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[2026] NSWSC 862
Supreme Court of NSW
2026-07-27
Harrison AJ
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Valor and Pride Hospitality Group Pty Ltd v Ord Developments Pty Ltd [2026] NSWSC 862
Hearing dates: 7-8 July 2026
Date of orders: 27 July 2026
Decision date: 27 July 2026
Jurisdiction: Equity
Before: Harrison AJ
Decision: (1) Set aside the orders made by Hammerschlag CJ in Eq dated 5 February 2026.
(2) Declare that Ord Developments Pty Ltd is entitled to terminate the lease between it as landlord and Valor and Pride Hospitality Group Pty Ltd as tenant of the premises known as “The Central Bar & Kitchen” situated at 51 John Street, Singleton.
(3) Pursuant to s 14 of the Civil Procedure Act 2005, dispense with the requirements under UCPR 6.8.
(4) Direct the entry of judgment in favour of Ord Developments Pty Ltd for possession of the whole of the land comprised in Folio Identifier 14A/63631 being the land situated at 51 John Street, Singleton and known as “The Central Bar & Kitchen”.
(5) Grant leave to Ord Developments Pty Ltd forthwith to apply for the issue of a writ of possession.
(6) Stay execution of the writ referred to in order (5) above against all occupants of the premises (excluding Valor and Pride Hospitality Group Pty Ltd) until 4pm on 14 September 2026.
(7) Direct Ord Developments Pty Ltd to serve on each occupant of the premises (excluding Valor and Pride Hospitality Group Pty Ltd) as soon as practicable:
(a) the cross-summons;
(b) the amended statement of claim;
(c) these orders; and
(d) my reasons for judgment.
(8) Grant leave to any occupant (excluding Valor and Pride Hospitality Group Pty Ltd) to apply by notice of motion regarding the judgment for possession within 7 days after they have been served in accordance with order (7).
(9) Direct that any application filed by any occupant pursuant to order (8) above be returnable before me at 10am on 14 September 2026.
(10) Dismiss the amended statement of claim and amended summons.
(11) Direct that all funds currently held in JDK Legal’s trust account on account of rent payable under the lease be released forthwith to Ord Developments Pty Ltd.
(12) Order Valor and Pride Hospitality Group Pty Ltd to pay Ord Developments Pty Ltd’s costs of the proceedings.
(13) Stay orders (2), (4) and (5) above, and grant Valor and Pride Hospitality Group Pty Ltd relief against forfeiture of the lease, upon the condition that Valor and Pride Hospitality Group Pty Ltd and/or Mark Joseph Smith pays to Ord Developments Pty Ltd or as it may direct by no later than 4pm on 11 September 2026 the whole of any rent then due under the lease but which then remains unpaid by Valor and Pride Hospitality Group Pty Ltd to Ord Developments Pty Ltd.
(14) Grant liberty to apply on 2 days’ notice.
Catchwords: LEASES AND TENANCIES – rent and outgoings – repair and maintenance obligations – where several plumbing and other issues arose and a dispute between the parties as to whose responsibility it was to remedy those defects under the lease escalated – whether these issues were structural in nature – whether the plaintiff was entitled to abate rent
LEASES AND TENANCIES – whether the plaintiff is entitled to relief against forfeiture
Legislation Cited: Civil Procedure Act 2005 (NSW), s 14
Conveyancing Act 1919 (NSW), s 129
Uniform Civil Procedure Rules 2005 (NSW), r 6.8
Cases Cited: Advance Fitness Corporation Pty Ltd v Bondi Diggers Memorial & Sporting Club [1999] NSWSC 264
Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2004] NSWSC 487
Blacktown City Council v Hocking [2008] NSWCA 144
Carbure Pty Ltd v Brile Pty Ltd [2002] VSC 272
Holus Bolus Pty Ltd v The Wicko Pty Ltd [2012] NSWSC 497
Category: Principal judgment
Parties: Valor and Pride Hospitality Group Pty Ltd (Plaintiff/Cross-Defendant)
Ord Developments Pty Ltd (Defendant/Cross-Claimant)
Representation: Counsel:
M Klooster (Defendant/Cross-Claimant)
Solicitors:
JDK Legal (Defendant/Cross-Claimant)
File Number(s): 2025/481644
Publication restriction: Nil
HIS HONOUR: Ord Developments Pty Ltd is the registered proprietor of the Central Hotel at Singleton. On or about 1 November 2020, Ord Developments leased the hotel to a third party who no longer retains any interest in the lease of the Central Hotel and who has never been a party to these proceedings.
Since approximately 30 June 2025, Valor and Pride Hospitality Group Pty Ltd has been in occupation of the hotel. The existing lease was later assigned to that company on 3 July 2025. Mark Smith is the director of Valor and Pride and guaranteed its performance of the lease. (References to that company and Mr Smith in what follows can be taken to be interchangeable unless otherwise stated.)
On or about 30 June 2025, Valor and Pride exercised an option to renew the lease for the period from 1 November 2025 until 31 October 2030. The company remains in occupation of the hotel in accordance with the terms of the renewed lease.
On 4 December 2025, Ord Developments issued a draft new lease to Valor and Pride for approval. Mr Smith sent a letter rejecting that lease the following day. Although the issues that arise for determination in these proceedings will need to be explained and considered in detail in what follows, Mr Smith’s rejection of the lease appears to have been significantly related to the fact that Ord Developments proposed that rent would remain at the then current rate of $157,441.68 (inclusive of GST) per annum, payable in equal monthly instalments of $13,120.14. Things became more complicated thereafter when problems with the plumbing in the hotel and other maintenance issues arose and there developed a dispute about who was responsible to fix them.
In circumstances that can only be described as extremely regrettable, that disagreement escalated, culminating in the institution of these proceedings. By the time the hearing commenced before me on 7 July 2026, there appeared to be four issues calling for consideration.
The first issue concerned a dispute between the parties about the rent payable by Valor and Pride. Ord Developments had not sought to alter the rent from the amount paid during the previous term. It relied upon clause 4.2(i) that provided that the outcome of any market rent review could not result in a reduction of the current rent then being paid by the lessee. Valor and Pride maintained that it was entitled to the benefit of a rent review and that the current market rent as assessed by its expert was significantly less than the current rent. Ultimately, Valor and Pride accepted that this clause operated as a ratchet provision. Mr Smith conceded that Ord Developments was entitled to continue to charge rent at the existing rate following renewal of the lease.
I should observe at this point that Mr Smith’s concession was entirely uncontroversial. However, he somewhat regrettably persisted with his interpretation of clause 4.2 from as early as 5 December 2025 until 8 July 2026, insisting that it did not operate in that way. That erroneous insistence unfortunately influenced his understanding of what rent Valor and Pride was obliged to pay which, in due course, led Ord Developments on 24 December 2025 to issue notices of breach of covenant for non-payment of rent and outgoings. That outcome could and should have been avoided.
The second issue concerned a dispute about gaming machine entitlements. Mr Smith claimed that Valor and Pride had what he described as an “equitable interest” in seven gaming machine entitlements leased by the company to third parties that are attached to the Central Hotel liquor licence. Precisely how that so called equitable interest is said to arise is not clearly explained. For example, its existence is contradicted by the terms of clause B2.2 of the lease which provides that the gaming machine entitlements are beneficially owned by Ord Developments. Clause B2.4 of the lease contains an acknowledgment to like effect. Clause 16.1(d) expressly prohibits Valor and Pride from mortgaging or charging the entitlements.
Following a discussion with Mr Smith, he indicated that he no longer wished to persist with this claim. That indication was also entirely uncontroversial. There was neither factual support nor any principled legal or equitable foundation for Valor and Pride’s asserted entitlement. That should also have been apparent to Mr Smith long before these proceedings were heard.
The third issue concerns Mr Smith’s claim to be entitled to an abatement of rent. That dispute gives rise to at least two questions.
First, whether Valor and Pride can demonstrate that certain plumbing problems and other alleged defects arise from Ord Developments’ failure to keep the building (which includes drains, sewers and other services in or to the Central Hotel) in good structural repair. That general issue focusses on whether the plumbing defects arise from Valor and Pride’s failure to keep all waste pipes and drains free from blockages in accordance with clause 8.1(a) of the lease and whether other alleged defects arise from Ord Developments’ failure to keep the building in good structural repair, allowing for its age and use, in accordance with clause 17.4 of the lease.
Secondly, assuming Valor and Pride can prove that Ord Developments is in breach of clause 17.4, whether the company can quantify the abatement it asserts by way of admissible evidence for the purposes of clause 4.8 having regard to:
(i) the area(s) of the Central Hotel that were substantially unfit for use; (ii) the period(s) certain area(s) of the Central Hotel remained substantially unfit for use; and (iii) the percentage of useability that was diminished by reason of (i) and (ii) above.
This issue remains very much in dispute and is potentially central to the question of how precisely to assess what Valor and Pride should be required to do in the event that it establishes an entitlement to relief against forfeiture in accordance with s 129 of the Conveyancing Act 1919. That is because there is no longer any contest about what rent Valor and Pride is liable to pay: the only issue is whether or not the company has established an entitlement to abate some portion of that rent.
The fourth issue concerns whether Ord Developments has established the matters raised in its cross-claim seeking damages and an order for possession of the Central Hotel. Simply put, Ord Developments maintains that unless Valor and Pride can establish an entitlement to abate 100% of the rent due under the lease from October 2025 until now, then it will have breached an essential term of the lease which would entitle Ord Developments to terminate immediately.
At the end of the first day of the hearing, a fifth issue “emerged”. Although it was nowhere referred to in the written submissions of either party, it was obviously an important matter that was always going to require consideration by me. I attempted to explain it to Mr Smith in the following terms:
“HIS HONOUR: I’ll have to go back. But it’s a provision of the C**onveyancing Act. Mr Klooster will tell you what it is, which entitles you as a tenant to apply on equitable principles for relief against forfeiture; that is to say, even if you have breached a lease, giving rise to an entitlement in the landlord to terminate the lease, if you make good the defects, in certain circumstances including payment of unpaid rent, about which there might be a dispute, or bringing into Court the disputed amount; pending resolution of that dispute, you can be relieved of the prospect that your rights will be taken away from you, because of the breaches you’ve allegedly committed. You follow?
I know you’re not legally represented, and relief against forfeiture is not an uncomplicated issue. But it’s clearly an issue that provides you with some benefits, potentially. You need to get across it. Whether you can do that before 10 in the morning, I can’t say. But you’ve clearly done an amount of legal research in various areas, some of it more and some of it less significant or helpful than others. But relief against forfeiture is something that you need to attend to. If you come here tomorrow at 10 o’clock and you need more time to deal with that, well, we’ll deal with that [then]…”
In order properly to consider each issue, the factual background surrounding the alleged defects and Mr Smith’s complaints requires attention.
On 28 October 2025, Mr Smith wrote to Ord Developments in the following terms:
“This letter serves as formal written notice regarding multiple serious plumbing failures within the premises leased at Central Bar and Kitchen. The issues identified are structural in nature, impacting essential health, safety, and sanitary conditions of the property.
1. Men’s and Women’s Toilets – Structural Plumbing Blockages
The men’s toilets have been repeatedly flooding, resulting in raw sewage surfacing externally, under the external wall and through the wall footings and the raw sewage surfacing in the parking area. This situation now constitutes a public health hazard, exposing staff, patrons, and accommodation guests to contaminated waste (Urine) and breaching the Public Health Act 2010 (NSW) and Environmental Health Regulations so immediate rectification is required to prevent further risk of contamination and potential enforcement action by local health authorities.
The women’s toilets are also flooding to the top of the toilet bowls, and the adjoining sink backs up into the same drainage line. A licensed plumber has assessed the system and confirmed that these blockages originate from underground structural plumbing, requiring access beneath the building to identify and clear the obstruction.
2. Blocked Shower – Second Floor Accommodation
Since the commencement of the lease on 1 July 2025, one of the showers servicing the second floor accommodation has been blocked and unusable due to a structural blockage within the floor waste. A licensed plumber has assessed the system and confirmed that the blockage originates from underfloor structural plumbing, requiring access beneath the floor to identify and clear the obstruction
Despite our efforts to clear the blockage, it remains non-functional. Only one shower within the men’s accommodation area on the second floor is currently operational, significantly affecting the amenity and usability of the accommodation facilities.
