs, as, for instance, maintaining a building in repair, keeping the insurance of a life on foot, or affording a particular kind of lateral or vertical support to a tenement, then a further breach arises in every successive moment of time during which the state or condition is not as promised, during which, to pursue the examples, the building is out of repair, the life uninsured, or the particular support unprovided.

The distinction may be difficult of application in a given case, but it must be regarded as one depending upon the meaning of the covenant.

1. Dixon J then endorsed the general principle that a lessee's covenant to keep premises in repair is continuing in nature, comparing that to the circumstance of a lessor's covenant to 'put the demised premises in repair' which he described as 'broken once for all if a reasonable time for putting the premises in repair elapses without his doing so'.[410]
2. Similarly, Starke J accepted that covenants to 'repair and keep in repair, to insure, or to cultivate' were all covenants of a continuing nature, compared to a 'covenant to put premises in good and tenantable repair', for which there could be only one breach.[411]
3. In my view, the second and third general propositions provide considerable support for the plaintiff's submissions in response to this defence. The covenant upon which the plaintiff has sued, and in respect of which the court has found a breach by the defendant, was a covenant to 'maintain and keep' the premises in good and substantial repair, order and condition. That covenant was of a continuing nature, given its terms and having regard to the authority cited above, particularly Larking.
4. The defendant's breach of this covenant continued throughout the course of the tenancy. Further, the damage caused to the Warehouse by reason of this breach may have arisen, at least initially, prior to 20 January 2011, but it continued, and was exacerbated through the enduring failure on the part of the defendant to maintain and keep the premises in good and substantial repair, order and condition.
5. Accordingly, the defendant's pleaded reliance on s 13(1) of the Limitation Act does not, in my respectful opinion, operate to preclude or diminish the plaintiff's claim for breach of cl 3.9(a) of the Original Lease, and then the Varied Lease.

PART VIII - ASSESSMENT OF DAMAGES IN RELATION TO THE PLAINTIFF'S CLAIMS IN CONTRACT A. Overview

1. The damages claimed by the defendant are for:[412]

(a) the cost of the rectification works required for the Units, in respect of which the plaintiff principally relied on the evidence of Mr Harrison, which totalled $3,815,826.27 (and which is further broken down at [755] below); and

(b) the loss of rent during the period that the rectification works were undertaken, in respect of which the plaintiff relied on the evidence of Mr Hagon, in the sum of $183,917.70;

(c) the loss of the payment of outgoings (being rates and land taxes) during the period that the rectification works were undertaken, in the sum of $48,628.67; and

(d) the urgent interim repair costs undertaken by the plaintiff following the termination of the Varied Lease by the defendant, in the sum of $25,540.96.

1. The plaintiff advanced its claim for damages on the same basis in respect of the contractual and tortious claims.
2. The claim for rectification costs was articulated as having two broad aspects, being the actual costs the plaintiff has in fact incurred in refurbishing Units 2 and 3 (which works had been completed prior to trial), and the estimated costs of demolishing and rebuilding Unit 1 (which had not been undertaken at the time of trial).[413] In the schedule of damages in closing, the plaintiff claimed the following amounts:

Estimated costs to rectify Unit 1 and the toilet block to Unit 1

1. After identifying the relevant principles, I will address the components of the damages claim in the sequence identified above, commencing with the cost of the rectification works.

1. The ruling principle for damages at common law for breach of contract is that, where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.[414]
2. The assessment of damages for a breach of a covenant to repair leased premises, or to reinstate the leased premises to their original condition, is to be undertaken in the same manner as the assessment of damages for a breach of a covenant to refrain from make alterations to the leased premises. The latter scenario was the subject of the High Court's analysis in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd,[415] an authority on which the plaintiff places some reliance.
3. In Tabcorp Holdings, the relevant covenant precluded the tenant from making or permitting to be made any substantial alteration or addition to the premises, without first obtaining consent. The High Court concluded that the measure of damages was the loss sustained by the landlord from the tenant's failure to perform its contractual obligation to preserve the premises, and that loss was the cost of restoring the premises to the condition in which they would have been if the obligation had not been breached.[416]
4. The court further explained that the measure of damages is not limited to the diminution in the value of the premises - it extends to the amount required to rectify the defects complained of and so return to the plaintiff the equivalent of a building on his or her land which is substantially in accordance with the contract.[417]
5. The court considered, and rejected, a qualification to the foregoing. The qualification contended for by the tenant in that case was that, not only must the work undertaken be necessary to produce conformity with the contractual obligation, it must also be a reasonable course to adopt.[418] The court observed that the test for unreasonableness as articulated by the tenant would appear to only be satisfied in 'fairly exceptional circumstances', in any event.[419] Ultimately, the court described this submission as resting 'on a loose principle of reasonableness which would radically undercut the bargain which the innocent party had contracted for and make it very difficult to determine in any particular case on what basis damages would be assessed'.[420] The court concluded this principle should not be accepted and held that:[421]

If the benefit of the covenant in cl 2.13 were to be secured to the Landlord, it is necessary that reinstatement damages be paid, and it is not unreasonable for the Landlord to insist on their payment.

1. I have earlier referred to the principles stated by the High Court in the Graham v Markets Hotel, among other authorities (at [504]). I need not repeat them here, other than to reiterate that the measure of damages may be conceptualised as the expenditure to be necessarily incurred by a reasonable landlord to put the premises into the state of repair contracted for, whether the actual landlord does those repairs or not.
2. I will proceed to apply these principles to the plaintiff's claim for damages.

(1) Evidence as to the works in relation to Unit 1

1. The dilapidated state of Unit 1 upon the departure of the defendant in late 2016 has been described in Part V and Part VI of these reasons. Further, the evidence is to the effect that, following the departure of the defendant from the premises in late 2016, the plaintiff took no significant steps to repair Unit 1. That remained the position as at trial. Mr Joseph Hawkins confirmed as much during the course of his cross-examination.[422]
2. Mr Joseph Hawkins explained that he 'had no money to repair it' and testified that his insurance had been cancelled so he was unable to claim the damage under his insurance arrangements with Zurich Australian Insurance Limited.
3. The transcript relevantly records the following interchanges:

THARBY, MR: Now, after IRM moved out, you did nothing to repair or replace Unit 1 even to this day; is that correct?

J HAWKINS, MR: I did nothing to repair it because I had no money to repair it, and the insurance company my insurance had been cancelled, so I couldn't claim off insurance. So it just sat there.

LUNDBERG J: Mr Hawkins, I appreciate you want to tell your story, but if you just listen to the question?

J HAWKINS, MR: Right.

THARBY, MR: The question was ... you did nothing to repair unit 1 after they moved out even to this date?

J HAWKINS, MR: No, I haven't done anything in unit 1. No.

1. Mr Joseph Hawkins further testified, in re-examination, that he had no intention of demolishing Unit 1, although he had plans to refurbish it in 2025, following the trial.[423] Mr Joseph Hawkins' evidence on this issue was, in part, as follows:

SCHOOMBEE, DR: Now, Unit 1, something is going to happen to that?

J HAWKINS, MR: Yes.

SCHOOMBEE, DR: What is your plan? Do you have a plan?

J HAWKINS, MR: I am going to refurbish it when I get some more money.

SCHOOMBEE, DR: Yes. So, that would then be part of the refurbishing of Unit 1?

J HAWKINS, MR: Yes. Well, I will start refurbishing that measurably next year.

SCHOOMBEE, DR: I understand. And just briefly while you say that, what do you mean by refurbishing?

J HAWKINS, MR: Getting all the steelwork inspected and digging around the footings where it is attached to the concrete blocks in the ground and seeing how badly rusted it is, or contaminated it is. And if it is, then work out whether we chop it off at a metre high or two metres or three metres high and put a new piece in and anchor it into the concrete.

SCHOOMBEE, DR: So that's really a decision that you ultimately take in the future, do you say?

J HAWKINS, MR: Yes.

1. I consider a fair reading of this evidence is that Mr Joseph Hawkins' intention at the time of trial was to expend funds in the future to rectify the defects in Unit 1, that the scope of that work was uncertain and would depend on further advice he received, as well as having the funds to undertake the work. I agree with the plaintiff's submission that unnecessary weight should not be applied to Mr Hawkins' use of the term 'refurbish' in this context. In any event, the assessment of the damages should properly focus, as a matter of principle, on the amount required to rectify the defects complained of by the plaintiff, which have been caused by the defendant's breaches, in order to restore the building to substantially the condition it ought to have been in at the conclusion of the lease, had the breaches not occurred.
2. As to the plaintiff's financial position, Mr Joseph Hawkins testified that his business had a large debt which he was seeking to reduce before attempting to obtain finance to rebuild the Warehouse.[424] Certainly, he accepted in his evidence that the business owned a number of assets in which he held equity, and accepted that he could have borrowed more money, but did not wish to. He explained that he 'wasn't going to stick another rope around [his] neck'. It is relevant to the mitigation argument raised by the defendant that the plaintiff had the ability to fund the rectification works, and I find that the plaintiff had that ability.
3. I have earlier referred, at [422], to the RSA Report obtained by the plaintiff in 2020. While the author of that report concluded the premises were 'safe from collapse', I did not assess that report as demonstrating that it would be economical to repair Unit 1, rather than demolish and rebuild it.

(2) Evidence as to the works in relation to Units 2 and 3

1. As to Units 2 and 3, remediation works for those parts of the Warehouse were undertaken prior to the trial. The plaintiff entered into agreements with Go2 Group Pty Ltd to this end.
2. The first such agreement is described as an 'Early Contractor Involvement Agreement' dated 18 May 2022.[425] That agreement required the contractor to coordinate and undertake investigations in relation to Units 2 and 3, to verify the accuracy of the existing as-built information, to ascertain the condition of the premises, and provide advice to the plaintiff. The fee payable under that agreement was $45,967.10 excluding GST.
3. The second agreement is described as a 'Formal Instrument of Agreement', which was executed on 3 November 2022.[426] The contract sum under that instrument is stated to be $1,143,333.40 exclusive of GST, with a date for practical completion being 15 March 2023. The contract was directed to the carrying out of refurbishment and remedial structural works to Units 2 and 3.[427]
4. The contract with Go2 Group Pty Ltd describes the proposed work as including the supply of 32 mpa 125 mm reinforced concrete slab for each of the Units, a new concrete apron to the existing entrance, concrete repair work, various roofing and cladding work (such as installing wall girts, wall cladding, and new roof purlins), new Colorbond steel corners to existing wall corners, replacing the metal sliding doors and tracks, and steel remediation.
5. The steel remediation was to include pressure washing of existing steelwork to remove contaminants, spray painting of the steel, addition of zinc primer and painting of metal doors.[428]
6. Mr Joseph Hawkins testified that this work did not involve any anticorrosion treatment being applied within these Units, although it must be said his evidence was quite vague in this regard.[429]
7. Mr Joseph Hawkins also explained that the work was to include, and did include, repair work to fill in the access holes which the defendant had created in 2009.[430]

1. Mr Neville Harrison is a registered builder, with over 64 years' experience in the construction industry. He was previously a board member of the WA Builders' Registration Board, and a former sessional member of the State Administrative Tribunal. He has been providing independent building inspections and reports as a consultant since around 2009.[431] Mr Harrison is not a structural engineer.
2. Mr Harrison prepared three reports in response to his instructions, namely an initial report dated 18 November 2019,[432] an addendum report dated 13 October 2020,[433] and a final report dated 29 October 2023.[434] I will refer to these reports as the First Harrison Report, the Second Harrison Report, and the Third Harrison Report.
3. The First Harrison Report provides Mr Harrison's estimate of the costs of remediating Units 2 and 3 (which was prepared before that work was undertaken), and also to demolish and reconstruct Unit 1.
4. The Second Harrison Report provides Mr Harrison's estimate of the timelines for the works outlined in the initial report.
5. The Third Harrison Report provides Mr Harrison's revised estimate for the demolition and reconstruction of Unit 1 only, following the remediation of Units 2 and 3.[435]
6. In expressing the opinions in his reports, Mr Harrison relied on his lengthy experience in the building industry, stretching over some decades. Mr Harrison also relied on the costs delineated in the well-known handbook referred to as 'Rawlinson's Construction Handbook', as well as on architectural and structural drawings of the Warehouse dated between 1989 and 1996.
7. Mr Harrison also solicited quotations from various third party subcontractors in order to provide the costs estimates for the works he identified.[436]
8. Mr Harrison's reports were fulsome and based on his first hand observations of the premises and the Warehouse.
9. No expert evidence was led by the defendant in response to the three expert reports prepared by Mr Harrison, although his evidence was challenged in certain respects during cross-examination.
10. On any assessment, Mr Harrison is an experienced builder. I accept Mr Harrison had the necessary expertise to express the opinions set out in his reports and I consider his evidence should be accepted by the court, subject to the limitation that he is not a structural engineer. However, I do not ultimately consider that this limitation undermines the force of the opinions expressed by Mr Harrison.
11. Mr Harrison testified that he attended the Warehouse for site visits, including on occasion with Dr Zurhaar. Mr Harrison stated that while he had regard to Dr Zurhaar's report, he used it as a reference rather than solely relying upon it. I accept his evidence in this regard.

1. In the First Harrison Report, which is dated November 2019, Mr Harrison explained that he had been instructed to attend the site and inspect Units 1, 2 and 3 and the building and structures situated on the property generally, in order to provide an independent expert report as to:

...the reasonable market value of the necessary remedial works required to return the building and structures on the property to a state which is in good and substantial repair and condition taking into consideration the age of the materials, fair wear and tear and the damage caused by corrosion.

1. Mr Harrison had been initially engaged by the plaintiff in February 2019 for this purpose. Subsequently, in November 2019, Mr Harrison was instructed to review the expert report of the plaintiff's scientific consultant on corrosion issues, Dr Zurhaar. Mr Harrison was asked whether he agreed with the method and extent of remedial works identified by Dr Zurhaar and, if not, to identify those items or areas in which he disagreed.[437]
2. In summary, Mr Harrison expressed the following opinions in his report:

(a) Mr Harrison expressed a concern as to the structural integrity of the external concrete wall panels in each of the Units, but in particular in Unit 1. He expressed the view that the fixings to the full height concrete wall panels dividing Unit 1 from the other Units were either missing or displayed a high level of corrosion.

(b) In relation to Unit 1, Mr Harrison observed heavy deposits of residual chemical on the roof purlins, rafters and both horizontal and vertical surfaces of the concrete walls. His observations included the following:

(i) The external metal wall and roof cladding, including wall girts, roof purlins and associated gutters, cappings, sliding and exit doors were either non-existent or severely dilapidated. Mr Harrison regarded the roof cladding as being unsafe.

(ii) Further, he considered the structural capacity of the concrete floor had been severely diminished and there were large areas where the thickness of the floor has been reduced by up to 25mm, with large cracks having developed across the entire floor.

(iii) He described the concrete surface as 'pitted and friable [meaning easily crumbled] and no longer serviceable'.

(iv) He also described the finished surfaces of the concrete wall panels as 'friable' with lower sections having been 'severely eroded'. Mr Harrison explained that several of the lower external panels had been impacted and damaged beyond repair. The structural integrity of the panels has been compromised, in his view.

(v) He considered the full height panels which had been modified to provide access between the Units (i.e. the access holes) would need to be replaced to re-establish separation of the Units.

(vi) The structural steelwork (being the columns, rafters and braces) displayed varying degrees of deterioration in his assessment. He described this as 'delamination of [the] surface from chemical attack', with the lower sections of the steel columns being the most severely damaged.

(vii) Mr Harrison observed that the electrical installation in Unit 1 was largely non-existent (being the lighting, power and emergency lighting). Further, the fire services were inoperable and cabinets were rusted (referring to the hose reels and hydrants).

(viii) Mr Harrison's conclusion with respect to Unit 1 was as follows:

The extent and severity of damage to all building elements from chemical attack is such that in my opinion the extent of remedial work required to reasonably restore individual elements is neither practicable nor cost effective. Therefore total demolition and reconstruction of this warehouse [being Unit 1] is recommended.

(c) Mr Harrison estimated the probable cost of demolishing and then reconstructing Unit 1, including the toilet block, was $1,516,335 inclusive of GST.[438] This estimate included a contingency of 2.5% and a builders' markup of 25% which he assessed as being at the lower end of the range he thought would be reasonable. In addition, Mr Harrison estimated the preliminaries and other general costs associated with the primary work to be $336,863 inclusive of GST.[439] This estimate included the builders' markup of 25%.

(d) In relation to Units 2 and 3, Mr Harrison gave consideration to whether the treatment of existing steelwork, to achieve a reasonable level of protection, could be completed in situ or whether it would need to be treated off-site (which would involve deconstruction and then reconstruction). Alternatively, he considered the option of total demolition of the Units and reconstruction in the manner outlined for Unit 1.

(e) Mr Harrison expressed similar observations in relation to Units 2 and 3 to those he had made concerning Unit 1. Heavy deposits of residual chemical were observed on roof purlins, rafters and the horizontal and vertical surfaces of the concrete walls. He described the roof cladding as unsafe. The structural steelwork was rusted and pitted, and would need to be blasted and treated. He considered offsite treatment would be less expensive and so the cost of removal and reconstruction would need to be built in to his estimate. Steelwork around the exit door openings, the door frames, and in other locations, would need to be replaced.

(f) In Unit 3, the concrete floor surface was 'pitted and friable' and the structural capacity had been diminished and he regarded it as 'unserviceable'. Mr Harrison observed that the surface of the lower sections of the southern concrete full height wall panels dividing Units 1 and 3 were 'severely pitted and friable'. Further, the concrete panels to the west elevation were 'severely pitted and friable' with large sections around the exit door having been destroyed. Mr Harrison opined that the structural integrity of walls panels to both the south and west elevations had been 'severely diminished'.

(g) In order to determine the existence of the damage to steel columns where that was concealed (that is, embedded in the concrete floor or encased by concrete wall panels), Mr Harrison took steps to expose the steelwork in random locations in Unit 3. From this, Mr Harrison observed that there was some damage to columns below floor level and the 'damage was severe where chemical deposits are trapped and remain between concrete wall panels and web of steel columns on North and West elevations'.

(h) In relation to Unit 3, Mr Harrison concluded that 'the reinstatement of concrete floor surface via topping or screed is not considered to be viable', given the risk of delamination from vehicular traffic is high. Instead he recommend the installation of a 125mm concrete floor to specification over the existing floor. Among other matters, Mr Harrison concluded the external concrete wall panels to the west elevation were not repairable and he recommended replacement. He considered the extent of damage to both lower faces of the full height concrete dividing wall panels with Unit 1 (and the connections to the structure) were beyond reinstatement and he recommended they be replaced.

(i) Mr Harrison estimated the probable cost of remediating Units 2 and 3, including the toilet block, was $1,370,469 inclusive of GST.[440] This estimate included a contingency of 2.5% and a builders' markup of 25% which he assessed as being at the lower end of the range he thought would be reasonable. In addition, Mr Harrison estimated the preliminaries and other general costs associated with the primary work to be $336,863 inclusive of GST.[441] This estimate included the builders' markup of 25%.

1. In the Second Harrison Report, which is dated 13 October 2020, Mr Harrison was instructed to prepare construction time schedules for preparing the building plans for submission to the City of Kwinana, approval of those plans, and the issue of a building licence.
2. In his report, Mr Harrison outlined a 22 week timeline for the pre-construction schedule, followed by a 30 week timeline for the construction schedule.

1. In the Third Harrison Report, which is dated 29 November 2023, Mr Harrison provided a revised report of the reasonable market value of the necessary remedial works for Unit 1. In preparing that report, Mr Harrison attended at the site again, in September 2023 and also reviewed the further photographs of the site and the quote for engineering services provided by Cenit Group Pty Ltd, as well as updated quotations from other contractors.
2. In this report, Mr Harrison maintained his earlier opinion that total demolition and reconstruction of Unit 1 remained the only viable option, in his view.
3. Mr Harrison's revised estimate of quotes was impacted by the shortages of materials and skilled labour in the building industry which he described as 'major constraints'. He expected that to continue for the foreseeable future. His estimate also included the costs for a project manager, which he considered would be required given the 'recent deferment of major projects and above average insolvencies of contractors' in the market. He did not consider the contingency of 2.5% needed to be adjusted.
4. Mr Harrison assessed the revised costs of the work as being $20,365 for the remediation of the toilet block, $2,099,582 for the demolition and reconstruction of Unit 1,[442] and $384,718.48 as the cost of preliminaries.[443] Each of these estimates was inclusive of GST, included a contingency of 2.5%, and a builders' markup of 25%.

1. As noted above, various quotations were obtained by Mr Harrison to support the cost estimates he prepared. The quotations were verified by witness statements made by the authors of the quotations, which were ordered to stand as the evidence of those witnesses without the need for them to be called.[444]
2. The quotations were as follows:

(a) A quotation for structural engineering services was provided by Mr John Velios of Total Structural Consulting Pty Ltd.[445] Mr Velios is a director of that business, which is a multi-disciplinary engineering consultancy business. The quotation was provided in August 2019. Mr Velios stated that the costs of carrying out this work at a later date would need to be the subject of review and revision.

(b) A quotation for decontamination services was provided by Mr Luke Giffen of Cleanaway Waste Management Limited, which provides waste management services.[446] The quotation was provided in June 2019. Mr Giffen stated it was an accurate estimate of the cost of carrying out the work at that time.

(c) A quotation for professional steel fabrication and erection services was provided by Mr Colin Brown of Southern Steelworks (which is presently owned by Netgain Investments Pty Ltd).[447] The business specialises in fabrication and erection of structural steel for commercial and industrial buildings. Mr Brown provided the quotation in October 2023, based on structural drawings and a scope of works with which he was provided.[448]

(d) Quotations for professional plumbing services were provided by Mr Hartley Saggers of Austland Plumbing Pty Ltd.[449] Mr Saggers was an experienced plumber with some 42 years' experience in the industry. The initial quotations were provided in July 2019 and were then revised in November 2023.

