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Speets Investment Pty Ltd v Bencol Pty Ltd[2020] QCA 247

Speets Investment Pty Ltd v Bencol Pty Ltd[2020] QCA 247

SUPREME COURT OF QUEENSLAND

CITATION:

Speets Investment Pty Ltd v Bencol Pty Ltd [2020] QCA 247

PARTIES:

SPEETS INVESTMENT PTY LTD

ACN 607 713 164

(appellant)

v

BENCOL PTY LTD

ACN 010 066 681

(respondent)

FILE NO/S:

Appeal No 10496 of 2019
DC No 242 of 2016

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

District Court at Townsville – Unreported, 29 August 2019 (Coker DCJ)

DELIVERED ON:

10 November 2020

DELIVERED AT:

Brisbane

HEARING DATE:

11 March 2020

JUDGES:

Sofronoff P and Bond and Callaghan JJ

ORDERS:

  1. The appeal is allowed on Grounds 2(a); 2(b); 2(c); 2(d) and 2(e).
  2. Ground 2(f) is dismissed.
  3. Orders 2 and 3 are set aside.
  4. Orders 1(a), 1(d) and 1(h) are set aside.
  5. In place of Orders 2 and 3, the Court orders that:
  1. (i)
    The parties are directed to bring in agreed minutes of order declaring the landlord’s responsibility for the shower system defects in terms consistent with this Court’s reasons within 14 days of the date of these reasons;
  2. (ii)
    If the parties are unable to reach agreement so as to permit compliance with the previous direction, they must file written submissions as to the appropriate form of declaration, limited to two pages, within a further seven days, and the Court will resolve on the papers the orders which should be made in final disposition of the appeal;
  3. (iii)
    It is declared that the respondent is liable under clause 7.1 of the lease for the treatment and painting of pipe columns at the front entry of the Motel as identified at pages 15-16 of the report of Mr Hopmeier dated 30 August 2016;
  4. (iv)
    It is declared that the respondent is liable under clause 7.1 of the lease for maintenance of the cold room and the repair of those parts of the cold room that have been damaged by rust;
  5. (v)
    It is declared that the respondent is liable under clause 7.1 of the lease for maintenance and repair of seals to the windows and of the security grills; and
  1. The parties are directed to file submissions on costs, limited to four pages, at the same time as the minutes of order referred to in 5(i) (or the submissions in 5(ii) if that becomes applicable), and the Court will resolve on the papers the orders which should be made in final disposition of the appeal.

CATCHWORDS:

LANDLORD AND TENANT – LEASES AND TENANCY AGREEMENTS – COVENANTS – AS TO REPAIR – GENERAL PRINCIPLES – where the landlord and tenant each alleged that the other is responsible under a commercial lease for works on and repairs to a motel – where the trial judge made declarations as to liability in favour of the tenant in relation to some areas of the motel – where the trial judge made declarations as to liability in favour of the landlord in relation to some areas of the motel – where the landlord appeals against declarations which declared the landlord to be responsible to do works or repairs – where the landlord appeals against declarations which set timeframes in relation to directions requiring the landlord to do works or repairs – where the landlord sought declarations attributing to the tenant liability under the lease for particular types of repair work – whether the respondent tenant was liable under the lease – whether the appellant landlord was liable under the lease

EQUITY – EQUITABLE REMEDIES – OTHER REMEDIES – where the trial judge was informed by parties that they sought orders only by way of declaration – where neither party sought specific performance – where the parties stated that an arrangement had been made to appoint an independent expert following trial to adjudicate on any disputes which might arise in relation to carrying out work or repairs under the commercial lease – where the arrangement was not a clear agreement between the parties – where declarations made by the trial judge were contingent on findings of the independent expert – where declarations incorporated coercive elements of relief – whether extrajudicial arrangement as to the independent expert was an improper delegation of judicial power – whether the declarations should be set aside

District Court of Queensland Act 1967 (Qld), s 68, s 113, s 118, s 119

Property Law Act 1974 (Qld), s 124

Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21, cited

Holus Bolus Pty Ltd v The Wicko Pty Ltd [2012] NSWSC 497, cited

Pialba Commercial Gardens Pty Ltd v Braxco Pty Ltd & Ors [2011] QCA 148, cited

Sanrus Pty Ltd & Ors v Monto Coal 2 Pty Ltd & Ors (No 5) [2019] QSC 210, cited

COUNSEL:

P A Travis for the appellant
J A Griffin QC for the respondent

SOLICITORS:

