WATERHOUSE v WAUGH

LOWER COURT District Court JURISDICTION : LOWER COURT DC 3886/00; DC 4212/98 FILE NUMBER(S) : LOWER COURT Rolfe DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

41000/01 DC 3886/00 DC 4212/98 HANDLEY JA GILES JA YOUNG CJ in Eq

2 June 2003 CHARLES HERCULES WATERHOUSE & ORS v WILLIAM MONTAGUE WAUGH & ANOR

LANDLORD & TENANT - assignment of accrued rights of lessor - concurrent lease - Conveyancing Act s 117 - contrary intention

LANDLORD & TENANT - covenant to deliver vacant possession at end of lease - substantial quantity of rubbish left on premises - breach of covenant

The appellants were the beneficiaries in the estate of the late Charles Waterhouse who died in 1954. His surviving brothers, John and Bill (the brothers), were the executors and trustees of his estate. The estate and the brothers owned the Chatswood Charles Hotel as tenants in common in equal shares. In February 1988 the brothers leased the Hotel to the respondent on a weekly tenancy. Following the settlement in principle of all proceedings between the appellants and the brothers arising out of the Hagan v Waterhouse litigation ((1992) 34 NSWLR 308), and to implement that settlement in part, the brothers gave "possession" of the Hotel to the appellants and directed the respondent to pay future rent to them as from 28 September 1992. The beneficiaries entered into a short term lease of the Hotel to the respondent which expired on 4 November 1992 when he vacated. The appellants sued the respondent for breaches of the 1988 and 1992 leases. A Judge of the District Court ordered that the proceedings be summarily dismissed. On appeal by leave:

HELD: (1) The appellants had no direct causes of action under the 1988 lease; (2) The delivery of "possession" to the appellants as from 28 September took effect as a concurrent lease of the Hotel by the brothers to the appellants; (3) Section 117(1) of the Conveyancing Act operated, prima facie, to transfer accrued causes of action under the 1988 lease to the appellants as concurrent lessees; (4) The transaction disclosed an intention that accrued rights should not pass which excluded the operation of s 117(1); (5) The appellants had no rights against the respondent under the 1988 lease as assignees of the brothers; (6) The repairing obligations relied on by the appellants as implied terms of the 1992 lease were inconsistent with its express terms; (7) A claim that the respondent had wrongfully removed plant from the Hotel when he vacated should not have been summarily dismissed; and (8) A claim that the respondent had left a large quantity of rubbish on the premises when he vacated and was therefore in breach of his obligation to deliver up vacant possession was open, although not properly pleaded, and should not have been summarily dismissed.

(2) Orders (1) and (2) made by Rolfe DCJ on 23 November 2001 set aside;

(3) In lieu thereof order that the proceedings be dismissed pursuant to DCR Pt 11 A r3 save for the plaintiffs' claims for the removal of plant as alleged in para 8(e) of the existing statement of claim and for the presence of rubbish on the premises when possession was delivered on 4 November 1992 as alleged in para 8(c) of the existing statement of claim in so far as those claims are based on the express terms of the 1992 agreements;

(4) The amended statement of claim of 12 January 2000 struck out;

(5) Appellants to have leave to file a futher amended statement of claim in accordance with these orders, to include all proper particulars, within 28 days;

(7) Appellants to pay the costs of the respondent of the appeal and cross-appeal and the costs of the cross-respondent.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

