(2011) 84 ACSR 261
Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113
[2003] NSWCA 91
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 644
[2017] HCA 12
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640
(1996) 148 ALR 472
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104
Source
Original judgment source is linked above.
Catchwords
(2011) 84 ACSR 261
Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113[2003] NSWCA 91
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 644[2017] HCA 12
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640(1996) 148 ALR 472
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104[2015] HCA 37
Ogdens Limited v. Weinberg (1906) 95 LT 567
Railway Commissioners for New South Wales v Orton (1922) 30 CLR 422(2003) 21 ACLC 1505
Registrar of Titles (WA) v Franzon (1975) 132 CLR 611
SAS Trustee Corporation v Miles (2018) 265 CLR 137[2018] HCA 55
Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223
TAL Life Ltd v ShuetrimMetLife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439[2016] NSWCA 68
TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333
[2002] NSWCA 82
The King v Rohan (a pseudonym) [2024] HCA 3
Thiess v Collector of Customs (2014) 250 CLR 664
[2014] HCA 12
Trustees of the Project Volar Creditors' Trust [2022] NSWSC 443
(2022) 161 ACSR 569
Williams v The Queen (1986) 161 CLR 278
Judgment (22 paragraphs)
[1]
rtz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223
TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68
TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333; [2002] NSWCA 82
The King v Rohan (a pseudonym) [2024] HCA 3
Thiess v Collector of Customs (2014) 250 CLR 664; [2014] HCA 12
Trustees of the Project Volar Creditors' Trust [2022] NSWSC 443; (2022) 161 ACSR 569
Williams v The Queen (1986) 161 CLR 278; [1986] HCA 88
Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158
Texts Cited: Macquarie Dictionary, online ed., accessed on 21 May 2024
Oxford English Dictionary, online ed., accessed 21 May 2024
Category: Principal judgment
Parties: Newstart 225 Pty Limited (Plaintiff)
Schon Gregory Condon (Defendant)
Representation: Counsel:
V Gray (Plaintiff)
T Cleary (Defendant)
[2]
Solicitors:
Matthew Folbigg Lawyers (Defendant)
File Number(s): 2023/00299526
Decision under appeal Court or tribunal: Local Court
Jurisdiction: Civil
Date of Decision: 22 August 2023
Before: Green LCM
File Number(s): 2021/00254599
[3]
Introduction
By its summons filed on 18 September 2023, the plaintiff, Newstart 225 Pty Limited (Newstart), appeals or, to the extent necessary, seeks leave to appeal, from orders made in the Local Court on 22 August 2023 by Greenwood LCM that Newstart's statement of claim be dismissed and Newstart pay the costs of the defendant, Mr Schon Condon, on the ordinary basis until 8 December 2021 and thereafter on an indemnity basis.
In order to consider the plaintiff's grounds of appeal and the principal issues in these proceedings, it is necessary to understand the relevant factual circumstances and the reasoning of the learned Magistrate.
[4]
Factual circumstances and background to the Local Court proceedings
The facts as to what relevantly occurred and the background to the proceedings between Newstart and Mr Condon are derived from the learned Magistrate's reasons for judgment delivered on 22 August 2023 or were agreed and can be adequately summarised as follows.
From 15 October 2015, Waleycorp Pty Ltd (Waleycorp) leased premises at Marrickville owned by Newstart under a written lease with a term of 3 years. In 2019, the lease was extended for another three years until 14 October 2021.
On 13 January 2021, Waleycorp was placed into voluntary administration and Mr Condon was appointed as administrator. The lease was still in operation at that time. Plant equipment, fixtures and fittings belonging to Waleycorp remained at the premises.
On 14 January 2021, Mr Condon wrote to Newstart concerning the premises and, on about this date, he instructed Slattery & Co to value Waleycorp's assets at the premises. Mr Condon's letter to Newstart was found by Greenwood LCM to have said in effect:
"Mr Condon was appointed administrator of [Waleycorp] on 13 January. Mr Condon understood [Waleycorp] leased the premises from Newstart. Mr Condon was not a party to any lease between Newstart and [Waleycorp] and had not adopted that lease and Mr Condon would only be liable for so much of the rent or other amounts payable by [Waleycorp], as would be attributable to a period beginning for [sic] more than five business days after the administration began."
On 18 January 2021, Kosmas Papadopoulos, director of Newstart, informed Mr Condon that a prospective tenant would start leasing the premises from March 2021.
On 21 January 2021, Mr Petrovic on behalf of Mr Condon informed Newstart that Waleycorp would continue to occupy the premises for two weeks for the purpose of realising Waleycorp's assets held at the premises.
Between 21 January and 3 February 2021, Mr Condon remained in possession of the premises and Slattery & Co, as his agent, sold Waleycorp's commercially realisable assets at the premises to Just Limitless Australia Pty Ltd (Just Limitless) and Just Limitless removed the purchased items from the premises.
On 3 February 2021, Mr Condon returned the key to Newstart.
On 4 February 2021, Newstart retook possession of the premises and issued an invoice for $4,308 for rent for the period 21 January to 4 February 2021. Mr Condon paid that amount on 4 February 2021.
[5]
The Reasoning of the Local Court
In the reasons for judgment, the Magistrate then noted that Newstart's claims against Mr Condon were based on tort and also on the Corporations Act 2001 (Cth) and her Honour dealt with the claim based on the Corporations Act first.
[6]
Claim based on the Corporations Act
For the purposes of the Corporations Act claim, her Honour recorded that it was not in dispute that Mr Condon was validly appointed as the administrator of Waleycorp. It was then noted that under s 437A of the Corporations Act, an administrator had control of the company's business, property and affairs and could dispose of any part of the property, and under s 437B, while exercising as such a power, the administrator was taken to be acting as the company's agent.
Based on s 437B and the decision in Gallop Investments Pty Ltd v Jones [2002] WASC 66, her Honour held that, subject to any exception established by Subdiv A of Div 9 of Pt 5.3A of the Corporations Act, Mr Condon could not be held personally liable for a claim for either debt or damages in respect of actions that he took as administrator of Waleycorp. As I understood it, this aspect of the Magistrate's decision was not challenged on this appeal.
Her Honour then turned to consider the provisions of Subdiv A of Div 9 (ss 443A to 443C) dealing with the liability of administrators. Section 443C was referred to and the relevant principles of statutory construction were noted. Her Honour held that s 443C appeared to make clear that that subdivision covers the field in relation to the personal liability of administrators. This conclusion was not in dispute in the present case.
Her Honour then considered s 443A and held that the reference to "debts" in s 443A(1) did not include "a makegood type claim … a claim in damages", relying on Branson J's decision in Molit (No.55) Pty Ltd v Lam Soon Australia Pty Ltd (Administrator Appointed) (No 2) [1996] FCA 659; (1996) 148 ALR 472. Once again, I did not understand that this aspect of her Honour's decision was challenged in this appeal.
Turning to s 443B(3), her Honour found that Mr Condon's letter of 14 January 2021 (the substance of which has been quoted above) "was fully compliant with s 443B(3)". It did not appear that anything turned on whether this conclusion was correct or not, since Waleycorp's occupation and use of the premises in order to sell the company's assets located on the premises meant that, if a notice had been given under s 443B(3), it ceased to have effect, by virtue of s 443B(5) and (6).
It was then noted that Newstart submitted that Mr Condon was personally liable for the lease because his notice to occupy the premises was out of time. Her Honour observed that Mr Condon had been appointed as administrator on 13 January 2021 and recorded Newstart's submission that the letter of 21 January concerning occupation of the premises was at least a day late and this made Mr Condon liable by operation of s 443B(2).
[7]
Claim based on tort
The learned Magistrate then described Newstart's alternative claim against Mr Condon as "a tort claim for failing to take reasonable care of the premises". After outlining Newstart's submissions in this regard, her Honour's analysis was as follows:
"The nature of the tortious wrong is not explicitly stated in Newstart's pleadings. It should have been specified in [sic, and] the specific elements of the tort must be addressed.
In the final submissions, Newstart uses the word 'negligence' but it is not stated in the pleadings. If it was a claim in negligence, there was no argument or evidence as to the existence of a duty of care, a breach of that duty or the issue of causation. Further, in the absence of the particular tort being expressly pleaded, Mr Condon was not in a position to respond or to consider the application or any defences that might be applicable. Repeatedly in submissions the term 'vicarious liability' is used but I am not aware of this being an identified tortious claim."
Once again, it was implicit in the reasons for judgment that the Magistrate rejected Newstart's tortious claim.
[8]
Contingent consideration of s 443B(8)
Her Honour concluded her reasoning by considering the application of s 443B(8) of the Corporations Act as follows:
"If I am wrong about my reasoning and conclusions in this case, it seems to me that this is a case in which s 443B(8) should apply of the Corporations Act. That says:
'Subsection (2) does not apply in so far as a court, by order, excuses the administrator from liability, but in order does not affect liability of the company.'
The administrator is not taken, because of subs (2), to have adopted the agreement or to be liable under the agreement otherwise [than] as mentioned in subs (2). My reasons for this finding are that Mr Condon made his position clear in his 14 January [letter] that he did not adopt the lease. [Waleycorp's] creditors would of course benefit from the fixtures and fittings being removed and sold. I am satisfied that Mr Condon needed 14 days to undertake this process and if he was to be held liable beyond that period, he may not have been able to direct the removal and sale of those assets, meaning they would have been surrendered to the detriment of creditors …".
[9]
Conclusion
The Magistrate's rejection of all of Newstart's claims was confirmed by the statement in the judgment that:
"FOR THE REASONS I HAVE SET OUT, THE NEWSTART CLAIM MUST FAIL."
The orders made by the Local Court on 22 August 23 were:
"Verdict for the defendant.
Statement of claim dismissed.
Plaintiff to pay defendant's costs of the proceedings on an ordinary basis until 08/12/21 and then on an indemnity basis."
[10]
The appeal and grounds of appeal
As noted above, Newstart filed its summons appealing, and seeking leave to appeal, from these orders on 18 September 2023.
In its summons instituting the appeal, Newstart sought the following orders:
"1. If leave to appeal be necessary, that leave.
