RIHSF Pty Ltd v Bhullar Steel Distribution Pty Ltd

Amended Statement of Claim

1. An Amended Statement of Claim was filed by the plaintiffs on 18 April 2016.
2. In this pleading, the plaintiffs plead that rent is outstanding by the first defendant under a lease between the parties entered into in 2009 ("the Lease") as allegedly extended in January 2014, in the sum of $98,946.98. It is pleaded that the second defendant who guaranteed the obligations of the first defendant under the Lease is also liable for this sum pursuant to the guarantee.
3. The plaintiffs additionally plead that the first defendant failed to comply with its make good obligations and maintenance obligations under Articles 7 and 10 of the Lease upon giving vacant possession. It is alleged that as a result, rectification works were required to be completed by the plaintiffs to return the leased property ("the Premises") to the condition it was in at the commencement of the Lease. It is said that both defendants are liable for these additional costs.

Amended Defence

1. An Amended Defence was filed by the defendants on 16 June 2016.
2. The defendants dispute any liability under the Lease as pleaded by the plaintiffs on the following bases: 1. It is pleaded that the Lease was not extended as alleged by the plaintiffs but a new lease was entered into in about December 2013 and that a document signed by the parties entitled "Continuation of Lease Agreement" dated 15 January 2014 only records some of the matters that were agreed between the parties; 2. It is alleged by the defendants that the plaintiffs agreed to obtain rectification at their expense (including the carrying out of any required repairs) of the five tonne crane at the Premises. It is also alleged that the plaintiffs agreed to install at their expense a fire exit (including staircase and doorway); 3. Whilst the first defendant agrees that it has not paid the three payments of rent referred to in paragraph 9 of the Amended Statement of Claim, it says that the plaintiffs breached the Lease by failing to obtain recertification of the five tonne crane, failing to install a fire exit in the Premises as agreed or at all and making a misleading or deceptive representation that the 10 tonne crane forming part of the Premises leased was less than 10 years old; 4. The defendants dispute the terms of either the amended Lease or the alleged second lease. In particular, it is asserted that there was no obligation in the second lease to comply with the maintenance obligations or make good obligations and in any case, that the first defendant carried out all such works as were notified by the plaintiffs to the first defendant with certain limited exceptions; 5. In the alternative, it is alleged that the make good obligations applied to the condition of the Premises and equipment as at the date of commencement of the second lease being 15 January 2014; 6. The defendants also state that no guarantee was given by the second defendant or any other person in relation to the second lease or in relation to the Lease beyond its term and any extension thereof by exercise of the option.

Cross-Claim

1. A Cross-Claim was filed by the first defendant on 22 January 2016.
2. In summary, the Cross-Claim alleges: 1. That it was a term and condition of the Lease that the cranes installed at the Premises were to be in good working order at the commencement date of the Lease and that the plaintiffs would at their expense commission a report in respect of the cranes and carry out any repairs or maintenance as the report may state as being required to bring the cranes into good working order/condition (paragraph 6); 2. The plaintiffs allegedly breached that obligation under the Lease; 3. There is alleged to have been a breach of a representation that the two cranes at the Premises would be upon commencement of the Lease, in good working order which was not the case; 4. The first defendant alleges that neither crane was ever in good working order and there had been significant interruptions to the first defendant's business by virtue of the cranes breaking down and otherwise performing below their capability; 5. The breach of the representation made was said to be a breach of s 18 of the Australian Consumer Law ("ACL"); 6. It is said that the Continuation of the Lease Agreement only continued some of the matters agreed between the parties and that the matters agreed were breached by the plaintiffs by failing to obtain recertification of the five tonne crane and by failing to install a fire exit; 7. It is also alleged that a representation by Mr Hancock on behalf of the plaintiffs that the 10 tonne crane was less than 10 years old was wrong and was misleading or deceptive.
3. As stated above, the first defendant seeks damages for breach of lease and misleading or deceptive conduct in the sum of $299,889.38.

Defence to Cross-Claim

1. A Defence to Cross-Claim has been filed by the defendants on 24 March 2016.
2. The plaintiffs deny the allegations in the Cross-Claim and in summary plead: 1. The plaintiffs commissioned a report from Demag, the manufacturer of the cranes, prior to the Lease and engaged Demag to carry out repairs to both cranes prior to the Lease; 2. That the two cranes were in good working order at the commencement of the Lease; 3. That the two cranes were regularly serviced by Demag at the instruction of the plaintiffs prior to the first defendant's occupation of the premises; 4. That the first defendant was negligent in ensuring regular service and maintenance of the two cranes throughout the term of the Lease; 5. That the entirety of the agreement between the parties is in the document entitled Continuation of Lease Agreement signed 22 January 2014.

Factual background

1. It is useful to set out a general factual background to the dealings between the parties which have led to these proceedings. Unless otherwise indicated, the following represent my factual findings.
2. From 1982 to 1986, Robert Hancock, the director of the first plaintiff, and his brother operated a business from premises at Riverstone in New South Wales under the name Epic Forge and Davis Engineering.
3. In 1986 the two brothers purchased the Premises. The Premises were then purchased from the two brothers by the plaintiffs in 2008. Between 1986 and 2009 the existing businesses were operated from the Premises and traded under the name of Epitech Pty Ltd ("Epitech").
4. At the time of purchase in 1986 of the Premises, there were installed on the Premises a five tonne crane and a 10 tonne crane. In his oral evidence, Mr Hancock expressed the belief, based on the fact he had been operating a nearby business since 1979, that the cranes were installed in about 1982 when the warehouse at the Premises was constructed by the previous owner. Later evidence suggests the cranes may have been manufactured in 1975.
5. The first defendant, BSD, conducts a steel distribution and steel processing business and has done so since August 2006. Mr Rajit Singh, the second defendant, is the sole director and shareholder of BSD. Mr Michael Bhullar, his son, is the General Manager of BSD and has been so since August 2006.
6. In January 2007, Epitech purchased and had Demag, a crane company, install, a new crane hoist to replace the crane hoist of the 10 tonne crane installed at the Premises. Other parts of the 10 tonne crane were not replaced at this time.
7. In late 2007 or early 2008 the plaintiffs were incorporated and registered.
8. In the period from August 2009 to November 2009, there were negotiations between the plaintiffs represented by their agent LJ Hooker and the first defendant represented by Mr Bhullar in relation to a lease by the first defendant of the Premises. On about 8 September 2009, a signed application to lease, signed heads of agreement and a deposit was received from BSD.
9. There were also negotiations in relation to the provisions to be included in the proposed lease.

The Lease

1. On or about 13 November 2009, the Lease was executed by the parties being the plaintiffs and the first defendant for the lease of the Premises. The term of the Lease was three years commencing on 1 December 2009 and terminating on 30 November 2012 with an option to renew for a period of three years commencing on 1 December 2012.
2. The Lease incorporated Annexure A which is the Reference Schedule referred to in the Memorandum filed at the Land and Property Information Office and bearing number 7795727 as referred to on the first page of the Lease. The approved use of the Premises was steel processing and fabrication. There was a guarantor under the Lease who was the second defendant.
3. Clause 10(h) and Clause 11 of the Reference Schedule provided as follows: "10(h) The Lessee must at its cost undertake throughout the term of the Lease and any holding over or renewal, a maintenance programme (the 'Maintenance Programme") for the Building, Land and Premises as follows: i. lawns and gardens to be mowed, weeded and properly attended to on a fortnightly basis; ii. overhead crane to be regularly serviced in accordance with Australian Standards under a service contract that the Lessee must enter with Demag or with any other highly experienced and fully insured overhead crane maintenance and repair company as is first approved by the Lessors (such approval not to be unreasonably withheld); iii. fire hose reels, extinguishers, illuminated exit signs and emergency lighting to be maintained on a six monthly basis and to be repaired and put in order so as to pass the annual fire safety audit and certification; iv. air conditioning units to be serviced, maintained, and if required then repaired on a quarterly basis and by a highly experienced and fully insured air conditioning contractor, and v. roller shutter doors to be serviced and repaired on an annual basis." … "11. The Lessors agree that the overhead cranes installed at the Premises are to be in good working order on the commencing date of this Lease in 2009 and the Lessors will at their expense commission a report on those cranes from an independent crane engineer concerning the working condition of those cranes and the Lessors will also promptly and at the cost of the Lessors, carry out any repairs or maintenance as the report may state as being required to bring the cranes into good working order/condition. This clause 11 is not to appear in any renewal of this Lease."
4. Relevant parts of the Memorandum lodged at the Land and Property Information Office included the following: ARTICLE 1: INTERPRETATION In this Instrument and any lease or sub-lease incorporating this Memorandum unless repugnant to the context or the contrary intention appears:- "the Lessor" means and includes the Lessor his, her or its successors and assigns and, where the context permits, his, her or its servants and agents; "the Lessee" means and includes the Lessee and, if a natural person or persons, his, her or their respective executors, administrators and permitted assigns, and if a corporation, its successors and permitted assigns and, where not repugnant to the context, the licensees, invitees, servants and agents of the Lessee. … ARTICLE 3: RENT The Lessee expressly covenants with the Lessor that: 3.01 The Lessee must during the whole of the term of the Lease as set out in the Reference Schedule forming part of the Lease pay to the Lessor without any prior demand therefor free of exchange, exclusive of GST and without any deductions or abatements in each year the annual rental (as set out in the Reference Schedule forming part of the Lease) payable by equal consecutive calendar periodical instalments as nominated in the Lease in advance and which shall become payable and be paid by the Lessee to the Lessor on or prior to the day of commencement of the- Lease and thereafter on the same day or date of each and every following nominated period. … ARTICLE 7: MAINTENANCE REPAIRS ALTERATIONS ETC The Lessee further covenants with the Lessor that: 7.01 Notwithstanding any consents or directions given by the Lessor the Lessee will at all times during the term and any holding over well and sufficiently repair maintain amend and keep the demised premises and all landlord's fixtures fittings furnishings plant machinery and equipment therein in good and substantial repair, working order and condition (having regard to the conditions thereof at the commencement of the Lease) and damage by fire, lightning, storm, tempest, act of God, war damage and fair wear and tear only excepted save where any insurance moneys are irrecoverable through the act, neglect, default or misconduct of the Lessee 7.02 The Lessee will at the expiration or sooner determination of the Lease peaceably surrender and yield up unto the Lessor the demised premises and the fixtures, fittings, furnishings, plant, machinery and equipment therein of the Lessor in good and substantial repair, working order and condition in all respects (having regard to the condition thereof at the commencement of the Lease) and clean and free from rubbish, (damage by fire, lightning, storm, tempest, act of God, war damage and fair wear and tear only excepted). The Lessee will ensure that all fittings for electric light bulbs, tubes and globes are fitted with same and are in good working order and condition, 7.03 Without limiting or affecting the generality of the preceding sub-articles of this Article the Lessee must at its own expense during the term: (i) so often as the Lessor may reasonably require but at intervals of not less than three (3) years paint, colour, treat with oil and cover with materials and to standards reasonably determined by the Lessor such, part or parts of the demised premises which have or ought to be painted, coloured, treated with oil or covered respectively (ii) cause the demised premises to be kept clean and free from dirt and rubbish and in particular store and keep all trash refuse and garbage in proper receptacles and arrange for the regular removal thereof from the demised premises; (iii) keep and maintain clean and in good order and repair and condition all its fittings fixtures plant furnishings and equipment; (iv) from time to time make good any breakage defect or damage to the demised premises or any part thereof or to any adjacent or adjoining building or any facility or appurtenance thereof occasioned by want of care misuse or abuse on the part of the Lessee or the Lessee's servants, agents, contractors or sub-contractors, sub-tenants or other persons other than the Lessor or persons under the control of the Lessor or otherwise occasioned by any breach or default of the Lessee hereunder or by any other cause other than where directly caused by the Lessor or persons under the control of the Lessor; … (viii) upon vacating the demised premises or immediately prior thereto to return all keys to the demised premises to the Lessor and at the request of the Lessor remove any signs, names, advertisements or notices erected, painted, displayed, affixed or exhibited upon to or within the demised premises and make good any damage and disfigurement caused by reason of such erection, painting, displaying, affixing, exhibiting or removal thereof. (ix) Keep and maintain in good order and repair and condition any air conditioning plant or equipment (whether of the Lessor or the Lessee) as maybe installed in the demised in the demised premises. (x) Replace and renew all globes, fluorescent tubes, tap washers and fittings, and fire exit signs in the premises as require from time to time replacement or renewal. … ARTICLE 9: COVENANTS BY THE LESSOR AND RESPONSIBILITIES OF LESSEE The Lessor covenants with the Lessee that: 9.01 The Lessee paying the rent hereby reserved and duly and punctually observing and performing the covenants obligations and provisions in the Lease on the part of the Lessee to be observed and performed may peaceably possess and enjoy the demised premises for the term hereby granted without any interruption or disturbance from the Lessor or any other person or persons lawfully claiming by from or under the Lessor except as otherwise herein provided. 9.02 The Lessee may at or prior to the expiration of the Lease take remove and carry away from the demised premises all fixtures, fittings, plant, equipment or other articles upon the demised premises in the nature of trade or tenants' fixtures brought upon the demised premises by the Lessee but the Lessee shall in such removal do no damage to the demised premises or shall forthwith make good any damage which the Lessee may occasion thereto and the Lessee must remove all rubbish and shall leave the demised premises in a clean state and condition. In the event that the Lessee does not remove and carry away such fixtures and fittings, plant, equipment or other articles at or prior to the expiration of the Lease the Lessor may at the expense of the Lessee remove and dispose of the same and any such fixtures, fittings, plant, equipment or other articles not removed by the Lessee by that date shall become the property of the Lessor. 9.03: Should the Lessee continue to occupy the demised premises after the expiration or sooner determination of the term of the Lease with the consent of the Lessor the Lessee will become a monthly tenant only of the Lessor at a monthly rental equivalent to a monthly proportion of 105% of the total annual rental and other moneys payable by the Lessee hereunder at the expiration or sooner determination of such term (as adjusted pursuant to the provisions of the Lease) payable monthly in advance and otherwise on the same terms and conditions mutatis mutandis as those herein contained so far as applicable, such tenancy being determinable at the will of either the Lessor or the Lessee by one (1) month's notice in writing expiring at any time. 9.04 If the Lessee vacates the premises whether with or without the Lessor's consent then the Lessor must take all responsible steps to mitigate its loss and where reasonably practical to endeavour to re-lease the premises at a reasonable rent and on reasonable terms. However the conduct of the Lessor taken in pursuance of this duty to mitigate damages is not of itself to constitute acceptance of any breach or repudiation by the Lessee or of any surrender by operation of law. … ARTICLE 10: DEFAULT, TERMINATION The Lessor and Lessee covenant and agree that: … 10.03 Without prejudice to the rights powers and remedies of the Lessor otherwise provided for under the Lease, the Lessee must pay to the Lessor interest at the rate of thirteen per centum (13%) per annum (or at such other interest rate as may be set out in the Reference Schedule forming part of the Lease) on any moneys due but unpaid for fourteen (14) days by the Lessee to the Lessor on any account whatsoever pursuant to the Lease such interest to be computed from the due date for the payment of the moneys in respect of which the interest is chargeable until payment of such moneys in full and to be recoverable in like manner as rent in arrears and with the Lessee acknowledging that the interest does represent a genuine pre-estimate of the Lessors loss flowing from a breach of the Lease by the Lessee. … 11.06 The covenants, provisions, terms and agreements included herein either expressly or by statutory implication cover and comprise the whole of the agreement between the Lessor and the Lessee and the Lessor and Lessee expressly agree and declare that no further or other covenants, agreements, provisions or terms whether in respect of the demised premises or otherwise shall be deemed to be implied herein or to arise between the Lessor and the Lessee by way of collateral or other agreement or by way of condition precedent by reason of any promise, representation, warranty or undertaking given or made by either party to the other on or prior to the execution hereof and if necessary to effectuate the aforesaid any such implication or collateral or other agreement is hereby negative. … ARTICLE 12: GUARANTEE This Lease is granted by the Lessor to the Lessee at the request of the Guarantors (more fully described in the Reference Schedule forming part of the Lease) AND in consideration of the Lessor entering into this Lease at the request of the Guarantors the Guarantors for themselves, their executors, administrators and assigns HEREBY EXPRESSLY GUARANTEE to the Lessor that (i) They are and remain Jointly and severally liable for the due and punctual payment of all moneys hereby covenanted or agreed to be paid and the due and punctual performance, observance and fulfilment by the Lessee of all the covenants, terms, provisions and conditions herein contained or implied and on the part of the Lessee to be performed, observed and fulfilled; (ii) They hereby jointly and severally indemnify the Lessor and agree at all times hereafter to keep the Lessor indemnified from and against all damages and all costs, losses and expenses which the Lessor may suffer or incur consequent upon or arising directly or indirectly out of any breach or non-observance by the Lessee of any of the covenants, terms, provisions or conditions AND remain liable to the Lessor under this indemnity notwithstanding that as a consequence of such breach or non-observance the Lessor has exercised any of its rights hereunder including Its rights of re-entry and notwithstanding that the Lessee (being a corporation) may be wound-up or (being a natural person) may be declared bankrupt and notwithstanding that the guarantee hereby given may for any reason whatsoever be unenforceable either in whole or in part; (iii) The liability of the Guarantors hereunder is not affected by the granting of time or other Indulgence or concessions to the Lessee or by the compounding, compromise, release, abandonment, waiver, variation, relinquishment or renewal of any of the rights of the Lessor against the Lessee or by any neglect or omission to enforce such rights or by any other act, matter or thing which under the law relating to sureties would or might but for this provision release the Guarantors from their obligations hereunder or any thereof; (iv) The guarantee and indemnity hereby given are to continue and are to remain in full force and effect until the due performance, observance and fulfilment by the Lessee of all the covenants, terms, provisions and conditions on the part Lessee to be performed, observed and fulfilled In accordance with the terms hereof; (v) If the Lease contains an option for a further Lease and the Lessee exercises such option the Lessor's obligation to grant such Lease subject to the Guarantors guaranteeing the Lessee's obligations under such Lease and indemnifying the Lessor in respect thereof in the terms of the guarantees and indemnities contained in this Article; (vi) They jointly and severally must pay all moneys hereby paid immediately upon the receipt by the guarantors of notice in writing from the Lessor that the Lessee has defaulted for more than seven (7) days in the payment thereof and to hold the Lessor indemnified against all losses, damages, expenses and costs which the Lessor may incur by reason of any breach or default on the part of the Lessee under its covenants and obligations contained in the Lease and in any such further Lease; (vii) This guarantee is to continue in full force and effect notwithstanding the early termination or expiry of the term of the Lease and notwithstanding any disclaimer of the Lease by any liquidator of the Lessee; (viii) The Guarantors must not prove or claim in any liquidation, composition, arrangement or assignment for the Lessee, until the Lessor has received one hundred cents in the dollar in respect of any monies due, owing or payable by the Lessee to the Lessor, and the guarantors will hold in trust for the Lessor any such proof and claim and any dividend received on it. (ix) The Guarantors jointly and severally agree to indemnify and keep indemnified the Lessor against all claims direct or indirect, sustained or incurred by the Lessor consequent upon any disclaimer of this Lease by any liquidator of the Lessee for the residue of the Lease term which would have remained if there had been no such disclaimer. (x) The rights, remedies and recourse of the Lessor against the Guarantors and each of them are not affected by the death, bankruptcy, disability, infancy, winding up, scheme or arrangement, reduction of capital, capital reconstruction or the appointment of a Receiver and/or Manager for the Lessee or any Guarantor and further are not affected by the fact that one or more of the persons named in this Lease as a Guarantor may never execute this Lease as Guarantor or that the execution of this Lease by any one or more of the Guarantors is or may become unenforceable, void or voidable. (xi) If the Lessor's entitlements in this Lease or in the land (or both) are transferred or assigned to any person or persons then the benefit of this Guarantee and the indemnities extends to the Transferee or Assignee and the benefit of this guarantee and indemnity shall continue to enure concurrently for the benefit of the Lessor notwithstanding any such transfer or assignment. (xii) The Guarantors acknowledge their obligation to the Lessor to guarantee any renewal of this Lease and to grant indemnities, all in the form of this Article 12. … ARTICLE 15 - YIELDING UP In the event that the Lessee fails to leave the demised premises in a good and tenantable state of repair having regard to their condition as at the commencement of the Lease then the Lessor may repair the demised premises so as to bring them up to a good and tenantable state of repair and recover the costs thereof from the Lessee together with an amount equal to such rents and other amounts which the Lessor would have been entitled to receive from the Lessee had the period within which such repair is carried out by the Lessor been added to the term of this Lease. The Lessor's rights and remedies hereunder are in addition to and are not to be construed in limiting or in any way affecting all its other rights and remedies against the Lessee as a result of the Lessee's failure to leave the demised premises in a good and tenantable state of repair.
5. In relation to Clause 10(h) of the Reference Schedule concerning crane maintenance and repair, although the plaintiffs pressed for Demag to be the company undertaking crane maintenance as this had been the company used by the plaintiffs for servicing the cranes prior to the Lease, in due course Mr Hancock, on behalf of the plaintiffs, approved Austfurn Services Sydney Pty Ltd ("Austfurn") as the first defendant's crane repair and maintenance company under the Lease: Exhibit A ("CB") 1/126.

The Demag Reports

1. On 30 October 2009, a representative from Demag undertook an inspection of the two cranes at the Premises and completed a "Periodical Service Report" for each crane both dated 22 October 2009. These considered various aspects of the two cranes. The contact in the Epitech company was stated in the Reports to be Rod Parker. Most aspects of the two cranes were said to be "OK". Some aspects were stated to require repairs. It appears that these repairs were completed by Demag on or about 10 November 2009 as reflected in a "Service Job" report dated 20 November 2009. This document appears to have been signed off by Mr Robert Hancock. It is noted that certain repairs were undertaken to both cranes and the Service Job document includes the following notation: "No outstanding repairs as of 20.11.09". A tax invoice was sent by Demag to Epitech dated 27 November 2009 apparently setting out the work undertaken and the parts repaired and/or replaced. The invoice was in the sum of $6,266.81: CB 1/140. The plaintiffs assert that the Periodical Service Report documents and the other material which has been set out satisfy the obligation of the plaintiffs as lessors referred to in Clause 11 of the Reference Schedule which I have set out above.
2. As indicated above, the Lease commenced on 1 December 2009: CB 1/44.
3. The evidence shows that various repairs were undertaken to the cranes at various stages of the Lease by the first defendant. These were usually in response to breakdowns, it appears from the documents.
4. On 14 January 2010, following issues raised by Mr Bhullar with the cranes, there was a discussion between Mr Bhullar of the first defendant and representatives of Demag in relation to the cranes. Mr Bhullar sent an email to Mr Hancock on 14 January 2010 to the following effect: "I had the meeting with Demag and they suggested that the drag in [is] normal and the reason I raised the question is because the crane we had worked with didn't have any drag without load and some drag with load. But anyway cranes are fine and I don't think there is any need to make them come to the site, unless you want to have a work [word] for your satisfaction."
5. Mr Bhullar had earlier set out issues that he wanted Demag to look at in relation to the cranes in an email dated 22 December 2009 which he had forwarded to Mr Hancock.
6. It seems that in August 2010 the first defendant had the first service completed in relation to the cranes. On 30 August 2010 Mr Bhullar sent an email to Mr Hancock stating as follows: "We just had the our [sic] first service completed and there are a few areas of concern. I'm yet to discuss it further with the technician so as to what needs immediate attention and what constitutes normal wear and tear." The email attached two documents entitled "Condition Report" in relation to the two cranes from the Austfurn Group and which referred to "faults" with the cranes.
7. On or about 30 March 2011, the first defendant through Mr Bhullar forwarded a document to Mr Hancock apparently after the second service on the cranes. The email stated relevantly as follows: "I've asked my crane mechanic to compile a report after second service on the cranes. Please find it attached. Also there are few issues which were from the date we moved in and need attention. As you can see I have asked for professional opinion on the wear and tear of the cranes and recommendations are attached."
8. The document included a covering letter from Austfurn with a detailed one page document referring to problems with the cranes.
9. The document also expressed opinions from Austfurn as to whether the items requiring repair or monitoring were "pre-existing faults" or not. It seems that the February 2011 service report is at pages 503-504 of Exhibit RIH-3 to the affidavit of Mr Hancock sworn 25 November 2016. This document notes as its description "6 monthly Aug Feb".
10. Mr Bhullar in his affidavit claims that he had conversations with Mr Hancock in relation to the alleged continual delay on the part of the plaintiffs in supplying the first defendant with a "condition report" from Demag in accordance with Clause 11 of the Reference Schedule to the Lease. This is disputed by Mr Hancock.
11. Later conversations alleged to have occurred in December 2011 and January 2012 as asserted by Mr Bhullar are also denied by Mr Hancock in his affidavits. However, it seems to be clear that the issue relating to the condition of the cranes remained constant from at least late 2011 coinciding with requests from the plaintiffs for evidence of the repair and maintenance of the cranes as required under Clause 10(h) of the Reference Schedule to the Lease. In April 2012, Mr Hancock asserts that Mr Bhullar provided him with invoices for work done on the cranes between January and April 2012.
12. On 15 May 2012, there was an important meeting at the Premises between Mr Bhullar, Mr Hancock and a representative from Austfurn, the first defendant's crane maintainer. What occurred at that meeting is disputed. However, it seems that at the meeting both Mr Bhullar and Mr Hancock disputed each party's obligations under the Lease. At the end of the meeting, the Austfurn document referring to repairs was signed by both gentlemen: CB 1/163. Mr Hancock states that they agreed to divide the estimated cost of the repairs of $9,000 in half. Mr Bhullar claims that Mr Hancock said that each should put in half and "we will worry about the other repairs later". Mr Hancock denies that.
13. There appears to have been ongoing verbal complaints about the cranes according to Mr Bhullar, although these are not reflected, it is alleged by the plaintiffs, in email correspondence.
14. On 30 November 2012, the term of the Lease expired and the first defendant BDS held over on a month-to-month basis as contemplated under the Lease: see Article 9.03. Mr Bhullar claims in his affidavit that BDS did not exercise the option to renew, as he was concerned about the condition of the cranes and the offices forming part of the Premises including that the offices did not have a fire exit. Mr Hancock disputes this, and says that the Lease was not renewed because of a downturn in the steel market and refers to an email from Mr Bhullar to him dated 7 January 2013 which states: "I have discussed with my father and looking at the market, we can continue the lease till June with either party to terminate the lease with three months' notice from end of the month. If the market picks up then we will be able to extend the Lease for longer duration after June": CB 1/167.
15. At about this time, Mr Bhullar pressed for the provision of a 10 year inspection report in relation to the cranes and asserted that it was mandatory to have the reports done on the cranes every 10 years. Mr Hancock countered this by pressing for evidence of repairs being completed to the cranes particularly those agreed in May 2012 when the parties had apparently split the cost of the repairs as to $4,500 each: CB 1/179.
16. Somewhat earlier, in response to Mr Bhullar's requests for proof of the 10 year inspection, Mr Hancock had stated to Mr Bhullar in an email dated 15 August 2013: "The Good news is that the 10 tonne crane is less than 10 years old (Purchased in Jan 2007), so don't require the inspection": CB 1/374. This is alleged by the defendants to constitute misleading or deceptive because it is accepted by the plaintiffs that only the hoist part of the 10 tonne crane was replaced in 2007 not the entirety of the crane itself.

