1. There is a reference to a WorkSafe report in the 22 June 2018 letter (being the letter said to identify the defects) although no specific details are given.
2. On or about 21 April 2017, Philip Fisher, inspector of WorkSafe, attended the apartments to conduct inspections under section 98(1) of the Occupational Health and Safety Act 2004 and issued an Improvement Notice V00015606551L/111-01 (Improvement Notice) to the Tenant.
3. Mr Fisher attended again on or about 27 June 2017 to follow up on the Improvement Notice and issued an Entry Report issued (Worksafe Report). The report was directed to Ms Zhao as the employer representative and was following up on the requirement in the Improvement Notice for the Tenant to provide a safe system of work with regards to emergency procedures in the workplace. One section of the report under the heading 'Issues requiring Attention By Body Corporate' identified works completed by the Owners Corporation in common areas. Some of those works required further attention.
4. The WorkSafe Report did not reference the Landlords' bathrooms or state that any apartment was uninhabitable.
5. During the hearing evidence was given by the Tenant about Boroondara City Council conducting an inspection of the premises on 21 November 2017.[3] By letter dated 13 December 2017 to BKH the business was assessed as 'satisfactory'. The following items relevant to the Landlords' bathrooms were identified by the Council as requiring rectification 'before the next routine inspection'-
   1. room 402 - ‑replace the cracked wall tile located in the bathroom so that all surfaces are maintained in a state of good repair; and
   2. room 403 - secure the loose plastic ceiling vent located in the bathroom, repair the non-functioning light fixture located in the bathroom;
   3. room 502 - ensure window is unlocked and able to be easily opened at all times.
6. The items in three bathrooms requiring rectification were minor in nature and not proof that all Landlords' bathrooms underwent 'a substantial deterioration in condition and became defective' since 2015.
7. The works proposed by the Tenant in June 2018 went well beyond the repairs required by Boroondara Council to three of the Landlords' apartments.