2. Appeal allowed.
3. Judgment of the court below be set aside.
4. Judgment for the appellant.
5. Damages
6. Costs
7. Such further or other orders as may be just".
Newstart formulated its grounds of appeal in the summons as follows:
"1. The Court below failed to apply or misconstrued Corporations Act section 443B(2).
2. The Court below misconstrued Corporations Act section 443B(4) and (5)
3. The Court below (conditionally) purported to exercise jurisdiction under Corporations Act section 443B(8) when such jurisdiction had not been pleaded and was not part of the case.
4. The Court below erroneously held that no cause of action in tort had been pleaded."
In its written submissions, however, Newstart identified what it called the "principal issues" in this appeal by way of three questions as follows:
"2. The principal issues in this appeal under section 443B of the Corporations Act are: where a company in administration under Part 5.3A of the Corporations Act leases premises under a lease which:
(a) requires the lessee throughout the term of the lease to 'well and sufficiently repair, maintain, cleanse, empty and amend the demised premises, the fixtures therein and all drains sewers closets sanitary arrangements, systems, yards, pavements, gutters, walls and erections and keep both the outside and inside of the premises in clean and attractive order, repair, and condition …' [cl 3(a)], is an administrator of the company appointed under Part 5.3A who remains in occupation of the premises and exercises rights under the lease after the expiration of the 5-day period referred to in section 443B(2) personally liable to the lessor for damages sustained by the lessor in consequence of a failure by the lessee company to perform that covenant?
(b) gives the lessee company the right at the expiration of any earlier time to remove the lessee's fixtures and fittings from the leased premises subject to making good any damages caused by the removal [cl 3(w)], is an administrator of the company appointed under Part 5.3A entitled to exercise that right under the lease to remove fixtures and fittings without any personal liability for damage caused to the premises by the removal?
3. The principal issue under the general law of tort is: does the amended statement of claim disclose a cause of action against the defendant in trespass and if so does the evidence entitle the plaintiff to a verdict against the defendant in respect of that cause of action?"
[11]
Grounds of appeal 1 and 2
Newstart's first two grounds of appeal concerned the proper construction and operation of s 443B in the circumstances found by the learned Magistrate.
[12]
Submissions
Newstart's submissions proceeded on the basis that, since Mr Condon as agent of Waleycorp used the premises during the period from 21 January to 3 February 2021, a notice, if any, given under s 443B(3) ceased to have effect by virtue of s 443B(5) and (6) and thus s 443B(2) became operative in respect of that period.
It was submitted that, on the proper construction of s 443B(2), damages for the makegood costs incurred by Newstart as a result of the removal of items and repairs carried out on its behalf by J&K and the rent lost as a result of being unable to let the premises while they were being made good were "other amounts payable by the company under the agreement as is attributable to [the period of Mr Condon's occupation of the premises]".
In support of this contention, Newstart submitted that, pursuant to cl 3(a) of the lease, Wayleycorp was under an obligation "… at all times during the said term hereby granted [to] well and sufficiently repair, maintain, cleanse, empty and amend the demised premises, the fixtures therein and all drains sewers closets sanitary arrangements, systems, yards, pavements, gutters, walls and erections and keep both the outside and inside of the premises in clean and attractive order, repair, and condition …". This obligation was said to be a continuing obligation in the sense that it continued during every moment of Mr Condon's occupation of the premises between 21 January and 3 February 2021 and was breached during every moment of that period when the premises were not "in a clean etc. condition". Since the company was liable in damages for those breaches which continued while Mr Condon was in occupation, it was submitted that those damages were "amounts payable by the company … as is attributable to [the relevant period]" within s 443B(2). Consequently, under that subsection, Mr Condon was said to be personally liable for those damages.
Similarly, Newstart relied on the obligation, under cl 3(w) of the lease, to make good forthwith any damage done to the premises as a result of the removal of tenant's fixtures when the fixtures were removed. It was submitted that since the damage from removal of the fixtures occurred during the period of Mr Condon's occupation but was not made good at the time of removal, Waleycorp was at that time in breach of that clause and liable in damages, and such damages would therefore be "a money sum payable by Waleycorp attributable to the period … during which Mr Condon occupied the premises". Thus, it was said that Mr Condon was also personally liable under s 443B(2) for those amounts.
[13]
Consideration
The first two grounds of appeal (and the first two questions) depend on the proper construction of s 443B(2) of the Corporations Act. There was no dispute in the present case as to the principles of construction to be applied.
[14]
Principles of construction
The construction of this provision must focus on the statutory text, considered in its context which includes, where relevant, the legislative history and extrinsic materials: Thiess v Collector of Customs (2014) 250 CLR 664; [2014] HCA 12 at [22] (French CJ, Hayne, Kiefel, Gageler and Keane JJ). Attribution of meaning to the text in context is to be guided so far as possible by statutory purpose, on the understanding that a legislature ordinarily intends to pursue its purposes by coherent means: SAS Trustee Corporation v Miles (2018) 265 CLR 137; [2018] HCA 55 at [20] (Kiefel CJ, Bell and Nettle JJ) and [41] (Gageler J, as his Honour then was).
[15]
Purpose of Pt 5.3A and the context of s 443B
Section 443B is found in Ch 5 of the Corporations Act which deals with external administration of a company's affairs and, more specifically, in Pt 5.3A of that Chapter which is concerned with administration with a view to maximising the chances of the company continuing in existence, see s 435A(a). Another object of Pt 5.3A, set out in s 435A(b), is providing for the business, property and affairs of an insolvent company to be administered in such a way that, if it is not possible for the company or its business to continue in existence, the administration results in a better return for the company's creditors and members than would result from an immediate winding up of the company.
In the present case, Mr Condon was appointed as such an administrator of Waleycorp on 13 January 2021 and, on 18 February 2021, the creditors of the company resolved pursuant to s 439C(c) that the company be wound up. As a result and by virtue of s 435C(2)(c), the administration under Pt 5.3A which commenced on 13 January 2021 came to an end on 18 February 2021.
Section 437A defines the role of an administrator and provides, inter alia, that an administrator has control of the company's business, property and affairs and can dispose of any part of the property. Section 437B states that, while exercising such powers, the administrator is taken to be acting as the company's agent and s 437D establishes that "only the administrator can deal with the company's property". Subject to the provisions of the Corporations Act providing for the personal liability of an administrator, when an administrator is taken to be acting as the agent of the company, the administrator does not generally become personally liable for the obligations of the company: Railway Commissioners for New South Wales v Orton (1922) 30 CLR 422 at 425-426 (Knox C.J., Gavan Duffy and Starke JJ); [1922] HCA 16; Molit (No.55) Pty Ltd v Lam Soon Australia Pty Ltd (Administrator Appointed) (No 2) [1996] FCA 659; (1996) 148 ALR 472 (Molit); and see also [86] of the Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 (1988) (the Harmer Report) whose relevant recommendations were implemented by the enactment of Pt 5.3A (in its original form) relating to administrators by s 56 of the Corporate Law Reform Act 1992 (Cth).
The Corporations Act does make provision for an administrator to be personally liable for certain amounts, in Subdiv A of Div 9 of Pt 5.3A of Ch 5, which consists of ss 443A to 443C. Those sections provide, relevantly for present purposes:
"443A General debts
(1) The administrator of a company under administration is liable for debts he or she incurs, in the performance or exercise, or purported performance or exercise, of any of his or her functions and powers as administrator, for:
…
(c) property hired, leased, used or occupied…; or
…
(2) Subsection (1) has effect despite any agreement to the contrary, but without prejudice to the administrator's rights against the company or anyone else.
443B Payments for property used or occupied by, or in the possession of, the company
Scope
(1) This section applies if, under an agreement made before the administration of a company began, the company continues to use or occupy, or to be in possession of, property of which someone else is the owner or lessor … .
General rule
(2) Subject to this section, the administrator is liable for so much of the rent or other amounts payable by the company under the agreement as is attributable to a period:
(a) that begins more than 5 business days after the administration began; and
(b) throughout which:
(i) the company continues to use or occupy, or to be in possession of, the property; and
(ii) the administration continues.
(3) Within 5 business days after the beginning of the administration, the administrator may give to the owner or lessor a notice that:
(a) specifies the property; and
(b) states that the company does not propose to exercise rights in relation to the property; and
(c) if the administrator:
(i) knows the location of the property; or
(ii) could, by the exercise of reasonable diligence, know the location of the property;
specifies the location of the property.
(4) Despite subsection (2), the administrator is not liable for so much of the rent or other amounts payable by the company under the agreement as is attributable to a period during which a notice under subsection (3) is in force, but such a notice does not affect a liability of the company.
(5) A notice under subsection (3) ceases to have effect if:
(a) the administrator revokes it by writing given to the owner or lessor; or
(b) the company exercises, or purports to exercise, a right in relation to the property.
(6) For the purposes of subsection (5), the company does not exercise, or purport to exercise, a right in relation to the property merely because the company continues to occupy, or to be in possession of, the property, unless the company:
(a) also uses the property; or
(b) asserts a right, as against the owner or lessor, so to continue.
Restrictions on general rule
…
(8) Subsection (2) does not apply in so far as a court, by order, excuses the administrator from liability, but an order does not affect a liability of the company.
(9) The administrator is not taken because of subsection (2):
(a) to have adopted the agreement; or
(b) to be liable under the agreement otherwise than as mentioned in subsection (2).
443BA Certain taxation liabilities
(1) The administrator of a company is liable to pay to the Commissioner of Taxation:
(a) each amount payable under a remittance provision because of a deduction made by the administrator; and
(b) without limiting paragraph (a), so much of each amount payable under a remittance provision because of a deduction made by the company during the administration as equals so much of the deduction as is attributable to a period throughout which the administration continued;
even if the amount became payable after the end of the administration.
…
443C Administrator not otherwise liable for company's debts
The administrator of a company under administration is not liable for the company's debts except under this Subdivision."