Continuation of Lease Agreement

1. After extensive negotiations, a document on the letterhead of the plaintiffs was signed by both parties. Excluding a rental schedule, the document was as follows: This agreement dated 15th January 2014 is to document a verbal agreement between RIHSF Pty Ltd & DMHSF Pty Ltd and Bhullar Steel Distribution Pty Ltd (Bhullar) to extend the existing lease number AF131465T dated 11th November 2009 for a further period as documented below. 1. RIHSF Pty Ltd & DMHSF Pty Ltd and Bhullar agree to extend the lease to 30th March 2015. 2. Notice to quit shall be in writing by either party is 3 months with the earliest notice to quit date 31st December 2014. 3. During November 2014 Bhullar will advise their intention in writing to extend the lease or their intention to exercise the option to quit. 4. RIHSF Pty Ltd & DMHSF Pty Ltd will provide a rental discount over calendar year 2014 of $18,000, subject to point 6 below. 5. Rental in January 2015 will continue without the discount 6. Unpaid excess water consumption of $5000 will be applied as a reduction of the rental discount at $833.33 per month from January 2014 to June 2014 7. All future excess water consumption will be invoiced. … Signed on this day: 22-01-2014 RIHSF PTY LTD & DMHSF PTY LTD [signed] R.I. HANCOCK BHULLAR STEEL DISTRIBUTIONS PTY LTD [signed] M. BHULLAR
2. The plaintiffs assert that this amounted to an amendment to the existing Lease and constituted an extension of the term of the Lease to 30 March 2015. It is also asserted that the second defendant, Mr Singh, remained liable for the obligations under the amendment under his guarantee in the Lease.
3. The first defendant, through Mr Bhullar, claims that the document does not set out all of the agreements between the parties and refers to the matters allegedly discussed in paragraphs 52-56 of his affidavit. The conversations set out in those paragraphs are denied by Mr Hancock in his affidavits.
4. There appears to have been continued disputes about the cranes between the parties including a meeting between Mr Bhullar, Mr Hancock and representatives of Demag on 22 October 2015.
5. From 11 November 2015, there appears to have been claims by the plaintiffs for the payment of rental arrears with assertions by Mr Bhullar that he would deduct the cost of crane repairs from the rental arrears claimed.
6. On 9 December 2015, the plaintiffs entered into a Contract for Sale of the Premises. On 10 December 2015, a notice was issued from the plaintiffs to the first defendant terminating the Lease.
7. There then occurred a number of interactions between the parties in relation to make good obligations. It is asserted by the plaintiffs that the first defendant did not comply with its make good obligations leaving the Premises dirty, filled with rubbish, leaving items which required disposal and other items needing repairs.
8. On or about 21 March 2016, the first defendant vacated the Premises. There is a substantial dispute between the parties as to the condition of the Premises on the date of vacation.

The issues in the proceedings

1. The parties are agreed in relation to the issues in the proceedings. They were set out in a document which was handed up to the court and they are as follows: Amended Statement of Claim 1. What is the amount of outstanding rent? 2. What was the status of the tenancy between the plaintiffs and the defendant after 30 November 2012? In particular: a.. Did the occupancy after 1 December 2012 constitute: i. a new lease on the same terms as the original lease (the Lease) or ii. a continuation of the Lease? iii. a tenancy at will at common law? b. In respect of the Continuation of Lease Agreement dated 14 January 2014: i. Was it valid at all insofar as it contradicted the Lease document? ii. Could it constitute a variation or continuation of the Lease when the Lease had expired on 30 November 2012? 3. Based on the answer to the above questions, did the guarantee contained in the Lease given by the second defendant survive the termination of the Lease by the effluxion of time on 30 November 2012? 4. What were the maintenance and make good obligations of the first defendant? 5. Did the first defendant breach those maintenance and make good obligations, and the make good request? 6. If the answer to question 5 is yes, what are the damages? Cross Claim 7. Did the plaintiffs/cross-defendants commission a report on the cranes from an independent crane engineer concerning the working of those cranes? 8. Were the cranes in good working order at the commencement date of the Lease on 1 December 2009? 9. Did the plaintiffs/cross-defendants engage in misleading and deceptive conduct about the state of the cranes as being in good working order? 10. Did the Continuation of Lease Agreement contain oral terms and if so what were those terms? 11. Did the plaintiffs/cross-defendants engage in misleading and deceptive conduct in representing that the 10 tonne crane was less than 10 years old and did not require recertification? 12. If any of the answers lead to the conclusion that the plaintiffs/cross-defendants have breached section 18 of the Australian Consumer Law or a term of the Lease or Continuation of Lease Agreement: a. Did those breaches cause damage? b. What is the quantum of those damages?

Evidence of Mr Robert Hancock

1. The plaintiffs read three affidavits from Mr Robert Hancock sworn 23 March 2016, 15 July 2016 and 25 November 2016, respectively. The later affidavits have extensive exhibits of documents and correspondence.
2. In his first affidavit sworn 23 March 2016, Mr Hancock essentially annexes the important documents in the case being the Lease and the Continuation of Lease Agreement dated 15 January 2014 apparently purporting to extend the Lease to 30 March 2015. He also provides evidence of the notice terminating the Lease served by the plaintiffs on the first defendant. Evidence is given in relation to the delay in the first defendant vacating the Premises and the assertion by Mr Bhullar on or about 18 March 2016, that the first defendant was still "cleaning up the building. We will restore the lights, paint and clean".
3. Mr Hancock gives evidence about attending the Premises on 21 March 2016 and conducting an inspection with his wife Mrs Hancock and Ms Dogra who he describes as Rose Bhullar, who is Mr Bhullar's de facto partner. He states that he saw plenty of rubbish and materials still on the floor of the Premises. Mr Hancock gives evidence that the first defendant vacated the Premises on 21 March 2016. He also gives evidence of rental money in the sum of $98,946.98 which he asserts is outstanding from the first defendant to the plaintiffs. He annexes to his affidavit a schedule (CB 1/90) setting out the amount outstanding.
4. The second affidavit of Mr Hancock was sworn 15 July 2016. In this affidavit, Mr Hancock gives the background to the businesses run by he and his brother and their various corporate entities and the purchase in 1986 of the Premises which were eventually transferred from the two brothers to Epitech and then to the plaintiffs. In paragraph 8 of the second affidavit, Mr Hancock states that in around January 2007 Epitech purchased and had Demag install a new crane hoist to replace the 10 tonne crane hoist in the Premises. There is an issue between the parties as to whether this in effect was a replacement of the 10 tonne crane. The plaintiffs say it was and the defendants say it was not.
5. Mr Hancock notes in his affidavit that between 1982 and 2009, the plaintiffs and Epitech and the two Hancock brothers maintained a crane service contract primarily with Demag (the full name of which is MHE-Demag Australia Pty Ltd) apart from the period between 1998 and 2000 when it was given to another entity. Mr Hancock gives evidence that Demag conducted a routine service of the cranes each quarter and that any non-routine maintenance requirements were documented on a service report. Mr Hancock notes that it was the practice of the management of the business to approve the Demag recommended repairs to maintain reliability and reduce risks of accident.
6. Mr Hancock gives the background to the negotiations concerning the Lease and exhibits email chains for this period. He refers to the signing of the Lease and the provision prior to commencement of the Lease of an inspection and report on the cranes by Demag on Epitech's instructions. He refers to the 30 October 2009 Demag Periodical Service Reports which identified the need for several repairs which he annexes to his affidavit and states that these were completed by 20 November 2009 at a cost of $5,697 plus GST which was paid by Epitech.
7. In paragraphs 20 and following of his second affidavit, Mr Hancock refers to dealings with Mr Bhullar of the first defendant in relation to issues concerning the cranes and the provision by the first defendant of inspection reports under Clause 10(h) of the Lease. These inspection reports have already been referred to above. Mr Hancock notes in paragraphs 21 and 22 of his affidavit that the first inspection report obtained by the first defendant from Ausfurn occurred nine months after the first defendant took occupancy of the Premises and the second report occurred some 15 months after the first defendant took occupancy of the Premises. He annexes those reports to his second affidavit.
8. Mr Hancock gives his versions of the 15 May 2012 meeting between Mr Bhullar and Andrew, a representative from Austfurn, the subsequent discounting of the plaintiffs' rent for June-August 2012 by $1,500 per month (paragraph 29) and correspondence between himself and Mr Bhullar relating to Mr Bhullar's request for a "10 yearly crane inspection report". Mr Hancock refers to correspondence between him and Mr Bhullar in which Mr Bhullar sought the 10 yearly crane inspection report and he sought evidence that the repairs to the crane as agreed on 15 May 2012 had been completed by the first defendant.
9. Mr Hancock notes in his second affidavit that for the 18 month period between 22 January 2014 and 29 July 2015, he has no records or recollections of communications with the first defendant other than him seeking the payment of outstanding rent.
10. Mr Hancock refers to a meeting on 22 October 2015 with representatives of Demag in an attempt to reach some resolution in relation to the issues concerning the cranes. He then gives the background in paragraph 40 and following of his second affidavit to demands on the first defendant to pay rent and the events leading up to the termination of the leasehold arrangements with the first defendant by the issuing of a notice to quit. In paragraph 48 of his affidavit, Mr Hancock sets out in some detail the steps which he took on behalf of the plaintiffs to complete cleaning and apparent make good works under the Lease for which the plaintiffs received an invoice in the sum of $3,513.60 plus GST. Other expenses incurred by the plaintiffs are also referred to in this paragraph. Mr Hancock annexes to his second affidavit a copy of a report from Westside Industrial Property dated 1 December 2009 to which he has added his comments in relation to the condition of the Premises when the first defendant vacated supporting the need for the extra make good works.
11. Mr Hancock's third affidavit dated 25 November 2016 is very detailed. Two exhibits to the affidavit, being Exhibits RIH-2 and RIH-3, are large bundles of documents to which he refers in the affidavit.
12. It is unnecessary for the purposes of this judgment to set out in detail the contents of this affidavit. In the affidavit Mr Hancock responds to the affidavits of Mr Bhullar, Ms Dogra and Mr Singh. In relation to the affidavits of Mr Bhullar and Ms Dogra, Mr Hancock disputes virtually all conversations referred to in those affidavits. I have already referred to some of the more significant differences in general terms above.
13. More important matters noted in Mr Hancock's third affidavit are as follows: 1. It has been his habit to make file notes of business-related phone conversations whilst talking on the phone and to retain those file notes on file (paragraph 6); 2. The two cranes located at the Premises were in the period 1986 to 2009 used to unload two tonne bundles of steel wire and rod coming into the factory and to move bins and were typically used with loads less than 2 tonnes in weight with usage being infrequent and usually limited to less than two hours per day for each crane; 3. The hardcopy company records of Epitech have been destroyed and Mr Hancock has restored an electronic backup of the MYOB accounting package used by Epitech up until December 2009 to print transactions between Epitech and Demag from May 2007 to November 2009 which were completed by Demag including regular quarterly services by Demag on the cranes in that period (paragraphs 9-10); 4. Mr Hancock approved the first defendant's nominated crane company Austfurn in October 2009 and informed the plaintiffs' agent of this. It is not in dispute that Austfurn was the approved company to service and maintain the cranes whilst the first defendant was in possession of the Premises; 5. Mr Hancock observed from time to time the operations of the first defendant and these included steel fabrication of very heavy steel girders used for bridges with most of the raw materials being heavy steel plate (paragraph 12); 6. An email from Mr Bhullar dated 10 December 2012 was the first occasion that Mr Bhullar had sought a 10 year crane inspection report. Mr Hancock gives evidence that he was not aware that such reports were required; 7. Mr Hancock concedes that on 15 August 2013 he had a meeting with Mr Bhullar and subsequently sent an email of that date in which he confirmed that the 10 tonne crane "is less than 10 years old (purchase Jan 2007), so does not require inspection". Mr Hancock states that by this statement he meant that the main working part of the 10 tonne crane, the hoist, was less than 10 years old (paragraph 20); 8. Says that the payments under the Lease were never brought up to date by the first defendant in the period 15 August 2013 until the termination of the Lease in March 2016; 9. The matter of a major inspection of the cranes was not raised again by Mr Bhullar until some two years later in July 2015; 10. After it commenced occupation, the first defendant provided to Mr Hancock the service and maintenance records it carried out for the cranes in emails dated 30 August 2010, 8 March 2011, 15 February 2012 and in an email from Mr Corazzol of Austfurn dated 9 July 2013 (paragraph 26). The plaintiffs assert that the maintenance and repairs were not carried out in accordance with the Lease and the first defendant failed to undertake the repairs identified by Austfurn in their various reports; 11. After termination of the Lease on 21 March 2016 Mr Hancock says that he visually inspected the two cranes and took photographs of them which he exhibits to his affidavit; 12. After vacation of the premises Mr Hancock had Demag undertake an inspection and report on the cranes which documents he annexes to his affidavit.
14. Mr Hancock was cross-examined by counsel for the defendants. Mr Hancock was asked questions in relation to the invoice which Exafast Pty Ltd forwarded to the plaintiffs which is at page 149 of Exhibit RIH-1 to Mr Hancock's second affidavit. This invoice relates to work allegedly undertaken in making good the Premises after vacation by the first defendant. Mr Hancock said that the invoice was issued to the plaintiffs as he had instructed Exafast employees to do the work indicated and it was agreed that Exafast would be paid for the work. He agreed that the invoice was not paid. It was put to him that the purpose of the creation of the invoice was to create a liability for the purpose of the proceedings. Mr Hancock said that the work was done and was invoiced and that the creation of a liability was a consequence of the issuing of the invoice but was not the purpose of Exafast in issuing the invoice.
15. Mr Hancock was asked some questions about his understanding and knowledge of the history of the two cranes at the Premises. He agreed that the cranes were at the Premises when they were purchased in 1986 and these were the same cranes when the property was leased to the first defendant in 2009. He could not recall whether a report had been obtained in relation to the reliability of the cranes when the Premises were purchased in 1986 but he stated that the cranes had been regularly serviced. He agreed that the reliability of the cranes was significant to his businesses and he took some steps with Demag by entering into a service agreement. He agreed that it was possible that he may have had the cranes checked before purchase of the Premises. He said he did not know the age of the cranes in 1986 but accepted that they were more than one year old. He agreed that Mr Parker, an employee of Epitech, was in charge of the maintenance of the cranes for most of the time since the purchase of the premises. He said Mr Parker reported in relation to the cranes to the general manager of Epitech and that he liaised with Mr Parker from time to time but not regularly.
16. Mr Hancock agreed that he knew the cranes required periodic servicing each three months and that he knew that from 1986 and even before, because he had previously owned a crane at other premises which had been serviced by Demag. He agreed that he knew that Demag did quarterly reports in relation to servicing the cranes through liaising with Mr Parker. Mr Hancock stated that he was aware that there was an Australian Standard in relation to cranes but only had general knowledge of it prior to the Lease. He did not know that the Standard required quarterly servicing but he knew that Demag undertook quarterly servicing. In answer to the question whether Epitech maintained a service logbook during the servicing of the cranes when it owned the Premises, Mr Hancock said that Epitech retained service records in a folder which he regarded as equivalent to maintaining a logbook. These were kept back to 1986 and were destroyed where relevant after seven years. Specifically, Mr Hancock believed the records that were kept by Epitech satisfied the requirements of paragraph 7.6 of Australian Standard 2550.3 relating to cranes, hoists and winches, being the 2002 Australian Standard he exhibits to his affidavit. He states that the records relating to the cranes were not transferred to the 2013 purchaser following the purchase.
17. Mr Hancock was then asked questions as to whether he knew what the first defendant intended to use the cranes for when it entered the Lease. He said he had a concept of what was going to be undertaken and was aware that the first defendant was engaged in fabrication of steel beams and girders. He did not know whether the first defendant's load and use of the cranes would be more or less than prior to the commencement of the Lease. In relation to the inspection and maintenance by Demag of the cranes prior to 2009, he agreed that a service contract had been entered into with Demag since 1986. He said it was not necessary to contact Demag as they scheduled regular inspections.
18. Mr Hancock was then taken to paragraph 18 of his second affidavit and his statement that prior to the commencement of the Lease, Epitech instructed Demag to conduct an inspection and report on the cranes which resulted in a 30 October 2009 Demag Periodical Service Report which identified the need for repairs. Mr Hancock stated that he believed Epitech contacted Demag to do that inspection rather than Demag merely turning up as scheduled. Mr Hancock said he believed that the general manager of Epitech asked for the inspection but had no recollection that he was involved in the request. It was put to Mr Hancock that the report dated 30 October 2009 was obtained at about the same time as the usual quarterly report based on the dates of the other reports. He agreed that the inspection at the end of October 2009 was about 2½ to 3 months after the previous inspection and conceded that it appeared that it broadly coincided with when the inspection report from Demag was due. He also agreed that the 30 October 2009 Demag report used the same criteria as the routine inspection report. He accepted that the report dated 30 October 2009 was broadly in the same form as previous reports. However, Mr Hancock said he was aware that Clause 11 was in the reference schedule to the Lease when he executed it on behalf of the plaintiffs. This is a factor pointing to the likelihood that the Demag reports were as a result of a request by Epitech.
19. Mr Hancock confirmed his view that there was no difference between a service report and a condition report and that a Periodic Service Report was sufficient to record the maintenance obligations in relation to the crane. He agreed that his view was that a crane condition report was the same as a Periodic Service Report because every quarter, the crane's condition was assessed by Demag. This was his view at all times including at the commencement of the Lease and in December 2015.
20. Mr Hancock agreed that he first learnt of the concept of major inspections of cranes in 2012 and that prior to that time he had no idea of the concept of a 10 yearly crane inspection report or what it involved. In answer to the suggestion that a major inspection report was required from time to time, he disagreed and said it was not required but could be done. He agreed that no major inspections of the cranes were undertaken when Epitech used the cranes prior to November 2009 as it depended on the quarterly inspections by Demag.
21. Mr Hancock was asked questions about his conversation on 22 October 2015 with representatives of Demag as referred to in paragraph 39 of his second affidavit. He agreed that the two persons were Mr Grosse and Mr Baldwin of Demag and that he had previously been aware of Mr Grosse as he had turned up for inspections on behalf of Demag in the 1980s and 1990s.
22. Mr Hancock was taken to his 22 October 2015 email to Mr Bhullar in relation to crane repairs which he sent to Mr Bhullar after visiting Demag: see pages 94 to 95 of Exhibit RIH1 to his second affidavit. In relation to the five tonne crane, Mr Hancock put in his affidavit: "crane Hoist is over 30 years old and effectively passed end of life." In relation to the 10 tonne crane, Mr Hancock stated: "crane Hoist was new in 2007 … Girder and Carriages are over 30 years old." Mr Hancock said that the email did not set out all of the things which were said to him by the Demag representatives in the meeting. He said there was also raised by the Demag representatives an issue in relation to a gap in the crane girder which was explained to him. Mr Hancock confirmed that the material relating to the five and 10 tonne cranes as to the age, with the five tonne crane being effectively passed end of life and the 10 tonne crane having a new crane hoist in 2007, was the result of his own knowledge. Mr Hancock was also taken to his letter to Mr Bhullar dated 30 October 2015 where he stated as follows: "As discussed we do not have exact dates for the installation of the crane Girder, and the Hoists. The Girders and the five tonne Hoists was installed prior to our acquisition of the building in 1986. We replaced the original 10 tonne hoist with a new hoist in 2007".
23. Mr Hancock agreed that his belief that the five tonne hoist had been installed circa 1982 was based on his knowledge of the owners and the previous building but was "a guess". He confirmed he did not obtain the information from Demag but the building appeared some time after he started business in the area in 1979. In relation to the view that the five tonne crane was "effectively passed end of life", Mr Hancock said this was his understanding which he had formed himself at about that time based on the age of the cranes and six years of alleged poor maintenance by the first defendant. He agreed that he did not hold this view in 2009 but had been a view which he had concluded by October 2015. He also agreed that the 10 tonne crane was about 30 years old except for the crane hoist. He did not have the view that the 10 tonne crane was effectively passed the end of its life as the major component of the crane, being the crane hoist, had been replaced in 2007.
24. It was put to Mr Hancock that other parts of the crane, other than the hoist, were important to its effective use and he agreed with that. He agreed that the other parts were 30 years old. When asked whether the other parts had passed their end of life he answered "not necessarily".
25. Mr Hancock was asked questions about a telephone conversation with Mr Bhullar on 19 December 2011, a file note in relation to which is at page 93 of Exhibit RAH2 to his third affidavit. He agreed that there was nothing relating to a discussion concerning Clause 11 of the Lease in the file note and on that basis he believed there was no discussion in relation to that clause, although there was a discussion in relation to cranes. He agreed that Mr Bhullar had complained that he had undertaken $20,000 of repairs. Mr Hancock was taken to his email to Mr Bhullar dated 19 December 2011 at page 42 to Exhibit MB1 to Mr Bhullar's affidavit. He expressed the opinion that the email was probably sent after the telephone conversation and did deal with Clause 11 of the Lease. He agreed that he could not be 100 per cent certain that Clause 11 was not discussed in the telephone conversation with Mr Bhullar, although it is not referred to in his file note. He accepted that he had denied Mr Bhullar's account of the conversation in his third affidavit.
26. Mr Hancock was asked questions about the events of August 2013 when he was in the process of negotiating terms with Mr Bhullar following the expiry of the initial term of the Lease. He agreed that he told Mr Bhullar that the 10 tonne crane was less than 10 years old: see the email from Mr Hancock to Mr Bhullar dated 15 August 2013 at page 16 of Exhibit RAH2 to Mr Hancock's 25 November 2016 affidavit. He also agreed that he did not refer to the hoist but to the crane. Mr Hancock said he referred to the crane but in doing that he was intending to refer to the hoist which he regarded as the main part of the crane. It was put to Mr Hancock that he intended to convey to Mr Bhullar that the 10 tonne crane had been purchased in 2007. He denied that and said he was referring only to the hoist. He accepted that components of the crane were older than 2007 and some had been up to 30 years old. When it was put to him that he was trying to convey to Mr Bhullar that the 10 tonne crane did not require an inspection, he said that his intention was to convey that the crane hoist did not require an inspection. He stated that Mr Bhullar had expressed doubts in relation to the age of the 10 tonne crane.
27. Mr Hancock was asked questions about paragraph 85 of his third affidavit and Annexure D to Ms Dogra's affidavit. His evidence in his affidavit was that Ms Dogra did not make the ticks or annotations on Annexure D to her affidavit during the inspection. He said he could not recall whether he talked to his wife in relation to his recollections before swearing the affidavit.
28. Mr Hancock confirmed that he said the hoist was the main part of the crane. He accepted it was not the only important part and that the crane carriage and girders were also important and that problems with each could affect the operation of the crane. He said, however, that the hoist was the main component.
29. In re-examination, Mr Hancock gave evidence that many things can stop a crane working, including problems with the pendant box and the wire.
30. Overall, Mr Hancock appeared to me to be an honest, careful and considered witness who gave his evidence directly and made concessions where appropriate.