(e) A quotation for professional land surveying services was provided by Mr Natalie Katona-Dyer of BE surveys in July 2023.[450]

(4) Evaluation of the costs claimed in respect of Unit 1

1. On the submissions advanced by the parties, the evaluation of the plaintiff's claim for the costs of rectification in respect of Unit 1 primarily involves an assessment as to whether the plaintiff has demonstrated the essential foundation of the claim, namely whether it is appropriate to assess the costs on the basis of a demolition and reconstruction of Unit 1.
2. The defendant submits that the evidence does not justify such a conclusion, which the plaintiff says is a mischaracterisation of the opinions of the experts.
3. Allied to this issue is the challenge raised by the defendant that there is no evidence from a structural engineer to support the contended finding that demolition is required. In particular, there was a challenge by the defendant to the expertise of Mr Harrison to express his opinions, bearing in mind he is not a structural engineer. Mr Harrison's ability to assess the structural integrity of the Warehouse was challenged by the defendant during cross-examination.[451] The defendant also emphasised that Dr Zurhaar was not a structural engineer.
4. I should note that both Mr Harrison and Dr Zurhaar were clear when expressing their opinions as to the limits on their expertise, and both experts recognised they were not able to express opinions on structural engineering or integrity matters. Neither of them sought to express opinions beyond their expertise.
5. In my view, given the weight of the evidence led by the plaintiff as to the state of disrepair and dilapidation of the Warehouse, it was not necessary for expert evidence to also be led from a structural engineer in support of the contention that demolition was warranted. The important features of the evidence led by the plaintiff which I consider should be accepted are as follows.
6. There is the opinion of Mr Harrison, being a qualified builder with decades of experience, to the effect that Unit 1 should be demolished and reconstructed. He regarded Unit 1 as being at the end of its serviceable life as a result of the degradation which had been caused. He considered the only viable option going forward for Unit 1 was to demolish it, and then rebuild. It was not put to Mr Harrison in cross-examination that he was incorrect in this opinion, nor was it put to him that the remediation of Unit 1 would be a more cost effective option than demolition, in some way.[452]
7. Mr Harrison recorded a number of observations from his first hand examination of the structure that indicated the structural steelwork was displaying various degrees of deterioration. He determined that Unit 1 was too badly corroded to be remediated. Mr Harrison was not aware of any structural engineering reports being provided, but confirmed that his opinion was based on his observations and experience.
8. I accept Mr Harrison's assessment that, having regard to his experience in the industry, he considered it would not have been reasonable to attempt to remediate Unit 1 given its state of disrepair.
9. The evidence of Dr Zurhaar and Dr Farinha is obviously also relevant to this issue. There were some nuances in the expression of opinion by Dr Zurhaar as to the state of Unit 1 and his ultimate view concerning demolition of that unit, which both parties addressed in closing.[453]
10. In his primary report, Dr Zurhaar opined that Unit 1 was 'damaged beyond technical and economic repair'.[454] Dr Zurhaar explained that opinion by reference to the extent and severity of the ammonium sulphate attack on the structure, together with the physical impact damage to the structural steel and concrete walls and floor of the Unit. He considered that in-situ remediation to make the premises safe and produce a cost effective service life was not possible. At ts 956, Dr Zurhaar expressed the opinion in relation to Unit 1 that 'technical repairs of the nature required are ... usually more expensive to complete than it is to replace the affected items', further explaining that:

...more often than not the technicalities of it and the economics of it preclude the sensibility of trying to cut off and replace half a steel column than it would be to bring in a new steel column and swap it out.

1. In the joint expert statement, Dr Zurhaar and Dr Farinha agreed that, in respect of Unit 1, there was 'evidence of advanced corrosion to the structural steel columns due to inadequate surface protection from the red oxide primer against corrosion'. Further, the experts agreed that, in Unit 1, 'the structural steel columns at the concrete wall level are very severely corroded and the concrete walls show severe AS attack and staining from where mounds of AS placed against the wall have caused AS to spill and contact with the bottom of the wall sheets and tops of the concrete walls'. Dr Farinha added a qualification, namely that he did not consider the extent of corrosion, particularly at the baseplate level, had compromised the structure from an engineering aspect.
2. The joint expert statement further records agreement between Dr Zurhaar and Dr Farinha to the following:

None of the Units need to be replaced in their entirety but all Units need to have significant maintenance and repair/replacement of components affected by the presence of AS.

1. Dr Zurhaar added a qualification to this statement, noting that 'some components may be in a state that is beyond economic repair making replacement more prudent despite repair still being technically possible'.
2. Towards the conclusion of their concurrent evidence, in response to a question from the court as to the concepts of economically repairable and technically repairable, both Dr Farinha and Dr Zurhaar provided further explanation of their opinions in this regard.[455] In explaining his opinion, Dr Zurhaar said that, very often, the replacement of building components becomes not only economically more attractive, but it is also technically more attractive and simplistic to replace the component. However, he also said:[456]

I would not like the court to get the impression that I have ever suggested that total demolition was necessary, and I also hesitate in providing evidence of structural engineering adequacy.

1. Dr Farinha explained that, from an economic point of view, one has to consider all of the associated costs that come with the repairs and one may decide that is no longer economic to repair it.[457]
2. My assessment of this evidence is that Unit 1 was economically irreparable at the time the assessments were undertaken by Dr Zurhaar and Dr Farinha, having regard to the serious damage suffered by Unit 1 over time, the indication from Dr Zurhaar that undertaking repair work may well be more expensive than the costs involved in demolition, and there would be serious risks associated with the repair process. This evidence is fortified by the opinions expressed by Mr Harrison. There were nuances in the expression of opinions by Dr Zurhaar on the issue, but the weight of the evidence as a whole sustains the primary basis for assessment advanced by the plaintiff, rather than the narrower, more limited, basis proposed by the defendant.
3. In my view, then, the plaintiff has demonstrated the basis of its claim for rectification costs in respect of Unit 1, namely that those costs should be assessed on the basis of a demolition and reconstruction of Unit 1. This would produce a measure of damages consistent with the principles I have outlined earlier, most particularly damages representing the amount required to rectify the defects complained of and return to the plaintiff the equivalent of a building on its land which is substantially in accordance with the contract. Further, as I have earlier noted, the High Court in Tabcorp Holdings rejected any additional overlay or qualification of reasonableness as part of this analysis.
4. Subject to considering questions of mitigation, I accept the plaintiff has demonstrated the basis for an assessment of the rectification costs for Unit 1 in the amount of $2,258,454.55, which is drawn from the comprehensive updated estimates prepared by Mr Harrison in Exhibit 747, which I have accepted.

(5) Evaluation of the costs claimed in respect of Units 2 and 3

1. The actual costs incurred by the plaintiff in rectifying Units 2 and 3 are supported by documentary evidence tendered at trial, which I accept as accurate. The evidence demonstrates the costs detailed in the table below were incurred by the plaintiff, and the rectification work was undertaken during the course of 2022 and 2023.

Go2 Group Preconstruction Management Fee under Early Contractor Involvement Agreement

Go2 Group Forward Works under Early Contractor Involvement Agreement

1. The largest of these costs were the amounts paid to the builder, Go2 Group, under the contractual arrangements which the plaintiff entered into with that entity (Exhibits 728 and 732), which included several contract variations. It would be reasonable, in my view, to expect some variations to building work of this magnitude and it can reasonably be inferred that the variations were a necessary part of the overall work undertaken by Go2 Group, having regard to the details in the invoices which support the variations.[458]
2. The costs actually incurred by the plaintiff exceed the estimate given by Mr Harrison, which I have referred to above. Mr Harrison's estimate of the probable cost of remediating Units 2 and 3, including the toilet block, was $1,245,881 plus GST, being $1,370,469 in total. He prepared that estimate in November 2019.
3. The defendant noted in closing submissions there was an absence of an explanation from the plaintiff as to why the plaintiff did not proceed with the rectification in accordance with the estimate given by Mr Harrison.
4. The difference between Mr Harrison's estimate and the actual costs incurred is $311,490.70, which is an increase of around 25% relative to Mr Harrison's earlier estimate. While the difference is significant, other than to consider questions of mitigation, which I will address below, I do not consider there to be any reason in principle to discount the costs incurred by reference to the earlier estimate. On the evidence, the work undertaken was necessary to restore Units 2 and 3 to the condition they ought substantially to have been in upon the defendant yielding up the premises in late 2016.
5. Counsel for the defendant observed that part of one of the invoices for the engineering fees claimed by the defendant (Exhibit 754) included work which was not compensable.[459] In fact, it included a discussion with a solicitor regarding the witness' attendance at court to give evidence (ts 824). I have mentioned this earlier in these reasons, at [260]. I accept that part of the invoice for $930 should be reduced accordingly. The amount to be excluded is the line item for work undertaken by the director, being Mr Lucchesi, in the amount of $187.50, which I have accounted for in the table above.
6. The defendant also raised some specific issues as to betterment, concerning the concrete specifications and the addition of insulation to the premises.[460]
7. As to the concrete specifications, the scope of works prepared by the Go2 Group includes the supply of a reinforced concrete slab for Units 2 and 3, described as '32mpa 125mm reinforced concrete'. Counsel for the defendant correctly noted that the Units originally had a concrete slab with specifications described as '20mpa'. I accept the rectification works have altered the quality of the concrete floor previously in place in Units 2 and 3, but on the evidence it is not possible to conclude that this represented a material form of betterment in the circumstances, nor can I assess the amount which should be applied by way of a reduction. The defendant has not identified an evidentiary basis to support a particular reduction which should be applied. I therefore do not propose to make any allowance in this regard.
8. I also accept that the changes to the insulation which formed part of the rectification works included some materials not previously in Units 2 or 3. Mr Joseph Hawkins confirmed as much in his evidence.[461] However, the extent of this change, and the nature of the additional insulation, is not apparent on the evidence. I cannot conclude that this represented a material form of betterment in the circumstances. Again, I therefore do not propose to make any allowance in this regard.
9. I would therefore allow the plaintiff's claim for rectification costs for Units 2 and 3 in the sum of $1,557,184.20 (which excludes GST), subject to considering the question of mitigation. Assessment of the claim based on the actual costs incurred is consistent with the third approach identified by the High Court in Tabcorp Holdings at [26], and I accept the submissions advanced by counsel for the plaintiff in this regard.[462]

1. It is open to the lessee, in a context such as the present and in response to a contractual claim for damages, to assert that the claimant lessor has failed to mitigate its loss and damage. The defendant has pleaded, in response to the contract claims asserted by the plaintiff, that the plaintiff failed to mitigate its alleged loss and damage.[463]
2. No particulars of that plea were provided by the defendant.
3. In essence, the defendant submitted that the storage of ammonium sulphate in the Warehouse was 'always going to cause corrosion in the absence of protective measures being taken'.[464] The plaintiff's failure to take reasonable steps to avoid, reduce or mitigate its loss is stark, according to the defendant. The defendant submits that it was not required to make structural repairs or upgrades or make expenditure which was capital in nature, and the plaintiff failed to take such steps.
4. The defendant makes several further points. It asserts that the plaintiff breached the obligation to prevent water ingress. The defendant says the plaintiff failed to act in the face of the storm damage in May 2015.
5. Further, after the defendant had vacated the premises, the defendant says the plaintiff appears to have done nothing to repair the premises for some years, other than when obliged to do so by the City of Kwinana's building order.[465]
6. Further still, the defendant emphasises the delay on the plaintiff's part in seeking to rectify Unit 1, which it submits has:[466]

...unquestionably contributed to what has been assessed as significantly higher replacement costs, if replacement was actually either proposed or required. This is shown by the difference in Mr Harrison's estimates from his report in 2019 and his report in 2023 due to the 'double whammy' of higher labour and materials costs. If the Premises had been repaired in 2017, this double whammy and the 4% per annum increases in costs to 2019 would have been avoided.

1. Counsel for the plaintiff resisted any suggestion that the plaintiff had failed to mitigate its loss and damage.[467]

Relevant principles concerning the duty to mitigate

1. The onus is on the lessee to prove that the lessor has failed to take reasonable steps to mitigate its damage, and to demonstrate the extent to which there has been a failure to mitigate: Luxer Holdings Pty Ltd v Glentham Pty Ltd.[468] It is not strictly correct to refer to this as a duty to mitigate, but this shorthand description is convenient to use.
2. The principle imposes on a plaintiff 'the duty of taking all reasonable steps to mitigate the loss consequent upon the breach and debars him from claiming any part of the damage which his due to his neglect to take such steps': Duke Group Ltd (In Liq) v Arthur Young (Reg); Peat Marwick Hungerfords (Third Party) (No 4).[469]
3. The standard to be observed by a party when acting to mitigate its damage was explained by Giles JA in the New South Wales Court of Appeal decision in Karacominakis v Big Country Developments Pty Ltd.[470] That case concerned a circumstance in which it was alleged the plaintiff should have re-let the premises to the tenant. His Honour explained that, since the defendant is a wrongdoer in that circumstance, in determining whether the plaintiff has acted unreasonably a high standard of conduct will not be required, and the plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct if it was reasonable for the plaintiff to do what he did.
4. Whether the plaintiff has acted unreasonably is a question of fact: Luxer Holdings.[471] The test of reasonableness for the purposes of assessing a failure to mitigate is not wholly objective and may take into account circumstances peculiar to the plaintiff such as the plaintiff's inability to afford measures in mitigation and the plaintiff's lack of knowledge of the steps which could be taken in mitigation of the damages: Burns v MAN Automotive (Aust) Pty Ltd.[472]
5. Further, where the assessment of damages relates to a commercial undertaking, such as in the present case, an evaluation of whether the plaintiff has taken reasonable steps to mitigate its damage relates to what the plaintiff 'would do in the ordinary course of business': Luxer Holdings.[473] Mitigation may require the injured party to take other reasonable measures that will prevent or diminish the loss.[474]
6. In the specific context of commercial leases, a number of authorities have dealt with the question whether a landlord's duty to mitigate loss only arises when the lease has been terminated, and whether the duty requires the landlord to terminate the lease.[475] Those cases have often arisen in circumstances where a tenant abandons the premises, which may or may not amount to a repudiation, and where the landlord is left with an election to terminate. Often they arise in claims for rent. These authorities were not the subject of submission at trial and it is unnecessary to express any views on them.
7. For present purposes, I proceed on the basis that ordinary principles of contract hold that the duty to mitigate may arise upon the breach of contract occurring, with the context of the breach being relevant to the nature of the so-called duty.
8. This approach is consistent with the summary of principles in McGregor on Damages at [9-050], which includes reference to instances where covenants to repair in leases have been breached.[476]
9. I will now turn to examine the evidence concerning the two periods or circumstances in which the failure to mitigate was raised. The first is during the currency of the lease and holding over, prior to the abandonment of the premises. The second is the period following the defendant's departure from the premises.

Findings and conclusion in relation to mitigation

1. The covenant to maintain and repair in the first paragraph of cl 3.9(a) of the Varied Lease was breached by the defendant over an extended period, during the currency of the lease and the holding over period. That breach caused damage to the Warehouse. I understand the defendant to submit that the plaintiff unreasonably failed to take steps to mitigate the loss consequent upon this breach, during the term of the lease and during the holding over period.
2. I have found that:

(a) The plaintiff was on notice of the corrosive effects of the ammonium sulphate from in or around mid-2006. Thereafter, the subject of the damage to the premises and the corrosive effects of the ammonium sulphate was a consistent and constant point of discussion between the representatives of the plaintiff and the defendant.

(b) Mr Joseph Hawkins and Mr David Hawkins attended the premises on several occasions over the course of the tenancy, and received updated reports from the defendant and from others about the state of the building.

(c) Mr Joseph Hawkins did not apply insurance proceeds to the repair of the Warehouse. He took no steps of any substance to ameliorate the effects of the storm damage in mid-2015.

(d) There is little doubt the plaintiff was aware of the deterioration of the building over time.

(e) On several occasions, the plaintiff engaged engineers or builders to examine the premises and provide reports as to the state of the structure.

(f) For example, Mr Hughes prepared a lengthy report for Mr Joseph Hawkins in August 2008. Mr Hughes detailed in his report the repair work he recommended, largely directed at Unit 1 with the other Units being protected and maintained through coating, among other things. The plaintiff took no steps in response to this report.

(g) Further, Mr Hughes prepared additional reports in early 2009 which included further recommendations. I have summarised the report earlier in these reasons. The cost of the remedial work was significant, although he outlined various options.

(h) Between around November 2010 through to September 2011, discussions occurred between the parties about the possible sharing of the cost of replacing the roof on the Warehouse, but no resolution was achieved in that regard. Mr Joseph Hawkins remained adamant at this point he would not bear the full cost of the work, and if that was the position maintained by the tenant, Mr Hawkins would rather simply maintain the approach of undertaking reactive work and then demolish Unit 1 when the defendant vacated the premises.

(i) Much later in the chronology, in August 2016, Marocchi Engineering prepared a detailed report for the plaintiff concerning the condition of the building, which provided recommendations for remedial work to be undertaken. I have referred to this report earlier in these reasons. The recommendations included replacing the entire roof cladding and roof purlins, replacing the wall girts and wall cladding, replacing the damaged roof and wall cladding to the ablution block, blast cleaning the structural steelwork, and blasting and cleaning all concrete dado walls.

(j) No significant remedial work was undertaken by either of the parties during the course of the defendant's tenancy. Mr Joseph Hawkins did not pursue any of the recommendations made to him about such work, with the endeavours in this regard hitting a brick wall given the inability of the parties to agree a cost sharing arrangement.

(k) Pursuant to cl 3.11(b) of the Varied Lease, at all times the plaintiff had a right to enter the premises, upon giving reasonable notice, although in cases of emergency, such notice was not required, in order to carry out 'repairs, renovations, maintenance, modifications, alterations or replacements to the Premises'.

1. On my assessment, it was always open to the plaintiff to take remedial steps itself, outside the obligations laid down by the contractual framework, over the period from at least 2008 onwards, in order to more fully repair the damage to the Warehouse caused through the corrosive effects of the ammonium sulphate, and to better protect the Warehouse structure from the future effects of that product. Mr Hawkins took no such steps. The application of polymeric coating, for example, could have been undertaken. The plaintiff had a contractual right to enter the premises to take the necessary steps. In my view, the failure on the part of the plaintiff to take such steps was unreasonable or improvident.
2. The position adopted by Mr Joseph Hawkins was driven more by emotion than any commercial or reasonable analysis.
3. No doubt Mr Joseph Hawkins was heavily influenced in the manner he behaved by the view he took throughout, which was that the defendant bore the obligation to maintain and repair the premises. I have found that his view in this regard is consistent with the proper interpretation of the Varied Lease.
4. It does not however follow that the plaintiff was able to take no remedial steps itself during the period, without some consequence. As outlined above, it remains an accepted principle that the plaintiff carried a duty to take all reasonable steps to mitigate the loss consequent upon the breach, and the plaintiff will be debarred from claiming any part of the damage which is due to its neglect to take such steps.
5. On my assessment, the defendant has established a failure to mitigate on the part of the plaintiff, in my view, in that the plaintiff failed to take reasonable steps to minimise the damage to the Warehouse during the currency of the lease and the holding over. This failure had a material effect on the state of the premises by the time the defendant vacated them in late 2016. Reasonable remedial steps by the plaintiff during this period, in the face of the continuing corrosion problem and the continuing breach by the defendant to comply with cl 3.9(a) of the Varied Lease, would have mitigated the damage to each of the Units. In my view, it is reasonable to expect a landlord with knowledge of such a problem to take appropriate remedial steps.
6. As to the period after the defendant vacated, there was a noticeable lack of promptness on the part of the plaintiff to undertake rectification works. A significant consequence of the lapse in time is that the estimated costs for the rectification of Unit 1 have increased considerably, from around $1.5m in 2019 (although this estimate included the toilet block rectification works as well), to well over $2.0m in the 2023 estimate prepared by Mr Harrison, noting there was only a modest increase in the cost of the preliminaries estimated by Mr Harrison. These amounts also include GST. The defendant's submission in this regard should be accepted, and an appropriate reduction should be made to account for the increased costs of rectification arising from this delay. Mr Harrison described the cost increases over this period as being impacted by the 'double whammy' of a shortage of building materials and a shortage of labour, among other factors.[477]
7. In the circumstances, I consider the defendant's contentions as to mitigation should be accepted in the respects I have mentioned above, and an appropriate adjustment should be made to the quantum of the plaintiff's damages claim.
8. Doing the best the court can do on the evidence available, I would reduce the assessment of the rectification costs for Unit 1 to $1.70m, being the mid-point between the original estimate and the revised estimate of the costs, and then allow a 25% reduction against the overall rectification costs forming part of the plaintiff's damages claim, to account for the unreasonable failure by the plaintiff to take remedial steps during the currency of the defendant's tenancy.
9. In assessing the extent by which damages should be reduced, I recognise that the defendant is the wrongdoer in the present circumstances and, although the plaintiff as lessor had a contractual right to enter the premises to undertake remedial work, a fundamental cause of the damage to the Warehouse was the manner in which the defendant conducted its operations. The storage of the ammonium sulphate by the defendant, the screening operations, and the dust caused by those operations, had substantial effects on the premises. I also recognise that, in principle, a high standard of conduct is not required on the part of the innocent party. A reduction of the damages by 25% is appropriate when these matters are considered.