41000/01 DC 3886/00 DC 4212/98

HANDLEY JA GILES JA YOUNG CJ in Eq

2 June 2003 CHARLES HERCULES WATERHOUSE & ORS v WILLIAM MONTAGUE WAUGH & ANOR

Judgment 1 HANDLEY JA: This is an appeal, by leave, from the summary dismissal of the appellants' proceedings by order of Rolfe DCJ of 23 November 2001. The appellants are the surviving beneficiaries and the legal personal representatives of a deceased beneficiary in the estate of the late Charles Waterhouse, who died in 1954. His brothers, John and Bill Waterhouse, were the trustees of his estate. Their administration of the estate was the subject of lengthy proceedings in the Equity Division: Hagan v Waterhouse (1992) 34 NSWLR 308. 2 The subject proceedings relate to the Chatswood Charles Hotel (the Hotel), which had been owned by the three Waterhouse brothers in equal one third shares. After the death of Charles the property was under the control of the surviving brothers (the brothers) as beneficial owners and trustees of the estate of Charles. The Hotel had been leased to Tooheys Limited, but it had given a year's notice of intention to quit, which expired on 31 January 1988. The Hotel was in a bad state of repair, and during 1987 the Metropolitan Licensing Inspector had taken an interest in its condition. Proceedings in the Licensing Court culminated in an order on 30 November 1987 directed to Mr Bill Waterhouse which required extensive works to be carried out at the Hotel (Blue 1/24). 3 Hurried negotiations during early February 1988 between Tooheys Limited, the Waterhouse brothers and Mr Waugh (the tenant), resulted in the latter taking possession of the Hotel under a weekly tenancy on 15 February 1988 (1/137, 153, 156). The tenant remained in possession until 4 November 1992. 4 In August 1992 the appellants and the brothers agreed in principle (2/280, 281) to the settlement of all proceedings in the Hagan v Waterhouse litigation on terms which included the following: "The [brothers] transfer to the [appellants] the whole of their right, title and interest in the Chatswood Charles Hotel and the business". 5 On 21 September the brothers signed and delivered a document addressed to the appellants which relevantly stated (2/282): "In accordance with the settlement agreement dated 21 August 1992 and in fulfilment of part of our obligations thereunder: (1) we hereby give you possession of the Chatswood Charles Hotel effective forthwith; (2) we shall notify the present lessee to pay all future rent to you;" 6 On 24 September the solicitors for the brothers sent a facsimile to the solicitors for the appellants confirming that possession of the Hotel and the title deeds for the brothers' one third interests had been given to the appellants (2/283). The appellants, through their solicitors, notified the tenant that they had become sole owners of the property and business and he was required, as from 28 September, to pay the rent to them. They also required payment of the arrears (2/312). On 1 October the appellants' solicitors faxed to the tenant a copy of the brothers' letter of 21 September (par 5). 7 The brothers gave notice of their assignment to the tenant on 2 October, which confirmed that the appellants had become the beneficial owners of the Hotel, and that possession had been given to them in the week commencing 21 September. It stated that: "From this date your tenancy arrangements will be transferred from us to the Charles Waterhouse Family". Following an unsuccessful attempt by the appellants to take possession on 2 October, the tenant obtained an injunction in the Equity Division to restrain interference with his quiet possession. This led on 4 October to the service on the tenant of a week's notice to quit (2/323). 8 Later that day the parties entered into the first 1992 agreement (2/324). This provided for the tenant to remain in possession until 28 October on agreed terms as to rent and outgoings. If further provided: "(7) On 28 October 1992 the Tenant shall deliver possession of the Hotel premises to the Landlord/Owners in the same state of repair as they are presently in, but fair wear and tear and damage by fire, storm, flood, tempest, Act of God, or inevitable accident excepted. (8) The Tenant undertakes to pay all arrears of rental prior to 28 September 1992 to the [brothers]. (9) When the Tenant gives possession of the Hotel to the Landlord/Owners on 28 October 1992 the Tenant shall give to the Landlord/Owners without compensation title to all plant (except Authorised Amusement Devices and CCU Unit, furniture, light fittings, cash registers, carpets then upon the premises excluding leased or rented items such as pool tables, jukebox, pinball machines, televisions and personal items". 9 On 30 October the parties entered into the second 1992 agreement (2/362) which postponed delivery of possession until 4 November. It also provided in cl 4(1) for the tenant to pay $26,888, being the appellants' portion of the arrears of rental to 28 September that the tenant acknowledged. The appellants reserved their rights in respect of council and water rates accrued before 1992, land tax, and repairs and maintenance. The other provisions are not presently relevant. 10 On 17 December 1992 the brothers, who were still the registered proprietors of the Hotel in their various capacities, executed a deed in favour of the tenant which, subject to certain further payments in respect of the arrears of rent, released him from all further claims arising out of his possession of the Hotel between February 1988 and 27 September 1992. 