Evidence of Mrs K Hancock

1. The plaintiffs read the affidavit of Mrs Kathleen Hancock sworn 16 November 2016.
2. Mrs Hancock is the wife of Robert Hancock and currently the office administrator of Exafast Pty Ltd. Mrs Hancock gives evidence in her affidavit that she has been employed by her husband and his brother David in various entities since 1989.
3. Mrs Hancock gives evidence that in November 2009 she assisted with the preparation of the Premises for the new tenant. Her job was to ensure all the offices and facilities were clean.
4. Mrs Hancock also gives evidence in relation to two meetings which she attended in relation to the Premises at the end of the period when the first defendant was in possession. Mrs Hancock gives evidence that she attended the Premises on 9 March 2016 with Mr Bykersma and Mr Hancock and found that the Premises had not been vacated or cleaned.
5. On 14 March 2016, Mrs Hancock attended the Premises for the purposes of an inspection with Mr Hancock and Ms Dogra. She indicated in that conversation that the cleaning was not good enough and that in her view the offices and facilities were still unclean. She states that Ms Dogra said that they had used a professional cleaner for the offices and facilities.
6. Mrs Hancock gives evidence of work conducted by her in cleaning the Premises from 22 March 2016. She describes the Premises as "dirty" and goes through what she did to clean the Premises which involved scrubbing of the walls and the amenities and toilet area. She states that she was aware that Mr Bykersma required the Premises to be clean on taking possession and had formed the view that they were "disgusting" as reflected in an email from him dated 10 March 2016 following his inspection on 9 March 2016. Mrs Hancock confirms that when she attended the Premises for a final inspection with Mr Bykersma on 31 March 2016 he indicated that the Premises were clean to his satisfaction. Mrs Hancock states that the total time she spent cleaning the Premises was 22 hours and 40 minutes.
7. Mrs Hancock responds to the affidavit of Ms Dogra dated 4 October 2016 and states that Ms Dogra did not make the ticks or annotations on Annexure D to her affidavit during the inspection on 21 March 2016. She said she recalled Mr Hancock agreeing that some of the items discussed were completed but not all of the items.
8. Mrs Hancock annexes to her affidavit the Westside Industrial Property Inspection Report dated 1 December 2009 to which Mr Hancock has annexed comments as at 21 March 2016. In paragraph 9 of her affidavit she indicates that Mr Hancock has "accurately reported the condition of the Premises as I saw them during my inspection of the Premises on 22 March 2016."
9. In cross-examination, Mrs Hancock agreed that there were two meetings at the Premises where Ms Dogra was present which she attended being the meetings on 14 March 2016 and 21 March 2016. She indicated that she did not take any documents to the latter meeting but that Mr Hancock had what she believed was a list of works to be done. She said that she did not know whether the document which Mr Hancock had at the meeting was the letter from Coleman Greig lawyers dated 15 March 2016 which was Annexure D to Ms Dogra's affidavit but without the annotations on the letter. Mrs Hancock said she did not know what document Mr Hancock had with him. She said the document was not shown to her by Mr Hancock but that she understood that it set out what the remaining make good issues were. Mrs Hancock said that she did not take notes during the meetings and the matters in her affidavit were based solely on her recollections of the meeting and Mr Hancock's annotations on the 1 December 2009 Westfield Industrial Inspection Report.
10. Mrs Hancock conceded that prior to swearing her affidavit she would have had conversations with Mr Hancock in relation to her recollections.
11. Mrs Hancock said that she did not recall exactly whether Ms Dogra had any documents with her in the 21 March 2016 meeting but she may have. She agreed that she did not see Ms Dogra make the annotations to the Coleman Greig letter indicated in Annexure D to Ms Dogra's affidavit. She agreed that she was inspecting the Premises and was not with Ms Dogra at every moment during the inspection.
12. In answer to the suggestion that she could not say for certain that Ms Dogra did not make the annotations during the meeting, Mrs Hancock said that she did not see her make the annotations.
13. Mrs Hancock was asked questions about Mr Bykersma's expectations in relation to the cleaning. She said that the cleaning was completed to a standard: 1. Commensurate to what a new purchaser would expect; and 2. To the standard that the premises were left in in 2009.
14. She confirmed that she prepared the cleaning of the Premises in 2009.
15. Mrs Hancock said she did not know whether she believed that Mr Bykersma would refuse to settle if he was not satisfied with the cleaning of the Premises and could not recall whether this was going through her mind at the time. She agreed that her husband had shown her an email from Mr Bykersma who described the Premises as "disgusting".
16. Mrs Hancock impressed me as an honest and truthful witness. She gave her evidence directly and made concessions where appropriate. I have no difficulty in accepting her as a witness of truth who was doing her best to give her evidence honestly and completely.

Evidence of Mr R Parker

1. The plaintiffs read an affidavit of Rodney Parker sworn 21 November 2016. Mr Parker is currently the technical manager at Exafast Pty Ltd. He has been employed by the Hancock brothers in various entities since 1986, initially as a maintenance fitter. In 1986 Mr Parker assisted in the move to the Premises of the business run by Epitech. He noted that there were two existing cranes at the Premises being the five tonne and the 10 tonne cranes.
2. During the period between 1986 and November 2009, apart from a short period between 1998 and 2000, Mr Parker was responsible for managing the maintenance of the cranes on behalf of Epitech, the company that occupied the Premises at that time and his then employer. He noted in his affidavit that the maintenance work was contracted to Demag which included a quarterly routine maintenance schedule. In addition, any repairs to the cranes were carried out by Demag.
3. Mr Parker noted the MYOB purchase details report for Epitech (previously named Yesterday Manufacturing Pty Ltd) showing payments made to Demag for quarterly services and other repairs in the period from May 2007 to November 2009. Mr Parker states that in late 2006 Demag recommended some major repairs to the hoist of the 10 tonne crane. He recalled that spare parts were hard to acquire for the model and some parts would need to be made to order and, as a result, in comparing the repair costs and the costs of replacement, the Board of Epitech instructed Mr Parker to cause Demag to replace the 10 tonne hoist and upgrade any required accessories. Mr Parker gave evidence that he recalled the cost was approximately $19,000 and the work was completed in or about early 2007.
4. Mr Parker gave evidence about the usage of the cranes between 1986 and 2009 at the Premises and stated that typically, loads were under two tonnes in weight and usage was infrequent, usually limited to less than two hours per day for each crane. Mr Parker also noted that during his time at the Premises the cranes were reliable and there were minimal delays caused by crane outages.
5. In his affidavit, Mr Parker also gives evidence in relation to the make good in March 2016. On 22 March 2016, Mr Robert Hancock asked him to help inspect the kitchen facilities in the workers' lunchroom. Mr Parker noted that the kitchen units had significant water damage and the drawer units were falling apart. In undertaking this task, Mr Parker noted that there was a leaking hose to the sink tap and it was apparent the whole kitchen was water damaged and beyond repair. As a result, he rebuilt the kitchen using some second hand drawer units from Exafast and a new benchtop. He annexes to his affidavits photographs of the kitchen during demolition, clearly establishing in my view the damage in the kitchen and in particular the water damage. Mr Parker gives evidence that he spent in total 12 hours performing the work to the kitchen.
6. In oral evidence in chief, he confirmed that the services and the invoices provided by Demag to Yesterday Manufacturing/Epitech were as recorded in the MYOB printout. He stated that as far as he knows, all of the invoices between 5 May 2009 to November 2009 were stated on the MYOB print out.
7. In cross-examination, Mr Parker confirmed that he had been assigned responsibility for maintaining the cranes in 1986 and carried out these tasks until 2009 except for a short period. He confirmed that this was the first time he had had a responsibility for dealing with cranes as he had not had such duties prior to 1986. At the time, he was not familiar with the Australian Standards as to cranes. He said that he relied on Demag's expertise in relation to the maintenance and servicing of the cranes and they were given contracts for quarterly services and maintenance. His role was primarily to liaise with Demag in relation to this work and to facilitate their maintenance schedule. He reported initially to the manager of the company and then Mr Robert Hancock and later to other managers. In the latter period up to 2009, he was the manager of the business. He was appointed to that position in the late 1980s and then he reported to the board of the company. When he was not reporting to the board he would report to Mr Robert Hancock. He indicated he would only report to Mr Hancock in relation to crane maintenance issues if there were expensive repairs required, such as when the 10 tonne crane hoist was replaced which required board approval. He agreed that in 2007 only the hoist of the 10 tonne crane was replaced. This was required as it was a fairly old hoist and replacement parts were difficult to obtain and some had to be handmade. The expense justified a replacement as the new hoist had additional features.
8. Mr Parker was asked questions in relation to breakdowns of the cranes and he said he did not recall the detail of breakdowns. He was taken to paragraph 12 of his affidavit in which he states that during his time at the Premises the cranes were reliable and there were minimal delays caused by crane outages. He said this was more of a general impression and he would be surprised if outages were more than one or two days during this time. His recollection was that generally parts were available and repairs were attended to promptly with no major things going wrong. He did not know when the two cranes were manufactured but said they were in the building when he moved in in 1986. Mr Parker said the cranes were inspected by Demag at every service. He denied that the work Demag did was confined to the quarterly inspections of the cranes other than in 2007 and said they were called out if there was a break down to the cranes.
9. Mr Parker appeared to be an honest witness who answered questions directly and clearly. I accept him as a witness of truth.

Evidence of Mr C Jones

1. The plaintiffs read an affidavit of Craig Jones sworn 16 November 2016. He is currently the storeman at Exafast Pty Ltd and has been employed since 2013.
2. Mr Jones was involved in the make good steps in March 2016. On 22 March 2016, Robert Hancock advised him that the factory would need to be cleaned and prepared for the purchaser to settle on 4 April 2016. Mr Hancock asked Mr Jones if he could help by working over Easter to which he agreed.
3. He noted that he inspected the toilet and washroom facilities and described their condition as damaged, filthy and unhygienic. Together with John Small, a casual Exafast employee, they worked in cleaning, painting, scrubbing and water blasting those areas. He also did some heavy general cleaning to assist Mrs Hancock. Mr Jones notes in his affidavit that the offices, kitchen, factory and yard were dirty and needed considerable work to make them presentable. Mr Jones annexes to his affidavit a number of photos which support this conclusion. He kept a note of his hours and he spent 22.5 hours performing the work.
4. Mr Jones was not required for cross-examination.

Evidence of Mr D Bykersma

1. The plaintiffs read an affidavit of Darren Bykersma sworn 23 November 2016. Mr Bykersma through a company apparently owned by him was the purchaser of the Premises in April 2016. He annexes to his affidavit the front page of the contract for sale. The completion date under the contract was to be on or before 14 March 2016. Mr Bykersma also annexes special conditions to the contract which in substance provided that the plaintiffs as vendors had to ensure that the first defendant complied with its make good requirements under the Lease.
2. Mr Bykersma notes that he attended the Premises on 8 February 2016 to measure up the building for an office fit out and noted that the factory and amenities were unclean and untidy. He met Mr Bhullar for the first time during the visit.
3. On 9 March 2016 he had another inspection. He notes in his affidavit that the operational business of the first defendant appeared to be still operating normally. He sent an email to Mr Hancock on 10 March 2016. The email included the following: "The condition of the amenities, kitchen, and other internal walls. They are disgusting. E.g. grease on walls and floors etcetera". Mr Bykersma also noted a number of other matters which needed to be attended to.
4. Mr Bykersma attended the property again on 22 March 2016 and conducted another inspection. At that time it appeared to him that the first defendant had vacated the property. In his affidavit he described the state of the building left by the first defendant as "disgusting". The offices were grubby and the kitchen bench and drawers were broken and dirty. The walls in the workers' amenities were filthy, toilets were filthy, the factory still had discarded pieces of steel lying around, desks and metal slag from welding, and masonry anchors left on the floor". He noted that Mrs Hancock had commenced cleaning and he discussed with her the standard of cleaning he felt necessary for occupancy.
5. Mr Bykersma states that on 1 April 2016 he re-inspected the Premises prior to settlement and stated that he was "quite pleased to see all the works I required had been completed. There was a replacement kitchen, painted entities, holes in the roof repaired, factory swept, steel and rubbish removed. I instructed my solicitor to settle the contract of sale." Mr Bykersma negotiated a figure of $3,700 with Mr Hancock as compensation for missing overhead high-bay lights. That sum was paid to him. His company moved into the Premises in early April 2016 about three weeks late.
6. Mr Bykersma was not required by the defendants for cross-examination.

Evidence of Mr J Small

1. The plaintiffs read an affidavit of Mr John Small sworn 25 November 2016.
2. Mr Small is a casual storeman at Exafast Pty Ltd while he completes tertiary studies and he has been employed in that role since about 2014.
3. Mr Small was involved in the make good efforts in March 2016 and worked over Easter with Mr Jones at the direction of Mr Robert Hancock. He was involved in cleaning the toilet and washroom facilities. He also worked another day repairing and cleaning the building on the Premises. He notes in his affidavit that he purchased and installed materials to cover areas of the roof on the Premises where sheets of corrugated iron were missing. He notes that there was one four metre bin of rubbish left behind and that he had to break up desks which were left by the first defendant. He annexes to his affidavit photographs supporting his evidence. Mr Small also notes that he repaired the connection to the fire hose reel bolted on the wall of the Premises. In total he spent 16 hours working on the Premises.
4. Mr Small was not required by the defendants for cross-examination.

Evidence of Mr P Brady

1. The plaintiffs read an affidavit of Peter Brady sworn 25 November 2016.
2. Mr Brady states in his affidavit that he is the owner of the business 5 Star Extinguisher Services which is licensed to supply, maintain and certify fire hose reels, extinguishers and emergency and exit lighting to building occupiers. Mr Brady notes that he has been the certifier for the Premises for the Hancock brothers and their various corporate entities since about 2005. Mr Brady gives evidence that he was retained in late 2009 to ensure that the essential services in the Premises were in order prior to hand over. He was introduced to Mr Bhullar at that time.
3. Mr Brady gives evidence that the last certification of essential services he did for the first defendant was on 7 November 2014 and he annexes a copy of that certificate to his affidavit. He gives evidence that he subsequently ceased providing services to the first defendant as he encountered difficulty in getting payment for the services he had provided. He states that in about February or March 2016 he received a call on behalf of the first defendant seeking his services however he advised them he was too busy to do the work. He then gives evidence that he received a telephone call from Robert Hancock on or about 16 March 2016 who advised him that he needed to get the essential services upgraded for the new owner of the Premises. A quote was provided and he inspected the Premises.
4. In paragraph 11 of his affidavit he gives evidence of a conversation with Mr Hancock in which he informed him that the fire hose reel had been placed in the wrong position and the pipes would not fit together.
5. Mr Brady gives evidence that on 23 March 2016 he attended the Premises and saw that the essential services certification was approximately five months overdue. He also noted from the fire extinguisher tags that these were also overdue for service. He upgraded the essential services including installing new emergency and exit lights and new fire extinguishers. He also noted that the electrical circuits were unsafe on the premises and he undertook additional work to make the electrical circuits safe. He annexes to his affidavit the invoice for the work. In response to Mr Bhullar's affidavit sworn 28 September 2016, Mr Brady said that he was never refused access to the Premises by anyone. Mr Brady subsequently issued a new essential services certificate for the new owners of the Premises.
6. Mr Brady was not required for cross-examination by the defendants. Having regard to Mr Brady's evidence and the fact he was not cross-examined, I prefer his evidence to Mr Bhullar's in relation to the issue of whether 5 Star and Mr Brady were refused access to the Premises by the plaintiffs or the new tenants: see paragraph 87(b) of Mr Bhullar's affidavit.
7. I also prefer Mr Brady's evidence in his affidavit about ceasing attending the Premises to do work for BDS to that in paragraph 95-48(d) of Mr Bhullar's affidavit. It seems clear that after 7 November 2014, 5 Star representatives did not attend the Premises "regularly throughout Bhullar Steel's tenancy" as Mr Bhullar asserts. I also reject Mr Bhullar's assertion in the paragraph stated that "5 Star advised Bhullar Steel after 21 March 2016 that they had been denied access to the premises". This is inconsistent with Mr Brady's affidavit, is something that he would have likely recalled and he was not cross-examined on the issue.