Carroll Legal & Compliance for the appellant
Giudes & Elliott for the respondent

  1. [1]
    SOFRONOFF P:  I agree with the reasons of Bond J and Callaghan J and the orders proposed by Callaghan J.
  2. [2]
    BOND J:  I have had the advantage of reading in draft the reasons for judgment of Callaghan J.  Although it will appear that I agree with many of his Honour’s conclusions, I prefer to express my own reasons as to the disposition of the appeal.
  3. [3]
    The present appeal arises out of a dispute between the appellant (the landlord) and the respondent (the tenant) as to which of them was responsible for certain repair works to the demised motel and its environs.
  4. [4]
    The dispute between landlord and tenant came to a head when the landlord issued to the tenant a notice to remedy breach of covenant under s 124 of the Property Law Act 1974 (Qld) dated 18 December 2015.  That notice –
    1. (a)
      contended that the tenant had breached various maintenance and repair obligations imposed on it by the lease;
    2. (b)
      required the tenant to remedy those breaches by carrying out certain specified repair works; and
    3. (c)
      notified the tenant that the landlord would be entitled to re-enter or forfeit the lease if the tenant failed to comply with the notice within a reasonable time.
  5. [5]
    After receiving that notice, the tenant commenced a proceeding in the District Court.  The tenant’s amended statement of claim at paragraphs [9], [10] and [10A] alleged that the landlord had the responsibility under the lease to carry out certain works itemised in a pleaded table which described and costed various items of work with cross-references to relevant parts of an expert report.  The details about the nature of and need for the works which were both specified and incorporated by reference were, accordingly, amongst the material facts relied upon by the tenant to establish its entitlement to the relief which it sought.
  6. [6]
    As ultimately formulated, the tenant’s amended statement of claim sought –
    1. (a)
      an injunction restraining the landlord from re-entering, interfering with the tenant’s right of quiet enjoyment, trespassing, and forfeiting the lease;
    2. (b)
      declarations aimed at vindicating the contention that the pleaded works were the landlord’s responsibility under the lease and the landlord was required to carry them out at its own expense, without any unreasonable or unnecessary interference with the tenant’s operation of the motel business, and in a prompt and timely fashion within set timeframes;
    3. (c)
      relief against forfeiture pursuant to s 124 of the Property Law Act;
    4. (d)
      alternatively, equitable compensation or damages in an amount representing the reasonable cost to the tenant of performing the itemised works should the landlord fail to perform the works; and
    5. (e)
      alternatively, that an order be made requiring a sum representing the reasonable estimate of performing the works (and ancillary costs) to be paid to the trust account of the tenant’s solicitors, and additional orders be made –
      1. appointing a supervising architect;
      2. facilitating the performance of works by a registered builder appointed by and working under the supervision of the supervising architect; and
      3. authorising payments to be made out of the trust account by the tenant’s solicitors for the purposes of the completion of the construction works.
  7. [7]
    By its amended defence and counterclaim, the landlord:
    1. (a)
      put in issue the truth or falsity of the material facts alleged by the tenant concerning the works;
    2. (b)
      denied responsibility to carry out the works pleaded by the tenant;
    3. (c)
      advanced its own positive case about the existence of certain works which needed to be carried out, expressing that case in a way which was different to the tenant’s pleaded case;
    4. (d)
      pleaded that the proper construction of relevant covenants of the lease required the tenant to perform the works alleged by the landlord;
    5. (e)
      alleged that the tenant had failed to mitigate any loss that it alleged it had suffered by failing to keep the property in good repair; and
    6. (f)
      denied that the tenant was entitled to claim for loss of revenue while the rooms were being repaired.
  8. [8]
    As ultimately formulated, the landlord sought to recover from the tenant (and from those who had guaranteed the tenant’s liability under the lease) damages for breach of the covenants under the lease which the landlord construed as requiring the tenant to perform the works.  Further or alternatively, the landlord sought specific performance of the works by the tenant.
  9. [9]
    Prior to the trial the parties had apparently arrived at an “agreement” or an “arrangement” as to the basis upon which they wished to conduct the trial.  So far as the record reveals, the “agreement” or “arrangement” was not reduced to writing.  Rather, its “substance” was read into the record by the tenant’s counsel on the basis that the landlord’s counsel would indicate disagreement if there was any.[1]
  10. [10]
    By this process, the primary judge was informed that the “justiciable” issues at trial were:
    1. (a)
      first, “the identification by the court of the nature and extent of any defects in the motel premises”, such defects in contention being “limited to those which [the tenant] contended for … in paragraphs 10 and 10A of the further amended statement of claim”;[2]
    2. (b)
      second, “the identification by the court of such works as it sees fit, which are required by it to be carried out by either and or both of the parties in respect of each defect”;[3]
    3. (c)
      third, “the identification by the court, if it sees fit, of any time schedule, within which the works or any part of them are to be carried out”;[4] and
    4. (d)
      fourth, “the determination of the extent, if any, to which either or both parties shall pay the costs and outlays of the other party with respect to the legal proceedings”.[5]
  11. [11]
    The primary judge was also informed that both parties now sought only orders “by means of a declaration”, to make it clear that no one was seeking orders for specific performance.[6]  The primary judge was then told – presumably by way of elaboration of the second “justiciable” issue – that he would be asked to identify “the party responsible for performing the works in accordance with the terms of the lease”.[7]  In relation to that issue, he had earlier been told that the parties had “agreed that an independent expert … is [to be] appointed and … adjudicate on any disputes which might arise in relation to the carrying out of [the] works”.  The primary judge was told that he would not be concerned with “identities or arrangements” in relation to that expert.[8]
  12. [12]
    Thus it was that the parties told the primary judge that they were not content to conduct a trial of all the issues in the proceeding by reference to the pleadings in the usual way.  Their “agreement” or “arrangement” reflected a choice to proceed in another way.  Unfortunately, that choice did not involve asking the Court to make an order for the separate determination of particular questions arising in the proceeding pursuant to Chapter 13 Part 5 of the Uniform Civil Procedure Rules 1999 (Qld), leaving any remaining questions to be dealt with by the Court on some other occasion.  Nor did it involve a careful identification of all of the questions arising in the proceeding which needed to be resolved by the trial of the proceeding.  Nor did it involve the parties saying that some only of the questions arising in the proceeding needed to be resolved because they had reached an identified settlement of the remaining questions.  It did not even involve language which accurately described the judicial tasks involved in the proceeding.  The judicial task was not to conduct an inquiry into the nature and extent of defects; it was to make findings as to whether allegations advanced in that regard had been proved to the relevant standard.  The judicial task was not to exercise a discretion (“as it sees fit”) as to the works which were required to remedy the defects which had been proved; it was to make findings as to whether allegations advanced in that regard had been proved to the relevant standard.  Finally, the judicial task was not to exercise a discretion (“as it sees fit”) as to the time within which the works which had been found to be necessary must be carried out; it was to determine disputes about the parties’ rights in relation to timing and then to make appropriate declarations as to those rights.
  13. [13]
    The position may be summarised in this way: the parties by their conduct invited the primary judge to exercise only an ill-defined part of his jurisdiction to hear and determine the proceeding at trial, to do so in an inappropriate way, and to do so by leaving other matters to be dealt with by some sort of extrajudicial arrangement between them which involved an independent expert, but about which he was not to be concerned.
  14. [14]
    Such an imprecise “agreement” or “arrangement” was always likely to end in tears.  And so it transpired.[9]
  15. [15]
    The orders made by the primary judge were as follows:

“(1) That there be a declaration as to the defects identified at the [motel].