11 The appellants did not become the registered proprietors of the Hotel until 22 December 1994 (2/431, 433, 435). However, on 30 December 1993, they commenced proceedings in the Supreme Court against the tenant based on claims arising out of his possession between February 1988 and November 1992. The action was later transferred to the District Court. 12 The proceedings before Rolfe DCJ included a notice of motion of 30 October 2000, brought by the tenant and another defendant, who has since been dismissed from the proceedings. This sought orders that the amended statement of claim be struck out under DCR Pt 9 r 17, or that the proceedings be summarily dismissed under DCR Pt 11 A r 3, and other relief. There was also a cross-motion by the appellants of 17 November 2000, seeking leave to further amend their statement of claim. Their existing statement of claim (Red 1) pleaded causes of action based on the 1988 tenancy agreement on the basis that the appellants, through their trustees, were parties to that agreement, and causes of action based on the 1992 agreements. 13 The claims based on the 1988 agreement were for unpaid rent, council rates and land tax to 28 September 1992, breaches of covenants to repair the premises and the plant, wrongful removal of plant and equipment, and failure to remove rubbish. 14 The further amended statement of claim, which the appellants sought leave to file (Red 47), alleged for the first time that the 1988 agreement was a lease of the business, as well as the premises. It included a claim based on an estoppel arising from a representation by the tenant acted on by the brothers. It also included a claim that on 24 September 1992 the brothers assigned to them "the whole of the legal and beneficial interest in the reversion of the Hotel and the business and the benefit of the lease between the defendant and the trustees ... and assigned to the plaintiffs all right, title and interest in and to the rents and profits of the said premises" (49). The statement of claim further alleged that the brothers gave express notice of the assignment to the tenant and that s 117 of the Conveyancing Act entitled the appellants to recover arrears of rent and other amounts and damages for breaches of the 1988 agreement. 15 The appellants also alleged breaches of the tenant's obligations under the 1992 agreements in failing to repair the premises and properly maintain the plant and equipment, failing to deliver up the whole of the business, and in particular its account customers, and failing to remove rubbish. 16 The causes of action pleaded (Red 1), and as sought to be repleaded (Red 47), may conveniently be divided into those based on the 1988 agreement and those based on the 1992 agreements. 17 The causes of action directly based on the 1988 agreement, on the necessary assumption that the appellants were parties to that agreement, are hopeless. The appellants cannot have any direct claims based on that agreement because they were not parties to it. Equally they can have no claim based on the alleged estoppel. 18 The appellants sought leave to plead causes of action based on the 1988 agreement acquired by assignment from the brothers. There was no express assignment of accrued choses in action as such because the letter of 21 September 1992 (par 5) only delivered immediate possession of the Hotel to the appellants, with the right to future rent. Nothing was said about any arrears or other accrued causes of action. The express reference to future rent impliedly excluded past rent and accrued causes of action. This is consistent with the brothers' letter to the tenant of 2 October 1992 (par 7). 19 The appellants sought to overcome these difficulties by reliance on s 117(1) of the Conveyancing Act which provides, so far as relevant: "Rent reserved by a lease and the benefit of every covenant or provision therein contained having reference to the subject-matter thereof and on the lessee's part to be observed or performed ... shall be annexed and incident to, and shall go with the reversionary estate in the land ... immediately expectant on the term granted by the lease ... and shall be capable of being recovered ... [and] enforced ... by the person from time to time entitled, subject to the term, to the income ... of the land leased". 20 The first question is whether the 1988 agreement was a lease for the purposes of this section, the second is whether the transaction with the brothers was capable of bringing the appellants within the section, and the last is whether the transaction evidenced a contrary intention. 21 The section has been held to only apply to leases in writing ("the benefit of every covenant or provision therein contained"): Blane v Francis [1917] 1 KB 252 CA. However this requirement has been liberally construed so that the section applies to leases evidenced only by an exchange of correspondence: Cole v Kelly [1920] 2 KB 106 CA, and where the only note or memorandum of the agreement was that signed by the landlord: Rye v Purcell [1926] 1 KB 446. 