Evidence of Mr M Bhullar

1. The defendants read the affidavit of Mr Michael Bhullar sworn 28 September 2016. Mr Bhullar is the General Manager of the first defendant, the son of the second defendant, and the person who had the vast majority of the dealings with the plaintiffs, particularly Mr Robert Hancock, in relation to the Premises.
2. Mr Bhullar's affidavit is detailed and is accompanied by a lengthy exhibit. In his affidavit, Mr Bhullar gives his account of the facts from August 2009 when he became interested in leasing the Premises on behalf of the first defendant until the vacation of the warehouse by the first defendant. He also responds to various affidavits which have been served on behalf of the plaintiffs (see paragraphs 94-95). A feature of Mr Bhullar's affidavit is that he refers to numerous telephone conversations with Mr Robert Hancock in which significant matters were discussed or agreed. Virtually all of these conversations are denied by Mr Robert Hancock in his affidavit evidence. The extensive reference to telephone conversations is despite the fact that, as the exhibit to his affidavit and the exhibits to the affidavits of Mr Hancock show, Mr Bhullar was a prolific email writer. Whether the conversations occurred on the telephone and in meetings as asserted by Mr Bhullar in his affidavit, will become a central issue for determination by the court in these proceedings.
3. More significant aspects of Mr Bhullar's affidavit include the following: 1. In 2009 Mr Bhullar started to investigate alternative premises for the purposes of relocation as he wanted larger premises with two overhead cranes (paragraph 7). He undertook all the inquiries and negotiations on behalf of the first defendant; 2. He gives evidence of the execution of the Lease (paragraph 10); 3. Mr Bhullar states that BSD took occupation of the Premises on or about 1 December 2009; 4. He notes that in the lease negotiations it was very important to him that BSD leased premises with two overhead cranes in good working order; 5. Mr Bhullar annexes email correspondence in relation to the proposed Clause 11 and the preference of the plaintiffs to use Demag for maintenance and repairs, whereas the first defendant wished to use its own crane company, Austfurn; 6. His assertion that he did not receive any report from Demag or otherwise prior to BSD taking possession of the Premises (paragraph 18). Mr Bhullar later gave inconsistent oral evidence in relation to this fact; 7. Mr Bhullar claims that immediately upon BSD moving into the Premises it became apparent to him that neither crane at the Premises was in proper working order (paragraph 22). He asserts that this was raised with Mr Hancock (paragraph 23). This conversation is denied by Mr Hancock; 8. Despite Demag attending the Premises on 11 January 2010, Mr Bhullar asserts that not all issues were attended to in relation to the cranes (paragraphs 24-26); 9. Mr Bhullar claims that he raised the issue of condition reports for the cranes and certification in accordance with the Australian Standards (paragraph 27). Mr Hancock denies this conversation; 10. Mr Bhullar gives the history of obtaining service and alleged condition reports concerning the cranes in August 2010 and March 2011 (paragraphs 28-30); 11. Mr Bhullar gives evidence in relation to a meeting on 15 May 2012 with Mr Hancock concerning pre-existing problems with the cranes where an agreement was reached for the parties to pay $4,500 each in relation to repairs (paragraphs 33-37). He claims that the Austfurn technician present raised the issue about a condition report and certification in this meeting. Mr Hancock denies this in his affidavit evidence. Mr Bhullar also asserts that the agreement was only in relation to urgent and essential repairs and that Mr Hancock said that they would worry about other repairs later (paragraph 35). This is denied by Mr Hancock in his affidavit evidence; 12. Mr Bhullar gives evidence in relation to the expiration of the first Lease and his pressing of Mr Hancock to get certification in relation to the cranes (paragraphs 40-41). Mr Hancock denies that in his affidavit evidence; 13. Mr Bhullar gives evidence of a meeting on 15 August 2013 with Mr Hancock and Mr Singh in relation to the need for certification of the cranes. Mr Hancock denies that; 14. Mr Bhullar gives evidence of receiving an email on 15 August 2013 from Mr Hancock when he was told that the 10 tonne crane was less than 10 years old and says that he was "astounded" when he received the email (paragraph 47). The sending of this email is not disputed; 15. Mr Bhullar gives evidence that he was reluctant to commit to a new lease because of outstanding certifications and repairs to the cranes (paragraph 50). This is denied by Mr Hancock in his affidavit evidence; 16. Mr Bhullar gives evidence in relation to negotiations for a further leasehold interest and claims that at that time his focus was on the cranes and certification of them. He gives evidence of oral discussions with Mr Hancock at meetings and telephone conversations in relation to the cranes (paragraphs 52-55). Mr Hancock denies the oral conversations; 17. Mr Bhullar gives evidence in relation to his signing of the document entitled Continuation of Lease Agreement but asserts that this only recorded financial aspects of the agreement and not other aspects including aspects relating to the recertification of the cranes (paragraphs 55-56). Mr Hancock denies this; 18. Mr Bhullar gives evidence of ongoing problems with the cranes and his request of Mr Hancock for appropriate certification (paragraphs 57-70). Mr Hancock denies the oral conversations alleged in his affidavit evidence; 19. Mr Bhullar gives detailed evidence in relation to the vacation of the Premises and asserts that he stopped paying rent because of the ongoing problems with the cranes and Mr Hancock's refusal to have them certified (paragraph 81); 20. Mr Bhullar asserts that BSD had performed all of the make good works requested by Mr Hancock in accordance with the Lease with certain exceptions (paragraph 87). He asserts that BSD restored the Premises to a superior condition to that as at 1 December 2009 (paragraph 89). Mr Hancock denies this and says the Premises were left dirty and damaged. In particular Mr Bhullar disputes the assertions in Mr Hancock's affidavit evidence and states that by 21 March 2016 the Premises had been cleaned and all rubbish removed (paragraphs 94-11 and 95-48(b).
4. Mr Bhullar was cross-examined at length by counsel for the plaintiffs.
5. Mr Bhullar was asked some questions about the initial negotiations relating to the Lease in 2009. He agreed that he dealt with Marcel Elias from LJ Hooker. He was taken to an email at page 14 of the exhibit to his affidavit from Mr Elias to Mr Semciw dated 7 October 2009 at 11:38am and agreed that this recorded matters which he had told Mr Elias. Mr Bhullar agreed that he told Mr Elias that the first defendant worked "around the clock" as stated in this email. Mr Bhullar said that he stated that to Mr Elias to convince Mr Elias that the first defendant should undertake its own servicing of the cranes but it was not true. Mr Bhullar said the standard shifts for BSD were eight-hour shifts but sometimes overtime was worked so the shifts were 10 to 12 hours. He said the usage of the crane was subject to the work to be completed but accepted that the first defendant made steel beams which could only be moved by the cranes and thus the cranes were used regularly in the work.
6. Mr Bhullar agreed that under Clause 10(h)(ii) of the Lease, the first defendant agreed to undertake a maintenance program which included for the overhead cranes to be regularly serviced in accordance with Australian Standards under a service contract with Demag or another approved company. He was asked whether as a result of this he familiarised himself with the Australian Standards and he said "not 100%". Mr Bhullar was taken to paragraphs 95-21 and 22 of his affidavit where he stated: "I was not aware of the applicable Australian Standards".
7. Mr Bhullar was then taken to the documents at pages 31-34 of the Exhibit to his affidavit (CB 3/850-853). Mr Bhullar confirmed that he understood that those documents related to a report following a Demag inspection of the cranes and that the works referred to at pages 33-34 were undertaken by Demag as set out in the document at 31. He also confirmed that the documents at 33-34 were what he understood to be Periodical Service Reports as a result of inspections in October 2009. Mr Bhullar stated that he was not sure when he received these documents but believed it was close to the time when the Lease was signed which was 13 November 2009. Clearly the document at 31 of Mr Bhullar's exhibit must have been provided after that date as it is dated 20 November 2009. I take Mr Bhullar's evidence to be that he received the documents before or soon after the time when the Lease was signed.
8. Mr Bhullar was taken to paragraph 22 of his affidavit where he states that immediately upon BSD moving into the Premises it became apparent to him that neither crane was in proper working order. Mr Bhullar confirmed this. It was put to him that shortly after this time he informed Mr Hancock in an email dated 14 January 2010 as follows: "But anyway cranes are fine and I don't think there is any need to make them come to the site, unless you want to have a work [look] for your satisfaction". Mr Bhullar agreed that he had sent this email to Mr Hancock. Mr Bhullar suggested that he was speaking generally as this was the view expressed by Demag. Mr Bhullar then said his comment was limited to the three issues which he had raised in an email to Mr Hancock which is at page 29 of Mr Bhullar's exhibit. However, he confirmed that he did not raise any other issues in relation to the cranes with Mr Hancock at that time.
9. I reject the suggestion in paragraphs 23-26 of Mr Bhullar's affidavit that his email only referred to three specific issues and not other issues that he was concerned about. I think it likely that Mr Bhullar would not have said that the cranes were "fine" if he thought that there were other issues that needed attention at this time.
10. Mr Bhullar gave evidence that he had a number of conversations with Mr Hancock after the New Year of 2010 in relation to the cranes because he had a few break downs. He agreed that he put nothing in writing in relation to these conversations but denied that they did not occur. He accepted that he only raised problems in relation to the cranes in the period January 2010 to August 2010 in conversations with Mr Hancock.
11. Mr Bhullar confirmed that in August 2010 he engaged Austfurn to inspect the cranes and provide service reports: see paragraph 29 of his affidavit. Mr Bhullar also confirmed that the service reports were at pages 36 to 37 of the exhibit to his affidavit (CB 3/885-6). It is noted that these reports are described as a "Condition Report" on each document. He agreed that this was the first service report in relation to the cranes and that he forwarded the document to Mr Hancock on 30 August 2010: see exhibit page 35. Mr Bhullar agreed that this was the first service undertaken by the first defendant since it signed the Lease. When asked why he had taken more than six months to obtain the first service report (it being nine months after the commencement of the Lease), Mr Bhullar said it was because he was waiting for Mr Hancock to provide a "condition report" in relation to the cranes.
12. Mr Bhullar agreed in cross-examination that the first defendant had an obligation to obtain service reports every six months in relation to the cranes and that it did not. Mr Bhullar agreed that he described what had occurred as the "first service" and did not describe the reports as "condition reports".
13. Mr Bhullar confirmed that he arranged for a second service report to be undertaken by Austfurn in February 2011 and that the service reports are at pages 33 and 34 to Exhibit RAH-3 to Mr Hancock's third affidavit (CB 2/503-4). Mr Bhullar was then taken to a document prepared by Austfurn which summarised the condition of the cranes and was described as an "updated condition report" dated 25 March 2011 which is at pages 38 to 39 of the exhibit to his affidavit. It was put to Mr Bhullar that the document merely set out the recommendations made in the earlier service reports but he denied that as it also gave the priority in relation to repairs to the cranes. He agreed that the condition report set out the recommended repairs referred to in the August 2010 service reports as well as referring to when the wear and tear on the cranes may have occurred. He agreed that he asked Austfurn to prepare the condition report and indicate when it considered the damage referred to had occurred. He said he did this to indicate the repairs required from the pre-existing "design point of view". Despite Mr Bhullar making a distinction between condition reports and service reports in paragraph 29 of his affidavit, he described the report dated 30 August 2010 from Austfurn as being "condition reports in relation to each crane of the same date". He agreed that the service reports from Austfurn entitled "Condition Report" had the same information in them as in the Periodical Service Report carried out for the plaintiffs by Demag.
14. In relation to the suggestion that there was no definition of "condition report" anywhere, Mr Bhullar denied that and he said he learnt it from the Australian Standard. He accepted that he did not refer to the distinction between a condition report and a service report in his 30 March 2011 email to Mr Hancock attaching the report compiled after the second service on the cranes (page 43 of Exhibit RAH-1 to Mr Hancock's second affidavit). He denied that the concept of a "condition report" was something which he had created after the event.
15. Mr Bhullar confirmed that he understood it was the first defendant's obligation under the Lease not just to have inspections by a crane maintenance company but also to undertake repairs when required. He conceded that the first defendant did not undertake the repairs indicated promptly as required in the reports. He also conceded that without regular servicing and repairs that cranes may deteriorate and this may potentially lead to break downs. Mr Bhullar agreed that not all the repairs referred to in the Austfurn condition report at page 39 of his Exhibit dated 25 March 2011 were undertaken promptly. He said that they were undertaken after a meeting with Mr Hancock and Austfurn in May 2012. Mr Bhullar said that he was not 100 per cent certain that the items indicating repairs were needed in the 25 March 2011 condition report were undertaken prior to May 2012 some 14 months later. Mr Bhullar said he was not certain when the repair work referred to in the 25 March 2011 condition report was carried out.
16. Importantly, Mr Bhullar conceded that the Demag 10 November 2009 Service Job document (Exhibit to his affidavit page 31; CB 3/850) cleared the cranes of needing any repairs. The document provides: "No outstanding repairs as of 20.11.09". In responding to the suggestion Austfurn did not know at the first inspection on 30 August 2010 what the condition of the cranes was as at 1 December 2009, Mr Bhullar confirmed that and said the first formal service inspection was attended by Austfurn because of breakdowns which had occurred prior to that date.
17. Mr Bhullar was then taken to an email he sent to Ava, Mr Hancock's daughter, on 2 December 2011 in which he said "as you can see in the reports the cranes are pretty old…" (exhibit to his affidavit page 41). Mr Bhullar said that this was based on the report and his personal visual assessment. Importantly, Mr Bhullar confirmed that it was plain to him that components of the 10 tonne crane were more than 10 years old. This concession is relevant to the alleged misleading or deceptive conduct cause of action relating to Mr Hancock's statement as to the age of the 10 tonne crane.
18. Mr Bhullar confirmed that he received a response from Mr Hancock on 19 December 2011 referring to Clause 11 of the Lease and asserting that the maintenance of the cranes was "clearly your responsibility". The response also referred to Mr Bhullar's email dated 14 January 2010 in which he asserted that the cranes were "fine" (see the email at page 42 of the exhibit to Mr Bhullar's affidavit). Mr Bhullar was taken to paragraph 31 of his affidavit in which he purports to set out the conversation he had with Mr Hancock which Mr Hancock denies in his affidavit. It was put to Mr Bhullar that a discussion in the terms of paragraph 31 of his affidavit did not occur but he maintained it. He agreed he had no file note of the conversation. Ultimately, when asked questions about the conversation and with an alternative version being put, it was clear that Mr Bhullar had a poor recollection of the conversation. After some further cross-examination, Mr Bhullar said that he could not recall raising the plaintiffs sending a "condition report" 100 per cent and he was also not sure if he referred to Clause 11 of the Lease in the telephone discussion with Mr Hancock.
19. Mr Bhullar was then asked some questions about the 15 May 2012 meeting with a representative of Austfurn and Mr Hancock. This is referred to in paragraphs 33-37 of his affidavit. Mr Bhullar confirmed that those paragraphs contained his version of what occurred at the meeting. He also confirmed that at the meeting all three attendees had a copy of the report of Austfurn which is at page 46 to the exhibit to his affidavit (CB 3/865). He agreed that at the meeting both he and Mr Hancock signed the document and dated it 15 May 2012.
20. It was put to Mr Bhullar that the first service report obtained by him dated 30 August 2010 and the second service report obtained dated February 2011, both referred to what he regarded as pre-existing faults and wear and tear. He agreed that these were the matters he wished to raise with Mr Hancock and the representative from Austfurn on 15 May 2012. He also agreed that the conference on 15 May 2012 was to discuss the existing faults and the pre-existing wear and tear. Mr Bhullar conceded that Mr Hancock agreed at the meeting to contribute towards the payments to fix all existing wear and tear items identified. He also agreed that Mr Hancock asked the Austfurn representative to estimate how much it would cost to fix the faults and wear and tear indicated. Mr Bhullar accepted that at the end of the discussion the work needed to be undertaken was assessed by the Austfurn representative at $8,700, which was rounded up to $9,000 and that Mr Hancock agreed to contribute $4,500 to that work by reducing the rent to be paid by the first defendant to the plaintiffs over three months by the sum of $4,500.
21. It was put to Mr Bhullar that the purpose of the document was "once and for all" to get rid of all pre-existing wear and tear issues between the parties. He disagreed with this and said it was only the "immediate" wear and tear issues. When asked what he said was the purpose of the document at page 46 of his exhibit, Mr Bhullar said it was signed to formalise the agreement between the parties to share the cost of repairing the pre-existing faults to get the cranes into operational condition. This was a significant concession, in my view, by Mr Bhullar: see T112.15-.23. Mr Bhullar accepted that there was some wear and tear caused by the first defendant over the last 2½ years of its occupation of the Premises and some of the items in the Austfurn document related to that period: T112.4.
22. It was put to Mr Bhullar that the first time he raised with Mr Hancock a request for a 10 year inspection report of the cranes was in December 2012. He disagreed with this and said it was first raised "pretty much immediately after we signed the lease": T112.39. He conceded that there was no term in the Lease relating to a 10 year inspection. Mr Bhullar was taken to paragraph 23 of his affidavit where he claims he referred to "a certification for the cranes" in an 8 December 2009 telephone conversation with Mr Hancock. It was put to him that this conversation never occurred which he denied. It was also put to Mr Bhullar that similar references to the cranes being "certified" in conversations in paragraphs 27, 30, 34, 36 and 38 of his affidavit never occurred which he denied. He said the references in his affidavit were correct.
23. In my view, this is difficult to accept. If certification of the cranes was so important to Mr Bhullar from December 2009, I think it is likely that he would have referred to it early in email correspondence which was not the case. It seems that the first time there has been a reference to a 10 yearly crane inspection report is in the email from Mr Bhullar to Mr Hancock dated 10 December 2012 which is at page 60 of the exhibit to his affidavit (CB 3/878). It appears clear from the correspondence between Mr Bhullar and Mr Hancock from 10 December 2012 until 8 January 2013 (Bhullar exhibit pages 58-60), that Mr Hancock had no idea what a 10 yearly crane inspection report was. In his 17 December 2012 email he stated: "Not sure what you mean about 10 year crane inspection report?" This suggests that the matter was newly raised with Mr Hancock which appears to be inconsistent with the conversation set out by Mr Bhullar in his affidavit particularly at [36]. This suggests that these conversations may well not have occurred as Mr Bhullar asserts.
24. Mr Bhullar was then asked questions about the undertaking of the work agreed on 15 May 2012. He agreed that in emails he told Mr Hancock that he would provide evidence of the works completed as agreed (exhibit to Mr Bhullar's affidavit pages 58-59) and email dated 16 May 2012. He accepted that Mr Hancock followed up on a number of occasions for evidence that the works had been undertaken: see emails on 8 January 2013, 16 January 2013 and 25 January 2013 (page 58 of his exhibit). Despite these emails, Mr Bhullar did not accept that the agreement reached on 15 May 2012 was all about fixing the issue of the wear and tear prior to the first defendant taking possession of the Premises. His assertion that it did not cover "structural repairs" is not referred to expressly in Mr Bhullar's email. Despite Mr Bhullar conceding that the whole purpose of the 15 May 2012 agreement was for each of the parties to pay 50% in relation to repairs including wear and tear, Mr Bhullar asserted that the agreement only related to mechanical repairs not structural repairs: T119.46-T120.33. Mr Bhullar conceded that that was not mentioned in the agreement dated 15 May 2012 or in any of the emails which followed. He also agreed that this qualification was not referred to in his affidavit.
25. In my view, this evidence of Mr Bhullar should be rejected. I think it is likely that if any qualification had been made in relation to mechanical repairs as opposed to structural repairs that he would have referred to it not only in an email at the time to Mr Hancock but also in his affidavit.
26. Mr Bhullar was then asked questions about his understanding of the obligations of the plaintiffs under Clause 11 of the Reference Schedule to the Lease and in particular, the obligation of the plaintiffs to bring the cranes "into good working order/condition." He agreed that there was nothing in the Lease about the plaintiffs as lessors having to provide certification or 10 yearly reports in relation to the cranes. He accepted that the request for a 10 yearly report in relation to the cranes was only put for the first time in writing to Mr Hancock on 10 December 2012: T121.38-T122.10. It was then put to Mr Bhullar that the first time he raised it in writing on 10 December 2012 was a week or so after the initial term under the Lease had expired: T122.12-.19. Mr Bhullar conceded that the first defendant could have walked away from the Lease "there and then" after giving a notice: T122.26. The email correspondence makes clear that Mr Hancock did not have a 10 yearly report of the cranes: see email dated 26 January 2013 at page 57 of the exhibit to Mr Bhullar's affidavit (CB 3/875).
27. Mr Hancock continued to press Mr Bhullar for evidence that the work agreed to be done in the meeting on 15 May 2012 had been completed: see his email dated 25 June 2013 at page 74 of Exhibit RIH-1 to Mr Hancock's second affidavit. Mr Bhullar's response was to seek a "comprehensive report on the cranes (repairs conducted)" from Mr Corazzol of Austfurn. Mr Corazzol responded with an email dated 9 July 2013 setting out the invoices and brief details in relation to the repairs conducted on the two cranes: page 61 to the exhibit to Mr Bhullar's affidavit. This document becomes of importance in relation to a claim for damages in the Cross-Claim. Mr Corazzol describes the list of invoices as "all the work we had conducted for the maintenance repairs other than the regular service and breakdowns." He also indicated that "the above works do not constitute the 10 year mechanical inspection as per Australian Standards AS 2550 and as such they are overdue… Normal quarterly inspections or services do not constitute the completion of a 10 year mechanical inspection."
28. The term of the Lease expired on 30 November 2012. In paragraph 40 of his affidavit, Mr Bhullar states that he did not exercise the option on behalf of BDS "as [he] was concerned about the condition of the cranes and the offices forming part of the premises. The offices did not have a fire exit…". Mr Bhullar confirmed the accuracy of this evidence in cross-examination. A careful study of the email correspondence suggests this evidence is incorrect: see pages 64 to 70 where there is the email chain which is part of Exhibit RIH-1 to Mr Hancock's second affidavit. I will consider this further below.
29. The first defendant did not take up the option to renew the Lease. Initially, Mr Bhullar said that the first defendant was going to continue the Lease (email dated 11 September 2012) but then in an email dated 7 January 2013, Mr Bhullar made clear that the real reason why the Lease was not renewed was the market for the first defendant's product and a reduction in work. In the 7 January 2013 email Mr Bhullar stated as follows: "I have discussed with my father and looking at the market, we can continue the lease till June with either party to terminate the lease with three months' notice from end of the month. If the market picks up then we will be able to extend the lease for longer duration after June".
30. He later added: "Basically Bob we don't want to overcommit ourselves. If the market improves then we will renew the lease for longer duration. For most of 2012 we have not been able to utilise half of the warehouse due to lack of work": page 64 of Exhibit RIH-1.
31. In my view, this correspondence establishes that the reason given by Mr Bhullar in paragraph 40 of his affidavit for not renewing the Lease is incorrect. Mr Bhullar later added in an email dated 15 January 2013: "Market is very bad, I can't commit to more than I have previous put forward to you … I really can't commit, market is too weak and we don't have much going."
32. In cross-examination, Mr Bhullar said that that was one of the reasons why he did not renew the Lease but it clearly appears to me to be the only or at least the most significant reason. Mr Bhullar appeared to me to be evasive in cross-examination in relation to this issue. Mr Bhullar agreed that he discussed the matter with his father and they agreed to continue with the Lease on a month-to-month basis.
33. There was then a substantial gap of about 11 or 12 months before the issue of the Lease was considered again. The matter began to be agitated in emails in December 2013: see page 82 to Exhibit RIH-1.
34. There was then a meeting between the parties on 6 January 2014. Mr Bhullar's version of the meeting appears to be set out in paragraph 52 of his affidavit. That version is denied by Mr Hancock. Mr Bhullar does not have a file note of the meeting; however, it is discussed in emails on 9 and 10 January 2014: see pages 78 to 79 of the exhibit to Mr Bhullar's affidavit. Mr Bhullar referred to crane repairs as ongoing and Mr Hancock commented that, as to the cranes: "Your responsibility anyway". Mr Hancock's response has to be seen in the light that he had already allowed $4,500 in May 2012 for pre-existing problems with the cranes.
35. A further meeting was then arranged for 14 January 2014. Mr Bhullar gives his version of the meeting at paragraphs 54-55 of his affidavit. The conversations in those paragraphs are denied by Mr Hancock. Mr Bhullar claims that there was a discussion about the cranes and certification of the five tonne crane. Mr Hancock discusses the meeting in his email dated 15 January 2014 which is at page 78 to the exhibit to Mr Bhullar's affidavit. In relation to the crane issue the following is stated: "Bob indicated that the crane issue was resolved several years ago when Fabtek offered a discount on the rent to bring the cranes into Order." Mr Bhullar's points in paragraph 55 of his affidavit are not referred to in the email and there is no response suggesting Mr Hancock's email is incorrect.
36. I reject Mr Bhullar's account of this meeting. It is inconsistent with Mr Hancock's email summarising the meeting and in my view Mr Bhullar would have been prompt in disputing the matter if there had been discussion as alleged on this issue. In relation to the fire exit issue, I also reject this evidence. The fire exit issue was in fact brought up by Mr Hancock as a peripheral matter over 12 months earlier on 3 November 2012: see Mr Hancock's 3 November 2012 email in which he seeks access to open a fire access door on the west wall of the factory at some stage: page 67 of Exhibit RIH-1. I do not accept that this was raised as an issue by Mr Bhullar in relation to the new lease and in particular it did not form part of the negotiations in relation to the new lease.
37. I accept Mr Hancock's evidence that the fire access door issue was not discussed at the meeting as alleged by Mr Bhullar. In particular, it is not referred to in Mr Bhullar's email dated 9 January 2014 where he sets out the first defendant's proposals in relation to the continuation of the Lease. I do not accept Mr Bhullar's evidence that he required a fire exit to be installed and that he only entered into the Continuation of Lease Agreement on that basis. I find that it was not a factor that caused Mr Bhullar or the first defendant to enter into the Continuation of Lease Agreement.
38. Similarly, I do not accept that a discussion occurred in relation to the cranes as set out in paragraph 55 of Mr Bhullar's affidavit. I accept Mr Hancock's evidence on this issue. Mr Hancock makes clear in his 10 January 2014 email that he regarded the crane repairs as Mr Bhullar's "responsibility": see also Mr Hancock's 15 January 2014 email. Mr Hancock was meticulous in documenting matters relating to meetings and there was no relevant mention of commitments in relation to the cranes as alleged by Mr Bhullar. Mr Bhullar agreed that it was a significant matter to him. If it was significant as he claims, in my view it would be very likely that he would have confirmed it in writing.
39. I also reject Mr Bhullar's assertion that what was intended to be documented was only the financial aspects of what had been agreed and the rest would "stay verbal": see paragraph 55 of his affidavit. That is inherently unlikely where these matters had previously been the subject of extensive discussion and dispute. Further, the issue in relation to the repairs to the crane had been dealt with at the 15 May 2012 meeting. If there had been a verbal agreement as Mr Bhullar alleges in paragraph 55 of his affidavit, Mr Hancock's 15 January 2014 email (page 78 of Mr Bhullar's exhibit) would have been a breach of the verbal agreement which would have almost certainly caused an angry response by Mr Bhullar yet it is not reflected in the correspondence. I reject Mr Bhullar's evidence in paragraph 55 of his affidavit.
40. Mr Hancock's 15 January 2014 email attached a draft agreement which Mr Bhullar signed on behalf of the first defendant and returned on 22 January 2014: see his email at page 77 of Exhibit RIH-1. In his 22 January 2014 email, Mr Bhullar only raised an issue in relation to water usage. No issue was raised in relation to the certification of the cranes or the installation of a fire door. The Continuation of Lease Agreement executed is at page 82 of the exhibit to Mr Bhullar's affidavit and is also annexed to Mr Hancock's first affidavit.
41. There then appears to have been a substantial period where there was no relevant contact between the parties until July 2015 when Mr Bhullar raised the issue of the cranes breaking down on a regular basis. He stated "due to their age they need a good overhaul": see page 103 to Mr Bhullar's affidavit. The substantial gap in contact between the parties also indicates to me that the alleged oral arrangements set out in paragraph 55 of Mr Bhullar's affidavit did not occur.
42. Mr Bhullar was then asked questions in relation to the involvement of his father, Mr Singh, in the business of BDS. In paragraph 5 to Mr Bhullar's affidavit he indicated that Mr Singh assisted in the daily operations of the business. He confirmed this was the case between 2009 and 2016 at the Premises. Mr Bhullar also confirmed that he talked to Mr Singh and discussed with him the lease arrangements being contemplated in 2012 and in 2013. Mr Bhullar agreed that he discussed the Continuation of Lease Agreement proposal with his father in 2013.
43. This evidence is relevant to the allegation that the guarantee obligations continued against Mr Singh after the Continuation of Lease Agreement was entered into.
44. There was then an extended period of cross-examination in relation to the issue of the breakdowns of the cranes and the cost to the first defendant in repairs and maintenance. This was relevant to the claim by the first defendant for loss of earnings in its Cross-Claim. In support of its claim, the first defendant relies upon a report of Mr Chris Katehos and Ms Leanne Marks of Furzer Crestani, Forensic Chartered Accountants, dated 4 October 2016. This will be considered further below.
45. In the email from Mr Bhullar to Mr Hancock dated 25 August 2015, which has been mentioned above (page 105 to the exhibit to Mr Bhullar's affidavit), Mr Bhullar stated: "They [the cranes] are due for twenty five yearly inspection and longer we delay worse they get. We lost a lot of production time lately because of the breakdowns and been spending money continuously."
46. Mr Bhullar agreed that this was the first time that he had raised the issue of loss of production of the first defendant in writing with Mr Hancock. Mr Bhullar gave evidence that by the word "lately" in the email, he was intending to indicate the period close to 25 August 2015 was when the cranes were becoming worse and less reliable. He agreed that as at this time the first defendant had been in occupation of the Premises for nearly six years. In answer to the suggestion that the cranes would have had a lot of wear and tear after six years of use Mr Bhullar said he could not "define that". He replied "not necessarily" to the suggestion that the cranes would have undergone a considerable amount of wear and tear as a result of the first defendant's use of the cranes over the close to six year period: T141.42-T142.3.
47. This issue of alleged loss of production by the first defendant due to the breakdowns in the cranes was covered extensively in cross-examination.
48. Mr Bhullar was initially taken to paragraph 75 of his affidavit in which he states the following: "In the course of preparing this affidavit I have perused the business records of Bhullar Steel and, in particular, service records from Austfurn, ACE, Demag and others in respect of call-outs to the premises when the cranes had broken down and were inoperative. I have prepared a document which sets out the dates upon which Bhullar Steel made payments in respect of those service reports, a copy of which is at Tab 47".
49. Later, contrary to this paragraph, Mr Bhullar said he did not prepare the document but he assembled the invoices supporting the details in the document: T174.47-175.4. He confirmed that the document which is Tab 47 to his affidavit is the document at pages 146-147 of the exhibit to his affidavit (CB 3/964).
50. This document refers to crane expenses in the period from 2009 to 2016 totalling $50,275.90. It was put to Mr Bhullar that the table at Tab 47 to his affidavit is the same table as was used by the chartered accountants from Furzer Crestani in preparing their report and on which they placed reliance at Attachment B to their report (CB 3/1153). Mr Bhullar agreed with that and agreed that Furzer Crestani used that document for the purposes of preparing its opinion in relation to the claim of the first defendant in its Cross-Claim.
51. A review of the Furzer Crestani report shows the significance placed by the chartered accountants preparing that report on Attachment B. The Furzer Crestani accountants were instructed to prepare an expert report to assess the first defendant's economic loss as a result of the two cranes not being in good working order: paragraph 1.1 of their report. The total calculated by them was $198,605: Clause 3.1. They were instructed to assume that, as a result of the failure to recertify and repair the cranes, the first defendant continued to experience numerous breakdowns and extended periods when the cranes were not able to be operated which resulted in delays in production and loss of work: paragraphs 5.1 and 5.15. Assumptions were made in relation to the breakdowns: Clause 6.4.
52. In particular, Furzer Crestani was instructed to assume that each breakdown required the first defendant to obtain repairs for the relevant crane and that the repair time ranged from a few hours to one and a half months. Three extended breakdowns were referred to: Clause 6.1 and Clause 6.5. Particular instructions were given in relation to Attachment B being the same document as is Tab 47 to Mr Bhullar's affidavit. The instructions included: a) that Attachment B represents the crane repairs and maintenance expenses incurred by the defendant; b) indicates each breakdown expense other than certain highlighted expenses, and c) represents down time as a result of the poor working condition of the crane.
53. The accountants assumed that each breakdown other than the regular maintenance work and the three extended periods resulted in an average breakdown of three days for one crane which results in a loss of capacity equivalent to 1.5 days per breakdown. They concluded that there were a total of 68 crane repairs with 63 of the 68 being short crane repairs averaging a loss of capacity of 1.5 days: paragraph 6.6. It is accordingly clear, that Attachment B was particularly significant to Furzer Crestani in their calculations: see Clause 9.3.
54. In paragraph 76 of his affidavit, Mr Bhullar stated that BDS does not retain records as to the length of each breakdown which he states would be for a minimum period of four hours and "could be" for a maximum of over three weeks: see also paragraphs 77-80 of Mr Bhullar's affidavit.
55. The document at Tab 47 of Mr Bhullar's affidavit referred to in paragraph 75 of the affidavit, refers to numerous invoice numbers for crane repairs from 2009 to 2016. Mr Bhullar in cross-examination claimed that he looked at the job sheets in relation to the invoices but did not exhibit them to his affidavit. He said that there was no "particular reason" for doing so. He initially said that he did not entirely agree with the suggestion that the job sheets would give a good indication of how long each particular job took but ultimately agreed that they would provide some background and source material for anyone reading the invoice to understand what the job was about: T143.1-.29.
56. Mr Bhullar did not agree with the proposition that the number of breakdowns of the cranes increased over time for the first defendant as it failed to maintain the cranes properly and do the repairs as recommended in the service reports: T144.4.
57. Mr Bhullar agreed that he only carried out repairs to the cranes in relation to specific breakdowns and not in relation to the repairs mentioned in the service reports: T144.9-.17. He stated that the first defendant undertook what were indicated as "immediate repairs" but not all repairs that were recommended in service reports: T144.25. In answer to the suggestion that minimum breakdowns of four hours referred to in paragraph 76 of Mr Bhullar's affidavit had been "rounded up" to three days in the Furzer Crestani report, Mr Bhullar said he did not know. However, this seems to be consistent with Clause 6.6(b) of the Furzer Crestani report, where an average breakdown, apart from the major breakdowns, of three days was used resulting in one crane being inoperable and accordingly a loss of capacity of three days times 50% being 1.5 days of business capacity lost, was adopted. Mr Bhullar agreed that he would carry out repairs that would keep the crane working but did not carry out repairs which may have given an overall longevity of life to the crane that were not seen as urgent: T144.31. This was a significant concession by Mr Bhullar.
58. In the course of the cross-examination in relation to the invoices and job sheets listed in Attachment B to the Furzer Crestani report and Tab 47 to his affidavit, Mr Bhullar was asked by the court how long it took for the crane repairers to attend when called. He said that it depended on their availability but they usually came to the Premises to undertake the work within the same day: see T160.25-.31. This is significant evidence in relation to the reliability of what is in paragraph 76 of Mr Bhullar's affidavit and Attachment B as relied upon by Furzer Crestani. It raises doubts in relation to the assumption of an average of a three day breakdown for a crane apart from the major breakdowns.
59. The result of the extensive cross-examination of Mr Bhullar in relation to the invoices and the job sheets is that in my view little weight can be placed on the document at pages 147-148 of the exhibit to Mr Bhullar's affidavit and Attachment B to the Furzer Crestani report. I make the following comments in relation to that table, the extensive cross-examination of Mr Bhullar on it, and the use of the table in the Furzer Crestani report: 1. The table at Tab 47 of Mr Bhullar's affidavit lists 78 items/invoices for alleged crane repairs. The amounts totalled $50,275.90. In Attachment B to the Furzer Crestani report, 10 of the invoices/items relate to service inspections only: invoices 28025, 28026, 29482, 29511, 30470, 30471, 32197, 32198, 34289 and 34290. These 10 highlighted expenses are excluded by Furzer Crestani as they do not amount to a breakdown expense: see Clause 6.6(a)(ii) of their report. Accordingly, only 68 crane repairs were considered by them, with 63 of those being short crane repairs: Clause 6.6(c) of their report; 2. I am not satisfied on the evidence that any of these 63 repairs related to the cranes not being in a good condition at the time of the commencement of the Lease as opposed to being caused by use by the first defendant. This was particularly the case in relation to the repairs from the commencement of the 2010-11 financial year; 3. No expert evidence was adduced specifically commenting on the invoices relied upon by Mr Bhullar and the first defendant which established, to my satisfaction, that the repair expenses and the alleged breakdowns related to defects or other issues existing as at 1 December 2009; 4. It seems clear that a number of repairs for which the first defendant paid were the subject of the 15 May 2012 agreement between Mr Hancock and Mr Bhullar on behalf of the plaintiffs and the first defendant, respectively, which resulted in a contribution of $4,500 by the plaintiffs: see pages 46 and 61 of the exhibit to Mr Bhullar's affidavit. In my view, there having been agreement on these repairs, these could not be subject to an additional claim by the first defendant. I will consider this further below; 5. Further, it seems that many of these repairs were not arranged by the first defendant soon after 15 May 2012 but were arranged in 2013 in many cases; 6. Invoice 30930 is in Mr Bhullar's table split into two parts and accordingly cannot constitute two events for the purposes of any breakdown calculation. This was conceded by Mr Bhullar in his oral evidence; 7. Mr Bhullar in paragraph 76 of his affidavit states that the breakdowns "would be for a minimum period [of] four hours and could be for a maximum of over three weeks". This does not support the Furzer Crestani assumption of an average of a three day breakdown for the shorter repairs. Indeed, that assumption seems to be inconsistent with Mr Bhullar's evidence; 8. Mr Bhullar agreed that the first defendant made steel beams which could only be moved by cranes and that the cranes were used regularly in work by the first defendant. The first defendant was in occupation of the Premises from 1 December 2009 to March 2016. That is an extensive period involving wear and tear on the components of the cranes. It is to be expected that repairs and servicing would be needed regularly if the cranes were used frequently by the first defendant which appears to be the case (certainly at least every six months if the cranes were correctly rated C4); 9. Mr Bhullar agreed that the contactors which were part of the electrics in the cranes were subjected to considerable wear and tear. Many call outs seemed to be related to faulty contactors; 10. One item in the schedule is that for 19 March 2014 which indicates "cash" and to which there is no invoice. Mr Bhullar was not able to assist in cross-examination as to what this was for. Accordingly, this cannot be taken into account; 11. A large number of the invoices indicated that the repairs were ordered and provided on the same day. This negates the basis of Furzer Crestani's opinion that there was an average of three days for each of the short breakdowns; 12. Some invoices (for example that at CB 2/614) related to parts containing dust or other impurities. This would appear to be unconnected with damage as at 1 December 2009. Some of the invoices related to an ordered job requested by the first defendant and not apparently to a breakdown. Accordingly, it could not be used in the way Furzer Crestani has used it on the assumption of a three day breakdown for a crane. 13. Some of the delays appeared to be attributable to the first defendant requiring the repairer to wait. This was the case with one of the major delays with the five tonne crane relied upon by Mr Bhullar in paragraph 77 of his affidavit: see the documents at CB 2/634. Mr Bhullar accepted in cross-examination that he told the repairer not to undertake the repairs in circumstances where Demag could have repaired the item in question. Accordingly, paragraph 77 of Mr Bhullar's affidavit appears to be wrong. Mr Bhullar claimed that this was due to some problem with repairs by Ausfurn and agreed that it was due to an act or omission of Ausfurn and was not the plaintiffs' problem. His assertion that it was relevant to the 10 yearly inspection is not established on the evidence; 14. In my view, the other two major delays alleged were also not established to be caused by any pre-lease defect. In relation to the 29 day delay referred to in paragraph 6.5 (c) of the Furzer Crestani report (CB 3/1129), the wear in the gears seems to have been pointed out to the first defendant well before the breakdown but nothing relevant was done to undertake the repair for several months and then only when the crane broke down: see CB 3/1060; CB 2/605; T182-3; T189-190 especially at T190.40. Causation in relation to the fifteen day delay in paragraph 6.5 (b) of the Furzer Crestani report also was not established; 15. A large number of the items listed in the table used by Mr Bhullar and Furzer Crestani appeared to be linked with items which are not obviously matters which existed as at 1 December 2009 (or could not reasonably have been determined as faulty as at 1 December 2009) and may well have been due to wear and tear through the use by the first defendant. Examples are contactors on the cranes (as mentioned above), fuses, problems with wires and the like. This included many of the matters relied upon by the first defendant in the table relied on by Mr Bhullar; 16. At least two invoices related to the Riverstone premises previously occupied by the first defendant and not the Smithfield premises occupied during 2009-2016: see the invoice at CB 2/483. The invoice at CB 2/561 also appears to relate to Riverstone although it could be an error; 17. A number of the invoices relied upon by Mr Bhullar and Furzer Crestani clearly relate to maintenance or services and not a breakdown. Accordingly, they should not have been used on the assumption of a short breakdown of three days by Furzer Crestani; 18. Some of the invoices related to the provision of a quote only and not the provision of repairs. Again, this could not be related to a breakdown: see CB 2/522-523 and 2/580; and 19. A number of the invoices related to invoices apparently paid for as the result of the 15 May 2012 agreement. The claim for loss of production appears to be seeking the claim twice: see the invoices at CB 2/531, 533, 537, 541, 543, 546 and 548. Some invoices appeared to relate to effectively the same item. See the invoices at CB 2/645 and 648.
60. The numerous matters which I have referred to in the previous paragraph in my view make Mr Bhullar's table at CB 3/964-5 and as used in the Furzer Crestani report as Attachment B, unreliable and not a proper basis for the claims made by the first defendant.
61. In re-examination, Mr Bhullar confirmed that the cranes were used regularly during the day at the Premises. They were used for receiving materials, placing materials on the metalworking machine (which took 2 to 3 hours to process) and then to upload the material from the machine.
62. I have made comments in relation to some aspects of Mr Bhullar's evidence. I consider his evidence in more detail below when I compare it to Mr Hancock's evidence.