1. The repair covenant in s 52 of the RLA is a covenant to repair on notice.[4]
2. There is no evidence before me of the Landlords of apartments 402 or 403 being requested to rectify the items in the Boroondara City Council letter of 21 November 2017. Even if they had been, it would not entitle the Tenant to withhold rent from all Landlords.
3. The Tenant submits that between June and July 2018 it had on four occasions communicated 'in significant detail' all aspects of the defects. It relies upon:
   1. the 22 June 2018 works proposal;
   2. the 29 June 2018 letter to the Owner's Corporation committee
   3. the 5 July 2018 follow up document enclosing the WorkSafe report and Boroondara Council report; and
   4. the 10 July 2018 letter from Ms Zhao to all apartment owners.
4. As noted earlier, the 22 June 2018 proposal did not identify specific defects. It was a proposal put forward under clause 22.4 of the Leases. To the extent that the photos depicted defects, there was no request to repair.
5. The 29 June 2018 letter to the Owner's Corporation committee was in response to Mr Goldyn's letter of 27 June 2018.
6. Mr Goldyn wrote in response to the 22 June 2018 proposal that the proposed works constituted a major renovation of bathrooms and as capital works fell under clause 22.4.1 of his lease. Mr Goldyn's email on its face is written by him as a landlord and also references other landlords. He refers to a meeting of landlords the following week regarding the proposed works. While his letter is signed by him, it includes the words 'Chairman of the OC Committee 432870J' after his name.
7. Mr Goldyn says he wrote the letter in his personal capacity and not as a letter from the OC Committee. The content of the letter which is specific to his apartment in many aspects supports that position. He informed the Tenant that it did not have authority to deduct any monies from the rent.
8. The 29 June 2018 letter to the Owner's Corporation subcommittee stated that many of the bathrooms are now in a state where there can be no further repair. It read 'We had multiple instances of cracked tiles, baths with surface peeling leaving exposed metal, mirrors with silvering deterioration etc.'
9. The 29 June 2018 letter is not a letter to specific Landlords requiring defects in specific apartments to be repaired. It does not request any repairs but rather seeks to justify the need for the proposed works.
10. Similarly the 5 July 2018 document entitled 'Justification for Immediate Bathroom Renovation Beaumont Kew Hotel 5th July 2018' does not identify defects in specific apartments and require the Landlord of that apartment to repair a specified defect. The letter has a link to a dropbox of photographs of bathrooms and references a maintenance record. The letter is the Tenant's justification for the proposed works. It is not a notice to repair to Landlords under s 52 of the RLA. Landlords were not provided with a choice to rectify a specified defect or undertake the refurbishment of their bathroom.
11. The 10 July 2018 letter repeats much of the 5 July 2018 document and does not ask any Landlord to repair any defect. The letter repeats the justification for the proposed bathroom renovation.
12. Mr Briffa gave evidence for the Landlords. He is the managing director of the Network Pacific Group which includes Network Pacific Strata Management, the owners corporation manager and Network Pacific Real Estate, the premises manager. He gave evidence of discussions 'six months into the lease' where the Tenant began conversing with his employee Silvana Di Camilo, a property manager, alluding to some deficiencies and defects inside the apartments. He spoke with Ms Di Camilo at length about them and they concluded that many of the items were general items that serviced apartment operators would take responsibility for such as cleaning mould in bathrooms. He was not party to the discussions.
13. Mr Briffa's evidence was that after receiving the June 2018 letter and apartments being reinspected he saw the bathrooms had 'a little bit of wear' but otherwise being in 'good nick'.
14. One Landlord, Mr Polidano gave evidence that the first time an issue was raised about the condition of the bathroom in his apartment was in the June 2018 letter.
15. The Tenant has not given evidence of requesting repairs from any Landlord of specific items in their bathrooms before the Landlords purported to terminate the Leases on 3 September 2018. Had it done so, and the Landlords refused to repair, the Tenant may have had rights under s 52 of the RLA to perform the repairs itself and seek reimbursement from the Landlords.
16. Neither Ms Zhao or Mr Dunstan gave evidence of raising specific defects with Landlords relating to their respective apartments and requesting the defects be rectified. Mr Dunstan said he had no discussion with Landlords about the bathrooms before the June 2018 letter. While there was reference to Ms Zhao to general discussions about bathroom refurbishment, such discussions on the evidence fell well short of being a request for repairs under s 52 of the RLA.
17. I find that the Tenant has not:
    1. established the condition of the bathrooms when the renewed Leases were entered into as required by s 52 of the RLA; and/or
    2. demonstrated that it gave any Landlords notice of repairs as required by s 52 of the RLA.
18. The Tenant has failed to prove that the Landlords were obliged under s 52 to pay for the proposed works and accordingly the Tenant was not entitled to offset repair costs against rent due.

Was the Tenant entitled at common law to offset the cost of upgrade works against rent?

1. The Tenant in its Reply to Closing Submissions relies upon s 57 of the RLA. No submissions were made as to how the common law might entitle the Tenant to offset the costs.
2. In the absence of any submission as to how the common law provides a defence to the Tenant, the claim fails for the same reasons as the s 57 claim fails.

Was the Tenant entitled under s 57(1) to offset the cost of the proposed works against rent?

1. Section 57 of the RLA is entitled 'Damaged premises' and provides:

(1) A retail premises lease is taken to provide the following if the retail premises, or the building in which the premises are located, is damaged -

(a) except where the tenant caused the damage, the tenant is not liable to pay rent, or any amount in respect of outgoings or other charges, that is attributable to any period during which the premises cannot be used under the lease or are inaccessible due to that damage; and

(b) except where the tenant caused the damage, if the premises can be used under the lease but that use is reduced to some extent by the damage, the tenant's liability for rent, and any amount in respect of outgoings or other charges, that is attributable to any period during which the use is reduced is decreased to the same extent; ...