22 The exchange of correspondence between the solicitors and agents for the parties between 5 February and 18 March 1988 (1/137, 153, 156, and 206) together comprise a note or memorandum of the contract signed by agents for the parties which sufficiently evidence their agreement. The reference in the letter of 12 February from Brock Partners to Freehill Hollingdale and Page to the preparation and execution of a formal agreement containing the express terms "and the usual terms applicable to a lease of a hotel" (154) does not, in my opinion, introduce any relevant element of uncertainty once the tenant had gone into possession. It cannot be inferred that the parties intended there to be no contract unless effect could be given to those words. See Fitzgerald v Masters (1956) 95 CLR 420, 427; Nicolene Ltd v Simmonds [1953] 1 QB 543 CA. The 1988 agreement was therefore a lease for the purposes of s 117. 23 The freehold in the Hotel remained registered in the names of the brothers until 22 December 1994. Although a transfer of the legal title to a reversionary estate would prima facie operate under s 117(1) to transfer accrued causes of action under the lease (London & County Ltd v W Sportsman Ltd [1971] Ch 764 CA) the reversion expectant on this weekly tenancy was determined along with that tenancy when the tenant vacated on 4 November 1992. The reversionary estate ceased to exist and could not be transferred to the appellants in 1994. 24 The appellants therefore have to rely on the transfer of possession in September 1992 as a transfer of the reversionary estate. Their counsel place some reliance on the decision in Dalegrove Pty Limited v Isles Parking Station Pty Limited (1988) 12 NSWLR 546, but that decision was not based on the first limb of s 117(1) which, as Bryson J recognised, requires a transfer of the legal estate (550). 25 The second limb of s 117(1), read with the opening words, provides: "Rent reserved ... and the benefit of every covenant ... shall be capable of being recovered ... [and] ... enforced ... by the person ... entitled, subject to the term, to the income of the land leased". Bryson J held that an equitable assignee of the reversion was within the second limb and entitled, as such, to enforce the covenants in the lease. 26 The September transaction purported to operate as an immediate delivery of possession to the appellants with the right to future rent (par 18). Since the tenant was in possession under a weekly tenancy which had not been determined the brothers could not give the appellants possession as such, or even the immediate right to possession. Their clear intention, confirmed by their letter to the tenant of 2 October (par 7) was to transfer "your tenancy arrangements" to the appellants as from 28 September. 27 As Young CJ in Eq suggested during argument, the law can only give effect to this intention by treating the transaction as a concurrent lease, that is, as a tenancy at will from the brothers to the appellants of the reversion expectant on the tenant's weekly tenancy. See Horn v Beard [1912] 3 KB 181, 187-8; and Conveyancing Act s 120 A(5). The nature of a concurrent lease is described by Woodfall's "Law of Landlord and Tenant", 28th ed, 1978 at p 246: "A concurrent lease is one granted for a term which is to commence before the expiration or other determination of a previous lease of the same premises to another person. Such a lease is said to take effect in reversion expectant upon the earlier term, which may be either shorter or longer than the concurrent term. But it should be observed that the concurrent term takes effect at once from the time limited for its commencement, and operates as an assignment of the reversion during such time as the two terms run concurrently ... It entitles the lessee, as assignee of part of the reversion, to the rent reserved in the previous lease, and to the benefit of the covenants therein contained, which are to be respectively paid and performed during the then residue of the term granted by the first lease, and the continuance of the concurrent lease". 28 In the absence of a contrary intention a concurrent lease passes to the concurrent lessee the concurrent lessor's accrued rights under the existing lease. See Cole v Kelly [1920] 2 KB 106 CA and London & County Ltd v W Sportsman Ltd [1971] Ch 764 CA, 781-2. This accords with the second limb of s 117(1). However the section operates subject to any contrary intention expressed by the parties, and it is clear that the brothers did not intend to transfer the arrears of rent to the appellants (pars 5, 7, 8(8), 10). 29 Even if the registration of the appellants as proprietors of the freehold was capable of transferring existing causes of action under the 1988 agreement which accrued prior to 28 September 1992, the brothers had released the tenant from these causes of action by the deed of 17 December 1992 (par 10). They no longer had accrued rights which could pass to the appellants on registration. 30 The appellants therefore fail on all claims under the 1988 agreement, whether already pleaded or not, and the order for summary dismissal as to those claims was correct. 31 The appellants would have been entitled in their own right, as concurrent lessors, to the benefit of any causes of action under the 1988 agreement which accrued between 28 September and 4 October, but these rights, if any, merged in the first 1992 agreement. Accordingly their only rights against the tenant are those conferred by the 1992 agreements. These relevantly comprised claims for breach of obligations to repair, and claims arising when the tenant vacated on 4 November. 