THE ABATEMENT DEFENCE
9 The cross-respondents' abatement defence particularises clause 11 of the Lease which is entitled "Damage and destruction" and which provides that "[i]f the premises are totally or partially destroyed or damaged so as to be unfit for the reasonable occupation and use by [Peninsula] … then a fair proportion of the Rent payable … will be suspended until either the premises are again fit for occupation and use or the lease is terminated". (Emphasis added.)
10 One question which arises on this submission is whether an abatement defence based on clause 11 of the Lease can apply in the present circumstances. Resolution of this question depends on whether it is reasonably open for the cross-respondents to contend that the carrying out of "unauthorised work" on the premises, which they allege resulted in the premises being unfit for use as a private hospital, can be described as total and partial destruction or damage so as to be unfit for reasonable occupation and use by Rosanza within the meaning of clause 11 of the Lease.
11 Rosanza submits that the correct construction of clause 11 is that it relates only to physical damage or destruction, and that the carrying out of the works and alterations is not damage or destruction which renders the premises unfit for reasonable occupation. The unfitness of the premises, it is said, must derive from either damage or destruction, not from other reasons such as the carrying out of the works where there has been a failure to obtain the necessary statutory authority. Rosanza contends that the paragraph 9 of the Defence to the Amended Cross-Claim should be struck out pursuant to O 11 r 16 of the Federal Court Rules 1979 (Cth).
12 While I can see some cogency in Rosanza's submission, I consider that it is not beyond reasonable argument that, if the premises can be proven to be unfit for reasonable use and occupation as a result of carrying out the unauthorised works, then this constitutes damage causing the unfitness. Accordingly, I do not consider that Rosanza should succeed on its submission. Reliance on clause 11 of the Lease is clearly expressed in paragraph 9 of the Defence to the Amended Cross-Claim, and I believe this submission should be open to ventilation at the final hearing because the application of clause 11 may turn on the precise nature and extent of the works carried out, their impact on the premises and the consequences of the breaches being enforced. Each of these considerations will depend to some extent on the detailed evidence adduced and tested at the final hearing.
13 Another issue concerns the possible availability of an abatement defence under s 87 of the Trade Practices Act 1974 (Cth) ("TPA"). When this motion came on for hearing before me, the applicants (including Peninsula, the first cross-respondent) indicated that they will assert an entitlement to relief under s 87 of the TPA. In particular, they will argue that the provisions of s 87 are sufficiently extensive to allow the Court to order that the rent payable under the Lease should be abated retrospectively, and that s 87(2)(a) enables the Court to declare any part of a contract be void ab initio. In response, Rosanza argues that because the applicants did not specifically mention s 87 in their Application or Statement of Claim, they should not be able to rely on it.
14 In my view, the terms of s 87 of the TPA are sufficiently broad to permit a reasonable argument by the applicants that, if the Lease is declared void ab initio, there is no present obligation to pay the rental as claimed. Although the applicants failed to plead s 87 with reference to abatement, I consider that relief under it could arguably be available. Accordingly, I will allow the Defence to the Amended Cross-Claim to be varied so as to include a reference to s 87 of the TPA as a basis for responding to the claim for outstanding rent.