[16]
Section 443B
By virtue of s 443B(1), the section applies "if, under an agreement made before the administration of a company began, the company continues to use or occupy, or to be in possession of, property of which someone else is the owner or lessor". Since Waleycorp, by its agent Mr Condon, continued to use or occupy or be in possession of Newstart's premises under the lease while the fittings and fixture were sold, s 443B applied in the present case.
Section 443B contains a "general rule" concerning the liability of an administrator in subs (2). This general rule is rendered inapplicable by operation of subs (4) if a notice is given complying with subs (3) and if the notice does not cease to have effect as provided in subss (5) and (6). In the present case, it was not in dispute that Waleycorp continued to use the premises between 21 January and 3 February 2021 for the purpose of realising the assets on the premises and thus, by virtue of subss (5) and (6), any notice given under subss (3) and (4) ceased to have effect and the general rule in subs (2) applied. Consequently, it is not necessary to consider subss (3)-(6) any further.
The remaining subsections, subss (7)-(9), establish "[r]estrictions on the general rule" in subs (2) as follows.
1. Subsection (7) relates to the effect of the appointment of a receiver of the property in question or the creation of security interest in the property and was not relevant in the present case.
2. Subsection (8) empowers a court, by order, to excuse an administrator from liability that would otherwise arise under subs (2). This subsection will also be referred to in relation to ground 3. It is sufficient at this point to note that such a provision indicates that subs (2) is not required to be given a restrictive construction since any inappropriate liability created by subs (2) could be cured by an order under subs (8). A similar point can be made concerning the operation of the more general provision in s 447A which also permits a court to make orders altering the application of s 443B(2): Re Mothercare Australia Ltd (admins apptd) [2013] NSWSC 263 at [6] (Black J).
3. Subsection (9) establishes that an administrator is not, because of subs (2), taken:
1. to have adopted the agreement, referred to in subs (1): par (a);
2. to be liable under that agreement otherwise than as mentioned in subs (2): par (b).
[17]
Application to the facts in the present case
Newstart sought to rely on s 443B(2) to establish that Mr Condon was personally liable for "other amounts payable by the company under the agreement as is attributable to [the relevant] period" from 21 January to 3 February 2021, namely:
1. the cost of work done in relation to: (a) removal of Dynabolts and locksons, wiring, furniture and rubbish from the premises; and (b) repair or replacement of the basement fan and the damaged handrail and making safe damaged wiring and lights, which can all be referred to as makegood cost claim, and
2. the rent lost because a new tenant could not take possession of the premises while the makegood work was being carried out, which can be referred to as the lost rent.
More particularly, it was contended that Waleycorp's breaches of cll 3(a) and 3(w) of the lease meant that the company was liable for unliquidated damages in respect of both the makegood costs and the lost rent, and the amount of such damages fell within the words "other amounts payable [by Waleycorp]". Then, it was in substance contended that each of the makegood costs and the lost rent was "attributable" to the relevant period from 21 January to 3 February 2021 because the obligations under cll 3(a) and 3(w) were either breached during the relevant period or were continuing obligations and the breach continued during the relevant period.
In my view, these submissions should not be accepted for a number of reasons.
First, on the proper construction of s 443B(2), "other amounts payable" do not include amounts recoverable by way of a claim for unliquidated damages for breach of a covenant in a lease. The expression "other amounts payable" in s 443B(2) refers to sums that are ascertained or can be ascertained which are payable and effectively recoverable as a debt. As explained above, an administrator's liabilities referred to in Subdiv A of Div 9 of Pt 5.3A of the Corporations Act are limited to debts and amounts which are payable and recoverable as a debt, they do not include liabilities for unliquidated damages for breach of covenants in the lease, whether the damages be for makegood costs or lost rent. Furthermore, since any such lost rent must be rent under a lease to a new tenant that could not be charged because the new tenant could not occupy the premises, the lost rent could not be "rent … payable by the company under the agreement" within s 443B(2).
[18]
Ground of appeal 4
The fourth ground of appeal, as it was developed in written submissions, related to whether, in the Local Court, Newstart pleaded a cause of action against the defendant in trespass and, if so, did the evidence entitle Newstart to a verdict against Mr Condon. This ground of appeal raises, at most, a question of mixed fact and law and consequently leave to appeal is required under s 40 of the Local Court Act.
In my view, given its focus on what was pleaded at first instance in this particular case, this ground of appeal 4 does not involve an issue of principle or a question of general public importance.
As to whether an injustice which was more than merely arguable was disclosed, it can be noted that the word "trespass" does not appear in the amended statement of claim, which was the pleading relied upon by Newstart in the Local Court. In oral submissions, the pleading of trespass was said to be found in par 2 of the amended statement of claim. That paragraph read as follows:
"On 21 January 2021 continuing until 4 February 2021 [Mr Condon] by his servants or agents entered upon the Premises and unlawfully damaged and defaced the ceiling, wall, floor and fixtures therein and unlawfully detached fixtures the property of Newstart and left the Premises in a damages, dirty, unsafe and disheveled state unfit for occupation."
The tort of trespass is committed whenever there is interference with possession of land without the licence or consent of the person in possession or without other lawful authority: TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333; [2002] NSWCA 82 at [23]-[24] (Spigelman CJ, Mason P and Grove J agreeing). Paragraph 2 of the amended statement of claim does not plead such a cause of action. It can be observed that, in par 2, there was no allegation of unlawful entry onto the premises nor could there have been. In the present case, Waleycorp was entitled to possession at all relevant times and Mr Condon was, by virtue of s 437B, taken to be Waleycorp's agent when he entered and used the premises for the purposes of the administration. Moreover, the only unlawfulness apparently alleged against Mr Condon were breaches of covenants in the lease.
In my view, the amended statement of claim did not plead a cause of action in trespass and, even if had purported to, such an action would have been bound to fail because Mr Condon as Waleycorp's agent was entitled to enter the premises. Furthermore, there were no findings by the Magistrate that anything that Mr Condon did after he entered the premises was unlawful or amounted to or could amount to a trespass so as to attract what was described by the High Court as "the old common law doctrine of trespass ab initio under which a person who had an authority under the general law to enter and be upon land would become a trespasser ab initio if he abused his authority": Barker v The Queen (1983) 153 CLR 338 at 363 (Brennan and Deane JJ); [1983] HCA 18. As has already been noted, the Magistrate found that Mr Condon did not bring any of the fittings or other things which had to be removed onto the premises and that there was no evidence as to who caused the damage to the items which had to be repaired (other than the handrail) or when that damage occurred.
[19]
Ground of appeal 3
The third ground of appeal related to whether reliance upon s 443B(8) had been pleaded or was otherwise part of Mr Condon's case. Accepting for the purposes of consideration, but not deciding, that this ground raises a question of mixed fact and law and not only a question of fact, I would refuse leave to appeal. Ground 3 only has significance if Newstart were successful on at least one of the other grounds and established that Mr Condon should have been held liable under s 443B(2). If that is not so, nothing turned on the Magistrate's contingent consideration of whether Mr Condon should be excused from liability under s 443B(2), as permitted under s 443B(8).
Since Newstart has not been successful on any other ground, and there was, in my view, no issue of principle or question of general public importance raised and no arguable injustice, leave to appeal should be refused in respect of ground 3.
[20]
Conclusion and Orders
For these reasons, Newstart has been entirely unsuccessful in that grounds of appeal 1 and 2 have not been made out and leave to appeal is to be refused in respect of each of the other grounds. The parties did not specifically identify any circumstances which would render it appropriate to order otherwise than that costs should follow the event. Nor did I identify any sufficient reason for doing so.
Accordingly, the orders of the Court are:
1. Leave to appeal in respect of grounds 3 and 4 is refused.
2. The summons is otherwise dismissed.
3. The plaintiff is to pay the defendant's costs.
[21]
Endnotes
Oxford English Dictionary, online ed., accessed 21 May 2024.
Macquarie Dictionary, online ed., accessed 21 May 2024.
See De Vries at [154].
[22]
Amendments
27 June 2024 - Variation made as per oral submission of an offer of compromise from the parties during the court session for handing down of judgment.
27 June 2024 - Variation made as per oral submission of an offer of compromise from the parties during the court session for handing down of judgment.
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Decision last updated: 27 June 2024
On 17 February 2021, Newstart submitted a formal proof of debt in the administration of Waleycorp in the amount of $44,678, comprised of back rent and $24,376 for makegood costs in respect of the premises. The proof was accepted by Mr Condon as being lodged but, during his appointment as administrator, he did not adjudicate on whether the claims should be accepted or rejected.
On 18 February 2021, Waleycorp's creditors resolved to put Waleycorp into liquidation with Mr Condon as liquidator and, at all relevant times, Mr Condon was either the administrator or liquidator of Waleycorp.
On 6 September 2021, Newstart commenced proceedings in the Local Court claiming damages of $45,722 from Mr Condon for "loss of rent between 5 February and 31 March 2021, the cost of performing [Waleycorps's] makegood and other obligations under clauses of the lease and GST", to use the Magistrate's description.
Her Honour summarised Newstart's case as follows:
"The plaintiff's case is that Mr Condon's employees and agents unlawfully detached and removed Newstart's [sic, should be Waleycorp's] fixtures from the premises, damaged and defaced the ceiling, walls and floor and left the premises in an unsafe, damaged and dirty state, unfit for occupation in breach of [Waleycorp's] lease. Newstart cleaned and tidied the premises to make them fit for occupation. It lost rent during this period as the premises were not in a fit state for the new tenant and Mr Condon is personally liable for these amounts either vicariously as an action in tort and/or under s 443 of the Corporations Act …".
Mr Condon's case was summarised in the following terms:
"Mr Condon says that he has no personal liability in respect of the claim in tort or otherwise and that his occupation of the premises was, at all times, in his capacity as administrator of [Waleycorp] and in accordance with his rights under s 443[B] of the [Corporations] Act."
The Magistrate effectively identified the issues to be determined as:
1. whether the premises were damaged or left in an unclean and untidy state; and
2. whether the effect of Mr Condon's letter of 14 January 2021 and his occupation of the premises was that he was personally liable under the lease and personally liable for damages in tort for any damage to the premises or for them being left in an unclean or untidy state.