1. I would accordingly assess the plaintiff's damages for the rectification costs for Units 1, 2 and 3, compensating for the loss and damage suffered by the plaintiff by reason of the defendant's breaches of the Varied Lease, as follows.
2. In respect of Unit 1, damages should be assessed as the reasonable costs of rectification work, involving the demolition and reconstruction of the unit, based on the midpoint between the amounts estimated by Mr Harrison in 2019 and 2013, being the amount of $1,643,598.65, further reduced by 25% to allow for the effects of the plaintiff's failure to mitigate the damage over the course of the defendant's tenancy. This is an amount of $1,232,698.99.
3. Also in respect of Unit 1, the damages should include the cost of preliminaries as estimated by Mr Harrison in 2023, reduced by 25% to allow for the effects of the plaintiff's failure to mitigate the damage over the course of the defendant's tenancy. This is an amount of $262,307.25.
4. In respect of the rectification costs of Units 2 and 3, the adjusted amount of $1,557,184.20 referred to in the table above at [819] should also be reduced by 25% to allow for the effects of the plaintiff's failure to mitigate the damage over the course of the defendant's tenancy. This is an amount of $1,167,888.15.
5. These amounts are reflected in the table below:

Estimated costs to rectify Unit 1 and the toilet block to Unit 1

1. I will now turn to the further heads of claim advanced by the plaintiff.

1. The plaintiff mounts a claim for damages for the defendant's breach of the leases for the three Units, in failing to leave the Premises in a good tenantable condition. The plaintiff claims damages for the rent it could have received from leasing the Premises after the defendant vacated, but which it did not obtain given the rectification works which it says were required.[478]
2. The quantum of foregone rent, as assessed by the plaintiff, was the sum of $200,307.70. This assessment is supported by the expert evidence of the licensed valuer who was briefed by the plaintiff, Mr Richard Hagon. I refer to his report dated 24 September 2020.[479]

1. As to Mr Hagon's evidence, which is relied upon by the plaintiff to support the quantum claim, it should be observed that his report is thorough, supported by numerous photographs of the premises and the relevant zoning information, and based on his assessment of the state of the rental market in 2016, using what he describes as a 'direct comparison approach'. Mr Hagon was briefed to address several specific questions. Those questions, and Mr Hagon's opinion in response, can be summarised as follows.
2. First, Mr Hagon was asked to express an opinion as to the likelihood that the plaintiff would have been able to lease the property once the defendant vacated the premises in November 2016 (either as a whole or on a unit by unit basis, or with one tenant occupying two units and a separate tenant in Unit 1). Two scenarios were posed. In the first scenario, Mr Hagon was asked to assume that the Warehouse was in reasonable condition for its age (allowing for reasonable wear and tear). In the second scenario, he was asked to assume that the Warehouse was in the corroded state shown in the photographs taken in November 2016.
3. Mr Hagon's opinion was that, in the first scenario, it was likely the Warehouse would be rented, and at market rent. In the second scenario, his opinion was that it was 'very unlikely' in terms of any lease of the buildings on the premises. However, he considered that a further lease was 'likely' in respect of the rear hardstand on the premises.[480]
4. Mr Hagon explained in his report that, 'because of the heavily corroded state and missing external cladding which made the buildings open to the elements and unable to be secured', he was of the opinion that the 'buildings [were] therefore unsuitable for warehouse/storage purposes'. Further, Mr Hagon opined that the property was also 'very visually unappealing both internally and externally due to the heavily corroded steel framing, metal cladding and concrete flooring', and considered the Warehouse had 'very poor marketability'.
5. Mr Hagon testified that in the period between November 2016 and the date he inspected the premises, in September 2020, the corrosion at the Warehouse had become more pronounced.
6. Second, Mr Hagon was asked to estimate the likely period it would have taken to secure a new tenant for the Warehouse, assuming the defendant gave 30 days' written notice of its intention to vacate before it vacated the premises. His opinion was that the likely period was three to five months, either as a whole or on a unit by unit basis.
7. Third, Mr Hagon was asked to provide a likely range of rental income that the plaintiff could have secured for the property once the defendant vacated it in November 2016 (either as a whole or on a unit by unit basis, or with one tenant occupying two units and a separate tenant in Unit 1). Again, he was asked to express an opinion by reference to the two scenarios earlier mentioned.
8. On the basis of his review of the available rents in the market, Mr Hagon opined that similar properties could attract an overall rental range of between $73 and $109 per square metre, per annum, as at the date of valuation.[481] In his estimation, if the Warehouse had been in a reasonable condition for its age at that date (i.e. the first scenario), it could have obtained an annual rent of between $75 and $80 per square metre for the Units, including the hardstand area. This equates to an annual rent for the whole of the Warehouse of between $360,000 and $384,000. On the basis of the corroded state of the Warehouse (i.e. the second scenario), Mr Hagon assessed the likely rent as being nil, with the rear hardstand being able to obtain annual rent of between $10 and $12 per square metre. This equates to an annual rent for the rear hardstand of between $27,000 and $33,000.
9. Fourth, Mr Hagon was asked to estimate the range of the likely length of lease that the plaintiff could have secured for the property once the defendant vacated it in 2016 (either as a whole or on a unit by unit basis, or with one tenant occupying 2 two units and a separate tenant in Unit 1). Once again, he was asked to express an opinion by reference to the two scenarios earlier mentioned.
10. Mr Hagon opined that the range for the likely length of a lease under the first scenario was three to five years, with a three to five year option. He considered this would include a three-month rent free period and annual rent reviews to the greater of CPI or 3% with a market review at the time of the option to renew. In the second scenario, his opinion was that the plaintiff would not have secured a tenant for the buildings, but in relation to the potential lease of the rear hardstand, his view was that a range of likely length of the lease would be one to two years, with a one to two year option, but with no incentives or rent reviews.

(3) Evidence that the plaintiff did lease the premises to a third party

1. The plaintiff accepts that the quantum of its claim should be reduced by the amount of rent which was actually received by the plaintiff from another lessee following the departure of the defendant.
2. For the period between 30 June 2018 and 31 December 2019, it is uncontroversial that the plaintiff received $16,390 in rent from the business known as 'Dirty Deeds Bin Hire'.[482]
3. The lease to 'Dirty Deeds Bin Hire' permitted that business to store its skip bins on the premises. The plaintiff charged only $242 per week under that new lease, which was far less than the rent which had been charged to the defendant. The lease to 'Dirty Deeds Bin Hire' was also for a limited period of time.

1. I accept the evidence of Mr Hagon, and the reasonableness and appropriateness of the methodology he adopted, and the opinions he expressed. There are two matters to mention, arising out of the cross-examination of Mr Hagon.
2. First, the existence of the lease to 'Dirty Deeds Bin Hire' in 2018/2019 was said to undermine the force of Mr Hagon's opinion that the prospect of the plaintiff securing a new tenant for the Warehouse was 'very unlikely'.[483] I do not accept the defendant's contention in this regard.
3. In my view, given the very specific nature of the limited lease taken by 'Dirty Deeds Bin Hire' business, I accept the plaintiff's submissions that the existence of this further lease following the defendant's departure from the premises does not substantially undermine the plaintiff's contention that the premises were unattractive to a potential tenant given their dilapidated nature and given the buildings were largely uninhabitable at the time the defendant vacated the premises.
4. Mr Hagon was cross-examined about this issue, and responded that the existence of a further lease did not change his opinion that the property was unhabitable and that the likely market rent was 'nil'. I refer to the following interchange with counsel:[484]

THARBY, MR So if in fact the lessor was able to find a tenant and lease out the premises for some rental amount, would that change your opinion that the rental value was nil?

HAGON, MR: Yes. I don't believe - I mean, it's possible they could have found a tenant willing to put up with the state of that building, but I don't believe it was habitable, as the local shire also, which I spoke to, deemed was uninhabitable. So I think - I still believe that it's - yes. They may have found a tenant, but I don't believe it was actually habitable.

THARBY, MR: If they found a tenant and a rental was paid, then your nil assessment - sorry. If a tenant was found and they were prepared to pay a rent, then the market rent would not be nil; is that correct?---

HAGON, MR: Not necessarily. It might have had some value to that particular tenant, but I think the overall market would not deem that building habitable as per the local shire deemed that it was dilapidated and not habitable. So it's possible that they could have found a tenant, but I believe the market rent, as I've stated there, was nil.

1. I accept the reasonableness of Mr Hagon's opinion that he regarded the market rent of the Warehouse to be 'nil', and consider the lease to 'Dity Deeds Bin Hire' to be something of an outlier.
2. Second, Mr Hagon accepted in his evidence that, in respect of a lease of the Warehouse only (with the rear hardstand being omitted from a prospective lease), the estimated annual rent of between $75 and $80 per square metre would need to be reduced. He explained this was because his estimate in effect assumed a lease of the Warehouse and of the rear hardstand. He could not express any view as to the precise reduction which would be required though, but he considered it was 'probably slight'.[485] Given Mr Hagon's evidence in this regard, doing the best the court can do to estimate the quantum of damages on the basis of the evidence adduced at trial, I would reduce the amount estimated by Mr Hagon by 5%.
3. I therefore find that the plaintiff has established on the balance of probabilities a claim for lost rent in the amount of $173,902.32, being:

(a) the sum of $200,307.70;

(b) reduced by 5%; and

(c) less the further rent received by the plaintiff of $16,390.

1. The head sum of $200,307.70 was calculated as being the foregone rent for the period of between 24 weeks and 32 weeks of the 52 week period which the plaintiff estimated as being required for the rectification works to be undertaken. I accept this overall period as a reasonable estimate. The balance of this period is accounted for largely on the basis that a few months would be required to find a new tenant and on the basis of a rent free period being offered to a new tenant.
2. Finally, I did not understand the defendant to contend that the above sum should be reduced by reason of any failure on the part of the plaintiff to mitigate its loss.

1. The plaintiff claims for the loss of the payment of outgoings by a tenant during the period in which the Warehouse was being repaired. The outgoings in question are council rates payable to the City of Kwinana and land taxes.
2. In respect of council rates, the plaintiff claims the sum for $38,573.34. This amount was calculated by the plaintiff based on a period of 12 weeks in which the premises were unlet, and using the council rates previously paid by the plaintiff, as evidenced by Exhibits 633 and 675.[486] I accept the accuracy of these calculations and the reasonableness of the approach adopted by the plaintiff.
3. In respect of land tax, the plaintiff claims the sum of $10,055.33, which was similarly calculated on the basis of a period of 12 weeks in which the premises were unlet. The plaintiff based the calculation on the land tax amount previously paid by the plaintiff, seen in Exhibits 646 and 676. I accept the accuracy of these calculations and the reasonableness of the approach adopted by the plaintiff.
4. The total of the lost outgoings of $48,628.67 (which is exclusive of GST) represents, in my view, damage suffered by the plaintiff by reason of the defendant's breaches and should be allowed. Again, I did not understand the defendant to contend that this amount should be reduced by reason of any failure on the part of the plaintiff to mitigate its loss.

1. The plaintiff undertook urgent repair works following the defendant's return of the premises to the plaintiff in late 2016. The work was undertaken on various occasions by several different contractors, but was not undertaken until 2018 and 2019.
2. The amounts claimed by the plaintiff are set out in the table below, and are evidenced by several invoices tendered by the plaintiff.[487] There was no dispute about the amounts claimed, but the defendant strongly disputed that the costs were referrable to the state of the premises when it left in late 2016.

Pristine Brick Cleaning - high pressure cleaning in required areas

Western Power - isolating power for work to be performed by Interlec

Elkon Pty Ltd - removing and securing damaged sheeting

Onsite Rental Group - rental of scissor lift to secure sheeting

1. It is evident that these repair works were undertaken well after the defendant had vacated the premises. In some respects, the lapse of time is at least two years. It is also most unlikely, in my view, that this work would have been required had the plaintiff moved promptly to remediate the Units, which it did not do.
2. It is therefore quite difficult to draw a link between the necessity for the work being undertaken and the defendant's breach of the Varied Lease in failing to repair or yield up the premises in the requisite state.
3. The difficulty the court has in drawing this link is further heightened by the evidence that some of the costs were incurred as a result of the directives given to the plaintiff by the City of Kwinana. For example, the City of Kwinana emailed the plaintiff in October 2017 regarding complaints that the Warehouse was in a 'state of disrepair and dangerous'.[488] Mr Joseph Hawkins accepted in his evidence that some of the work was undertaken in response to the notices issued by the City of Kwinana.[489]
4. On my assessment, the plaintiff has failed to demonstrate that the interim repair work is a head of damage which is causally connected to the defendant's breaches of the Varied Lease. In particular, I am not satisfied the repairs have been shown, on the balance of probabilities, to be referable to the state of the premises in late 2016 when the defendant exited the premises. It is more likely that the costs were required as a result of the plaintiff's own decision to delay undertaking any remediation works.
5. I would therefore not allow this head of the claim.

1. The plaintiff claimed interest on damages and on its claim for unpaid rent at the rate of 6.0% p.a., in accordance with s 32 of the SCA. The plaintiff's calculations are detailed in the schedule of damages in closing, through until 3 May 2024, in the amount of $217,445.92, at a daily rate of $299.21.[490]
2. The accuracy of that calculation was not seriously challenged at trial and I accept it is accurate based on the amounts which had been claimed by the plaintiff during the trial. Of course, the plaintiff's claim for interest will need to be re-calculated by counsel once they have had an opportunity to review these reasons, by reference to the amounts for damage which the court has assessed.

PART IX - UNPAID RENT CLAIM A. The plaintiff's claim

1. The plaintiff's claim for unpaid rent in respect of the Units is pleaded at [9] and [10] of the SOC, with particulars of the amounts claimed detailed in Annexure 1 to the SOC.[491]
2. The quantum claimed by the plaintiff has not remained static and the plaintiff concedes there was some 'complexity' to the rent charged over time.[492]
3. In closing, a schedule of damages was filed by the plaintiff, dated 30 April 2024, which seeks an amount of $494,416.21 (exclusive of GST).[493] I refer to item 1 of the schedule of damages and the itemised schedule therein which also calculates the interest which is claimed. The components of the claim, which includes some adjustments for rates and taxes, as particularised in the schedule of damages, are set out in Attachment D to these reasons.
4. I have proceeded on the basis that the quantum claimed in the schedule of damages handed up during the closing addresses represents the final distillation of the plaintiff's claim.
5. The rent claim stretches from 31 January 2014 to December 2016, and relates to the period during which the defendant was holding over in respect of Units 1, 2 and 3. The plaintiff asserts, in essence, that the defendant has failed to pay the full rent over this period.
6. The plaintiff contends that, upon the expiry of the terms of the leases, the rent review provision in cl 3.2 of the Varied Lease did not confine the plaintiff's right to determine the rent payable. Rather, the holding over provision applied thereafter (see cl 5.10 of the Varied Lease) and the plaintiff was permitted to charge any amount of rent it determined.[494]
7. Further, the plaintiff submits that the defendant was not entitled to abate rent in this period. The plaintiff emphasises that cl 5.12 of the Varied Lease only permitted the defendant to abate rent 'unless the damage or destruction was caused by or in consequence of any act or default of the Lessee'. The plaintiff's case is that the damage which the defendant relied upon to justify its abatement was caused by the defendant's acts and defaults, and, as such, it could not abate rent.[495]
8. Further, the plaintiff points out that if there was 'any dispute concerning this provision', it was to be determined by an arbitrator. By the terms of cl 5.12 of the Varied Lease, in the event of a dispute, the defendant was to then pay rent without abatement until the date of the award of the arbitrator or agreement between the parties. The plaintiff contends there was 'plainly a dispute' about whether or not the damage or destruction was 'caused by or in consequence of any act or default of the Lessee', such that the defendant was 'not entitled to apply any abatement unless and until an arbitrator determined the question'. As the question was never referred to arbitration, the plaintiff says the defendant was obliged to pay all rent without abatement.[496]
9. The plaintiff thus submits the defendant remains liable for the unpaid rent which is claimed. This is because the damage was caused by or in consequence of the defendant's actions and by the time it commenced abating the rent, there had been a long standing dispute between the parties. In those circumstances, the defendant was obliged to continue paying the rent without abatement by force of cl 5.12 of the Varied Lease.[497]

1. In response to the claim for unpaid rent, the defendant pleads several responses.[498]
2. First, the defendant asserts that the plaintiff's claim for outstanding rent was based on an amount which was incorrectly calculated, or was not calculated in accordance with the formula stipulated by the lease, such that the defendant was entitled to refuse to pay the rent amount to the extent that amount exceeded the rent payable on a proper calculation. The defendant thus contends the rent reviews for the Units have been incorrectly applied and calculated by the plaintiff and do not accord with the terms of the lease.[499] The defendant describes the plaintiff's case as lacking detail and as having being presented in a 'confused state'.[500]
3. The defendant made reference to the evidence of Ms Bosch at trial, being the author of the adjustment statements issued by the plaintiff. The defendant observed that Ms Bosch had accepted in her evidence that she did not have a copy of the Varied Lease, that she did not understand how the rent adjustment provision worked, that she used both the Australian CPI and Perth CPI in respect of the different units at different times, and that she never attempted to calculate the 'Current Market Rent' for the units, as required by the Varied Lease.
4. Further, the defendant noted that Ms Bosch did not appear to have had regard to the rent review dates when calculating rent reviews. The Varied Lease refers to the rent reviews for Unit 1 as being on 1 March each year, and Schedule 3 provided that the rent reviews for Units 2 and 3 would be on 1 September each year.
5. Further still, the defendant noted that, if the rent was not reviewed within six months of the rent review date, the plaintiff would lose any right of review, having regard to cl 3.2 of the Varied Lease.
6. Put simply, as to Unit 1, the defendant submits that the 30 April 2015 rent review (see Exhibit 532) and the 16 February 2016 rent review (see Exhibit 597) did not calculate market rent as was required by the terms of the Varied Lease. As to Units 2 and 3, the defendant submits that the 30 April 2015 rent review was not notified by the plaintiff within six months of 1 September 2014, being the required period.
7. Second, the defendant contends that its obligation to pay rent was subject to an entitlement to abatement, where the premises were 'damaged rendering them unfit for occupation or use until the Premises [were] reinstated and made fit for occupation and use'. The defendant relies on cl 5.12 of the Varied Lease.
8. The defendant pleads that it issued a notice of default on 17 June 2015 to the plaintiff in respect of water ingress caused by storm and tempest damage in May 2015, seeking rectification of damage to the premises, following which the plaintiff failed to rectify the damage. The defendant refers to the second default notice issued on 6 July 2015, by which it notified the plaintiff it was withholding rent for failure to reinstate premises fit for occupation or use. Further, the defendant relies on the third default notice for rectification of damage, issued on 29 July 2015, notifying the plaintiff that Unit 2 was approximately 70% unfit for occupation or use
9. The defendant pleads that its obligation to pay rent abated; further or in the alternative its obligation to pay rent was set-off or alternatively discounted, and it denies any breach of the obligation to pay rent.[501]
10. The defendant contends it had an entitlement to an abatement of rent for the space within the Units it could not use, particularly given the plaintiff 'was responsible for preventing water ingress, for structural repairs and repairs of a capital nature'.[502]
11. Third, further or in the alternative, the defendant pleads an estoppel defence, alleging that the plaintiff was estopped from claiming rent was payable by the defendant, alternatively from claiming that more than a fair and just proportion of rent was payable by the defendant.[503]

1. The pleadings and submissions of the parties require a consideration of cl 3.1, cl 3.2, cl 5.10 and cl 5.12 of the Varied Lease in particular (which provisions also have application to Units 2 and 3).
2. Clauses 3.1 and 3.2 of the Varied Lease concern the payment of rent by the defendant, and the process by which the rent would be reviewed. Clause 3.1 provides as follows:

3.1 Rent

The Lessee must pay the Rent (free from all deductions) at the times prescribed in Schedule 1 (subject to review pursuant to this Lease) to the Lessor.

1. Schedule 1 to the Varied Lease provided that the initial annual rent for Unit 1 was the sum of $182,400 plus GST per annum (or $76 per square metre plus GST), which was payable monthly. The rent was expressed to be payable until 28 February 2007 and 'as thereafter determined pursuant to Clause 3.2 and 3.3 of the Lease' (see item 5.2, sch 1).[504]
2. The rent was to be reviewed on 1 March 2007 and annually each year on 1 March during the term of the lease (item 6, sch 1). Clause 3.2 of the Varied Lease provided for a regime by which the lessor would give the lessee a notice prior to each of the 'Rent Review Dates' of the proposed rent, identifying all calculations, with the proposed rent to be the lesser of the 'Current Market Rent' of the premises or the rent as increased by a CPI adjustment referred to as the 'Perth CPI'. The Varied Lease included a detailed definition for the 'Current Market Rent' and for the term 'Perth CPI'. Further, as part of this contractual regime, the lessee was required to respond and indicate its agreement (or otherwise) to the proposed rent. Where there was no agreement, the new rent was to be determined by a 'Valuer', acting as an expert, nominated by both parties or nominated by the President of the Australian Property Institute Inc. (Western Australian Division). I have set out the lengthy terms of cl 3.2 in Attachment A to these reasons.
3. Clause 3.3 of the Varied Lease, which I need not recite in its entirety, relates to the calculation of outgoings, the provision of an estimate for outgoings, and an adjustment process.
4. Clause 5.10 of the Varied Lease is a holding over clause. Clause 5.12 of the Varied Lease permits the abatement of rent on the part of the defendant. The terms of these provisions are included in Attachment A to these reasons.
5. There are some infelicities in the terms of cl 5.12, as noted by counsel for the plaintiff at trial, who described the clause as 'obtuse'.[505] Among other matters, the words 'preventing the Lessor from claiming under the relevant policy of insurance', which appear outside the parenthetical exclusion, do not make literal sense on a fair reading of the provision. It appears likely that these words were intended to form part of the parenthetical exclusion.

1. Ms Bosch gave evidence at trial concerning the plaintiff's claim for outstanding rent. In addition, a number of documentary exhibits were tendered by the parties concerning the rent adjustments implemented by the plaintiff over the relevant period.
2. Ms Bosch's evidence, which I accept, was to the effect that the accounting system maintained by the plaintiff had been used to generate the outstanding accounts schedule, which is Exhibit 818.[506] That schedule records, according to the plaintiff's accounting system, the rental periods in respect of which the defendant had failed to pay rent to the plaintiff. The schedule commences in January 2014 and runs through to October 2016. The schedule records a total of $565,158.07 in outstanding rental payments.
3. An annotated version of the outstanding accounts schedule was created by Ms Bosch (Exhibit 687), which she updated on 9 August 2018. The total of outstanding payments in the annotated schedule is $543,255.30. The amounts included GST. The difference in the amounts is adequately explained by Ms Bosch's annotations which appear in Exhibit 687. As earlier noted, the plaintiff's final claim for rent in the schedule of damages differs in quantum to the evidence given by Ms Bosch, being a lesser figure. Although there are differences in the amounts, I accept there is a high degree of reliability in the final calculations having regard to the evidence of Ms Bosch and the various schedules she prepared during the period in question, which also included rental increase schedules for the three Units, being Exhibits 765, 766 and 767.
4. As earlier noted, the claim for unpaid rent relates to the period during which the defendant was holding over under the leases for the three units. The defendant remained in occupation of the Units until it abandoned the premises in November 2016.
5. During this period, the rent was adjusted by the plaintiff on several occasions. Ms Bosch gave evidence about these matters and explained the process she followed in adjusting the rent.
6. In her evidence in chief, Ms Bosch explained that she initially calculated a rental increase for the rent due by the defendant in respect of the Warehouse. She explained that was a flat increase of 5%. The defendant objected to that increase, following which Ms Bosch applied a CPI increase.[507] The increase which was not agreed appears to relate to the period from August 2013 to January 2014, for which the plaintiff gave notice to the defendant of an increase in rent to $118.75 per square metre, including GST. The notice was given by a statement dated 8 August 2013 (Exhibit 395). As noted, the plaintiff subsequently accepted this increase was not agreed and issued a credit adjustment note on 31 January 2014 to reverse the increased amount (Exhibit 473).
7. Then, on 31 January 2014, the plaintiff issued three further invoices or statements in respect of Units 1, 2 and 3, setting out a proposed, retrospective rental increase adjustment for those Units (Exhibits 470, 471 and 472). The statements indicated that the increases were based on CPI but did not provide specific calculations in this regard. It is not necessary to set out the amounts referred to in those statements.
8. The above statements were accompanied by a further, separate statement dated 31 January 2014 (Exhibit 469) which claimed payment of an outstanding amount of $54,959.81 for the three Units (inclusive of GST) for the March 2014 period.[508] Again, this was stated to be based on CPI adjustments but without providing any calculation in this regard. The new rate noted in this statement was $124.91 per square metre.
9. During cross-examination, Ms Bosch testified that she used both the Australian CPI and the Perth CPI when calculating the rent increase, as she did not have a copy of the lease at the time she performed the calculation. Ms Bosch did not attempt to calculate the 'Current Market Rent' under the lease at any point in time. This is a defined term in the Original Lease, which is referred to within cl 3.2(a)(i).
10. A further increase in the rent was implemented by the plaintiff on 30 April 2015, in the amount of $127.03 per square metre (excluding GST). This was communicated to the defendant by a letter from Ms Bosch dated 30 April 2015 (Exhibit 532), which referred to an increase of 1.7% for CPI for the period from the December 2013 quarter to the December 2014 quarter.
11. The final increase was implemented by the plaintiff on 16 February 2016, by letter issued by Ms Bosch to the defendant (Exhibit 597). The letter increased the rent by way of CPI adjustment, stated to be the CPI index for 31 December 2015 and the CPI index for 31 December 2014 (being 108.6 and 107.0 respectively). The application of this CPI adjustment, being approximately 1.5%, increased the rent to $128.93 per square metre (excluding GST) for each of the Units.
12. During the relevant period, the defendant plainly voiced to the plaintiff its concern as to the state of the Warehouse. The defendant issued a notice of default on 17 June 2015 in respect of water ingress caused by storm and tempest damage, which had occurred in May 2015, and sought rectification of the damage to the premises. The defendant issued a second default notice on 6 July 2015 and notified the plaintiff that it was withholding rent for failure to reinstate premises fit for occupation or use. Then, on 29 July 2015, the defendant issued a third default notice for rectification of damage notifying that Unit 2 was approximately 70% unfit for occupation or use.
13. The defendant unilaterally withheld payment of a portion of the rent during the relevant period. Mr Tip O'Neill testified that the rent was withheld in order to indemnify the defendant for its costs and because the premises were in 'serious disarray' by reason of the damage to the Warehouse over time.[509]
14. In withholding the rent, the defendant did not follow the contractual process outlined in cl 5.12 of the Original Lease, in that it did not refer the dispute to arbitration and it withheld payments notwithstanding the requirement that the lessee continue to pay the rent until the dispute was resolved through arbitration or by agreement.

