Pipeclay Lawson Ltd v Brand Ventures Pty Ltd

Rent and outgoings from 15 January 2020 to 17 February 2020

1. Rent was payable by monthly instalments in advance on the first day of each month (Clause 3.1).
2. There was no evidence that the defendant was in default of its covenant to pay rent to McWilliam's.
3. The notice given by the administrators on 15 January 2020 that they did not propose to exercise rights in relation to the head lease was not a surrender of the head lease. It did not relieve the defendant of its obligations to pay rent to McWilliam's. Notwithstanding this, the plaintiff demanded that the defendant pay the plaintiff rent from 15 January to 18 February 2020 in the sum of $132,727.65 and the defendant acceded to that demand and made that payment (T45-46; 92.5-92.7).
4. The plaintiff claimed the sum of $50,542.83 for rent and outgoings claimed to be payable by the defendant for the period 15 January to 17 February 2020. That sum was comprised of council rates, water rates and land tax of $10,356.81, $1,035.98 and $32,023.11 respectively, and $7,126.93 being the difference between rent paid by the defendant to the plaintiff for that period and rent that the plaintiff claimed was payable by the defendant for that period under its sublease.
5. No rent was payable by the defendant to the plaintiff under the sublease. Nor were outgoings payable by the defendant to the plaintiff under the sublease.
6. The plaintiff relied upon cll 3(b) and 5 of the deed of consent to sublease. Those clauses provided: "3(b) The Subtenant must: (i) comply with its obligations under the Sublease; (ii) not do anything which causes or could cause the Tenant to breach the Tenant's obligations under the Head Lease; (iii) not assign, sublet or part with possession or share possession of the Sublease Premises without the prior consent of the Landlord despite anything to the contrary in the Sublease; and (iv) obtain the approval or consent of the Landlord and the Tenant to anything for which the Tenant's approval or consent is required under the Sublease. … 5. Indemnity 5.1 Subtenant liable On demand, the Subtenant is liable for and indemnifies the Landlord against all Claims directly or indirectly arising from or incurred by the Landlord in relation to any default or delay by the Subtenant in the performance of its obligations contained or implied in this deed or in the Sublease. 5.2 Indemnity continues The indemnity in clause 5.1 is independent from the Subtenant's other obligations under this deed and does not come to an end when the Sublease expires or is terminated. It is not necessary for the Landlord to incur expense before enforcing that indemnity."
7. "Claims" was defined to include all liability damage and loss.
8. The plaintiff submitted that the defendant breached its covenant to comply with its obligation under the sublease or failed to pay moneys owing under the sublease which caused or could have caused McWilliam's to breach McWilliam's' obligations under the head lease (Clause 3(b)(i) and (ii)). It also submitted that it was entitled to indemnity from the defendant for loss indirectly arising from or incurred by it in relation to default by the defendant in performance of its obligations in the sublease.
9. The plaintiff did not plead that the defendant was in breach of its sublease.
10. I do not accept that the plaintiff has established that the defendant breached its sublease by failing to pay rent when due, or, if it were in arrears in paying rent to McWilliam's, that this caused the plaintiff to suffer any loss. There is no evidence that McWilliam's' failure to pay moneys owing under the head lease after 31 December 2019 was caused or contributed to by any failure by the defendant to pay rent owing under the sublease (Clause 5.1).
11. Accordingly, I reject the claim for $7,126.93 for allegedly underpaid rent for the period from 15 January to 17 February 2020.
12. In fact, on 21 February 2020 the defendant paid the plaintiff $132,727.65 which it was not liable to pay, apparently in response to the plaintiff's demand for payment and threat immediately to lock it out of the premises on termination of the sublease. In final submissions, the defendant sought a credit in respect of this payment against any sums it might be found liable to pay to the defendant. However, the defendant had not brought a cross-claim for recovery of this payment and did not plead that it was entitled to set off the payment against any sum for which it might be found to be liable. The belated claim that it was entitled to a set-off raised the question whether the defendant was entitled to recover the payment on restitutionary grounds, but this issue was not litigated.
13. The plaintiff is liable to the relevant authorities for rates, water charges and land tax. Under the headlease McWilliam's agreed to pay "…taxes impositions and outgoings payable in respect of the demised premises or the user or occupation thereof or any service or supply thereto." (Clause 2.3; CB 44).
14. By cl 5.1 of the sublease the defendant was required to pay outgoings relating to the premises direct to the relevant authorities or supplier.
15. "Outgoings" was defined so as to include the rates, water charges and land tax the subject of the claim. Outgoings were payable by the defendant on or before their due dates.
16. Thus the defendant bore the ultimate burden of the Outgoings for which the plaintiff was liable to the relevant authorities and the plaintiff was entitled to be indemnified against its liability for Outgoings by the defendant. There was no evidence as to whether the plaintiff had paid the Outgoings for the period from 15 January to 17 February 2020, but that does not matter. Its liability is not disputed. It is entitled to be indemnified against its liability by the defendant. There is no issue as to the amount claimed, namely $50,542.83.

Occupation Fee or Damages from 18 February to 31 March 2020

1. The second head of claim was for damages in the nature of mesne profits or an occupation fee for the period from 18 February 2020 (that is, from the termination of the sublease) to 31 March 2020 being the date on which the defendant's licence under the orders of 5 March 2020 expired.
2. The defendant was not a trespasser from 5 March 2020 but an occupation fee is payable for the period of the licence. The parties did not agree on the quantum of the fee or damages for the period from 18 February to 5 March 2020 nor as to how such damages or fee should be determined. By the orders of 5 March 2020 the defendant acknowledged liability to pay outgoings.
3. The plaintiff submitted that it was entitled to damages or a fee based on the market rental value of the property for the period of the defendant's occupation from 18 February to 31 March 2020 plus outgoings. Both parties retained a valuer. They provided reports as to their opinion of the market rental value of the premises. Unfortunately their evidence could not be taken at the hearing owing to injury suffered by one of the valuers. Arrangements are to be made to take their evidence once the valuer retained by the defendant has recovered.
4. The parties agreed that issues concerning this part of the claim that did not depend on the valuers' evidence should be determined in advance of taking their evidence.
5. The first question is whether the defendant is liable for damages or an occupation fee in respect of Warehouse B. Mr Tok deposed that by early January 2020 the defendant occupied Warehouse A only and that Warehouse B was empty. He deposed that the defendant had been trying to find a tenant for Warehouse B and had placed a sign on the premises to advertise that it was available for lease and that during one of his visits to the property in January 2020 Mr Libling, pointed to the sign advertising Warehouse B for lease and told the defendant to take the sign down as he did not consent to its leasing Warehouse B.
6. Mr Libling did not recall the conversation but confirmed that he saw a "For Lease" sign at the front of the property in or around January 2020 and called the real estate agent listed on the sign requesting that it be removed immediately as the plaintiff did not consent to the property being sublet by the defendant. He deposed that Warehouses A and B are separated by a wall with voids or openings between the two warehouses. None of this evidence was the subject of cross-examination.
7. There was no evidence that the defendant offered possession of Warehouse B to the plaintiff on and from 18 February 2020. To the contrary, the orders of 5 March 2020 provided the defendant with a licence to occupy Warehouse B as well as Warehouse A up to 31 March 2020. This was consistent with the two warehouses being one contiguous property. The occupation fee provided for by the orders of 5 March 2020 was clearly to be calculated by reference to the whole of the property the subject of the licence, that is, both Warehouse A and Warehouse B. Damages in the nature of mesne profits for the period from 18 February to 5 March 2020 are also payable in respect of both Warehouse A and Warehouse B because the defendant did not deliver possession of Warehouse B to the plaintiff.
8. The market rental value of the property is the usual measure of mesne profits which are in effect damages for trespass (Lamru v Kation Pty Ltd (1998) 44 NSWLR 432 at 439-440 (Cohen J); Sydney Local Health District v Macquarie International Health Clinic Pty Ltd [2020] NSWCA 274 at [134]). In Sydney Local Health District v Macquarie International Health Clinic Pty Ltd, the Court of Appeal said (at [135]-[136]): "Fifth, whilst the usual measure of damages for or by way of mesne profits will be the market rent for the premises in their state during the period of the trespass, there may be special circumstances associated with the defendant which warrant a departure from this yardstick. Any departure from this yardstick is not, however, at large, but again is tied or limited by the defendant's actual usage of the property in question. Sixthly, and in a similar vein, the market rent may be conceptualised or influenced by reference to the particular characteristics of the trespasser (see Ashman and Thompson) or the plaintiff (see, for example, Chep's willingness in Bunnings to accept a lower rate of hire for a large customer such as Bunnings)."
9. The defendant submitted that, had it been necessary for it to have done so, it could have sought and would have been entitled to an order under s 130 of the Conveyancing Act 1919 (NSW) staying any proceeding by the plaintiff to enforce a right of re-entry on such terms as to the court might seem just, such that it should not be considered as a trespasser. Because the parties agreed to the consent orders of 5 March 2020 which provided for the grant of a licence and payment of an occupation fee, it was not necessary for it to obtain an order under s 130 of the Conveyancing Act. Nonetheless, so the defendant submitted, the principles in relation to the usual measure of mesne profits were not applicable to the present case.
10. There is some force in the defendant's submission, but even if the question were to be considered from the perspective of s 130 of the Conveyancing Act, any stay of the plaintiff's proceeding to enforce its right of re-entry would provide for the payment of "…proper and reasonable rent, costs, expenses, damages, compensation…" as the court thought fit.
11. The plaintiff considered that the defendant was occupying the property pursuant to its sublease at a rent that was below market value. The defendant had no estate which entitled it to occupy the property beyond the period of the head lease. I see no reason in principle why the rent payable under the sublease should be determinative of the proper and reasonable rent that would have been payable had an order been made under s 130. Because the valuation evidence is yet to be taken, it is inappropriate that I express any final view. It is sufficient to say that I do not accept that the market rent or value of Warehouse A and Warehouse B is irrelevant to the determination of the plaintiff's claim for damages in the nature of mesne profits or for a reasonable occupation fee under the licence provided for by the orders of 5 March 2020.