Legal Position
Under the lease and pursuant to common law and section 52 of the Conveyancing Act 1919 (NSW), the landlord is responsible for maintaining and repairing the structural components of the premises, including all fixed plumbing, sewer, and drainage systems forming part of the building infrastructure.
These defects constitute failures of essential services and structural defects that materially impact our ability to lawfully and safely operate the business. The landlord is under a legal and contractual obligation to remedy such defects at their expense and within a reasonable timeframe.
Failure to act promptly may also breach the landlord’s duty to provide premises that are fit for their intended commercial purpose and may give rise to claims for compensation and orders for repair through the NSW Civil and Administrative Tribunal (NCAT).
Required Immediate Action
Accordingly, I request that:
1. The landlord immediately engage an emergency licensed plumber to attend the premises, assess, report, and undertake repairs to rectify all structural plumbing blockages and drainage defects.
2. A written confirmation be provided within five (5) business days of this notice, confirming that these repairs will be carried out at the landlord’s cost and specifying a commencement date for works.
If the landlord fails, refuses, or neglects to take prompt action, I will have no alternative but to escalate the matter to the appropriate tribunal or court to seek orders for repair, and any applicable compensation for loss of amenity and business disruption.
Please treat this matter as urgent and requiring immediate action.”
“Please see below from the lease clearly stating that this you need to fix the plumbing issues and that I am indemnified for all costs and expenses
As your letter states, these are serious issues that need to be rectified immediately, please take this email as a notice to repair and notify me when the works are scheduled and completed
Feel free to call if you would like to clarify or discuss”.
“Please find attached a response to your indemnity claim. You have 7 days from the date of this letter to:
1. Engage a licensed plumber to investigate and repair the underlying structural plumbing defects (not temporary clearings); and
2. Confirm in writing the works undertaken and the timeline for completion.”
On 3 November 2025, Mr Smith wrote to Ord Developments asserting that Valor and Pride was entitled to a rent abatement because of the disruption caused by the plumbing defects. On 4 November 2025, Mr Smith paid $7,269.00 in rent, being approximately 55% of the rent for November 2025.
On 6 November 2025, JDK Legal, acting for Ord Developments, wrote to Mr Smith in these terms:
“1. We refer to your letters of 28 October 2025 and 3 November 2025 regarding the Central Hotel Singleton (‘Hotel’). We act for the lessor, Ord Developments Pty Ltd (‘Lessor’) of the registered lease AQ662559 (the ‘Lease’). We understand that you are the director of Valor and Pride Hospitality Group Pty Ltd (the ‘Lessee’). If you have engaged legal representatives in relation to this matter, please let us have their contact details.
2. We are instructed to respond to your correspondence, as follows:
The Lease
3. Clause 11.2(a) of the Lease provides:
‘The Lessee will at all times keep the Premises including the Lessor’s Property and Lessee’s Property, in good repair and condition having regard to their condition at the earlier of the Commencing Date and the date that the Lessee first occupies the Premises (subject to fair wear and tear)’.
4. Pursuant to clause 11.2(b), the Lessee’s obligations to repair the Hotel does not apply to any ‘structural maintenance, replacement or repair’. However, despite clause 11.2(b) ‘the Lessee will at the Lessee’s cost replace to the satisfaction of the Lessor’s architect any fixtures or installation belonging to the Premises…. which are worn out or destroyed or otherwise require replacement’ (clause 11.2(d)).
5. Ultimately, the Lessee must maintain and repair the Lessor’s property in a good and serviceable condition (clause 11.2(e)).
6. We note, you have referred to sections 52 and 53 of the Conveyancing Act 1919 (NSW) in your correspondence. Our view is that these sections are not relevant. Enclosed is a copy of the legislation.
The Lessee’s Complaint
7. Your letters assert that the Hotel’s plumbing is structurally defective, which has caused several toilet and shower drains to block and overflow. However, you have not provided an investigative report from a qualified plumber or engineer particularising how the Hotel’s plumbing is structurally defective. In the absence of any supporting material the Lessor disputes your claim that the blocked drains relate to a structural defect.
8. If structural defects are the cause of the recently blocked drains, then one would expect the blockages to have been an ongoing occurrence. However, we are instructed that, to the Lessor’s knowledge, the Hotel has not previously had issues with blocked drains.
9. Pursuant to clause 11.2(a) of the Lease, the Lessee is required to keep the Premises in good repair and condition. This obligation requires the Lessee to undertake necessary maintenance work to unblock the Hotel’s drains.
Rent Abatement
10. We refer to your letter of 3 November 2025, which asserts that you are entitled to a rent abatement because of the disruption caused by the blocked drains. You rely on section 52 of the Conveyancing Act 1919 (NSW) and the ‘common law covenant of quiet enjoyment’ as authority for the purported entitlement.
11. As explained at paragraph [7] above, you have not provided any supporting material to demonstrate that structural defects are the cause of the blocked drains. Accordingly, the Lessee is required to repair and maintain the Property pursuant to clause 11.2(a) of the Lease, which includes unblocking the drains. In these circumstances, the Lessee is not entitled to a rent abatement.
12. Further, you have arbitrarily calculated the purported rent abatement. Even if the Lessee was entitled to an abatement (which is disputed), the calculation of a 45% reduction of rent is egregious.
13. On 4 November 2025, you paid $7,269.00 being approximately 55% of the monthly rent for November 2025. As you are aware, the total monthly rent is $13,513. Accordingly, you are currently in arrears for approximately 45% of the monthly rent, being $6,244.74.
14. Pursuant to clause 18.6 of the Lease, the payment of rent (clause 4.1) is an essential term of the Lease. The Lessor can recover damages from the Lessee for any loss or damage suffered by the Lessor because of the Lessee’s breach of the Lease – including terminating the Lease. Additionally, pursuant to clause 6.1(a)(ii) of the Lease, the Lessee is required to pay the Lessor’s legal costs in relation to a breach of the Lease by the Lessee.
Moving Forward
15. The Lessee is currently in default of an essential term of the Lease by not paying the monthly rent for November 2025. To remedy this default, we request that the Lessee pay the rental arrears ($6,244.74) by, Thursday 13 November 2025.
16. If the payment of rent is not received by this date, we are instructed to issue a Notice of Breach of Covenant pursuant to section 129 of the Conveyancing Act 1919 (NSW). We will also seek to recover all legal costs incurred by our client in relation to this default.
17. Additionally, in the absence of any supporting material indicating the blocked drains are caused by structural defects, the Lessor hereby puts the Lessee on notice, pursuant to clause 11.3 of the Lease, that the Lessee must repair all blocked drains as particularised in your letters of 28 October 2025 and 3 November 2025. The Lessor requires this work to be undertaken within 28 days of this letter, being Thursday, 4 December 2025.
18. We also note that NCAT does not have jurisdiction to determine commercial lease disputes other than ‘retail leases’ as defined in the Retail Leases Act 1994 (NSW). The Lease is not a ‘retail lease’. Accordingly, NCAT does not have jurisdiction to determine the matters raised in your correspondence.
19. Given the seriousness of the matters raised in this letter, we encourage you to seek urgent legal advice.”
“1. We refer to your letter of 6 November 2025. We are instructed to respond to your correspondence, as follows:
Structural Defects
2. You have continued to assert that the purported plumbing failures and defects ‘constitute structural defects’. We acknowledge your continued claim that the ‘structural plumbing may be out of code’. However, you have not specified the nature of the structural defects alleged nor have you provided any supporting material from a qualified tradesperson.
3. In your letter of 28 October 2025, you stated that ‘a licensed plumber has assessed the system and confirmed that the blockages originate from underfloor structural plumbing, requiring access beneath the floor to identify and clear the obstruction’. On 3 November 2025, you referred to further assessments from ‘professional licensed plumbers’.
4. So that the matter can be progressed, please provide us with all reports prepared by the licensed plumbers referred to in your correspondence. If reports have not been prepared, please provide us with the licensed plumber’s name and contact details. The provision of this information will enable our client to investigate the concerns you have raised.
5. In any event, the Lease defines pipes, drains, sewers and other services to the Premises as Lessor’s Property. The sewerage pipes do not constitute part of the ‘structure’ of the building. The structure is that part of the total building that supports the loads and stops the building falling down.
6. The Lessee’s obligations under the Lease are:
■ Clause 8.1(a)(i): keep all waste pipes and drains in the Premises free from blockages.
■ Clause 11.2(a): keep the Premises including the Lessor’s Property in good repair and condition.
■ Clause 11.2(d): replace the Lessor’s Property which are worn out or destroyed.
■ Clause 11.2(e): maintain and repair the Lessor’s Property.
7. Evidently, it is clearly the Lessee’s obligation to maintain sewerage pipes and clear any blockages. This does not constitute “structural maintenance” as the pipes do not form part of the building structure.
8. Additionally, we are instructed that our client has not been made aware of ‘structural plumbing defects’ by any previous lessees.
Moving Forward
9. The Lessee is obligated to unblock and maintain the pipes. In these circumstances, the Lessee:
(a) is not entitled to any rent abatement and is currently in default of an essential term of the Lease for unpaid rent. Our client will issue a Notice of Breach of Covenant if the Lessee does not remedy this default by next Thursday, 13 November 2025.
(b) has been notified, pursuant to clause 11.3 of the Lease, that the Lessee must repair all blocked drains as particularised in your letters of 28 October 2025 and 3 November 2025. The Lessor requires this work to be undertaken by Thursday, 4 December 2025.
10. Our client will defend any proceedings commenced by the Lessee in relation to the matters raised in this letter. Additionally, our client will file a cross-claim seeking to recover damages (i.e. loss of rent) and legal costs.
11. As suggested in our previous correspondence, we strongly encourage you to seek urgent legal advice.”
On 11 November 2025, Valor and Pride commenced proceedings in the Small Claims Division of the Local Court seeking orders that Ord Developments carry out repairs to remedy the plumbing defects. Those proceedings were eventually discontinued on 18 December 2025.
On 11 December 2025, Valor and Pride commenced these proceedings on an urgent basis by application to the Duty Judge. On 12 December 2025, Slattery J made orders providing a mechanism for the parties to appoint a joint expert to inspect and report on the plumbing defects.
On 16 December 2025, Mr Joel Fullick as the Court-appointed joint expert produced a report (the first report) which:
(a) revealed that there was “an extremely large buildup of calcified urine” (the blockage); (b) stated that he had managed to crack the blockage, partially clearing the urinal line which was now allowing use; and (c) recommended two rectification methods to clear the blockage entirely being:
(i) option A: pouring two bottles of acid down the drain at an estimated cost of $500.00 to $700.00 (excluding GST); and (ii) option B: if option A fails, excavate outside the building to gain access to the sewer line.
On 17 December 2025, his Honour made orders for the parties to implement option A and to split those costs equally.
On 24 December 2025, Ord Developments issued:
(a) a breach notice under the lease relying on Valor and Pride’s failure to pay the rent for November 2025 and December 2025; and (b) a further breach notice under the lease relying on Valor and Pride’s failure to pay outgoings.
Between 21 December 2025 and 8 January 2026, Valor and Pride closed the hotel.
On 11 January 2026, Mr Smith wrote to JDK Legal asserting four new “serious structural and safety defects” being:
(a) steel corrosion and falling render on the second-floor balcony; (b) emergency exit light and emergency stairwell light from the balcony leading from the kitchen area were not connected to the main power supply; (c) a portion of the balcony roof structure had collapsed; and (d) a floor joist had collapsed in the bar area.
On 29 January 2026, Ord Developments wrote to Mr Smith demanding payment of outstanding rent and outgoings by 4 February 2026 and foreshadowing termination of the lease if such payments were not made.
On 3 February 2026, Mr Smith served an affidavit identifying the following alleged “structural defects”:
(a) the blockage; (b) an illegal sewer connection rendering the disabled toilets unusable; and (c) the new defects.