32 The appellants relied upon the covenant to repair implied by s 84(1)(a) of the Conveyancing Act. This section probably only applies to leases by deed. See P R Watts "Implied Covenants in Leases" (1937) 10 ALJ 357-9. It is not necessary to decide this point, or to decide whether the first 1992 agreement was a deed because the implied covenant may be excluded. Conveyancing Act s 74(2). Clause 7 of the first agreement provided: "On 28 October 1992 the Tenant shall deliver possession of the Hotel premises to the Landlord/Owners in the same state of repair as they are presently in, but fair wear and tear and damage by fire, storm, flood, tempest, Act of God or inevitable accident excepted". This express term was confirmed but not varied by the second agreement. 33 This express term is clearly inconsistent with the term that might be implied by s 84(1)(a) which is therefore excluded. The appellants relied in the alternative on the repair obligation implied by law in weekly tenancies that was recognised in Warren v Keen [1954] 1 QB 15 CA. However this implied term would be also inconsistent with the express term and must share the fate of the term that might be implied by s 84(1)(a). 34 The existing statement of claim (Red 1) pleaded an implied obligation to repair under the 1988 agreement and breach, but did not plead the express term in the first 1992 agreement or its breach. The proposed statement of claim pleaded a Warren v Keen implied term in the 1992 agreements that "the Tenant would use the Hotel in a tenant-like manner and repair damage to the Hotel occasioned by them or their servants and guests and ... keep the Hotel in a reasonable state of repair during the term of the lease" (Red 51). 35 The proposed statement of claim does not plead the express term in the first 1992 agreement dealing with repairs or its breach. There is no evidence, and there has been no suggestion, that the tenant committed any breach of the express term. The appellants therefore fail on their claims under the 1992 agreements for breach of any obligation on the tenant to repair the premises and the order for summary dismissal, as to those claims, was correct. 36 There remain the causes of action alleged to arise when the tenant vacated on 4 November 1992. These comprised failure to redeliver the benefit of the whole of the Hotel business, removal of plant and failure to remove rubbish. 37 The 1992 agreements did not confer on the appellants any express right to the business as such. A recital in the first agreement stated that "The Tenant is the Lessee/Occupier of the premises and business", but there was no express obligation on the tenant to deliver up the business as such. 38 There were of course numerous subsidiary obligations relating to the stock-in-trade, the plant and furniture, amusement device machines and a central credit machine, and there were obligations to deliver vacant possession (cl 4) and possession (cl 7). The second 1992 agreement confirmed the tenant's obligation to deliver possession of the Hotel (cl 1), but contained no obligation to deliver up the business as such. 39 The existing statement of claim (Red 1) did not plead any cause of action relating to the business as such. The proposed statement of claim (Red 47) alleges that the tenant leased the business under the first 1992 agreement and asserted an implied term that he would redeliver the business to the appellants (pars 17, 18). It further alleged (par 22) that the appellants, as assignees from the brothers, became entitled to possession of the business and the account customers (par 24), and that the appellant failed to redeliver to the appellants the whole of the benefit of the business. The particulars of this paragraph in the proposed statement of claim confine this allegation to the tenant's failure to deliver documents and other information containing details of his account customers. 40 The appellants could acquire no rights to the business as such by assignment from the brothers. The business originally belonged to Tooheys Limited and it passed to the tenant on a walk-in/walk-out basis on 14 February 1988. The licence and the local goodwill passed with the premises, first to the tenant and then to the appellants, but the account customers, book debts and associated books and records were the property of the tenant and formed part of his personal goodwill. 41 The allegation that the 1992 agreements contained an implied term that obliged the tenant to deliver to the appellants his books, records and other information relating to his account customers cannot be supported. Such a term would be inconsistent with the express terms of the 1992 agreements which define with some precision the tenant's obligations on giving up possession of the Hotel. Leave to amend to plead these claims was rightly refused. 42 Clause 9 of the first 1992 agreement obliged the tenant to give the appellants "without compensation, title to all plant (Except Authorised Amusement Devices and CCU Unit), furniture, light fittings, cash registers, carpets then upon the premises ... ". The existing statement of claim alleged (par 8(e)) that the tenant carried away "stoves, refrigerators, freezers, steel benches, cooking utensils, crockery and cutlery". This allegation is repeated in the proposed statement of claim (par 23 (d)). 43 The cooking utensils, crockery and cutlery used in the Hotel business, which were not expressly excluded by cl 9 as "personal items", were capable of being plant. In Blake v Shaw (1860) Johnson 732, 734 [70 ER 615-6] Page-Wood VC, in the context of a gift by will of the plant and goodwill of the business, said: "In most cases the word 'plant' is used to describe something which, if not in direct contrast to stock, is at any rate of an entirely different nature. All the matters permanently used for the purposes of a trade, as distinguished from the fluctuating stock, are commonly included in the term 'plant'. It consists sometimes of things which are fixed ... and in other cases of horses, locomotives, and the like, which are in this sense only fixed [in] that they form part of the permanent establishment intended to be replaced when dead or worn out". 