Outgoings from 18 February to 31 March 2020

1. The only issues in relation to the plaintiff's claim for outgoings for this period were whether the defendant was liable to pay outgoings with respect to warehouse B or whether it could set off its liability against the monies paid to the plaintiff.
2. For the reasons above, the defendant was so liable, and is not entitled to the set-off claimed.

Defendant's obligations on vacating the property

1. Mr John Commisso, an Asset Manager of the plaintiff, deposed that it was much easier to lease a property when the property is an empty shell. He said (CB 815): "7. Based on my experience in managing industrial and commercial properties, I am aware that it is much easier to lease a property when the property is clean, freshly painted, has new floor coverings or floor coverings in good condition and is an empty shell. By empty shell I mean that there is no pre-existing tenant fitout. Prospective tenants are less likely to enter a lease for a property if it needs to be painted, needs new floor coverings or if there is an existing fitout because they will then need to incur the cost and time of undertaking this work or removing the fitout. Having an empty shell improves the prospect of a property owner being able to lease a property because a tenant can simply fitout the leased space in the manner they desire so as to tailor the property to their specific needs."
2. Initially the plaintiff claimed damages from the defendant in the sum of $1,050,065 based on a report of a Mr Stephen Cooke, a building consultant and chartered surveyor, as the cost which the plaintiff said it had incurred or would incur in repainting and repairing the warehouses and in removing the tenant's fitout. At the commencement of the hearing the plaintiff had advised that it no longer pressed claims for $96,500 assessed by Mr Cooke as the cost of certain items of work. Following a ruling that substantial parts of Mr Cooke's report including his assertions as to the costs of work were inadmissible, the plaintiff in final submissions confined its claim to 28 items where the plaintiff says that work was required as identified in Mr Cooke's report for which it claimed damages of $379,265.30 plus 10% for contractors, preliminaries and margin, and 6% for project management consultant fees in respect of those items which had not yet been carried out.
3. The sublease does not require the defendant to return the premises to an "empty shell" as described by Mr Commisso. The plaintiff relies on the following provisions: "13.1 Repair and replace The Sublessee must: (a) keep the Premises and the Sublessee's Property in good repair except to the extent that any disrepair is caused by…reasonable wear and tear or a defect in the structure of the Premises; and (b) repaint (or otherwise appropriately finish) the internal surfaces of the Premises, and repair or replace damaged or worn floor coverings, whenever reasonably necessary so as to keep the Premises looking clean and tidy. 13.2 Maintenance of plant and equipment The Sublessee must: (a) enter into all contracts for maintenance and repair of any plant and equipment servicing the Premises as are reasonably required by the Sublessor with contractors approved by the Sublessor (who may not unreasonably withhold its approval); (b) give all relevant authorities all certification required by those authorities in connection with the plant and equipment; and (c) when the Sublessor asks, give the Sublessor evidence that the Sublessee has complied with this clause. 13.3 Maintenance of grounds and pest control The Sublessee must: (a) regularly maintain the grounds of the Premises and where necessary replace the plants, shrubs and trees; … 15. Cleaning The Sublessee must: (a) keep the Premises tidy; (b) provide a cleaning service to the office portion of the Premises and arrange to have rubbish removed regularly from the premises; (c) keep rubbish awaiting removal from the Premises in appropriate containers; and (d) comply with the Sublessor's reasonable directions about the removal, storage and recycling of rubbish. … 17.2 Compliance The Sublessee must comply with all laws and the requirements of all authorities in connection with the: (a) Premises; (b) Sublessee's Business; (c) Sublessee's Property; and (d) Sublessee's use and occupation of the Premises, except those requiring structural work on the Premises unless that work is required because of the Sublessee's particular use or occupation of the Premises. … 24. Yielding up 24.1 Sublessee's obligation On or by the earlier of the Terminating Date and the date this sublease ends, the Sublessee must: (a) ensure the Premises are in a condition consistent with the Lessee having complied with its obligations under clause 12; (b) remove all loose Sublessee's Property from the Premises; and (c) vacate the Premises and give the Sublessor all keys, access cards and other security devices for the Premises which have been issued to the Sublessee or the Sublessee's associates. 24.2 Sublessee's Property Without limiting clause 24.1, the Sublessee may but is not obliged to remove the Sublessee's Property (that is not loose Sublessee's Property) from the Premises on or by the earlier of the Terminating Date and the date this sublease ends, however, the Sublessee must not remove Sublessee's Property which: (a) is part of structural work done by the Sublessee to the Premises, unless the Sublessor gives the Sublessee a notice to remove it or unless, as a condition of its consent to the Sublessee doing the structural work, the Sublessor stipulated that it must be removed; or (b) is to remain on the Premises under a condition imposed by the Sublessor when approving of the Sublessee's works on the Premises. 24.3 Sublessee's Property abandoned If the sublessee does not remove any Sublessee's Property in accordance with this clause 24, then the Sublessor may treat it as abandoned and either keep it as its own or dispose of it as the Sublessor sees fit at the Sublessee's expense."

Clause 13.1(a): keep in good repair

1. In Proudfoot v Hart (1890) 25 QBD 42 Lord Esher MR, with whose reasons Lopes LJ agreed, referred to Payne v Haine (1847) 16 M&W 541; 153 ER 1304 where the contract was to keep premises in "good repair", the expression used in clause 13.1(a). His Lordship said that that is "much the same thing as 'tenantable repair'" (at 51).
2. In Payne v Haine Baron Parke said (at 545, 1306) that the age and class of the premises let with their general condition as to repair at the commencement of a lease must be estimated in order to measure the extent of repairs to be done where there is an obligation to keep old premises in good repair. The plaintiff does not dispute this principle.
3. In Butt's Land Law 7th ed (Professor Edgeworth) Law Book Co 2017, the learned author says (at [7.840]): "The standard of repair required under a covenant to repair is a matter of construing the terms of the covenant. Every word of the covenant must be considered, construed in the context of the other provisions of the lease (Anstruther-Gough-Calthorpe v McOscar [1924] 1 KB 716 at 731-732; Bonafair Holdings Pty Ltd v Hungry Jacks Pty Ltd [2016] NSWCA 276). For example, a covenant to keep in 'good and substantial repair' may impose a higher standard than a covenant simply to keep in 'good tenantable repair' (Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349); and a covenant (in a plain language lease) to maintain in 'good condition and repair' may impose a higher standard than a covenant simply to keep in 'repair', since 'good condition' may be a separate concept from, and add significantly to, 'repair' (Welsh v Greenwich London Borough Council [2000] 49 EG 118 (CA), noted [2001] Conv 184, as interpreted in Lee v Leeds City Council [2002] 1 WLR 1488 at [61]) … The required standard of repair depends on many factors. They include the following: the nature of the building; the terms of the lease; the state of the building at the start of the lease; the nature and extent of the defect sought to be remedied; the nature, extent and cost of the proposed remedial works, and at whose expense they are to be undertaken; the value of the building and its expected life span, and the effect of the works on that value and life span; current building practices; the likelihood of a recurrence if one remedy rather than another is adopted; and the comparative cost of alternative remedial works and their impact on the occupants' use and enjoyment of the building (Holding and Management Ltd v Property Holding and Investment Trust Plc [1990] 1 EGLR 65 at 68-69, adopted in Eyre v McCracken (2000) 80 P & CR 220)."
4. In Proudfoot v Hart Lord Esher MR said that the measure of what was "good tenantable repair" was to be judged by whether the state of repair in which the premises were left was reasonably fit for the occupation of a reasonably-minded tenant of the class who would be likely to take it (at 52-53, 54, 55). His Lordship illustrated this by reference to the obligations of a tenant of a residential property obliged to leave the property in tenantable repair (which meant much the same as good repair) in relation to wallpapering, painting, whitewashing the ceilings (in the days of ubiquitous coal fires), painting and decorating. His Lordship rejected the view of the official referee that the tenant's obligation was to repaper with similar paper to that which was on the walls before and repaint with similar paint to that which was on the painted portion of the premises but also rejected the view that under a covenant to keep a house in tenantable repair, a tenant could never be required to put on new wallpaper. Even if the paper on the walls were in a worse condition than when the tenant went in, the tenant would not be obliged to repaper under the covenant if a reasonably-minded tenant of the class who took a house in that location would not think the house was unfit for his occupation (at 53).
5. Similarly, in relation to painting, if the woodwork would decay unless repainted, the tenant must repaint to a standard that would be expected by a tenant of a house of the character and at the location of the particular premises (at 54). If ceilings had been blackened, then the tenant was not obliged to whitewash the ceilings if a reasonable prospective tenant would not refuse to take the house because of the state of the ceilings (at 54). If the floor were rotten, the tenant's obligation under a covenant to keep the premises in tenantable repair would require him to put the floor in repair and if he failed to do so, the landlord could charge the tenant with the necessary cost of a floor which would satisfy a reasonable man taking the premises, but could not charge the tenant with the cost of putting down a new floor of a different kind (at 55).
6. Similarly Lopes LJ said (at 55) that "good tenantable repair" meant "…such repair as, having regard to the age, character and locality of the house, would make it reasonably fit for the occupation of a reasonably-minded tenant of the class who would be likely to take it".
7. To this must be added that it is necessary to have regard to the state of the building at the commencement of the lease (Alcatel Australia Ltd v Scarcella (1997) 8 BPR 15, 695 at 15,699-5,700, Windeyer J, affirmed in Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 at 356).
8. In Graham v Markets Hotel Pty Ltd (1943) 67 CLR 567, Starke J said (at 585): "The state of repair required by a covenant to yield and deliver up premises well and substantially repaired depends primarily upon the words used. It involves, in the present case, an obligation to yield and deliver up the premises in such a state of repair as that in which they would be found if managed by a reasonably minded owner having regard to their age, their character, their ordinary use and the requirements of the tenants likely to take them at the time of the demise or subletting (Lurcott v Wakely & Wheeler (1911) 1 KB 905; Anstruther-Gough-Calthorpe v McOscar (1924) 1 KB 716), Atkin LJ, as he then was, said in the latter case that such a covenant connotes the idea of making good damage so as to leave the subject matter as far as possible as though it had not been damaged (at 734). It involves renewal of subsidiary parts: it does not involve renewal of the whole."
9. Although the ambit of an obligation to keep a building in good repair is to be assessed having regard to the building's condition at the commencement of the lease, so that an obligation to keep an old building in good repair does not require it to be made as if it were new, nonetheless if the building is out of repair the obligation to "keep" it in good repair will require that the premises be put in good repair having regard to the nature and age of the building (Payne v Haine at 545,1306; Proudfoot v Hart at 50, 55; Lurcott v Wakely & Wheeler [1911] KB 905 at 916-917).
10. The principles stated in Proudfoot v Hart to which I have referred are not necessarily applicable in all cases, as in Anstruther-Gough-Calthorpe v McOscar [1924] 1 KB 716 where the lease was for 95 years during which the character of the neighbourhood and requirements of prospective tenants changed. But there is nothing like that in the present case. Proudfoot v Hart was applied by the Full Court in Abrahams v Shaw (1969) 72 SR (NSW) 225 at 229 (Sugerman JA, Herron CJ and Walsh JA agreeing).