On 5 February 2026, Hammerschlag CJ in Eq made orders enjoining Ord Developments from terminating the lease, pending resolution of the proceedings.
On 10 February 2026, Mr Fullick carried out works to remove the blockage.
On 11 February 2026, the parties entered into an agreement, on a without admissions basis, in the form of a letter from JDK Legal to Mr Smith in these terms:
“We refer to your letter dated 10 February 2026 and email of 11 February 2026.
We believe that the parties’ positions are closely aligned in so far that:
■ The Lessee’s interest (if any) in all seven (7) GMEs are reserved for determination at the final hearing.
■ These settlement terms do not affect both parties’ rights in relation to the issues in dispute, including, but not limited to, rent abatement and losses.
However, as the Lessee has proposed additional terms, the offer contained in our letter of 10 February 2026 is not considered to have been accepted.
To avoid any uncertainty regarding the terms of a settlement agreement, we are instructed to again make the following offer in a genuine attempt to settle the interim relief. You will note, we have included additional terms relating to structural repairs and filing fees in response to your letter in order to facilitate a resolution.
The Defects
1. The Lessor will (without admission) engage Mr Fullick to undertake plumbing works necessary to remedy the alleged defects (if any) identified in paragraphs 26, 27, 28 and 34 of Mr Smith’s affidavit of 3 February 2026.
2. The Lessor will (without admission) engage a qualified tradesperson to undertake works necessary to remedy the balance of the alleged defects (if any) identified in Mr Smith’s affidavit of 3 February 2026.
3. Mr Fullick and the tradesperson engaged in accordance with [2] above will be instructed to:
(a) inspect the defects identified in Mr Smith’s affidavit;
(b) provide a report identifying, with specificity:
(i) the location of any defects (if any)
(ii) the cause, existence and extent of any defects (if any);
(iii) the method(s) of rectification for any matters identified in (i) and (ii) above (the ‘Remedial Works’); and
(iv) the estimated cost of the Remedial Works, and
(c) undertake the Remedial Works identified in [3](b)(iii).
4. The Lessor will, without admission, pay all costs of Mr Fullick and the appointed tradesperson. The ultimate liability for Mr Fullick and the tradesperson’s costs will be determined by the Court at a final hearing.
5. The intention of the Lessor making the above offer is to identify and fix any alleged defects as promptly as possible, whilst reserving the question as to who is ultimately responsible under the Lease to pay for those repairs.
Rent and Outgoings
6. Upon completion of the Remedial Works (‘Completion Date’), the Lessee will on the day after the Completion Date pay all rent and outgoings for the remainder of that calendar month on a pro rata basis. The Lessee must then pay all future amounts as they fall due in accordance with the Lease. The rent and outgoings will be paid by the Lessee into JDK Legal’s trust account. JDK Legal will not be authorised to release any amounts paid by the Lessee until the Court’s further orders or Supreme Court proceedings (2025/00481644) are otherwise determined, discontinued or dismissed.
7. The necessity of an independent market rent review is to be determined at a final hearing. Should the Court order a market rent review in accordance with the Lease, the Lessor acknowledges that any rent paid which exceeds the determined rental amount will be re-imbursed to the Lessee within 14 days of the determination of the market rent review.
8. The intention of the Lessor making the above offer is to require the Lessee to pay full rent and outgoings from the date after the Completion Date but, acknowledging the Lessee’s concerns about the quantum of rent payable, having the rent and outgoings paid into the Lessor’s solicitor’s trust account until the Supreme Court matters are finalised.
Termination and Rent Abatement
9. Subject to clause 10 below, the Lessor is restrained from terminating, forfeiting, re-entering, evicting, or otherwise interfering with the quiet enjoyment of the Lessee’s possession of the Hotel until Court’s further orders or the Supreme Court proceedings (2025/00481644) are finalised.
10. For the avoidance of any doubt, the Lessor reserves its rights to terminate the Lease for any new breaches of the Lease, including, but not limited to, the Lessee’s failure to pay rent and outgoings in accordance with clause 6 above.
11. The parties acknowledge that the amount of rent and outgoings payable under the Lease for the period from 1 November 2025 until the Completion Date will be determined at a final hearing.
12. The intention of the Lessor making the above offer is to allow the Lessee to make its rent abatement argument without the Lessor taking action to terminate the Lease, but also ensuring the Lessor is not prevented from taking action authorised under the Lease if the Lessee does not comply with the Lease after the Remedial Works have been completed.
Gaming Assets
13. The Lessee will sign and return the enclosed gaming machine entitlement (‘GME’) variation form by no later than 2:00pm Wednesday, 11 February 2026.
14. The Lessee will procure that the licensee also signs and returns the GME variation form by no later than 2:00pm Wednesday, 11 February 2026.
15. Determination of the Lessee’s interest in the GMEs (if any) is reserved for final hearing. Any entitlement to hosting fees and/or gaming machine revenue, which will be determined at final hearing, will be re-imbursed to the Lessee from the commencement of the Registered Transfer of Lease AV211713 if ordered by the Court. The conduct of the Lessee in clause 13 and 14 above is on a without admissions basis, in that it cannot be used to support any argument at final hearing that the Lessee is not entitled to an interest in the GMEs.
16. The intention of the Lessor making the above offer is to ensure that three GMEs are leased out at valuable consideration which will prevent the Lessor and the Lessee (depending on the Lessee’s success on the final determination of clause 15) losing income from the GMEs. This offer will also allow the Lessee to gain income (depending on its success in relation to clause 15) from the previous GME lease that it signed to lease three GMEs to the Empire Hotel in November 2025.
Final Hearing and Costs
17. The interim hearing before Peden J on 12 February 2026 is vacated.
18. The parties will seek an expedited final hearing upon the Remedial Works being completed.
19. The parties agree to seek an adjournment of the hearing on 13 February 2026, noting that an expedited final hearing will be sought by both parties upon the Remedial Works being completed.
20. The intention of the above offer is to avoid the need for appearances at further interlocutory hearings this coming Thursday and Friday.
21. Costs of the proceedings are in the cause and will be determined at the final hearing.
Structural Repairs
22. The parties acknowledge that a central issue in dispute is the obligation under the Lease (including but not limited to clause 17.4) to undertake structural repairs at the Hotel and its application to the Remedial Works.
23. Determination of which party is obligated to undertake the Remedial Works will be determined at a final hearing. Notwithstanding, the Lessor has agreed, on without admissions basis, to undertake the Remedial Works at its costs initially in accordance with clause 4
Filing Fees
24. The parties acknowledge that costs of the proceedings to date are otherwise reserved and will be determined at final hearing.
25. Notwithstanding clause 24, the Lessor agrees to pay the Lessee $3,216, without admission and on a without prejudice basis, on account of its filing fees.
26. The Lessor reserves its rights in relation to the payment of $3,216 to the Lessee on account of the filing fees and in respect of the costs of the proceedings generally.
This offer is capable of immediate acceptance in writing, at which point in time a binding agreement comes into place between the parties.
This offer seeks to avoid further interlocutory hearings and preserve the status quo until the matter is resolved at a final hearing (if required). Upon the completion of the Remedial Works, the parties will be better positioned to work towards a final settlement.
Given the upcoming interlocutory hearing, this offer is open for acceptance until 2:00pm on Wednesday, 11 February 2026. If the Lessee does not accept the offer within the offer period, the offer will be taken to have been rejected.”
(a) the parties issued a letter of instruction to Mr Fullick to inspect and report on the blockage and alleged illegal sewer connection and undertake plumbing works to remedy the blockage and alleged illegal sewer connection; and (b) Valor and Pride acknowledged in writing that the issues with the men’s toilet and disabled toilets had been rectified.
On and from 23 February 2026, works were carried out at the Central Hotel to rectify the new defects.
On 3 March 2026:
(a) Mr Fullick attended the Central Hotel to carry out works and issued a report (the second report). (b) The second report confirmed that:
(i) the disabled toilets ran into the sewer as per current codes; (ii) the women’s toilet blockage was rectified by removing the blockage around the kitchen sink connection; (iii) the upstairs male shower was blocked as there was a steel wool item blockage:
(a) the blockage was removed and the shower was tested for 10 minutes as functioning; (b) Valor and Pride subsequently reported the shower had become blocked again; and (c) further works requiring 4 hours to be undertaken were recommenced to rectify the shower; and
(iv) the toilet areas on the ground floor were completely functional and could be used to maximum capacity.
(a) Mr Fullick attended the Central Hotel, carried out further works to unblock the men’s shower and issued a further report (the third report). This report confirmed that object causing the blockage to the men’s shower was the head of a toilet brush; and (b) JDK Legal wrote to Mr Smith confirming that the remedial works under the 11 February 2026 interim agreement had been completed and that rent (adjusted pro rata for that month) should now be paid into its trust account.
On 13 March 2026, Valor and Pride paid rent (adjusted pro rata for that month) into the trust account of JDK Legal.
On 31 March 2026, Mr Smith informed JDK Legal that he had paid the rent for April 2026. That payment did not clear, with Mr Smith informing JDK Legal in writing on 8 April 2026 that Valor and Pride’s accounts had been blocked by the Federal Police.
On 30 April 2026, Mr Smith wrote asserting (for the first time) that the remedial works had not been completed.
“I refer to the agreement dated 11 February 2026 and the works said to have been completed.
After investigations into material obtained in a notice to produce from your client it has been determined the works at the premises have not been completed with compliance and by non-certified tradespersons and not completed properly rather in a cover up of the structural works therefore clause 6 of the agreement is still in place in relation to the payment of rent.
1. Non-Completion of Remedial Works
1.1 I do not accept that the ‘Remedial Works’ have been completed within the meaning of the agreement.
1.2 Clause 6 provides that rent is payable only upon completion of those works. That obligation has not arisen.
1.3 As established by the High Court in Perri v Coolangatta Investments Pty Ltd, where a contractual obligation depends on the fulfilment of a condition, that obligation does not arise unless and until the condition is satisfied.
1.4 In this case, completion of the Remedial Works is a condition precedent to the obligation to resume rent.
2. Nature of the Works Undertaken
2.1 The works undertaken appear to involve structural elements, including:
■ deterioration of heavily corroded steel archways along with broken away brickworks from the archway associated with the falling render; and
■ failure of flooring joists under the floor within the bar area
2.2 Those matters appear to have been addressed by covering or patching, rather than proper rectification.
2.3 No engineering report, certification, or approval was ever assessed, approved or certified.
3. Works Not Properly Completed
3.1 The High Court has made clear that building work must be carried out properly and in accordance with the contract.
3.2 In Bellgrove v Eldridge, the Court held that work must be performed in a proper and workmanlike manner, and defective work does not constitute proper performance.
3.3 Further, in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd, the Court confirmed that a party is entitled to the performance contracted for, not an inferior or substitute outcome.
3.4 In circumstances where structural defects appear to have been concealed rather than rectified, and no engineering assessment or certification has been provided, the works cannot be regarded as properly completed.
4. Failure to Comply with Proper Standards
4.1 The absence of engineering assessment or certification in relation to structural elements raises serious concerns as to whether the works meet proper building standards.
4.2 As recognised in Bryan v Maloney, building work must ensure structural integrity and avoid latent defects.
4.3 Works that simply cover underlying structural issues without proper assessment or certification are inconsistent with those standards.
5. Licensing Concerns
5.1 Your client and an alleged qualified painter Tim Burcham carried out the works on the two structural works in questions under the name of Ord Developments Pty Ltd.
5.2 Mr. Burcham, a painter, not a qualified tradesperson to carry out the works issued an invoice to Ords Development Pty Ltd for 7 hours labour and the purchase of Builders Big + Hardner to the total of $467.85.
5.3 I have conducted searches of the public register maintained by NSW Fair Trading and made enquiries with the Building Commission.
5.4 Those enquiries do not identify:
■ any builder’s licence held by ORD Developments Pty Ltd; or
■ any current builder’s or relevant trade licence held by Mr Hamish Tobias Ord (noting no licence appears to have been held since approximately 2018).