1. On the pleaded cases, and in light of the submissions advanced by the parties, there are three issues requiring consideration in the context of this claim.
2. First, whether the plaintiff has demonstrated an entitlement to be paid the individual components of the rent claim having regard to the terms of the Varied Lease. This requires a consideration of cl 3.2 and cl 5.10, in particular.
3. Second, whether the defendant has demonstrated an entitlement to an abatement of rent and, if so, to what extent. The terms and operation of cl 5.12 of the Varied Lease are of particular importance in this regard.
4. Third, whether the defendant has demonstrated the estoppel defence to the claim which is pleaded at [9.11] of the Defence.

F. Has plaintiff established its claim for unpaid rent?

1. The plaintiff's claim for unpaid rent is a claim in contract in respect of which the plaintiff bears the onus of proof. For its part, the defendant bears the onus of proof in establishing its pleaded defences.
2. The plaintiff's claim for unpaid rent, in respect of each of the Units, related to periods during which the defendant was holding over under the leases.
3. Ordinarily, where a lessee holds over after a formal lease has expired, there is an implication that the holding over occurs on the terms of the expired lease, absent some agreement, with necessary modifications, but continues on a periodic basis.[510] Ultimately, the true enquiry in that circumstance is as to the intention of the parties, to the extent it can be ascertained.[511]
4. In the present circumstance, however, the Varied Lease incorporated a holding over clause, found in cl 5.10. The parties are in disagreement as to the effect of this clause.
5. The defendant submits that the purpose of an express holding over clause such as this is to rebut the presumption of a yearly holding over period, referring to the long-standing authority of Moore v Dimond. For completeness, it should be observed that, in Western Australia, s 71 of the Property Law Act 1969 (WA) (PLA) has abolished the rule of the common law that a tenancy from year to year is implied by payment of rent.
6. Further, the defendant argues that the words 'monthly rent as determined by the Lessor', on a proper construction, should be taken to mean 'as determined in accordance with the rent review provision'.[512] The rent review provision remains operative, according to the defendant, during the holding over period by reason of the words 'if an extension had been granted at the expiry of the Term', alternatively by reason of the final words 'otherwise on the same terms and conditions as this Lease'.
7. The plaintiff criticises the defendant's submissions as failing 'to grapple' with the operation of cl 5.10.[513] The plaintiff submits that the defendant places much reliance on the rent review provision in cl 3.2, without recognising that cl 5.10 permitted the plaintiff to determine the monthly rent in this holding over period.
8. What then is the effect of cl 5.10 of the Varied Lease?
9. In my view, the language employed within the provision should be given its ordinary and natural meaning, consistent with the principles of contractual construction to which I have earlier referred in these reasons. On its terms, the clause operates to provide that the defendant will be a monthly tenant of the plaintiff while remaining in possession of the premises. Further, the clause provides that the defendant will pay rent on a monthly basis, and expressly provides that the rent will be as determined by the plaintiff. The defendant must also continue to pay the 'Outgoings' (and it might be inferred that the second reference to 'Outgoings' is an error and was intended to be a reference to the defined term 'Rates and Taxes'),[514] with those amounts being payable by the defendant as if an extension of the term had been granted. Finally, the clause provides that the continuing lease will be otherwise on the same terms and conditions as the Varied Lease.
10. When the clause is read in its entirety, it cannot be said, in my view that the reference to rent 'as determined by the Lessor' should be taken to mean 'in accordance with the rent review provisions' in the Varied Lease instrument. Rather, the clause expressly singles out the payment of rent as being one aspect of the continuing lease going forward which is not governed by the terms and conditions of the Varied Lease. Indeed, in a scenario in which the continuing duration of the lease between the parties was uncertain, there are good practical reasons to think the parties would not wish the rent review regime to continue to have operation.
11. The phrase 'as determined by the Lessor' should not be treated as mere surplusage in the provision. The phrase is objectively intended to permit the lessor to determine the rent for the holding over period. The language which follows, concerning the payment of 'Outgoings' (and, in my view, the payment of 'Rates and Taxes' as well) are to be associated with the phrase, 'if an extension of the Term had been granted at the expiry of the Term'. Construed in this manner, the provision makes logical sense and does not produce an absurd outcome.
12. A lessee may argue, in this circumstance, that this construction of the provision affords unlimited scope to the lessor to determine the rent. In my view, there is nothing uncommercial in having a clause which permits the lessor to determine the rent in the holding over period, and so to depart from the previous regime which catered for a structured rent review process. This is explicable given the lessee is remaining in occupation beyond the agreed term, albeit with the consent of the lessor. The lessee's remedy in this circumstance, should it find the rent objectionable, is to vacate the property. The defendant, in this case, had the option to do so.
13. I therefore reject the defendant's criticisms as to the method of calculation of the rent during the holding over period, to the extent to which the defendant asserts that compliance with cl 3.2 was required. Further, this is not a case in which the plaintiff lessor sought to grossly increase the rent during the period of holding over, but rather adopted an approach of incrementally increasing the rent by reference to particular CPI increases. It was entitled to do so. No question as to whether the rent increases were wholly unreasonable or excessive arises in these circumstances, and no argument to this effect was advanced by the defendant.
14. I therefore find that the plaintiff's claim for unpaid rent, in the sum of $494,416.21 (exclusive of GST), as particularised in the schedule of damages, and as set out in Attachment D to these reasons, was determined in a manner which accords with cl 5.10 of the Varied Lease (and has application to the lease for all of the Units).

G. Has defendant established an entitlement to an abatement?

1. In general terms, covenants in a lease are not mutual or interdependent. Thus, a tenant's obligation to pay rent will not cease where a plaintiff has failed to repair premises: Bishop v Moy.[515] Lease provisions as to abatement of rent may operate, however, to permit a complete or partial reduction in the tenant's rent obligation during a period in which the premises are unfit for occupation or use. The operation and effect of such provisions will necessarily turn on the express language used by the parties, including whether the entitlement to abate is conditioned on compliance with certain steps.
2. The defendant claims an entitlement for an abatement, based on the terms and effect of cl 5.12 of the Varied Lease. The defendant did not assert that there had been a frustration of the contract, in any sense.
3. By its terms, cl 5.12 operates to wholly or partially abate the defendant's obligation to pay 'Rent, Rates and Taxes and Outgoings' where the premises (or any part of the premises) is 'so destroyed or damaged as to render the Premises unfit for occupation or use'.
4. It did not appear to be greatly in contest at trial that the Warehouse was unfit for occupation or use in the manner contended by the defendant, for an extended period. The evidence supports a finding that the premises were not usable in the ordinary manner for the period in question. However, there were two contentious matters arising from the terms of cl 5.12 which received attention at trial, which I will address below.

1. As earlier noted, there is a carve-out or exception to the clause which appears in parentheses, namely where the 'damage or destruction was caused by or in consequence of any act or default of the Lessee'. This carve-out is followed by the words, 'preventing the Lessor from claiming under the relevant policy of insurance'. When read literally, the clause does not make grammatical sense and it appears the drafting has miscarried. It would appear likely, and would make better grammatical sense of the clause, if the words concerning the policy of insurance were read as forming part of the parenthetical phrase.
2. When read in this way, there would appear to be two parts to the exception. First, that the damage or destruction was caused by the lessee. Second, where the lessor is prevented from claiming under a relevant policy of insurance.
3. Are these parts to the exception conjunctive, such that both must be satisfied? It would make more sense if the exception was read disjunctively. In this sense, the infelicity in the drafting of the exception may extend beyond the placement of the parentheses, to the language used therein, such that the insurance component of the exception was intended to be expressed as an alternative, in a similar manner to the way I have construed cl 3.9(a) of the Varied Lease.
4. To some extent, the foregoing involves a re-writing of the language of cl 5.12 of the Varied Lease. However, this constructional technique is consistent with the approach permitted by Fitzgerald v Masters,[516] where it may be concluded that the drafting of the contract in question has miscarried. That is, words may generally be supplied, omitted or corrected, in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency.
5. On this approach, the parenthetical exclusion in cl 5.12 should be read as follows - 'unless the damage or destruction was caused by or in consequence of any act or default of the Lessee, or prevented the Lessor from claiming under the relevant policy of insurance'.
6. If the disjunctive approach to the exception is adopted, given the conclusions I have reached above as to the breaches of the covenants in the Varied Lease by the defendant, the exception in cl 5.12 of the Varied Lease is engaged such that the defendant is not entitled to an abatement of rent. The pleaded claim to an entitlement to abatement would fail for this reason, as submitted by the plaintiff.[517]
7. However, if the conjunctive approach to the exception is adopted, the exception would not be engaged, there being no evidence that the conduct of the defendant prevented the plaintiff from claiming under the insurance policy in place. Indeed, there is evidence the plaintiff successfully made a claim under the policy during the period which is the subject of the abatement of rent contention.
8. Although neither construction can be described as overwhelmingly persuasive, the parenthetical drafting infelicities I have mentioned are best cured by the disjunctive construction I have identified. This means that the right of the lessee to an abatement is lost where the damage or destruction was caused by, or in consequence, of any act or default on its part. It would otherwise be absurd to permit abatement to be applied by a tenant even though the unfitness for occupation or use of the premises stemmed from the tenant's own wrongdoing. Given the factual findings I have made above in Part VI and Part VII as to the conduct of the defendant and the breach of cl 3.9(a) by the defendant, the rent abatement defence must fail.

1. In any event, there is another rock on which the defendant's 'abatement ship' flounders. I refer here to the proviso to cl 5.12 and the arbitration regime.
2. The clause requires that any dispute on the abatement issue is to be determined by a single arbitrator in accordance with the provisions of Commercial Arbitration Act 1985 (WA), which has since been superseded by the Commercial Arbitration Act 2012 (WA). Importantly, the clause requires the defendant to continue to pay the 'Rent, Rates and Taxes and Outgoings' without any abatement until the dispute had been determined by the arbitrator or by agreement reached between the parties. This operates as a 'pay now, argue later' clause as described by counsel for the plaintiff.
3. Again, the plaintiff criticises the defendant for failing to 'grapple' with the terms of cl 5.12 and for its failure to refer the dispute concerning abatement to arbitration.[518]
4. In my view, the criticisms are justified.
5. A dispute between the parties had arisen as to whether or not the damage or destruction to the Units was 'caused by or in consequence of any act or default of the Lessee'. The defendant did not refer that dispute to arbitration. There was no real explanation in the evidence as to why the defendant chose not to pursue that approach. Unless and until an arbitrator determined that question, which the parties expressly agreed was a matter to be referred to arbitration, the defendant was obliged to pay the ongoing 'Rent, Rates and Taxes and Outgoings' and was not entitled to apply any abatement.
6. The plaintiff submits that the only determination that the court needs to make is that the defendant 'is obliged to pay rent until an arbitrator has made a determination: that is the plain meaning of the clause'.[519] That submission is correct and should be accepted, in my view.
7. The parties agreed, by the terms of the lease, that this issue would be determined by means of an arbitration, and that was the exclusive mechanism for resolution of the dispute. One can readily understand why the commercial parties to a long term lease would bargain for a process whereby the resolution of any dispute as to the abatement of rent is to be addressed through a swift arbitral process, in conjunction with a continuing obligation on the lessee to make rental payments and a refund obligation in the event there is an overpayment.
8. Further, the parties used broad language to express their agreement - that 'any dispute concerning' the abatement clause would need to be referred to arbitration. One might compare this to the narrower drafting approach employed in the abatement clause under consideration in Great Union Pty Ltd v Sportsgirl Pty Ltd.[520] The clause in that case provided that the 'proportion' of the abatement was be decided through an arbitral process. The Victorian Court of Appeal concluded that the provision in the lease in question did not extend to any determination of the 'entitlement' to an abatement, only to the quantification issue.[521] The plaintiff and the defendant in the present case agreed that all disputes concerning abatement would need to be referred to arbitration.
9. No question of ouster of the court's jurisdiction arises by agreeing to such an approach. The defendant was at liberty to initiate arbitral proceedings and, if left unsatisfied by that process, could challenge the award in this court in the limited manner permitted by the Commercial Arbitration Act 2012 (WA).
10. Having failed to refer the dispute to arbitration, the position remains that the defendant was obliged to pay the rent without abatement, and the plaintiff cannot be held out of its rent by reason of the defendant's failure to pursue arbitral proceedings.
11. The defendant was not entitled to unilaterally withhold payment of rent. Proper compliance with the agreed, and mandatory, contractual regime was first required, in my view.
12. For these reasons, the defendant's claimed entitlement to an abatement of rent, and contention that the non-payment of rent was justified by reason of cl 5.12 of the Varied Lease must fail.

1. The defendant pleads that the plaintiff was estopped from claiming rent, alternatively from claiming that more than a fair and just proportion of rent was payable by the defendant. The defendant pleads that it relied upon the plaintiff's obligation to maintain and repair under the lease, upon the defendant's entitlement to abate rent under the lease, and upon certain representations made by the plaintiff.[522]
2. The pleaded representations are to the effect that the defendant's security of tenure would continue for the useful life of the premises, after which time the building situated thereon would be demolished, that the defendant was free to continue to maintain and repair the building as necessary, and with the intention that contribution towards maintenance and repair to the premises would be made by the plaintiff. The defendant pleads an understanding that the repair costs 'were to be reimbursed, set-off, applied as rent or otherwise settled by contribution or other combination of entitlements, under a new lease'.
3. The defendant did not expressly abandon the estoppel defence so far as it related to the unpaid rent claim, but did not develop the contention in its closing submissions to any degree. On my assessment, the defence, which is pleaded in rather vague terms, fails. I reach that conclusion for the following reasons.
4. First, there is no evidence which sustains the making of any representations on the part of the plaintiff which justified the withholding of rent payments by the defendant or which had the effect of indicating that a set-off or contribution process would be followed by the plaintiff in due course to bring repair costs and rent payments to account in some manner. The defendant has not pointed to any such evidence, and none is apparent from the evidence of the witnesses at trial or the documentary material. Evidence in support of the estoppel might have been given by Mr Tip O'Neill, the president of the parent company and a director of the defendant, but no such evidence was led from him.[523]
5. Second, the defendant's pleaded estoppel must be seen in the context of the terms of the lease and the express regime for abatement of rent which was agreed by the parties (in cl 5.12 of the Varied Lease). As earlier noted, I have concluded that the defendant failed to comply with the abatement provision, which required that the lessee continue to pay rent notwithstanding any dispute as to the damage to the property. There is very little room for an estoppel to operate in the manner pleaded by the defendant, which would be, in effect, contrary to the terms of cl 5.12.
6. Third, the evidence shows the plaintiff consistently pressed the defendant for payment of the outstanding rent once it became apparent the defendant was refusing to pay the full amount which had been invoiced. The issue was followed up with the defendant by both Ms Bosch[524] and Mr David Hawkins[525] on a relatively regular basis. I do not detect in the evidence any indication given by the representatives of the plaintiff that it acceded to the non-payment of the rent. Mr David Hawkins' email interchange with Mr Tip O'Neill on 3 March 2016, which I have set out in full earlier in these reasons, would have left the president and chief executive officer of the defendant in no doubt that the plaintiff required the rent to be paid.
7. The estoppel plea must therefore fail.

1. The plaintiff's claim for the unpaid rent should be upheld.
2. The defendant was in breach of its obligation to pay rent in respect of Units 1, 2 and 3 over the period from January 2014 to November 2016, in the amounts set out in Attachment D to these reasons. I accept that the total amount of the claim demonstrated by the plaintiff is $494,416.21 (exclusive of GST), which is payable together with interest at 6% p.a., as calculated in the schedule of damages in closing dated 30 April 2024.[526]

PART X - THE PLAINTIFF'S CLAIM IN TORT A. The plaintiff's pleaded claim in negligence

1. I now turn to the last of the claims pleaded by the plaintiff. The plaintiff pleads a claim in negligence, asserting that the defendant owed it a duty of care to:[527]

(a) handle, store and/or process ammonium sulphate (including for the production and then storage of fertiliser containing the same) in such a manner so as to prevent any damage being caused to the Units and the building on the property;

(b) take action to mitigate the damage which could be caused by the defendant's method of delivering and storing the ammonium sulphate in the Units; and

(c) rectify any damage caused to the Units and the building on the property immediately, so as to keep them in good and substantial repair, order and condition and to prevent further or ongoing damage.

1. This duty is said to have arisen in the circumstances of the contractual relationship between the parties and the defendant's business in purchasing, storing, processing, value-adding (including by way of screening), marketing, selling and using ammonium sulphate as a fertiliser in the building, and the defendant's knowledge of the products, including ammonium sulphate, that it was storing in the Units.[528]
2. Further, in support of the pleaded duty, the plaintiff relies on the 'corrosive nature and potential' of ammonium sulphate, and the vulnerability of the plaintiff 'as a specific and ascertainable party' in relation to activities involving ammonium sulphate conducted by the defendant in its business, which involved readily foreseeable damage to property and related economic harm, including the loss of insurance cover for the building on the property.[529] Finally, the plaintiff pleads that it relied on the defendant to conduct its business in a proper and reasonable manner.[530]
3. The duty is pleaded to have been a continuing duty throughout the terms of the leases.[531]
4. Critically, the plaintiff alleges it was reasonably foreseeable that if the defendant failed to comply with the pleaded duty or duties, the plaintiff would suffer loss and damage if the Units and the building on the property were damaged as a result of the manner in which the ammonium sulphate was handled, stored and/or processed (including for the production and then storage of fertiliser containing ammonium sulphate).[532] The plaintiff alleges that, in breach of the defendant's duty pleaded at [20] of the SOC, the defendant 'failed and neglected to handle, store and/or process ammonium sulphate (including for the production and then storage of fertiliser containing the same) properly or reasonably' in the Units, and the plaintiff refers to the manner in which it says the defendant should have conducted the business as pleaded at [12] of the SOC.[533]
5. The loss and damage pleaded by the plaintiff is the cost to repair the Units and the loss of rental income.[534]
6. The plaintiff provided the court with an aide memoire which helped to frame the plaintiff's claim in tort.[535]

B. The defendant's pleaded defences to the negligence claim

1. The claim in tort is denied by the defendant. The defendant denies it owed the pleaded duty and alleges no such duty is capable of arising as a matter of law.[536]
2. In essence, the defendant maintains it was entitled to handle and store the ammonium sulphate in the manner that it did as it was an expressly permitted purpose in the offer to lease, and in the lease.[537] The defendant contends that it did not, at any time, in the course of the occupation of the premises, produce or process ammonium sulphate on the premises.[538]
3. Further, and importantly for the purposes of the defendant's case, it says that at all times the plaintiff knew the business of the defendant and the manner in which the defendant stored its ammonium sulphate on the premises and the plaintiff voluntarily assumed the risks of handling and storing ammonium sulphate on the premises.[539]
4. The defendant then pleads five substantive responses to the negligence claim, the first being an estoppel,[540] the second being a concurrent wrongdoer plea,[541] the third being a contributory negligence plea,[542] the fourth being a plea that the plaintiff failed to mitigate its loss,[543] and the fifth being a limitation period point.[544]
5. In support of various of these defences, the defendant pleads out the knowledge of the plaintiff,[545] says the loss and damage was reasonably foreseeable to the plaintiff,[546] says it was reasonably foreseeable to the plaintiff that there was a risk of the plaintiff suffering economic loss if it failed to take steps to repair and maintain the premises,[547] and pleads the plaintiff failed to take precautions against the risk of the alleged loss or damage.[548]
6. Pausing at this point, it is convenient to set out the specific aspects of the plaintiff's knowledge which are pleaded by the defendant at [22A.1] of the Defence. The defendant asserts that the plaintiff knew:

(a) of the business of the defendant;

(b) the defendant intended to use and used the premises for the value adding and storage of ammonium sulphate;

(c) ammonium sulphate was a corrosive substance;

(d) the defendant's places and modes of storage of the ammonium sulphate at the premises;

(e) the defendant used a shaker table to sort ammonium sulphate at the premises;

(f) of the ventilation of the premises and that the defendant often kept the access doors of the premises open during operating hours;

(g) that neither the plaintiff nor the defendant had applied a polymeric sealer/coating to the concrete floors, concrete walls and structural steel; and

(h) it (i.e. the plaintiff) had an obligation to maintain and repair the premises to prevent water ingress.