Clause 24: remove sublessee's property

1. In relation to cl 24, it was common ground that in cl 24.1 the reference to cl 12 was a typographical mistake and should have been a reference to cl 13.
2. The defendant's obligation under cl 24.1(b) was only to remove the "Sublessee's Property" that was loose.
3. Pursuant to cl 24.2 the defendant was not obliged to remove Sublessee's Property that was not loose, but if the Sublessee did not remove Sublessee's property that was not loose, then the Sublessor could treat the property as abandoned and either keep it or dispose of it at the Sublessee's expense.
4. The plaintiff is not the Sublessor. It did not take an assignment of the Sublessor's rights under cl 24.3.
5. The first question is what is the "Sublessee's Property". That term was defined as follows: "Sublessee's Property means: (a) all plant and equipment, fixtures, fittings, furniture, furnishings and decorations and other property in, on or fixed to the Premises that is not Sublessor's Property or Services; and (b) the plant and equipment, fixtures, fittings, furniture, furnishings and decorations and other property in the Premises nominated by the Sublessor to the Sublessee which are: (i) owned by the Sublessor; (ii) in the nature of trade or Sublessee's fixtures (including electrical wiring and cabling); and (iii) made available by the Sublessor by way of incentive for the benefit of the Sublessee during any part of the Term."
6. Sublessor's Property was defined as follows: "Sublessor's Property means the Sublessor's fixtures, fittings and other property in, on or fixed to the Premises."
7. Paragraphs (a) and (b) of the definition of Sublessee's Property must be read disjunctively notwithstanding the use of the word "and" between paras (a) and (b). Under para (a) of the definition Sublessee's Property means property that is not the Sublessor's Property or Services. Under para (b) Sublessee's Property means property owned by the Sublessor and to which sub-paras (ii) and (iii) apply. If paras (a) and (b) of the definition of Sublessee's Property were read conjunctively, they would be inconsistent and meaningless. Thus property is Sublessee's Property if it falls within either para (a) or (b) of the definition.
8. The plaintiff submitted and Mr Cooke asserted that property would be Sublessee's Property if it were property installed in the premises of which the defendant took advantage. I do not agree. To fall within para (b) of the definition of Sublessee's Property, the property in question must be "nominated by the Sublessor to the Sublessee". There is no such implied nomination, merely by reason of the fact that the Sublessee might use property of the Sublessor that was installed in the premises. Any such property which the Sublessee was allowed to use would be provided to the Sublessee by way of incentive for its benefit and thus fall within para (b)(iii). But the requirements that the Sublessor's Property both be made available by way of incentive for the benefit of the Sublessee and be nominated by the Sublessor precludes the construction that property installed in the premises by the Sublessor of which the Sublessee took advantage became Sublessee's property without nomination by the Sublessor that it should be Sublessee's property.
9. Nor would that construction make commercial sense. On that construction where the Sublessor had installed air-conditioning or cabling or electrical wiring which the Sublessee used, then, on the termination of the sublease, for example, for non-payment of rent, the Sublessee would be entitled to remove the Sublessor's fixtures under cl 24.2 and the Sublessor would have no remedy. That would not be a sensible construction of the sublease. Nor does it conform with the ordinary meaning of the definitions.
10. There is no evidence that McWilliam's nominated any of its property as Sublessee's property pursuant to the definition in para (b) of Sublessee's Property.
11. Further, even if such property were the Sublessee's Property pursuant to para (b) of the definition of Sublessee's Property, it would not follow that the plaintiff was entitled to remove such property at the defendant's expense. The right given under cl 24.3 for the Sublessor to treat Sublessee's Property that was not removed as abandoned and either to keep it or dispose of it at the Sublessee's expense was a right personal to McWilliam's. The plaintiff did not succeed to that right.
12. It follows that the plaintiff cannot claim the expense of removing the Sublessee's Property that is not loose Sublessee's Property under cl 24.3. Because the defendant was not obliged to remove Sublessee's Property that was not loose Sublessee's Property, it was not in breach of its covenant under cl 3(b)(i) of the deed of consent to sublease by not removing its property that was not loose.
13. I turn to the individual items of work for which the plaintiff claims damages.

Signage

1. Mr Cooke assumed that the defendant was required to: "remove all sublessee installed signage, including safety signage and directional signage, corporate signage etc; allow to remove all associated fixings and to make good all damage caused…allow for safe access to undertake the required works." The plaintiff relied on cll 24.2 and 24.3.
2. There is no dispute that the defendant did not remove its signage.
3. I rejected Mr Cooke's assertion that the cost of doing the work he described was $3,000 for lack of any reasoning to support his estimate. However, the defendant tendered a report prepared by Mr Cooke entitled "Terminal schedule of dilapidations report" that was provided by the plaintiff to the deed administrators of McWilliam's in support of a claim by the plaintiff to prove in the deed administration. The defendant tendered the document in support of its contention that because the plaintiff was entitled to prove in the deed administration of McWilliam's for the amounts for which it claimed damages from the defendant, it had not proved that it had suffered loss that it claimed from the defendant.
4. No limitation was sought on the use to which Mr Cooke's dilapidations report, that the defendant tendered, could be put. In final submissions, counsel for the defendant sought such a limitation but I declined to make such an order at that late stage.
5. The contention for which the dilapidations report was tendered is not tenable. If both the defendant and McWilliam's are liable to the plaintiff for the cost of the same repairs or making good, the plaintiff cannot have double recovery but is entitled to judgment against each party. The administrators indicated their intention to allow a proof of debt for a substantial part of the sums claimed against McWilliam's but there was no evidence that the plaintiff had received any payment nor as to the likely dividend in the deed administration.
6. In his "dilapidations report" which became Exhibit 1, Mr Cooke asserted that the cost of the works described above was $3,000. He gave no reasons for that assertion. It is of no weight.
7. There is evidence that the plaintiff incurred a cost of less than $150 to remove the large signage from the front of the property (CB 971). (The charge of $150 also covered clearance of a stormwater drain). Although there was other signage on the property, it was not of that magnitude. It beggars belief that if removal of the large sign at the front of the property cost less than $150, removal of all of the signage would cost $3,000.
8. In any event, the signage was not "loose" Sublessee's Property. Counsel for the defendant conceded the claim to the extent of $150. But for that concession, I would not have allowed this item of damage at all, but in light of the concession it should be allowed in the sum of $150.