5.5 Invoices issued are in the name of ORD Developments Pty Ltd and do not disclose any builder’s licence number.
5.6 No licensed builder or building company has been identified in the pleadings or evidence as having carried out or supervised the works.
5.7 In Pavey & Matthews Pty Ltd v Paul, the High Court confirmed that work carried out outside statutory requirements, including licensing requirements, is not enforceable in the usual way.
6. Effect on Completion and Rent
6.1 In light of the above matters:
■ the works have not been properly carried out;
■ no proper engineering assessment or certification has been provided; and
■ no licensed contractor has been identified
■ I do not accept that the Remedial Works have been completed.
6.2 For clarity, my position is not that I am refusing to pay rent, but that:
■ the obligation to resume rent under clause 6 has not arisen, as the condition precedent of completion has not been satisfied within the agreement
■ This position is also consistent with Foran v Wight, which confirms that a party is not required to perform a dependent obligation where the other party has not properly performed its obligations.
7. Request for Information
7.1 To clarify this position, please provide by 5:00pm tomorrow:
■ Details of any builder’s licence under which the works were carried out;
■ The name of any licensed contractor or supervisor;
■ Details of any other entity or trading name involved; and
■ An affidavit from any of the above stating the same;
■ Copies of any engineering reports or certifications relating to the works.
7.2 If I do not hear from your client by the deadline I will assume that there is no other builders licence or entity. If only limited information is supplied I will be seeking for an extension from the court due to this fresh evidence for my service of all evidence to serve subpoenas on the other entity and canvass the requirement of a cross claim.
8. Further Steps
8.1 If it is the Defendant’s position that the Remedial Works have been completed, then in the absence of proper certification and clarification of licensing, I consider that the appropriate course would be for:
■ the existing covering works relating to the structural issues (including the steel archways and flooring/joists) to be removed;
■ the underlying structural elements to be properly inspected by a suitably qualified engineer;
■ the engineer to provide a report identifying the condition of the structure and the required rectification works; and
■ those rectification works to be carried out by appropriately licensed tradespersons under proper supervision, with the engineer providing confirmation that the works have been completed in accordance with acceptable standards.
■ once that process has been undertaken and the works are properly completed and certified, the position under clause 6 can be reassessed.
8.2 In the absence of such steps, I do not accept that the Remedial Works have been completed.
8.3 I also reserve my right to raise these matters with the Building Commission if necessary.
I look forward to your response.”
On 6 May 2026, JDK Legal wrote to Mr Smith confirming, among other things, that rent for April and May 2026 had not been paid.
On 4 June 2026, Ord Developments’ expert, Mr Pandey, inspected the Central Hotel. His report confirmed that he did not observe:
(a) any sagging, displacement, major settlement cracking, bearing failure or separation on the arched lintel on the first-floor balcony; or (b) any visible gross collapse, major displacement or obvious excessive deflection of the fibre cement flooring behind the bar.
“ITEM 9A MARKET RENT REVIEW DATES
On commencement of any Option lease.
…
‘BUILDING’ means the land and buildings described in Item 4 and includes all improvements in or on the Building owned or controlled by the Lessor, the Lessor’s Property, the Fire Equipment, the Airconditioning Equipment and any extensions or additions to the Building and any part of the Building.
…
‘LESSOR’S PROPERTY’ means all wires, cables, ducts, plant, machinery, fixtures, fittings, equipment, kitchens, toilets, grease traps, wash basins, water, gas and electrical fittings and equipment, pipes, drains, sewers, roof and other services in or to the Premises or the Building owned or controlled by the Lessor including the items noted in the inventory in Schedule 1.
…
‘PREMISES’ means the premises described in Item 5 and includes all the Lessor’s Property, the Fire Equipment and the Airconditioning Equipment located within the Premises all the equipment and contents listed in the Inventory and any part of the Premises.
…
4.2 MARKET RENT REVIEWS
(a) This Clause 4.2 applies if a Market Rent Review Date is set out in Item 9A.
(b) Not earlier than three Months but not later than 1 month before a Market Review Date, the Lessor may give the Lessee a written notice of the Lessor’s assessment of the Current Annual Market Rent of the Premises as at that Market Rent Review Date.
(c) The Rent from and including the relevant Market Rent Review Date is the amount stated in the Lessor’s notice given under Clause 4.2(b) unless the Lessee gives the Lessor a written notice within 21 days after the Lessor's notice is given objecting to the Lessor’s assessment.
(d) If the Lessor and the Lessee do not agree on the Current Annual Market Rent of the Premises as at the relevant Market Rent Review Date within 21 days after the Lessee’s notice under Clause 4.2(c) is given then that amount must be determined by a Valuer who:
(i) is nominated by the Lessor and the Lessee or (if they do not agree upon a nomination within 21 days after the Lessee’s notice under Clause 4.2(c) is given) is nominated at the request of either the Lessor or the Lessee by the President;
(ii) is instructed to make a determination that conforms with the criteria set out in the definition of Current Annual Market Rent in Clause 1.1 and notify the Lessor and the Lessee of the amount determined within one month of the appointment;
(iii) will act as an expert and not as an arbitrator and whose determination will be final and binding.
(e) The Lessor will request the President to appoint another Valuer if the nominated Valuer:
(i) fails to accept the appointment;
(ii) fails to make the determination within one month after acceptance of the appointment;
(iii) becomes incapacitated or dies;
(iv) resigns.
(f) The Lessor and the Lessee may make written submissions to the Valuer before the date on which the Valuer is required to make the determination. When making the determination, the Valuer is entitled (but not obliged) to take into account any written submissions, except any not consistent with Clause 1.1.
(g) The Lessor and the Lessee will each pay one half of the Valuer’s costs of the determination.
(h) If the Rent has not been agreed or determined by a Market Rent Review Date:
(i) the Lessee will pay the Lessor the Rent applicable immediately before that Market Rent Review Date by equal monthly instalments on account of the Rent from that Market Rent Review Date; and
(ii) On the first Rent Payment Date after the Rent has been agreed or determined under this Clause 4.2, the Lessee must pay the Lessor the difference between what the Lessee has paid on account of Rent and the Rent payable for the period from and including the relevant Market Rent Review Date up to but excluding that Rent Payment Date.
(i) This Clause 4.2 shall not operate to reduce the Rent payable in any year of this Lease below the amount equal to the Rent payable in the year immediately preceding the Market Rent Review Date.
…
4.8 ABATEMENT
(a) Except where claims cannot be made under the Lessor’s insurance of the Premises because of an act or failure to act by the Lessee, where the Premises are damaged by fire, flood, lightning, storm or other disabling cause and, as a consequence, the Premises are either substantially unfit or substantial access cannot be given for the Lessee’s use, or the Lessor considers it undesirable to rebuild the Premises, Clauses 4.8(b) and 4.8(c) apply.
(b) The Rent and the Lessee’s Proportion of Outgoings (or a proportionate part of the Rent and/or the Lessee’s Proportion of Outgoings depending on the extent of the damage) will abate from the date of the damage until the Premises are either made fit or reasonably accessible for the Lessee’s use or rebuilt, or this Lease is terminated under Clause 3.3.
(c) Any dispute under this Clause 4.8 will be referred to arbitration under the Commercial Arbitration Act, 1984. Any party can have legal representation at such arbitration.
…
USE OF PREMISES
8.1 USE REQUIREMENTS
(a) The Lessee will:
(i) keep all waste pipes and drains ln the Premises free from blockages;
...
11.2 KEEPING IN REPAIR
(a) The Lessee will at all times keep the Premises including the Lessor’s Property and Lessee’s Property, in good repair and condition having regard to their condition at the earlier of the Commencing Date and the date that the Lessee first occupies the Premises (subject to fair wear and tear).
(b) The Lessee’s obligations under Clause 11.2(a) do not extend to:
(i) any repair required because of damage to the Premises covered by the insurance taken out by the Lessor in respect of the Building (except where any insurance moneys are irrecoverable through the act omission or misconduct of the Lessee or the Lessee’s employees and visitors); or
(ii) any structural maintenance, replacement or repair, except where rendered necessary:
(A) by the act omission or misconduct of the Lessee or the Lessee’s employees and visitors; or
(B) by reason of the Lessee’s particular use of the Premises; or
(C) any alterations the Lessee makes to the Premises.
(c) The Lessee will make good every defect in or damage to the Premises caused by lack of care or misuse by the Lessee or by the Lessee’s employees and visitors.
(d) Despite Clause 11.2(b), the Lessee will at the Lessee’s cost replace to the satisfaction of the Lessor’s architect any fixtures or installations belonging to the Premises including, but not limited to any Airconditioning Equipment (provided it exclusively services the Premises) Fire Equipment and the Lessor’s Property, exit lights and emergency lighting which are worn out or destroyed or otherwise require replacement.
(e) Except as otherwise provided by this Lease, the Lessee must maintain and repair the Lessor’s Property in a good and serviceable condition and to a standard as would reasonably be expected from a hotel business being conducted in a proper manner.
(f) Should any item of the Lessor’s Property deteriorate to a state which is not commensurate with items used in a properly run hotel business, the Lessee must replace those items at his own expense and, following replacement of those items, they become part of the Lessor’s Property and no compensation is payable by the Lessee.
11.3 NOTICES TO REPAIR
The Lessor can give written notice to the Lessee to repair any defects or to carry out any repair works which the Lessee is required to do under this Lease. The Lessee will make good any defects and will carry out any repairs required by the Lessor’s notice and do so without delay and within such time as the Lessor shall determine as reasonable given the nature and extent of the works and notify the Lessor when it has done so.
…
14.3 INTERRUPTION OF SERVICES
The Lessor is not liable to the Lessee for any loss suffered by the Lessee because the Lessor’s Property or the Fire Equipment or Airconditioning Equipment or any services, fail to function.
14.4 INDEMNITIES BY LESSEE
(a) Subject to Clause 14.4(b) the Lessee indemnifies the Lessor against all claims, costs and expenses for which the Lessor is or may be liable in relation to:
(i) loss of or damage to the Premises, or to any property, or injury to or the death of any Person; or
(ii) overflow or leakage of water (including rainwater) or from any sprinkler or from any connection of or to any appliance using water, gas, electricity, sewerage, drainage or other facilities of the Premises, whether originating inside or outside the Premises;
caused or contributed to by the use of the Premises by the Lessee or the act, omission or default of the Lessee or the Lessee’s employees and visitors.
(b) The Lessor is not entitled to the indemnity in Clause 14.4(a) when the loss, damage or injury is caused or contributed to by the Lessor’s negligence or wilful acts but only to the extent that the damage or injury is caused by the Lessor’s negligence or wilful act.
(c) The Lessee indemnifies the Lessor against all claims, costs and expenses for which the Lessor is or may be liable arising from the negligent or careless use or abuse:
(i) of the water, gas, electricity, sewerage, drainage or other facilities of the Premises by the Lessee or the Lessee’s employees and visitors;
(ii) failure by the Lessee to notify the Lessor of any defect in the Premises of which it was aware.
…
17.4 BUILDING
The Lessor shall maintain the Building in good structural repair (allowing for its age and use). The Lessor acknowledges that other than as expressly provided in this Lease the Lessee is not responsible for structural maintenance and repair.
…
18.3 RE-ENTRY ON DEFAULT AND FORFEITURE
The Lessee will be in default under this Lease and the Lessor can immediately without demand or notice re-enter the Premises and terminate this Lease if:-
(a) Rent is unpaid for 14 days after the due date;
(b) Any other monies are unpaid for 14 days after the due date;
(c) Repairs and replacements required by any notice are not completed within the time required by such notice;
(d) The Lessee fails to perform any other of the Lessee’s obligations under this Lease for 14 days after the Lessor gives the Lessee written notice of the Lessee’s default;
...”
Mr Smith submitted that the men’s toilet and the associated biohazard, was one of the most significant defects affecting the premises. This was not an ordinary blockage or a blocked toilet: it was a serious sewer infrastructure failure that rendered part of the licensed premises unusable, created a public health risk and substantially interfered with the operation of the business.