The Magistrate then summarised the evidence concerning whether the premises were damaged or left in an unclean and untidy state and the consequences as follows:
"Turning to the state of the premises, Mr Papadopoulos said the premises were left damaged and in a mess and he had to engage J & K Electrics to repair, clean and tidy them to return them to the condition that they were in when Waleycorp took possession. Because of the mess, even though Newstart had a new tenant, Mr Papadopoulos said that the tenant was unable to move in until after J & K had completed its work, resulting in Newstart losing rent.
Mr Condon's employee, Ms McCrae, took photos of Waleycorp's office when she attended on 14 January 2021. They show the office as part of the premises is neat and tidy, in contrast with the rubbish and mess shown in Mr Papadopoulos's photos from about 4 February 2021. Mr Papadopoulos said Mr Condon's representative (Mr Petrovic) had told them he would have the mess cleaned up and later that it had been cleaned up. Mr Petrovic denied saying this, instead promising to look into it. Mr Papadopoulos agreed Mr Petrovic said those words, but also maintained that he said he would clean up the premises.
Mr Davies told the Court he was engaged as one of the four workmen attending the premises on 4 February. Mr Davies adopted the photographs submitted in the evidence of Mr Papadopoulos. Mr Charlston did not agree with the accuracy of the photographs, Mr Papadopoulos's photographs. Mr Davies said the premises were in a shambolic state with the clearing of the rubbish taking some eight days. At that point, Mr Davies said it could be seen that there were some 60 to 80 Dynabolts protruding from the floors and walls. He said sections of concrete needed to be removed to extract the bolts. He said it took up to two hours to extract each Dynabolt, some ten days' of work. Further, there were some 14 Chemset anchors eposxied to the premises floor. These took about two hours each to remove. Mr Davies said it took five days to do this work. The floor and the walls then had to be patched and the handrail had to be removed and reinstalled. After this work, Mr Davies Said the premises needed to be cleaned, venetian blinds were placed and there was also I think a fan that needed to be replaced and there was painting required of the office and factory.
Mr Papadopoulos maintained that Just Limitless workers cut electrical cords, but agreed he did not see them being cut, nor did he see who damaged the power outlet that he said had to be repaired or that basement fan. Mr Charlston said that whilst Slatterys gave strict instructions not to damage them his workers accidentally damaged the railing around the stairs. Mr Charlston said that he offered to get it fixed for $1,200 or offered $1,200 for Newstart to fix it. He claims Mr Papadopoulos told him to just leave it. Mr Charlston said he then spoke with Mr Papadopoulos, offering to clean up the premises for $5,000. He claims Mr Papadopoulos said to him, "No, I'll deal with it. Just get off my site." Mr Papadopoulos agreed he wanted the workers off the premises immediately. Mr Condon's occupation ceased on 3 February 2021.
Under cross-examination, Mr Davies said he didn't know who put the rubbish on premises. He agreed that the Dyna and Chemset bolts had been in place for more than four weeks. He said he is an independent contractor who does work for Mr Papadopoulos most months over the last eight years. He said he charges on a daily basis and he had issued an invoice that had been paid. He agreed the amount of the invoice had been about $12,000, but his invoice was not attached to his evidence. Now, Mr Papadopoulos agreed that he is a shareholder of both Newstart and J & K Electrics agreeing that he would benefit from any payment to either. He would not accept that there were profit margins charged by J & K. He agreed he saw it - no independent quotes from other companies nor from the tradesman J & K engaged.
Mr Papadopoulos produced two versions of invoice 2801, one dated 29 June for some $29,922, the other dated 17 February for $24,376. Mr Papadopoulos said that there were some items on the 29 June invoice that required adjustment down, including some rectification work and some rent. He agreed that no invoice had been produced for the hire of the scissor lift. Mr Condon noted the double charging in the claim for damages, including for the scissor life hire, payment of rent and loss of rent for the same period. Mr Condon also noted that Newstart did not produce any contemporaneous documents to support the items or amounts claimed in the proceedings. Mr Condon said that the Court can only conclude there are significant discrepancies and inconsistencies in the amounts claimed by Newstart."
The findings in respect of the state of the premises and the consequences were then identified in the reasons for judgment. These findings included the matters set out below.
1. The photographs showed that "at least the office" was in a neat and tidy state before Mr Charlston's team from Just Limitless removed fittings and fixtures and was not in a neat and tidy state afterwards.
2. Newstart's relevant claim for work done for Newstart through J&K Electrics (J&K) related to two categories of work:
1. removal of items including Dynabolts and locksons, wiring, furniture and rubbish; and
2. repair of items including by way of replacement of the basement fan, repair of the damaged handrail and making safe damaged wiring and lights.
1. As to the items which had to be removed, Mr Condon did not bring any of the fittings or other things onto the premises and they all belonged to Waleycorp not Mr Condon.
2. As to the items which had to be repaired, other than the handrail damage, there was no evidence as to who caused the damage or when.
3. Any liability for repairs would only arise in accordance with cl 36 of the lease on termination or expiration of the lease following a failure to make good at the end of the lease.
4. Mr Condon, as liquidator, accepted Newstart's claims for lost rent and the make good costs as a proof of debt in the liquidation of Waleycorp.
The learned Magistrate then considered whether Mr Condon was liable under s 443B(2) which, in the circumstances referred to in subs (1) of that section, renders an administrator liable "for so much of the rent or other amounts payable by the company under the agreement as is attributable to a period [determined in accordance with paragraphs (a) and (b) of that subsection]".
Her Honour noted that Mr Condon remained in possession of the premises until 3 February 2021 and was liable to pay rent for the period of occupation from 21 January to 3 February 2021, which her Honour found he did. It was then observed that Newstart sought to use s 443B(2) to hold Mr Condon personally liable also for the makegood and lost rent costs on the basis that they were "other amounts payable by the company under the agreement as is attributable to [the relevant period of his occupation]".
Her Honour addressed the issue of whether the "makegood costs" were included in the words "other amounts payable by the company under the agreement as is attributable to [the relevant period of his occupation]". The Magistrate was of the view that the Court of Appeal's decision in De Vries v Rapid Metal Developments (Australia) Pty Ltd [2011] NSWCA 100; (2011) 84 ACSR 261 (De Vries) established the proposition that "any liability arising at the end of a rental period cannot be attributable to a period" and "therefore, s 443B applies to the rent payable during the administrator's actual occupation of the premises and not makegood or loss of future rent costs that would arise only at the end of the lease."
It was then observed that Mr Condon conceded that cutting the handrail went beyond the scope of his duties as administrator and he had offered to fix it or pay for it, which offer was refused by Newstart. But her Honour said that, in any event, the obligation to fix the handrail would have arisen at the end of the lease as part of the obligation to make good.
As to the lost rent claim, her Honour appeared to accept Mr Condon's submission that he could not be held liable for periods when he was not using or occupying the premises and he had returned the key on 3 February 2021 and the lease was at an end.
It was implicit in the judgment that, for these reasons, the claim under s 443B(2) for makegood costs and lost rent was rejected.
Newstart's rights of appeal to this Court are found in ss 39 and 40 of the Local Court Act 2007 (NSW). Under s 39, a party to proceedings in the Local Court may appeal to this Court as of right "but only on a question of law". Under s 40 of that Act, a party may appeal "on a ground that involves a question of mixed fact and law … but only by leave of the Supreme Court".
In an appeal only on a question of law under s 39 of the Local Court Act, a plaintiff is required to identify precisely the particular questions of law raised, in accordance with the principles referred to in cases such as Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223 at [13] (Meagher, Payne and White JJA), Ferella v Chief Commissioner of State Revenue [2014] NSWCA 378 (Ferella) at [6] (Leeming JA) and [22] (White J, Barrett JA agreeing) and Williams v The Queen (1986) 161 CLR 278 at 287 (Gibbs CJ); [1986] HCA 88.
Mr Gray of counsel, who appeared for Newstart, contended that the first two questions in the principal issues set out in his written submissions covered the first two grounds of appeal and could be seen to raise questions of law. Otherwise, it was submitted that leave should be granted under s 40 of the Local Court Act.
Although s 39 of the Local Court Act confines an appeal to this Court to an appeal "only on a question of law", it has been held that there is no satisfactory test of universal application available to define what is a question of law: Ferella at [4], citing Collector of Customs v AGFA-Gevaert Ltd (1996) 186 CLR 389 (AGFA-Gevaert) at 394 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ); [1996] HCA 36. Nonetheless, some assistance can be derived from High Court authority which establishes that whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law: Hope v Bathurst City Council (1980) 144 CLR 1 (Hope) at 7 (Mason J); [1980] HCA 16; AGFA-Gevaert at 395. In Hope at 8 and AGFA-Gevaert at 395, the High Court indicated, however, that there was an exception to that principle, when a statute used words according to their ordinary meaning and it was reasonably open to hold that the facts of the case fell within those words. In that situation, it was said the question as to whether the facts did or did not fell within those words was one of fact. To illustrate the point, an example was given in Hope of a statute that gave rise to the question whether certain behaviour was within the statutory description "insulting" and, since it was not unreasonable to find that the behaviour met that description, it was said that the question was a question of fact.
On the basis that the relevant facts in the present case were fully found, the application of s 443B to those facts and the terms of the lease, including cll 3(a) and 3(w), as envisaged in the first two principal issues, covering the first two grounds of appeal, could be said in my view to raise questions of law. The present case does not raise questions similar to the example given in Hope which involved a value judgment about whether behaviour was "insulting", about which minds might reasonably differ.
As to Newstart's last two grounds of appeal and the question identified in the third principal issue, however, these appeared to me to raise, at most, questions of mixed fact and law. Consequently, leave to appeal in respect of those grounds was required. In that regard, the applicable principle is that ordinarily leave to appeal should only be granted if the appeal involves issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[37] (Basten JA, Tobias JA agreeing) and the cases there cited.
I shall deal with the first two grounds of appeal concerning s 443B of the Corporations Act first and then the last ground relating to whether Newstart pleaded a cause of action in trespass in the Local Court and was entitled to judgment on that basis. The remaining ground of appeal 3, concerning the Magistrate's contingent consideration of s 443B(8), is relevant only if Newstart were successful on one of the other grounds. Consequently, I shall consider ground 3 last.