Communications equipment etc

1. $18,000 was claimed for work described as follows: "1.5 Communications equipment, stock management system and associated cabling: Allow to isolate, disconnect and remove at communications equipment and stock management system including communications frames, server cabinets, data sockets, wireless routers / boosters, VolP system controls, stock management systems receivers, cabling, etc, ensuring cabling is taken back to source and safely terminated. Allow to make good all damage caused upon completion to leave all retained surfaces in repair. Allow for safe access to undertake the works."
2. The plaintiff relied upon cll 24.2 and 24.3 and also cll 13.1(a) and 15(a).
3. The equipment and cabling referred to was not the Sublessee's Property. In relation to this item, Mr Tok deposed that "we have undertaken this work" (CB415). But he was referring to different work (T50.16). There was, however, no evidence that the communications equipment and associated cabling was installed by the defendant. Even if it were, it was not loose Sublessee's Property that the defendant was required to remove.
4. The plaintiff did not complain that the equipment and cabling was not in good repair. Rather it wanted the materials to be removed. The defendant was not in breach of cl 13.1(a). The question then is whether the claimed cost of removal is recoverable as the cost of making the premises tidy.
5. One of the photographs relied on by the plaintiff (CB 862) show cabling in the room in which the defendant had computer services. It shows the premises in an untidy state because the cabling and associated equipment has been left on the floor having been taken down from a cavity in the ceiling with the cabling hanging from that cavity. The room could be made tidy by replacing the cabling and attachments into the cavity and re-fixing the ceiling panels.
6. The other photograph (CB 863) shows a communication connection area with cabling, some of which is on the floor and appears untidy.
7. But the cost claimed is for the removal of this material. There is no evidence and I do not infer that removal of the material is necessary to keep the premises tidy.
8. There is no evidence and I do not infer that the services of a contractor would be required to make the areas tidy or that any expense would be incurred beyond the time of an employee or employees of the plaintiff.
9. Where no evidence is given as to the amount of damage flowing from a breach so that it is virtually impossible to assess damages, this will generally permit only an award of nominal damages: Dixon v Deveridge (1825) 2 C & P 109; 172 ER 50; Twyman v Knowles (1853) 13 CB 222; 138 ER 1183; McGregor on Damages, 21st ed, 2021 (James Edelman) Sweet and Maxwell [10-001].
10. I allow nominal damages for this item based on a breach of cl 15(a) in that the premises were not left in a tidy condition, but reject the claim for breach of cl 13.1(a) and cll 24.2 and 24.3.

Security system

1. The third item claimed was for a sum of $1,000 for the removal of security cameras installed by the defendant. The defendant accepted liability for this sum. Because of that concession I will allow it, although I find it hard to see how it could be loose Sublessee's Property that the defendant was obliged to remove.

Light fixtures

1. The next item of work for which damages was claimed was described as follows: "1.15 Alternative light fixtures: Allow to isolate, disconnect and strip out and make good to any damaged surfaces."
2. The plaintiff relied on cll 24.2 and 24.3.
3. This item refers to lights installed by the defendant. The plaintiff claimed $1,800 for the cost of removing the light fixtures. The defendant said that the lights installed could be reused. Whether that be so or not, the light fixtures were not loose Sublessee's Property and the defendant was not required to remove them. The plaintiff is not entitled to the cost of removal because it is not an assignee of the Sublessor's right under cl 24.3.

Bolts

1. The plaintiff claimed $70,000 for work involved in the removal of bolts from the floor of Warehouse A and $2,500 for work involved in the removal of bolts from the floor of Warehouse B.
2. The work was said to involve drilling into the floor of the warehouses (a concrete slab) to remove the bolts, and infilling the holes so that the floor could receive new finishes.
3. In respect of the bolts, Mr Commisso deposed as follows: "I estimate that there were thousands of screws, bolts and nails left fixed in the floor or laying loose through the Warehouses when Brand Ventures vacated. I agree with Mr Cooke's estimate of approximately 3,500 bolts. I recall that when Austap Plumbing Services attended the Property to undertake work shortly after brand ventures vacated, they refused to drive their vehicle into the warehouse due to the number of screws, bolts and nails lying on the floor."
4. Mr Commisso was not cross-examined on this evidence.
5. Mr Cooke's report, however, makes no reference to bolts left loose. It refers only to "bolt fixings", and, in specifying the work required to be done in respect of these items, refers to work said to be required for the removal of bolts fixed in the concrete slabs.
6. There was no evidence that the plaintiff incurred any additional cost in sweeping up bolts left loose on the floor of the warehouses.
7. In light of what is said at [66]-[70] above, the only basis upon which the plaintiff can claim in respect of the bolts fixed into the concrete floor is the covenant to repair under cl 13.1(a).
8. Mr Tok's evidence was that the bolts were used to fix racking to the floor of the warehouses (T55.5-50), and that some of the bolts were present before the defendant took possession of the premises (T59.20-39). Mr Tok identified the bolts as "dyna bolts".
9. Mr Tok maintained that, at the end of the lease, the defendant had cut the bolts flush with the concrete slab (T60.35-36). When asked why the defendants did not "extract the bolts from the concrete", Mr Tok replied: "This is the way that normally it's done in warehouses. I mean, we've occupied other warehouses. You cut it level with the thing and then the next person comes in, erects their own racking." (T30.49-41)
10. This evidence was unchallenged. I considered Mr Tok to be a credible witness. He was prepared to make admissions against interest.
11. I accept Mr Tok's evidence as to the usual practice in this industry with regard to the cutting and levelling of bolts. This is evidence of the state of repair which would leave the warehouse reasonably fit for the occupation of a reasonably-minded tenant of the class of tenant likely to occupy the premises.
12. The plaintiff has not shown that, with respect to the bolts, the defendant breached its covenant to keep the premises in good repair. I reject this item.

Painted yellow lines

1. The plaintiff made a claim for the removal of painted yellow lines on the floor of the warehouses, and for sealing the floors after the removal of the paint.
2. The plaintiff claimed for this work under cll 13.1(a) or (b), and cl 15(a).
3. It is convenient to begin with cll 13.1(b) and 15(a).
4. The obligation to repaint under cl 13.1(b), being an obligation to "repaint (or otherwise appropriately finish) the internal surfaces", is qualified by the clause "whenever reasonably necessary so as to keep the Premises looking clean and tidy." It is also coupled with an obligation to "repair and replace damages or worn floor coverings".
5. This suggests that the obligation to repaint is directed at the painting of entire surfaces, as opposed to the painting of markings or signage, such as the yellow lines painted on the floor of the warehouses. Nor is the presence of yellow lines readily answerable to the description of "unclean" or "untidy".
6. The plaintiff is not entitled to the costs of removing the yellow lines under cl 13.1(b).
7. Similarly, the general obligation under cl 15(a) to "keep the Premises tidy" did not require the defendant to remove the painted lines from the floors of the warehouses.
8. As to the obligation to keep in good repair under cl 13.1(a), the unchallenged evidence of Mr Tok was that the floor of the warehouses was painted both with lines painted by the defendant during the course of its occupancy, and with lines which predated the sublease and which were revealed by the removal of racking by the defendant at the end of its occupancy (T58.48-59.12).
9. In respect of the lines painted by the defendant, Mr Commisso's evidence was that the markings were "suited to the racking used by Brand Ventures, which it took when it vacated the property." (CB 824)
10. The defendant did not challenge this evidence. Mr Tok's evidence in respect of the lines painted by the defendant was that they were painted for safety reasons. (T55, 59) It should be noted, however, that whereas Mr Commisso's evidence was that the lines were used by forklift drivers (CB 823), Mr Tok's evidence was that they only guided pedestrian traffic (T56.6). Nothing turns on this.
11. In explaining why the lines needed to be removed, Mr Commisso referred to an earlier paragraph of his affidavit quoted at [46] above.
12. In can be inferred from Mr Commisso's evidence that a reasonably-minded tenant of the class of tenant likely to occupy the premises would require its own safety markings to be painted. This would require the removal of existing markings, to make the premises reasonably fit for the occupation of such a tenant. That is because, were new safety markings painted over existing markings, the new markings would be less readily perceived.
13. Accordingly, the plaintiff is entitled to the cost of the removal of the lines painted by the defendant.
14. The next question is whether a different result ought to be reached in respect of lines which were hidden by the racking during the course of the defendant's occupancy and pre-dated the sublease.
15. Unlike the lines painted by the defendant which the evidence disclosed were painted for safety reasons, there was no direct evidence of the purpose of the lines which were hidden by the racking.
16. Mr White SC, who appeared with Ms Epstein for the plaintiff, sought to draw the inference that the lines were painted "for the purpose of identifying the location and placement of the racks" (T107.44). Given that Mr Tok's evidence was that he had never seen them before (which is to say that the racking entirely covered the painted lines) (T58.5), this is a reasonable inference to draw. Lines painted for this purpose would be peculiar to each tenant.
17. In any event, even if one does not draw the inference that the lines which lay under the racks were present in order to identify the placement of the racks, a tenant seeking to install its own fitout would ordinarily need to remove such lines in order to paint any markings, such as safety markings, which it required for its own fitout. This follows from the evidence of Mr Commisso quoted above at [46].
18. It may be said that to be reasonably fit for the occupation of a reasonably-minded tenant of the class of tenant likely to occupy the premises, the warehouse floor was required to be rid of lines of the kind formerly hidden by the racking. It is true that the defendant did not remove these lines when it took occupation. But the racking present at the commencement of the sublease was suited to its use of the warehouse. It cannot be assumed that a new tenant would wish to install the same sized racking in the same locations.
19. Nonetheless, it does not follow that the defendant was required to remove the lines that had been painted before it occupied the warehouse in order to keep the warehouse in good repair. The presence of those lines at the commencement of the sublease did not mean that the premises were not then in good repair. They were fit for the defendant's occupation because it took over the racking. The defendant did not have to remove the lines to put the premises in good repair during the currency of the lease. Its obligation to repair is to be assessed having regard to the condition of the warehouse when it took occupation. McWilliam's could not complain that the defendant did not remove the lines it had installed.
20. Therefore the plaintiff is entitled only to the cost of removing the lines painted by the defendant.
21. Mr Cooke's opinion as to the cost of removing the painted lines ($34,000) was rejected as inadmissible. In light of my rulings on the admissibility of Mr Cooke's report the defendant did not tender the report of a Mr George Zakos whose report on the cost of rectification of work identified by Mr Cooke had been served by the defendant. But parts of Mr Zakos' report were tendered by the plaintiff. These included Mr Zakos' opinion that the cost of removing an assumed 400 metres of line marking installed by the defendant would be $2,120 being 24 hours of labour at $80 per hour and $200 for the cost of materials. There was no contrary evidence as to the length of line markings installed by the defendant. Accordingly I assess damages for this item in the sum of $2,120.