Mr Fullick was appointed pursuant to the Court orders on 12 December 2025 as the independent plumbing expert. He confirmed that his overriding duty was to the Court and that his opinions were independent and based upon his expertise. When Mr Fullick first attended the premises on 16 December 2025, he observed that the men’s urinal was completely inoperable. Importantly, he also observed that the sewer overflow had already created a biohazard requiring warning signals and signs and cleaning before his attendance.
Mr Fullick’s first report similarly records finding biohazard warnings in place, as the urinal was not operational. The observation independently confirmed the evidence given throughout these proceedings that sewage had overflowed from the men’s toilet into the customer area, requiring the area to be isolated because of the health risk.
Mr Fullick then investigated the cause. He physically inspected the plumbing, undertook jetting, conducted camera inspections and flood testing before forming his opinion. His camera inspection revealed something far more significant than an ordinary blockage. He found a substantial accumulation of calcified urine inside the sewer line, hardened into a concrete like substance, and that the blockage had progressively developed over many years. Even after partial clearing of the obstruction, it remained within the sewer infrastructure.
Mr Smith submitted that those findings are extremely important. The blockage was not caused by anything done by Valor and Pride after taking possession four months before. The calcified urine was build-up from the vacated period of three years between 2018 and 2020, due to the urine sitting in the pipe with no water flushing through the pipe. This caused the urine to calcify into a hard obstruction within the sewer infrastructure.
Mr Fullick then addressed the nature of the affected pipework. He concluded that the pipework formed part of the main sewer system serving the premises, was located within and beneath the building structure and was not a surface fixture or something capable of ordinary replacement. He further expressed the opinion that this pipework formed part of the sanitary plumbing infrastructure of the building itself. He therefore characterised the condition as long term deterioration, accumulation over many years and infrastructure failure, rather than routine maintenance. That evidence is entirely inconsistent with any suggestion that the blockage arose from Valor and Pride’s occupation. It had simply taken years for calcified urine to accumulate under the sewer line, ultimately causing it to fail.
Mr Fullick then considered how the defect could be rectified. Initially, he proposed two alternatives. The first involved chemical treatment using sulfuric acid followed by flushing and reinspection. The second involved excavation, exposing the sewer, installing an inspection opening and mechanically clearing the sewer line as a permanent solution. Mr Fullick subsequently carried out the first alternative by the introduction of sulfuric acid into the floor waste. He confirmed that this fully resolved the calcified urine blockage within the sewer line.
Importantly, however, that successful rectification does not alter the cause of the original failure. Mr Fullick’s opinion remained that the blockage had formed progressively over many years because of the long term calcification.
Mr Smith then addressed clauses 11.2 and 17.4. He acknowledged that these clauses directly address responsibility under the lease. Mr Smith submitted in this context that this was not a blocked fixture requiring ordinary maintenance by the tenant. It was deterioration within the landlord’s sewer infrastructure. The evidence also demonstrates the seriousness of the consequences. The sewer overflow produced a biohazard and the urinal could not be used.
To emphasise his point, Mr Smith reiterated the following matters. Warnings had to be erected. Wastewater had overflowed within a licensed venue where food and alcohol were served. Valor and Pride was required to continue operating a hospitality business while customers were exposed to the effect of sewer overflow and offensive odours. The evidence established that the odour extended into the entertaining area, because the urine and wastewater were being forced back through the drainage system. Mr Fullick’s findings regarding the long term calcification blockage are entirely consistent with his evidence.
Mr Smith acknowledged that clauses 11.2 and 17.4 of the lease allocate responsibility for maintaining and repairing the structural fabric and permanent infrastructure of the building. He submitted that Mr Fullick’s evidence supports the proposition that every significant plumbing defect falls squarely within those clauses, because the sewer line formed part of the building. The pipework was beneath and within the structure. The defects developed over many years: they resulted from ageing infrastructure or original installation defects. Rectification required invasive structural works rather than routine plumbing. Mr Fullick never describes these defects as failures of tenant maintenance. Instead, he repeatedly described them as failures of the building’s plumbing infrastructure.
Mr Smith submitted that clauses 11.2 and 17.4 imposed the obligation upon Ord Developments to rectify those structural plumbing defects, and its failure to do so constituted a breach of the lease. Ord Developments’ refusal to rectify the men’s toilets from October 2025 to January 2026, and only after a court order from Slattery J on 12 December 2025, caused a decrease in patronage, loss of trade, reputational damage within the town and cancellation of Christmas functions into December. Trade decreased greatly in December by about $20,000. The hotel reopened on 8 January 2026, with lost trade up to about $50,000.
Mr Smith submitted that the evidence concerning the women’s toilet is significant, because it demonstrates that the problem was not one of ordinary maintenance or misuse by the tenant or any of the patrons. Rather, the independent expert concluded that the defect originated within the building’s permanent sewer infrastructure.
Mr Fullick identified the actual cause of the failure. He found there was a chokepoint within the main sewer lines servicing the premises. This was a backfall within the pipework. Waste and water accumulated within the service line and this caused slow discharge and overflow into the women’s toilets and adjacent sink, causing them to block up. Those findings are particularly important, because Mr Fullick did not attribute those problems to Valor and Pride’s use of the premises. Instead, he specifically concluded that the affected pipework forms part of the main sewer infrastructure of the building. It is located beneath the building. It is not an accessible, serviceable fixture. It forms part of the sanitary plumbing infrastructure of the building. Most importantly, Mr Fullick expressed the opinion that the backfall and the chokepoint were likely caused at the time of the original installation of the sewer line beneath the building, rather than through recent use or any maintenance failure.
Mr Smith once again stressed that this was not a defect created by Valor and Pride or the result of excess patronage or the result of poor maintenance. It is a defect embedded within the building’s permanent sewer infrastructure. Mr Fullick further explained that rectification required access beneath the building, installation of additional supports, correction of the sewer alignment, and restoration of the proper fall on the sewer line.
Mr Smith submitted that “those works plainly involve structural access to the building. They are not routine plumbing maintenance and they involved repairing infrastructure beneath the building itself”. Mr Fullick summarised the cause of the women’s toilets defect as structural backfall within maintenance sewer lines, and likely original installation defects.
That conclusion remained unchanged through his reports. There is no competing plumbing evidence contradicting those findings. Accordingly, the independent expert evidence established that the failure with the women’s toilets was caused by defects within the building’s structural sewer infrastructure, for which the landlord retained responsibility under the lease in accordance with clauses 11.2 and 17.4. Mr Smith submitted that these clauses “allocate responsibility for maintenance and repairs, the structural fabric, and the permanent infrastructure of the building”. Mr Smith submitted that Mr Fullick’s evidence showed that every significant plumbing defect falls squarely within those clauses.
According to Mr Smith, Ord Developments attempted to characterise this issue simply as a blockage. However, Mr Fullick’s evidence demonstrates that the issue is considerably more complex. Mr Fullick found that the upstairs men’s shower became completely inoperable because of a blockage located within the shower gully. Further investigation located the obstruction. It consisted of the head of a toilet brush lodged within the gully trap. Standing alone, the foreign object might appear to be a maintenance issue.
However, that is not where Mr Fullick’s opinion ends: he considered why such a blockage could not be cleared by a normal plumbing method. He found the gully trap formed part of the building’s fixed wastewater infrastructure. It is located beneath the first-floor bathroom floor and is positioned above the ceiling of the ground-floor bistro. There were no inspection openings or maintenance access points, and attempts to clear the obstruction through ordinary maintenance methods were unsuccessful. Because of the lack of access, ordinary maintenance became impossible.
Instead, rectification required removal of part of the downstairs bistro ceiling, carrying out the work while the restaurant was closed, cutting out the pipework, removal of obstruction, and replacing the gully trap. These are invasive building works. They are not simply routine plumbing maintenance. Mr Fullick acknowledged that the immediate blockage was caused by a foreign object, being a toilet brush head. However he was equally clear that because of the pipework’s location and absence of access points, the issue could not be resolved through ordinary maintenance and required invasive works to the building structure to access and repair the infrastructure.
Accordingly, while the foreign object initiated the blockage, the reason the shower remained unusable was because of the design and location of the building’s permanent plumbing infrastructure. The inability to access that infrastructure without removing sections of the building transformed what might otherwise have been a simple maintenance issue into a structural building repair. Mr Fullick summarised this point again in his conclusion. He accepted that isolated defects such as the shower obstruction were caused by foreign objects. However he stated they nevertheless required significant building works to rectify, because of the lack of access to the infrastructure. Mr Smith reiterated that clauses 11.2 and 17.4 allocate responsibility for maintaining and repairing “the structural fabric and permanent infrastructure of the building”.
Mr Smith observed that when I come to consider Mr Fullick’s evidence, it is important to remember that every significant plumbing defect falls squarely within those clauses. Mr Fullick never describes these defects as failures of tenancy maintenance. Instead, he repeatedly describes them as failures of the building’s plumbing infrastructure. Mr Smith again submitted in these circumstances that clauses 11.2 and 17.4 impose the obligation upon Ord Developments to rectify those “structural plumbing defects”, and its failure to do so constitutes a breach of the lease.
Mr Smith anticipated that Ord Developments may seek to rely upon clause 11.2 of the lease to submit that the upstairs men’s shower blockage resulted from the misconduct or wrongdoing by Valor and Pride, its employees, or visitors. Mr Smith submitted that the submission could not succeed on the evidence. Mr Fullick identified that the immediate obstruction consisted of the head of a toilet brush lodged within the shower gully trap: however, importantly, Mr Fullick did not express any opinion that the foreign object had been placed there by Valor and Pride, its employee or any visitor to the premises, nor was any evidence led by Ord Developments to identify who did so.
Ms Joanne Agius’ evidence was that she has lived in the upstairs accommodation since before 2023 and worked regularly as a cleaner in return for subsidised rent. She said in her affidavit that the upstairs men’s shower had been blocked and unusable since at least 2023, being well before Valor and Pride commenced the lease on 30 June 2025. The obstruction was therefore already present before Valor and Pride took possession. Accordingly, clause 11.2 has no application, because there is no evidence that the blockage was caused by any act or omission of Valor and Pride for which it bears responsibility under that clause.
However, Mr Fullick’s evidence goes further. He found that the gully trap forms part of the building’s fixed wastewater infrastructure. It is located beneath the first-floor bathroom floor and above the ceiling of the ground-floor bistro. There was no inspection opening, no maintenance access points and ordinary plumbing methods could not clear the obstruction. As a consequence, there was a requirement to remove part of the bistro ceiling, cut out permanent pipework and replace the gully trap. These were invasive building works to gain access to the infrastructure. Accordingly, Mr Smith submitted that the responsibility falls not under clause 11.2 but under clause 17.4, which requires Ord Developments to keep the building in good structural repair.
In summary, Mr Smith submitted that when Mr Fullick’s evidence is considered as a whole, it reveals a consistent theme. The plumbing issues affecting the premises were not isolated maintenance complaints. His evidence identified permanent defects within the sewer infrastructure of the building. For the women’s toilets, the defect lay in the original installation of the sewer line beneath the building. For the men’s shower, although the immediate obstruction was a foreign object, the inability to clear it arose because the fixed wastewater infrastructure had no inspection or maintenance access points and required invasive building works to reach it.
Mr Smith submitted that Mr Fullick ultimately concludes that the primary defects were located within the main sewer system of the building, that the affected pipework formed part of the structural plumbing infrastructure of the premises and that the conditions developed over many years and were consistent with ageing infrastructure and installation defects rather than routine maintenance. Accordingly, Mr Fullick’s expert evidence supports Valor and Pride’s contention that these plumbing failures engaged Ord Developments’ obligation to repair the structural plumbing infrastructure of the premises under the lease under clauses 11.2 and 17.4.
Mr Smith nominated the real question as whether Ord Developments discharged its contractual obligations by carrying out repairs to the arch and the bar floor using appropriately qualified persons and in accordance with the accepted engineering practice. The original first-floor archway defect involved falling render exposing heavily corroded steel lintels. Those lintels are structural members supporting the masonry above the arch. The deterioration had become so severe that pieces of render were falling onto the public footpath below, to the point where Singleton Council had to attend the premises and block off the walkway.