1. The defects relied upon are the same defects relied upon for the claim under s 52 of the RLA set out earlier in these reasons. As discussed in the s 52 context the documents relied upon do not identify what defects may have been present in each of the 23 Landlords' apartments.
2. The Tenant pleads in its Points of Defence that these defects meant the bathrooms were damaged within the meaning of s 57 and therefore could not be used at all, or to their normal extent. The Tenant asserts that the 'defects were so substantial that the Apartments were not fit for habitation and rental and could not be leased out ...from July 2018.'
3. The Tenant submits that the poor appearance and guest complaints caused by these defects caused damage to the business reputation and guest satisfaction ratings and affected the occupancy rate and limited the tariff achievable. It asserts that it was therefore entitled to withhold the rent, or part thereof, under s 57 of the RLA.
4. The Tenant has not provided evidence to support this claim. For example, there was no valuation evidence to support the claim that the occupancy rate and achievable tariff have been impacted by the condition of the bathrooms. No guest complaints were provided nor were any guests called to give evidence.
5. The Tenant submits that rooms were out of order due to increased maintenance requirements affecting their availability due to the time required to regularly remove and grout /silicone, application of chemicals to kill mould then replacing with fresh silicone, attempting to seal cracks in tiles and gaps between tap fittings and shower walls. There is no evidence of what apartment was out of order for what time due to any maintenance works.
6. The onus of proving those assertions rests with the Tenant.[5]
7. To establish any entitlement to offset any part of the rent under s 57 of the RLA, the Tenant must establish that the apartments (or part thereof) were damaged to the extent that they could not be used in part or at all.
8. The Tenant submits that the impact to its business was obvious. It says it could not utilise the apartments and stopped utilising them in July 2018 because:
   1. the rooms were of poor appearance and caused guest complaints which damaged its ratings and reputation;
   2. rooms were out of order due to increased maintenance requirements; and
   3. defects that were part of Essential Safety Measures were noncompliant and as such the Tenant should not utilise the premises because of potential risk to guests and insurance would not cover the premises.
9. Other than making broad assertions the Tenant did not provide specific evidence of:-
   1. having to turn guests away because of the unavailability of any apartment due to maintenance works;
   2. damage to its reputation or rating;
   3. what apartment could not be used for what time period because of these issues; or
   4. the impact of any of the allegations on its insurance cover.
10. Section 57 is predicated upon there being damage. The word 'damage' is not defined and as such bears its plain and ordinary meaning.
11. In Sun v Younan, Senior Member Walker said about the meaning of 'damage' in s 57:[6]

In normal parlance it is used to refer to accidental damage but it seems to me that the section envisages any state of disrepair which renders the Premises unable to be used or inaccessible. If rented premises fall into such a degree of disrepair then I think the section applies. For example if a landlord so neglected his obligation to make structural repairs that the premises fell down it could not sensibly be said to be said that the premises were not damaged. Where the consequences of disrepair were less serious the premises are nonetheless damaged. It is a matter of degree. The want of the repair is the cause. The damage is the effect.

1. The repair of premises 'damaged' under s 57 is not the same as the obligation to repair and maintain under s 52.
2. The Tenant gave extensive evidence about a series of photographs of bathrooms. The photographs show the condition of the apartment bathrooms. There is evidence of, at least in some apartments, the occasional cracked tile, flaking paint in bathtubs, missing grout or discoloured grout, mould in some areas and gaps around taps. There is no doubt that the bathrooms looked outdated and worn compared with the bathrooms proposed by the Tenant.
3. The Tenant referred to a non-compliance notice issued to it on 8 October 2018 from Boroondara City Council as proof of defects or damage to the apartments. The notice relates to 18 of the Landlords' apartments and required rectification within 60 days (Non-Compliance Notice) of certain items. The items included such things as:
   1. cleaning surfaces in the bathroom to remove mould in rooms 110 and 302;
   2. sealing a gap in wall joints below wash basis in rooms 116, 117, 207, 208, 302, 404, and 502;
   3. repair or replace the damaged wall tiles located around bathtubs in rooms 204, 209, 211, 215, 302, 402 and 504; and
   4. replace deteriorated mouldy silicon around bathtubs and showers in 109, 204, 211, 213, 214, 215, 302, 502, and 504.
4. One difficulty with the Tenant's case is that it bundles the apartments together as if they are one premises rather than looking at each apartment as a separately leased apartment and identifying whether a particular apartment was damaged within the meaning of s 57. There are 23 apartments and 23 leases.
5. Neither the photos nor the Non-Compliance Notice show that any of the Landlords' apartments were damaged for the purpose of s 57 of the RLA.
6. Mr Briffa gave evidence which was not challenged that a new serviced apartment business operator took over approximately two thirds of the apartments shortly after the Tenant vacated the premises. The new tenant conducted no substantial renovation works in any of the bathrooms prior to the commencement of the operation of their business.
7. The Tenant claims that the new operator charged a reduced rent. That may be so but that does not make the apartments unusable.
8. The Tenant has failed to establish on the evidence that it is more likely than not that the apartments were not able to be used because of damage to the bathrooms. Accordingly, no right to an abatement of rent arises under s 57 of the RLA.