Fire safety

1. The plaintiff claims $26,238.35 under cl 17.2 in respect of works undertaken by the plaintiff which the plaintiff says were required to bring the warehouses in line with the relevant Australian Standard. The plaintiff alleged that the defendant had failed to maintain fire safety records and to undertake yearly testing to sprinkler and hydrant systems. The defendant said that it had done so.
2. Mr Commisso deposed that the defendant did not supply an annual Fire Safety Statement upon vacating the property (CB 825). He exhibited invoices from Chubb Fire & Security Pty Ltd from 13 February 2020 to 26 August 2020 for allegedly rectifying the defendant's breaches in this regard. The invoices totalled $26,238.35.
3. As evidence that it had complied with its obligations under cl 17.2, the defendant relied on a letter and attached fire safety assessment report sent from Chubb to McWilliam's on 16 December 2019 (CB 426).
4. In the face of this evidence, Mr White at first conceded that the work had in fact been done, and accepted that the plaintiff's case was that the defendant was in breach of the clause by failing to notify the plaintiff that the relevant fire safety requirements had been met. (T112.7). He also submitted that the absence of markings on tags attached to fire extinguishers indicated that Chubb had not in fact conducted the requisite testing. (T112.11-12)
5. The fire safety assessment report exhibited to the affidavit of Mr Tok is clear evidence that the inspection took place. The reasonable inference to draw, absent evidence to the contrary, is that Chubb simply failed to mark the fire extinguisher tags.
6. The relevant obligation under cl 17.2 is to "comply with all laws and the requirements of all authorities". The clause says nothing about notifying the plaintiff of the defendant's compliance with any relevant law or requirement.
7. I reject this claim.

Hardware

1. The plaintiff claims $260 for replacement of a door handle which it says is required to put the property into a state of good repair. The defendant concedes this item. (T146.4-7)

Bollards

1. The plaintiff claims $5,000 as the cost of work necessary to replace or repair damaged bollards.
2. The plaintiff conceded that there was no evidence of any damaged bollards other than the evidence in Mr Cooke's report (T146.11-29).
3. Mr Cooke refers to "[i]mpact damaged bollards". (item 2.9, page 5) Attached to his report is one photograph which depicts a bollard which appears to have been bent to the side.
4. The plaintiff did not point to any evidence, nor did it seek to draw any inference, which might establish that one bent bollard fell short of the state of repair which would be reasonably fit for the occupation of a reasonably-minded tenant of the class of tenant likely to occupy the premises.
5. The evidence is insufficient to support a finding of breach of cl 13.1(a).
6. Mr Cooke's evidence as to the cost of the relevant remedial work was ruled inadmissible. The plaintiff relied on item 2.11 of the dilapidations report (Exhibit 1) sent to the administrators of McWilliam's. It simply stated that the cost of replacing or refixing damaged bollards was $5,000 without any explanation as to how that cost was arrived at other than a general statement, applicable to all items in the report, that the cost was based on rates recently received by contractors for works of a similar nature and including costs books. I have serious reservations about the reliability of the estimates in Exhibit 1. I have already commented on Mr Cooke's costing for the removal of signage (at [78] above). Another example where his estimate can be compared with a cost actually incurred is for item 2.6 in dilapidations report where Mr Cooke opined that a maintenance inspection of all roller shutter doors to identify works to leave doors in repair would cost $13,500. This did not include the cost of repairs (Item 2.6). Mr Commisso exhibited to his affidavit a quote and invoices in relation to the repair and servicing of roller shutter doors totalling $4,356 (CB 825). If the cost of the actual repair and servicing of roller shutter doors was $4,356 it strains credulity that the cost of investigation would be three times as much. I give no weight to the unreasoned cost estimates in the dilapidations report, Exhibit 1.
7. Accordingly, had I found a breach in respect of this item, I would have awarded the plaintiff only nominal damages

Lights and light fittings

1. The plaintiff made a number of claims in respect of lights and light fittings in the two warehouses which it said required replacing or repair. These are separately identified as items 2.11, 2.17, 2.24 and 2.27 of the Scott Schedule.
2. These claims, as particularised in the plaintiff's Scott Schedule, were: $5,000 for "light fittings" in Warehouse A; $2,000 for "lights" in Warehouse A; $6,500 for "light fittings" in Warehouse B; and $2,000 for "lights" in Warehouse B.
3. What is meant by the distinction between "lights" and "light fittings" is not at first clear. Mr Cooke's report makes a distinction between lights in the office and amenities areas of each warehouse and in the warehouse areas. The amounts claimed in respect of "light fittings" in the Scott Schedule correspond to amounts given for the office and amenities areas items in Mr Cooke's Report. The amounts claimed in respect of "lights" correspond to the warehouse area items.
4. Accordingly, it would appear that, in the Scott Schedule, those items which refer to "light fittings" refer to lights in the office and amenities areas, and those items which refer to "lights" refer to lights in the warehouse areas.
5. Annexed to Mr Commisso's affidavit were photographs which were said to correspond to each of these areas.
6. The photographs which were said to depict the office and amenities areas of Warehouse A (CB 960-963) appeared to depict two distinct spaces. In the first space, one or perhaps two lights are not illuminated. In the second space, (CB 972) somewhere between 5 and 10 lights are not illuminated.
7. When asked about the photographs depicting the second space, Mr Tok suggested that the reason that several lights were not illuminated was because the relevant switch had not been turned on. He said that the lights which were not illuminated were controlled by a switch which was in a different location to the switch which controlled the lights which were illuminated (T65.4-5).
8. The photographs which were said to depict the warehouse areas of Warehouse A (CB 981-984) revealed no more than 13 unilluminated lights.
9. The photographs which were said to depict the office and amenities areas of Warehouse B (CB 972-974) revealed no more than 3 unilluminated lights.
10. The photographs (CB 1001-1004) which were not identified as depicting the warehouse areas of Warehouse B in Mr Commisso's affidavit but were identified as such by Mr Tok (T66.30) revealed between 20 and 30 unilluminated lights.
11. Mr White submitted that, in total, the evidence revealed approximately 40 lights requiring repair or replacement. (T115.20)
12. Mr Tok deposed that the defendant had "changed lights as needed as they were quite old" and similarly that the "[l]ights were very old and we changed the[m] when required" (CB 418-419).
13. In the course of cross-examination there occurred the following exchange: Q. I want to suggest to you, Mr Tok, that there were in fact a considerable number of lights that were not working when you vacated the premises? A. I wouldn't agree with that because if I had kept them updated because I knew that lights to be on for staff to be working. Admitted there could have been one or two that we might have missed or it could have - it could have been just - they're old lights, a lot of them, the ones that weren't - the tubes weren't replaceable, we used to change the whole lot but when there was a chance to change the tubes, we used to change it. So I've only seen a couple. And that one with the whole bunch not working, that was just a switch. Someone didn't turn the switch on.
14. From Mr Tok's evidence that he saw it as necessary to conduct an inspection of broken lights upon vacating the premises it can be inferred that replacement of broken lights is necessary to render the premises reasonably fit for the occupation of a reasonably-minded tenant of the class of tenant likely to occupy the premises.
15. I therefore find that the defendant was in breach of cl 13.1(a) in respect of the broken lights.
16. The defendant submitted that there is no reliable evidence to act upon in respect of the cost of the work said to be required for the repair and replacement of the lights (Defendant's Closing Subs [91]).
17. I accept this submission. Mr Cooke's evidence of the cost of the relevant remedial work was rejected. His estimate in the dilapidations report is of no weight. There was no other evidence of the cost incurred or which would be incurred in replacing the lights. It is therefore impossible to assess damages.
18. An invoice for $28,780.57 for lighting works issued by "Cherry Energy Solutions" to the plaintiff (CB1000) was not relied upon by the plaintiff.
19. Accordingly, the plaintiff is entitled only to nominal damages in respect of this breach.