1. Having regard to the pleadings and the submissions advanced by the parties at trial, the following issues arise for determination in the context of the negligence claim.
2. First, whether the plaintiff has demonstrated the existence of the pleaded duty of care owed by the defendant. The plaintiff bears the onus on this issue.
3. Second, whether the defendant has been shown to have breached the pleaded duty, on the balance of probabilities. Again, the plaintiff bears the onus on this issue.
4. Third, whether the breaches caused damage to the Warehouse, which the plaintiff bears the onus of establishing.
5. There are then the five matters raised by the defendant in its pleading. Fourth, whether the defendant has established the estoppel defence. Fifth, whether the defendant has established the concurrent wrongdoer plea. Sixth, whether the defendant has established the contributory negligence plea (which is confined to the tort claim, and has no application to the claims in contract). Seventh, whether the plaintiff has been shown to have failed to mitigate its loss. Eighth, whether the defendant has established the defence under the Limitation Act.
6. In substance, then, the defendant contends, through its various pleaded responses, that any liability imposed on the defendant should be reduced to nil having regard to the plaintiff's conduct and contribution to the damage.[549]

1. I will now consider the first issue identified above.
2. An essential element of the tort of negligence is that the defendant owes the plaintiff a duty to take reasonable care when engaging in an activity to avoid causing the plaintiff a particular type of damage or loss that is reasonably foreseeable.
3. The present case is not one involving a duty of care to avoid causing pure economic loss. The loss in question was property damage to the Warehouse through the conduct (or lack of conduct) on the part of the defendant.
4. The defendant submitted that the relationship of landlord and tenant is not an established relationship in which the law will impose a duty of care in negligence.[550] I accept this submission. Indeed, the plaintiff accepted there was limited authority on the question whether a tenant owes a duty of care to a landlord.[551] Nonetheless, I would not describe the existence of such a duty as novel in this setting.
5. The defendant forcefully submitted there is no reason for imposing a duty in the present case given the landlord and tenant were commercial parties leasing an industrial warehouse and, importantly, had allocated risks between themselves through agreed contractual terms and conditions that are inconsistent with (and narrower than) the duties of care alleged by the plaintiff.[552] The plaintiff contends to the contrary. There is of course no reason in principle why concurrent duties in contract and tort might not arise.
6. In the present setting, it is appropriate, in assessing whether a duty of care was owed by the defendant as lessee, to consider whether loss arising from its conduct was foreseeable, and then consider all the circumstances, having regard to the salient features of the case. This will include matters which indicate that the plaintiff had some vulnerability to suffering loss in the circumstances, the knowledge of that vulnerability on the part of the defendant, and whether the plaintiff held a degree of control which might be relevant to that vulnerability and permit the plaintiff to avoid the foreseeable loss: Perre v Apand Pty Ltd.[553]
7. The plaintiff's pleaded contention is that it was a 'specific and ascertainable party in relation to activities involving [ammonium sulphate] conducted by the [defendant] in its [business], which involved readily foreseeable damage to property and related economic harm, including the loss of insurance cover for the building'.[554] Other than the insurance, this contention accords with the evidence at trial and the court's findings, even though it may be accepted that the plaintiff was aware of the presence of the corrosive fertiliser, had knowledge of the defendant's operations, and became aware from mid-2006 of the corrosive effects of the fertiliser.
8. Further, the findings the court has made in relation to the expert evidence, which was supported by both experts, is that the ammonium sulphate was reasonably likely to have a corrosive effect on the structure of the Warehouse if mitigatory steps were not taken. Dr Zurhaar explained it in this way:[555]

...if anyone expected to store ammonium sulphate bulk fertiliser in a facility like that for a decade and not expect it to do that kind of damage that - without some preventative measures being installed, that would have been foolhardy or misguided.

1. I would accept that loss arising from conduct (or lack of conduct) on the part of the defendant, as the party having control of the Warehouse over a lengthy period, was reasonably foreseeable, particularly with the storage of ammonium sulphate in large quantities within the Warehouse, having a recognised corrosive effect if exposed to moisture. The defendant and its personnel were well aware of the nature of the product they were storing and handling, and the likely impact on the building if appropriate steps were not taken. The corrosive effects emerged as early as mid-2006. The description of this as a 'unique problem' by the defendant's personnel does not advance matters very far, and is frankly difficult to accept on the weight of the evidence. This Warehouse was not purpose designed for the storage of corrosive fertiliser and, without adequate preventative steps being taken, the resulting damage was highly likely to result.
2. In my view, the particular circumstances of the present case provide some support for the plaintiff's pleaded duty, most particularly the nature of the defendant's business in storing a corrosive fertiliser within the Warehouse, and the identifiable nature of the plaintiff as a party who would likely be impacted by inaction on the part of the defendant as a long term lessee. These are significant considerations which were emphasised by the plaintiff. But they do not produce the answer to the duty question, in my view.
3. The criterion of vulnerability is often a central consideration in pure economic loss cases.[556] While the vulnerability of the plaintiff to suffering loss may remain a relevant criterion in establishing whether a duty of care should be found in cases beyond those involving pure economic loss, I do not understand it to be a central consideration.
4. For my part, I would not characterise the plaintiff as vulnerable in the sense described in Woolcock. That is, being unable to protect itself from the defendant's want of reasonable care, either entirely or in a way that would cast the consequences of the loss on the defendant. The plaintiff had the ability to undertake additional repair work itself, and could have entered the premises for this purpose, or it could have acted to terminate the lease, or given notice for the defendant to vacate once the defendant was holding over. The plaintiff did not have control over the defendant's day to day business operations, but it had mechanisms to ameliorate the problem of which it had knowledge.
5. Importantly, it should be noted that the duty of care pleaded by the plaintiff is wide in its terms.
6. The pleaded duty extends to the handling, storing and process of ammonium sulphate by the defendant in such a manner so as to prevent 'any damage' being caused to the Units and the Warehouse generally. That duty is broader than the contractual obligations on the part of the defendant as are found in the lease instrument in this case, properly construed.
7. A disconformity between the obligations owed under contract and the asserted duty of care is a relevant aspect of the duty analysis, particularly where the plaintiff is not a stranger to the contract, as in the present case. More broadly, the existence and terms of a contractual arrangement between the parties will form part of the salient features to be assessed by the court in considering whether a duty should be found to exist.[557]
8. So, there are important limitations on the duty owed by the defendant, in this case, arising by reason of the existence of the commercial contractual terms to which the parties agreed. First, the law should not impose a duty on the defendant which is broader than the obligations which the parties have agreed - the contractual relationship provides a basis for ascertaining the extent of the duty of care owed at common law. Second, any relevant duty will have ceased by the time the defendant concluded its holding over and returned the premises to the plaintiff. Indeed, this accords with the plaintiff's pleaded formulation of the duty, as seen at [20A] of the SOC.
9. The defendant's submissions in the respects just mentioned should be accepted, in my view.[558]
10. In the present case, the lack of vulnerability on the part of the plaintiff, together with the express terms of the Varied Lease and the duties and obligations established thereunder, amount to decisive considerations against the existence of the broad duty pleaded by the plaintiff.
11. The duty pleaded by the plaintiff is focused on the handling, storing and processing of ammonium sulphate by the defendant, although it is said to also extend to the taking of action to mitigate and rectify any damage.[559] I do not consider the formulation of the duty could be so wide as to extend to the prevention of 'any damage because caused to the units'. As I have noted, that would exceed the contractual obligations owed by the defendant, which allowed for a fair, wear and tear exception. The duty would thereby extend to preventing damage in broader terms, and without the limitations, as are found in cl 3.9(a) of the Varied Lease.
12. I consider the plaintiff has failed to demonstrate the existence of a duty of care owed by the defendant to the plaintiff in the pleaded terms. This conclusion is fatal to the plaintiff's claim in negligence, but I will proceed to consider the additional issues, in the event I am wrong on this first issue.

1. Had it been necessary to reach a conclusion as to the plaintiff's allegation that the defendant breached the asserted duty, contrary to my conclusion above, I consider that allegation has been demonstrated on the balance of probabilities.
2. I observe that the plaintiff relies in this regard on largely the same conduct asserted as demonstrating the contractual breach of cl 3.9(a) of the Varied Lease. For largely the same reasons I have expressed in relation to that breach, I consider a provisional finding should be made that the defendant failed to implement precautions that a reasonable person would take against the risks of damage to the Warehouse, which risks were reasonably foreseeable.
3. In this regard, it is to remembered that the standard of care in negligence is to take precautions that a reasonable person would take against a reasonably foreseeable risk. The parties properly drew attention to the terms of s 5B(1) of the Civil Liability Act 2002 (WA) (CLA), which is found in pt 1A of the CLA headed 'Liability for harm caused by the fault of a person'.
4. Section 5B provides as follows:

(1) A person is not liable for harm caused by that person's fault in failing to take precautions against a risk of harm unless -

(a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known); and

(b) the risk was not insignificant; and

(c) in the circumstances, a reasonable person in the person's position would have taken those precautions.

(2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things) -

(a) the probability that the harm would occur if care were not taken;

(b) the likely seriousness of the harm;

(c) the burden of taking precautions to avoid the risk of harm;

(d) the social utility of the activity that creates the risk of harm.

1. The failure arises because of the lack of preventative steps taken by the defendant to mitigate the corrosive and other effects of the ammonium sulphate on the premises, and then the failure to take steps to properly rectify the damage once it became apparent. I refer to the conclusions set out in Part VII of these reasons which explain the breach by the defendant of cl 3.9(a) of the Varied Lease, bearing in mind the plaintiff relies on the same matters in support of both the contractual and tortious breaches.[560] It is not necessary to repeat those matters here, other than to make four short points in conclusion on this issue:

(a) I accept the plaintiff's submission that it was reasonably foreseeable the storage and screening of ammonium sulphate by the defendant would lead to a dispersal of ammonium sulphate through the premises, coming into contact with water, and leading to corrosion of the Warehouse. I accept that the representatives of the defendant were well aware of this risk, given the nature of the defendant's business and its awareness of the chemical properties of the fertiliser.[561]

(b) The risk in question was not insignificant, indeed it was a material risk with a high probability of eventuating.

(c) A reasonable person in the position of the lessee would have taken precautions against this risk, it being apparent there were recognised steps which could have been taken. Recommendations were received by the defendant about these steps, such as the report of Mr Hughes in August 2008 which was provided to the defendant,[562] and the recommendation from Modular Construction Services received by the defendant in July 2013.[563] The lessee was well placed to implement these precautions, and failed to do so (to the necessary extent) because of the insistence that its contractual position was correct.

(d) The defendant operated its valuable business from the Warehouse over a lengthy period. It formed part of its global fertiliser business. This was no 'two-dollar backyard operation'.[564] The reasonableness and burden of the precautions emphasised by the plaintiff should be seen in this context.

1. There is no real contest that, if the court finds the existence of the duty of care and a breach by the defendant of that duty, that the breach caused the loss and damage claimed by the plaintiff. In my view, the evidence supports a finding that the fault on the part of the defendant was a necessary condition of the occurrence of the harm in question, and further that it is appropriate for the scope of the defendant's liability to extend to such harm.
2. In this regard, the case satisfies both elements in s 5C(1) of the CLA. The plaintiff has discharged its onus to demonstrate causation to the necessary degree.

1. I have addressed, and rejected, this plea earlier in these reasons.

H. Proportionate liability and concurrent wrongdoer

1. The defendant submits that the 'Proportionate liability' regime in pt 1F of the CLA is engaged in the present case.[565]
2. Pursuant to s 5AK(1)(a) of the CLA, in any proceedings involving an 'apportionable claim', the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just, having regard to the extent of the defendant's responsibility for the damage or loss. Further, pursuant to s 5AK(1)(b), the court may give judgment against the defendant for not more than that amount.
3. The defendant pleads the plaintiff was a 'concurrent wrongdoer' and that the plaintiff's claim is an 'apportionable claim', within the meaning of those terms in s 5AI of the CLA. The defendant relies on the conduct and knowledge pleaded at [22A.1] to [22A.5] of the Defence in support of its contentions.
4. The plaintiff rejects the proportionate liability plea at both a threshold level and on the facts. It is only necessary for present purposes to address the former of these contentions, which I consider should be accepted. My reasoning is as follows.
5. The first point to observe is that s 5AK of the CLA only has application in relation to proceedings involving an 'apportionable claim' where there are two or more 'concurrent wrongdoers', as defined in s 5AI of the CLA. While it may be accepted the plaintiff's claim falls within the definition of 'apportionable claim' in s 5AI of the CLA, the plaintiff raises a threshold issue as to whether it is a 'concurrent wrongdoer'. The term 'concurrent wrongdoer' is defined as follows in s 5AI of the CLA:

concurrent wrongdoer, in relation to a claim, means a person who is one of 2 or more persons whose act or omission caused, independently of each other or jointly, the damage or loss that is the subject of the claim.

1. The plaintiff pleads, and submits, it must be shown that such a party committed some 'wrong' against the plaintiff which contributed to the plaintiff's loss, and that the plaintiff cannot be a wrongdoer against itself.[566] Counsel for the plaintiff submitted that the literal definition of 'concurrent wrongdoer' should not be slavishly applied.
2. In my view, the plaintiff's proposition is correct, as a matter of first principles and construction. It is central to the regime in pt 1F of the CLA that the persons who are 'concurrent wrongdoers' are persons who are not parties to the proceedings but who have, through some act or omission, committed a wrong which as caused the same damage or loss to the plaintiff which is the subject of the proceedings. Under the regime, pursuant to s 5AKA of the CLA, the defendant has a duty to inform the plaintiff of the existence of such concurrent wrongdoers. Such persons may then be joined to the proceedings, with leave, pursuant to s 5AN of the CLA. The plaintiff to the proceeding will not typically fall within the express terms of the definition because the plaintiff will not have committed a wrong which has caused the same damage or loss. Nor does the overall structure of the statutory regime contemplate, on my analysis, that a plaintiff will be one of the 'concurrent wrongdoers'.
3. Although not expressly cited at trial, the submission by counsel for the plaintiff that his position is 'accepted law' is wholly supported by a decision of the New South Wales Court of Appeal.[567]
4. In Rennie Golledge Pty Ltd v Ballard,[568] the court was required to consider an application to amend the defence after judgment had been entered, but prior to the assessment of damages, in order to introduce a contention that the claims were 'apportionable claims' under pt 4 of the Civil Liability Act 2002 (NSW). That regime is relevantly in the same terms as pt 1F of the CLA.
5. The judge at first instance dismissed the amendment application, on several grounds. On appeal, that decision was affirmed by all members of the court. Basten and Campbell JJA both expressed opinions that a plaintiff whose own acts or omissions have been a cause of their own loss or damage cannot be characterised as a 'concurrent wrongdoer'.[569]
6. Campbell JA held as follows:

[128] There is a more fundamental problem concerning the contention that the contracting Respondents are "concurrent wrongdoers". On the proper construction of Part 4 Civil Liability Act as a whole, a plaintiff whose own acts or omissions have been a cause of his own loss or damage is not a "concurrent wrongdoer". This construction highlights the distinction between contributory negligence and proportionate liability.

[129] I accept that, on a literal reading of s 34(2) Civil Liability Act a plaintiff whose acts or omissions have been a cause of the damage or loss that is the subject of the claim fits within the definition of "concurrent wrongdoer". However, on its proper construction s 34(2) should not be read in that literal fashion. If there is a statutory definition of a term that has an ordinary English meaning, the ordinary English meaning can influence the operation of that definition...

[130] Reading s 34(2) with that principle in mind, it is not ordinary English for a person to be a "wrongdoer", of any kind, insofar as he causes harm to himself. In ordinary English, when there is a wrongdoer there is some other, different, person who has been wronged. That shade of meaning continues to apply in the definition of "concurrent wrongdoer". (authorities and citations omitted)

1. The plaintiff's submission should accordingly be accepted. The defendant's reliance on s 5AK of the CLA is misplaced in my view and accordingly fails.
2. Of course, it should be noted that the regime in pt 1F of the CLA sits apart from the contributory negligence regime, which may be invoked against a plaintiff, in appropriate circumstances. A defendant may also point to a failure to mitigate on the part of a plaintiff. A conclusion that a plaintiff is not a 'concurrent wrongdoer' does not therefore deprive a defendant of the ability to rely on acts of the plaintiff in defence or diminution of the claim against it.

1. Turning next to the contributory negligence response, the defendant asserts that any loss or damage was caused or contributed to by the negligence of the plaintiff.[570]
2. Accordingly, the defendant contends that any damages that the plaintiff may recover in relation to its loss or damage are to be reduced by the extent to which the court thinks just and equitable, having regard to the plaintiff's share in responsibility for the loss or damage pursuant to s 4(1) of the Law Reform (Contributory Negligence and Tortfeasor Contribution) Act 1947 (WA) (Law Reform Act). Section 4 relevantly provides:
   1. Contributory negligence, court may reduce plaintiff's damages

(1) Whenever in any claim for damages founded on an allegation of negligence the court is satisfied that the defendant was guilty of an act of negligence conducing to the happening of the event which caused the damage then notwithstanding that the plaintiff had the last opportunity of avoiding or could by the exercise of reasonable care, have avoided the consequences of the defendant's act or might otherwise be held guilty of contributory negligence, the defendant shall not for that reason be entitled to judgment, but the court shall reduce the damages which would be recoverable by the plaintiff if the happening of the event which caused the damage had been solely due to the negligence of the defendant to such extent as the court thinks just in accordance with the degree of negligence attributable to the plaintiff.

(1A) Subsection (1) shall not operate to defeat any defence arising under a contract.

1. The principles which will apply to a finding of liability in relation to contributory negligence are the same as those which apply to a finding of liability on account of negligence. This is dictated by s 5K of the CLA, which provides:

(1) The principles that are applicable in determining whether a person is liable for harm caused by the fault of the person also apply in determining whether the person who suffered harm has been contributorily negligent in failing to take precautions against the risk of that harm.

(2) For that purpose -

(a) the standard of care required of the person who suffered harm is that of a reasonable person in the position of that person; and

(b) the matter is to be determined on the basis of what that person knew or ought to have known at the time.

1. The assessment of apportionment of liability between a negligent party and a party who has been found contributorily negligent involves the exercise of an individual choice or discretion: Podrebersek v Australian Iron & Steel Pty Ltd.[571] The assessment requires a consideration of the relative importance of the conduct of each party in causing the damage. The whole conduct of each negligent party in relation to the circumstances of the matter must be subjected to comparative examination: Wynbergen v Hoyts Corporation Pty Ltd.[572] Put another way, it involves a consideration of the degree to which the party departed from the standard of conduct expected of someone in its position: Nicol v Allyacht Spars Pty Ltd.[573]
2. In my view, had the plaintiff established the existence of a duty of care, and had it been necessary to assess damages for the breach of that duty in this case (contrary to my conclusions), I would have concluded that the defendant had established the contention in the Defence at [22A.6.3] and reduced the damages by 25%. A reduction of the damages to that extent, consistent with what I have said earlier in these reasons, represents a fair assessment of the plaintiff's share of responsibility for the loss and damage suffered by the Warehouse, having regard to the plaintiff's failure to take reasonable precautions against the risk of the loss and damage arising.

1. Finally, the defendant contends the plaintiff failed to mitigate its loss and damage.[574] I refer to and repeat the conclusions I reached in Part VIII above as to the plaintiff's failure to mitigate in the contractual context. Those conclusions have equal application in this respect.

K. Limitation Act defence

1. The limitation period for claims in negligence is six years, by virtue of s 13(1) of the Limitation Act. The writ of summons in this action was filed on 20 January 2017. The defendant has pleaded a defence under the Limitation Act in respect of the tortious claim advanced by the plaintiff (see [21] of the Defence), in respect of damage suffered prior to 20 January 2011.
2. The defendant carries the onus of establishing this defence.
3. The defendant submits[575] that a cause of action in tort accrues when measurable damage is first suffered even though further damage continues to accrue, relying on Wardley Australia Ltd v Western Australia,[576] among other authorities. The defendant accepts that the measurable damage must be beyond that which is negligible.[577] Once a tortious cause of action has accrued, the defendant submits that the cause of action will cover all loss and damage attributable to the same breach, thereby barring the whole claim.[578]
4. The defendant thus submits that the plaintiff's claim in tort arose prior to 20 January 2011 and was statute barred by the time the writ of summons was filed on 20 January 2017.[579]
5. The plaintiff asserts the breaches of duty on the party of the defendant were continuing in nature, consistent with the submission it advanced in relation to the contractual breaches. In the alternative, the plaintiff submits that the 'serious and specific' damage in respect of which it sues took effect or emerged in 2014 and 2015, which then set the limitation period running.[580]
6. In my view, the defendant's reliance on the limitation period in relation to the negligence claim fails for similar reasons to the contract claim. In particular, the second and third general propositions (described at [744] and [745]) apply with equal force in the tortious context. My reasoning is as follows, which involves consideration of the additional authorities relied upon by the parties.
7. First, in order to demonstrate the existence of a cause of action in negligence, it is necessary for a plaintiff to show that a duty of care was owed to it by the defendant, that the defendant breached that duty of care, and that the breach of duty caused damage to the plaintiff. Ordinarily, therefore, the cause of action in negligence arises for limitation purposes when the plaintiff sustains damage: Hawkins v Clayton[581] and Commonwealth v Cornwell.[582]
8. Second, the question is the extent of damage which is required to establish a cause of action in negligence. The cause of action arises in negligence when the plaintiff sustains measurable loss or damage, or the loss or damage is beyond negligible. This proposition emerges from the plurality judgment in Wardley,[583] which has been followed many times since. Whether damage has been suffered will be a matter of fact in each case.[584]
9. Third, the factual circumstances in which limitation period issues have been considered by courts in negligence claims must be borne in mind. Many of the authorities cited by the defendant in support of its defence under the Limitation Act are cases involving economic loss, arising from misleading statements or negligent advice, or concern prospective or contingent loss scenarios. In those cases, speaking very generally, the limitation period will run from the time at which the measurable loss occurs, even though further damage continues to accrue and even though the plaintiff is not aware of the damage, as was explained, for example, by Handley JA in Scarcella v Lettice.[585]
10. In the present action, the court is concerned with physical or property damage. Where property damage has occurred, there are particular principles which need to be considered in circumstances where latent defects are involved. Those particular principles need not be examined here as the damage in question, being the corrosion suffered within the Warehouse, was obvious and apparent from around mid-2006, at the earliest.
11. Fourth, in the present matter, from around mid-2006, there was a physical change in the structure to the Warehouse, resulting from the ammonium sulphate dust and its corrosive effects. This damage rendered the structure less useful or valuable, and is sufficient to found a conclusion that damage had occurred. Support for this analysis can be found in the decision of the English Court of Appeal in Hunter v Canary Wharf Ltd.[586]
12. Fifth, there is a broader proposition which should be identified at this point, similar to the second general proposition referred to at [744] above, namely that the same breach of duty can give rise to different causes of action, for example where there is an independent causation of separate losses. This is the point made by Leeming JA in Loulach De[587]opments.587 His Honour there made reference to the facts in Darley Main Colliery Co[588]Mitchell588 in which two subsidences were caused by the negligence of the defendant. The House of Lords concluded in that case that each additional subsidence arising from the same act or omission of the defendants represented a new cause of action for which damages might be[589]covered.589
13. Leeming JA also cited with apparent approval the observations of Cooke J (as his Lordship then was) in the New Zealand Court of Appeal in Bowen v Paramount Builders (Hamilton) Ltd.[590] Cooke J had stated as follows, after quoting a passage from Salmond on Torts:[591]

Presumably, however, it is a question of fact and degree whether damage is sufficiently distinct to result in a separate cause of action. On the evidence in the present case it seems to me that the damage suffered by the building was not truly continuous; and that between the slight damage during the McKays' ownership and the considerable damage after the Bowens bought there were a difference and an interval marked enough to justify treating the latter damage as distinct.

1. The passage in Salmond on Torts, as it appears in the later edition identified by Leeming JA, is as follows:

Both on principle and on authority (Maberley v Peabody & Co [1946] 2 All ER 192) it seems that when an act is actionable only on proof of actionable damage, successive actions will lie for each successive and distinct accrual of damage. But where the damage sued for in the second action is not in reality distinct from that sued for in the first, but it merely a part of it or consequential upon it, it cannot be recovered. In other words, compensation for the first damage includes compensation for all the ulterior consequences of that damage whether already accrued or not, but it does not include compensation for entirely distinct damage accruing from the defendant's act independent of the damage first sued for.