44 That decision was followed in Yarmouth v France (1887) 19 QBD 647 CA in a case under the Employers Liability Act dealing with safety at work. Lindley LJ said (658): "There is no definition of plant in the Act: but, in its ordinary sense, it includes whatever apparatus is used by a businessman for carrying on his business, - not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or moveable, live or dead, which he keeps for permanent employment in his business: see Blake v Shaw". 45 The appellants have refused to provide proper particulars of the plant and furniture allegedly removed by the tenant, but the proceedings have not been dismissed on this ground. The tenant's obligation under cl 9 was in terms limited to items "then upon the premises", but whatever those words mean they do not justify the summary dismissal of this part of the claim without trial on the basis that any items removed were not "then upon the premises". 46 No proper basis appears for summarily dismissing the appellants' claim that the tenant removed from the premises "stoves, refrigerators, freezers, steel benches, cooking utensils, crockery and cutlery", and to this extent the appeal should be allowed. 47 The final claim is that the tenant left rubbish on the premises. A vendor will be in breach of a term requiring delivery of vacant possession if a substantial quantity of rubbish is left on the premises: Cumberland Consolidated Holdings Ltd v Ireland [1946] KB 264 CA. 48 The first 1992 agreement required the tenant to deliver up vacant possession on 28 October (cl 4) and to deliver the premises in a particular condition (cl 7). The later clause did not cut down the tenant's obligation to deliver vacant possession. 49 The second 1992 agreement provided in cl 1 for possession to be delivered on 4 November "in accordance with the terms of " the first agreement, and thus did not cut down the tenant's obligation to give vacant possession. 50 A term in a contract for the sale of land, which requires the vendor to deliver "possession", will ordinarily be construed as requiring delivery of vacant possession. Cook v Taylor [1942] Ch 349, 352. There is no reason for adopting a different construction in agreements between landlord and tenant. The tenant was bound to deliver vacant possession. 51 In Cumberland Consolidated Holdings Ltd v Ireland Lord Greene MR said (270-1): "Subject to the rule de minimis a vendor who leaves property of his own on the premises on completion cannot ... be said to give vacant possession, since by doing so he is claiming a right to use the premises for his own purposes, namely, as a place of deposit for his own goods inconsistent with the right which the purchaser has on completion to undisturbed enjoyment ... the right to actual unimpeded physical enjoyment is comprised in the right to vacant possession. We cannot see why the existence of a physical impediment to such enjoyment ... should stand in a different position to an impediment caused by the presence of a trespasser ... When we speak of a physical impediment we do not mean that any physical impediment will do. It must be an impediment which substantially prevents or interferes with the enjoyment of the right of possession of a substantial part of the property". 52 In my judgment, therefore, the presence of a substantial quantity of rubbish on the premises, which substantially interfered with the appellants' enjoyment of their right to possession of a substantial part of the premises, was capable of being a breach of the tenant's obligation to deliver vacant possession. There is nothing in the material before the Court which would entitle us to say that the quantity of rubbish left on the premises was de minimis, and accordingly to this extent there is a triable issue, and to this extent the appeal should be allowed. 53 The appellants have succeeded on limited issues arising under the 1992 agreements, but even so need leave to amend to properly plead their surviving claims. The existing statement of claim does not plead the express terms of the 1992 agreements and their breach as the basis of the claims for the removal of plant and the presence of rubbish. The proposed statement of claim is no better in these respects. The rubbish claim as pleaded is based on an implied term, and the plant claim as pleaded is not based on any explicit term, express or implied, but appears to be based on a general term relating to the delivery up of the business. 54 The point that the presence of a substantial quantity of rubbish could be a breach of a term requiring delivery up of vacant possession was not taken by the appellants in their written submissions but was first raised by a member of the Court. 55 The appellants have managed to salvage what to all appearances is only a small part of their original claims, but have not been able to salvage their existing or proposed statements of claim, even in part. They should therefore pay the costs of the respondent and of the cross-respondent, Mr Bill Waterhouse, of the appeal and cross-appeal. 56 The following orders should be made: (1) Appeal allowed in part;