  1. (a)
    Structural defects in rooms 1 to 8 and 10 to 30 relating to shower recesses which cause or allow water to leak from the shower stalls into adjoining areas, including bedrooms, adjacent rooms, skirting boards, walls and wall recesses.
  1. (b)
    Rectification works as required to the surface finish in areas surrounding the swimming pool and adjacent covered areas.
  1. (c)
    Rust to the bases of pipe columns at the front entry to the said motel.
  1. (d)
    Poor and damaged portions of the boundary fence between the said motel and adjoining property.
  1. (e)
    Replacement or repair of the external windows and/or frame.
  1. (f)
    Replacement or repair of the cold room.
  1. (g)
    Repairs as necessary to the dropped ceiling in the under-croft over the walkway on the right-hand side of the driveway entrance to the said motel.
  1. (h)
    Replacement of loose and cracked pavers constituting part of the driveway and carpark, and defects as may be identified in the substrata underneath the driveway and carpark pavers.
  1. (2)
    That there be a declaration as to the party responsible for the works to be performed pursuant to declaration 1 as may be directed by an independent expert.
  1. (a)
    The [landlord] is to be responsible for the costs of works required pursuant to declarations (1)(a), (c), (d) and (f).
  1. (b)
    The [tenant] is responsible for the costs of works required pursuant to declaration (1)(b) and (g).
  1. (c)
    The [landlord] is responsible for the costs of works required pursuant to declaration (1)(e) should the independent expert direct the removal and replacement of external windows and frames.
  1. (d)
    The [tenant] is responsible for the costs of works required pursuant to declaration (1)(e) should the independent  expert direct resealing of the existing external windows and frames.
  1. (e)
    The [tenant] is responsible for the costs of replacing loosed, loose or cracked pavers constituting part of the driveway and carpark pursuant to declaration (1)(h) as directed by the independent expert.
  1. (f)
    The [landlord] is responsible for the costs of rectification to the substrata of the driveway and carpark pursuant to declaration (1)(h) as directed by the independent expert.
  1. (3)
    That there be a declaration that the timeframe for works to be performed pursuant to declarations (1) and (2) as herein as may be directed by an independent expert.
  1. (a)
    Insofar as declaration (1)(a) is concerned, two bathrooms per month, beginning within 30 days of any direction or determination of the independent expert.
  1. (b)
    Insofar as declarations (1)(b), (c), (d), (e), (f) and (g) are concerned, works are to be commenced within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction.
  1. (c)
    Insofar as declaration (1)(h) is concerned, any works required pursuant to a direction determination of the independent expert should be commenced within six months of such determination direction and completed within nine months.
  1. (4)
    That, by consent, an injunction issue restraining the [landlord] personally and/or through its employees, servants and/or agents from
  1. (a)
    re-entering the premises … and
  1. (b)
    forfeiting the lease of the premises … ; and
  1. (5)
    That the [landlord] pay the [tenant’s] costs of and incidental to the proceedings as agreed between the parties, and, failing agreement, as may be assessed at 80 per cent of costs assessed on a standard basis.”
  1. [16]
    The following observations may be made at the outset:
    1. (a)
      It is apparent that, apart from the introduction of a consent injunction, the primary judge sought to address the four “justiciable” issues which the parties had identified for him and which I have recorded at [10] above.
    2. (b)
      The first such issue sought to have the Court make findings as to the nature and extent of the alleged defects.  It may be observed that the language used in the form of the declaration did not articulate any proposition about the existence of defects.  Nevertheless, it was evidently the intention of the primary judge that the subparagraphs of order 1 be understood as describing defects which he had found to exist.[10]  Some items were described at a high level of generality: see orders 1(a), (c) and (d).  For others, the items were described using terms which contemplated that a choice was still to be made: see orders 1(e) and (f) which said that certain matters needed “replacement or repair”, but without saying which.  And the primary judge also described some defects in terms which contemplated that someone else (not defined) would identify what, if anything, had to be done: see order 1(b) (“as required”), order 1(g) (“as necessary”) and order 1(h) (“as may be identified”).
    3. (c)
      The second such issue sought to have the Court do two things: first, to identify the works necessary to remedy the defects identified by the answers to the first issue, and second, to allocate responsibility as between landlord and tenant for carrying out the identified works.  The orders made by the primary judge did not address the first task, but rather left the identification of the works necessary to be done to be the subject of a direction by an “independent expert”.  That was a misunderstanding of the parties’ intention (at least as it was expressed at the commencement of the trial), which was evidently that the expert would only be involved in resolving disputes which might arise in relation to the implementation of the orders which the court had made as to the works which had to be done.  Some orders did allocate responsibility for some alleged defects: see orders 2(a) and (b).  However, the remaining allocation of responsibility was phrased in a way which depended upon some future decision or direction by the independent expert.
    4. (d)
      The third such issue sought to have the Court identify, “if it sees fit”, a time schedule within which the works identified by previous orders were to be carried out.  I have already observed that the question itself was misleading because it suggested, wrongly, that there was a discretion involved.  In any event, the primary judge specified certain timeframes in terms which operated by reference to a contemplated direction or determination made by the independent expert.
  2. [17]
    If one had regard only to their form, the orders made by the primary judge could validly be criticised as being flawed and uncertain because they made no provision whatsoever for the appointment of the independent expert to which they referred.  But the real problem was an antecedent one.  The primary judge had jurisdiction pursuant to s 68(1)(b)(xiii) of the District Court of Queensland Act 1967 (Qld) to hear and determine actions and matters for the determination of any question of construction arising under the lease and for a declaration of the rights of persons interested.  But the declarations made did not involve declarations of extant rights under the lease.  The lease had not been drafted in such a way as to create rights which could be expressed by reference to future directions by an expert.[11]  And there was no evidence that the “arrangement” or “agreement” between the parties was a binding contract which contained terms creating such rights.  Before this Court the landlord submitted that the primary judge had not properly exercised his jurisdiction to hear and determine the case before him.  I agree.  The declarations represented a delegation to an undefined person at an undefined future time of the determination of the content of the parties’ rights (and correlative obligations) under the lease.[12]  In my view, for this reason alone, those of the orders which were in this form and which were challenged on appeal cannot be permitted to stand.
  3. [18]
    The landlord’s appeal did not seek to correct all the deficiencies in the primary judge’s responses to the issues he was asked to address.  In particular, the landlord did not seek to have this Court answer the three issues that had been placed before the primary judge.  Rather, as will shortly appear in more detail, the landlord sought from this Court only:
    1. (a)
      orders setting aside all those declarations which might be thought to have declared the landlord to be responsible to do something;
    2. (b)
      orders setting aside the declarations which set a timeframe in relation to those directions which might be thought to require the landlord to do something; and
    3. (c)
      declarations attributing to the tenant liability under the lease for particular types of repair work.
  4. [19]
    The issues which arise on appeal may conveniently be dealt with under headings which relate to the particular defects which were the subject of complaint, and in the order in which they were challenged by the first ground of appeal.

Defects concerning shower recesses in the motel

The issues on appeal

  1. [20]
    The primary judge had relevantly ordered:

“(1) That there be a declaration as to the defects identified at the [motel].

  1. (a)
    Structural defects in rooms 1 to 8 and 10 to 30 relating to shower recesses which cause or allow water to leak from the shower stalls into adjoining areas, including bedrooms, adjacent rooms, skirting boards, walls and wall recesses.

  1. (2)
    That there be a declaration as to the party responsible for the works to be performed pursuant to declaration 1 as may be directed by an independent expert.
  1. (a)
    The [landlord] is to be responsible for the costs of works required pursuant to declarations (1)(a) …

  1. (3)
    That there be a declaration that the timeframe for works to be performed pursuant to declarations (1) and (2) as herein as may be directed by an independent expert.
  1. (a)
    Insofar as declaration (1)(a) is concerned, two bathrooms per month, beginning within 30 days of any direction or determination of the independent expert.”
  1. [21]
    The relevant appeal grounds were:
    1. (a)
      Ground 2(a)(i): that the primary judge had erred in fact and law in declaring that the landlord was to be responsible for the cost of works required by “structural defects in rooms 1 to 8 and 10 to 30 relating to shower recesses which cause or allow water to leak from the shower stalls into adjoining areas, including bedrooms, adjacent rooms, skirting boards, walls and wall recesses”.
    2. (b)
      Ground 2(b): that the primary judge erred in fact and law in declaring that the timeframe for works to be performed pursuant to the declaration be “as may be directed by an independent expert”.
    3. (c)
      Ground 2(c): that the primary judge erred in fact and law in declaring that the works be performed at a rate of “two bathrooms per month, beginning within 30 days of any direction or determination of the independent expert”.
    4. (d)
      Ground 2(f): that the primary judge erred in fact and law in overruling the landlord’s objection to the tender of parts of the tenant’s expert opinion evidence.
  2. [22]
    The relevant orders sought on appeal were:
    1. (a)
      that the declarations in orders 1(a), 2(a) and 3(a) be set aside; and
    2. (b)
      that the following declaration be made:

“A declaration that [the tenant] is liable under clause 7.1 of the Lease for the repair of those defects identified in the following cells of the table beginning at page 8 of the report of 30 August 2016 with respect to the cells of the table starting at page 8 of the rooms 1-8, 10-24, and 27-30.