1. Counsel for the Landlords helpfully set out in closing submissions the legal principles pertaining to repudiation which are not in dispute.
2. In Shevill v Builders Licensing Board[7], Gibbs CJ stated:

As Lord Wright pointed out in Heyman v. Darwins Ltd., repudiation is an ambiguous word and is used in various senses. We are of course concerned only with a case in which it is admitted that there was a valid and binding contract. Such a contract may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way. In such a case the innocent party is entitled to accept the repudiation, thereby discharging himself from further performance, and sue for damages.

1. Mr Epstein submits that Sheville does not assist the Landlords as they are not innocent because of their refusal to perform repair and maintenance obligations over a substantial period of time. There is no evidence however of the Landlords being given notice of the need to repair or maintain.
2. In Progressive Mailing House Pty Ltd v Tabali Pty Ltd[8] Mason J stated:

...repudiation of a contract is a serious matter and is not to be lightly inferred and... neither a breach of a covenant to pay rent nor a breach of a covenant to repair, without more, constitutes a breach of a fundamental term, nor amounts to a repudiation of a lease.

1. In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd[9] the majority stated:

The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation.... Secondly, it may refer to any breach of contract which justifies termination by the other party.... There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words.

1. The promisor's words or conduct are construed objectively so as to determine their intention or position.[10] The promisor's subjective state of mind is irrelevant; what matters is the character of the promisor's conduct.[11]
2. In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [12] Brennan J stated:

Repudiation is not ascertained by an inquiry into the subjective state of mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party's inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. 30. His Honour held that the relevant question is as follows:18 Would a reasonable person in the shoes of the innocent party clearly infer that the other party would not be bound by the contract or would fulfil it only in a manner substantially inconsistent with that party's obligations and in no other way?

1. In Koompahtoo, the majority put it as follows:[13]

The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.

1. Words or conduct clearly implying a refusal to perform may constitute repudiation.[14]
2. The Tenant submits that regarding the principles stated in Laurinda and Koompahtoo, a reasonable person would conclude that the Landlords did not intend to perform their obligations under the lease.
3. I do not accept the Tenant's submission. The Tenant's interpretation of clause 22.4 of the Leases is contrary to the wording of the clause. The Landlords at all times acted within their rights under the Leases.
4. I have found that the Tenant was not entitled to withhold rent. I must decide whether the withholding of rent amounts to repudiation by the Tenant.
5. I accept the Landlords' submissions that the following acts of the Tenant, when taken together, amount to repudiatory conduct by the Tenant. The Tenant demonstrated that it had no intention of complying with its obligations under the Leases to pay rent when it fell due:-
   1. the failure to pay the rent which fell due on 1 July 2018;
   2. the email of 12 July 2018 where Ms Zhao wrote in response for a demand for rent:

for the owners haven't advice (sic) me their preferred payment terms. I will offset that the full rent to the cost based on the lease agreement until they officially notify me their preferred payment options. The landlord upgrade work is not subject to landlord's approval, as tenant we do need to make sure the unit is up to the standard and comply to the Health and Safety Act.