Evidence of Mr R Singh

1. The defendants relied on an affidavit of Mr Ranjit Singh sworn 22 September 2016. As indicated above, Mr Singh is the sole director and shareholder of the first defendant and the father of Mr Bhullar. Mr Singh in his capacity as director, signed the Lease dated 13 November 2009 and also signed the Lease as a guarantor.
2. Mr Singh indicates in his affidavit that following the termination of the initial term of the Lease on 30 November 2012, he was aware that Mr Bhullar on behalf of the first defendant and Mr Hancock on behalf of the plaintiffs agreed on terms pursuant to which the first defendant continued to occupy the Premises. Mr Singh indicates that he did not sign any documentation in relation to that agreement and did not give authority to Mr Bhullar to give any guarantee from him.
3. Mr Singh also indicates that he was aware in December 2013 and January 2014 that there were further communications between Mr Bhullar and Mr Hancock in relation to the continuing occupation of the Premises by the first defendant and that the first defendant remained in occupation of the Premises until March 2015. He states that he did not sign any lease or variation of lease documentation on behalf of the first defendant or as guarantor and did not give authority to Mr Bhullar to give a guarantee for him. Mr Singh states that he has never agreed to an extension of the guarantee in respect of the first defendant's continued occupation of the Premises after 30 November 2012.
4. In cross-examination, Mr Singh stated that he worked in the business of the first defendant on the floor as a mechanic/machine operator when the first defendant was in occupation of the Premises.
5. Mr Singh agreed that he recalled discussing the option to renew with his son and also having further discussions in relation to the continuation of the occupation of the Premises in 2013. Mr Singh gave evidence that he was aware of the Continuation of Lease Agreement; however, he said that he did not believe he had seen it before. He agreed that he had discussions with his son in relation to continuing on in the Premises and did not tell his son that he did not want the first defendant to continue on in the Premises or not to sign any documents. Mr Singh said that he recalled having a discussion with his son about continuing on but did not know what the final decision was. He did not recall being told that his son had reached any agreement which had been finalised. He thought that whatever was going on was continuing: T200.3. He said he was content for that to occur.
6. Initially, Mr Singh said that it took two to three years to look for alternative premises for the first defendant to move to in place of their occupation of the Premises: T200.20. When asked when he started looking he somewhat inconsistently said "in 2015" only a relatively short period before the first defendant's vacation of the Premises: T200.33-.46. The fact that the first defendant had been looking for some time for alternative premises makes it less likely that alternative premises could have been found quickly by it if the Continuation of Lease Agreement was not entered into.

Evidence of Ms M R Dogra

1. The defendants relied on an affidavit of Ms Meena Rose Dogra sworn 4 October 2016.
2. Ms Dogra is the de facto partner of Mr Bhullar and was a regular visitor to the Premises between December 2009 until March 2016, including working in an administrative position for the first defendant for a short period at that time.
3. At the request of Mr Bhullar, Ms Dogra became involved in the process of the first defendant vacating the Premises and making good the Premises in March 2016. Ms Dogra gives evidence in her affidavit that she co-ordinated the cleaning of the Premises, painting of the kitchen, tiling of the bathroom, repairs to the fire hose and reel and the removal of rubbish. In her affidavit she indicates: 1. The cleaning of the Premises was mostly performed by AA Better Cleaning Services; 2. The painting of the kitchen, repairs to the fire hose and the tiling of the bathroom were performed by Steves Handyman Services; 3. The rubbish removal was largely performed by Complete Metal Industries.
4. Relevant invoices are annexed to Ms Dogra's affidavit.
5. On 15 March 2016, Ms Dogra met with Mr Hancock at the Premises. Mr Hancock walked around and made notes. At the end of the inspection, he handed to Ms Dogra a list of things relating to the Premises which she can no longer locate.
6. On 21 March 2016, Ms Dogra met with Mr and Mrs Hancock at the Premises and the three of them carried out an inspection of the Premises including working through a list contained in a copy of a letter from Coleman Greig, solicitors, who were the solicitors for the plaintiffs. Ms Dogra states in her affidavit: "We inspected each item on that list and in respect of each item I ticked it off as having been approved by Bob after he had carried out the relevant inspection…". Ms Dogra states that at the completion of the inspection, Mrs Hancock said words the effect that the only thing she was not happy with was the painting in the kitchen.
7. In cross-examination, Ms Dogra gave evidence that the invoice from AA Better Cleaning Services was for both office cleaning and the cleaning of the kitchen, but not for cleaning the factory.
8. Ms Dogra was asked some questions in relation to the invoice from the handyman which was dated 21 March 2016. Ms Dogra said that he had performed some work previously and did other work on the morning of 21 March 2016. She said that she saw Mr and Mrs Hancock at about 10.30 to 11am on that day.
9. Ms Dogra was then asked a number of questions in relation to the Coleman Greig letter which is at CB 3/1078. Ms Dogra stated that this letter was emailed to the first defendant by the plaintiffs' lawyer. Ms Dogra gave evidence that the ticks on the document were made on 21 March 2016 as was most of the writing, except the writing for the last bullet point on the first page relating to the fire related matters and emergency and exit lights and the first bullet point on the second page relating to the high bay lighting which she states was added on 22 March 2016. It was suggested to Ms Dogra that she did not organise the fire safety certificate and she denied that and said she organised someone to undertake the certificate. This should be contrasted with the evidence of Mr Brady. Having regard to the fact that Mr Brady specifically dealt with the Premises and was not cross-examined on this issue, I prefer his evidence as it is likely that he would have recalled the circumstances of creating the certificate.
10. In relation to the high bay lighting note, it was put to Ms Dogra that she did not add that writing on 22 March 2016 and that texts from Mr Hancock show that the high bay lighting was not finalised until 31 March 2016: see CB 1/468-469. Ms Dogra denied this. In my view, the contemporaneous evidence at CB 1/468-469 should be preferred to the current recollections of Ms Dogra on this issue.
11. The main issue between Mr and Mrs Hancock and Ms Dogra was whether Ms Dogra had ticked the items in the Coleman Greig letter in the course of the 21 March 2016 inspection. It may be that the ticks were completed at some stage on 21 March 2016. However, I do not accept Ms Dogra's evidence if it suggests that Mr Hancock had approved each of the matters ticked with the word "done".
12. The overwhelming evidence both from Mr Hancock, Mrs Hancock and the various workers who undertook the cleaning and repairs of the Premises, is that substantial work needed to be done including cleaning, scrubbing and repairs. I think it highly unlikely in the light of that evidence that Mr Hancock and Mrs Hancock would have accepted the existing state of the Premises on the departure of the first defendant. It may be that the ticks indicated that work had been undertaken by tradesmen or cleaners retained by the first defendant. However, I reject the evidence of Ms Dogra if it is sought to be relied on for the purposes of establishing that all the make good works had been undertaken to the satisfaction of Mr Hancock. The contemporaneous evidence clearly establishes that it had not. I think it unlikely that Mr Hancock would have merely accepted the substantial additional expense which the make good work required the plaintiffs to incur.
13. The affidavit of Mr Small sworn 25 November 2016 is inconsistent, for example, with the suggestion by Ms Dogra's tick that the "repair the hole in the roof" had been fixed: see paragraph 7 of Mr Small's affidavit. Similar comments can be made in relation to the fire hose reel. Ms Dogra's note suggests it had been done. This is inconsistent with paragraph 11 of Mr Small's affidavit. Mr Small was not cross-examined in relation to this issue.
14. To the extent there is any inconsistency, I prefer the witnesses on behalf of the plaintiffs to Ms Dogra for the reasons I have given above.

The report from Furzer Crestani

1. The defendants relied upon a report dated 4 October 2016 from Mr Chris Katehos and Ms Leanne Marks from Furzer Crestani. I have already discussed the report briefly above.
2. It seems that the crucial assumption on which the conclusions in the report were based, being the accuracy of Attachment B as representing the crane repairs and maintenance expenses incurred by the first defendant due to the poor condition of the cranes, is not established by the evidence as I have indicated above.
3. In Kyluk Pty Ltd v Chief Executive, Office of Environment and Heritage [2013] NSWCCA 114 the Court of Criminal Appeal, after reviewing the authorities, considered the approach which should be taken to an expert report if factual assumptions made by an expert are not established.
4. In Kyluk Schmidt J stated in [177] as follows: "[177] An expert opinion which meets those requirements need not be excluded if all of the factual bases upon which the opinion is proffered are not established by the expert's own evidence. Even if facts which the expert "assumes" or "accepts" in reaching the opinion expressed are not proved in some other way, then the opinion may still be admissible. That will depend on the nature of those facts and what bearing they have on the opinion. If they provide but a small part of the basis upon which the opinion rests, then the failure to prove those facts may have but little impact, and not render the opinion inadmissible. The failure to prove facts which provide a significant basis for the opinion might, by way of contrast, be such as to render the opinion no longer relevant to a fact in issue, no foundation for the opinion having been established. Such an opinion, even if it were admitted, would be of no value. Where an opinion is admitted, the failure to establish a fact which is not of such significance, may nevertheless have an impact on the weight given to the opinion."
5. McCallum J was of the same view as Schmidt J: see at [138]. At [61] Price J stated that even if an opinion based on an assumed but unproven fact is admissible, the opinion may be given little or no weight if the assumption is not made good by the evidence. See also Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 at [37]; Taub v R [2017] NSWCCA 198 at [18]-[33] per Simpson JA (with whom Button and Walton JJ agreed).
6. In my view, the important assumption made by Furzer Crestani in relation to Attachment B was not established on the evidence for the reasons which I have earlier given. Having regard to the crucial role which Attachment B plays in that report (see paragraphs 6.6 and 9.3 of the report), the loss of income and additional repair cost components in the report are, in my view, not established: see paragraph 3.1. I will consider the consequences of this finding when I consider the Cross-Claim further below.

The expert evidence

1. The parties both relied on expert reports in relation to the cranes. A conclave report was also prepared.

Report of Mr P Spry

1. The plaintiffs relied on an affidavit of Peter Robert Spry sworn 5 December 2016 which attached an expert report dated 2 December 2016. Mr Spry is a mechanical engineer and holds a Bachelor's degree in Engineering from the New South Wales Institute of Technology (now University of Technology, Sydney). He is highly qualified in the design, analysis and investigation of mobile mechanical and materials handling equipment, especially cranes. Mr Spry has an endorsement from the Crane Industry Council of Australia as a crane engineer and is a licensed assessor of cranes.
2. Mr Spry's report is a highly detailed one. It is noted that Mr Spry was not provided with any documents in relation to the condition of the cranes prior to 1 December 2009.
3. Mr Spry expressed the following opinions in his report: 1. Based on his review of the service reports provided to the first defendant by various crane inspection and maintenance subcontractors, a progressive deterioration over the time of the first defendant's occupancy of the Premises of the two cranes was apparent; 2. Mr Spry was unable to make an unequivocal determination of the residual life of the cranes at the beginning of the first defendant's occupancy of the Premises as at 1 December 2009. However, the documents examined by Mr Spry suggested that the cranes were suitable for continued use at the beginning of the Lease; 3. The level of periodic inspection of the cranes during the first defendant's occupancy of the Premises was inadequate and it appeared a significant number of service calls did not address the underlying issues with the deteriorating nature of the cranes, in particular a large number of the recorded service actions appeared to be breakdown callouts suggesting crane availability was the prime reason for the service action as opposed to regular maintenance; 4. The service and inspection records of the first defendant in relation to the cranes examined by Mr Spry were poorly presented with some not being clear; 5. Mr Spry emphasised the importance of periodic inspection of cranes which are specifically intended to identify, record and address issues relating to the cranes. Breakdown services do not do this; 6. Mr Spry assumed a usage of the cranes of 8 to 20 hours per day by BDS. It is noted that this is inconsistent with Mr Bhullar's evidence who suggested that there was one shift of eight hours per day with overtime increasing to 10 to 12 hours on occasions but at least 2 to 3 hours of this time per day the crane was not used; 7. The lack of inspection of the cranes was highly likely to significantly degrade the serviceability and possible safety of the cranes; 8. The documents examined by Mr Spry did not identify the need for a major inspection of the cranes. He indicated that this may represent a deficiency in Demag's review of the cranes. It would appear reasonable that Mr Hancock could have relied on input from Demag to identify any requirements. The statement by Demag that there were "no outstanding repairs as at 20.11.09" was referred to. The replacement of the hoist on the 10 tonne crane in 2007 was noted. Mr Spry noted it would be appropriate practice for a proper evaluation of the crane and an assessment of safety and continued suitability of the crane to be performed by Demag as part of the installation; 9. If the service and inspection work performed prior to the first defendant's occupancy was properly performed it was logical to conclude that the crane at the beginning of the occupancy was fit for service and therefore proper care and maintenance would continue to provide proper service; 10. The recurring theme in relation to the cranes of the replacement of failed wiring and contactors during the occupancy by the first defendant was typical of a crane being operated outside its design duty. Mr Spry said that this tended to support the proposition of high and inappropriate crane usage; 11. Poor maintenance of the crane by the first defendant would have contributed to its poor condition. Further, a significant proportion of wear was likely to have occurred during the first defendant's occupancy and the cranes' condition was exacerbated by inappropriate inspection and maintenance; 12. The first reference to notable wear issues concerning the cranes was on 30 August 2010 some eight months after the first defendant assumed control of the cranes; 13. The history, specific information of usage of the cranes and detailed inspection are generally important. The first two can indicate that a detailed inspection was not necessary. The conclusion of Mr Corazzol that the majority of the wear would have occurred before the first defendant moved into the premises would require considerable information such as crane usage rates, effective regular service, inspection and other relevant historical data up to the time in question; 14. While it was plausible that the cranes had experienced a reasonable amount of wear prior to the first defendant assuming control of the cranes, the wear after the first defendant's occupancy of the premises was clearly very significant. This led to the conclusion that the out of specification wear did not exist prior to 20 November 2009; 15. Mr Spry could find no specific reference to any major inspection being performed in any of the supplied documentation. An inspection 10 years or 25 years from the date of manufacture is not a universal basis for determining the need for a major inspection, major overhauls or strip down inspection of a crane. The need for a major inspection should be based on a clear determination by a competent person after extended use of the crane and therefore used as a basis in determining the operational readiness of the crane; 16. Reference was made to the Demag report which indicated: "no outstanding repairs as at 20.11.09" as an indication of the perceived condition of the crane at that date. The reference to items requiring monitoring would indicate to Mr Spry that the item would not currently prevent safe operation of the crane; 17. Increased deterioration was apparent to the cranes after 1 December 2009 up to 14 May 2012; 18. There was a progressive increase from the documents of the repair work required on both cranes over the period of the Lease. Without specific details of the operation of the cranes in the period, it was difficult to accurately quantify the deterioration; 19. The frequency of inspections/services during the first defendant's occupancy of the Premises was significantly less than required by the relevant applicable Australian Standard. It was apparent that the basis of a significant number of the inspection/service call-outs during the period of the Lease, due to breakdown, do not constitute preventive maintenance.
4. Mr Spry was cross-examined extensively by counsel for the defendants. Mr Spry confirmed that the age of the cranes was not the only relevant factor but the usage of them was more significant. Mr Spry indicated that the term "fit for service" was a generally used term in the crane industry in relation to the ongoing use of a crane.
5. It was put to Mr Spry by counsel for the defendants that the concepts of "fit for service" or "suitability for service" were different to the "condition" of a crane. He disagreed with that but agreed that the condition of the crane was relevant to its fitness for service and that the condition of the crane was a component of whether it was fit for service. He agreed that the condition of a crane encompassed different things to suitability for service. He also agreed that there was a range of parameters in relation to the condition of a crane.
6. Mr Spry was then asked whether fitness for service was different to a crane being in "good condition". He indicated that this depended on the meaning of "good" but that a crane which was in good condition was fit for service. He also stated that to be fit for service a crane must have a minimum condition. Mr Corazzol added at this point in the conclave evidence that the manufacturers' standards would also be relevant to whether a crane was fit for service.
7. Mr Spry was asked to assume that there was no major inspection of the cranes up to 2013. He was asked whether it would be possible for the electrical components to be at the end of life but not be known. He answered that it was possible but that electrical components had been replaced a number of times in the course of the first defendant's use of the cranes. This indicated to him the possibility of usage other than through fair wear and tear. Mr Spry also said that the frequent replacement of wiring and contactors was unlikely to be caused only by age as cranes were designed to operate for extended periods of time. This was in the context of his comment in paragraph 3.4.18 of his report that the frequency of repairs indicated high and inappropriate crane usage. Mr Spry indicated that it was not unknown for crane electricals to last 40 years without being replaced at all and that many cranes of that age were still operating satisfactorily.
8. Mr Spry was then asked whether 10 and 25 year major inspections should occur of a crane.
9. Mr Spry gave evidence that the two components in relation to wear on a crane were frequency of use and the load lifted by the cranes. In relation to frequency, Mr Spry accepted that he had assumed use of between eight and 20 hours per day of the cranes. When asked to assume use of eight to 10 hours with two to three hours of non-use on each day, he accepted that this would reduce the time of usage of the crane. He also accepted that it would moderate his opinions but not necessarily change his conclusion. The usage would not be as heavy but that did not mean that the usage was not heavy. The question of the load would be relevant. As to load, Mr Spry assumed an extensive load because of the movement of thick steel plate used by the first defendant in its steel manufacturing process. He agreed that the load depended on the weight of the steel plate when manufactured and he assumed about a 2 metre length of plate. In his view, the lifting of such thick plate would be pushing the limit of a 10 tonne crane.
10. It was put to Mr Spry that it was desirable on a detailed inspection for parts of the crane to be stripped down and examined. He said that was not necessarily the case and the history of use and the history of maintenance was a better guide when you did not have information. He stated the history of use and the history of maintenance were the first considerations in relation to a crane. Both experts agreed that if a firm had been involved in the history of maintenance of the crane that that would be a relevant factor. Mr Spry said it would depend on the length of time a company had been involved in the maintenance of a crane. Mr Corazzol agreed with this and the manufacturer's recommendations would also be relevant
11. Mr Spry did not necessarily agree that there would be a need to strip down a crane after 25 years and said it would depend on the observations of the crane repairer. He agreed that the mechanical and electrical parts of the crane would be reviewed at 10 years and the electrical and structural parts would be reviewed at 25 years. In relation to the age of the cranes, Mr Spry agreed that the cranes could have been installed in about 1982 but that the hoist for the 10 tonne crane was installed in 2007: see at CB 1/203. Mr Corazzol indicated that he had seen the Demag plate on the five tonne hoist and it indicated it was manufactured in 1975. He was of the view that the 10 tonne crane was from the same era.
12. Mr Spry's report appears to have been prepared following a thorough analysis of the documents and the maintenance service and repair history relating to the cranes. He was extensively cross-examined and appeared to be a knowledgeable and competent expert. The one concern is his assumption in relation to the usage of the cranes. There was no evidence to suggest that the cranes were used between eight and 20 hours per day. Mr Spry said that it would change his views in relation to the time component of the usage of the cranes but would not change his views as to the other aspects of his opinion depending on the loads being used on the cranes.
13. Mr Spry appeared to me to be a cautious and thorough expert both in his report and whilst giving answers in cross-examination.

Report of Mr Paul Corazzol

1. The defendants relied on a report of Mr Paul Corazzol dated 6 June 2016. Mr Corazzol is the New South Wales Operations Manager for Australian Crane Engineering Sydney Pty Ltd, formerly known as Austfurn Sydney Pty Ltd. He was involved in the maintenance and review of the cranes in question in the proceedings. In relation to that matter, he can be distinguished from Mr Spry who had not maintained and repaired the cranes. Mr Corazzol clearly has extensive knowledge and experience in cranes as is clear from his report.
2. Mr Corazzol expressed the following opinions and views in his report: 1. He noted that Austfurn was first commissioned to conduct a routine service inspection of the two cranes in August 2010 and stated that he could not make comment with regard to the working order, condition, maintenance and repairs of the two cranes at the Premises prior to August 2010; 2. The 30 August 2010 reports indicated to him that the two cranes were in a "fair condition" and most likely would have been in the same condition for a long period of time. Inspection reports also noted that there were various issues with the two overhead cranes and that there were items in need of repair. These items were brought to the attention of Mr Bhullar. Over the period of approximately three years, various subsequent reports, quotes and estimates for Mr Bhullar were supplied in relation to the condition of the two cranes; 3. Some repairs were carried out to the two cranes after the agreement between Mr Bhullar and Mr Hancock in 2012. Mr Corazzol noted that predominantly, the repairs needed were observed to be the result of many previous years of normal usage and subsequent wear. Mr Corazzol expresses the opinion that the majority of the wear would have occurred before the first defendant moved into the Premises and started to operate the two overhead cranes; 4. Mr Corazzol has not found on the two cranes or been supplied any evidence of the actual crane classification. He expressed the opinion that the cranes would most likely be in the Class 4 range, which is defined as moderate being cranes that hoist the rated capacity fairly frequently and normally with light loads; 5. From Mr Corazzol's inspection on 7 March 2016 and his review of previous reports, there were still many repair items that were outstanding and required attention; 6. Austfurn were called out to attend breakdowns and to conduct repairs to the cranes on a number of occasions whilst the first defendant was in occupation of the building. Some of those issues meant the cranes were unusable; 7. Mr Corazzol referred to the Australian Standards that indicated where the design life of a crane was unknown, the assessment of the suitability for continued use of the crane should be carried out at ten-year intervals for the mechanical components and at 25 year intervals for the structure. He noted that both inspections were well over due when the first defendant moved into the Premises.
3. Mr Corazzol annexes to his report detailed crane inspection reports for both cranes prepared in March 2016.
4. Mr Corazzol is clearly a very experienced crane repairer and maintainer. He was effectively trained on-the-job and by attending many courses and training days in relation to crane management. He does not have, it appears, tertiary mechanical engineering qualifications as does Mr Spry.
5. Mr Corazzol's report is far briefer and more limited than Mr Spry's. It is not as closely reasoned. He was also not subjected to extensive cross-examination. The few answers he gave in cross-examination or in his oral evidence appeared to indicate that he was very knowledgeable in relation to cranes.