  1. (1)
    Room 1: Conditions of wall outside shower and other matters (Other Matters);
  1. (2)
    Room 2: Other Matters;
  1. (3)
    Room 3: Condition of shower (Shower);
  1. (4)
    Room 4: Shower and Other Matters;
  1. (5)
    Room 5: Shower and Other Matters;
  1. (6)
    Room 6: Shower and Other Matters;
  1. (7)
    Room 7: Shower and Other Matters;
  1. (8)
    Room 8: Shower and Other Matters;
  1. (9)
    Room 10: Shower;
  1. (10)
    Room 11: Shower;
  1. (11)
    Room 12: Shower and Other Matters;
  1. (12)
    Room 13: Shower and Other Matters;
  1. (13)
    Room 14: Shower and Other Matters;
  1. (14)
    Room 15: Other Matters;
  1. (15)
    Room 16: Other Matters (staining to carpet only);
  1. (16)
    Room 17: Shower and Other Matters;
  1. (17)
    Room 18: Shower and Other Matters;
  1. (18)
    Room 19: Shower;
  1. (19)
    Room 20: Shower and Other Matters;
  1. (20)
    Room 21: Shower and Other Matters;
  1. (21)
    Room 22: Other Matters;
  1. (22)
    Room 23: Shower;
  1. (23)
    Room 24: Other Matters;
  1. (24)
    Room 27: Other Matters (minor cracking to skirting);
  1. (25)
    Room 28: Other Matters;
  1. (26)
    Room 29: Other Matters; and
  1. (27)
    Room 30: Other Matters;”

The allocation of responsibility for these defects

  1. [23]
    The principal issue on appeal was whether the primary judge had erroneously attributed responsibility to the landlord for the various defects in the shower systems of the motel which had been identified in the tenant’s expert reports.  I adopt Callaghan J’s description of the relevant evidence[13] and I agree with his Honour’s reasons for concluding that the relevant expert opinion evidence was admissible in relation to this issue.[14]
  2. [24]
    Callaghan J has quoted the relevant covenants of the lease at [120] of his reasons.
  3. [25]
    The landlord’s argument before this Court was that the primary judge erred:
    1. (a)
      in finding that the alleged defects called for “structural” repair under cl 7.3 of the lease;
    2. (b)
      in finding that the alleged defects were “latent defects” under cl 7.3 of the lease; and
    3. (c)
      in failing to find that the evidence showed that the tenant was liable to repair under cll 7.l(a) and (e) of the lease.
  4. [26]
    Debate was joined before us as to the limits of these concepts as a matter of general principle.
  5. [27]
    I agree with the view expressed by Callaghan J that the resolution of this aspect of the appeal does not require this Court to seek to consider the often vexed issue of what is “structural” and what is not “structural”, as a matter of general principle.  The same may be said for what defects are “latent” and what defects are not “latent”.  That is because cl 7.2 of the lease in this case made it perfectly clear that the landlord was obliged to replace the motel’s “shower systems excluding shower screens” when they came to the end of their life.  That obligation must be regarded as excluded from the scope of the tenant’s responsibility pursuant to cl 7.2 and within the scope of the landlord’s responsibility pursuant to cl 7.3.
  6. [28]
    As Callaghan J has demonstrated,[15] the unchallenged expert opinion evidence supported the conclusion that the bathrooms, and in particular the showers, were past their use-by date.  This evidence amply justified a conclusion that the shower systems had come to the end of their life and, accordingly, it was the landlord’s obligation to replace them.

The orders made by the primary judge cannot stand

  1. [29]
    The findings under the previous heading justify the conclusion that orders should be made which declare the nature of the landlord’s responsibility for the defects found.  On this issue the landlord has lost.  However, the difficulty with achieving that outcome is that the only order capable of having that effect was order 2(a) (when read with order 1(a)).  But order 2(a) had the vice of linking the allocation of responsibility to the landlord with the obligation to perform works “as may be directed by an independent expert”.  For reasons already explained, the landlord was correct to challenge that form of order.
  2. [30]
    The result is that an order should be made setting aside orders 1(a) and 2(a)[16] but a declaration should be made as to the landlord’s responsibility in terms consistent with the basis on which this Court has determined the landlord’s responsibility for this category of defects.  The parties should be given an opportunity either to agree on an appropriate form of declaration or, in default of agreement, to advance submissions to this Court on that question.
  3. [31]
    The only remaining issue is the challenge to order 3(a).  There were two flaws in that form of order.  First, it suffered from the same vice as order 2(a) in that it was contingent upon a decision being made by an independent expert.  For that reason it cannot stand.  But second, it purported to make a declaration as to the timeframe within which the landlord was obliged to carry out the works.  I agree with the observations made by Callaghan J at [113] to [115] of his reasons.

Conclusion

  1. [32]
    The following orders should be made:
    1. (a)
      Orders 1(a), 2(a) and 3(a) are set aside.
    2. (b)
      The parties are directed to bring in agreed minutes of order declaring the landlord’s responsibility for the shower system defects in terms consistent with this Court’s reasons within 14 days of the date of these reasons.
    3. (c)
      In the parties are unable to reach agreement so as to permit compliance with the previous direction, they must file written submissions as to the appropriate form of declaration, limited to 2 pages, within a further 7 days, and the Court will resolve on the papers the orders which should be made in final disposition of the appeal.

Defects concerning rust to the bases of pipe columns

The issues on appeal

  1. [33]
    The primary judge had relevantly ordered:

“(1) That there be a declaration as to the defects identified at the [motel].

  1. (c)
    Rust to the bases of pipe columns at the front entry to the said motel.

  1. (2)
    That there be a declaration as to the party responsible for the works to be performed pursuant to declaration 1 as may be directed by an independent expert.
  1. (a)
    The [landlord] is to be responsible for the costs of works required pursuant to declarations (1) … (c) …

  1. (3)
    That there be a declaration that the timeframe for works to be performed pursuant to declarations (1) and (2) as herein as may be directed by an independent expert.

  1. (b)
    Insofar as declarations (1) … (c) … are concerned, works are to be commenced within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction.”
  1. [34]
    The relevant appeal grounds were:
    1. (a)
      Ground 2(a)(ii): that the primary judge had erred in fact and law in declaring that the landlord was to be responsible for the cost of works required by “rust to the bases of pipe columns at the front entry to the said motel”.
    2. (b)
      Ground 2(b): that the primary judge erred in fact and law in declaring that the timeframe for works to be performed pursuant to the declaration be “as may be directed by an independent expert”.
    3. (c)
      Ground 2(d): that the primary judge erred in fact and law in declaring that the works were to be commenced within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction.
  2. [35]
    The relevant orders sought on appeal were:
    1. (a)
      that the declarations in orders 1(c), 2(a) and 3(b) be set aside; and
    2. (b)
      that the following declaration be made:

“A declaration that the [tenant] is liable under clause 7.1 of the Lease for the treatment and painting of pipe columns at the front entry of the Motel as identified at pages 15-16 of the report of 30 August 2016;”