1. the statement from Ms Zhao that the Tenant had no intention to pay the rent until such time as the Tenant' demands for the proposed works were met;

1. the demand in a letter dated 17 July 2018 from Spencer Reyner the then solicitors for the Tenant, to Ms Di Camillo that the July s 146 Notices be withdrawn. Spencer Reyner reiterated the Tenant's view that it had complied with its obligations under the Leases 'by way of proceeding with and conducting Landlord Upgrade Works and subsequently has offset the rental'. Spencer Reyner specifically relied upon clause 22.5. of the Leases;
2. the failure to reply to the Landlord's solicitors letter of 27 July 2018 which requested evidence of the alleged agreed amount and agreed purpose referred to in clause 22.5.1 of the lease which the Tenant asserted formed the basis of the rent set off; and
3. the tenant failed to pay the August 2018 and September 2018 rent.

1. I accept the Landlords' submissions by Mr Virgona that
   1. while, as noted above by reference to Mason J's judgment in Progressive Mailing House, a breach of a covenant to pay rent without more will not constitute a repudiation of a lease, the course of conduct over a period of months as set out above plainly constitutes the 'more' to which His Honour was referring.
   2. viewed objectively, a reasonable person in the shoes of the Landlords could only infer from the correspondence referred to above and the repeated failure to pay the rent for a period of three months, that the Tenant had no intention to honour its obligations under the leases in respect of its obligation to pay the rent, and accordingly the Landlords were entitled to accept the repudiation by the Tenant.
2. In summary I have found that
   1. The Tenant did not have a right to offset rent against the cost of the proposed works; and
   2. The Tenant repudiated the Leases by its conduct prior to 3 September 2018.
3. In the circumstances I find that the Landlords validly terminated the Leases for repudiation on about 3 September 2018.

What is the consequence of the Landlords terminating the Leases on 3 September 2018?