1. Sixth, drawing the foregoing principles together, I proceed on the basis that the nature of the property damage suffered or caused over time must be carefully examined before the propositions of law identified by Mason P in Winnote, upon which the defendant places much reliance in its submissions, are applied. Those propositions include the following statement:[592]

Merely because a substantial loss occurs (ex hypothesi) at a later point of time does not establish that there was no damage stemming from the same breach occurring at an earlier date being damage that occurred outside of the limitation period, thereby barring the whole claim (Wardley at 531, Segal at [26]).

1. Winnote was a case concerned with negligent legal advice. His Honour recognised that it was not necessary for the court in that case to examine the correctness of decisions which suggested that successive actions would lie 'for each successive and distinct accrual of damage where negligent work causes a building to subside and crack'.[593] That principle did not arise in the context of the 'transaction cases' with which the Court of Appeal in Winnote was concerned.
2. In the case of property damage, the plaintiff's submission is therefore correct, in my view, that there can be successive actions in negligence brought for each successive and distinct accrual of damage. In my view, the findings of fact as to the damage suffered by the Warehouse in the present case demonstrate that damage occurred over time which was distinct, although it must be recognised that questions of degree are involved in this regard, and this comfortably allows for the conclusion that the causes of action are distinct.
3. It follows that the defendant has not demonstrated that the plaintiff's claim in negligence wholly arose prior to 20 January 2011 such that it is statute barred. In my view, the plaintiff is entitled to maintain the claim for all damage suffered after 20 January 2011 as part of its tortious claim (had that claim been upheld).
4. The defendant has not demonstrated, on the balance of probabilities, the defences it has pleaded under the Limitation Act. Those defences must therefore fail.

PART XI - THE DEFENDANT'S COUNTERCLAIM A. Overview

1. The defendant pleads a counterclaim in contract arising from the weather damage caused to the premises, which required the plaintiff to incur the costs of repairs, and arising from the damage to the ammonium sulphate during its occupancy.[594] The defendant's solicitors made a demand to the plaintiff for payment of these costs, or some of them, in early 2017.[595]
2. The defendant bears the onus of proof in establishing its counterclaim.
3. The claim was denied by the plaintiff.[596]
4. The plaintiff asserts that the counterclaim should be dismissed as a corollary to the contended finding that the defendant is legally responsible and liable for the damage caused to the Units. Alternatively, the defendant submits that several items claimed by the defendant are untenable in any event.[597]
5. In my view, the conclusion I have reached as to the proper construction of the Original Lease, and the Varied Lease, is fatal to much of the defendant's counterclaim. The contractual obligations on which the defendant rests this claim were not breached by the plaintiff, on the basis of the conclusions I have reached. It is nonetheless necessary to record the court's provisional factual findings on the counterclaim, in the event I am wrong as to the proper construction of the lease.

1. There are several heads of claim advanced by the defendant, namely the cost of repairs to the premises, the loss of value of the defendant's product, the costs of reconditioning the defendant's product, and the costs of relocating the product.
2. Each of these heads of claim are pleaded to be compensable as loss and damage flowing from the plaintiff's breach of express covenants of the Original Lease, the Varied Lease, and the Offer to Lease.[598]
3. Paragraph 34 of the Defence pleads as follows:

Despite the matters pleaded in paragraphs 24 to 33, the plaintiff, in breach of clause 3.9(a) of the First Lease, failed to maintain and repair the Premises to prevent water ingress, failed to ensure the external appearance of the Premises is maintained to a high standard in breach of special term 8.3 to Schedule 1 of the First Lease and clause 11.4 of the Offer to Lease, and failed to ensure that the standard of the Premises and land is lifted to an acceptable standard pursuant to clause 1.1(t) of the First Lease.

1. As to the costs of repairs to the premises, the defendant contends that, despite the plaintiff bearing the contractual obligation to prevent water ingress, during the period 2010 to 2016, the defendant incurred costs and expenses for maintaining and repairing the premises to prevent, or at least limit, water ingress. The defendant demanded payment of these costs after it terminated the lease and vacated the premises. It is asserted that the repair and maintenance costs total $214,542.70.55, although the defendant accepts that BHP reimbursed it for around one third of these costs under their contractual arrangement.[599] The claim ultimately advanced at trial was for $155,498.23.[600]
2. As to the loss of value of the defendant's product, the defendant contends that after the ammonium sulphate was affected by water, it could only sell the damaged product at a reduced price. The claim in this regard is for $153,018.25.[601]
3. As to the costs of reconditioning its product, the defendant asserts that it was required to take steps to recondition some of its ammonium sulphate so that the product could be sold. This involved moving the product away from Unit 2 within the Warehouse, to enable it to be dried out. The defendant estimates this claim in the amount of $6,666.[602]
4. Finally, as to the claim for relocating its product, the defendant alleges it incurred costs in relocating the ammonium sulphate to other premises because it could not be stored at the Warehouse without being exposed to water ingress. The sum of $18,713.75 is claimed in this regard, for the hire of semi-tippers and excavators to move the product from the Warehouse to other storage premises in Kwinana Beach.[603]
5. In summary, the defendant claims the following amounts:

1. I will examine each of the heads of claim in sequence.

1. As to the cost of the repairs to the Warehouse, which were borne by the defendant during its occupancy, I have earlier found that the defendant's representatives took steps to engage external workers to undertake repairs on various occasions. The work undertaken was largely of a reactive nature, including patches to the roofs and walls, replacing certain walls, and structural repairs.
2. The defendant maintained a schedule of the repairs, an example of which can be seen at Exhibit 525.[604] That schedule was prepared as at 27 January 2015. I accept the schedule is an accurate record of the costs which were incurred by the defendant, which was updated regularly by the defendant. Three observations should be made about the schedule.
3. First, the amount recorded in the schedule requires adjustment in light of the defendant's concession that it was reimbursed for certain amounts by BHP. In this regard, the contention put by the plaintiff that the defendant had been reimbursed by BHP in an amount of over $200,000 is not correct, and should not be accepted. I find that the amount reimbursed was only $59,044.47.[605]
4. Second, the difficulty with the defendant's schedule, however, is that it captures all repair and associated work undertaken by the defendant in relation to the Warehouse. This includes repair to the automatic gates, installation of fire boxes, six-monthly fire protection services, fencing work and the weighbridge calibration, as well as repair work to the gutters, roof and walls. Indeed, when the schedule at Exhibit 557 is compared to the schedule at Exhibit 525, it can be seen that there is a significant difference in the nature of the repair work which was undertaken.
5. To the extent to which it is possible to discern from the schedules maintained by the defendant and the documentary evidence, the amounts within the schedule which are referable to repair work associated with corrosion and other damage caused by the storage of the ammonium sulphate in the Warehouse, are those which were paid to Alltype Roof Repairs, Bellfire,[606] Freo/Modular, and Safeway Contracting.
6. These items total $164,093.27 and are detailed in the table below.

Alltype Roof Repairs (incurred between January 2011 and December 2014)

1. Third, when the first and second observations are examined, the court is left in some difficulty attempting to discern from the evidence how to treat the reimbursement by BHP. In particular, it is not clear whether the reimbursement amount of $59,044.47 is referable only to the amount referred to in the preceding paragraph, being the amount of $164,093.27. There is evidence that the reimbursement by BHP was, in general terms, around one-third of the amount incurred by the defendant. I refer to the evidence of Mr Tip O'Neill in this regard.
2. However, that does not appear to me to be a satisfactory basis to make an assessment.
3. In my view, the better approach, in the absence of any delineation by the defendant, is to apply the full amount of the reimbursement against the repair costs I have assessed as being relevant. That is an assumption or approach which favours the plaintiff, rather than the defendant, and is preferable in the absence of the delineation to which I have just referred. Accordingly, the best assessment which can be made on the evidence is that the relevant repair work cost which was incurred by the defendant, and which was not the subject of reimbursement by BHP, is the amount of $105,048.80.[607]
4. The court therefore finds that the costs of the relevant repair work incurred by the defendant which was not reimbursed by BHP is the amount of $105,048.80.

1. Having regard to the above factual findings, the defendant's claim under this head must fail for the following reasons.
2. First, to the extent to which the defendant's counterclaim for the repair costs was mounted on the basis of a breach of cl 1.1(t) of the Varied Lease, which is the provision directed at 'lifting the standard of the premises', I do not accept the claim has been demonstrated. That provision is confined in its operation to the state of the premises at the commencement of the tenancy. The repair costs claimed relate to a period some years into the tenancy. In any event, the evidence does not support a finding that the repairs were necessary to 'lift the standard' of the premises to 'an acceptable standard'.
3. Second, to the extent to which the defendant's counterclaim for the repair costs was mounted on the basis of breaches by the plaintiff of special term 8.3 of sch 1 to the Varied Lease, it must fail. Special term 8.3 provides as follows:

The Lessor will ensure the external appearance of the Premises is maintained in a high standard (fair wear and tear always excepted).

1. This aspect of the claim, and the scope of special term 8.3, was not given much attention at trial. In my view, the claim fails because the evidence does not enable a conclusion to be reached that the repair works were required to meet the 'high standard' referred to in this term. Further, special term 8.3 is directed at the 'external appearances' of the premises, and the repair work claimed by the defendant was not undertaken by reason only of the 'appearance' of the Warehouse. I therefore do not accept the defendant has demonstrated a breach of special term 8.3.
2. Third, to the extent to which the defendant's counterclaim for the repair costs was mounted on the basis of breaches of the Offer to Lease, the claim has not been made out. The Offer to Lease was overtaken by the Original Lease instrument, and then the Varied Lease. In my view, the Offer to Lease did not continue to have contractual significance after the point at which the Original Lease was executed.
3. Fourth, to the extent to which the defendant's counterclaim for the repair costs was mounted on the basis of a breach of the second paragraph of cl 3.9(a) of the Original Lease, and then the Varied Lease, the claim must fail having regard to the conclusions I have reached in respect of the plaintiff's claim and as to the proper construction of the lease. The repair work in question was required to be undertaken by reason of the defendant's own neglect, default or misconduct, from which it follows that the defendant was obliged to undertake that repair work by reason of the first paragraph of cl 3.9(a) of the Original Lease, and then the Varied Lease.
4. Fifth, in any event, if I am wrong in the conclusions I have reached, and if, contrary to my findings, the plaintiff is contractually liable to pay the repair costs incurred by the defendant, the quantum of the relevant repair work cost incurred by the defendant which was not reimbursed by BHP is $105,048.80 - not the amount claimed by the defendant.

1. The evidence led, and factual contentions advanced, by the defendant as to the value of the damaged product should be accepted, in my view.
2. In particular, Mr Donkin gave evidence that the defendant suffered damage to the ammonium sulphate in late 2016 by reason of water ingress.[608] His evidence was to the effect that the defendant could only sell the product at a reduced rate as a result of the damage. I have accepted his evidence in this regard. Further, Mr Goodwin gave evidence to a similar effect to the evidence given by Mr Donkin regarding the damage to the ammonium sulphate stored within the Warehouse. I have also accepted his evidence.[609]
3. The evidence reveals that the defendant sold 1,488.10 metric tonnes of ammonium sulphate in November and December 2016 at a unit price of between $40 and $90, with an average unit price of $71.52. Ordinarily, the defendant would have sold the product at a unit price of $165. I accept this evidence, which is supported by the invoices collated within Exhibits 782 and 783.
4. The difference in sale value, as calculated by the defendant, and which I accept, is $153,018.25. The amount is reflected in the schedule prepared by the defendant at Exhibit 781, and is supported by the invoices to which I have just referred.
5. The court is therefore able to find, and I do find, that the value of the ammonium sulphate stored within the Warehouse which was damaged by water ingress was $153,018.25, calculated by reference to the loss in sale value.
6. I accept that the water ingress into the Warehouse caused damage to the product, as asserted by the defendant, which led to a loss in value upon the sale of the product.

1. However, given the conclusions I have reached in respect of the plaintiff's claim, and the proper construction of the lease instrument, this loss in value cannot be said to have been suffered by reason of breaches of the Original Lease (or the Varied Lease) on the part of the plaintiff. Rather, the loss was suffered as a natural consequence of the defendant's breach of the repair obligation in the first paragraph of cl 3.9(a).

1. The amount claimed by the defendant under this head is modest, being $6,666. The claim is based on the costs incurred by the defendant in hiring a loader, and associated labour, to undertake work to recondition some of the ammonium sulphate stored in the Warehouse.
2. Mr Donkin explained the steps taken by the defendant in his evidence.[610] In substance, he testified that the ammonium sulphate which was damaged was scooped up by the loader and moved into Unit 2, where it was reconditioned by the defendant following the water damage.
3. There was a dearth of evidence to sustain the quantification of this aspect of the defendant's counterclaim. While I accept that the work was undertaken and some cost was incurred, it is not possible on the evidence to make any positive finding as to the quantum involved. Quite properly, counsel for the defendant conceded in closing oral submissions that the claim could not be sustained on the evidence.[611]
4. I find that the defendant undertook some work to recondition the ammonium sulphate, but no value can be ascribed to that work on the evidence.

1. In any event, given the conclusions I have reached in respect of the plaintiff's claim, and the proper construction of the lease instrument, any such costs cannot be said to have been incurred by reason of breaches of the Original Lease (or the Varied Lease) on the part of the plaintiff. Rather, the costs were incurred as a natural consequence of the defendant's breach of the repair obligation in the first paragraph of cl 3.9(a).

1. The amount claimed by the defendant under this head is $18,713.75, and is based on the costs of having to relocate the ammonium sulphate to other premises in around October and November 2016. The relocation was required, according to the defendant, because the product could not be stored in the Warehouse without being exposed to water ingress.[612] The cost was incurred in hiring 'semi tippers and excavators' to move the product to the premises of Summit Fertiliser.[613]
2. Other than as to the urgency of the work involved, I accept the evidence of Mr Tip O'Neill in which he explained the work involved in relocating the product,[614] and I also accept the costs claimed were incurred by the defendant in this regard. The costs are supported by the invoices from TMM Logistics found in Exhibits 657, 658, 659, 661, 662, 665, and by the invoices from Mayday Earthmoving found in Exhibits 653, 655 and 674.
3. By way of example, the invoice from TMM Logistics at Exhibit 658 was for the 'Supply of two Semi Tippers to transfer product from Butcher to Office Road (Summit)', for an amount of $6,957.50. Further, the invoice at Exhibit 655 from Mayday Earthmoving was for eight excavators in the amount of $2,216.50. It is evident that equipment would need to be hired by the defendant in order to move the large volume of the defendant's product.
4. Importantly, though, it should be noted that the relocation of the product occurred in the twilight of the defendant's tenancy, while it was in the process of terminating the Varied Lease and relocating the whole of its operations. It will be recalled that the defendant's solicitors gave notice of the termination on 18 November 2016. I will return to this issue below.
5. I accept the defendant incurred costs in undertaking work to relocate the ammonium sulphate, in the amounts claimed by the defendant.

1. Once again, however, given the conclusions I have reached in respect of the plaintiff's claim, and the proper construction of the lease instrument, these costs cannot be said to have been incurred by reason of breaches of the Original Lease (or the Varied Lease) on the part of the plaintiff. Rather, the costs were incurred as a natural consequence of the defendant's breach of the repair obligation in the first paragraph of cl 3.9(a).
2. Further, this aspect of the counterclaim suffers for another reason.
3. As earlier noted, in October and November 2016 the defendant was in the process of terminating the lease and relocating its business, having been holding over for some years. The costs incurred by the defendant in moving its product would have been incurred in any event in these circumstances. To the extent to which it was contended that the relocation was done 'rapidly' or 'urgently', and that the urgency caused the costs (or additional costs) to be incurred, I do not accept this contention. The plaintiff correctly submits that the premises had been in a dilapidated state for many months before this.[615]
4. The circumstance was thus not one of urgency by October 2016. The move in premises was something of an inevitability, which had been on the cards from a much earlier point in time.

PART XII - CONCLUSIONS AND RELIEF

1. For the foregoing reasons, I have reached the following conclusions in relation to the plaintiff's claims and the defendant's counterclaim.
2. First, the court has concluded in Part VII of these reasons that the plaintiff has demonstrated, on the balance of probabilities, its contractual claims against the defendant for:

(a) breaches of cl 3.9(a) of the Varied Lease in respect of the damage to the Warehouse;

(b) breach of cl 3.23 of the Varied Lease in respect of the failure to yield up the premises in good and substantial repair and condition; and

(c) breach of cl 3.23 of the Varied Lease in respect of the failure to repair the access holes made in the internal walls to the Units.

1. Second, the court has also concluded in Part VII of these reasons that the plaintiff has not established, on the balance of probabilities, the breaches of cl 3.17 and cl 5.3(e) of the Varied Lease, arising from the non-renewal of the insurance cover for the Warehouse, or the breaches of cl 3.10(a), cl 3.10(b), cl 3.15(a) and cl 5.23 of the Varied Lease, concerning the alleged contravention of s 56 of the EP Act. These claims must be dismissed.
2. Third, as to the plaintiff's contractual claims for breaches of the Varied Lease which have been proven, the court has reached the following conclusions as to the damages and other amounts payable by the defendant, as explained in Part VIII of these reasons:

(a) as to the plaintiff's claim for damages quantified by reference to the rectification costs for Units 1, 2 and 3, this has been established on the balance of probabilities, after taking into account the plaintiff's failure to mitigate, in the sum of $2,662,894.39 (exclusive of GST);

(b) as to the plaintiff's claim for loss of rent under the Varied Lease during the rectification works, this has been established on the balance of probabilities, and the court quantifies the amount of the lost rent as $173,902.32 (exclusive of GST); and

(c) as to the plaintiff's claim for loss of the payment of outgoings during the rectification works, this has been established on the balance of probabilities, and the court quantifies the amount of the unpaid outgoings as $48,628.67 (exclusive of GST); and

(d) as to the plaintiff's claim for the cost of the urgent interim repair works undertaken by the plaintiff in 2018 and 2019, this has not been established on the balance of probabilities and is not allowed.

1. Fourth, the plaintiff's contractual claim for outstanding rent owed by the defendant, in respect of the breach of cl 3.1 of the Varied Lease has been established on the balance of probabilities, as explained in Part IX of these reasons, and the court quantifies the amount of the rent payable by the defendant as $494,416.21 (exclusive of GST), upon which interest will be payable as claimed by the plaintiff.
2. Fifth, the plaintiff's claim in tort has not been established and must be dismissed, for the reasons given in Part X.
3. Sixth, the defendant's counterclaim in contract for damages for breaches of the Varied Lease has not been established and must be dismissed. I have set out my reasons in this regard in Part XI above.
4. I will need to hear from counsel as to the precise orders which should now be made to reflect the foregoing, as well as in relation to interest and costs. The plaintiff's claim for interest is allowed (see [896] to [897] above) and will need to be recalculated by the plaintiff in accordance with these reasons.

1.1 Definitions

In this Lease, unless the contrary intention appears:

...

(i) 'Outgoings' means all costs and charges assessed, assessable, charged, chargeable, paid, payable or otherwise incurred in respect of the Land or the Premises and without affecting the generality of the foregoing includes the cost of:

(i) Cleaning the Premises, the Land, all windows, glass, doors and similar items, including the cost of wages, all overheads paid to the cleaning, maintenance and supervisory staff, all materials used in cleaning, toilet requisites, towels, all equipment lease or hire charges, insurance premiums in relation to cleaning equipment, all repairs and maintenance related to cleaning equipment, compaction and removal of rubbish including any charge imposed by the local authority, the supply of storage equipment and removal of rubbish, hiring, leasing, repairing, maintaining, running and insuring, rubbish compactors or other removal equipment and pest control;

(ii) Gas, oil, electricity (metered and used only), light, power, fuel, telephone (excluding install costs), sewerage, stormwater drainage and other services or requirements supplied to the plant or equipment rooms, workshops including also the running, operating expense and maintenance of the Airconditioning Plant;

(iii) Ongoing maintenance of the Premises and including all gardening and landscaping expenses;

(iv) Insurance premiums and the excess on insurance paid by the Lessor on behalf of itself or the Lessee in respect of any risk relating to the Lessor's ownership or interest in the Premises and any equipment, plant or appliance therein and against damage by fire, explosion, earthquake, aircraft, riot, civil commotion, flood, lightning, storm, tempest, act of God, war damage, fusion, smoke, rainwater, impact by vehicles, machinery breakdown, demolition and removal of debris, architects' and other consultants' fees, public risk or liability, sprinkler leakage, water damage, workers' compensation, statutory liability in respect of employees of the Lessor working in or about the Premises;

(v) Running and maintaining all services from time to time and as agreed with Lessee provided by the Lessor for tenants, occupiers or visitors of the Land including but without limiting the generality of the foregoing the Airconditioning Plant, lavatories and sanitary conveniences and accessories, building maintenance units, building management services and communication services including the cost of all service and maintenance contracts associated therewith, fees and premiums paid to consultants or specialist contractors, the cost of purchase and installation of any materials or parts in association with the maintenance, servicing or repair of any service plant or equipment (but specifically excluding the capital cost of the replacement or upgrading of the whole or any part of such services);

(vi) Maintaining, testing and replacing all fire equipment including all stop-cocks, hydrants, alarms, drench curtains, fire sprinkler systems, hoses, extinguishers and other fire prevention equipment in the Premises and all charges rendered by the Fire and Emergency Services Authority of Western Australia and any telecommunications carrier in the supply, maintenance, servicing and monitoring of the fire alarm system, but specifically excluding the capital cost of the replacement or upgrading of the whole or any part of the systems;

(vii) Security, caretaking and management, including (but not limited to) wages and overheads paid and uniforms provided to security and caretaking staff, costs and charges rendered by contract security companies and the cost of leasing, maintaining, repairing and running security equipment including telecommunication charges and any fees paid to any managing agents in managing the Premises and any reasonable fees or costs paid to any accountant or auditor in relation to calculation or codification of the Outgoings;

(viii) Providing, maintaining, repairing and replacing all signs including the cost of lighting thereof; and

(ix) Any other expenditure reasonably and properly incurred by the Lessor in respect of the operation of the Premises and the Land.

(x) Nothing in this lease shall mean that the lessee is liable to contribute to the cost of the repair of any inherent defect of any structural repairs or any repair or replacement which is of a capital nature.

(r) 'Term' means the term specified in Schedule 1 and any Further Term;

(t) Any and all costs related to lifting the standard of the premises and land to an acceptable standard including site clean up and compliance to existing permits are entirely for the lessors account.

The Lessee must pay the Rent (free from all deductions) at the times prescribed in Schedule 1 (subject to review pursuant to this Lease) to the Lessor.