Carpets

1. The plaintiff claims $7,600 for the cost of work which is described in the Scott Schedule as follows: Carpets: Allow to remove the existing and fit new carpet flooring to currently carpet office areas.
2. The plaintiff relies on an invoice exhibited to the affidavit of Mr Commisso, which includes an item for "Take up existing carpet" charged at $7,600 (CB 880).
3. It did not press a claim for a further sum to "fit new carpet flooring" as appears in the Scott Schedule.
4. Mr Commisso deposed that: "The carpet in the Level 2 office of Warehouse A has been removed by Pipeclay Lawson because it was in bad condition and for the reasons I have stated in paragraph 7." [which is quoted above at [46]]
5. Mr Commisso was not cross-examined on this evidence.
6. The plaintiff also relies on photographs exhibited to the affidavit of Mr Commisso which appear to show a ripped, buckled and stained carpet. (CB 964-966, 975-976).
7. In its closing written submissions, the defendant submitted that "[t]here is no evidence that anything more than a clean may have been required." (Defendant's closings subs [93]) This ignores the rips and buckles pictured in the photographs of the carpet, which would not be repaired by cleaning.
8. Mr Altan attempted to characterise the plaintiff's reason for removing the carpet as a desire to return the warehouses to an "empty shell" (T147.5), but this ignores Mr Commisso's evidence that the carpet was removed "because it was in bad condition".
9. The defendant did not point to any evidence which challenged the evidence given Mr Commisso.
10. It can be inferred from Mr Commisso's evidence that the removal of carpet in a bad condition was necessary to make the premises reasonably fit for the occupation of a reasonably-minded tenant of the class of tenant likely to occupy the premises.
11. It should be noted that the plaintiff makes its claim in respect of the carpet under cl 13.1(b), not cl 13.1(a). The former, which specifically concerns "floor coverings", does not, like the latter, refer to keeping the premises in "good repair" but rather requires the defendant to "repair and replace damaged or worn floor coverings, whenever reasonably necessary so as to keep the Premises looking clean and tidy."
12. Neither the plaintiff nor the defendant submitted that anything turned on this distinction.
13. I allow the claim of $7,600 in respect of the carpet.

Floor soiled with white paint

1. The plaintiff claims $6,500 "to remove paint marks from flooring including sanding down and recoating the timber flooring and replacing vinyl as necessary".
2. Again, this claim is made under cl 13.1(b), not cl 13.1(a).
3. The paint marks are said to be in the canteen area of Warehouse A. (Mr Cooke's report, item 2.14)
4. Mr Commisso deposed (CB 826) that the white paint (which was identified by reference to the relevant item in Mr Cooke's report) needed to be removed for the reasons given at paragraph 7 of his affidavit (quoted at [46] above).
5. Mr Tahmazoglu's evidence was that the paint was there at the commencement of the lease (T84.28). That evidence was unchallenged.
6. In the course of cross-examining Mr Tahmazoglu, Mr White brought Mr Tahmazoglu's attention to a photograph included in Mr Cooke's report, which is described as "Paint staining to Level 1 former canteen areas flooring" (T84.19). (CB 341) That photograph clearly shows a small area of paint staining. It was this paint which Mr Tahmazoglu said was present at the commencement of the lease.
7. The item in Mr Cooke's report which refers to the soiling of the floor of the canteen area refers to "[a]reas of timber and vinyl flooring … heavily soiled with white paint". (CB 334) The photograph to which Mr Tahmazoglu's attention was drawn appears to show a grey vinyl surface as well as a brown timber surface, which corresponds to the description in the schedule of Mr Cooke's report.
8. In its Scott Schedule, however, the plaintiff relies on photographs in the report of Mr Zakos. (CB 737, 741, 743 and 744) These photographs, which are said to depict the floor soiled with white paint, are not clear. The floor does appear to be covered with large areas of whiteness, but this is not obviously the result of paint. Rather the whiteness appears to be scuffing or dust. Nor do any of the photographs appear to depict the same staining, or even the same floor, as is depicted by the photograph in Mr Cooke's report. They do not appear to depict either vinyl or timber flooring.
9. The photographic evidence referred to in the Scott Schedule is not evidence of staining by white paint. The only evidence of soiling by white paint is the photograph in Mr Cooke's report, the corresponding item in Mr Cooke's report, the reference to that item by Mr Commisso, and Mr Tahmazoglu's oral evidence in respect of the photograph.
10. It might be said that a paint stain on the floor of a canteen area is not "tidy", which is the standard imposed by cl 13.1(b).
11. But this standard must be considered in light of Mr Tahmazoglu's unchallenged evidence that the paint was present at the commencement of the lease.
12. I find that the defendant was not in breach of cl 13.1(b) in failing to remove the white paint stains.
13. In any event, there is no evidence of the cost of the work said to be required, because Mr Cooke's evidence as to cost was rejected and his opinion in the dilapidations report is of no weight.
14. I accept the defendant's submission that there is no reliable evidence that the Court can act upon in respect of this item. If I had found there to be a breach in respect of this item, I would have awarded only nominal damages.

Repairs to amenities

1. The plaintiff claims $5,487 under cl 13.1(a) for repairs to the amenities, being toilet blocks.
2. The plaintiff relied on three invoices issued by Austap Plumbing Services to the plaintiff for work completed in April and May 2020, exhibited to the affidavit of Mr Commisso. (CB 967-971)
3. The plaintiff claims the total sums of the first and second invoices, being $4,752 and $385 respectively. The works the subject of these invoices were extensive, and involved the replacement of various aspects of the plumbing in the amenities which, in the invoices, are said to be broken, leaking, missing or otherwise defective.
4. For the third invoice the plaintiff claims a sum of $350 which appears to correspond to one of the items on the invoice, being the cost of repair to what is describes "[m]en's toilet door" which was said to be "rotting at the bottom".
5. The defendant submitted that the invoices reveal "renovation items mixed in with repair items". (Defendant's written closing submissions [101], [104]). In argument, Mr Altan referred specifically to: "… the removal and replacement of existing mirrors, removal of soap dispenses et cetera. The removal, down further, four basin tap sets, replace pan collars et cetera. It's not entirely clear whether they are renovation items, as they appear to be, or repair items for items that genuinely required repair. And then there is simply no way of knowing which part of the invoice relates to which item, and so again in my respectful submission there's a lack of reliable evidence that would enable the court to quantify with any accuracy the items that are genuine repair items."
6. This submission wrongly assumed that the obligation to keep premises in good repair did not require the defendant to replace or renew damaged or defective items (Lurcott v Wakely & Wheeler at 919, 923-924; Graham v Markets Hotels Pty Ltd at 579, 585).
7. The photographic evidence reveals missing taps (CB 343), damage to a hand basin splashback (CB 343), damaged vinyl flooring (CB 843-844) and missing tiles (CB 848).
8. In respect of the damaged splashback, Mr Tok's evidence was that the hand basins were in that state at the commencement of the lease. (T67) His evidence in respect of the missing taps was that the defendant had never used those showers, from which it can be inferred that the showers were in that state at the commencement of the lease. (T67) In respect of the damaged vinyl flooring his evidence was also that the premises were received in that state. (T68) His evidence was similar in respect of the tiles. (T69)
9. Nonetheless, in this case the defendant's obligation to keep the amenities in good repair required that they be put in good repair.
10. I allow this item.