In addition, Newstart pointed to cl 7(d) and (f), and cl 17 of the lease and contended that they established or supported Newstart's right to claim damages for the breaches of cll 3(a) and (w) at any time after breach and not only at the end of the lease.
On these bases, it was submitted that the Local Court erred by concluding, in substance, that s 443B(2) did not apply to the costs of repairs and removals, referred to as the "makegood", or to the consequential loss of future rent because the liability for those amounts arose at the end of the rental period and was not attributable to the relevant period.
As to the construction of s 443B(2), Newstart submitted that an administrator's right of indemnity under s 443D(aa) indicated that the liability under s 443B(2) was not narrow and the approach contended for by Newstart was consistent with s 443D.
In response, Mr Condon made submissions, in relation to the first two grounds of appeal, covering the proper construction of s 443B(2), especially in the context of ss 437A, 437B, 443A, and 443C.
As to Newstart's claim for rent for the period after Mr Condon had returned the key and Newstart had retaken possession, it was submitted that this was not rent that fell within "so much of the rent … as is attributable to a period … throughout which the company continues to use or occupy … the property", as specified in s 443(2). Thus, it was contended that the claim for rent "could only be a damages claim against [Waleycorp] that fell outside s 443B".
As to the "other makegood type damages claimed", Mr Condon submitted that these damages were not "rent or other amounts payable … as is attributable to a period" in s 443B(2). Mr Condon submitted that the Court of Appeal's judgment in De Vries established the proposition that the amounts payable by the relevant company in that case were not "attributable to a period" where they resulted from a failure, at the end of the hire agreement, to return the items hired in good condition. The present case was submitted to involve essentially the same situation and thus "any amounts claimed as damages in the present matter were not attributable to the period of administration, but instead were attributable to [Waleycorp's] failure to return the Premises in good condition when the Lease came to an end."
Mr Condon also submitted that, even if it were not the case that the liability only arose at the conclusion of the lease, the Magistrate did not make sufficient findings of fact to support any other outcome in the present case.
In relation to Newstart's contentions based on continuing breaches of cll 3(a) or (w) of the lease, it was in effect submitted that:
1. on the proper construction of the lease, including in particular cll 1(6) and 20, Newstart's argument failed because the right to claim damages for failing to repair only arose after notice of defects had been given and if there was then a failure to repair by the company within a reasonable time;
2. such an approach was consistent with Larking v Great Western (Nepean) Gravel Ltd (1940) 64 CLR 221; [1940] HCA 37 which was the authority relied upon by Newstart in relation to continuing breaches of contract; and
3. otherwise, Newstart's right to recover the expenses and costs of making good were recoverable at the end of the lease under cl 36 but only from Waleycorp.
Furthermore, even if the preceding submissions were not accepted and the Magistrate had made sufficient findings of fact, it was submitted that the types of damage claimed by Newstart would not fall within the clauses said by Newstart to constitute continuing obligations. This was because any relevant damage occurred because of Waleycorp installing the fittings on and bringing material into the premises before Mr Condon was appointed as administrator. In addition, in relation to cl 3(w), it was said that that clause related to damage done by removing fixtures not by failure to remove them, which was what Newstart claimed for, and that none of the items claimed actually fell within that clause. Rectifying previously caused damage to the premises was said not to be attributable to the relevant period of Mr Condon's use of the premises.
Thus, it was contended that Newstart's claims should fail.
In this Subdiv A, a number of types of amounts for which an administrator will be personally liable are identified:
1. "debts [the administrator] incurs" in the performance or exercise, or purported performance or exercise, of any of the administrator's functions and powers, in s 443A;
2. "so much of the rent or other amounts payable by the company [under [certain leasing or hiring agreements] as is attributable to a period [which does not extend beyond the period of the administration]", in s 443B; and
3. certain amounts required to be remitted to the Commissioner of Taxation because of a deduction made by the administrator or, where the deduction was made by the company "so much of each amount payable … as equals so much of the deduction as is attributable to a period [of the administration]", in s 443BA.
Against that background, s 443C in effect establishes that, otherwise than as provided in those sections, an administrator is not liable for "the company's debts".
It has been held that "debts", when used in s 443A(1), is used in its ordinary meaning and does not include a liability for unliquidated damages such as "a claim for damages for failure to comply with a covenant in a lease to make good damage caused to the leased premises": Molit at ALR 474 (Branson J). The usual meaning a "debt" is a sum of money which is now payable or will become payable in the future by reason of a present obligation: Webb v. Stenton (1883) 11 QB 518 at 526-528 (Lindley LJ) and is something recoverable by an action for debt and thus involves a sum that is ascertained or can be ascertained: Ogdens Limited v. Weinberg (1906) 95 LT 567; Hunyh v Swanson [1999] NSWSC 72 at [37] (G James J). That "debts" in s 443A(1) do not include a liability to pay unliquidated damages was accepted by the learned Magistrate in the present case and Newstart did not seek to base its claims in the present matter on s 443A(1).
As noted above, the word "debts" is also used in s 443C in reference to the general effect, or scope of operation, of Subdiv A of Div 9 of Pt 5.3A of Ch 5. The applicable rule of construction is that the same words appearing in different parts of a statute should be given the same meaning, unless there is reason to do otherwise: The King v Rohan (a pseudonym) [2024] HCA 3 at [25] (Gageler CJ, Gordon and Edelman JJ); Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618 (Mason J, Barwick CJ and Jacobs J agreeing); [1975] HCA 41. In my view, there is no reason why the word "debts" should be given a meaning in s 443C different from its meaning in s 443A(1).
The express terms of ss 443A and 443C read in the context of the other provisions of Subdiv A of Div 9 of Pt 5.3A of Ch 5 suggest that the subject matter of this Subdivision is intended to be "debts" and, thus, the only type of liability for which the administrator was intended to be liable by operation of this Subdivision was one which met the description of a "debt". This approach to Subdiv A of Div 9 of Pt 5.3A is supported by consideration of s 443D(a) which states, inter alia, that "[t]he administrator of a company under administration is entitled to be indemnified out of the company's property … for … debts for which the administrator is liable under Subdivision A [of Div 9 of Pt 5.3A] or a remittance provision as defined in subsection 443BA(2)". The general assumption inherent in s 443D(a) is that Subdiv A relates to "debts" rather than the other types of liability that are referred to in s 443D.
As noted above, apart from the amounts specifically described as "debts" in ss 443A and 443C, there are two other types of amounts referred to in Subdiv A, namely those referred to in s 443BA and those referred to in s 443B(2).
As to the amounts referred to in s 443BA, these are amounts payable to the Commissioner of Taxation under certain former and current remittance provisions of relevant Commonwealth taxation legislation which require a withholding entity to deduct and withhold amounts from payment to the persons otherwise entitled to them because of actual or potential taxation liabilities. The withholding entity is then required to remit those amounts to the Commissioner of Taxation. Under provisions such as ss 250-10, 255-1 and 255-5 of Sch 1, Ch 4, Pt 4-15, Divs 250 and 255 of the Taxation Administration Act 1953 (Cth), any amount payable to the Commissioner under s 443BA is "a debt due to the Commonwealth": s 255-5(1)(a). Thus, like ss 443A and 443C, s 443BA is limited to monetary obligations which are debts. This conclusion also explains why s 443D(a) refers to "debts for which the administrator is liable under … a remittance provision as defined in subsection 443BA(2)".
It can also be noted that s 443BA deals with two types of debts payable to the Commissioner of Taxation. Under s 443BA(1)(a), the first type is an amount payable because of "a deduction made by the administrator" (emphasis added) which necessarily means that the amount will be limited to deductions made during the period of the administration. By way of contrast, under s 443BA(1)(b) the second type of amount payable relates to "deductions made by the company during the administration" (emphasis added) and only includes "so much of each [such] amount … as equals so much of the deduction as is attributable to a period throughout which the administration continued".
The requirement to remit that part of the s 443BA(1)(b) amount as is "attributable" to the administration period appears to arise out of the fact that, under provisions such as s 16-75 in Sch 1 Ch 2 Pt 2-5 Subdiv 16-B of the Taxation Administration Act, the amounts required to be remitted to the Commissioner are to be remitted periodically. Thus, where the relevant remittal period is longer than the period of the administration, part of the amount required to be remitted may have been deducted during the administration and another part of the amount required to be remitted may have been deducted when the company was not in administration.
As used in s 443BA(1)(b) and elsewhere in the Corporations Act, "attributable" and cognate words do not appear to have a special or technical meaning. The ordinary English meaning of "attributable" is, according to the Oxford English Dictionary, [1] "capable of being attributed or ascribed, esp. as owing to, produced by" and the Macquarie Dictionary gives the meaning of the verb "attribute" as "to consider as belonging to; regard as owing, as an effect to a cause". [2] Accepting the limitations on the usefulness of dictionary definitions in statutory construction, as explained for example in TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [80] (Leeming JA, Beazley P and Emmett AJA agreeing), the description of "so much of each amount payable" as being "attributable" to a period in s 443BA(1)(b) indicates that the intention was to refer to that part of each amount payable which was deducted and withheld during the administration period and not when the company was not in administration.
On this construction, both types of amounts referred to in s 443BA, for which the administrator will be personally liable, are debts constituted by amounts deducted only during the period when the company was in the administration which are required to be remitted to the Commissioner of Taxation.
In that whole context, the provisions of s 443B are to be considered.
Turning to the general rule, subs (2) provides that, subject to the other provisions of s 443B:
"the administrator is liable for so much of the rent or other amounts payable by the company under the agreement as is attributable to a period:
(a) that begins more than 5 business days after the administration began; and
(b) throughout which:
(i) the company continues to use or occupy, or to be in possession of, the property; and
(ii) the administration continues."
In the present case and in the circumstances identified above, the relevant period was from 21 January 2021 up to, and including, 3 February 2021.