Ord Developments engaged Mr Tim Burcham, a painter, to undertake the repair works. Those works principally consisted of applying rust guard or a similar rust product over the exposed steel, fitting the damaged area with builder’s bog and repairing the section. There is no evidence before the Court that Mr Burcham is a structural engineer, a builder, experienced in structural remediation, a heritage renderer, or otherwise qualified to assess the structural adequacy of corroded structural steel.
Finally, Mr Smith contended that the hole in the floor in the bar area was a structural defect and therefore the responsibility of Ord Developments in accordance with clause 17.4.
These submissions were understandably directed to the overarching question of determining who was responsible for the plumbing repairs and other defects in accordance with the relevant clauses of the lease. They are as follows.
Building is defined in the lease to include all improvements on the building owned or controlled by the lessor and the lessor’s property. Lessor’s property means all wires, cables, ducts, plant, machinery, fixtures, fittings, equipment, kitchens, toilets, grease traps, wash basins, water, gas and electrical fittings and equipment, pipes, drains, sewers, roof and other services in or to the premises or the building owned or controlled by the lessor. Premises means the hotel known as “Central Hotel, 51 John Street, Singleton” and includes all the lessor’s property.
With respect to the lessee’s obligation to repair:
(a) Clause 8.1 of the lease requires Valor and Pride to keep all waste pipes and drains in the premises free from blockages. (b) Clause 11.2(a) of the lease requires Valor and Pride to keep the premises including the lessor’s property in good repair and condition having regard to their condition as at 1 November 2020 (subject to fair wear and tear), but does not extend to any structural maintenance unless rendered necessary by the lessee’s act or omission or by reason of the lessee’s use of the premises. (c) Clause 11.2(e) of the lease requires Valor and Pride to maintain and repair the lessor’s property in a good and serviceable condition and to a standard as would reasonably be expected from a hotel business being conducted in a proper manner. (d) Clause 11.2(f) requires Valor and Pride to replace at its expense without compensation any lessor’s property that deteriorates to a state which is not commensurate with items used in a properly run hotel business. (e) Clause 11.3 permits the lessor to direct Valor and Pride to carry out repairs it is required to do under the lease and it must do so without delay.
Clause 17.4 of the lease requires Ord Developments to maintain the building in good structural repair (allowing for its age and use).
Clause 4.8 deals with abatement:
(a) Clause 4.8(a) provides Valor and Pride with an entitlement to abatement where it can demonstrate that:
(i) part of the premises is substantially unfit for use as a licensed hotel by reason of damage caused by fire, flood, lightning, storm or other disabling cause; and (ii) the damage did not occur due to Valor and Pride’s breach of the lease.
(b) Clause 4.8(b) provides that rent and outgoings will be reduced proportionate to the extent of the damage until the premises are made fit.
In light of these provisions of the lease, Ord Developments submitted that Valor and Pride would need to demonstrate that the defects arise from either a failure by Ord Developments to keep the building in good structural repair or a failure by it to carry out structural maintenance and that such structural maintenance did not arise through Valor and Pride’s use of the premises.
The proper meaning of the term “structural” must be determined in the context of the clauses in the lease and surrounding circumstances. Ord Developments submitted that the expression structural “concentrates the mind upon the condition, state, or quality of a building [suggesting] something which is associated with, relates to, or affects the structure considered as a whole”: Holus Bolus Pty Ltd v The Wicko Pty Ltd [2012] NSWSC 497 at [31].
Ord Developments drew my attention to Carbure Pty Ltd v Brile Pty Ltd [2002] VSC 272 at [44] where Balmford J said:
“‘[T]he structure’ is that part of the total building that supports the loads and stops the building falling down. It should be emphasised that a building may be structurally sound notwithstanding that it shows signs of movement; as by the opening of cracks. Unless such cracks indicate a real and present threat to load bearing integrity, of building failure or collapse, they may be treated as simply cosmetic defects – susceptible of patching, painting or other straight-forward repair.”
“The distinction between structural and non-structural repairs requires the Court to make a practical judgment as to whether the work, having regard to its nature and extent, interferes with or alters the framework or structure of the building.”
The cases establish that determination of the question whether or not, for example, amendments or alterations are of a structural nature, is largely a matter of fact and degree and the court should apply a practical, “common-sense man-of-the-world view”: Holus Bolus at [32].
Ord Developments submitted that unless there is a “real and present threat to load bearing integrity”, the building is not in a state of structural disrepair (Carbure at [44]) and maintenance or repair is “structural” when its purpose and effect are to remedy some “failure on the part of the structure to remain satisfactorily put together”: Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2004] NSWSC 487 at [40].
Ord Developments submitted that, at this stage, the plumbing defects do not enliven its repair obligations for the following reasons.
First, Valor and Pride has adduced no evidence to establish that these defects have threatened the load-bearing integrity of the building and it bears the onus of proof in this regard. Secondly, the flooding in the men’s toilets downstairs was caused by “an extremely large buildup of calcified urine”. Thirdly, the backflow in the women’s toilets downstairs was caused by a blockage in a chokepoint around the kitchen sink connection. Fourthly, the issue with the men’s shower was caused by a blockage in a “waste pipe” or “drain”, being the head of a toilet brush. Fifthly, in accordance with clause 8.1(a) of the lease, Valor and Pride must keep waste pipes and drains free from blockages, which would include an extremely large buildup of calcified urine and/or the head of a toilet brush. Finally, the clearing of a blocked chokepoint, removal of an extremely large buildup of calcified urine and/or the head of a toilet brush does not and could not involve structural maintenance of any kind.
Ord Developments also submitted that the further defects do not enliven its repair obligations for the following reasons.
First, Valor and Pride has adduced no evidence to establish that these defects have threatened the load-bearing integrity of the building and it bears the onus of proof in this regard.
Secondly, the photos relied on by Valor and Pride cannot demonstrate a breach of Ord Developments’ repair obligations in the absence of expert evidence as to what is shown in the photographs or how they should be interpreted. Ord Developments submitted that I could not permissibly make findings of fact that are otherwise unsupported by the evidence. To do so would be no more than conjectural or speculative: Blacktown City Council v Hocking [2008] NSWCA 144 at [8]-[9], [167]-[169].
Thirdly, even if Valor and Pride could prove these matters, it has adduced no evidence that can assist me to determine how much useability was lost as a result. Ord Developments submitted that, even on the most generous view of the evidence, it is difficult to see how a complete abatement of rent could be established on and from November 2025.
Finally, the closest anything gets to being a problem of a structural nature or that there has been a failure of Ord Developments to comply with its obligation to carry out structural maintenance concerns the lintel. In answer to this issue, Ord Developments submitted that it doesn’t matter on the pleaded case and it certainly doesn’t matter on the abatement claim on Mr Smith’s own admission. That was a reference to the following indication given by Mr Smith:
“PLAINTIFF: It’s a heritage building. It hasn’t been completed to a normal heritage building. It’s a totally different colour to the building. The works completed to it is – it’s just been a cover and conceal. It has not been completed. I have a right to have a heritage building completed to the same as what it was.
HIS HONOUR: It’s not causing you, as far as you know, calculable financial loss, but you say enforcing your rights ‑ if there’s an obligation‑‑
PLAINTIFF: There’s an obligation within the agreement.
HIS HONOUR: There’s an obligation, you say ‑ 17.4 says, ‘The lessor shall maintain the building in good structural repair, allowing for its age’. I'll have to cope with that in due course. The lessor acknowledges that, other than expressly provided in this lease, you’re not responsible, so you say 17.4 requires them to put it in good order.
PLAINTIFF: Correct.
HIS HONOUR: I understand that, but apart from your desire to have that term of this lease enforced so that you get a building of the sort you were entitled to get, you’re not claiming that you suffer a calculable loss. You just want your rights enforced according to the lease.
PLAINTIFF: Correct.”
With respect to the hole in the bar floor, Ord Developments submitted that the expert says that the hardwood joists which support the subfloor structure are a structural element but that there is no evidence that there has been any type of failure of the joists themselves. The complaint that was raised was limited to the subfloor material. There was no suggestion that the joists needed repair.
Ord Developments’ ultimate submission was that no clause in the lease or any combination of clauses can be construed, in the light of the evidence describing and explaining the various defects complained of and the problems that they caused for Valor and Pride, as imposing any obligation on Ord Developments to carry out structural maintenance to the Central Hotel. If it be the case that Valor and Pride has not established an entitlement to abatement, the only question remaining is whether Valor and Pride is entitled to relief against forfeiture following the issue of the respective notices of breach of covenant to pay rent and outgoings. There is no issue before me that the breaches identified in those notices have not been remedied.
As will by now be apparent, there are only two fundamental issues that require resolution:
Was Valor and Pride entitled to withhold rent upon the basis that it had a right to abatement because of Ord Developments’ breaches?
If Ord Developments was entitled to give a notice of breach in advance of terminating the lease for non-payment of rent or failure to pay outgoings, is Valor and Pride entitled to relief against forfeiture?
With respect to the first issue, the answer must be “no”. This is for the following reasons.
First, clause 11.2(b)(ii) places the responsibility for “structural maintenance, replacement or repair” upon Ord Developments. None of the defects of which Mr Smith complains is concerned with any structural maintenance, replacement or repair within the meaning of that clause. Mr Smith refers constantly to what he describes as serious sewerage infrastructure failures or cognate expressions. It will be recalled that Mr Smith first referred to those terms as early as his letter of 28 October 2025 when he purported to describe “the legal position” under the lease, asserting that “the landlord is responsible for maintaining and repairing the structural components of the premises, including all fixed plumbing, sewer, and drainage systems forming part of the building infrastructure”. His submissions repeatedly refer to “serious sewer infrastructure failures” and “deterioration within the landlord’s sewer infrastructure”. He also refers to “permanent infrastructure” and “ageing infrastructure”, “plumbing infrastructure” and “permanent sewer infrastructure”. There is also a reference to “structural sewer infrastructure” and “wastewater infrastructure”.
In my view, “structural maintenance and repair” has nothing to do with infrastructure, a term that is nowhere used in the lease. Mr Smith appears intentionally to elide these expressions to accommodate the submission he wishes to advance.
It is clear from the terms of clause 17.4 that Valor and Pride is not responsible for “structural maintenance and repair”. However, “lessor’s property” includes all wires, cables, ducts, plant, machinery, fixtures, fittings, equipment, pipes, drains, sewers, and other services in or to the premises. Clause 11.2(a) required Valor and Pride to keep the premises including the lessor’s property in good repair and condition. The major defects of which Valor and Pride complains related to problems with pipes, drains and sewers. These services are no more structural than electricity conduits, water pipes or gas lines.
In any event, clause 8.1(a)(i) imposes an unambiguous obligation upon Valor and Pride to keep all waste pipes and drains in the premises free from blockages. There is no express limitation or carve out that relieves Valor and Pride of that obligation upon the basis that the blockages in the pipes or drains in question predated the commencement of the lease or are otherwise unrelated to any fault of Valor and Pride.
Secondly, even if these provisions were not in terms a complete answer to Mr Smith’s submissions, to the effect that “structural” and “infrastructural” should be read interchangeably, the expert evidence does not assist him. As already referred to in some detail during submissions, Mr Fullick attended the premises and corrected to plumbing problems. His 9 March 2026 plumbing report was in these terms:
“Report findings/comments
Following the resolution of the urinal as highlighted previously.
We have been engaged to address the three additional items as highlighted below:
* The disabled downstairs toilet and a possible illegal connection
* The ladies bathroom blocking up during heavy flow
* The upstairs male shower blocking during use.
During our investigation we have note the following:
* We have been able to camera inspect as well as flush the disabled toilets and can confirm the toilet runs into the sewer as per current codes. There were no functioning issues noted during our inspection.
* The women’s toilets blocking during high use we have been able to gain access under the building to locate a choke point in the main sewer line located around the kitchen sink connection. There was backfall present to the line which was causing water and waste to sit and slowly choke up the line. We have been able to resolve this by installing additional hanging saddles during our inspection.