1. By the termination letter dated 3 September 2018 from KLC Law to Spencer Rayner, the Landlords stated that they were willing to permit the Tenant to remain in the premises as a monthly tenant.
2. The Landlords contend that, as there was no entitlement to possession of the apartments after 3 September 2018, the most reasonable inference is that the Tenant occupied the apartments under the monthly tenancies.
3. The Tenant says that there is no evidence that the Tenant accepted the offer of monthly tenancies either in writing, by performance or by paying rent.
4. I accept the Landlords' contention for reasons that follow.
5. It is important to look at the actions of the parties after 3 September 2018.
6. By letter dated 10 September 2018, from Spencer Reyner to KLC Law, the Tenant denied it repudiated the Leases and reiterated the Tenant's right to offset rent against Landlord Upgrade Works. The letter was silent about the offer of monthly tenancies.
7. The parties agreed that on 5 October 2018 the Tenant paid $137,474.52 for rent to the managing agent without admission. No further evidence was given about this payment.
8. On about 8 October 2018, Boroondara City Council issued the Non-Compliance Notice following an inspection on 4 October 2018. The inspection was part of the Council's annual review process of the premises to ensure compliance with the Public Health and Wellbeing Act 2008 (Vic) and regulations. The Council gave the Tenant 60 days to rectify the noncompliance items.
9. The non-complying items required such things as
   1. cleaning surfaces in the bathroom to remove mould in rooms 110 and 302;
   2. sealing a gap in wall joints below wash basis in rooms 116, 117, 207, 208, 302, 404, and 502;
   3. Repair or replace the damaged wall tiles located around bathtubs in rooms 204, 209, 211, 215, 302, 402 and 504; and
   4. replace deteriorated mouldy silicon around bathtubs and showers in rooms 109, 204, 211, 213, 214, 215, 302, 502, and 504.
10. By letters dated 13 October 2018 sent on about 15 and 16 October 2018, the Tenant gave the Landlords notice of the Non-Compliance Notice and requested the respective items referred to in the Non-Compliance Notice be rectified. The letters requested the Landlords advise within 24 hours of their plan to rectify the items listed stating that if a plan was not provided within 24 hours a breach notice would be issued. The Tenant further advised that apartments that had bathroom renovations planned but not started or completed were excused by the Council from the compliance orders.
11. On about 30 October 2018, the Landlords served further notices on the Tenant pursuant to s 146 of the PLA requiring the Tenant to repair and maintain the apartments in accordance with the Leases noting the Tenant was now on monthly leases. The notices stated that in breach of the repair obligation under the lease, the Tenant failed to repair and/or rectify the items detailed in the Non-Compliance Notice.
12. On about 3 November 2018, the Tenant served breach notices entitled 'Notices for breach of duty to landlord of rented premises' dated 31 October 2018 to the Landlords. The notices confirm the existence of a lease and required amongst other things that the Landlords repair and maintain the apartments in accordance with the Non-Compliance Notice within 14 days.
13. On about 9 November 2018, the Landlords served notices on the Tenant pursuant to s 146 of the PLA requiring the Tenant to pay the October 2018 rent.
14. By letter dated 27 November 2018 to the Landlords, the Tenant gave notice of termination of the lease of each of the Landlords' apartments as of 5pm on 2 December 2018. The Tenant claims in its Points of Defence that the termination was on account of the Landlords' repudiation of the Leases.
15. On 29 November 2018 KLC Law sent a letter to the Tenant's then solicitors Spencer Rayner stating that the Tenant had repudiated the monthly tenancies by amongst other things purporting to terminate the Leases.
16. The consequence of the Landlords terminating the Leases on 3 September 2018 is that the Tenant remained in possession on monthly tenancies. The Tenant's subsequent conduct supports this finding because of it:
    1. remaining in possession of the premises;
    2. issuing letters dated 13 October 2018 and 27 November 2018 and notices of breach dated 3 November 2019 to the Landlords; and
    3. participating in a mediation at the Office of the Small Business Commissioner which mediation was suggested by KCL Law in its 3 September 2018 letter in which it offered monthly tenancies.
17. There is no ambiguity or uncertainty in the terms of the monthly tenancies as suggested by the Tenant. They are on the same terms as the Leases but modified to a monthly arrangement.
18. In final submission the Tenant says in opposition to a monthly tenancy that the Landlords failed to provide a disclosure statement. No explanation was provided as to why the Landlords would have been obliged to provide a disclosure statement or the consequence that might follow if one was not provided. A disclosure statement is not required for a valid lease to be formed.
19. The actions of the Tenant were consistent with the existence of a lease. The Leases were terminated on 3 September 2018. At that time the Tenant was offered monthly leases. Notwithstanding its denial of any repudiation of the Leases, the tenant remained in possession and the arrangement between the Landlords and Tenant after that date viewed objectively is consistent with the existence of monthly tenancies on the same terms as the Leases.
20. If not pursuant to monthly tenancies, it is unclear on what basis the Tenant could have remained in possession of the premises after 3 September 2018. The Tenant had otherwise forfeited the Leases and had not sought relief from forfeiture from the Tribunal.
21. I accept the Landlords contention that the Tenant purporting to terminate the leases effective 2 December 2018 was a repudiation of the monthly tenancies. The Tenant evinced a clear intention to no longer be bound by the monthly tenancies.
22. The Landlords by the KLC Law letter of 29 November 2018 accepted the Tenant's repudiation of the monthly tenancies and terminated the monthly tenancies effective from 2 December 2018. The Landlords required the Tenant to deliver the keys and security passes to the managing agent by 5 pm on 2 December 2018 and return the apartments to the Landlords in a clean and repaired condition as required by the Leases.
23. Mr Dunstan said there were no keys or security passes to return as the locking mechanism belonged to the Tenant.
24. The Tenant did not comply with the 29 November 2018 letter. I accept the Landlords' position that it was entitled to claim rent or an amount equivalent to rent up to 2 January 2019 due to the Tenant's failure to return possession of the premises before that date. It was not until April 2019 that the Tenant removed the locking system from the apartment doors.
25. I am not required to decide whether the Landlord's breach notices dated 30 October 2018 were valid as the Landlords did not terminate based upon those notices.
26. I accept that there may have been repair works in some apartments which were more than cosmetic or cleaning works. Landlords were given notice of the issues in their apartments by the Tenant's letters dated 13 October 2018 and 3 November 2018.
27. The existence of these repair works did not however entitle the Tenant to terminate the monthly tenancies based on the Landlords' alleged repudiation.
28. It is well-established that a party who is not willing and able to perform the contract according to its terms has no right to terminate the contract for the other party's breach, even if that breach would otherwise justify termination.[15]
29. The Tenant was in breach of its obligations under the Leases and monthly tenancies for failing to pay rent. The Tenant was not ready, willing and able to perform its obligations.
30. Furthermore, the Landlords covenant to repair under the Lease had no time stipulated for compliance.
31. The Landlords rely upon the decision of Croft J in Red Pepper[16], where his Honour stated at [53]:

Where a contract or lease does not stipulate a time for performance of a particular term, it is unlikely that the term is fundamental or essential. This principle has been applied to a landlord's repair covenant leading to the conclusion that it was not an essential or fundamental term of a lease. There is no reason, in my view, why the same position does not follow in the present circumstances. Moreover, a landlord's repair covenant will, typically, encompass a large range of possible defects which may need attention; from major structural defects down to the most minor and inconsequential defects or problems. It follows that to treat such a covenant as, ipso facto, a fundamental term of the lease with the consequence that any breach, no matter how trivial, would entitle the tenant to terminate the lease is contrary to common sense and would cause injustice to landlords.

1. For the reasoning provided by Croft J, there is no reason why the same position does not follow in this case.
2. The first time the Landlords were put on notice of the need to carry out repairs was not until the Tenant's letter of 13 October 2018 setting out the details of the Boroondara Council's Non-Compliance Notice. Even then it is questionable as to what items were Tenant responsibilities rather than Landlords' obligations.
3. What is clear is that the works for the most part appeared to be cosmetic or cleaning works. They were not substantial, and each apartment must be considered in isolation from any other.
4. Given the relatively minor nature of most items and the fact that there was no time stipulation under the Leases for any Landlords' works to be carried out, any failure on the part of the Landlords to carry out those works does not constitute repudiatory conduct on the part of the Landlords.
5. This conclusion is further supported by the fact that the Tenant by its letters dated 13 October 2018, required the Landlords to undertake works within 60 days. The Tenant alleged repudiation by the Landlords occurred before the 60 day period expired.
6. For these reasons, I find that Landlords terminated the monthly tenancies effective 2 December 2018.
7. The Tenant has failed to establish any of the grounds in its Points of Defence and accordingly its Counterclaim must fail.

What is the quantum of the Landlords' claims against the Tenant?

1. In the Amended Points of Claim the Landlords claim:
   1. The Outstanding Amount defined to be $126,948.09 for rent and interest owing up to 2 January 2019;
   2. Interest on the Outstanding Amount;
   3. Additional Costs defined to be $10,334.17 being the costs to clean and repair; and
   4. Costs.

1. The Tenant did not dispute that the rent payable to the Landlords remained unpaid since July 2018. The amount of rent was $1,592.50 per apartment per month.
2. The Tenant gave no evidence to challenge the quantum of the Landlord's' rent claim other than to deny liability and suggest in closing submissions without reference to any evidence that no rent was owed before 1 November 2018.
3. I have found that the Tenant is liable to pay rent up to 2 January 2019.
4. The parties agree that the Tenant paid $137,474.52 on 5 October 2018.
5. The parties are required to submit an agreed quantum for rent owing up to 2 January 2019 and interest thereon.