(a) Notice of Proposed Rent on each 1 March (starting on 1 March 2007)

(i) The Lessor shall not later than one (1) month prior to each of the Rent Review Dates set out in Schedule 1 give to the Lessee a notice in writing of the rate at which the Lessor proposes the Rent shall be payable from the Rent Review Date ("Proposed Rent") identifying all calculations which will be the lesser of the:

(A) Then Current Market Rent of the Premises; or

(B) Rent payable by the Lessee to the Lessor immediately preceding the relevant Rent Review Date increased by the Perth CPI according to the formula:

OR is the Rent payable immediately prior to the Rent Review Date;

A is the Perth CPI for the latest quarter concluding prior to the Rent Review Dale;

B is the Perth CPI for the latest quarter concluding one (1) year prior to the Rent Review Date;

and the amount so fixed will be the Rent payable from the Rent Review Date in respect of which notice has been given.

(ii) The Lessee shall, within thirty (30) days of receiving the notice ("Response Period") give to the Lessor notice that the Lessee agrees or does not agree to pay the Proposed Rent.

(iii) If the Lessee neglects to give the Lessor the notice within the Response Period the Lessee shall be deemed to have agreed to pay the Proposed Rent.

(iv) If the Lessee agrees to pay or is deemed to have agreed to pay the Proposed Rent then the Proposed Rent shall become the Rent and shall apply from that Rent Review Date.

(b) Reference to Valuer

(i) If the Lessor fixes the Rent payable from any Rent Review Date as the then Current Market Rent of the Premises and if within the Response Period, the Lessee gives to the Lessor notice that it does not agree to pay the Proposed Rent, then the Rent to be paid from that Rent Review Date shall be the then Current Market Rent of the Premises determined by a Valuer nominated by both parties, by whose decision each of the Lessee and the Lessor hereby agree to be bound.

(ii) If the Lessor and the Lessee do not agree upon the nomination of the Valuer within the period of twenty eight (28) days commencing upon the expiration of the Response Period then the Current Market Rent of the Premises shall be determined by a Valuer nominated, at the request of either party, by the President of the Australian Property Institute (Inc.) (Western Australian Division) ("President").

(iii) Any Valuer appointed under this sub clause shall be acting as an expert and his determination shall be final and binding.

(iv) Until the Rent from that Rent Review Date is determined, the Lessee shall pay Rent to the Lessor at the rate applicable immediately prior to that Rent Review Date and any adjustment which may be necessary in respect of the Rent shall be made within 14 days after a determination is made.

(v) The costs of determining the Rent shall be borne equally by the Lessee and the Lessor.

(c) Lessor's Failure to Give Notice

The Lessor shall not by reason of its failure to give notice of the Proposed Rent in accordance with sub-clause (a) within 6 months after the due date of the Rent Review forfeit its right to have the Rent from that Rent Review Date reviewed. The Reviewed Rent will only be payable from the date that the Lessee received that notice of the Proposed Rent. If, however, the Lessor fails to give notice of the Proposed Rent in accordance with sub-clause (a), the Lessor forfeits its right to that Rent Review.

(d) Valuer's Default

If any Valuer:

(i) Fails to accept the nomination to act; or

(ii) Fails to determine the Current Market Rent of the Premises within 28 days of accepting the nomination to act; or

(iii) Becomes incapacitated or dies; or

(iv) Resigns as the nominee, then either party may request the President to appoint another such Valuer the cost of which appointment shall be borne equally by the Lessor and the Lessee.

...

3.9 Maintain and Repair Premises

The Lessee must maintain and keep the Premises in good and substantial repair, order and condition except in the event of damage by explosion, earthquake, aircraft, riot, civil commotion, fire, flood, lightning, storm, tempest, act of God, war, fair wear and tear and any other risk insured against by the Lessor PROVIDED THAT this exception shall not apply if the damage is caused by the neglect, default or misconduct of the Lessee and the Lessor's insurances are invalidated by an act, neglect or default of the Lessee.

The Lessor must maintain and repair the Premises to prevent water ingress.

Any cleaning performed must be to a commercial standard.

The Lessee shall repair and make good any damage (regardless of how minor) which may be caused to the Premises at any time by the installation or removal by the Lessee of any fixtures, fittings, plant or equipment supplied and fitted by the Lessee or on behalf of the Lessor.

Not to use nor permit to be used the Premises for any purpose other than the use stated in Schedule 1 unless otherwise agreed in writing nor to permit nor suffer the use of the Premises for any residential purpose whether temporary or permanent and the use of the Premises shall conform to all laws and local authority laws, lay-laws, regulations or requirements and the Lessee shall obtain and maintain all necessary approvals, consents, permits and licences from all relevant authorities for its use of the Premises that are not already in place.

Not to do, exercise nor carry on nor permit nor suffer any person to do exercise or carry on in the Premises any noxious, noisome, offensive, illegal or immoral act, trade, business, damage or disturbance to the Lessor.

Notwithstanding anything to the contrary contained or implied in this Lease, to comply promptly with all acts relating to the Premises or the use thereof PROVIDED THAT the Lessee will not be under any liability in respect of any structural alteration required by any act other than those caused or contributed to by the Lessee's use or occupation of the Premises.

In the positioning of partitions upon or within the Premises to comply with all acts, regulations and ordinances relating to fire detection and alarm and to pay to the Lessor the cost of effecting any alteration to the thermal detectors or other fire alarm or extinguishment installations required or necessary to comply with any Act, regulation or ordinance or the requirements of the Insurance Council of Australia and the Fire and Emergency Services Authority of Western Australia.

(a) The Lessee must effect and maintain in respect of the Premises adequate public risk insurance which insurance policy is to include a cross liability clause to operate in the same manner (except as to the kind of liability) as if there were a separate policy covering insured persons in the names of the Lessor and the Lessee for their respective rights and interests for the time being in an amount not less than $10,000,000 in respect of any one claim or any higher amount reasonably required by the Lessor from time to time with an insurance company approved by the Lessor (which approval may not be unreasonably withheld) and to supply to the Lessor details thereof and to ensure that the insurance conforms with the reasonable requirements from time to time of the Lessor of which the Lessee is given notice.

(b) The Lessee must effect and maintain in respect of the Premises, in the names of the Lessor and the Lessee for their respective rights and interests, a plate and other glass policy against breakage covering all plate and other glass in the Premises including external glazed windows.

(c) If required by the Lessor to produce the policies in respect of public risk and plate glass insurance to the Lessor.

(d) The Lessee must deliver to the Lessor upon the request of the Lessor certificates of currency issued by the insurance company in respect of the public risk and plate glass insurance.

(e) Not to alter the terms or conditions of any policy without the written approval of the Lessor and to deliver promptly to the Lessor particulars of any change or variation of the terms and conditions in respect of the public risk and plate glass insurance policies.

3.17 Not to invalidate Insurance

Not to do nor suffer to be done any act, matter or thing upon the Premises nor bring nor keep anything therein whereby the insurance on the Premises against damage by fire and other insured risks might be rendered void or voidable or whereby the rate of premium is or is liable to be increased and if the Lessor approves in writing any proposal of the Lessee to add to or increase any insured risk, to pay all additional premiums of insurance on the Premises required on account of the additional or increased risk caused by the use to which the Premises are put by the Lessee and the Lessor shall provide the Lessee with copies of all insurance policies to enable the Lessee to comply with this Clause 3.15 of this Lease.

...

3.19 Insurance - Fixtures

(a) The Lessee must reimburse the Lessor within fourteen (14) days of receipt of an invoice from the Lessor for all premiums payable on a policy of insurance effected by the Lessor for the full insurable value on a replacement or reinstatement basis of the Lessor's fixtures, fittings, materials, goods, furniture and partitions in the Premises against fire, storm, tempest, earthquake, Civil commotion, extraneous risks including rain water and other water damage, flood, riots, strikes, malicious damage, explosion, impact by vehicles or aircraft, articles dropped from aircraft and all other risks reasonably required by the Lessor. If required in writing by the Lessee the Lessor will provide the Lessee with all information reasonably required by the Lessee to enable the Lessee to verify that the premiums the subject of the invoice relate only to the Premises;

(b) The Lessee must insure and keep insured to the full insurable value on a replacement or reinstatement basis the Lessee's fixtures, fittings, materials, goods, furniture and partitions in the Premises against fire, storm, tempest, earthquake, civil commotion, extraneous risks including rain water and other water damage, flood, riots, strikes, malicious damage, explosion, impact by vehicles or aircraft, articles dropped from aircraft and all other risks reasonably required by the Lessor with a public insurance company approved by the Lessor (which approval may not be unreasonably withheld) and to deliver a copy of the policy and all receipts for premiums to the Lessor upon demand.

Upon the expiry or sooner determination of the Term the Lessee must:

(a) Peaceably to surrender and yield up to the Lessor the Premises subject to the other provisions of this Lease, clean and free from rubbish and in good and substantial repair and condition as nearly as possible in the same condition as at the commencement of the Term fair wear and tear excepted; and

(b) Surrender to the Lessor all keys belonging to the Premises including security access cards held by the Lessee whether provided by the Lessor or made or procured by the Lessee for his own use and not to permit these to come into the possession or control of any person other than responsible persons authorised by the Lessee and to use his best endeavours to protect and keep safe the Premises and any property contained therein and to keep all doors and windows securely fastened when not in use.

Each of the covenants by the Lessee contained in each of the following clauses are deemed to be essential terms of this Lease:

(a) The covenant to pay the Rent as specified in Clause 3.1;

(b) The covenant to pay Rates and Taxes and Outgoings as specified in Clause 3.3 and Clause 3.4;

(c) The covenant relating to use of the Premises as specified in Clause 3.10;

(d) The covenant relating to assignment and sub-letting of the Premises as specified in Clause 3.14; and

(e) The covenant against voiding insurance as specified in Clause 3.16.

If the Lessee remains in possession of the Premises after the expiry of the Term with the consent of the Lessor the Lessee will be a monthly tenant of the Lessor at a monthly rent as determined by the Lessor together with the Outgoings and Outgoings which would be payable by the Lessee if an extension of the Term had been granted at the expiry of the Term but otherwise on the same terms and conditions as this Lease.

If the Premises or any part thereof is so destroyed or damaged as to render the Premises unfit for occupation or use (unless the damage or destruction was caused by or in consequence of any act or default of the Lessee) preventing the Lessor from claiming under the relevant policy of insurance the Rent, Rates and Taxes and Outgoings payable pursuant to this Lease or a fair and just proportion according to the nature and extent of the damage sustained will from the date of damage or destruction until the Premise as are reinstated and made fit for occupation and use abate and cease to be payable and any dispute concerning this provision is to be determined by a single arbitrator in accordance with the provisions of Commercial Arbitration Act 1985 WA and in any arbitration proceedings either party may be represented by his solicitor or other legal representative PROVIDED THAT the Lessee shall pay the Rent, Rates and Taxes and Outgoings without any abatement until the date of the award of the arbitrator or agreement between the Parties (whichever is the earlier) whereupon the Lessor shall refund to the Lessee any Rent Rates and Taxes and Outgoings overpaid by the Lessee within fourteen (14) days after the date of the award of the arbitrator.

...

5.22 No Warranty by Lessee as to Prior or Post use

The Lessee gives no warranty for the prior or Post Lease use to which the Premises may or may be put and the Lessor accepts the Premises for the Term with full knowledge of and subject to any prohibition or restriction on the use thereof under or pursuant to any law or other statutory authority and if the business was or will be carried on by the Lessor at the Premises is permissible only with consent pursuant to any Act or other statutory authority the Lessor shall obtain that consent at his own expense.

The Lessor gives no warranty as to the use to which the Premises may be put other than the Premises may be lawfully used as commercial and medical offices and the Lessee accepts the Premises for the Term with full knowledge of and subject to any prohibition or restriction on the use thereof under or pursuant to any law or other statutory authority and if the business carried on by the Lessee at the Premises is permissible only with consent pursuant to any Act or other statutory authority the Lessee shall obtain that consent at his own expense.

Lot 310 on Diagram 75968 being the land on Certificate of Title Volume 1857 Folio 370 and being 30 Butcher Street, Kwinana Beach, Western Australia

Unit 1, 30 Butcher Street, Kwinana Beach, Western Australia as set out on the plan in Schedule 2 having an area of 2,400m2

5.1 The Rent shall be paid monthly in advance on the first day of each month by equal consecutive monthly payments of $15,200 plus GST commencing on the Commencement Date.

5.2 The Rent payable by the Lessee to the Lessor for the Premises from the Commencement Date until 28 February 2007 shall be $182,400 plus GST per annum and as thereafter determined pursuant to Clause 3.2 and 3.3 of this Lease.

On 1 March 2007 and then annually on each 1 March thereafter during the Term (and during any Further Term)

First Further Term: 1 March 2008 - 28 February 2011 (both inclusive)

Second Further Term: 1 March 2011 - 28 February 2014 (both inclusive)

8.1 The Lessee is to have use of the certified weighbridge installed within the Premises for the Term of this Lease (and during any Further Term). The Lessor has agreed to have the weighbridge upgraded at the Lessor's cost in consideration of the Lessee entering into this Lease. The Lessor, at the Lessor's cost, will arrange for a telephone line to be installed at the weighbridge.

8.2 The Lessee is, subject to execution of this Lease. and provision of the Security Deposit, to have the right to commence moving equipment into the Premises prior to the Commencement Date.

8.3 The Lessor will ensure the external appearance of the Premises is maintained in a high standard (fair wear and tear always excepted).

1. Photographs taken by G Jeanes for valuation report of unit 1, July 2004 (Exhibit 10)

1. Photographs taken by G Jeanes for valuation report of unit 1, December 2005 (Exhibit 47)

1. Photographs taken by G Jeanes for valuation report of units 2/3, November 2009 (Exhibit 261)

1. Photographs taken by bank valuer for valuation of Units 1, 2 and 3, May 2012 (Exhibit 326)

1. Photographs taken by G Jeanes for valuation report of units 1, 2 and 3, July 2015 (Exhibit 548)

1. Photographs referred to in the evidence of David Goodwin and Mr Joseph Hawkins (Exhibits 168, 304, 475 and 535)

Plaintiff's claim for unpaid rent[616]**

Less: Credit Council rates for 12 days being after 30 days from vacation

Land tax not invoiced 18.11.2016 plus 30 days' notice period

Oct, Nov, Dec 2016 portion of Land tax/Council rates after vacation

Less: 12 days credit from account allowing for notice period

1. This attachment sets out the rulings on admissibility, and associated reasons for those rulings, made during the course of the trial and following the trial. Before addressing the objections, it is necessary to identify the terms of s 79C(2a) of the Evidence Act 1906 (WA) (Evidence Act) and the principles applicable to that provision, which were the subject of submission from counsel during the course of the objections

1. Section 79C(2a) of the Evidence Act states:

(2a) Notwithstanding subsections (1) and (2), in any proceedings where direct oral evidence of a fact or opinion would be admissible, any statement in a document and tending to establish the fact or opinion shall, on production of the document, be admissible as evidence of that fact or opinion if -

(a) the statement is, or directly or indirectly reproduces, or is derived from, a business record; and

(b) the court is satisfied that the business record is a genuine business record.

1. The applicable definitions are set out in s 79B, as follows:

business means any business, occupation, trade or calling and includes the business of any governmental body or instrumentality and of any local government;

business record means a book of account or other document prepared or used in the ordinary course of a business for the purpose of recording any matter relating to the business;

derived means derived, by the use of a computer or otherwise, by calculation, comparison, selection, sorting, consolidation or by accounting, statistical or logical procedures;

document means any record of information and includes, in addition to a document in writing -

(c) any disc, tape, sound track or other device in which sounds or other data (not being visual images) are embodied so as to be capable (with or without the aid of some other device) of being reproduced therefrom; and

(d) any film, negative, disc, tape or other device in which one or more visual images are embodied so as to be capable (with or without the aid of some other device) of being reproduced therefrom;

statement includes any representation of fact or opinion whether made in words or otherwise.

1. As is evident from the text, and as explained by Smith J in Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 23],[617]

s 79C(2a) applies solely to 'business records' as that term is defined. Further, s 79C(2a) applies to statements made by a qualified person, including statements tendered for the truth of the contents recorded in a document by third party. Section 79C(2a) also applies to statements that are not made by a qualified person. 2. The term 'qualified person', in relation to a statement, is defined to mean a person who:[618]

(a) had, at the time of making of the statement, or may reasonably be supposed to have had at that time, personal knowledge of the matters dealt with by the statement; or

(b) where the statement is not admissible in evidence unless made by an expert on the subject of the statement, was at the time of making of the statement such an expert.

1. I refer to and respectfully endorse the principles applicable to the operation and scope of s 79C(2a) which were summarised by Solomon J in Rhodes v De Castro [No 2],[619] and which I have applied in this case in assessing the admissibility of the documents. Those principles need not be repeated here.
2. It should also be recognised that s 79C is a remedial provision which is to be construed liberally and not pedantically. As Solomon J noted in Rhodes v De Castro [No 2], these provisions operate to permit second-hand or 'double' hearsay to be admitted.[620]
3. Of course, as Solomon J observed in Rhodes v De Castro [No 2], the admission of a statement pursuant to s 79C does not of itself prove conclusively the truth of the statement, and the weight to be accorded to the statement remains an issue for assessment at the conclusion of the trial proceedings.
4. To the extent required, the court's rulings and associated short reasons in relation to the above objections are set out below.

(3) Exhibits 357, 358 and 359 - Complaints made to the DEC and to the City of Kwinana

1. These three documents, tendered by the plaintiff, are factually connected. The first two documents emanate from the Department of Environment and Conservation (DEC). The third document is from the City of Kwinana. The documents are all dated 17 January 2013.
2. Exhibit 357 is an Incident Report maintained by the DEC dated 17 January 2013. On its face, it records an apparently anonymous complaint from a member of the public regarding emissions of sulphate from the Warehouse when loading trucks, including an assertion that a 'white plume' was 'going down the street'.
3. Exhibit 358 is an email exchange between Ms Waugh at the DEC and Ms Chui at the City of Kwinana, who was an Environmental Health Officer at that local government. The email was sent on the same day as the complaint was recorded, being 17 January 2013. Ms Waugh referred the complaint to Ms Chui, noting that the premises were not the subject of any licence or registration with the DEC. Ms Chui indicated in her response email that she would follow up the complaint and conduct an inspection.
4. Exhibit 359 is a file note prepared by Ms Chui on 17 January 2013, which attaches four photographs. The file note is headed 'Dust complaint - 30 Butcher St Kwinana Beach'. The photographs provide a visual record of Ms Chui's inspection. The photographs appear to show, as counsel for the defendant emphasised (ts 912), a dust plume emanating from a location that is not the Warehouse. Rather, the dust plume appears to be emanating from a different location, further down the street. The photographs show residue on the pathway and road immediately outside the Warehouse premises, though.
5. The court overruled the objections as to relevance and hearsay, and the documents were admitted subject to weight. The documents are relevant to the plaintiff's breach of contract claim and may be admitted pursuant to s 79C(2a) of the Evidence Act. The documents record statements of facts as to the emissions from the vicinity of the premises, being a matter in respect of which direct oral evidence would be admissible in the proceedings. Each of the documents are genuine business records of the DEC or the City of Kwinana, prepared in the ordinary course of business, and record matters relating to their respective businesses. Recording complaints about matters such as this may be inferred to be part of their ordinary business activities.
6. Further, in my respectful view, the probative value of the documented contemporaneous complaint regarding the emission from the vicinity of the premises in January 2013 outweighed any asserted prejudicial effect to the defendant, bearing in mind the defendant would be able to make submissions about the significance of the documents having regard to the photographs taken by Ms Chui. Absent the photographs, the argument in support of the discretionary rejection of the tender would have been far stronger.
7. As the court indicated at ts 918, there is a real question as to the ultimate weight to be attributed to an anonymous complaint such as this. However, as I say, the inclusion of a photographic record of the subject matter of the complaint allows the defendant, and the court, a fair opportunity to evaluate the complaint. There were also other contemporaneous documents in existence (eg: Exhibit 366) which demonstrated the defendant's awareness of the complaint at the time.
8. The three documents were accordingly admitted into evidence.

(4) Exhibit 362 - complaint made to the City of Kwinana

1. This document is an email chain, tendered by the plaintiff, between Ms Chui at the City of Kwinana and a member of the public (who is named in the document). The member of the public lodged a complaint as to the emanation of dust into their premises at 24 Butcher Street. The emails were sent on 21 and 22 January 2013, so shortly after the complaint which was the subject of Exhibits 357, 358 and 359, but appears to be a distinct and different complaint to that which was the subject of those exhibits.
2. The email from the member of the public refers to the dust source as being 'mainly fertiliser' and indicates it has been 'quite heavy the past two months on a daily basis'.
3. As with Exhibits 357, 358 and 359, I consider the matters which are the subject of the email chain are relevant to the plaintiff's breach of contract claim. The email chain is a genuine business record maintained by the City of Kwinana, prepared in the ordinary course of the business of the City. The document may be admitted pursuant to s 79C(2a) of the Evidence Act. The document records evidence of facts as to the emissions from the premises, being a matter in respect of which direct oral evidence would be admissible in the proceedings.
4. I concluded that the prejudicial value of the document did not outweigh the probative value of the document, it being a contemporaneous record of a detailed complaint made to the relevant local government agency about emissions from the premises adjacent to 24 Butcher Street, which is likely to be 30 Butcher Street, the location of the Warehouse.
5. The court therefore admitted the document into evidence, ruling against the objections as to hearsay and relevance.

(5) Exhibit 592 - email from Zurich Financial[621]

1. This document is an email from Ms Belinda Agars of Zurich Financial Services Australia (Zurich Financial) to Mr Martin Noordewier dated 9 February 2016. I understood Zurich Financial be an entity within the Zurich Australian Insurance Limited group. The document was tendered by the plaintiff. Mr Noordewier gave evidence at trial, having been called by the plaintiff. He is a registered insurance broker employed by Insurance Broking Services Pty Ltd. Ms Agars was not called as a witness at trial.
2. The email purports to record a discussion between Ms Agars and Mr Noordewier as to the insurance held by the plaintiff with Zurich Australian Insurance Limited, and to also record the decision taken by the insurer (and by Zurich Financial) that it would not insure the premises going forward. Among other matters, Ms Agars states in the email that:

Given the poor condition at 30 Butcher Street, Kwinana which has been attributed to the combination of the type of fertiliser stored (Ammonium Sulfate) causing accelerated corrosion and a lack of general building maintenance, as discussed we are not in a position to insure this location going forward.

1. The email records that Ms Agars was based in West Perth at the time, that is, February 2016. The email refers to an updated claims report as having been attached, but the document as tendered did not include any such report. The email as tendered also appears to include only part of the overall email chain, which is evident from the bottom of the email and from the statements made in pars 1 to 4 of the email itself (which refer to 'matters below').
2. The email, and the statements in the email, may arguably be said to afford evidence of the following matters, relevantly for present purposes:

(a) evidence that a decision whether to continue to insure the plaintiff in respect of damage to the Warehouse was taken by the insurer (and Zurich Financial) in February 2016;

(b) evidence that the decision taken by the insurer (and Zurich Financial) was that it would not further insure the plaintiff;

(c) evidence that this decision was communicated to an agent of the plaintiff, namely Mr Noordewier, on 9 February 2016; and

(d) evidence as to the reasons or bases upon which the insurer (and Zurich Financial) made this decision, and the truth of those reasons.