(2) Orders (1) and (2) made by Rolfe DCJ on 23 November 2001 set aside;

(3) In lieu thereof order that the proceedings be dismissed pursuant to DCR Pt 11 A r3 save for the plaintiffs' claims for the removal of plant as alleged in para 8(e) of the existing statement of claim and for the presence of rubbish on the premises when possession was delivered on 4 November 1992 as alleged in para 8(c) of the existing statement of claim in so far as those claims are based on the express terms of the 1992 agreements;

(4) The amended statement of claim of 12 January 2000 struck out;

(5) Appellants to have leave to file a further amended statement of claim in accordance with these orders, to include all proper particulars, within 28 days;

(7) Appellants to pay the costs of the respondent of the appeal and cross-appeal and the costs of the cross-respondent. 57 GILES JA: I agree with the orders proposed by Handley JA, and with his Honour's reasons. 58 YOUNG CJ in EQ: I agree with the judgment of Handley JA but wish to add a few remarks with respect to the final claim, that is, that the tenant left rubbish on the premises. 59 This aspect of the case caused me some concern. My researches show that there is very little written on the exegesis of a covenant to yield up possession simpliciter. Probably this is because in most lease documents there are other covenants dealing with the obligations of the tenant to reinstate etc. 60 Indeed, Foa on Landlord and Tenant (7th ed 1947) p 676, suggests that where there is no covenant requiring reinstatement and the nature of the premises has not been changed where no waste has been committed, there is no obligation on the tenant to do anything positive. 61 In this case, in what Handley JA refers to as "the first 1992 agreement", clause 4 merely provides that "The Tenant shall deliver up … vacant possession" at a particular time and clause 7 provides that possession of the premises when delivered shall be in the same state of repair as they were in on 5 October 1992. 62 However, after giving the matter considerable thought, I concur with the view that Handley JA has taken that a tenant does not deliver up vacant possession if he or she leaves rubbish on the premises at the end of the lease other than a amount of rubbish which might be termed minimal. 63 This is consistent with authorities such as Savage v Dent (1737) 2 Strange 1064; 93 ER 1034, where it was held that a publican who leaves beer behind has not given vacant possession as well as the cases on vendor and purchaser such as Cumberland Consolidated Holdings Ltd v Ireland [1946] KB 264, cited by Handley JA and the decision of this Court in Smilie Pty Ltd v Bruce (1998) 9 BPR 16,723 per Handley JA. 64 Accordingly, I agree with the reasons given by Handley JA and the orders he proposes.

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