* The upstairs male shower was blocking seconds after using original which after many attempts at jetting the line were unsuccessful we have sucked the water out of the shower gully to find an obstruction present in the base. There is what looks to be a steal [sic] wool item glued into the base of the gully. This is solely responsible for stopping the natural flow of the shower water, I was able to knock a small section away which after testing the shower for 10 minutes seemed to resolve the blockage.
Following our exit from the site we did receive a call from Mark who advised after one of the hotel patrons showered for 20 minutes the shower had re-blocked. This was very unusual as we had tested the shower before leaving.
The only repair method or repair for this now is to remove a section of ceiling in the dining room to cut the pipework out as any further attempts at clearing this may result in a hole to the shower gully which will impact the restaurant dining room ceiling.
We have been given approval to proceed and have carried out the works, the pipework has been replaced and the shower tested. The object was the head of the toilet brush.”
There is nothing express or implied in Mr Fullick’s reports that gives any support to Mr Smith’s contention that any of the plumbing issues were structural in nature or involved structural maintenance, replacement or repair.
With respect to the archway and the hole in the bar floor, Valor and Pride tendered Dr Andrew Abbo’s report dated 6 July 2026. Dr Abbo is a highly qualified civil engineer. He inspected the Central Hotel at the request of Mr Smith on 12 June 2026. A summary of his observations and findings is as follows:
“2 Inspection
2.1 Visual Inspection
An inspection of the repairs in question was conducted at 11:30am on Monday 12th June 2027 [sic, 2026]. The purpose of the inspection was to consider the suitability of repairs, assess adequacy of the repairs and provide advice in relation to the underlying structural issues and their repair as appropriate.
The inspection was conducted from ground/floor level only and involved visual inspection of the external front walls and the floor area behind the bar. I also accessed the sub floor space of the building via an old cellar but the subfloor structure below the bar area was inaccessible from this room.
The inspection did not involve any non-destructive testing, removal of any linings, measurement of steel thickness, removal of render or repairs to expose corroded steelwork, measurement of steel thickness, moisture readings, or conduct crack width measurement.
We also inspected the front facade of the building which displayed similar damage to the render above the repaired arch and other cracking in the vicinity of the arches.
Photographs taken during the inspection are contained in Appendix C.
2.2 Observations
2.2.1 Repairs to render in archway
My inspection of the repaired archway was conducted after the repairs in question had been undertaken and as such the steel lintels were not visible (refer Photos 9 – 12). There is a distinct crack between the Builders Bog and the original cement render along most of the length of the repair.
I did not observe any visible signs of structural inadequacy that might be associated with the degraded performance of steel lintels such as structural cracking in the masonry/render or excess.
I note that this arch is much shorter in length than the arches across the front of the building.
In addition, I note the repairs were quite distinctive as the texture, colour and finishing of edges did not match that of the original rendered surface in my opinion.
2.2.2 External walls
The render to most other arches across the front of the building showed signs of similar degradation to the repaired arch (refer Photos 13-16). There is distinctive cracking of the render under most arches reflecting delamination of the render due to corrosion of the underlying steel lintel. It would be reasonable to assume the corrosion to the lintels is of similar severity to that of the repaired arch. It would also be reasonable to expect that some areas of render may start spalling and dropping onto the pathway below in the foreseeable future.
On the vertical face of the wall above some arches there is a vertical crack in the render. As my inspection being conducted from ground level, I could not determine if the vertical cracking occurs only in the render or if it extends into the brickwork itself. However, such cracking is consistent with downward deflection of the arch and an indication that structural adequacy of the steel lintels has been degraded to an extent that it allows excessive deflection of the arched brickwork.
2.2.3 Hole in Bar Floor
At the time of my inspection the repairs in question had been undertaken and these obscured the hole in the fibre cement flooring visible in the photographs. I did observe some localised minor cracking to the floor adjacent to the aluminium plate.
I could not access the subfloor space below the repairs to inspect the sub-floor structure supporting this area of the floor.
However, I was able to access the subfloor space via an old cellar. In this part of the building the floor was supported on hardwood joists supported by various beams and brick walls.”
“In relation to the structural integrity of the steel lintels 1BS commented that ‘Structural integrity is not proven to be compromised on the accessible visual evidence’. We agree there is no visible evidence of broader structural inadequacy of the repaired masonry archway. However, there is visual evidence of damage to the steel lintels. The steel lintels are embedded in the walls and as such should be considered as structural load bearing members until advised otherwise by a structural engineer. Given the nature of the construction and the corrosion of the steelwork we would have expected this matter to have been referred to a structural engineer or a builder with expertise in heritage construction.”
Taking account of all of these matters, it seems to me that Mr Smith had no legitimate basis upon which to abate the rent. Even if it could be said that the defects of which Valor and Pride complained rendered the premises either substantially unfit or meant that substantial access could not be given, the obligation to rectify the problems was not the obligation of Ord Developments. With the exception of the archway, the problems were not structural. In the case of the archway, accepting for the purposes of the argument that it was structural and rectification became the responsibility of Ord Developments, Mr Smith’s concession about its effect upon his use of or access to the premises means that he did not have an entitlement to abate the rent as a result. It follows that Valor and Pride was in breach of the lease and that as the notices of breach given to the company were not complied with, Ord Developments’ right to terminate the lease pursuant to clause 18.3 and re-enter and take possession of the premises arose.
Moreover, Mr Smith has not demonstrated an enforceable right under the terms of the 11 February 2026 agreement to withhold or abate rent as it was never sued upon. Correspondingly, Mr Klooster on behalf of Ord Developments had properly conceded that Ord Developments’ damages claim may similarly be subject to the company performing the work referred to in the 11 February 2026 agreement. As that agreement has also not been sued upon by Ord Developments, it cannot insist that the amount of its claim for reimbursement for work it performed pursuant to that agreement be made a condition of any grant of relief against forfeiture.
“1. I am the sole director of the Plaintiff company and am authorised to swear this affidavit on its behalf.
2. Except where otherwise stated, the facts deposed to in this affidavit are within my own knowledge.
3. This affidavit is made in support of an application for relief against forfeiture should the Court determine that the Defendant has established a right to terminate the Lease.
4. The Plaintiff respectfully maintains that the Defendant is not entitled to terminate the Lease and relies upon its submissions in opposition to the Cross-Claim.
5. This affidavit is made only in the alternative and without prejudice to the Plaintiff’s primary position.
Plaintiff’s Conduct
6. Since taking an assignment of the Lease on 30 June 2025, the Plaintiff has remained committed to operating the Central Hotel.
7. Despite substantial structural defects and plumbing failures affecting the Premises, the Plaintiff continued trading wherever reasonably possible.
8. The Plaintiff continued employing staff throughout the dispute despite significant financial losses caused by the condition of the Premises.
9. At all times the Plaintiff intended to continue operating the Hotel and never abandoned the Lease.
Rent
10. During these proceedings the Plaintiff disputed the amount of rent payable because of the market rent review and because of substantial abatements claimed arising from the Defendant’s breaches of the Lease.
11. The Plaintiff has now accepted the contractual monthly rent determined for the purposes of these proceedings of $13,120.14 from 1 November 2025.
12. The Plaintiff is willing and able to continue paying the rent as determined by the Court.
13. The Plaintiff does not seek to avoid its obligations under the Lease.
Defendant’s Breaches
14. The Plaintiff’s claims for rent abatements arose solely because of substantial breaches of the Lease by the Defendant.
15. Those breaches included, amongst other things:
(a) the men’s toilet sewer biohazard;
(b) structural plumbing defects affecting the women’s toilets;
(c) the upstairs accommodation shower plumbing defects;
(d) structural deterioration of the first-floor archway;
(e) structural defects behind the bar floor;
(f) other structural matters identified in the expert evidence.
16. Those defects substantially interfered with the Plaintiff’s use and enjoyment of the Premises.
17. The Plaintiff relied upon the independent expert evidence of Mr Joel Fullick and Dr Andrew Abbo in support of those claims.
Current Position
18. Since the rectification of the principal plumbing defects, particularly the men’s toilet, women’s toilets and upstairs accommodation shower facilities, the Plaintiff has undertaken extensive work to restore the business.
Those initiatives included:
(a) discounted meal promotions;
(b) reduced-price beer promotions;
(c) cocktail nights;
(d) special promotional events;
(e) rebuilding customer confidence following the sewer and biohazard incident.
19. Those initiatives have been successful.
20. The business has substantially recovered.
21. The Plaintiff believes the business is now approaching normal trading levels.
22. The Plaintiff intends to continue operating the Hotel under the Lease.
Remaining Structural Issues
23. The Plaintiff’s remaining concerns relate principally to the structural matters identified by structural engineer Dr Andrew Abbo.
24. The Plaintiff seeks orders requiring those structural works to be completed in accordance with Dr Abbo’s recommendations by appropriately qualified contractors.
25. Once those works are completed, the Plaintiff intends to continue performing all obligations under the Lease.
Hardship
26. If the Lease were terminated:
(a) due to the monies put into the business at the venue termination of the lease would force bankruptcy to the company and myself personally;
(b) fifteen employees would lose their employment;
(b) [sic] those employees rely upon that employment to support themselves and their families in a country town;
(c) thirteen long-term accommodation residents would lose their accommodation;
(d) many of those residents are employed locally, in the town including at the Singleton Abattoir;
(e) affordable long-term accommodation within Singleton is limited and difficult to obtain.
- [sic] Termination of the Lease would therefore adversely affect not only the Plaintiff but also numerous employees, accommodation residents and members of the Singleton community.
Equity
27. The Plaintiff has invested substantial capital, time and effort into restoring the Hotel.
28. The Plaintiff has continued operating despite significant structural defects for which it contends the Defendant bears responsibility.
29. The Plaintiff has acted in good faith throughout the Lease.
30. The Plaintiff remains ready, willing and able to comply with the Lease as determined by this Honourable Court.
31. Any prejudice to the Defendant can be adequately addressed by appropriate conditions imposed by the Court, including payment of any rent found to be payable.
32. By contrast, forfeiture of the Lease would cause the Plaintiff substantial and disproportionate hardship.
33. I respectfully believe it would be just and equitable that, if the Court concludes that a right of forfeiture has arisen, relief against forfeiture be granted upon such terms as the Court considers appropriate.”
“HIS HONOUR: … Q. But nevertheless, you say that you’re not in a position to offer or bring into Court or pay in some other acceptable fashion the rent you concede is due, the outgoings in accordance with the lease or the plumbing invoices for the work carried out at the expense of the plaintiff [sic, defendant], you’re not in a position to pay that money into Court?
A. I don’t – I don’t believe they’re – they’re not at cost – my cost. But if I was to pay the – the costs that Mr Klooster sent to me, no.
Q. Sorry, I’m intervening. You accept, do you, that the unpaid rent up to and including – I’ll go back a space. Do you accept that rent – the period since the date of renewal is due at the rate of the lease that was being renewed?
A. I now concede that, yes.
Q. You understand in accordance with the appropriate principles that you’d be required to pay that either to the landlord or bring it into court, pending resolution of any other disputes that might exist between you before relief against forfeiture could be granted; you understand that?
A. Yes.”
Mr Klooster uncontroversially conceded that this is a case in which relief against forfeiture would be appropriate, provided Mr Smith does equity by bringing into Court or paying the unpaid rent at the full rate. He submitted that Mr Smith has no right to do equity by paying less than the full amount into Court upon the basis that he has neither demonstrated a right under the terms of the lease to withhold or abate rent nor a currently enforceable right to do so under the terms of the 11 February 2026 agreement. Mr Klooster says that any contested rent reduction, if available or established, should be paid into Court along with the uncontested rent, with assessment of the validity of the abatement claim pending the lessor’s compliance with the 11 February 2026 agreement to be litigated later. In other words, the minimum price of relief against forfeiture should be the payment of the full amount of the rent, even if I were to have found that Valor and Pride had established an as yet unquantified entitlement to abatement. In light of my decision, that quantification issue does not arise.