1. The last of these matters is the most contentious.
2. The plaintiff sought to tender this document as a business record pursuant to s 79C(2a) of the Evidence Act and also on the basis of the 'qualified person' provision in s 79C(1)(a) of the Evidence Act, as well as contending the document may be admitted as evidence that the decision was received by the plaintiff's agent. The tender was objected to on the basis of hearsay.[622] The court notes the document was referred to during the evidence of Mr Noordewier[623] and the parties made submissions in closing about the admissibility of the email.[624] The court approached the issue on the basis that a ruling on the email's admissibility would not be made until the conclusion of the evidence.
3. Having considered the matter, I accept the email is capable of being admitted as a 'business record' pursuant to s 79C(2a) of the Evidence Act. The email, which I accept is genuine, was prepared in the ordinary course of the business of Zurich Financial, being an email as to claims and coverage in respect of an insurance arrangement with the plaintiff. The email is not the document which records the decision as such, but through this email the representative of Zurich Financial was communicating a decision to an insured's agent or broker. It may reasonably be inferred this occurred in the ordinary course of the business of the insurer. The statement made by Ms Agars as to coverage and the decision not to insure the Warehouse any further, is a statement in respect of which direct oral evidence would have been admissible.
4. The statements within the document are probative of the decision taken by the insurer (and Zurich Financial), that the insurer had declined to further insure the plaintiff, and that this was communicated to the broker. However, when considering whether the statements in the document as to the reasons for that decision should be admitted, I consider the absence of any witness from the insurer or Zurich Financial is an important factor in assessing the prejudice to the defendant. The matters raised in the email, as to the insurer's reasons, are complex and contentious, and it should be observed that this email provides only a summary of those reasons. It would be highly prejudicial to the defendant, in my view, to receive the email as evidence of the reasons for the decision not to insure, much less as to the truth of those reasons. It must be remembered that the email is not a decision document, as such, but an email notifying the broker of the decision, in a summary fashion.
5. The document may be received into evidence, in my view, only to demonstrate that a decision was taken by the insurer (and Zurich Financial) not to further insure the premises, and that this decision was communicated to the plaintiff's broker. The email will not be received as evidence, as a matter of fact, that the poor condition of the premises was the reason for the decision, nor that the poor condition was caused by the combination of the ammonium sulphate and the lack of general building maintenance.
6. Further, I would not receive the document pursuant to s 79C(1) of the Evidence Act, as to any of the statements therein, as I do not conclude that any of the matters in s 79C(2) have been satisfied by the plaintiff. It would be necessary for the plaintiff to demonstrate one or other of those pre-conditions had been satisfied. Section 79C(2)(g) is commonly relied on in this regard, but it cannot be concluded that, having regard to all the circumstances of the case, undue delay, inconvenience or expense would be caused by calling Ms Agars as a witness, particularly in a case in which other witnesses have given evidence by video link, including from overseas, and the court has no evidence as to the whereabouts of Ms Agars, whether she remains employed by Zurich Financial, or whether she would in any event be able to give evidence.
7. I therefore rule that Exhibit 592 be admitted only on the basis that, on or about 9 February 2016, the insurer (and Zurich Financial) had reached a decision to decline to further insure the plaintiff, and this decision was communicated to the plaintiff's broker.

1. This document is lengthy written report prepared by an entity described as 'SW19', which appears to provide building inspection services (SW19 Report). The SW19 Report is dated 2 December 2016 and was tendered by the plaintiff. The document states it was prepared at the request of the plaintiff, to record the condition of the premises, and to 'quantify the repairs required to return the building to an average condition expected of a building of this age'.
2. The SW19 Report includes an extensive description of the state of the premises, and various schedules identifying specific areas which are damaged and are said to require repair. A number of photographs are included in the report.
3. The SW19 report also includes various recommendations described as being the recommendation of an engineering firm, apparently detailed in another document described as the 'Marocchi Engineering Report'. That other report is not attached to the document.
4. Mr Joseph Hawkins gave evidence in relation to the SW19 Report (ts 400). His evidence in this regard was extremely vague. He had limited recollection about the report and how it came to be prepared. As counsel for the defendant observed, there was no probative evidence from the 'best witness available' to give evidence about the document as to its purpose or use (ts 924). Nonetheless, the plaintiff sought to tender the SW19 Report as a business record pursuant to s 79C(2a) of the Evidence Act (ts 925).
5. The court ruled that the objection to the document, that it was hearsay, should be upheld and declined to admit the SW19 Report pursuant to s 79C(2a). I was not satisfied the document was a 'business record' used in the ordinary course of business (ts 932). The evidence given by Mr Joseph Hawkins in relation to the SW19 Report was inadequate to demonstrate this point, and the court could not otherwise be satisfied based on the material appearing on the face of the report. Rather, the document appears to be a bespoke report prepared by an external consulting company at the request of the plaintiff, shortly before the commencement of proceedings. That is not in the ordinary course of business.
6. Further, the court was concerned as to the prejudicial impact of the document, relative to its probative value. At ts 933, the court observed that the SW19 Report was a complex document which contained a range of propositions about which submissions might be made in due course concerning the level of corrosion and further work that might need to be prepared in relation to the Warehouse. Those are all matters on which not only would the court benefit from hearing from the author of the report, but the defendant would be unable to cross-examine any witness on these complex matters.
7. Accordingly, had the court found the SW19 Report was capable of being admitted pursuant to s 79C(2a) of the Evidence Act, it would have concluded in any event that the tender of the document should be rejected on discretionary grounds.

(7) Exhibit 694 - Invoice from Onsite Rental Group

1. This document is an invoice from Onsite Rental Group Ltd for equipment hire, dated 19 March 2019. The invoice appears on its face to be for the hire of a scissor lift by the plaintiff . The invoice is for a total of $457.09.
2. The invoice includes a handwritten statement, which reads - 'Used to secure sheeting'.[625]
3. The plaintiff sought to tender the document as a business record pursuant to s 79C(2a), which was objected to by the defendant. In my view, the document is a genuine business record prepared in the ordinary course of business, to record information as to services provided by a business to the plaintiff, and the cost of those services. There is no basis to reject that admission on discretionary grounds. The court accordingly ruled that the document could be received in evidence, subject to the qualification that the handwritten statement was not admissible until proven in some way, bearing in mind the handwritten comment did not form part of the original document and its reception would be prejudicial unless the provenance of the statement was established.
4. Mr Joseph Hawkins gave evidence in relation to this document (ts 419). His response when asked about the statement was that it was not his handwriting, but that he believed that the invoice would have been paid. Ms Bosch was also taken to the document during her evidence (ts 577), whereupon she confirmed the statement had been written by her, and she believed the invoice had been paid. However, Ms Bosch could not confirm what the equipment was used for, or why she made the note.[626]
5. The defendants maintained the objection to the handwritten statement being admitted on the basis that Ms Bosch had no direct knowledge of the work being undertaken; rather, she annotated the invoice based on what she had been told by other people.[627] While this submission emphasises that limited weight should be accorded to the handwritten statement, in the circumstances the court determined that the objection should be disallowed and that the document could be admitted as evidence including as to the handwritten statement made by Ms Bosch.[628]

(8) Exhibit 35 - notes regarding the draft lease

1. This document is an email chain from Mr Syminton to Mr Burns, in which the emails were sent between 10 and 15 August 2005, which also includes notes apparently prepared by Mr Syminton explaining his proposed changes to the draft lease.
2. The plaintiff sought to tender the document as a business record, and contended that the emails detailed specific exchanges setting out the basis upon which a particular change to the draft lease was advanced, indicated what both parties knew and, importantly, gave context to those clauses proposed to be amended, citing the approach taken by the High Court in Codelfa Construction Pty Ltd v State Rail Authority (NSW).[629] The defendant objected to the document[630]on the basis it was not sought to be relied upon by either party during the trial, and was not included in the trial bundle, although it was referred to in the opening submissions filed by the defendant.[631]
3. The court overruled the objection.[632] I did so on the basis that, as the document had been referred to in the defendant's opening submissions, there was no unfairness to the defendant in allowing the document to be admitted. The weight, and legal effect, of the matters contained therein can be addressed separately.

1. This document is a letter from Lavan Legal to Tolson & Co dated 21 April 2009. Lavan Legal acted for the defendant at the time, while Tolson & Co acted for the plaintiff. The letter attached emails between Mr Burns and Mr Syminton, sent in August 2007, regarding the form of lease to be used for Units 2 and 3. The letter explains that the draft lease provided to the defendant was 'vastly different' to the terms of the original lease for Unit 1 and complains that Mr Burns was, in April 2009, now insisting that the defendant execute a form of lease other than that said to have been earlier agreed.
2. The plaintiff sought to tender the document on the basis it showed the terms of the lease for Units 2 and 3 were never extended, and so the plaintiff and defendant operated under a holding over.[633] The defendant for its part indicated that this particular issue was not in contest and so the document lacked relevance.
3. I ruled that Exhibit 237 should be admitted. The document explains the course of events, in part, between August 2007 and April 2009 as to the lease for Units 2 and 3, and demonstrates on its face that the defendant maintained a position that the lease should reflect the original lease terms for Unit 1.

(10) Exhibit 287 - letter from the defendant to BHP

1. This document is a letter addressed to BHP, authored by Mr Syminton and Mr Brian Garbellini of the defendant, dated 12 November 2010. The letter is a cover letter to the October 2010 Monthly Activity Report prepared by the defendant, which forms part of the exhibit. A report of that nature was regularly provided by the defendant to BHP, as part of the distribution arrangements between them. On its face, the document appears to indicate that granular ammonium sulphate was being received by the defendant from BHP, as well as the standard product.
2. The defendant objected to the document being admitted as it was only one side of the correspondence and therefore of limited use. The court overruled the objection.[634] The fact it was only one side of the correspondence is not a proper basis for an objection. The court concluded the document should be admitted.

(11) Exhibit 368 - Fertilizer Handling Code of Practice

1. This document is a 21 page document titled 'Fertilizer Handling Code of Practice', which is dated 14 March 2013. It appears to have been prepared by an entity styled as 'Fertilizer Australia Incorporated'. The first paragraph describes the code as being a 'draft code of practice'.
2. The plaintiff sought to tender this particular version of the document. Counsel for the plaintiff recognised that the defendant had referred to the August 2008 version in his opening (not the 2013 version), and noted that the defendant had pleaded the code of practice in its Defence at [12.5].[635] The defendant's plea expressly referred to the 'Australian Fertiliser Services Association Code of Practice for Members', which was tendered as Exhibit 154. The entity identified in Exhibit 154 appears to be different to the entity which authored Exhibit 368, being the 2013 version, assuming for present purposes these are in fact different versions of the same code of practice, which is unclear.
3. Counsel for the plaintiff explained he was seeking to tender the document as part of its responsive case to the defendant's plea. Counsel explained:[636]

To my knowledge, nobody actually referred to [the Code of Practice], but if anybody wants to refer to it now or say that they complied with handling codes of practice as a generalised, easy, glib statement to make, then [the plaintiff] can say, "Well, look at 368. You pleaded that document and you didn't even comply with it."

1. The code sought to be tendered by the plaintiff was not the code pleaded by the defendant. No witness was called to explain the differences between the codes, their origins, or provide context for the court in relation to them. Exhibit 368 was not specifically put to any witness during the course of the trial, although the plaintiff's counsel cross-examined Mr Tip O'Neill on the practices therein.
2. Given these matters, the court upheld the objection and rejected the tender of the 2013 document.[637] The 2013 code is not relevant, and there would be no evidentiary basis for the court to make findings on the basis of the practices therein.

1. This document, prepared by the defendant, provides a history of rent payments made by the defendant to the plaintiff, 'from 1 March 2005 to present'. The document is dated 18 May 2013 and details annual rental amounts, and the rental increases, for each term for Unit 1 (2005 - 2013) and Units 2 and 3 (2008 - 2013). The plaintiff sought to tender this document. Ultimately, the defendant did not take issue with the tender.[638]

(13) Exhibit 414 - amendment to the BHP agreement

1. This document provides terms for an amendment to the Ammonium Sulphate Sales Agreement between BHP and the defendant. The document is dated 5 September 2013 and has been signed by representatives for both parties. The plaintiff tendered the document before it made closing submissions,[639] and the defendant ultimately did not object to the tender.[640]
2. In the circumstances, the court ruled the document would be received in evidence.

(14) Exhibit 791 - invoice from Go 2 Group Pty Ltd

1. This document is an invoice, together with supporting statements, issued to the plaintiff by the Go 2 Group Pty Ltd, dated 7 November 2023. The invoice was for a total of $14,845.80. The Go 2 Group Pty Ltd appears to be a building and construction business.
2. The defendants objected to the document being admitted on the basis that it was not included in the schedule of damages and had no discernible use.[641] The plaintiff asserted that the document confirmed that rectification works had been completed and paid for by the plaintiff, and identified the relevant cross-reference in the schedule of damages.[642]
3. The court overruled the objection and ruled that the first page of Exhibit 791, being the invoice document, should be admitted into evidence, showing the payment made by the plaintiff for rectification work undertaken by the Go 2 Group Pty Ltd. Only the first page of Exhibit 791 contained material relevant to the proceedings.

1. This document is an email from Mr David Pritchard of CBH to Mr Troy Hawkins and Mr David Hawkins of the plaintiff, dated 19 April 2024, which confirmed receipt of copies of the leases for the Butcher Street premises. This email was produced by the plaintiff during the evidence of Mr David Hawkins. The plaintiff sought to tender the email as a business record and the defendant opposed the admission.[643]
2. The email is a genuine business record prepared in the ordinary course of business. It may be admitted pursuant to s 79C(2a). There is no basis to reject the tender on discretionary grounds In the circumstances, the court ruled the email from Mr Pritchard to the plaintiff's representatives would be received in evidence.

1. This document is a table which identifies the quarterly CPI indices for Perth and Australia, for each quarter from March 2001 to June 2022. The plaintiff sought to tender this document.[644] The defendant objected on the basis the information within the table appears to have been compiled from an unknown secondary source.[645] The court apprehended that the document had been compiled by the plaintiff, from other sources.
2. The plaintiff explained that the document was relevant to Ms Bosch's evidence, and was relied on to show there was little difference between the CPI figures for Perth and Australia.[646] Further, the amounts in the document were linked to the amounts in Exhibit 377, showing increases in rent amounts calculated by reference to CPI.[647]
3. In the circumstances, the document should be received in evidence, allowing the parties to make such submissions as they wish, but recognising the veracity (and weight) of the document was far from clear - it was not an official table of CPI figures produced by the Australian Bureau of Statistics or some other reputable body.

(17) Document 585 - Internal email within the City of Kwinana

1. This document is an internal email from the Planning Compliance Officer employed by the City of Kwinana, sent to others within the City of Kwinana, on 7 January 2016. The email incorporates various photographs of the Warehouse taken on 5 January 2016.
2. The email sent by the Planning Compliance Officer states that the photos are of the:

...building used for stockpiling of corrosive material (Sulphate of Ammonia) and the damage to the building. Officers previously investigated the corrosive dust causing a nuisance to adjacent properties.

1. I understood counsel for the plaintiff tendered the document without relying on these statements within the email - reliance was placed on the photographs only.[648] The defendant did not take issue with this.[649]
2. On this basis, the court ruled the email may be admitted into evidence, confined to the photographs themselves and not the language which appears in the covering email.[650]

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] To be referred to in these reasons as the product or ammonium sulphate.

[2] As will be apparent from these reasons, I do not accept that the lease for Units 2 and 3 was a separate, stand-alone lease arrangement (described by the plaintiff as the 'Second Lease'), but rather formed a variation to the Original Lease.

[3] Initially, the supplying entity was WMC Resources Ltd, which was subsequently acquired by BHP Billiton Ltd and became BHP Billiton Nickel West Pty Ltd. For convenience, I have referred to these entities as BHP in these reasons.

[5] The claims are pleaded in the second re-amended statement of claim dated 26 August 2022 (SOC). See also the plaintiff's second further re-amended reply to defence and defence to counterclaim dated 6 July 2023 (Plaintiff's Reply).

[6] See [12H] to [12M] of the SOC and ts 212.

[7] See the further re-amended defence and counterclaim dated 26 June 2023 (Defence). See also the defendant's amended reply to defence to counterclaim dated 4 November 2022 (Defendant's Reply).

[8] Norwich Union Life Insurance Society v British Railways Board [1987] 2 EGLR 137, 138 (Lord Hoffman).

[9] Plaintiff's opening submissions [30].

[11] SOC, prayer for relief B, C, E and I.

[13] SOC [20], prayer for relief D, F and I.

[16] Prayer for relief in the counterclaim at pars A to H, together with a claim for interest.

[17] Additionally, further particulars were supplied by the defendants: see Defendant's particulars dated 26 August 2019 and 1 September 2023.

[18] Amended Papers for the Judge dated 11 April 2024.

[19] The reference to a 'dado' wall indicates the bottom half of the walls were concrete, operating as a protective lower section, with metal sheeting above that.

[20] Exhibit 10 (valuation report prepared in July 2024).

[37] Exhibits 32 and 44 (draft leases).

[39] Exhibit 26 (being the invoice from Beton Contractors dated 28 June 2005).

[48] Exhibit 79 (Email exchanges between Mr Ross Syminton and Mr Joseph Hawkins in June and July 2007).

[62] Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Australia) Pty Limited [2000] HCA 35; (2000) 201 CLR 520 [22] (Gleeson CJ, Gaudron, McHugh and Hayne JJ) (Sara Lee Household).

[63] Sara Lee Household [23] - [24].

[64] See, for example, Exhibits 328, 367, 531, 775.

[66] As explained in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56 [48] (Emmett J).

[67] Watson v Foxman [1995] NSWCA 497; (1995) 49 NSWLR 315, 318 - 319 (McLelland CJ in Eq, as his Honour then was).

[69] Fazio v Fazio [2010] WASC 263 (Martin CJ).

[70] Siah v Wong [2021] WASC 19 (Smith J).

[71] Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560 [22]. See also Bell P (with whom Bathurst CJ agreed) in ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24 [27] - [29].

[72] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.

[73] Plaintiff's closing submissions [49] - [50].

[74] Defendant's closing submissions [67] - [71].

[75] Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361 [63].

[76] Knell v QAV Pty Ltd [2020] WASCA 23.

[77] Plaintiff's closing submissions [49].

[79] Trans-Tasman Proceedings Act 2010 (Cth), s 30 and s 31; RSC, O 39A r 3.

[80] Defendant's closing submissions [69].

[85] Plaintiff's closing submissions [31].

[86] Defendant's closing submissions [49].

[89] Exhibits P6 and P7 (less expenses of $409.09).

[90] Exhibits P8 (for Unit 3) and P9 (for Unit 2).

[141] Exhibit 82 (Email from Mr Peter Burns to Mr Ross Syminton dated 9 August 2007).

[143] Exhibit 108 (Letter from Mr Hughes, the registered builder, to the Town of Kwinana dated 13 March 2008).

[170] Exhibit 314 and ts 342, 496, 728.

[180] See Attachment E to these reasons.

[206] Exhibit 657, 658, 659, 661, 662.

[209] See, rather ominously, Exhibit 666.

[215] J.J. Hawkins and Co Pty Ltd v International Raw Materials Pty Ltd [2024] WASC 124 (Lundberg J).

[216] Exhibit 706 (filed 20 November 2019).

[217] Exhibit 712 (filed 27 October 2020).

[218] Defendant's closing submissions [83].

[220] Exhibit 713 (filed 30 September 2021).

[231] The Australian Standard is Exhibit P11.

[249] ts 536 - 537 (Mr Donkin) and ts 619 (Mr Tip O'Neill).

[254] The complete exchange with the witness is at ts 668 - 671.

[259] Defendant's closing submissions [16].

[266] Plaintiff's closing submissions [7].

[267] Plaintiff's closing submissions [11].

[268] Plaintiff's closing submissions [12].

[269] Plaintiff's closing submissions [95].

[270] Plaintiff's closing submissions [21].

[276] Defendant's closing submissions [135].

[277] Plaintiff's closing submissions [106].

[278] Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158; (2023) 113 NSWLR 1 [48] - [50] (Ward P, Beech-Jones JA and Griffiths AJA).

[279] Electricity Generation Corporation trading as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].

[280] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] ‑ [52].

[281] Mineralogy Pty Ltd v The State of Western Australia [2005] WASCA 69 [15]. See also AIG Insurance Australia Ltd v McMurray [2023] WASCA 148 [135] - [140].

[282] Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 [9] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ). See also Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158; (2023) 113 NSWLR 1 [48]- [50] (Ward P, Beech-Jones JA and Griffiths AJA) and Saipan Holdings Pty Ltd v City Gym Sydney Pty Ltd [2023] NSWCA 55 [128] (Ward P, Gleeson JA and Simpson AJA agreeing).

[283] Papantoniou v Stonewall Hotel Pty Ltd [2018] NSWCA 85 [40].

[284] Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297 [13] (Basten JA, McColl and Campbell JJA agreeing).

[285] Miwa Pty Ltd v Siantan Properties Pte Ltd [18], citing Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Export Services Inc [2011] NSWCA 137 [55]- [56] (Macfarlan JA, Young JA and Tobias AJA agreeing) and Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5 [27] - [31].

[286] Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd [2006] EWCA Civ 1732 [22].

[287] The J & P Marlow (No 2) Pty Ltd v Hayes and McCabe [2023] NSWCA 117; (2023) 112 NSWLR 29 [76] (Bell CJ), [98] - [100] (Meagher and Kirk JJA) (J & P Marlow).

[288] Alcatel Australia Ltd v Scarcella [1998] NSWSC 483; (1998) 44 NSWLR 349 [354] (Sheller JA with whom Powell and Beazley JJA agreed) (Alcatel).

[290] Brown v Davies [1957] 3 WLR 818, 825 - 826.

[291] Haskell v Marlow [1928] 2 KB 45, 59 (Talbot J).

[292] Regis Property Co Ltd v Dudley [1959] AC 370, 394 (Viscount Simonds), 402 (Lord Tucker), and 410 (Lord Denning).

[293] Agtan Pty Ltd v Caltex Australia Petroleum Pty Ltd [2018] VSCA 169 (Agtan).

[295] Haskell v Marlow (59) (Talbot J).

[296] Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWCA 224 (Hodgson JA, Basten JA and McLellan CJ at CL) (Alamdo Holdings).

[297] Alamdo Holdings [35] (Hodgson JA).

[298] Re Leisure Resort Holdings Pty Ltd (Unreported, Queensland Supreme Court, 14 January 1994) (Ryan J). That decision was not disturbed on appeal: Leisure Resort Holdings Pty Ltd v Leisure Resort Group Pty Ltd [1994] QCA 324.