The allocation of responsibility for these defects

  1. [36]
    The issue for construction here arose because “Motel” was defined in cl 1 as “the premises described in the statutory form to this Lease including the Land and the Building.”  “Building” was defined in the same clause as “all structures and improvements that already exist or are erected on the Land during this Lease.”  Obviously enough, the pipe columns the subject of dispute fell within the definition of “Motel”.  There was then a tension between these two propositions:
    1. (a)
      The tenant’s obligation under cl 7.1(a) was to keep the Motel and the Landlord’s Property clean and in good repair, but cl 7.2(a)(i) made it clear that the obligation to keep in good repair was not intended to extend to make the tenant responsible for “structural repairs”.
    2. (b)
      The landlord’s obligation under cl 7.3(a) was to ensure that the Motel and the Landlord’s Property were kept in a good structural state and condition and to replace items within the definition of the Landlord’s Property when they came to the end of their life.
  2. [37]
    The landlord argued that the primary judge erred in finding that there was evidence sufficient to trigger the repair obligation under cl 7.3 of the lease.  It submitted that the evidence went no further than showing aesthetic or decorative concerns calling for minor treatment and painting to avoid the need for major repair in the future.  It submitted that, on the evidence, the only possible conclusion was that the only relevant obligation lay on the tenant under cl 7.1 of the lease.
  3. [38]
    The tenant argued for a definition of “structural” which would give the term its literal meaning, “of or relating to a structure”.  On its argument, if the repair under consideration was a repair to something which could be regarded as part of a structure (and the motel building plainly could), then the repair must be described as a “structural repair” and therefore within the scope of the exclusion in cl 7.2(a)(i) and not the tenant’s responsibility.  That approach was too simplistic and left no room for the sophisticated allocation of responsibility as between landlord and tenant which is expressed in cl 6.1(o), and cll 7.1, 7.2 and 7.3 of the lease.  The use of the adjective “structural” in this lease was evidently intended to require that the nouns qualified by it (variously “nature”, “repair”, and “state and condition”) possess a qualitative aspect over and above the fact that they related to something which could be regarded as a structure.
  4. [39]
    I adopt Callaghan J’s description of the relevant evidence and I agree with his Honour’s reasons for concluding that the evidence did not support any conclusion that the landlord’s repair obligation under cl 7.3 of the lease had been triggered.[17]  The evidence warranted only a conclusion that the rusted areas needed treatment and painting.  Once that conclusion was reached, the obligation to treat and paint rusted areas must be regarded as falling within the tenant’s obligation to keep the Building (forming part of the Motel) clean and in good repair.
  5. [40]
    It follows that the landlord has demonstrated that a declaration in the form it seeks should be made.

The orders made by the primary judge cannot stand

  1. [41]
    There was no argument put before us which would justify interfering with order 1(c) made by the primary judge.
  2. [42]
    Insofar as order 2(a) dealt with this defect, it reflected an erroneous allocation of responsibility.  Moreover, for reasons earlier identified, orders in the form of orders 2(a) and 3(b) cannot be supported and the orders made in that form must be set aside.

Conclusion

  1. [43]
    The following orders should be made:
    1. (a)
      Orders 2(a) and 3(b) are set aside.
    2. (b)
      It is declared that the respondent is liable under clause 7.1 of the Lease for the treatment and painting of pipe columns at the front entry of the Motel as identified at pages 15-16 of the report of Mr Hopmeier dated 30 August 2016.

Defects concerning damaged portions of the boundary fence

The issues on appeal

  1. [44]
    The primary judge had relevantly ordered –

“(1) That there be a declaration as to the defects identified at the [motel].

  1. (d)
    Poor and damaged portions of the boundary fence between the said motel and adjoining property.

  1. (2)
    That there be a declaration as to the party responsible for the works to be performed pursuant to declaration 1 as may be directed by an independent expert.
  1. (a)
    The [landlord] is to be responsible for the costs of works required pursuant to declarations (1) … (d) …

  1. (3)
    That there be a declaration that the timeframe for works to be performed pursuant to declarations (1) and (2) as herein as may be directed by an independent expert.

  1. (b)
    Insofar as declarations (1) … (d) … are concerned, works are to be commenced within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction.”
  1. [45]
    The relevant appeal grounds were:
    1. (a)
      Ground 2(a)(iii): that the primary judge had erred in fact and law in declaring that the landlord was to be responsible for the cost of works required by “poor and damaged portions of the boundary fence between the said motel and adjoining property”.
    2. (b)
      Ground 2(b): that the primary judge erred in fact and law in declaring that the timeframe for works to be performed pursuant to the declaration be “as may be directed by an independent expert”.
    3. (c)
      Ground 2(d): that the primary judge erred in fact and law in declaring that the works were to be commenced within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction.
  2. [46]
    The relevant orders sought on appeal were that the declarations in orders 1(d), 2(a) and 3(b) be set aside.  No replacement declaration or order was sought.

Concessions made by the parties dictate the outcome

  1. [47]
    For reasons earlier identified, orders in the form of orders 2(a) and 3(b) cannot be supported and the orders made in that form in relation to this issue must be set aside.
  2. [48]
    For its part, on appeal the landlord submitted[18] that it would not oppose an order being formulated which made it clear that the tenant was not responsible for any work to be done in relation to the fence.  However, it submitted that because the tenant had failed to show that the fence was wholly within the boundary of the land that was the subject of the lease, it would be difficult to formulate an order which did not carry with it the risk of requiring the landlord to fix a fence which could be, at least partially, the neighbour’s fence.  The landlord’s point was that if the fence was a dividing fence which was wholly (or partly) on an adjacent property, then the owner of that property was a necessary party to any proceedings in which declarations would be made as regarding the rights and liabilities of parties in relation to the fence.  Ultimately, the tenant conceded before this court that neither party should have a declaration in their favour.

Conclusion

  1. [49]
    Orders 1(d), 2(a) and 3(b) should be set aside.

Defects concerning the cold room

The issues on appeal

  1. [50]
    The primary judge had relevantly ordered:

“(1) That there be a declaration as to the defects identified at the [motel].

  1. (f)
    Replacement or repair of the cold room.
  1. (2)
    That there be a declaration as to the party responsible for the works to be performed pursuant to declaration 1 as may be directed by an independent expert.
  1. (a)
    The [landlord] is to be responsible for the costs of works required pursuant to declarations (1) … (f).

  1. (3)
    That there be a declaration that the timeframe for works to be performed pursuant to declarations (1) and (2) as herein as may be directed by an independent expert.

  1. (b)
    Insofar as declarations (1) … (f) … are concerned, works are to be commenced within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction.”
  1. [51]
    The relevant appeal grounds were:
    1. (a)
      Ground 2(a)(iv): that the primary judge had erred in fact and law in declaring that the landlord was to be responsible for the cost of works required by “replacement or repair of the cold room”.
    2. (b)
      Ground 2(b): that the primary judge erred in fact and law in declaring that the timeframe for works to be performed pursuant to the declaration be “as may be directed by an independent expert”.
    3. (c)
      Ground 2(d): that the primary judge erred in fact and law in declaring that the works were to be commenced within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction.
  2. [52]
    The relevant orders sought on appeal were:
    1. (a)
      that the declarations in orders 1(f), 2(a) and 3(b) be set aside; and
    2. (b)
      that the following declaration be made:

“A declaration that the [tenant] is liable under clause 7.1 of the Lease for maintenance of the cold room and the repair of those parts of the cold room that have been damaged by rust.”