The conclave report

1. A conclave report was prepared by both experts and is dated 12 April 2017. It is stated to be based on the two reports of Mr Corazzol and Mr Spry, a conclave meeting held on 21 February 2017 and subsequent discussion between the two experts.
2. The conclave report is significant as in my opinion Mr Corazzol altered a number of the views he expressed in his report. The conclave report first considered the initial contention in the Corazzol report that the majority of wear to the cranes occurred before the first defendant moved into the Premises on 1 December 2009. This was to be seen in the context of the earlier statement in Mr Corazzol's report that he could not comment with regard to the working order, condition, maintenance and repairs of the two cranes at the Premises previous to August 2010 and his assessment of the cranes as being in a "fair condition" as at that date.
3. It was agreed by both experts that the documents referred to by them indicated wear on the cranes but did not indicate what proportion of the allowable wear had been consumed and what proportion was attributable to the first defendant's usage or otherwise of the cranes. The experts agreed that the pre-lease inspection by Demag of both cranes, if properly performed, would indicate that "out of specification" wear did not exist prior to 20 November 2009. The experts also agreed that both cranes did appear to be "fit for service" at the time of the beginning of the first defendant's lease and that no "out of specification" wear was noted as present. Mr Corazzol noted that the unknown quality was the Demag inspections. However, he did not challenge the view that a properly performed pre-lease inspection should indicate that there was no "out of specification" wear. Neither expert could indicate the percentage of allowable wear on the cranes at the beginning of the Lease. Mr Corazzol also agreed that the cranes were deemed "fit for service" at the time of the first inspection until the next inspection. Mr Corazzol also made the comment that the crane electricals were original and the structure had some paintwork deterioration when he first examined it but stated that these did not of themselves indicate the cranes were not fit for purpose.
4. The agreement between the experts in the conclave report on this issue is in my view significant. There is no reason to assume that the Demag inspections in October 2009 and the subsequent repairs made in November 2009 were not properly undertaken. There was no evidence or suggestion that Demag was not an expert in relation to cranes. Accordingly, the cranes appeared fit for service of the time of the beginning of the Lease and the cranes were not to be regarded as "out of specification" following the November 2009 repairs.
5. In relation to the crane class, the experts agreed that the class of crane had not been clearly identified at any stage. Mr Corazzol clarified that his assessment that the cranes were C4 classification was a "reasonable guess". Both experts agreed that the C4 classification was common for cranes in similar installations and this could be taken as a reasonable guess, although further information could challenge the assumption.
6. Mr Corazzol confirmed that he could not unequivocally determine the condition of the cranes prior to the Lease commencing as the first inspections were undertaken by Austfurn in 2010. The experts agreed that based on the information provided, there was no information indicating that both cranes were not "fit for service" on or about 1 December 2009. Mr Corazzol also indicated that on the first inspection in 2010, the cranes were considered by Austfurn to be "fit for service" at that date.
7. As to the state of the cranes during the Lease, Mr Corazzol indicated that there were numerous occasions when regular inspections were "put-off" by Mr Bhullar. Mr Corazzol stated that the condition of the cranes on 30 March 2012 (28 months after the possession of the Premises by the first defendant), indicated significant wear. Both experts agreed that at the times the cranes were inspected and passed that the cranes must be assumed "fit for service" and hence serviceable. If any items were identified as requiring attention, they must also be assumed as serviceable unless a specific notation was made by the crane maintainer that the relevant crane should not be used until the item was rectified. The state of a crane must be considered serviceable, according to the experts, at least until the next required inspection. Mr Corazzol agreed that the assumed required inspections were not being performed during the majority of the time that Austfurn was involved with the inspections.
8. The experts agreed that the requirements of the applicable Australian Standard should have been met as part of the obligations of the first defendant. It was also agreed that inspections/maintenance should have occurred at least every 12 weeks and periodical inspections at least every 24 weeks. Depending on the usage in the crane classification, both experts are of the view that probably these should have occurred more frequently.
9. In relation to maintenance, Mr Corazzol agreed that repair items occurred on a number of inspection reports without being repaired and that had they been fixed when first identified, would not have been needed to be re-identified in subsequent reports. It was also stated by the experts that the minimum requirement for an actual inspection and maintenance was not met and that wear related breakdowns would have been minimised by early intervention, normally occurring during routine inspection and maintenance. Mr Spry indicated that mechanical and structural items tend to show wear and deterioration from usage and when inspected at appropriate intervals, breakdowns and in-service failure tends to be minimised. Mr Corazzol did not disagree with that conclusion.
10. The experts agreed that whilst it was clear that earlier attention to identified items would have notably reduced the occurrence of breakdowns and faults, there was no agreement as to who was responsible for carrying out the work. The experts also agreed that there were a number of repairs invoiced to the first defendant that were a result of maintenance occurring less frequently than required by the use of the two cranes. A review of the frequency of callouts was undertaken and it was concluded that there were a significant number around the middle and the end of the Lease period, particularly the very end of the Lease, indicating a lower degree of maintenance.
11. The experts also discussed the relevance of any requirement to upgrade a crane when later standards have been gazetted. They agreed that it was not a specific requirement to bring older cranes up to the latest standard unless the requirement was a safety standard.
12. In my view, the conclave report opinions support the position of the plaintiffs in these proceedings. The experts are of the view that the cranes were "fit for service" as at the commencement of the Lease and the degree of wear at that time could not be determined. Mr Corazzol also agreed that upon first inspection in 2010, although repairs were recommended, the cranes were also fit for service. Criticisms in relation to the maintenance of the first defendant were noted, particularly that Mr Bhullar put off some regular maintenance and recommended repairs.
13. The conclave report in my view indicated that Mr Corazzol agreed with a number of the conclusions of Mr Spry. The conclusion I reach from the experts' reports is that the cranes were fit for service as at 1 December 2009 and that the degree of wear at that date was uncertain. The first time that Austfurn examined the cranes was not until August 2010, some nine months later. At that time the cranes were also regarded by the experts as fit for service.

Credit and reliability of the evidence of Mr Hancock and Mr Bhullar

1. As indicated above, there are substantial differences in the evidence of Mr Hancock and Mr Bhullar in relation to a number of crucial conversations and meetings. Many aspects of Mr Bhullar's affidavit have been denied by Mr Hancock. Mr Bhullar has also frequently denied Mr Hancock's accounts of meetings and telephone conversations.
2. The court is faced with the need to make a decision between the two witnesses and their different versions of the events. I have already indicated aspects of Mr Bhullar's affidavit which I have rejected or have concerns about. The parties have made various submissions on credit issues which I have taken into account in reaching my conclusions and findings: see for example the defendant's submissions dated 1 December 2017, paragraphs 6-12.
3. Having carefully considered the submissions made by the parties and the evidence, I am of the view that I should prefer the evidence where inconsistent, of Mr Hancock to that of Mr Bhullar.
4. First, although Mr Hancock was cross-examined for a much shorter period than Mr Bhullar, I found him overall to be a more impressive witness. He gave his evidence openly and directly and made concessions when appropriate. I formed the opinion that he had a better recollection of events than did Mr Bhullar.
5. Secondly, many of the matters relied upon by Mr Bhullar in his affidavit were alleged comments or agreements or concessions made by Mr Hancock in telephone conversations or meetings between Mr Bhullar and Mr Hancock. A number of those conversations occurred many years ago and also a number of years prior to the preparation of Mr Bhullar's affidavit. It seems surprising to me that Mr Bhullar could have such a good recollection as he apparently asserts, of these important conversations and agreements after the passage of that period of time.
6. Thirdly, the evidence before me shows that Mr Bhullar was an extensive user of email. In my view, it is likely that if additional agreements or promises by Mr Hancock had occurred, that Mr Bhullar would have been prompt in recording these in emails. Mr Bhullar did not appear to hesitate to assert a position or take a point when it assisted him and the first defendant. In my view, it is unlikely that Mr Bhullar would not have recorded in an email or in correspondence to Mr Hancock matters allegedly agreed outside formal correspondence or formal documentation.
7. Fourthly, there were a number of aspects of Mr Bhullar's evidence that raised real concerns for me about his reliability as a witness. I note the following matters: 1. In paragraph 18 of his affidavit, Mr Bhullar stated that he did not receive any report from Demag or otherwise prior to the first defendant taking possession of the Premises. The paragraph makes no distinction between a "full condition report" and any other type of report. Mr Hancock denies this in his third affidavit. During cross-examination, Mr Bhullar was asked when he received the documents at CB 3/850-853 which are the Service Job document and the Periodical Service Reports dated 22 October 2009 and 10 November 2009 prepared by Demag in relation to the two cranes. Mr Bhullar stated that he was not sure when they were provided but said: "I think probably close to the time when we signed the lease": T88.4. The Lease was dated 13 November 2009. The document at CB 3/850 is dated 20 November 2009 in handwriting but Mr Bhullar's answer seems to concede that the documents were probably provided prior to the first defendant taking possession of the Premises. Mr Bhullar's oral evidence is thus inconsistent with paragraph 18 of his affidavit; 2. In paragraph 22 of his affidavit, Mr Bhullar states that immediately upon the first defendant moving into the Premises it became apparent to him that neither crane was in proper working order. This is reinforced by Mr Bhullar in paragraphs 23-28 of his affidavit. This should be compared to Mr Bhullar's email to Mr Hancock sent on 14 January 2010 where he stated that: "But anyway cranes are fine and I don't think there is any need to make them come to the site…". In paragraph 26 of his affidavit Mr Bhullar seeks to explain away the email. However, it appears to me to be clear that at that stage at least, Mr Bhullar thought that the cranes were operating satisfactorily. I reject Mr Bhullar's attempts to limit what he intended in the email in question; 3. In paragraph 31 of his affidavit, Mr Bhullar asserts that he had a conversation with Mr Hancock which included a discussion about Clause 11 of the Lease. In cross-examination, Mr Bhullar was much less certain about this conversation and showed a poor recollection of it. In particular, he said that he was not sure if he referred to Clause 11 or not in the relevant conversation, contrary to his affidavit: see T107.25-T108.6, especially at T108.5. 4. In paragraphs 27, 30, 34, 36 and 38 of his affidavit, Mr Bhullar makes reference to condition reports in relation to the cranes and the need for certification in accordance with the Australian Standards. In paragraph 36, Mr Bhullar refers to the Austfurn technician referring to a 10 year certification of the cranes. This was allegedly at a meeting on 15 May 2012 attended by Mr Hancock and the Austfurn technician. Despite the alleged significance of the 10 year certification to Mr Bhullar, the first reference to a 10 year crane inspection report by him was on 10 December 2012 in an email to Mr Hancock: CB 3/878. I think it likely that if this issue had been raised earlier as Mr Bhullar asserts, it would have been specifically referred to and confirmed by Mr Bhullar in an email. I accordingly reject Mr Bhullar's account of the 15 May 2012 meeting which was denied by Mr Hancock in his affidavit; 5. In paragraph 75 of his affidavit, Mr Bhullar states as follows: "I have prepared a document which sets out the dates upon which Bhullar Steel made payments in respect of those service reports, a copy of which is at Tab 47." This relates to the preparation of the document which is exhibited to his affidavit at CB 3/964. In his oral evidence, Mr Bhullar said that he did not personally prepare the schedule at CB 3/964-965: T174.47-T175.4. This shows that his affidavit is wrong in this regard; 1. The cross-examination of Mr Bhullar from T143 and following of the transcript in relation to the document at CB 3/964-965 shows numerous errors in the document. This reflects poorly on Mr Bhullar's reliability as a witness as paragraphs 75-76 of his affidavit clearly suggest that the problems with the cranes were due to the original condition of them when the first defendant took possession of the Premises as opposed to the use of them by the first defendant; 2. In paragraph 77 of his affidavit, Mr Bhullar refers to an alleged conversation with a Demag officer which as a result meant that the first defendant was unable to operate the five tonne crane to full capacity again during its occupation of the Premises. In cross-examination, Mr Bhullar effectively accepted that a conversation to the effect set out in paragraph 77 of his affidavit did not occur and that Demag could have fixed the five tonne crane on 27 or 28 August 2015 but Mr Bhullar said not to proceed to do so: T188.24-T189.10. 3. In paragraph 50 of his affidavit, Mr Bhullar states that he was reluctant to commit to a new lease "because of outstanding certifications and repairs to the cranes" and also "numerous and frequent breakdowns of the cranes which led to considerable downtime". This should be compared to Mr Bhullar's emails dated 7 January 2013 and 15 January 2013 at CB 1/167-8. In these emails, Mr Bhullar does not refer to the cranes as being a reason for not renewing the Lease but rather the state of the market for the first defendant. In the 15 January 2013 email Mr Bhullar states: "Market is very bad, I can't commit to more than I have previous put forward to you … I really can't commit, market is too weak and we don't have much going." The 7 January 2013 email includes: "I have discussed with my father and looking at the market, we can continue the lease till June with either party to terminate the lease with three months' notice from the end of the month. If the market picks up then we will be able to extend the lease for longer duration after June … Basically Bob we don't want to over commit ourselves." The reasons Mr Bhullar gave at the time in these emails were not connected to those referred to in paragraph 50 of his affidavit. In my view, the contemporaneous emails are much more likely to be correct and I reject the reasons set out in paragraph 50 of Mr Bhullar's affidavits as being the reasons for not renewing the Lease; 4. In paragraph 95-48(d) of his affidavit Mr Bhullar suggests that Five Star Extinguisher Services were not refused access to the Premises by the first defendant but were refused access by the plaintiffs. This should be compared to Mr Brady's affidavit where he denies that he was refused access to the premises by the plaintiffs. I prefer Mr Bradley's evidence on this issue as he is an independent witness; 5. In paragraph 95-48(d), Mr Bhullar also suggests that Five Star Extinguisher Services had been to the Premises regularly throughout the first defendant's tenancy as Bhullar Steel used them to carry out the required fire safety inspections and to carry out repairs as necessary. Mr Brady, who was an independent witness and who was not cross-examined on his affidavit, says that he ceased attending the Premises because of difficulties in securing payment from the first defendant. This is directly contrary to Mr Bhullar's evidence. I prefer Mr Brady's evidence as he was not cross-examined in relation to it.
8. The above matters raise real issues in relation to the reliability and accuracy of Mr Bhullar's evidence.
9. Having assessed both Mr Hancock and Mr Bhullar giving oral evidence and having regard to the matters which I have set out above, I prefer Mr Hancock's evidence where it is inconsistent with Mr Bhullar's evidence. Mr Hancock's evidence seemed to be often supported by contemporaneous documents particularly emails and I prefer him overall as a more reliable witness.

Consideration of the various issues

1. The first issues to be determined relate to those pleaded by the plaintiffs in the Amended Statement of Claim. 1. What is the amount of any outstanding rent? 2. What was the status of the tenancy between the plaintiffs and the defendant after 30 November 2012? 3. Did the guarantee given by the second defendant contained in the Lease survive the termination of the Lease by the effluxion of time on 30 November 2012? 4. What were the maintenance and make good obligations of the first defendant? 5. Did the first defendant breach those maintenance and make good obligations? 6. What damages should be awarded to the plaintiffs?
2. Numerous issues are also raised in the Cross-Claim which has been filed by the defendant: 1. Did the plaintiffs/cross-defendants commission a report on the cranes from an independent crane engineer concerning the working of those cranes within Clause 11 of the Lease? 2. Were the cranes in good working order at the commencement date of the Lease on 1 December 2009? 3. Did the plaintiffs/cross-defendants engage in misleading or deceptive conduct about the state of the cranes as being in good working order? 4. Did the Continuation of Lease Agreement contain oral terms, and if so, what were those terms? 5. Did the plaintiffs/cross-defendants engage in misleading or deceptive conduct in representing that the 10 tonne crane was less than 10 years old and did not require recertification? 6. Causation and damages issues.

What is the amount of any outstanding rent?

1. In paragraph 15 of his affidavit sworn 23 March 2016, Mr Hancock states that the defendants have failed and/or refused to pay the sum of $98,946.98 in rent owed to the plaintiffs. He annexes a schedule at CB 1/90 indicating how that amount was arrived at. See also paragraphs 9-12 of the Amended Statement of Claim.
2. In paragraph 6 of the Amended Defence to the Amended Statement of Claim filed 16 June 2016, a defence is set out to certain of the payments of rent said to be outstanding in paragraph 9 of the Amended Statement of Claim.
3. The dispute between the parties seems to turn on the rental obligations applying under the Continuation of Lease Agreement. The plaintiffs have sought $17,565.43 in rent for the months of January, February and March 2016 whereas the defendants point to the amount specified for January to March 2015 (GST exclusive) in the Continuation of Lease Agreement: defendants' 21 December 2017 submissions paragraphs 3-4. It appears that the plaintiffs have increased the amount of the rent by 4% relying on Clause 10 (c) of the Lease which they regard as applying by virtue of the provisions of the Continuation of Lease Agreement: see submissions dated 1 February 2018 paragraph 1. It seems from the Continuation of Lease Agreement that the parties thought their legal relationship would not extend past 30 March 2015.
4. In my view, the submissions of the defendants should be preferred on this issue as to the correct amount. There is nothing in the Continuation of Lease Agreement to establish that there could be any rental uplift factor from April 2015. The document refers to a rate from January 2015 and there is nothing to suggest that this should alter if the arrangement continued past March 2015. Clause 10 (c) applies during the term of the Lease and for any renewal: see also Article 3.02. The rate in Article 9.03 (105%) applies during any holding over. In my view, in the absence of any relevant evidence, the monthly rate set out in the Continuation of Lease Agreement for January to March 2015 plus GST should be used for the period from January to March 2016. The parties should check the rental calculations in accordance with this finding.

What was the status of the tenancy between the plaintiffs and the first defendant after 30 November 2012?

1. The Lease between the parties included an option to renew for a period of three years commencing 1 December 2012. Under Article 13 of the Lease, the option existed provided the lessee gave the lessor not less than three calendar months' notice in writing nor more than six calendar months' notice in writing, prior to the expiration of the current lease term: CB 1/44 and 1/73.
2. There were discussions between the parties' representatives in relation to the possibility of the first defendant exercising the option to renew under the Lease. However, in the end, the option was not exercised by the first defendant: see the correspondence at CB 1/167-174.
3. Accordingly, on the whole of the evidence the first defendant in my view held over as a monthly tenant at the expiry of the Lease term. This amounted in law to a new common law tenancy at will. See the discussion in Chan v Cresden (1989) 168 CLR 242 at 248-249. Article 9.03 of the Lease provided as follows: "9.03: Should the Lessee continue to occupy the demised premises after the expiration or sooner determination of the term of the Lease with the consent of the Lessor the Lessee will become a monthly tenant only of the Lessor at a monthly rental equivalent to a monthly proportion of 105% of the total annual rental and other moneys payable by the Lessee hereunder at the expiration or sooner determination of such term (as adjusted pursuant to the provisions of the Lease) payable monthly in advance and otherwise on the same terms and conditions mutatis mutandis as those herein contained so far as applicable, such tenancy being determinable at the will of either the Lessor or the Lessee by one (1) month's notice in writing expiring at any time": see CB 1/67.
4. The plaintiffs submit that the first defendant held over from 1 December 2012 with the consent of the plaintiffs pursuant to Article 9.03 of the Lease and that this did not amount to a new lease but a continuation of occupation under the existing Lease: see also the submissions dated 1 February 2018 at [2]-[5] especially at [4]. The defendants submit that the holding over was not under the existing Lease but pursuant to a new tenancy: paragraphs 12-13 of the plaintiffs' submissions dated 1 December 2017; paragraphs 5-10 of the defendants' submissions dated 17 December 2017.
5. In my view, the defendants' submissions should be preferred on this point. The legal relationship between the parties from 1 December 2012 was not under the Lease which had expired but was under a common law tenancy at will on a month to month basis as contemplated by Article 9.03 of the Lease. From January 2014, the holding over under the tenancy at will ended. The legal relationship between the parties was then determined by a new unregistered lease under the Continuation of Lease Agreement. It could not create a formal leasehold interest under the Real Property Act as it was not registered under that Act. There is some suggestion from the correspondence that there may have been an agreement to vary the notice period operative during the holding over to 3 months: CB 1/167; and CB 1/184-185. However, it is unnecessary to determine this issue because of subsequent events.
6. There was then substantial correspondence between the parties and a number of meetings between Mr Hancock and Mr Bhullar to advance the terms on which the first defendant would remain in the Premises: CB 1/180-185. These emails are all sent with the subject "continuation of lease". The question is whether, as a matter of law, what was agreed between the parties amounted to a continuation of the existing Lease, a variation of that Lease or the creation of a new lease.
7. In due course, the Continuation of Lease Agreement was executed by Mr Hancock on behalf of the plaintiffs and Mr Bhullar on behalf of the first defendant: CB 1/186. The title to this document suggests a "continuation" of the existing Lease. The document itself says that its purpose is to document a verbal agreement between the parties "to extend the existing Lease number AF131465T dated 11 November 2009 for a further period" with a number of variations to the Lease.
8. In their submissions in chief, the plaintiffs submit: 1. The Lease has simply been extended by the parties, initially on a holding over for month-to-month and finally pursuant to the Continuation of Lease Agreement; 2. It was the objective intention of both parties that apart from the three months' notice to quit period, nothing changed in the terms and conditions of the Lease; 3. The new arrangement is not limited simply to the seven items set out in the Continuation of Lease Agreement but rather that, where not inconsistent, the existing terms and conditions of the Lease applied to the arrangement between them; and 4. There was no second Lease: cf plaintiffs' written submissions in reply dated 1 February 2018 at paragraphs 21-23.
9. The defendants submit that the Continuation of Lease Agreement amounted to a new second lease and that the existing Lease did not continue and was not varied despite the reference in the 15 January 2014 document.
10. The first issue is whether Mr Bhullar had authority to enter into the Continuation of Lease Agreement on behalf of the first defendant. This does not appear to be in issue in the proceedings. In any case, the evidence of Mr Bhullar and Mr Singh, including their oral evidence, establishes in my view that Mr Bhullar had actual or at least ostensible authority to enter into the Continuation of Lease Agreement on behalf of the first defendant. See Mr Singh's oral evidence at T199.39-.41 and T200.1-.27. Mr Singh remained working at the Premises and was aware that the first defendant continued to occupy the Premises. Although Mr Singh claims not to have seen the Continuation of Lease Agreement (T199.19), in my view the first defendant is bound by that document. Mr Singh, the directing mind and will of the first defendant (T197.47), seemed to give actual authority to Mr Bhullar on behalf of the first defendant to sign a lease document. Mr Singh: 1. Was aware that Mr Bhullar was having negotiations in relation to a continuation of occupation of the Premises by the first defendant with Mr Hancock: T199.41; 2. Permitted Mr Bhullar to undertake those negotiations; 3. Did not limit his authority to do so: T199.27; 4. Discussed with his son about continuing on in the Premises: T199.24.
11. In relation to ostensible authority, it should be noted that: 1. Mr Bhullar was appointed by the first defendant with the title of General Manager; 2. Mr Bhullar conducted the negotiations on behalf of the first defendant in relation to the original Lease: plaintiffs' supplementary written submissions dated 6 December 2017 paragraph 24A; 3. Mr Bhullar had, to Mr Singh's knowledge, conducted all negotiations on behalf of the first defendant with the plaintiffs in the period 1 December 2009 to early 2014; 4. On no occasions did Mr Singh relevantly countermand Mr Bhullar's decisions or actions in relation to the first defendant in his dealings with Mr Hancock or suggest any limitations to Mr Hancock; 5. On no occasions did Mr Singh question the basis on which the first defendant was remaining in the Premises after the expiry of the term of the Lease; 6. Mr Singh attended a meeting with Mr Bhullar and Mr Hancock on 15 August 2015. There is no suggestion Mr Singh expressed to Mr Hancock any limitation on Mr Bhullar's authority about lease issues concerning the first defendant; 7. This amounts in my view to the first defendant through Mr Singh holding out to the plaintiffs that Mr Bhullar had authority to negotiate further lease terms with the plaintiffs on behalf of the first defendant: see Crabtree Vickers Pty Ltd v Australian Direct Mail & Addressing Co Pty Ltd (1975) 133 CLR 72 at 80; Williams Group Australia Pty Ltd v Crocker [2016] NSWCA 265 at [64]-[65]. Therefore, Mr Bhullar had ostensible authority to execute the Continuation of Lease Agreement.
12. The next question is whether the Lease was varied and it continued, as the plaintiffs assert, or whether there was a new lease, as the defendants assert. There is then a question as to what were the terms of that new arrangement.
13. In my view, on the evidence there was a new lease between the parties which was never registered under the Real Property Act. I accept the defendants' written submissions on this issue. The Lease entered into in 2009 had ended as its term had expired. The holding over created a tenancy at will on a month to month basis. The Continuation of Lease Agreement created a new lease. There was no variation of the existing Lease in December 2013/January 2014 as it had expired although there was a holding over on a month to month basis as contemplated in Article 9.03.
14. However, an issue arises as to the terms of the new lease and in particular, whether it incorporated impliedly or by reference some of the terms of the original Lease which had expired. In my view, on its proper analysis, the Continuation of Lease Agreement created a new lease on the same terms and conditions as the existing Lease, where those terms were appropriate, but subject to the changes set out in writing in the Continuation of Lease Agreement letter at CB 1/79-80: 1. The term of the original Lease had expired on 30 November 2012. The first defendant had not exercised its option to renew; 2. As found above, the first defendant continued in occupation of the Premises pursuant to the holding over provisions in Article 9.03 of the Lease. This created a tenancy at will determinable on one months' notice (or possibly three months' notice); 3. The parties then negotiated the terms of the future arrangements between them; 4. The Continuation of Lease Agreement letter refers to extending the existing Lease not to varying the existing Lease. In my view, having regard to the fact that the holding over term was being utilised by the first defendant with the plaintiffs' consent (creating a tenancy at will), this effectively amounts to an objective intention of the parties to create a new lease but upon the same terms, where appropriate, of the existing Lease as varied in the Continuation of Lease Agreement; 5. The fact the agreement was on the same terms, where appropriate, is in my view established by the Continuation of Lease Agreement read in its context including the correspondence between the parties; 6. These include Mr Hancock's email dated 15 January 2014: CB 1/180; and the two emails between Mr Hancock and Mr Bhullar of 22 January 2014: CB 1/180; 7. In my view, it is inconsistent with the correspondence between the parties and their conduct, for the arrangement between them simply to be the terms set out expressly in the Continuation of Lease Agreement. In particular, there is no suggestion between the parties in their correspondence that provisions such as the make good obligations would not continue to apply to the new agreement. Such an arrangement would be highly unlikely and one would expect express reference to this to exist in the correspondence if that was the parties' objective intentions. Otherwise, the first defendant could leave the Premises in a damaged and dirty state with large amounts of disused materials remaining and the plaintiffs would have no remedy. This conclusion is supported in my view by the reference in the Continuation of Lease Agreement to the desire of the parties to "extend the existing lease number AF131465T".
15. The plaintiffs submit in their 1 December 2017 written submissions that the "make good" obligations do not change because the Continuation of Lease Agreement makes clear that the parties intended that the relevant terms and conditions that applied to the existing Lease were to continue to apply. I take that submission to include an argument that even if a second lease was created, the maintenance and make good obligations under the Lease were incorporated into the new lease by reference: see paragraph 19 of the plaintiffs' reply submissions dated 1 February 2018. I accept such a submission for the reasons I have set out above. In my view, it is completely consistent with the Continuation of Lease Agreement and is confirmed by the correspondence between the parties.
16. I reject the submission of the first defendant that any new lease did not incorporate the terms and conditions, where appropriate, of the existing Lease, as that appears to be inconsistent with the Continuation of Lease Agreement, the correspondence and the conduct of the parties: see the defendants' 17 December 2017 submissions at paragraphs 30-37.
17. In their written submissions dated 17 December 2017, the defendants provide complex reasons following a close analysis of the Lease provisions, why they submit that the make good obligations in the Lease do not apply to any second lease. See paragraphs 35-37. In my view, reading the Continuation of Lease Agreement in a practical and commercially common sense way, the parties intended those obligations in the Lease to be incorporated into the second lease and to apply to the first defendant.
18. First, they are not inconsistent with the express terms of the Continuation of Lease Agreement. Secondly, they give practical content to the reference in the Continuation of Lease Agreement to "extend the existing lease." Thirdly, they recognise that the first defendant had been in continuous occupation of the Premises since 2009 and had a right of exclusive possession. Fourthly, it is inconceivable in my view that the parties objectively intended the maintenance and make good obligations to cease. This would have been commercially nonsensical - the plaintiffs would have been giving up valuable rights. I do not read Article 7.02 of the Lease by its reference to "at the expiration or sooner determination of the Lease" as leading to a contrary conclusion. Fifthly, I do not accept that any obligation would be fixed on the condition of the Premises as at 1 December 2012 or December 2013 as submitted by the defendants. That would render any holding over arrangement commercially unattractive to the plaintiffs and unlikely to have been intended by the parties.
19. I will consider the position if I am wrong on this point and the condition of the Premises which is relevant is as at 1 December 2012 or December 2013/January 2014. As at January 2014 the first defendant had been in possession of the Premises for several years (and at the earlier date for three years). The plaintiffs could lead no evidence on the state of the Premises at these times as they had given exclusive possession to the first defendant in 2009. It was a matter which was peculiarly within the knowledge of the first defendant. However, in my view I should not assume that the first defendant had been breaching the Lease by not maintaining and cleaning the Premises in accordance with its obligations under Articles 7.01 and 7.02. Accordingly, I am entitled to assume that the Lease terms were being complied with on these matters and the condition to be compared is that which assumes the Lease terms had been complied with to the state of the Premises when the first defendant gave up possession of the Premises to the plaintiffs in 2016.