Pipes

1. The plaintiff claims $5,027 under cl 13.1(a) for "pipes" and, more specifically, "localised repairs to replace the impact damaged sections of the downpipes".
2. The plaintiff relies on three invoices issued by Austap Plumbing Services to the plaintiff. (CB 977, 978, 980)
3. The first, for works completed on 21-24 April 2020, includes four separate items: "building maintenance" charged at $1,200; "roof repair" charged at $900; "plumbing repairs" charged at $600; and "emergency call-out charges" charged at $250. The building maintenance item was for the replacement of six damaged downpipes, including the concreting of the base. The roof repair addressed leaks and blocked gutters, downpipes and sumps. The plumbing repairs involved the removal of unnecessary off-cuts, brackets and "metals", and the replacement of "damaged and broken drain grates". The emergency call-out charges concerned works done to repair a leak from the toilet block onto the warehouse floor.
4. The second, for works completed on 4 May 2020, is for the replacement of an "old, rusted and broken" downpipe said to be "leaking in 3 locations" at a cost of $660.
5. The third, for works completed on 29 October 2020, is for the replacement of a downpipe which "was broken and had fallen of (sic) the column", and for the installation of a missing grate which presented a trip hazard. The cost of these works was $1,122.
6. Mr Commisso deposed that the work said to be required by Mr Cooke, being "localised repairs to replace the impact damaged sections of the downpipes", had been undertaken by the plaintiff, and referred to the invoices. He did not say the work was undertaken for the reasons in paragraph 7 of his affidavit.
7. The plaintiff also relies on two photographs exhibited as part of exhibit MT3 to the affidavit of Mr Tok, both of which depict downpipes. (CB 590, 592) The first clearly shows a downpipe with a large hole. The second shows a downpipe without any obvious damage, but with what appears to be the rotting and buckling of fixtures surrounding the pipe. The pipe appears to be leaking.
8. In his affidavit, Mr Tok deposed that these photograph in exhibit MT3 were taken on 5 and 27 July 2018, 14 December 2019, and 3 April 2019. (CB414) Given that, in the same paragraph, Mr Tok refers to repairing broken pipes on 27 July 2018, it can be inferred that the photographs of the faulty downpipes were taken on that date. In cross-examination, Mr Tok said the dates were obtained from the photographs' file information on his computer. (T73)
9. Mr Tok deposed: (CB 419) "Many of these pipes were leaking when we moved in. Steve from JCT Building Maintenance repaired them. There were no leaking ones when we vacated. The pipes are very old."
10. In cross-examination, Mr Tok admitted that he might not have been aware of damaged pipes at the time of the defendant's vacation of the premises: Q. And it is the case, is it not, that you may not have been aware of the existence of broken pipes at the time you vacated the property, is that possible? A. It's possible, but I haven't seen it, yeah. I did do a walk through and I didn't see anything. I wasn't exactly looking at pipes, but I was having a general look
11. The defendant led no evidence to challenge the invoices. Mr Commisso was not cross-examined on them.
12. The defendant submitted that many of the items charged on the invoices do not concern damage to pipes.
13. It is true that, in argument, Mr White did appear to limit the plaintiff's claim to a claim for damage to the pipes. He submitted: "Pipes, your Honour, I submit that there is the invoices at 2.21, and the photos. Now, that's the evidence of Mr Commisso that when Brand Ventures vacated, these pipes were broken and clearly work was done to fix them, and in our respectful submission there was no cross-examination or issue in relation to that matter, and your Honour would accept that as a reasonable expense in relation to that matter."
14. Mr Altan submitted: "In relation to 2.21, the claim for the rainwater downpipes, the evidence of Mr Tok and Tahmazoglu, as given under cross-examination yesterday, was that there was no damage or leaking downpipes as at the time Brand Ventures vacated the premises. They were specifically asked about certain photos, and their evidence was - and they answered the questions by reference to other items in the photos and they backed up their reasons for saying well, this couldn't have been at the time that it's being put to me it was taken. And your Honour would, in my respectful submission, accept that evidence. Then insofar as the quantum of that claim is concerned, there is in the affidavit of Mr Commisso at p 827 a similar problem as the problem that I just identified to your Honour in relation to the Austap invoices, and that is that when one looks at it, at p 978 your Honour will see that there is an unrelated item that appears, roof repair, and other plumbing repairs down the bottom for $600 which appear to be unrelated to the pipes - or I'm sorry, the second point might be related to pipes. But then there are some further emergency repairs, and this is on p 980, and bearing in mind, your Honour, that we're talking with the first invoice it's issued on 6 May for work that appears to have been performed on 21 April, 22 April and 23 April. This is many many weeks after the premises were vacated by Brand Ventures."
15. Mr Tahmazoglu was not, in fact, cross-examined in respect of the downpipes.
16. Although Mr Altan appeared to say that the "roof repair" was unrelated to the pipes, the item appears to ascribe the leaking to blocked downpipes and relevantly reads: - All gutters, downpipes and sumps were blocked due to the size of the roof. - Cleaned all gutters, downpipes and sumps.
17. The emergency call-out charges also refer to a "waterproofing issue around the drain pipes".
18. It may be accepted that parts of the works described as "plumbing repairs" and "emergency call-out charges" might not be directly related to the downpipes.
19. In the third invoice, it may be accepted that the installation of a missing grate is not directly related to the downpipes, but it is nonetheless a necessary item of repair.
20. While the plaintiff's claim was expressed in the Scott Schedule as one in respect of "impact damaged downpipes", the plaintiff's case in respect of this item was broader, as shown by the evidence in the form of the invoices.
21. Mr Altan also submitted that the repairs were effected "many many weeks" after vacation of the premises by the defendant. The defendant, however, led no evidence and did not cross-examine Mr Commisso to suggest that the damage was caused in the interim.
22. I allow this item.

Damaged fire insulation

1. The plaintiff claims $6,000 under cl 13.1(a) for damaged fire insulation.
2. The only evidence of the damaged fire insulation is an item in Mr Cooke's report (item 2.27, page 8) which refers to "damaged and loose fire insulation" and which indicates that a sum of $6,000 is required to effect the repairs, and the evidence of Mr Commisso given in his affidavit (CB 827) that the work identified by Mr Cooke needs to be done for the reasons Mr Commisso gives in paragraph 7 of his affidavit.
3. Mr Tok did not challenge the evidence that the fire insulation was damaged but deposed "[w]e did not damage any fire insulation." (CB 419) That is, Mr Tok did not deny that it was damaged but said the damage was not caused by the defendant. He was not challenged on that evidence.
4. The relevant question is whether the defendant was in breach of its covenant to repair in failing to repair the damaged fire insulation.
5. No inference can be drawn from the evidence of the damaged fire insulation as to the state of repair which would be reasonably fit for the occupation of a reasonably-minded tenant of the class of tenant likely to occupy the premises.
6. Unlike, say, the removal of line markings on the floor of the warehouses which allows a new tenant to fitout the premises in a way appropriate for its intended use, there is no suggestion that the replacement of fire insulation would be reasonably expected by a reasonably-minded new tenant.
7. Nor does the evidence disclose the extent of the damage, so that even if the standard of repair was clear, it would not be possible to say whether the damage fell short of that standard.
8. The evidence is insufficient to support a finding of breach.
9. In any event, the inadmissibility of Mr Cooke's evidence as to the cost of repairs means that it is impossible to assess damages. If I had found there to be a breach in respect of this item, I would have awarded only nominal damages.

Damaged cladding

1. The plaintiff claims $12,000 under cl 13.1(a) for damaged cladding.
2. The evidence for this item is similar in nature to that in respect of the damaged fire insulation.
3. Mr Cooke asserts the existence of the damage in his report and the need for repair (item 2.25, page 7). Mr Commisso deposes that the damage must be repaired for the reasons in paragraph 7 of his affidavit. (CB 827)
4. In addition, there is also photographic evidence attached top Mr Cooke's report depicting the damaged cladding. (CB 343)
5. Mr Tok admitted the damage but deposed that it "[w]as there when we moved in". (CB 419)
6. Mr White referred to this item only cursorily in argument. (T113)
7. Again, the evidence is insufficient to support a finding of breach.
8. I reject this item.
9. Even had I found that the defendant was in breach in respect of this item, damages would only have been nominal.

Damaged columns

1. The plaintiff claims $5,000 for damage to areas of concrete columns. It relies on cl 13.1(a).
2. Again the only evidence of this item is in Mr Cooke's report (item 2.26, page 7) and Mr Commisso's reference to it (CB 827). Mr Cooke reported that there were "several areas of impact damage noted to painted concrete columns". Mr Commisso said that Pipeclay Lawson would repair the damage. Mr Tok said the defendant did not cause the damage.
3. The item was referred to only cursorily by Mr White. (T113)
4. The evidence is insufficient to support a finding of breach. I reject this item. Had I found a breach, I would have awarded only nominal damages.

Damaged perimeter fencing

1. The plaintiff claims $14,500 for damaged perimeter fencing, relying on cl 13.1(a).
2. Mr Commisso's evidence (CB 827) was a brief reference to the relevant item in Mr Cooke's report (item 2.27), as well three photographs which appears to depict chain wire fencing on the perimeter of the premises.
3. No clear damage is evident from the photographs except for one pole in the fence which appears to be tilted.
4. Mr Cooke's evidence consisted of an item in his report which asserted that the fence was "impact damaged" and remedial work was required including "repairing concrete kerbs and re-casting fencing support posts."
5. Mr Tok's evidence in his affidavit that that the "[f]ence was buckled in some places and had holes in other sections at the time we commenced occupation, which we mended as required" (CB 420).
6. In cross-examination (T73-74), Mr Tok's evidence was as follows: Q. … Now, do you agree that the perimeter fencing had been damaged during the time that you were in occupancy? A. Yes, it had some holes in it as I suggested there. Q. And were the holes in part the result of impact damage? A. Well, the holes were there when I was there. The fence was just old. We - we repaired some holes ourselves because the people coming into the premises. Q. And there was damage to the sections of the fencing; do you recall that? A. Damage in some sections? Q. Yes. A. No, I don't recall any damage. Q. And do you recall there was damage to the concrete kerbs? A. No. I mean, is there pictures of the damages? Q. Well, I'm asking you Mr Tok whether you recall there being any damage-- A. To kerbs, no. Q. --to kerbs? A. No, I don't recall any.
7. I accept that there was some damage to the perimeter fencing, but the evidence is insufficient to establish that it fell short of the standard of good repair.
8. In any event, the inadmissibility of Mr Cooke's evidence of cost of repair and my assessment that the dilapidations report is of no weight means that, even if breach were made out, only nominal damages could be given.

Damaged brickwork

1. The plaintiff claims $6,000 for damaged brickwork.
2. Mr Commisso again deposed that the damaged brickwork (which again was identified by reference to the relevant item in Mr Cooke's report) ((CB 335, item 2.28) needed to be removed for the reasons given at paragraph 7 of his affidavit.
3. Exhibited to Mr Commisso's affidavit were two photographs said to depict the damaged brickwork. The first (CB 1005) depicts a large external wall on the premises with four widely-spaced brick-sized holes. The second (CB 1006) depicts a narrow gash in the brickwork which extends over six layers of bricks.
4. Mr Tok deposed that the defendant did not cause the damage. (CB 420)
5. In cross-examination, Mr Tok said he had never seen the damage before. (T74) In respect of the second photograph, he said: "This could have been caused by a forklift but this is the back yard where we have no forklifts and we - we've only used it towards the end of our occupancy, stored some containers there, so there's no machines or anything of sort operating here, so I don't know - I don't know whether we would have caused that. I wouldn't know."
6. Given the age of the building, and given that this damage to brickwork has not been shown to be more than superficial, the evidence cannot be said to support a finding that the brickwork falls short of the standard of good repair.
7. Again, even if breach were made out, there was no credible evidence of the cost of repair and only nominal damages could have been given.