The allocation of responsibility for these defects

  1. [53]
    I adopt Callaghan J’s evaluation of the relevant evidence concerning this defect as expressed at [164] to [166] of his Honour’s reasons.  I wish to add only an observation concerning the matter dealt with at footnote 101 in his Honour’s judgment.
  2. [54]
    The landlord argued before this Court that there was no admissible evidence that the cold room was in need of replacement, or had a structural or latent defect, in a way which could trigger the landlord’s obligations under cl 7.3 of the lease.
  3. [55]
    The qualification “admissible” was evidently a reference to a paragraph in the expert report of Mr Hopmeier dated 4 December 2017, in which he observed:[19]

“Kitchen Coldroom:  We [that is, Mr Hopmeier and an expert who had been engaged by the landlord, but who was not called and whose reports were not in evidence] are in agreement that this in poor condition & is a health hazard.  However, the minor repair works suggest by [the landlord’s expert] would be inadequate.  The [tenant] has had Stallard’s, a reputable Refrigeration company, look at the coldroom & they consider is at the end of it’s life & needs replacing.  The only reusable part is existing blower.  There estimate of cost is $7,029.00.  This indicates that both my estimate & [the landlord’s expert’s estimate] are way below what is required.”

  1. [56]
    It is obvious that the highlighted portion of the quote was inadmissible hearsay.  And it was double hearsay in the sense that it did not even record an out-of-court statement made by the speaker to Mr Hopmeier, but was evidently Mr Hopmeier’s record of an out-of-court statement made to him by someone on behalf of the tenant about what someone on behalf of Stallard’s had said to them.  It did not record Mr Hopmeier’s own observation or his own opinion that the cold room was at the end of its life and needed replacing.  Indeed, it appeared that Mr Hopmeier’s opinion was different to that which some unidentified person at Stallard’s had apparently expressed to some unidentified person on behalf of the tenant.  The tenant did not call anyone from Stallard’s to prove the opinion.
  2. [57]
    Before the primary judge, objection was taken to the admissibility of Mr Hopmeier’s 4 December 2017 report in its entirety.  That objection failed (except in relation to a passage dealing with a different category of defect) and the report was ultimately admitted by the primary judge on the basis that reliance would be placed on Mr Hopmeier’s observations and opinions.[20]  The limited basis of admission of the report would not permit the tenant to place any reliance on the inadmissible part of the report either before the primary judge or in this Court.  I agree with Callaghan J’s conclusion that that material must be disregarded.
  3. [58]
    Once that conclusion is reached, the inadequacy of the evidence concerning this category of defects means that it falls to be resolved in a similar way as the category concerning rust to the pipe columns.  I agree with Callaghan J, for the reasons his Honour expresses, that the evidence that there was “rust around base of cold room and over door head” does not approach the level which would justify categorising the rust as a structural defect.  The cold room fell within the definition of “Landlord’s Property”, but the admissible evidence did not suggest it needed to be replaced.  Under cl 7.1(a), the tenant was obliged to keep the Motel clean and in good repair.  “Motel” was defined to include the Landlord’s Property.  Accordingly, the tenant’s obligation to keep the Motel in good repair extended to keeping the cold room in good repair.  A more direct route to the same outcome could be found in cl 7.1(e), which expressed a direct obligation on the tenant, at its cost, to maintain and repair the Landlord’s Property.
  4. [59]
    It follows that the landlord has demonstrated that a declaration in the form it seeks should be made.

The orders made by the primary judge cannot stand

  1. [60]
    There was no argument put before us which would justify interfering with order 1(f) made by the primary judge.
  2. [61]
    Insofar as order 2(a) dealt with this defect, it reflected an erroneous allocation of responsibility.  Moreover, for reasons earlier identified, orders in the form of orders 2(a) and 3(b) cannot be supported and the orders made in that form in relation to this issue must be set aside.

Conclusion

  1. [62]
    The following orders should be made:
    1. (a)
      Orders 2(a) and 3(b) are set aside.
    2. (b)
      It is declared that the respondent is liable under clause 7.1 of the Lease for maintenance of the cold room and the repair of those parts of the cold room that have been damaged by rust.

Defects concerning the external windows and frames

The issues on appeal

  1. [63]
    The primary judge had relevantly ordered –

“(1) That there be a declaration as to the defects identified at the [motel].

  1. (e)
    Replacement or repair of the external windows and/or frame.

  1. (2)
    That there be a declaration as to the party responsible for the works to be performed pursuant to declaration 1 as may be directed by an independent expert.

  1. (c)
    The [landlord] is responsible for the costs of works required pursuant to declaration (1)(e) should the independent expert direct the removal and replacement of external windows and frames.
  1. (d)
    The [tenant] is responsible for the costs of works required pursuant to declaration (1)(e) should the independent expert direct resealing of the existing external windows and frames.

  1. (3)
    That there be a declaration that the timeframe for works to be performed pursuant to declarations (1) and (2) as herein as may be directed by an independent expert.

  1. (b)
    Insofar as declarations (1) … (c), (d) … are concerned, works are to be commenced within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction.”
  1. [64]
    The relevant appeal grounds were:
    1. (a)
      Ground 2(a)(v): that the primary judge had erred in fact and law in declaring that the landlord was to be responsible for the cost of works required by “replacement or repair of the external windows and/or frames should the independent expert direct the removal and replacement of external windows and frames”.
    2. (b)
      Ground 2(b): that the primary judge erred in fact and law in declaring that the timeframe for works to be performed pursuant to the declaration be “as may be directed by an independent expert”.
    3. (c)
      Ground 2(d): that the primary judge erred in fact and law in declaring that the works were to be commenced within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction.
  2. [65]
    The relevant orders sought on appeal were:
    1. (a)
      that the declarations in orders 1(e), 2(c) and 3(b) be set aside; and
    2. (b)
      that the following declaration be made:

“A declaration that [the tenant] is liable under clause 7.1 of the Lease for maintenance and repair of seals to the windows and the security grills;”

The allocation of responsibility for these defects

  1. [66]
    There was no argument put before us which would justify interfering with order 1(e) made by the primary judge.
  2. [67]
    For reasons earlier identified, orders in the form of orders 2(c) and 3(b) cannot be supported and the orders made in that form in relation to this issue must be set aside.  The same might be said in relation to order 2(d), but the tenant has not sought to challenge that order.
  3. [68]
    The only live issue is whether the declaration sought by the landlord ought to be made.
  4. [69]
    In this regard, the only relevant evidence was Mr Hopmeier’s observation that:

“I noted when inspecting the exterior of windows to all other units that most of the seals to glass in all windows is breaking down & perishing, this is common with age & will generally lead to water leaks.  Also the anodising on the security screen to all windows was breaking down & the aluminium under corroding with will reduce the effectiveness of security screen.  It would therefore that most windows may have to be replaced in the near future.”