Did the guarantee contained in the Lease given by the second defendant survive the termination of the Lease by the effluxion of time on 30 November 2012?

1. An issue to be determined is whether the second defendant Mr Singh remained liable pursuant to the guarantee he gave under the Lease for the legal obligations under the Continuation of Lease Agreement. The plaintiffs submit that he does. The defendants submit that he does not.
2. The terms of the guarantee given by the second defendant in Article 12 of the original Lease do not, in my opinion, make the second defendant liable for anything agreed under the Continuation of Lease Agreement. The legal obligations under the Lease had expired. I accept the defendants' written submissions in paragraphs 17-22 of the defendants' 17 December 2017 written submissions. Article 12(i) refers to a guarantee of the obligations of the first defendant "herein contained or implied and on the part of the Lessee to be performed, observed and fulfilled." The Article also makes clear the guarantee applies in relation to any option period: Article 12(v). It makes no reference to any other later lease, whether legal or equitable. See also the analysis in Chan v Cresdor, above, at 249-250.
3. The plaintiffs relied on Article 12 (vii) which states that the guarantee is to continue in full force and effect notwithstanding the early termination or expiry of the term of the Lease: see submissions dated 1 February 2018 at paragraphs 11-13. This submission should be rejected. In my view, Article 12(vii) merely preserves rights which have accrued against the guarantor under the guarantee following the expiry of the term of the Lease. For example, if the tenant had not paid the rent for the penultimate month of the Lease the landlord could recover it from the guarantor under the guarantee even though the Lease term had expired.
4. The plaintiffs relied on Article 12(iv) of the Lease, however this in my view only relates to obligations under the Lease itself.
5. The plaintiffs relied on Article 12(xii) of the Lease which provides that the guarantor acknowledges his/her obligation to the lessor to guarantee any renewal of the Lease. It is said that the January 2013 agreement about the notice period and the Continuation of Lease Agreement amount to "renewals" of the Lease within Article 12(xii): submissions dated 1 February 2018 paragraphs 24-30. In my view, this submission should be rejected. Article 12(xii) of the Lease was in my view clearly aimed at the renewal of lease contemplated in Clause 5 of the Reference Schedule and Article 13 of the Lease under the option granted not further agreements some time later between the parties. I do not see Pozetu Pty Ltd v Alexander James Pty Ltd [2016] NSWCA 208 which was relied on by the plaintiffs as assisting them as the terms of the lease considered there were very different.
6. It is also to be noted that the second defendant did not sign the Continuation of Lease Agreement. The Agreement was only purported to be signed by Mr Bhullar on behalf of the first defendant: CB 1/80. He did not purport on the face of the document to sign it also on behalf of the second defendant as guarantor. I do not accept the substance of the plaintiffs' submissions at paragraphs 42-48 of their 1 February 2018 reply written submissions. The evidence did not establish in my view that Mr Bhullar had ostensible authority on behalf of the second defendant to make him liable under the guarantee obligations in the Lease for the matters contained in the Continuation of Lease Agreement.
7. As I have found that the arrangement under the Continuation of Lease Agreement constituted a new lease, in my opinion the guarantee provided by the second defendant under the existing Lease did not continue to apply to him under the new lease. The existing Lease had expired.
8. If I am wrong in my conclusion that there was a new lease as opposed to a variation of the existing Lease, then the position of the second defendant needs to be considered under the guarantee.
9. I take into account the written submissions of the plaintiffs dated 1 December 2017 at paragraphs 33-36 and 41-59. I also take into account the plaintiffs' reply submissions dated 1 February 2018 at paragraphs 36-41. In my view, as stated above, there is no evidence that the second defendant gave authority to Mr Bhullar to agree to a continuation of the second defendant's guarantee under the Continuation of Lease Agreement or the variation to the existing Lease. Mr Singh in his affidavit sworn 22 September 2016, states that he did not give authority to his son Michael to give a guarantee from him after the termination of the Lease on 30 November 2012. I accept that evidence and there is nothing in the conduct of Mr Singh to infer that he gave any authority or that Mr Bhullar purported to exercise any authority to bind him.
10. Further, in my view, the Continuation of Lease Agreement involved a substantial alteration of the parties' existing rights at that stage which had the effect of altering the guarantor's rights and liabilities and discharging the second defendant on the alternative scenario from liability under the existing guarantee: see Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; (1987) 162 CLR 549 at [15]-[19]; Farrow Mortgage Services Pty Ltd (in liquidation) v Slade and Nelson (1996) 38 NSWLR 636 at 637; Barecall Pty Ltd v Hoban [2009] NSWSC 1104 at [122]-[124]. In Farrow, above, Gleeson CJ noted at 637 as follows: "The case is to be determined by the application of the well-settled principle that a variation of the agreement between a creditor and a debtor, of a kind which could prejudice a surety, will discharge the surety from liability unless the surety consents to the variation, or unless there is a contrary provision in the contract of suretyship."
11. The principles stated in Barecall were not questioned in the following appeal: Barecall Pty Ltd v Hoban [2010] NSWCA 269. In Caltex Australia Petroleum Pty Ltd v Troost [2015] NSWCA 64 Emmett JA (with whom Meagher and Barrett JJA agreed) stated as follows at [52]-[53]: [52] In the case of a guarantee, if there is an agreement made between the principal creditor and the debtor to vary the obligation that is the subject of the guarantee, the guarantor ought to be consulted. If the guarantor does not consent to the alteration, the guarantor will be discharged unless it can be shown, without enquiry, that the alteration was unsubstantial or could not be otherwise than beneficial to the guarantor. If it is not self-evident, the court will not enquire as to the effect of the alteration to determine its materiality (see Holme v Brunskill [1878] 3 QBD 495at 508 and Ankar v National Westminster at 558-9). The principal creditor will not be permitted to vary the guaranteed obligation or to extend time to the debtor without consulting and obtaining the consent of the guarantor since, by doing so, the principal creditor alters the rights of the guarantor (Ankar v National Westminster at 560). However, if the principal contract contemplates and provides for variation of its terms, then the obligations guaranteed by the guarantor will also be subject to variation, with the consequence that such variation will generally not discharge the guarantor's liability (see, eg, Trade Credits Ltd v Burnes [1979] 1 NSWLR 630 at 634). [53] Thus, relevant to contention (1) is the extent to which the granting of time to a debtor, or other variation of the arrangements between the debtor and the principal creditor, will have the effect of discharging an indemnifier, as distinct from a guarantor. In principle, a material variation of the terms and conditions applicable to the obligations of the principal debtor to the principal creditor, if the variation is material so far as concerns the indemnifier, may well create a pro tanto discharge of the obligation to indemnify. That principle is strengthened by the fact that an indemnity is a primary obligation, which is by its nature more onerous than a secondary obligation. That is to say, assuming there is no express term to that effect, there may well be an implied term of an indemnity that the indemnified party will not vary the terms of the principal obligations so as to render more onerous the obligation to indemnify in respect of loss or damage resulting from a breach of the principal obligations. That argument was left open by this court in Schoenhoff v Commonwealth Bank [2004] NSWCA 161 AT [26]-[29]."
12. Accordingly, the question is whether there was an agreement made between the plaintiffs and the first defendant to vary the obligation which is the subject of the guarantee of the second defendant. If so, the guarantor will be discharged unless it can be shown that the alteration was unsubstantial or could not be otherwise than beneficial to the guarantor.
13. The plaintiffs submit that there was no change that adversely affected the second defendant as surety under the Ankar principle. The second defendant submits that this submission does not properly consider the nature of the changes: see written submissions dated 17 December 2017 at paragraphs 23-26.
14. In my view, the second defendant's general submission on this point should be accepted. Under the existing arrangements, the first defendant was under a holding over on a month to month basis where either one month or possibly three months' notice could be given of termination of the Lease: Article 9.03 at CB 1/67 cf CB 1/167. However, under the Continuation of Lease Agreement between the plaintiffs and the first defendant, the lease term was extended to 30 March 2015 and a notice to quit was on three months' notice with the earliest notice to quit date being 31 December 2014. This bound the first defendant to a period under the new lease agreement of at least until 30 March 2015 whereas previously there was the ability to terminate on one months' notice. This, in my view, was a substantial and material variation which affected the position of the second defendant as surety. The alteration was not "unsubstantial or could not be otherwise than beneficial to the guarantor" within the Troost case, above.
15. Further, the Continuation of Lease Agreement contemplated an increase in the rent to be paid in 2015: see CB 1/79-80. Although, as the plaintiffs' submit, increases in rent were contemplated under the original Lease and the holding over provisions, there is no evidence that the second defendant was aware of any increases in rent under the Continuation of Lease Agreement: cf paragraphs 37-40 of the plaintiffs 1 February 2018 written submissions.
16. Accordingly, in my view even if the Lease was only varied and there was no new lease as the plaintiffs submit in chief, the guarantee of the second defendant did not continue. It follows in my opinion, that there should be judgment for the second defendant in relation to the Amended Statement of Claim.

What were the maintenance and make good obligations of the first defendant?

1. It follows from my analysis above, that the make good and repair obligations under the existing Lease were incorporated by reference into the Continuation of Lease Agreement. The make good obligation under Article 7 of the Lease has to be seen in the context of the other obligations of the lessee to make repairs and to cause the demised premises to be kept clean and free from dirt and rubbish.
2. As I have indicated above, in my consideration of the evidence of the various witnesses, to the extent there is any inconsistency, I prefer the witnesses on behalf of the plaintiffs to the evidence given by Ms Dogra for the reasons which I have set out. In particular, I note that Mr C Jones, Mr D Bykersma, Mr J Small and Mr P Brady were not cross-examined in relation to their affidavits. I accept their evidence.
3. In substance for the reasons given in the plaintiffs' submissions in chief on this issue, in my view the plaintiffs' claim for the make good expenses is in the main made out. I will deal with the claim in relation to the air-conditioning expenses below. It is, however, not necessary for me to decide the issue raised by the plaintiffs whether Ms Dogra was fabricating her evidence or that the affidavit from Steve Handyman contained a deliberately illegible ABN number. As I have indicated earlier in these reasons, I prefer the evidence of the plaintiffs' witnesses including Mrs Hancock to that of Ms Dogra on the make good issues.
4. The defendants submit that the various make good/maintenance obligations of the first defendant were assessed by some unreasonable and elevated standard of repair/cleanliness expected by the purchaser's representative Mr Bykersma: see written submissions dated 17 December 2017 paragraphs 41-42. I reject those submissions.
5. I am satisfied by the affidavit evidence of the plaintiffs' various witnesses (several of whom were not cross-examined) and the photographs annexed to and commented on in those affidavits, that the first defendant did not comply with its obligations. In many respects, as set out in those affidavits, I find the Premises were left in a dirty and/or damaged state upon the first defendant ceasing its possession. In reaching that conclusion I have taken into account the fact that the lease was of a steel fabricating factory and not an office. Context is important. I have also taken into account the comments of the Court of Appeal in Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 at 354-356 as relied on by the defendants. Works were required to be undertaken so as to put the Premises in the condition they would have been in if good and substantial repair had been undertaken during the period of the leasehold relationship. Appropriate cleaning also needed to be undertaken.
6. I reject the submission of the defendants that "the time spent on cleaning the premises simply has no resemblance to the test that has to be applied": submissions paragraph 41. The time taken to clean is relevant when assessed in the light of the whole of the affidavit evidence including the photographs. I do not consider that unnecessary time was spent meeting an unreasonable standard having regard to Articles 7.02-7.03.
7. The defendants submit that the amounts for replacement of the air-conditioning units should not be allowed as the evidence does not establish the link between the replacement of the systems/units and the lease obligations: see defendants' written submissions dated 17 December 2017 paragraphs 46-47. In my view, there is force in that submission. The plaintiffs appear to accept that some reduction is warranted: see paragraph 69 of the plaintiffs' 1 February 2018 written submissions. The replacement of the units could have been due to the simple wearing out of the systems through usual wear and tear. The evidence for the plaintiffs does not establish the contrary. I would disallow the amounts of $4,100 and $325 for this reason. The amounts of $450 and $250 claimed appear to be linked to repairs and maintenance and I would allow them: see CB 1/270.
8. Having regard to the evidence, I allow the plaintiffs' claims in relation to the make good expenses as set out in paragraph 48 of Mr Hancock's affidavit sworn 15 July 2016 with the exception of the two amounts referred to in the previous paragraph. Paragraph 48 of the affidavit, when seen in the light of the other evidence of the plaintiffs' lay witnesses, establishes in my view that the other repairs/works were required to satisfy the first defendant's obligations. The first defendant is liable for these sums because of the breach by it of the maintenance and make good obligations set out in Clause 7 of the Lease which were incorporated into the Continuation of Lease Agreement.
9. The defendants submit that the cleaning amount should not be allowed because it is reflected in an invoice sent to the plaintiffs by a related company which should be regarded as a "mock up": written submissions paragraphs 46-47. I accept and find on the evidence that the cleaning was undertaken as alleged. The rates do not appear to be unreasonable. I accept Mr Hancock's evidence as to the invoice: T28-29. I reject the submission that the invoice was "a mock up to create a contrived liability".

Did the first defendant breach those maintenance and make good obligations?

1. Yes, for the reasons I have set out. The first defendant did not repair and make good the Premises as it was obliged to. The Premises were left in a damaged state, contained rubbish and discarded materials and were dirty. I accept the evidence of the plaintiffs' witnesses on this issue.

What damages should be awarded to the plaintiffs?

1. As I have indicated above, I have allowed the claims set out in paragraph 48 of Mr Hancock's 15 July 2016 affidavit with the exception of the two air-conditioning amounts. The parties should bring in Short Minutes of Order to reflect the award of the sums referred to as damages together with any appropriate claim for interest.

Did the plaintiffs/cross-defendants commission a report on the cranes from an independent crane engineer concerning the working of those cranes within Clause 11 of the Lease?

1. Clause 11 of the Reference Schedule to the Lease has been set out above. For convenience I repeat it here: "11. The Lessors agree that the overhead cranes installed at the Premises are to be in good working order on the commencing date of this Lease in 2009 and the Lessors will at their expense commission a report on those cranes from an independent crane engineer concerning the working condition of those cranes and the Lessors will also promptly and at the cost of the Lessors, carry out any repairs or maintenance as the report may state as being required to bring the cranes into good working order/condition. This clause 11 is not to appear in any renewal of this Lease."
2. In my view, in relation to the reporting aspects concerning the cranes, Clause 11 of the Lease requires: 1. The lessors at their expense to commission a report on the overhead cranes installed at the Premises; 2. The report is to be from an independent crane engineer concerning the working condition of the cranes; and 3. The lessors will promptly and at the cost of the lessors, carry out any repairs or maintenance as the report may state as being required to bring the cranes into good working order/condition.
3. Did the plaintiffs at their expense commission a report on the overhead cranes installed at the Premises from an independent crane engineer concerning the working condition of the cranes?
4. The first defendant submits that the plaintiffs did not comply with their obligations under Clause 11 of the Lease by obtaining the report required pursuant to the Clause. The plaintiffs submit that they did.
5. I refer to paragraphs 13-25 of the first defendant's written submissions dated 1 December 2017 on this issue and paragraphs 3-10 of its reply submissions dated 1 February 2018. The first defendant submits that the obligation under Clause 11 of the Lease was to be discharged by: 1. Commissioning a report on the cranes; 2. From an independent crane engineer; and 3. Concerning the working condition of the cranes.
6. It is also submitted (paragraph 17 of its primary submissions) that the issue of whether a report complying with Clause 11 was commissioned by the plaintiffs is a matter of contractual construction determined by what a reasonable businessperson would have understood it to mean by reference to the commercial purpose sought to be achieved relying on Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12 at [16]-[17]. The plaintiffs accept the accuracy of this submission: submissions dated 22 December 2017 at paragraph 153. I agree generally with the first defendant's submission on the principle applicable. In Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 the majority of the High Court stated as follows at [35]: [35] Both Verve and the Sellers recognised that this court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".
7. The following surrounding circumstances at the time the Lease was entered into appear to me to be relevant: 1. The parties were aware from the Lease that the first defendant intended to use the Premises for steel processing and fabrication: Reference Schedule Clause 3; 2. The parties were aware that the Premises were leased with two cranes being the five tonne crane and the 10 tonne crane which were overhead cranes; 3. The parties were aware that the first defendant intended to use the cranes in the course of its business to be conducted at the Premises; 4. The parties were aware that the cranes were already installed at the Premises. There is nothing to suggest that anyone believed either crane had been recently installed at the Premises. Accordingly, some existing wear and tear to the cranes was to be reasonably expected by the first defendant; 5. Both parties had practical experience with cranes before and realised that the cranes had to be regularly maintained and serviced by a crane expert; 6. It was clearly important to the first defendant, and that importance would have been obvious to all parties, that the cranes were in reasonable condition and in good working order at the time of commencement of its possession of the Premises.
8. Demag undertook the October periodical service reports and the repairs arising from those reports as referred to in the Service Job report. There is no suggestion by the first defendant in its submissions that Demag did not constitute an independent crane engineer under Clause 11 in the Lease.
9. The real issue is whether the Periodical Service Reports together with the Service Job document amounted to the plaintiffs commissioning a report on the cranes concerning the working condition of the cranes.
10. There was some suggestion by the first defendant that the Periodical Service Reports were reports which just occurred as part of the usual quarterly inspections of the cranes and were not specially commissioned by the plaintiffs. In my view, there is no substance in that claim. The plaintiffs still permitted the inspections to occur. Further, Mr Hancock gave evidence that Demag was contacted to undertake the October 2009 reports: T36.14-.32. In my view, that is likely having regard to Mr Hancock's evidence that he was aware that Clause 11 was in the Lease when he executed it on behalf the plaintiffs: T41.47. I accept Mr Hancock's evidence on this issue. In any case, the plaintiffs paid for the Periodical Service Reports and inspections and provided those reports to the first defendant. Accordingly, in my view the plaintiffs did at their expense commission the Periodical Service Reports and the Job Report.
11. The next question is whether the reports relied upon by the plaintiffs amounted to a report concerning the working condition of the cranes within Clause 11.
12. In my view, a reasonable businessperson looking at the clause would understand its commercial purpose to be to produce a document which reveals the working condition of the cranes, refers to any repairs which need to be conducted to the cranes, identifies those repairs so that they could be attended to and warns if there were any dangerous or unsafe aspects of the cranes. Also, the commercial purpose of the clause was to ensure that when the Premises were handed over by the plaintiffs to the first defendant, the cranes which the first defendant was intending to use at the Premises, were in good working order and condition.
13. In my view, contrary to the first defendant's submissions, the Periodical Service Reports and the Job Report from Demag complied with the plaintiffs' obligations under Clause 11 of the Lease for the following reasons: 1. The clause does not set out or specify a particular format in which the report was to be provided. The important factor was the content of the report itself; 2. It is clear that various crane engineers described inspection reports prepared by them in different terms. Demag entitled the report a "periodical service report": at CB 1/135-137. Austfurn described a similar report as a "Condition Report": CB 1/144; 3. The Demag reports in question provided a summary and an itemised report. Although Mr Bhullar was later critical of these reports, describing them as a "pink slip" (CB 1/176), the reports described whether aspects of the cranes were "okay" or repairs were required or urgent work was required or the cranes should not be used. The Periodical Service Reports also had a part for comments. Comments were made in relation to both cranes by Demag employees in the 30 October 2009 handwritten comments. The service Job Report dated 20 November 2009 included "no outstanding repairs as of 20.11.09"; 4. The Periodical Service Reports indicated the condition of the cranes, what repairs were needed and ultimately when seen together, showed that the repairs were undertaken; 5. Clause 11 does not say that a 10 year inspection or a strip down inspection in accordance with Australian Standards was required to be performed as part of the contemplated report; 6. The cranes were utilised by the first defendant upon taking possession of the Premises. It was accepted by Mr Bhullar that he received the Demag documents on or about the time that the Lease was signed. Having regard to the date of the documents, clearly the service job document was received after that date. However, it appears to have been received prior to the first defendant taking possession of the Premises.
14. A distinction seems to be drawn by the first defendant in its submissions between a report which showed whether a crane was "fit for service" and a report which showed the working condition of a crane in order to denote whether it is in "a good working order" or "good working order/condition". Mr Spry, the plaintiffs' expert, seemed to accept that there was a difference between the working condition of a crane and whether it was fit for service. However, what must be looked at, in my view, is the words in the clause itself in their context rather than the view of the expert (it not being suggested that words in the clause had a particular trade meaning).
15. Looking at the reports provided by Demag in November 2009, looking at the surrounding circumstances of the Lease, and considering the commercial purpose of clause 11 in the Lease, in my opinion the reports provided concerned the working condition of the cranes within Clause 11. The reports were detailed and apparently thorough. They referred to various aspects of each crane and provided a rating/comment. They informed the reader of the repairs which were recommended. I do not consider that Clause 11 requires the matters referred to in paragraph 21 of the first defendant's submissions dated 1 December 2017. It must be recalled in relation to paragraphs 22-23 of the first defendant's submissions, that Demag was the crane engineer which had been undertaking for some considerable time the servicing, maintenance and repairs of the cranes in question. It was therefore familiar with the cranes and was in a good position to provide reliable reports: see also paragraph 166 of the plaintiffs' 22 December 2017 submissions. This was a factor referred to by Mr Spry: T244.5-.16.
16. If I am wrong in my conclusion and the reports provided by the plaintiffs to the first defendant as prepared by Demag did not comply with Clause 11 of the Lease, then the question arises as to the damages that such a breach of Clause 11 would result in. Relevant to this is the next issue which is whether the cranes were in a "good working order/condition" as at the commencement date of the Lease being 1 December 2009.

Were the cranes in good working order at the commencement date of the Lease on 1 December 2009?