There are two types of amounts referred to in s 443B(2) for which the administrator will be personally liable. The use of the singular verb "is" in the clause "as is attributable to a period", however, indicates that its subject is not "rent" or "other amounts" payable under the agreement but rather "so much of" the rent or other amounts, or in other words that part of the rent or other amounts, as is attributable to the relevant period. The amounts which are the subject of subs (2) are, thus:
1. "so much of the rent … payable … under the agreement as is attributable to [the relevant] period"; and
2. "so much of the … other amounts payable … under the agreement as is attributable to [the relevant] period".
Since rent is a periodic charge for use or occupation of property, that part of the rent payable which is "attributable" to the relevant period naturally refers to the part of the rent incurred because of, or owing to, the occupation or possession of the premises during the relevant period and can be readily ascertained by reference to the rent expressed as an amount payable per period of time. In addition, given the nature of rent as an ascertained or ascertainable sum payable by the lessee and recoverable by the lessor in accordance with the agreement, it falls within the description of a debt.
The description of the second category of amounts to which subs (2) applies as "so much of the … other amounts payable by the company under the agreement as is attributable to [the relevant] period" indicates that the other amounts payable can be divided into "so much … as is attributable" to the relevant period and the remainder which is not attributable to that period. In light of the construction of "attributable" referred to above, it appears that "so much of the … other amounts payable by the company under the agreement as is attributable to [the relevant] period" identifies that part of the "other amounts payable" that belongs, or owes its existence, to the relevant period and not to some other period during which the agreement was in existence.
In addition to being "attributable" to the relevant period, the amounts must also be "payable". It has been held in Glass v Defence Force Retirement and Death Benefits Authority (1992) 38 FCR 534 at 537 (Gummow J), cited by Black J in Melbourne Aircraft Leasing (UK) Ltd v Algeri and Ors in their capacity as joint and several Trustees of the Project Volar Creditors' Trust [2022] NSWSC 443 at [152]; (2022) 161 ACSR 569, that:
"'Payable' is an ordinary English word signifying that something is presently capable of being paid. If the amount is not capable of being paid unless and until … some other event shall have happened, it is not 'payable' in accordance with that ordinary meaning."
If the "other amounts" to which s 443B(2) refers were intended to include unliquidated damages for breach of contract, that amount would not be "payable" or ascertainable until the claim for those damages had been made and determined.
Furthermore, given the use of the term "debts" in ss 443C and 443D(a) in relation to the general scope of operation of Subdiv A of Div 9 of Pt 5.3A and the fact that all of the types of amounts in ss 443A and 443BA and the rent referred to in s 443B(2) can properly be characterised as debts, the context of s 443B(2) suggests that the expression "other amounts" referred to in that subsection was also intended to be limited to debts rather than any unascertained amounts not yet payable, such as unliquidated damages. This construction, together with the requirement that the amounts be attributable to the relevant period of the administration and not some other period, is consistent with the purpose and practical operation of Div 9 of Pt 5.3A of Ch 5 of the Corporations Act in that it would ensure that the amounts for which an administrator will be liable could be ascertained at the end of the period of administration and, thus, the quantification of the administrator's indemnification under s 443D could be determined and these matters could be taken into account in making the decision pursuant s 439C at the meeting convened under s 439A. If the "other amounts … attributable to [the relevant] period" referred to in s 443B(2) included amounts by way of unliquidated damages, the administrator's liabilities and the extent of the administrator's indemnification under s 443D might not be able to be determined for a considerable period, depending upon when proceedings to recover such unliquidated damages were commenced and determined. Such a result could hinder the achievement of the purpose of administration under Pt 5.3A in the appropriately short time frames envisaged under the relevant provisions of the Corporations Act for the making of a decision as to the future of the company's affairs.
This construction of Subdiv A, including s 443B, is also consistent with relevant aspects of the extrinsic material, which may be relied on under s 15AB of the Acts Interpretation Act 1901 (Cth), including the Harmer Report and the Explanatory Memorandum to the Corporate Law Reform Bill 1992 (Cth). The Harmer Report included the following:
1. [86] (third dot point) which states:
"Agent of the company. The administrator will act as an agent of the company. Although the administrator will be subject to personal liability for particular debts incurred in the course of the administration, the deemed agency will otherwise protect the administrator from personal liability in respect of obligations properly incurred on behalf of the company."
(emphasis added, footnotes omitted)
1. [89]-[93] which relevantly state:
"89. Scope of personal liability. In DP 32 (para 67) the Commission proposed that an administrator be liable for a contract or other transaction to the extent to which the company has received a benefit from the transaction. However, the IPAA, ICAA and ASA expressed reservations about this wording. As in the case of receivers the wording of the companies legislation s 324(l) should be used: an administrator should be liable for debts incurred by the administrator in the course of the administration for services rendered, goods purchased or property hired, leased, used or occupied. It should be emphasised that liability is only for debts incurred by the administrator. Debts incurred without the administrator's knowledge or approval will not give rise to liability.
90. Liability for rent and similar payments. The personal liability of the administrator will extend to liability for rent or similar obligations in respect of possession, use or occupation of property during the administration. However, this liability will not apply for the first seven days of the administration. Payments falling due during this period will be a claim against the company only. The administrator will thus have an opportunity to investigate the affairs of the company and avoid a liability of which the administrator may not have had notice at the time of accepting the appointment. Several submissions suggested that the liability of an administrator under leases should commence seven days after the administrator has been notified of the relevant agreement by the owner of the property. In this way, the administrator would be protected from liability under contracts for use or occupation of property where the administrator was unaware of the existence of property or of the fact that the property was not owned by the company.
91. Conclusion. While the Commission recognises the concerns expressed by the submissions, a better way of dealing with this problem is to give the court a discretion to exempt the administrator from liability where it appears that the administrator ought fairly to be excused and the Commission recommends accordingly. The emphasis will thus remain on the administrator's duty to investigate but the administrator can still be protected from genuinely unknown liability. One circumstance in which the court might excuse an administrator is where a company is leasing equipment, but the administrator is unaware that the equipment is subject to a lease.
92. Restrictions on administrator's liability. The Commission recommends that:
• the administrator not be liable where a charge over the property in respect of which the rent or similar payments are due is being enforced
• periodical payments be apportioned so that the administrator is only liable for the period of possession, use or occupation
• the administrator not be deemed to have adopted any agreement
• the administrator not be liable for the performance of any provision of an agreement other than the payment of rent or some similar obligation.
The administrator will not otherwise be liable for the debts of the company.
93. Indemnity. An administrator will have a right to indemnity out of the property or assets of the company. The indemnity should be commensurate with the administrator's personal liability. …"
(emphasis added, footnotes omitted)
The Explanatory Memorandum to the Corporate Law Reform Bill 1992 dealt with Subdiv A at [562] et seq. as follows:
"Subdivision A - Liability
562. This subdivision will spell out in detail the debts for which the administrator will be personally liable.
Proposed section 443A - General debts
563. This proposed section will establish the general principle that the administrator will be personally liable for all debts, liabilities and obligations he or she incurs as administrator (proposed subsection (1)). The administrator will be unable to contract out of this personal liability. However, the administrator's rights against the company and others will not be prejudiced (proposed subsection (2)).
Proposed section 443B - Payments for property used or occupied by. or in the possession of. the company
564. This proposed section deals with the situation where the company is renting property at the time when the administrator is appointed (proposed subsection (I)). The administrator will have 7 days after appointment during which the administrator will not be personally liable for rent payments (proposed paragraph (2)(a)). This will allow the administrator 7 days to make a preliminary assessment of the position of the company and to decide in an informed fashion whether the administration should continue, before the administrator becomes personally liable for rental payments.
565. The remaining subsections in proposed section 443B provide further protections for the administrator. First, it may be that in some circumstances, such as where the property consists of a chattel that is not capable of being moved within 7 days, or where an owner or lessor declines to take possession of the property, the personal liability imposed on administrators may be unduly onerous. Proposed subsections (3) and (4) will alleviate such situations by allowing an administrator 7 days in which to give to the owner or lessor notice that the administrator does not propose to use or occupy certain property. Where such a notice is given, the administrator will be relieved of liability in respect of that property. Such a notice will, however, cease to have effect if expressly revoked by the administrator or where the company actually uses or asserts a right as against the owner or lessor to continue to occupy or be in possession of the property (proposed subsections (5) and (6)).
566. The administrator will not be liable for rental payments in respect of a period after a secured creditor appoints a receiver or takes possession of the relevant property (proposed subsection (7)). This could occur where, for example, a creditor secured over the whole, or substantially the whole, of the property of the company exercises rights under proposed section 441A to appoint a receiver or take possession. This subsection will not, however, excuse the company from liability.
567. The Court may order that the administrator is not liable for rental payments (proposed subsection (8)). It might be appropriate for the Court to use this power where, for example, the books of the company were in such a disordered state that the administrator was unable, even using his or her best endeavours, to ascertain within 7 days whether the company had any assets. Any such order exempting the administrator from liability will not affect the liability of the company.
568. Finally, the mere fact that the administrator may be liable for rent under an agreement will not make the administrator liable for any of the other obligations imposed on the company by the agreement (proposed subsection (9)). This will enable the administrator to limit the amount to which the administrator is personally liable to an amount necessary to fulfil the purpose of the administration.
Proposed section 443C - Administrator not otherwise liable for company's debts
569. This section will provide that, except insofaras proposed sections 443A and 443B make the administrator personally liable for the company's debts, the administrator will bear no such liability."
(emphasis added)
These extracts from the relevant extrinsic material, including especially the emphasised passages, provide significant support for the construction set out above.
The parties did not point to any High Court or intermediate appellate authority on the specific construction of the words "so much of the … other amounts payable by the company under the agreement as is attributable to [the relevant] period" in s 443B(2) and I have not been able to find any such cases. Nor was there any first instance judgments that dealt with the specific issues raised in the present case. The Court of Appeal has, however, considered substantially the same words which appear in s 419A(2) of the Corporations Act and the construction adopted was consistent with the construction of s 443B(2) set out above.