  1. [70]
    The issue for construction here is that which I identified at [36].  Clause 7.1(a) explicitly stated that the tenant was obliged to keep the exterior façade of the Building and exterior windows clean and in good repair.  And it did so by specifying those matters rather than leaving them to fall within any of the defined terms used in the clause (namely “Motel”, “Building” or “Landlord’s Property”).  The obligation so expressed explicitly extended to exterior windows and the reference to the façade must be taken to apply to security screens.
  2. [71]
    But again, the resolution of the issue is dictated by the evidence which enables the defect to be characterised.  The tenant’s obligation to maintain and keep in good repair the exterior façade and windows cannot be disputed.  It plainly applied to the defects proved by the evidence.  Even if one assumes that security screens and exterior windows are encompassed within “Landlord’s Property” (and the correctness of that assumption is by no means clear), the statement in the last sentence of Mr Hopmeier’s observation did not demonstrate a factual basis sufficient to prove that any obligation to replace had yet crystallised.
  3. [72]
    It follows that the landlord is entitled to the declaration it seeks.

Conclusion

  1. [73]
    The following orders should be made:
    1. (a)
      Orders 2(c) and 3(b) are set aside.
    2. (b)
      It is declared that the respondent is liable under clause 7.1 of the Lease for maintenance and repair of seals to the windows and of the security grills.

Defects concerning the driveway and carpark pavers

The issues on appeal

  1. [74]
    The primary judge had relevantly ordered –

“(1) That there be a declaration as to the defects identified at the [motel].

  1. (h)
    Replacement of loose and cracked pavers constituting part of the driveway and carpark, and defects as may be identified in the substrata underneath the driveway and carpark pavers.
  1. (2)
    That there be a declaration as to the party responsible for the works to be performed pursuant to declaration 1 as may be directed by an independent expert.

  1. (e)
    The [tenant] is responsible for the costs of replacing loosed, loose or cracked pavers constituting part of the driveway and carpark pursuant to declaration (1)(h) as directed by the independent expert.
  1. (f)
    The [landlord] is responsible for the costs of rectification to the substrata of the driveway and carpark pursuant to declaration (1)(h) as directed by the independent expert.
  1. (3)
    That there be a declaration that the timeframe for works to be performed pursuant to declarations (1) and (2) as herein as may be directed by an independent expert.

  1. (c)
    Insofar as declaration (1)(h) is concerned, any works required pursuant to a direction determination of the independent expert should be commenced within six months of such determination direction and completed within nine months.”
  1. [75]
    The relevant appeal grounds were:
    1. (a)
      Ground 2(a)(vi): that the primary judge had erred in fact and law in declaring that the landlord was to be responsible for the cost of works required by “replacement of loose and cracked pavers constituting part of driveway and carpark, and defects as may be identified in the substrata underneath the driveway and carpark pavers as directed by the independent expert”.
    2. (b)
      Ground 2(b): that the primary judge erred in fact and law in declaring that the timeframe for works to be performed pursuant to the declaration be “as may be directed by an independent expert”.
    3. (c)
      Ground 2(e): that the primary judge erred in fact and law in declaring that, insofar as the declaration identified at [75](a) is concerned, any works required pursuant to a direction determination of the independent expert were to be commenced within six months of such determination direction and completed within nine months.
  2. [76]
    The relevant orders sought on appeal were that the declarations in orders 1(h), 2(f) and 3(c) be set aside.  No replacement declaration or order was sought.

The orders made by the primary judge cannot be supported

  1. [77]
    The form of order 1(h) reveals that the primary judge did not actually find that there were defects in the substrata underneath the driveway and carpark pavers.  He contemplated only the possibility that an independent expert might find that they existed, hence “defects as may be identified in the substrata underneath the driveway and carpark pavers.”  The same wording appeared in the only part of the primary judge’s reasons which expressed his Honour’s identification of defects.[21]
  2. [78]
    Orders 2(f) and 3(c) suffered from the vice already identified.
  3. [79]
    For reasons already expressed, none of the impugned orders of the primary judge can be supported.  They must be set aside.
  4. [80]
    For completeness, I should observe that this was not a case in which the landlord has succeeded on this category of defects solely because of the defect in the form of the orders made.  In my view, the state of the evidence before this Court did not permit this Court to form the view which the primary judge did not form and to allocate some responsibility for defects to the landlord.  The state of the evidence was this:
    1. (a)
      A number of photographs were tendered showing the carpark after rain.  The photographs showed puddles in a number of spots on the surface of the paving and pooling in some of the lower areas.
    2. (b)
      Mr Hopmeier had expressed these views in his report of 30 August 2016:

“Car parking & storm water drainage: Another matter discussed in Abscan Reports, was the undulating condition of paving in car park & driveway areas. I obtained copies of the original Planning Approval for Motel & this stated that “all stormwater concentrated by the development is to be piped to a lawful point of discharge as nominated by the City Engineer. the Building Permit also states “runoff from roof & paved area is to be collected on site & piped to kerb & channel”. The original plan indicates that all paving fall toward the road to direct water to grated drain in drive & internal downpipes to discharge onto paving. This appears to have been altered as there was originally a rain tree in centre of car park & water was directed to front & rear of car park. The rear being collected in a sump which pipes water to street. It was noted that there are a number of low spots in paving which will collect & hold water after rain, these are visible as dark muddy patches on paving. The car park should be relatively level & direct water to collection areas as required, it is obviously not the case in this situation. Paving was used extensively in the early 80’s , however, has since been found basically unsuitable for areas where cars are driven over it, it is laid on compacted fill & it is virtually impossible to compact this evenly, so when heavy cars drive over it the pavers basically settles in softer spots, leaving it uneven & with puddles in it. With time these get deeper & the water held in these after rain softens fill below & allow the pavers to move against each other & chip & become un even. The deterioration accelerates with time. As paving is basically an unsuitable material & these days quite expensive, I would suggest the whole area needs to be replaced with concrete.”

  1. (c)
    Mr Hopmeier had expressed these views in his report of 4 December 2017:

“(i.) Uneven Driveway & carpark: As per my Report I disagree that no work is required: We are in agreement that the surface is uneven & that ponding occurs during rain, however, because of these facts I consider the drive & carpark require replacement for the following reasons:

 They don't drain properly to road as required by original Council Approval.

 The uneven surface causes a trip hazard. This may not be so evident to a normally mobile person, however, as a TPD classified person myself, I am very conscious of the surfaces I am walking on & even relatively minor variations in surfaces can cause trip hazards to me. These days with our aging population more & more people are mobility impaired & many are not in wheelchairs, so trip accidents can happen more frequently.

 Though the water may drain through pavers, they will leave a residue of mud on surface of pavers from dust washed off their surface & off roofs & this can cause slip hazards.

In areas used by the general public the reduction in hazards to users should be seriously considered & reduced where ever possible & this will reduce the possibility of legal actions.”

  1. (d)
    During the trial the primary judge excluded the admissibility of the evidence in the previous subparagraph on the basis that he was not satisfied as to Mr Hopmeier’s expertise in relation to the driveway.  It was evident from his Honour’s reasons for judgment that he did not resile from that view.[22]  His reasons revealed that he was drawing a distinction between inadmissible and unqualified expressions of opinion and the observational evidence contained in the previous report.[23]
  2. (e)
    It is true that there are some expressions of opinion in the material quoted at [80](b) above, and that report was admitted into evidence, but those expressions of opinion are from someone the primary judge was not prepared to regard as qualified to express opinion evidence concerning the driveway.  I would not give weight to them.
  3. (f)
    The result is that the only relevant evidence was the observational evidence of Mr Hopmeier and the photographic evidence.
  4. (g)
    I am not persuaded to make any finding of the existence of a defect for which the landlord is responsible based on this evidence.