Blocked drains

1. The plaintiff claims $4,400 for work undertaken to clear blocked drains.
2. It relies on an invoice issued to the plaintiff by Austap Plumbing Services (CB 1007) for works completed on 8 March 2021.
3. In the course of the hearing, Mr White also referred to photographs (CB 858-859) depicting four blocked drains, which were said to be taken shortly after vacation of the premises. Mr Tok agreed with this. (T74)
4. In cross-examination, Mr Tok was asked: "you did not clean the drains on vacation of the property, did you?". He replied: "No. It doesn't look like it." (T75)
5. From this I infer that the cleaning of drains was necessary to render the premises reasonably fit for the occupation of a reasonably-minded tenant of the class of tenant likely to occupy the premises.
6. The invoice relied upon by the plaintiff as evidence of cost of clearing the drains is for works completed a little under a year after the defendant vacated the premises. In that time the drains could have become more blocked. However there is no other evidence of what it would have cost to clear the drains shortly after the defendant vacated the premises and Mr Commisso was not cross-examined on the subject.
7. Accordingly, I allow this item.

Cleaning

1. The plaintiff claims $10,243.95 in respect of cleaning work which was undertaken after the defendant vacated the premises.
2. The plaintiff claims under the general repair covenant at cl 13.1(a), as well as under cl 15.
3. The plaintiff relies on an invoice issued by Assetlink Services to Australian Postal Corporation for $10,243.95 for various services performed on 23, 24 and 27 April 2020. (CB 1009-1010) Mr Commisso deposed that the plaintiff reimbursed Australian Postal Corporation for this payment. (CB 828)
4. The plaintiff also relies on a number of photographs (CB 838-845, 849-854, 963-964) exhibited to Mr Commisso's exhibit which depict dirt, stains and rubbish in various parts of the premises.
5. Mr Commisso deposed as follows: (CB 820) "Brand Ventures only cleaned the bathroom in Warehouse A. The balance of the Property, including the bathrooms in Warehouse B, was unclean, smelt badly and was left in a disgusting stat with cat faeces in the office area of Warehouse B."
6. He also deposed that "Brand Ventures only cleaned the toilets and office areas of Warehouse A". (CB 828)
7. He was not cross-examined on this evidence.
8. Mr Tok deposed that he "personally had [cleaning] attended to" (CB 415) and that the defendant "engaged professional cleaners to clean the office and amenities before vacating the premises" (CB 420).
9. In cross-examination, it was put to Mr Tok that the defendant "only cleaned the toilets and the office in warehouse A". Mr Tok said he could neither agree nor disagree, and that he did not know. (T75)
10. Mr Tok identified some of the areas depicted by the photographs as lying within Warehouse C, but conceded that others depicted parts of Warehouse B. (T78)
11. I allow this item.

Painting

1. The plaintiff claims $114,000 and $11,700 under cl 13.1(b) for the cost of repainting internal and external surfaces.
2. The $114,000 is said to be for the painting of "previously painted masonry and plaster finished surfaces including walls, ceilings, columns, etc." The $11,700 is said to be for the painting of "previously painted timberwork including door, doorframes, sills, etc."
3. In respect of the larger sum, the plaintiff relies on Mr Commisso's affidavit, where he deposed: "I did not observe any of the office walls having been recently painted when Brand Ventures vacated the property."
4. Mr Commisso then makes reference to a number of photographs (CB 838-845) he took on or around 1 April 2020 which he says support this.
5. The plaintiff also relies on other photographs exhibited to Mr Commisso's affidavit. (CB 849-854, 963-964).
6. Mr Commisso was not cross-examined in respect of this evidence.
7. The photographs depict surfaces where paint is worn, where different coats have been applied or where plaster is exposed or where painting is otherwise required.
8. Mr Altan submitted that those blemishes were the result of the removal of partitioning by the plaintiff. The defendant led no evidence in support of this.
9. The photographic evidence depicts surfaces which require repainting to be rendered clean and tidy.
10. Mr Tok deposed that the paint was "old" when the defendant moved in. (CB 420)
11. It is true that the standard of cleanliness and tidiness imported in the obligation to repaint so as to keep the premises looking clean and tidy is to be informed by the state of premises at the time of the commencement of the lease. However, I do not consider Mr Tok's evidence that the paint was "old" is enough to modify the standard imported by cl 13.1(b) such that the surfaces depicted in the photographs could be said to answer that clause's standard of cleanliness and tidiness.
12. Accordingly, I find that the defendant was in breach of cl 13.1(b) in respect of the item for which the larger sum of $114,000 is claimed.
13. The plaintiff relies on the report of Mr Zakos for that figure. No challenge was made to this figure by the defendant. I allow the claim for $114,000.
14. In respect of the smaller sum, the plaintiff relies only on Mr Commisso's evidence that the work was necessary for the reasons set out in paragraph 7 of his affidavit. (CB 828)
15. The plaintiff did not make reference to any photographic evidence in respect of the smaller sum, but the photographs do show doors, doorframes and sills with blemishes. (CB 839, 844, 850, 855)
16. Mr Commisso was not cross-examined in respect of this evidence.
17. The defendant resists the claim for the same reasons it resists the larger repainting claim.
18. For the same reasons for which I allow the larger claim, I allow the smaller repainting claim.

Contractors' preliminaries and margin

1. The plaintiff claims a further 10% of the total sum of its damages as representing the cost of "contractors, preliminaries and margin".
2. Mr Cooke and Mr Zakos are agreed on this percentage. In his dilapidations report Mr Cooke asserted that an 8% allowance should be made for contractors' preliminaries and margins. The defendant did not rely on this discrepancy which remains unexplained. But as Mr Zakos agreed with the 10% margin and it was not disputed by the defendant I will allow it.

Project management and consultant fees

1. The plaintiff also claims a further 6% of the total sum of its damages as representing the cost of "project management and consultant fees".
2. Mr Cooke and Mr Zakos are agreed on this percentage, but there should be no project management fees or consultants' fees over the contractors' margins for the items allowed that are yet to be carried out.

Conclusions

1. For these reasons I: 1. reject the plaintiff's claim for unpaid rent for the period from 15 January to 17 February 2020 ([17]-[27]); 2. reject the defendant's unpleaded claim to be entitled to set off $132,727.65 against moneys otherwise payable by it to the plaintiff ([28]); 3. accept the plaintiff's claim for $50,542.83 as indemnity against its liability to pay outgoings for the period from 15 January to 17 February 2020 ([32]); 4. conclude and will declare that the plaintiff's claim for an occupation fee or damages in the nature of mesne profits for the period from 18 February to 31 March 2020 is to be assessed by reference to the defendant's occupation of both Warehouse A and Warehouse B ([39]); 5. accept the plaintiff's claim for outgoings for the period from 18 February to 31 March 2020 ([45]); 6. allow the plaintiff's claim for damages in relation to the defendant's obligations on vacating the property only as follows: 1. $150 for the cost of remaining signage ([79]); 2. $1,000 for the removal of security canvas ([90]); 3. $2,120 as the cost of removing painted lines ([126]); 4. $260 for replacement of a door handle ([134]); 5. $7,600 for the cost of removing and fitting new carpets ([161]); 6. $5,487 for the cost of repairs to amenities ([197]); 7. $5,027 for repair or replacement of damaged pipes ([219]); 8. $4,400 for the unblocking of drains ([263]); 9. $10,243.95 for cleaning ([274]); 10. $125,700 for repainting ([275]-[292]); 1. otherwise reject or allow only nominal damages for the balance of the plaintiff's claim for damages. I assess nominal damages in aggregate in the sum of $100.
2. Where the damages allowed relate to costs paid by the plaintiff the plaintiff is entitled to interest at the rates provided for the purposes of s 100 of the Civil Procedure Act 2005 (NSW) from the time of payment.
3. Where the damages allowed relate to costs yet to be incurred the plaintiff is entitled to a further 10% for contractors' preliminaries and margins ([294]).
4. I was informed that it was anticipated that the defendant's valuer would be fit to give evidence by August 2020. I directed the parties to communicate with my associate with a view to fixing the resumption of the hearing before 29 August. No such communication has been received. I assume that the witness is still unfit.
5. I will order that the determination of the plaintiff's claim for an occupation fee pursuant to order 2 made on 5 March 2020 or for damages for trespass be determined separately and after the determination of the other issues in the proceedings. Whether that further hearing will be before me or another judge will depend on the availability of the witnesses, my availability, the availability of other judges and the decision of those responsible for listings. The matter should be referred to the registrar for relisting, and for any directions in that regard.
6. I direct the plaintiff's counsel to bring in short minutes of order in accordance with these reasons.
7. I will hear the parties as to whether it is appropriate to make orders as to costs of the proceedings to date (other than in relation to the issues that remain to be determined), and if so as to what costs orders should be made. The parties have had mixed success, but the defendant has had more success than the plaintiff. I will deal with the costs of the issues I have determined unless there have been offers of compromise or Calderbank offers which encompassed the claims which remain to be decided and preclude an assessment of costs at this stage.
8. I order that: 1. within 7 days the plaintiff serve on the defendant its proposed short minutes of order in accordance with these reasons; 2. within 7 days thereafter the defendant serve on the plaintiff any amendments proposed by the defendant to those short minutes; 3. if the parties agree on the orders to be made in accordance with these reasons short minutes of those orders are to be provided to my associate forthwith; 4. if the parties do not agree, both parties are to provide to my associate within a further 7 days short minutes of the orders for which they contend and submissions of no more than 5 pages in support of their contention.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 July 2021