1. Clause 5.1 of the Leases required the Tenant to return possession of the premises in clean and repaired condition.
2. The Landlord relies upon a series of invoices relating to general cleaning, minor repair works and locksmith works to support the claim for the Additional Costs.
3. Mr Briffa gave evidence that the apartments were dirty and messy when the managing agent undertook a property inspection after the Tenant vacated.
4. Ms Zhao said the apartments were cleaned between June and December 2019.
5. Mr Dunstan said he thought the premises were returned in a clean state although there may have been some dust. He did not check the rooms and they were cleaned when the last guest left.
6. I accept the evidence of Mr Briffa that some cleaning was required after the Tenant vacated in addition to the cleaning undertaken by the Tenant. I accept as evidence of general cleaning and minor repair works totalling $1290.60 the following invoices: -
   1. Hammersmith invoice for $45;
   2. 24: seven Maintenance Solutions invoice no 279138 for $132
   3. Tarkis Vissaritis invoice for $150;
   4. 24: seven Maintenance Solutions invoice no 279139 for $132;
   5. 24: seven Maintenance Solutions invoice no 279296 for $145.20;
   6. 24: seven Maintenance Solutions invoice no 279298 for $145.20;
   7. 24: seven Maintenance Solutions invoice no 279295 for $145.20;
   8. 24: seven Maintenance Solutions invoice no 279114 for $132;
   9. 24: seven Maintenance Solutions invoice no 279112 for $132;
   10. 24: seven Maintenance Solutions invoice no 279137 for $132.
7. I do not accept that the Landlords are entitled to be compensated for the installation of new locks for the reasons that follows.
8. By text message the date of which is unclear, Mr Briffa texted Mr Dunstan stating:

Please ensure all landlords doors are opened on Saturday morning at 10:00 am. Locksmith will be changing all locks for landlords managed by Network Pacific Real Estate.

This morning we removed the remaining components of our locks on doors of apartments managed by Network Pacific Real estate to facilitate ease of installation for your locksmith per your advice. Note that this means that those apartments are unsecured and I note that your locksmith has not yet attended. We take no responsibility for the security of those apartments....

1. Mr Briffa responded by text 'thanks Rob'.
2. The Landlords complain that the Tenant removed the entire locking mechanism for the doors. Mr Briffa said he never authorised Mr Dunstan to remove locking mechanisms from the doors. He said that all that had to be done was for Mr Dunstan to cut some wires and remove the locks from his vin card system.
3. The Tenant says that the door locks were part of the Tenant's installation which is part of the hotel access management system purchase for the hotel operation. It says they remain Tenant property and it was entitled and required to remove them at the end of the lease.
4. I accept the Tenant's position. Mr Briffa's text made it clear that a locksmith would be changing all locks. It was reasonable for the Tenant to remove its locking mechanism on the understanding that new locks would be installed.
5. I do not accept that the Tenant is liable to pay the cost of a rental valuation, an invoice for which was included in the bundle of invoices relied upon by the Landlords to substantiate the Additional Costs. There is no evidence before me as to the liability of the Tenant to pay this cost.
6. I assess the Landlords' damages for Additional Costs to be $1,290.60.

1. The parties agree that Ms Zhao and Mr Dunstan guaranteed the Tenant's obligation under the Leases.
2. I find that Ms Zhao and Mr Dunstan are liable to the Landlords for the amount payable to them by the Tenant.

[1] Clause 22.4 is entitled 'Landlord's Repair, Maintenance and Replacement obligations'.

[2] Versus (Aus) Pty Ltd v ANH Nominees Pty Ltd [2015] VSC 515 at [52]- [57]

[3] The inspection was routine and was part of the annual review process for the purposes of assessment of compliance with the Public Health and Wellbeing Regulations 2009 (Vic) ("Regulations").

[4] Red Pepper Property Group Pty Ltd v S 3 Sth Melb Pty Ltd [2019] VSC 41 at [61] (Red Pepper).

[5] Casa Di Iorio Investments Pty Ltd v Guirguis [2017] VSC 266 at [56].

[6] [2010] VCAT 254 at [35].

[7] [1982] HCA 47; (1982) 149 CLR 620 at 625-626 (citations omitted) ( Shevill).

[8] [1985] HCA 14; (1985) 157 CLR 17 at 32-33 (Progessive Mailing House).

[9] [2007] HCA 61; (2007) 233 CLR 115 at 135-136 (citations omitted) (Koompahtoo).

[11] Sopov v Kane Constructions Pty Ltd (2007) 20 VR 127 at [9].

[12] [1989] HCA 23; (1989) 166 CLR 623 at 647 (Laurinda).

[14] Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286 at 304-305; Carr v JA Berriman Pty Ltd [1953] HCA 31; (1953) 89 CLR 327 at 351.

[15] DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 at 433.