1. In paragraphs 26-45 of their submissions dated 1 December 2017, the defendants submit that the cranes at the Premises were not in good working order at the commencement date of the Lease being 1 December 2009. I have taken into account the matters referred to in those paragraphs.
2. Contrary to those submissions, in my view the two cranes were in good working order/condition at the commencement date of the Lease on 1 December 2009 for the following reasons: 1. The cranes were installed at the Premises at least from 1986 and possibly from 1975 (according to Mr Corozzol); 2. As the affidavit evidence of Mr Hancock and Mr Parker makes clear, apart from a short period between 1998 and 2000, maintenance work on the cranes was contracted to Demag which included a quarterly routine maintenance schedule. Any repairs to the cranes were also carried out by Demag: Parker affidavit paragraph 5. Thus as at October 2009 Demag had detailed knowledge of the two cranes through a long maintenance history: See Mr Spry at T244.9; 3. It was the practice of the management of Epitech to follow the Demag recommended repairs to maintain reliability of the cranes and to reduce risk of accidents: Hancock affidavit sworn 15 July 2016, paragraph 10; 4. There was independent contemporaneous documentary evidence before the court establishing that Demag inspections occurred at least from 2003, although both Mr Parker and Mr Hancock stated that they occurred from 1986. I accept their evidence on this issue; 5. Evidence before the court reinforced Mr Hancock's and Mr Parker's evidence that inspections were conducted quarterly and repairs occurred as recommended: see CB 1/309; see also paragraph 9 of Mr Hancock's 25 November 2016 affidavit; 6. The MYOB details of Epitech for the period May 2007 to November 2009 reinforce the evidence of regular maintenance and repairs by Demag on behalf of the plaintiffs; 7. Despite paragraph 12 of Mr Parker's affidavit, and his admission that he did not have specific memories of the crane reliability or lack of reliability (T70.30), his general impression was that the cranes were not out of service for any lengthy period of time and that "generally Demag had them repaired within short periods of time if there were breakdown issues": T70.36. Mr Parker confirmed that parts were generally available for the cranes and they were attended to "quite promptly" and apart from the hoist with the 10 tonne crane which was replaced, "there weren't any major things that went wrong other than, you know, rope replacements and guides and maybe electrical problems or something like that": T71.11. I accept Mr Parker's evidence on these matters. This evidence assists the plaintiffs; 8. Whilst Mr Bhullar called out Demag to look at the cranes in January 2010, he informed Mr Hancock that the "cranes are fine and I don't think there is any need to make them [Demag] come to the site": CB 1/141; 9. Despite Clause 10(h)(ii) of the Reference Schedule to the Lease, the first defendant did not have the overhead cranes regularly serviced (even if the cranes were a C4 category - CB 2/684 table 7.2.1 and paragraph 3.4.10 of Mr Spry's report at CB 2/686), particularly in 2010-11. The first service did not occur until 30 August 2010, nine months after the commencement of the Lease: CB 3/854. Whilst Austfurn prepared a document arising from an inspection in March 2011 which suggested "pre-existing faults" (CB 3/857-858) and purported to date a number of those pre-existing faults to 31 August 2010, that was not reflected in the 30 August 2010 Condition Reports prepared by Austfurn. Accordingly, there is a question whether those alleged "pre-existing faults" were in existence as at 1 December 2009 in the light of the Demag reports prepared in October 2009. The Demag and Austfurn reports were in a similar format. Obviously, Demag inspected the cranes on a date close to the commencement of the Lease; 1. Considerable reliance was placed by the first defendant on the report of Mr Corazzol suggesting that the cranes were not in good working order as at 1 December 2009. In his 6 June 2016 expert report, Mr Corazzol expressed the opinion that the August 2010 Austfurn inspection reports "brought to light the fact that the two cranes were in a fair condition and most likely would have been in the same condition for a long period of time": CB 3/1080. Mr Corazzol also expressed the opinion that the nature of the repairs undertaken following the agreement between Mr Bhullar and Mr Hancock in 2012, "were observed to be the result of many previous years of normal usage and subsequent wear. In my opinion, the majority of this wear would have occurred before Bhullar Steel Distribution moved into the premises on 1 December 2009 and started to operate the two overhead cranes." Mr Corazzol's opinion in his report must be seen in the context of paragraph 2 of the Conclave Report at CB 3/1160. In my view, paragraphs 2.3.2, 2.3.3, 2.3.4, 2.4.1 and 2.4.2 of the Conclave Report, involve an alteration in Mr Corazzol's views in his first report. In the light of the Conclave Report, in my view Mr Corazzol's evidence does not indicate that the cranes were not in a good working order/condition as at 1 December 2009. It should be noted that there is no definition of "good working order" or "good working order/condition" in the Lease or in the Reference Schedule. I accept the first defendant's submission that when Clause 11 is read as a whole it is plain that the terms "condition" and "order" are used interchangeably. The evidence looked at as a whole, in my view establishes and I find that the cranes were reliable and functional and in good working order as at 1 December 2009. I am not of the view that having regard to the whole of the evidence I can conclude that the problems that occurred after 1 December 2009 with the cranes were more probably than not in existence as at 1 December 2009 as opposed to occurring from the continued use by the first defendant of the cranes and its failure to obtain regular inspections and maintenance of the cranes. I also do not accept the submission that the signing of the Austfurn document on 15 May 2012 by Mr Hancock on behalf of the plaintiffs, amounted to any concession or admission that the cranes were not in a good working condition as at 1 December 2009: CB 3/865. In my view, Mr Hancock agreed to the plaintiffs paying half of the estimated costs of the repairs in order to try and resolve the arguments between the plaintiffs and the first defendant as to the crane issues. I find that the document reflects an agreement between the parties as to a final determination of any alleged liability of the plaintiffs in relation to the cranes' condition as at 1 December 2009: see paragraphs 68-72 of the plaintiffs' written submissions dated 22 December 2017. I reject the submission of the defendants that the contemporaneous documents provide support for Mr Hancock knowing or acknowledging that the cranes were not in good working order at the commencement of the Lease. I do not read the documents relied on in that way.
3. In paragraph 42 of the first defendant's submissions dated 1 December 2017, it is stated that Mr Corazzol does not identify infrequent maintenance schedules as a cause of the break downs in the cranes. In paragraph 10.3.1 of the Conclave Report between the experts, the following is stated: "It was agreed that there were a number of repairs invoiced to Bhullar Steel that were a result of maintenance occurring less frequently than required by the duty of these cranes": CB 3/1170. See also paragraph 7.3.3 of the Conclave Report.
4. Overall, I find that the two cranes were in good working order and condition as at 1 December 2009. Accordingly, I find that there was no breach by the plaintiffs of this part of Clause 11 of the Lease.

Did the plaintiffs/cross-defendants engage in misleading or deceptive conduct about the state of the cranes as being in good working order?

1. In paragraph 10 of the Cross-Claim, the first defendant pleads as follows: 1. A representation was made by the plaintiffs that the Premises were a clear span warehouse serviced by one 10 tonne crane and one five tonne crane; 2. The representation was made in trade or commerce; 3. The first defendant relied upon the representation in entering into the Lease as the first defendant's business required two cranes to enable it operate efficiently; 4. The representation was a misrepresentation which was misleading or deceptive conduct by silence as the representation implies the two cranes were, or would be upon commencement of the Lease, in good working order which was not the case; 5. Neither crane has ever been in good working order; 6. LJ Hooker were the plaintiffs' leasing agents and the plaintiffs are liable in respect of any misrepresentations and misleading or deceptive conduct made by LJ Hooker in respect of marketing and/or leasing of the Premises; and 7. As a result of the misrepresentation, the first defendant has suffered loss.
2. It is pleaded that the representation was made in breach of s 18 of the ACL.
3. Section 18 of the ACL provides as follows: "18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in Part 3‑1 (which is about unfair practices) limits by implication subsection (1)."
4. In my view, it is clear that the representation, if made as alleged, was made in trade or commerce. It allegedly occurred in relation to enquiries concerning the lease of commercial premises.
5. The authorities clearly establish that in certain circumstances, silence may amount to misleading or deceptive conduct. The real question is whether, in all the circumstances of the particular case, there has been conduct whether by act or omission (including silence) which is misleading or deceptive or likely to mislead or deceive: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; Fabcot Pty Ltd v Port Macquarie Hastings Council [2011] NSWCA 167 at [209]; OXS Pty Ltd v Sydney Harbour Foreshore Authority [2016] NSWCA 120 at [178].
6. The representation relied upon is that allegedly made in an email from Marcel Elias from LJ Hooker Commercial to Mr Bhullar on behalf of the first defendant, in an attached property detail report relating to the Premises in which the following is stated: "Clear span warehouse offers an internal clearance of 6.0m (approx) and is serviced by one 10 tonne crane and one five tonne crane." The email from Mr Elias to Mr Bhullar stated: "As discussed, the attached report has details of the warehouse with a five tonne and a 10 tonne overhead crane": CB 3/820.
7. There is no suggestion that the email or the report was copied to Mr Hancock or originated from Mr Hancock.
8. In my view, no representation was made as is alleged in paragraph 10 of the Cross-Claim. First, the representation apparently relied upon was only that the warehouse was "serviced by one 10 tonne crane and one five tonne crane." In my view, it cannot be implied into this representation that the cranes were in good working order as opposed to reasonable working order. What was stated was factually correct. Further, the fact that the cranes were at least in reasonable working order was, in my opinion, established by the Demag Periodical Service Reports dated 22 October 2009 and the service Job Report dated 20 November 2009: CB 1/135-138. These meant that the representation of the cranes being in at least reasonable working order was accurate as at the date of commencement of the Lease.
9. Further, for the reasons given above, I do not accept that either crane was not in good working order as at the date of commencement of the Lease. I specifically reject the submission made in paragraph 55 of the submissions dated 1 December 2017 from the defendants, that it was within Mr Hancock's knowledge that both cranes were past their working lives. This is inconsistent with the service history for the cranes, the evidence of Mr Parker, the evidence of Mr Hancock, the fact that the first defendant used the cranes in its business for several years after 1 December 2009, the history of regular servicing by Demag prior to 1 December 2009 and the reports prepared in October and November 2009.
10. The materials show that the cranes were regularly serviced by Demag which had been involved in the historical servicing of the cranes for an extensive period of time: see paragraph 9 of Mr Hancock's affidavit sworn 15 July 2016 and paragraph 5 of Mr Parker's affidavit sworn 21 November 2016.
11. In my view, no such representation was made and I reject this part of the first defendant's Cross-Claim

Did the Continuation of Lease Agreement contain oral terms, and if so, what were those terms?

1. It is the first defendant's submission that there were additional oral terms to those set out in the Continuation of Lease Agreement: see paragraph 5(d) of the Amended Defence and paragraphs 46-51 of the defendants' submissions dated 1 December 2017. The plaintiffs submit that there were no such additional oral terms.
2. The first issue is whether the conversations occurred as alleged by Mr Bhullar and the first defendant. As I have found above, I regard Mr Bhullar as an unreliable witness in relation to the oral conversations at the various meetings with Mr Hancock and I prefer Mr Hancock's evidence where it is inconsistent. Mr Hancock denies the relevant conversations on which the defendants rely: see paragraphs 52-56 of Mr Bhullar's affidavit and paragraphs 60-62 of Mr Hancock's third affidavit. I accept that evidence of Mr Hancock.
3. In my view, it is inherently unlikely that Mr Bhullar said to Mr Hancock words to the effect that the plaintiffs would be required to install a fire exit including staircase and doorway for occupational health and safety purposes so that the first defendant could comply with fire safety regulations. The matter was raised between the parties but it was raised by Mr Hancock to Mr Bhullar in an email dated 3 November 2012 as a virtual aside when Mr Hancock stated: "Michael, I forgot to discuss but we may need to open a fire access wall on the west wall of the factory, at some stage. We would need access to do this when appropriate": see CB 1/70. This did not appear to be an issue between the parties: see the version with marked up responses at CB 1/167-8. There is nothing to suggest that this issue would have been likely raised by Mr Bhullar or that it was important to him other than the reference in Mr Bhullar's affidavit. In the light of this analysis and my view of the reliability of Mr Bhullar's evidence, I find that no such representation was made by the plaintiffs as asserted in Mr Bhullar's affidavit or that there was any agreement as to the fire exit which became an oral term in addition to the Continuation of Lease Agreement.
4. Even if there was such an agreement, I cannot see how any breach of that agreement by the plaintiffs could possibly have caused any loss to the first defendant. I reject this aspect of the Cross-Claim.
5. Consideration therefore needs to be given as to whether there was an agreement between the plaintiffs and the first defendant in or prior to January 2014 which became an oral term of the Continuation of Lease Agreement that the plaintiffs would obtain recertification at the plaintiffs' expense of the five tonne crane: see paragraph 5(d)(i)-(iii) of the Amended Defence. The first defendant relies on the fact that an agreement was reached to provide certification of the five tonne crane by a proposal from Mr Hancock on 22 October 2015.
6. However, the position was quite different at the end of 2013 and in early 2014. Mr Hancock had made it abundantly clear that as at January 2014 he regarded crane repairs as the responsibility of the first defendant: email dated 10 January 2014 in which Mr Hancock stated: "Your responsibility anyway": CB 1/181. This email is inconsistent with Mr Hancock agreeing suddenly on behalf of the plaintiffs at or about the time of the execution of the Continuation of Lease Agreement to take responsibility for certification of the five tonne crane. There is no mention of cranes in Mr Hancock's 8 January 2014 email: CB 1/183. Mr Hancock responded on 10 January 2014: "If you don't like my proposal, then it's over mate": CB 1/181.
7. Having regard to all these matters, I consider that the conversation stated by Mr Bhullar in his affidavit on which the first defendant relies in its Amended Defence is highly unlikely and did not occur. The contemporaneous documents are important on this issue. In coming to this conclusion, I take into account the email from Mr Hancock to Mr Bhullar dated 15 August 2013: CB 3/890-891. I find that no such agreement was made between the plaintiffs and the first defendant giving rise to the alleged further oral term. This part of the first defendant's Cross-claim is rejected.

Did the plaintiffs/cross-defendants engage in misleading or deceptive conduct in representing that the 10 tonne crane was less than 10 years old and did not require recertification?

1. Paragraph 19 of the First Cross-Claim filed 22 January 2016 provides as follows: "19. Bob, on behalf of the Cross Defendants, represented to Michael, on behalf of the Cross Claimant, that the 10 tonne crane forming part of the premises was less than 10 years old and, therefore, the aforesaid Australian Standard did not require recertification ("the second representation"). The second representation was made in trade and commerce, was relied upon by the Cross Claimant in entering into the agreement in or about December 2013, was misleading or deceptive and was a misrepresentation. Particulars 1. The crane girder which, pursuant to the Australian Standard required recertification every 10 years and which is the integral part of the crane structure, was manufactured in about 1982 and was not the subject of the current recertification; 2. The second representation was made in an email from Bob to Michael dated 15 December 2013."
2. This is denied in paragraph 19 of the Defence to Cross Claim filed 24 March 2016.
3. The representation alleged was said to have been made in an email from Mr Hancock to Mr Bhullar dated 15 December 2013. The email referred to has to be seen in the context of a history of emails between Mr Bhullar and Mr Hancock: see CB 1/371-373 and CB 3/872-878. What is clear from these emails, is that Mr Bhullar, on behalf of the first defendant, was pressing for a "10 yearly crane inspection report" (email dated 10 December 2012: CB 3/878) and a "mandatory" crane report (email dated 17 December 2012: CB 3/877). The emails also establish that there was a meeting on 15 August 2013 between at least Mr Hancock and Mr Bhullar: see email dated 15 August 2013 (CB 1/374). In the email dated 15 August 2013, the following is stated by Mr Hancock: "The Good news is that the 10 tonne crane is less than 10 years old (Purchased in Jan 2007), so does not require the inspection." Despite the particulars in paragraph 19 of the Cross-Claim, this appears to be the email relied upon by the defendant: submissions dated 1 December 2017, paragraphs 57-62.
4. Mr Bhullar, in his affidavit sworn 28 September 2016, relies on this representation as being important to him in the lease negotiations which led to the Continuation of Lease Agreement being signed: see paragraphs 47-56 of Mr Bhullar's affidavit, particularly paragraphs 47 and 55. If accepted, Mr Bhullar's affidavit, particularly at paragraph 55, would establish that Mr Bhullar, on behalf of the first defendant, relied upon the representation that the 10 tonne crane was less than 10 years old in signing the Continuation of Lease Agreement on behalf of the first defendant.
5. The evidence clearly establishes that although the hoist of the 10 tonne crane was replaced in early 2007 the remaining parts of the crane were not replaced and were significantly more than 10 years old: see T44.20-.27; T45.38-46.8; T50.44-T52.35; T246.1-.21.
6. Mr Hancock in cross-examination, stated that he did not intend to convey that the 10 tonne crane was purchased in 2007 because by the email in question, he was only referring to the hoist which had been replaced in 2007: T52.23. Mr Hancock accepted that there were components of the 10 tonne crane older than 2007: T52.27.
7. In paragraphs 57-62 of its submissions dated 1 December 2017: the defendants submit: 1. It cannot seriously be in doubt that Mr Hancock misrepresented that the 10 tonne crane was less than 10 years old and did not require recertification in the 15 August 2013 email. It was said it was the excuse deployed by Mr Hancock for the plaintiffs' inaction; 2. The representation alleged was made, it was untrue and Mr Hancock knew it was untrue; 3. The only serious dispute was whether the first defendant relied on the representation and it caused it loss; 4. When the representation is put in context it is clear it caused loss to the first defendant as it was made at the time when the parties were renegotiating a further lease and Mr Bhullar had made consistent complaints about the lack of certification for both cranes. Mr Hancock allegedly made the representation when Mr Bhullar was reluctant to commit to a new lease because of the outstanding certifications and the numerous breakdowns of the cranes. It is alleged Mr Bhullar accepted the assurances given to them by Mr Hancock about the 10 tonne crane's age in entering into the continuation of Lease Agreement; 5. While Mr Hancock denies that he had a conversation about the 10 tonne crane on 14 January 2014, this is inherently improbable given the disputes between the parties in relation to the cranes.
8. As stated above, a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive: s 18 of the ACL.
9. Section 236 of the ACL provides as follows: "236 Actions for damages (1) If: (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3; the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention. (2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued."
10. Accordingly, in order for a party to recover damages for a breach of s 18 of the ACL, that party must prove that the loss or damage allegedly suffered was caused because of the conduct of another person.
11. This raises a question of causation which is to be determined as a matter of common sense and experience taking into account the legal framework in the ACL: Henville v Walker (2001) 206 CLR 459. The relevant conduct does not have to be the sole cause of the parties' actions but it must be a cause which materially contributes to the damage allegedly suffered. Reliance in a case such as the present must be established by the defendant. It is up to the party alleging loss to prove the causal connection between the misleading or deceptive conduct and the loss alleged: Haros v Linfox Aust Pty Ltd [2012] FCAFC 42.
12. In my view, the representation alleged was clearly made by Mr Hancock on behalf of the plaintiffs in the 15 August 2013 email. When read as a whole, the representation was untrue and was misleading or deceptive. I reject the plaintiffs' submission to the contrary: paragraph 131 of their 22 December 2017 submissions. I do not consider that the representation made can be seen to be limited to the hoist as opposed to the entirety of the crane and it is clear that a hoist is only one, albeit a major, component of the crane. The representation was clearly made in trade or commerce between parties in a commercial setting.
13. It is alleged that Mr Hancock knew that the representation was untrue. As set out above, he asserts in cross-examination that he did not know this and he was intending to only refer to the hoist. In my view, it is unnecessary to determine this question as the representation was clearly misleading or deceptive. If required to decide the issue, I would have accepted Mr Hancock's explanation as it is unlikely that he would have deliberately made such a falsehood in the light of the fact that the age of the crane could readily have been ascertained by Mr Bhullar through asking representatives of Austfurn, the first defendant's expert.
14. I therefore turn to the question whether the first defendant relied on the representation and it caused it loss.
15. I find that the first defendant has failed to establish that Mr Bhullar on behalf of the first defendant relied on the representation relating to the age of the 10 tonne crane in entering into the Continuation of Lease Agreement for the following reasons: 1. The reports prepared by the Austfurn group dated 30 August 2010, on which the first defendant placed some reliance, suggested wear in the 10 tonne crane as at that date: see CB 3/855 and CB 3/858; 2. Mr Bhullar described in an email to Mr Hancock's daughter that the report suggested to him that "the cranes are pretty old": see email dated 2 December 2011 at CB 3/860; 3. At T106.41 Mr Bhullar conceded that it was plain to him as at 2 December 2011 that components of the 10 tonne crane were more than 10 years old. This is inconsistent with reliance on the email from Mr Hancock; 4. In his 17 December 2012 email to Mr Hancock, Mr Bhullar stated: "I am sure these cranes are more than 10 years old"; 5. At paragraph 47 of his affidavit, Mr Bhullar states: "… I was astounded when I received his email later that day advising that the 10 tonne crane was less than 10 years old."; 6. In my view, Mr Bhullar's affidavit at paragraphs 52 to 55 is unreliable in relation to the conversations he asserts. First, I have indicated above that I found Mr Bhullar to be an unreliable witness and I prefer the evidence of Mr Hancock where it was inconsistent. Secondly, there is nothing in the email correspondence close to the execution of the Continuation of Lease Agreement that indicates any reliance on the representation made on 15 August 2013. See the emails at CB 3/890-899. In my view, the conversations in paragraphs 52 and 55 of Mr Bhullar's affidavit, which are denied by Mr Hancock, are inherently unlikely having regard to the email correspondence on and around that time and I reject them. 7. For these reasons, I find that Mr Bhullar on behalf of the first defendant did not rely on the 15 August 2013 representation to enter into the Continuation of Lease Agreement and accordingly, the representation, although misleading and deceptive, caused no loss. I also note that Mr Singh in his evidence stated that he and his son started looking for new premises because "the cranes were giving [a] lot of trouble" and it took two and a half to three years to locate alternative premises: T200.15-.23. This also suggests that the first defendant had little alternative but to continue with a leasing arrangement until it located alternative premises for its factory which was taking some considerable time. However, I do not place a lot of weight on Mr Singh's evidence as it was in some parts inconsistent: T200.43.
16. This cause of action is accordingly rejected.

Causation and damages issues

1. Based on my reasoning above, I find that there was no breach of s 18 of the ACL by the plaintiffs.
2. In relation to the alleged breach of the oral terms of the Continuation of Lease Agreement, I have found that there were no oral terms as alleged.
3. Accordingly, there can be no damages for the breaches relied on. This also is the case in relation to the 10 year crane representation which I have found was not relied upon by Mr Bhullar (or anyone else) on behalf of the first defendant.
4. In relation to the alleged breach of Clause 11 of the Lease, in my view there was no breach of this clause by the plaintiffs. Accordingly, no damages should be awarded for breach of the Lease by the plaintiffs.
5. If I am wrong in that conclusion, and there was a breach of Clause 11 of the Lease as alleged by the defendants, as the reports provided by the plaintiffs to the first defendant as prepared by Demag did not comply with the Lease, I find that the cranes were in good working order and condition in any case. Accordingly, even if there was a breach of the Lease by the plaintiffs by not providing the report within Clause 11, any report provided would have established that the cranes were in good working order and condition. Therefore, I would have awarded nominal damages only of $10 if this breach was established.
6. In the alternative, even if I had determined a breach of the Lease as alleged, on the basis that the cranes were not in good working order as at 1 December 2009, I would have found that they were in reasonable working order based on the Demag reports and their service history. Further, for the reasons set out earlier in this judgment, I find that the principal assumption on which the Furzer Crestani report was prepared, being the accuracy of Attachment B to that report, has not been established. Accordingly, having regard to the importance of that assumption, I could not rely on that report for the purposes of either causation or assessing damages as claimed by Furzer Crestani.
7. I also was not satisfied as to the accuracy of any part of attachment B having regard to the cross-examination of Mr Bhullar on it, his email dated 14 January 2010 and the first defendant's practice of only calling out Austfurn when there was a breakdown: cf paragraphs 65-66 of the first defendant submissions dated 1 December 2017.
8. I have reviewed the submissions in paragraphs 65-68 of the defendants' written submissions dated 1 December 2017, the plaintiffs' written submissions in paragraphs 138-139 (and the Appendix A) of their submissions dated 22 December 2017, the cross-examination of Mr Bhullar, the relevant invoices relied on and the job sheets for the work undertaken where available. I am not satisfied that any aspect of the work charged and paid for was as a result of the condition of the cranes as at 1 December 2009 not complying with Clause 11 or otherwise the cranes being not in good working order as at 1 December 2009 as opposed to the condition of the cranes following use of them by the first defendant following it taking possession of the Premises.
9. I also do not consider that the first defendant has established causation in relation to this part of its Cross-Claim even if a breach of Clause 11 is found. In particular, I was not satisfied on the evidence that any failure by the plaintiffs to undertake 10 year/25 year inspections was causative of any loss having regard to the October/November 2009 reports and the history of the cranes, including the regular maintenance of the cranes by Demag.
10. If I am wrong in that conclusion, I find that the 15 May 2012 signed document (CB 1/163) which was signed at the 15 May 2012 meeting constituted an agreement between the parties to limit to $4,500 (which was paid via a rent reduction for a period) the plaintiffs' liability for any pre-lease issues relating to the condition of the cranes. I prefer Mr Hancock's account of the meeting in paragraph 28 of his 15 July 2016 affidavit to the competing version of Mr Bhullar. Mr Hancock's version appears to be consistent with the document itself and the prior correspondence between the parties. I also have found Mr Hancock to be a more reliable witness in relation to the meetings between the parties.
11. For these reasons I dismiss the first defendant's Cross-Claim.

Disposition

1. I thank Counsel for their assistance in their detailed written submissions.
2. For the reasons set out above, I make the following orders: 1. Judgment for the plaintiffs against the first defendant on the Amended Statement of Claim; 2. Judgment for the plaintiffs/cross-defendants on the Cross-Claim. The Cross-Claim is dismissed; 3. Judgment for the second defendant in relation to the Amended Statement of Claim. The Amended Statement of Claim is dismissed against the second defendant. 4. The first defendant is to pay the plaintiffs' costs of the proceedings as agreed or assessed (excluding any costs of the plaintiffs relating to the claim against the second defendant). 5. The plaintiffs are to pay the second defendant's costs of the proceedings as agreed or assessed. 6. Liberty to apply within 14 days to vary the costs orders in (4) and (5) above. 7. The parties are to bring in Short Minutes of Order within seven days in relation to the amount to be awarded against the first defendant in the Amended Statement of Claim including any interest. 8. The exhibits are to be returned after 28 days.
3. As will be seen above, I have found for the second defendant against the plaintiffs. The same counsel and solicitors represented both defendants. In order to assist any assessing officer, I note my preliminary view, subject to submissions, is that the issues concerning the second defendant did not exceed 10% of the hearing time taken up in the proceedings.

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: 29 March 2018