In De Vries v Rapid Metal Developments (Australia) Pty Ltd [2011] NSWCA 100; 84 ACSR 261 (De Vries), the Court of Appeal dealt with s 419A(2) of the Corporations Act which relevantly provided in circumstances similar to s 443B(2):
"Subject to subsections (4) and (7), the controller is liable for so much of the rent or other amounts payable by the corporation under the agreement as is attributable to a [specified] period …".
In comments which were obiter dicta, [3] Sackville AJA (Hodgson and Macfarlan JJA agreeing) addressed the question whether a liability under an agreement for the hire of goods to replace lost or damaged goods at the hirer's "ruling list prices" at the end of the hiring was "attributable" to the relevant period in that case. His Honour held, in De Vries at [161]-[162]:
"161. In my opinion, the language of s 419A(2) is not apt to extend to a liability to make payments under a hiring agreement between an owner of goods and a corporation, when the liability is not incurred or is not enforceable until the end of the period of hire. I do not think that it can be said that the liability imposed on [the corporation] by cl 22(b) of the Hiring Agreement was to make payments attributable to the period of hire or to the use of the goods during that period. [The corporation's] liability was to replace all lost or damaged goods at [the hirer's] ruling list prices. The liability to make payments calculated in this way was attributable to [the corporation's] failure, for whatever reason, to return the hired scaffolding to [the hirer] in good condition, as required by s 419A(2). The amounts payable by [the corporation] were not attributable to a period, but to its failure to return the scaffolding in good condition.
162. If [the hirer's] submissions are correct, it is difficult to see what purpose is served by the words " as is attributable to a period " in s 419A(2). If the drafter intended s 419A(2) to cover all liabilities that are incurred during or at the end of a hiring agreement, it would have been simple enough to say so."
This reasoning was primarily focused upon whether an obligation which arose at the end of the hiring was "attributable" to the period relevant in that case, but it is consistent with the construction referred to above.
It can also be noted that, in these obiter comments, Sackville AJA rejected, at [156], the contention that the words "other amounts" were to read ejusdem generis with "rent". In doing so, his Honour adopted the reasoning of the trial judge, R A Hulme J, that there was no warrant for identifying a genus from the single word "rent", contrary to what Campbell J had held in Re: Nardell Coal Corporation (in liq) v Hunter Valley Coal Processing [2003] NSWSC 642; 21 ACLC 1505 (Nardell Coal). Sackville AJA and R A Hulme J cited the comments of Spigelman CJ in Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91, at [126], that it is essential for the application of the ejusdem generis rule that at least one common characteristic described as a genus is to be identified and that at least two different species are required to determine a relevant genus.
In rejecting the application of the ejusdem generis rule to the construction of the words "other amounts payable by the corporation", the Court of Appeal did not expressly consider the comments in the Harmer report quoted at [158] of the Court of Appeal's judgment which described the relevant obligations intended to be covered as "rent and similar payments", which may have provided alternative support for the conclusion reached by Campbell J in Nardell Coal at [97] to the effect that "other amounts payable by the corporation under the agreement" are limited to types of payment similar to rent such as "payment[s] which are payable by a lessee as consideration, payable periodically, for the rights conferred on the lessee by the lease".
The reasoning in De Vries concerning the ejusdem generis rule does not, in any event, apply to the reasoning set out above concerning the context provided by ss 443C and 443D(a) in relation to the scope of operation of Subdiv A of Div 9 of Pt 5.3A and the fact that all of the amounts referred to in ss 443A and 443BA and the rent referred to in s 443B(2) are types of debts or are recoverable as debts, as well as the practical operation of these provisions, which all support the construction that the expression "other amounts payable" is intended to be limited to ascertained or ascertainable amounts presently recoverable and, in that sense, debts.
In so far as the Court of Appeal's reasoning in De Vries was otherwise applicable in the present case, it supported the construction referred to above. Similarly, the extrinsic material such as that referred to by Sackville AJA in De Vries at [158]-[159] did not support a different construction.
In the absence of any clear authority to the contrary and for the reasons given above, in my view, the words "so much of the … other amounts payable by the company under the agreement as is attributable to [the relevant] period" in s 443B(2) should be construed as referring to that part of such amounts:
1. as are ascertained or ascertainable and payable by the company under the agreement and can, in that sense, be described as debts; and
2. which belong, or owe their existence, to the relevant period and not some other period during which the agreement was in existence.
For the purposes of disposing of the present appeal, it is not necessary, however, to hold that the "other amounts" referred to in s 443B(2) are limited to "debts" in the sense explained above. This is because there are other grounds which support the conclusion that Newstart's claim did not involve "so much of the … other amounts payable by the company under the agreement as is attributable to [the relevant] period".
Secondly, even if the expression "other amounts payable" did include unliquidated damages for breach of covenants in the lease, the amounts claimed for makegood costs and lost rent were not "so much of the … other amounts as is attributable" to the relevant period in the circumstances of the present case. This was so both factually and legally.
Factually, apart from the finding that "at least the office" was in a neat and tidy state before Just Limitless removed fittings and fixtures during the relevant period and was not in a neat and tidy state afterwards, there was no finding as to when the items which had to be removed were actually brought onto the premises. With respect to the items which had to be repaired other than the damaged handrail, there was no finding as to who caused the damage or when. Since the need to remove or repair items was not proved to have been caused, or to have arisen, during the relevant period, Newstart had not discharged the onus of proving that the damages flowing from breaches of cll 3(a) or 3(w) for makegood costs were "attributable" to the relevant period in the sense of belonging to, or owing its existence to, that period. Similarly, Newstart had not discharged the onus of proving that the lost rent was caused by anything that belonged to or arose during the relevant period so as to be "attributable" to that period.
Legally, the unliquidated damages claimed in relation to makegood costs and lost rent were not, on the proper construction of the lease, "attributable" to the relevant period because any liability for such damages only arose either at the end of the lease or after notice to rectify the breach had been given and not complied with. If a liability to make good arose at the end of the lease under cl 36(1)(b), then it was not "attributable" to the relevant period, on the basis explained in De Vries at [161]. The liability in respect of lost rent could only arise after the end of the lease, because prior to that time the premises could not be leased to another tenant. In addition, as to any liability that might arise from a breach of a continuing obligation under the lease, a liability for makegood costs or lost rent would only arise after a notice to rectify had been given and had not been complied with, and no such liability arose in the present case as there was no finding that any notice to rectify had ever been given. This reasoning depends on the proper construction of the lease.
In the present case, the construction of the relevant provisions of the lease is not entirely straightforward as there are numerous overlapping obligations relating to repair and maintenance, and remediation. The relevant clauses, including those relied upon by Newstart, were:
1. Clauses 1(4) and (6) which incorporated by reference the corresponding expanded provisions in Sch 4 of the Conveyancing Act 1919 (NSW) which relevantly provide, respectively:
1. by virtue of cl 1(4):
"And also that the lessee will during the term, when, where, and so often as the need shall be, but having regard to the condition of the demised premises at the commencement of the lease and excepting reasonable wear and tear … occurring within the term -
(a) well and sufficiently maintain, amend, and keep, and
(b) at the expiration or sooner determination of the term peaceably surrender and yield up unto the lessor,
in good and substantial repair the demised premises …."
1. by virtue of cl 1(6):
"That the lessor … may, twice in every year during the term at a reasonable time of the day upon giving to the lessee two days previous notice, enter upon the demised premises and view the state of repair thereof, and may serve upon the lessee … a notice in writing of any defect, requiring the lessee … within a reasonable time, to repair same in accordance with any covenant expressed or implied in the lease, and that in default of the lessee's… so doing it shall be lawful for the lessor, the lessor's executors, administrators, or assigns from time to time to enter and execute the required repairs."
1. The "Additional covenants by Lessee" which included the following:
"3. To the following special additional provisions which however shall not (except in so far as the provisions hereinafter contained shall expressly negative or modify the same) be held to in any way limit or abridge any of the provisions of the Conveyancing Act 1919 - 1958 or the Real Property Act 1900 namely: -
Repair And Cleaning:
(a) Notwithstanding the provisions herein contained the Lessee will at his own expense at all times during the said term hereby granted well and sufficiently repair, maintain … the demised premises, the fixtures therein … and keep both the outside and inside of the premises in clean and attractive order, repair and condition …
Fixture and Fittings
(b) The Lessee will at the expiration or sooner determination of the said term surrender and yield up to the Lessor and subject to its obligations under clause 1(4) hereof leave undisturbed all water, gas, electric light and other fixtures and fittings which are or may hereafter be put in to and upon the demised premises by the Lessor in good order and condition.
…
Tenants Fixtures
(w) … Subject thereto and subject to any other condition of this lease and as hereinafter provided all other fixtures, plant, … and other material or articles brought onto the premises by the Lessee, shall be trade or tenant's fixtures and subject to tenant rights and the Lessee may at or prior to the expiration or sooner determination of the lease take, remove and carry away the same from the premises but the lessee shall in such removal do no damage to the premises and shall forthwith make good any damage which he may occasion there to. The Lessee's obligations to observe or perform this covenant shall survive the expiration of the other term or other termination of this lease. …
…
Lessee's Default:
7. …
(d) In the case of the breach or non-observance or non-performance of any of the covenants conditions provisos or agreements here contained or implied on the Lessee to be performed and observed,
THEN and in any such case it shall be lawful for the Lessor at any time thereafter and whilst such neglect or default continues and without further notice or demand to enter (forcibly if necessary) into and upon the demised premises or any part thereof in the name of the whole and to repossess the same as of his former estate and expel the Less and those claiming under him and remove his effects from the demised premises without being taken or deemed guilty of any manner of trespass or wrong but without prejudice to any action or right of action or any remedy of the Lessor in respect of any breach of the Lessee's covenants herein contained or implied: and that thereupon this Lease shall if the Lessor so elects determine cease and be at an end and the Lessee shall be and remain liable for the rent at the rate herein reserved.
…
(f) The Lessor, may, but shall not be obliged to, remedy at any time without notice any default by the Lessee under this Lease and whenever the Lessor so elects all costs and expenses incurred by the Lessor (including legal costs and expenses) in remedying a default shall so constitute a liquidated debt and shall be paid by the Lessee to the Less or on demand;
…
Lock Up
17. The Lessee will use his best endeavours to protect and keep safe the demised premises and any property contained therein from theft and robbery … and the Lessee shall maintain such security and other services as may be necessary for this purpose.