At the conclusion or the hearing, I raised the question of whether or not Mr Smith should be given the chance further to amend his statement of claim to rely upon the unpleaded 11 February 2026 agreement. That approach was opposed by Mr Klooster and I did not grant Valor and Pride leave to do so at that late stage of the proceedings. However, after I had reserved my decision, Mr Smith forwarded a notice of motion to my Associate seeking the following relief:
“1. Pursuant to the Court’s power to permit amendment of pleadings, the Plaintiff be granted leave to file and serve a Further Amended Statement of Claim in the form annexed to the affidavit of Mark Smith sworn on 9th July 2026.
2. The Further Amended Statement of Claim be deemed filed upon payment of the prescribed filing fee.
3. The Defendant have leave, if so advised, to file and serve an amended Defence within 14 days.
4. The costs of this Notice of Motion be costs in the cause.
5. Such further or other orders as the Court considers appropriate.”
Mr Smith’s 10 July 2026 affidavit is well prepared and serves two purposes. The first is to give content to the issues to which I am required to have regard in determining the terms and conditions upon which any order by me granting Valor and Pride relief against forfeiture should be made conditional. The second is to annex a draft of the proposed amended statement of claim that Valor and Pride now wishes to file.
Mr Smith’s affidavit is in the following relevant terms:
“Background
1. I am the sole director of the Plaintiff and am authorised to swear this affidavit on its behalf. Except where otherwise stated, the facts contained in this affidavit are within my own knowledge.
Security Bond
2. The Defendant presently holds the Plaintiff’s security bond under the Lease in the sum of $39,360.42.
3. That security remains available to the Defendant pending determination of any outstanding financial issues.
4. I believe that the existence of that security substantially protects the Defendant against any financial prejudice.
Employees
5. Plaintiff presently employs approximately 15 employees in the operation of the hotel.
6. Those employees depend upon the continued operation of the business for their employment.
Accommodation
7. The Plaintiff presently accommodates approximately 13 residents in rooms situated within the hotel.
8. Immediate possession by the Defendant would require those residents to vacate or make alternative accommodation arrangements.
Existing Bookings
9. The Plaintiff presently has confirmed customer bookings for example this Saturday evening 11 July;
(a) two 50th birthday functions one of 70pax and the other 50pax and also;
(b) one 30th birthday function of 30pax;
(c) other confirmed private functions and bookings have been made.
10. Deposits have been received for a number of those bookings. Immediate closure of the hotel would require cancellation of those functions.
Venue
11. We are the only venue that plays live music in Singleton on Friday and Saturday nights and this is one that idea that has brought back our patronage.
Plaintiff's Property
12. The Plaintiff owns substantial plant and equipment presently situated within the hotel.
13. That property includes but not limited to:
[inventory attached]
14. The Plaintiff’s property represents a substantial investment in the above belongings within the pub to remove from the hotel approximately $150,000.
Removal
15. Removal of that property cannot reasonably occur immediately.
16. Removal will require:
(a) qualified tradespersons;
(b) electricians;
(c) refrigeration contractors;
(d) transport vehicles;
(e) labour.
17. Removal is likely to require approximately 2 weeks to empty out the Hotel.
18. If the defendant was to keep the tenants need to place him on notice new linen, fridges, washing machines, wardrobes, side tables and lamps need to be purchased for the tenants.
Reinstatement
Various original landlord-owned fixtures and equipment presently remain in storage.
Those items will require reinstatement before vacant possession can reasonably be delivered.
Goodwill
19. Since October 2025 the Plaintiff has worked to rebuild the business following the plumbing failures, biohazard conditions and structural issues affecting the premises.
20. The Plaintiff has invested substantial time, labour and money rebuilding the goodwill of the hotel.
21. Immediate forfeiture would destroy much of that goodwill.
Financial Consequences
22. Immediate forfeiture would result in:
(a) closure of the business;
(b) loss of employment in a small country town;
(c) cancellation of bookings;
(d) interruption to accommodation;
(e) loss of goodwill;
(f) inability to remove the Plaintiff’s property in an orderly manner.
Appeal
23. If the Court orders forfeiture of the Lease and possession of the premises, the Plaintiff intends to consider its appeal rights.
24. If advised to do so, the Plaintiff intends to file a Notice of Appeal together with an application for a stay pending determination of the appeal.
Relief Against Forfeiture
25. The Plaintiff believes that any monetary entitlement (if any) determined by the Court can adequately be secured.
26. The Defendant presently holds security under the Lease.
27. I respectfully believe that the Defendant can be adequately protected by monetary orders without immediate forfeiture of the Lease.
Orders
28. This affidavit is sworn in support of the Plaintiff’s Notice of Motion seeking:
(a) relief against forfeiture;
(b) a stay of any possession order;
(c) time to satisfy any monetary judgment;
(d) leave to remove the Plaintiff’s property;
(e) such further orders as the Court considers appropriate.
“The Plaintiff further claims:
1. A declaration that the Agreement dated 11 February 2026 is valid and binding.
2. A declaration that the Defendant failed to complete the remedial works required by the Agreement.
3. A declaration that no Completion Date occurred within clause 6 of the Agreement.
4. A declaration that the Plaintiff was not required to recommence payment of rent pursuant to clause 6 until completion of the remedial works.
5. A declaration that the payment of $9,311.06 made during March 2026 was made under the mistaken belief that the Completion Date had occurred.
6. An order that the payment of $9,311.06 be brought into account in determining the parties’ rent account.
7. A declaration that the Plaintiff remained entitled to rent abatements until completion of the remedial works.
8. Judgment for such amount as the Court determines upon taking the rent account between the parties.
9. Judgment for damages for loss of trade, loss of use of the premises and consequential loss, plaintiff is seeking $20,000 for the month of December 2025, $50,000 for the month of January and $10,000 for the upstairs mens shower accommodation between the date of 30 June 2025 and March 2026.
10. Judgment for court costs paid on the 12th December 2026 (excl interlocutory costs).
11. Judgment for the costs reasonably incurred in obtaining expert evidence, including:
(a) Drainkeepers;
(b) Dr Andrew Abbo;
or such other amount as the Court considers appropriate.
12. Interest pursuant to the Civil Procedure Act 2005 (NSW).
13. Costs.
14. Such further or other relief as the Court considers appropriate.
…
AMENDED STATEMENT OF CLAIM
Additional Facts Relating to the Agreement dated 11 February 2026
Agreement
1. On or about 11 February 2026, the Plaintiff and the Defendant entered into a written agreement for the purpose of resolving interlocutory issues arising from the Defendant’s alleged failure to comply with its obligations under the Lease and facilitating the continuation of the Plaintiff’s occupation of the premises pending final determination of these proceedings.
2. It was an express or alternatively implied term of the Agreement that:
(a) the Defendant would engage appropriately qualified tradespersons to undertake and complete all outstanding remedial works;
(b) Mr Joel Fullick would undertake and supervise the plumbing rectification works;
(c) the remedial works would be completed before the occurrence of the contractual Completion Date;
(d) upon the day following the Completion Date the Plaintiff would recommence payment of rent on a pro rata basis;
(e) thereafter rent would be paid into the trust account of JDK Legal pending final determination of these proceedings;
(f) disputes concerning market rent, rent abatements, gaming machine entitlements and reimbursement would remain reserved for determination by this Honourable Court.
Plaintiff’s performance
1. During March 2026 the Plaintiff believed the remedial works required by the Agreement had been completed.
2. In reliance upon that belief the Plaintiff recommenced payment of rent and, on or about 15 March 2026, paid the Defendant the sum of $9,311.06.
Discovery of continuing defects
1. Following inspection of subpoena material and further investigation, the Plaintiff discovered that the remedial works required by the Agreement had not been completed.
2. In particular:
(a) structural defects remained within the premises;
(b) the structural archway had not been properly repaired;
(c) the hole within the bar floor had not been structurally rectified;
(d) the remedial works had not been undertaken by appropriately qualified tradespersons as contemplated by the Agreement;
(e) further structural rectification remained necessary.
Consequences
1. By reason of the matters pleaded above:
(a) no Completion Date occurred within the meaning of clause 6 of the Agreement;
(b) the Plaintiff was not contractually obliged to recommence payment of rent after 11 February 2026 until completion of the remedial works in accordance with the Agreement;
(c) the payment of $9,311.06 was made under the mistaken belief that the contractual Completion Date had occurred.
Continuing entitlement to rent abatement
1. The Plaintiff says that because the remedial works were not completed in accordance with the Agreement, the Plaintiff remained entitled to continue claiming rent abatements until completion of those works.
Loss and Damage
1. As a consequence of the Defendant’s breaches of the Lease and breaches of the Agreement, the Plaintiff has suffered loss and damage.
Particulars
(a) excessive rent paid;
(b) loss of trading revenue;
(c) loss of use of customer areas;
(d) accommodation losses;
(e) expert witness expenses;
(f) diminution of goodwill and reputation;
(g) such further loss as appears from the evidence.”
The terms of this proposed amended statement of claim are instructive in the sense that they offer a window to the understanding of Mr Smith’s current thinking about a number of matters, including his entitlement to abate rent. Mr Smith agreed with the proposition I put to him that the minimum cost of relief against forfeiture would be payment of all currently outstanding and unpaid rent. The pleading last referred to may tend to suggest a desire to contest that obligation.
Be that as it may, it is clear that Mr Smith wishes to be given the opportunity to retain his lease of the Central Hotel into which he has clearly exerted a great deal of financial, physical and emotional energy. These proceedings are replete with the sense that Mr Smith’s erroneous understanding of the respective rights and obligations under the lease of Valor and Pride on the one hand and Ord Developments on the other hand has unfortunately led him quite ill-advisedly to maintain a legally untenable position on several issues that could and should have been dealt with very differently. If Mr Smith received good legal advice he obviously ignored it: if he followed any legal advice he was given it was clearly bad advice.
I have given close consideration to the position in which Mr Smith now finds himself. The grant of relief against forfeiture of a commercial venture such as the Central Hotel must take account of manifold competing considerations, including those that affect the financial positions of both the lessee and the lessor. In that respect I have paid close attention to the nature and seriousness of Valor and Pride’s breaches of the covenant to pay rent and the nature and extent of any loss that will be suffered by it if the lease were terminated. Mr Smith’s uncontested evidence makes it clear that the financial result for him and the company would be potentially catastrophic. I also take account of the fact that the breaches were not committed in blatant or flagrant disregard of the terms of the lease. They were instead the regrettable outcome of a misunderstanding or misinterpretation of its terms. I do not lose sight of the fact that the actual physical consequences for Mr Smith and what was then his fledgling business caused by the problems with the plumbing would have been most unpleasant. I do not have a sense that further breaches of the terms of the lease are likely. The premises have also not been re-let.
Mr Smith gave a personal guarantee of the obligations of Valor and Pride under the lease. The orders that I propose take account of that liability.
I make the following orders:
Set aside the orders made by Hammerschlag CJ in Eq dated 5 February 2026.
Declare that Ord Developments Pty Ltd is entitled to terminate the lease between it as landlord and Valor and Pride Hospitality Group Pty Ltd as tenant of the premises known as “The Central Bar & Kitchen” situated at 51 John Street, Singleton.
Pursuant to s 14 of the Civil Procedure Act 2005, dispense with the requirements under UCPR 6.8.
Direct the entry of judgment in favour of Ord Developments Pty Ltd for possession of the whole of the land comprised in Folio Identifier 14A/63631 being the land situated at 51 John Street, Singleton and known as “The Central Bar & Kitchen”.
Grant leave to Ord Developments Pty Ltd forthwith to apply for the issue of a writ of possession.
Stay execution of the writ referred to in order (5) above against all occupants of the premises (excluding Valor and Pride Hospitality Group Pty Ltd) until 4pm on 14 September 2026.
Direct Ord Developments Pty Ltd to serve on each occupant of the premises (excluding Valor and Pride Hospitality Group Pty Ltd) as soon as practicable:
(a) the cross-summons; (b) the amended statement of claim; (c) these orders; and (d) my reasons for judgment.
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Valor and Pride Hospitality Group Pty Ltd
Ord Developments Pty Ltd