…
Lessee to Repair:
19. The Lessee will during the said term well and sufficiently repair maintain and keep the said premises… in good and substantial repair. … The Lessee will at all times during the continuance of this Lease keep and at the expiration or sooner determination of the said term peaceably surrender and yield up unto the Lessors the said premises … in good and substantial repair and condition having regard to the condition thereof the commencement of the lease reasonable wear and tear [etc] … excepted …
Lessor Can Require Repair:
20. The Lessors shall be able when and as often as the Lessor shall require and without previous notice at all reasonable times of day by itself or its agents to enter the premises and view the state of repair thereof and to serve upon the Lessee notice in writing of any defect requiring him to repair the same. In default of the Lessee repairing any defect according to any notice … the Lessors may enter the premises with or without workmen architect and others and, may execute the required repairs and additions and in addition to the Lessors other remedies to recover from the Lessee by way of overdue rent the cost of such repairs …
…
Lessee's Obligation On Termination Of Lease:
36. Notwithstanding any other provision in this lease;
(i) The Lessee will on termination or expiration of this lease:
…
(b) restore the premises to a good and tenantable state of repair and cleanliness having regard to the condition of the premises of the commencing date of this lease reasonable wear and tear and structural defects not caused by the Lessee excepted;
…
In the event that the Lessee fails to duly and punctually comply with the Lessee's obligations under clause 36(i)(b), the Less or may carry out any works which the Lessee was required to but failed to perform pursuant to clause 36(i)(b) and the expenses, liabilities or damages incurred by the Lessor in performing such works shall be due and payable to the Lessor.
…".
The principles concerning construction of a commercial lease were considered recently by the Court of Appeal in Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158 at [48]-[50] (Ward P, Beech-Jones JA and Griffiths AJA). At [49], it was relevantly held:
"The principles are identified in cases such as Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[52] per French CJ, Nettle and Gordon JJ and Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 644; [2017] HCA 12 at [16] per Kiefel, Bell and Gordon JJ. They may be summarised as follows:
1. The rights and liabilities of the parties are determined objectively by reference to the contract's text, context (as a whole) and purpose.
2. It is necessary to ask what a reasonable businessperson would have understood the terms of a commercial contract to mean, which requires consideration of the language used by the parties, the circumstances addressed by the contract and the commercial purpose or objects to be secured by it.
3. Ordinarily, this process of construction is possible by reference to the contract alone and, if an expression in the contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to alter its plain meaning.
4. Recourse to such events, circumstances and external things may be necessary to identify the commercial purpose or objects of the contract or where there is a constructional choice.
5. Each of the events, circumstances and external things to which recourse may be had is objective but those events, circumstances and external things need to be known to the parties or assist in establishing the purpose or object of the transaction, including its history, background and context and the market in which the parties were operating.
6. Evidence of the parties' statements and actions reflecting their actual intentions and expectations are inadmissible.
7. Unless a contrary intention is indicated in the contract, a Court is entitled to approach the task of construction on the assumption that the parties intended to produce a commercial result, in the sense that a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience" (citing Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35])."
Applying those principles to the commercial lease between Newstart and Waleycorp, and bearing in mind the text of the relevant clauses, the purpose of the lease being to allow the lessor to occupy, and conduct its business from, the premises and the fact that the lease should be construed so as to avoid it working commercial inconvenience, in my view, the lease should be construed so as to have the following relevant effect.
1. Waleycorp was under a continuing obligation to keep the premises in a good state of repair, under cll 1(4), 3(a) and 19.
2. Waleycorp was also under an obligation to hand over the premises at the end of the term or earlier determination of the lease in a good state of repair, under cll 1(4), 3(b), 19 and 36(i)(b).
3. Waleycorp was, at or prior to or at the end of the term or earlier determination of the lease, entitled to remove the tenant's fixtures but must in removing them do no damage to the premises and must make good any damage so caused forthwith, under cl 3(w).
4. Newstart was entitled to view the state of repair of the premises and serve a written notice requiring Waleycorp to repair the premises within a reasonable time, under cll 1(6) and 20. Clause 1(6) restricted that right to twice a year with two days' notice but cl 20 did not contain similar restrictions and stated that the right may be exercised "as often as the Lessor shall require". In resolving this apparent conflict, it can be noted that the introductory wording of cl 3 indicates that "the following special additional provisions … shall not (except in so far as the provisions hereinafter contained shall expressly negative or modify the same) be held to in any way limit or abridge any of the provisions of the Conveyancing Act 1919". The wording and layout of the lease mean that it is not entirely clear whether "the following special additional provisions" refers only to cl 3(a) to (y) or cll 3 to 45. Given the function of Sch 4 of the Conveyancing Act and the fact that the operation of relevant provisions of that Act can be negatived or modified if that is done expressly in the lease, it appears to me that the provisions of the Conveyancing Act incorporated by clauses such as cll 1(4) and (6), should prevail over clauses such as cl 20, to the extent of the inconsistency. This is supported by the consideration, in the particular case of cll 1(6) and 20, that Newstart having a right "without previous notice at all reasonable times of day by itself or its agents to enter the premises and view the state of repair" could lead to considerable commercial inconvenience and should be avoided.
5. If Waleycorp was "in default" of complying with a written notice to rectify given under cl 1(6) and cl 20, Newstart was entitled to enter and execute the required repairs, under cll 1(6), 7(f) and 20.
6. If Newstart did elect to carry out such repairs as a result of a default by Waleycorp to comply with such a written, it was entitled to recover the costs and expenses in remedying the default as a liquidated debt payable on demand, under cl 7(f).
7. Clause 7(d) provided for Newstart to have a right of re-entry to take repossession if Waleycorp was in breach of a covenant in the lease "without prejudice to any action or right of action or any remedy of the Lessor". Thus, cl 7(d) did not confer any independent right to recover damages for breach of any covenant but merely stated that exercise of the rights conferred by that clause was "without prejudice" to any other such rights. In any event, Newstart did not purport to exercise its right of re-entry under this clause and, as a result, cl 7(d) had no role to play in the present case.
8. Clause 17 was also mentioned in Newstart's submissions but it related to Waleycorp keeping the premises safe and protected from robbery and theft. There was no claim in the Local Court that Waleycorp had breached this covenant and it did not appear to have any relevance in the present case.
9. On termination of the lease, if Waleycorp failed to comply with its obligation under cl 36(i)(b) to "restore the premises to a good and tenantable state of repair", Newstart could carry out the repair work and "the expenses, liabilities or damages incurred … in performing such works shall be due and payable" to Newstart.
As noted above, even if the obligations under provisions such as cl 3(a) to keep the premises in repair were continuing obligations, there was no finding, or evidence, in the present case that, prior to the lease coming to an end on 4 February 2021, Newstart had given any notice to rectify any failure to keep the premises in good repair under expanded cl 1(6) or cl 20 or that Waleycorp was in default in that regard. Accordingly, Newstart had no entitlement to enter the premises and effect repairs itself during the relevant period, under cl 7(f) or otherwise. Nor was there any finding that Newstart had carried out repairs and removed items during the period from 21 January to 3 February 2021 before the lease had come to an end.
In so far as cl 3(w) was relied on, this did not assist Newstart because it did not require Waleycorp to remove the Dynabolts and locksons, wiring, furniture and rubbish from the premises because none of these things were "damage to the premises" done "in such removal [of the tenant's fixtures]" which is what Waleycorp was required to remedy under that clause. Similarly, lost rent was not such damage. In addition, there was no finding that the repair or replacement of the basement fan or making safe damaged wiring and lights was damage to the premises caused by or at the time of the removal of the tenant's fixtures. Indeed, on the Magistrate's findings, apart from the damage to the handrail, there was no evidence as to who caused the damage which was required to be repaired or when. Thus, Newstart failed to discharge its onus of establishing that the amounts claimed by it were "attributable" to the relevant period on those bases.
The makegood costs had been incurred by Newstart after the end of the lease because of Walyeycorp's failure on termination of the lease to "restore the premises to a good and tenantable state of repair and cleanliness having regard to the condition of the premises of the commencing date of this lease reasonable wear and tear and structural defects not caused by the Lessee excepted" in breach of cl 36(i)(b). On the Magistrate's factual findings and given the construction of "attributable" above, the amounts which might be payable by Waleycorp as a result of the breach of that obligation at the end of the lease were not "so much of the … other amounts payable by the company attributable to [the relevant] period". This also follows if the reasoning in De Vries at [161] is adopted in relation to s 443B and the facts of the present case.
As to any lost rent, of its very nature that could not have been incurred prior to the end of Waleycorp's lease nor did a right to recover it arise prior to the end of the lease on the findings in the present case. In other words, any entitlement to lost rent as a result of an inability to let the premises to a new tenant related only to Waleycorp's failure to comply with its obligations under cl 36 "on termination … of this lease" and thus any damages for lost rent were not "attributable to the [relevant] period", on the construction of "attributable" referred to above and consistently with the reasoning in De Vries.
For these reasons, I do not accept that the Local Court, in concluding that Newstart's claims for makegood costs and lost rent should be dismissed, relevantly misconstrued s 443B(2) of the Corporations Act. Nor, on the facts as found, was there any relevant misconstruction of s 443B(4) and (5) since subs (4) was not engaged in respect of the period from 21 January to 3 February 2021 when Waleycorp was using the premises for the purposes of realising the assets on those premises. This was accepted by Mr Condon and, as a result, he paid the rent for that period in accordance with his liability, which arose under s 443B(2), in respect of rent attributable to that period.
Accordingly, grounds 1 and 2 have not been made out and the answers to each of questions 2(a) and (b) formulated in Newstart's written submissions, in the circumstances of the present case and on the proper construction of s 443B, is: no.
As a result, there did not appear to me to be injustice that was more than arguable raised by the fourth ground of appeal.
In these circumstances, I refuse leave to appeal in respect of ground 4.