Conclusion

  1. [81]
    Orders should be made that orders 1(h), 2(f) and 3(c) are set aside.

The orders which should be made to dispose of the appeal

  1. [82]
    It follows from the foregoing analysis that the orders I would make are:
    1. (a)
      The appeal is allowed.
    2. (b)
      Orders 1(a), 1(d) and 1(h) are set aside.
    3. (c)
      Orders 2(a), 2(c) and 2(f) are set aside.
    4. (d)
      Orders 3(a), 3(b) and 3(c) are set aside.
    5. (e)
      The parties are directed to bring in agreed minutes of order declaring the landlord’s responsibility for the shower system defects in terms consistent with this Court’s reasons within 14 days of the date of these reasons.
    6. (f)
      If the parties are unable to reach agreement so as to permit compliance with the previous direction, they must file written submissions as to the appropriate form of declaration, limited to two pages, within a further seven days, and the Court will resolve on the papers the orders which should be made in final disposition of the appeal.
    7. (g)
      It is declared that the respondent is liable under clause 7.1 of the Lease for the treatment and painting of pipe columns at the front entry of the Motel as identified at pages 15-16 of the report of Mr Hopmeier dated 30 August 2016.
    8. (h)
      It is declared that the respondent is liable under clause 7.1 of the Lease for maintenance of the cold room and the repair of those parts of the cold room that have been damaged by rust.
    9. (i)
      It is declared that the respondent is liable under clause 7.1 of the Lease for maintenance and repair of seals to the windows and of the security grills.
    10. (j)
      The parties are directed to file submissions on costs, limited to four pages, at the same time as the minutes of order referred to in (e) (or the submissions in (f) if that becomes applicable), and the Court will resolve on the papers the orders which should be made in final disposition of the appeal.
  2. [83]
    It remains to mention one matter only.  Logically, a question arises as to whether orders 2(b), 2(d) and 2(e) should be permitted to stand.  They were orders in the form which I have earlier criticised, in that they were declarations which operated by reference to something which might be directed by an independent expert.  However, they were orders which imposed responsibility on the respondent and, unsurprisingly, the appellant did not seek to have them set aside.  Nor did the respondent seek any such order.  Perhaps it could be argued that, for that reason, this Court should not interfere with them.  I think that would be an unjust outcome.  The error identified by the appellant as part of its challenge to the particular subparagraphs of order 2 which it did challenge infects the entirety of order 2.  One consequence of finding in favour of that part of the appellant’s challenge is that the entirety of the order must be set aside.  Accordingly, I would also set aside orders 2(b), 2(d) and 2(e).
  3. [84]
    CALLAGHAN J:  The appellant, (hereafter landlord) Speets Investment Pty Ltd, owns the “Raintree Motel” (the Motel) which is located on Bowen Road at Rosslea, in Townsville.  The Motel is leased and operated by the respondent (hereafter tenant), Bencol Pty Ltd.  The parties each have alleged that the other is responsible, under a commercial lease (the lease), for works on and repairs to the Motel.

The “Arrangement”

  1. [85]
    The history of the litigation is convoluted.[24]  However, prior to the hearing in the District Court, the parties came to an “agreement” or an “arrangement” as to the basis upon which they wished to conduct the proceedings.
  2. [86]
    The learned District Court Judge was explicitly informed that both parties sought only orders “by means of a declaration”.  It was recorded “so [as] to make that very clear”, that “nobody will be asking … for specific performance against the other party”.[25]
  3. [87]
    In outlining the arrangement the respondent stated the following:

[T]he parties have privately agreed – it won’t concern the court as to identities or arrangements, but they’ve privately agreed that an independent expert capable of dealing with the matter is appointed and that independent expert is going to adjudicate on any disputes which might arise in relation to the carrying out of works.[26]

“He will have a function in respect of any issues relating to works. But your Honour will be asked, in due course, to adjudicate, to the extent that you see fit, as to what you think the works should be.”[27]

  1. [88]
    There appears to have been a discussion, in chambers, between the learned trial judge and trial counsel, and the concept of an independent expert was apparently mentioned there.[28]  Other than that, there was little mention of the independent expert throughout the trial – except by the respondent’s counsel who stated:

“What that comes down to, once again, is it replaced or is it repaired…[t]hat doesn’t concern the court in this trial. What the court will look at is there a defect in the cold-room, and there clearly is. The independent expert will then have that, if necessary, referred to him if the parties can’t agree after we’ve had the trial, and he will determine what needs to be done, and he might say just put a bit of metal stripping there, that’ll fix it up, or he might say replace the whole thing, that doesn’t concern us. It really is just is it a defect, and who’s responsible.”[29]

  1. [89]
    The appellant’s counsel did not refer to the independent expert in any of his oral submissions at trial.
  2. [90]
    In the final paragraph of his written submissions (in reply) he stated that:

“It is not the case that a finding of the need for a repair results in the independent expert deciding whether that repair falls under one or other repair clause in the Lease. All the independent expert is charged with doing is assisting the parties with any disputes between them as to the carrying out of repairs by the party(s) declared by this Court to be responsible for the repairs.[30]

  1. [91]
    In his judgment the learned trial judge ultimately recorded his perception of the situation as follows:

[27] Interestingly, whilst an agreed statement, was read into the record, the outlines of each [of] the parties’ counsel provided at the conclusion of the hearing did not reflect a clear agreement as to what might be the justiciable issues.[31]  The Plaintiff notes the justiciable issues in the outline as follows:

  1. (1)
    The identification by the Court of the nature and extent of any defects in the motel premises;
  2. (2)
    Is the rectification of any identified defect in the motel premises the responsibility of the Plaintiff or the responsibility of the Defendant under the terms of the lease; and
  3. (3)
    Should the Court impose a time limit on the carrying out of the works, or any part of the works, and if so, what timeframes are appropriate?

[28] However, the Defendant sets out in their outline at paragraph 6(a) and (b) what they say are the real issues that the Court is being asked to resolve.  Those matters are as follows:

  1. (a)
    What is the proper construction of the relevant lease obligations regarding the performance of the works identified at paragraphs 10(a)-(f), (h)-(i) of the further amended statement of claim?
  2. (b)
    Which, if any, items listed as works is the owner or the tenant or both liable to perform under the lease properly construed?

[29] Costs also remain a live issue, as reflected in the agreed statement to which I have made reference and that is acknowledged by the Defendant.  As is obvious, therefore, from what I have said, there is not exact agreement regarding the words said to indicate the justiciable issues, but when one delves deeper there is clear agreement as to the course to be followed.”

  1. [92]
    Later in the judgment, his Honour wrote:

[82] As was agreed between the parties, the court is required or perhaps more specifically is requested to therefore:

  1. (1)
    identify the nature and extent of any defects in the motel as may be contended in the further amended statement of claim;
  2. (2)
    identify such works which are required to be carried out by either/or both of the parties in respect of each defect;
  3. (3)
    identify, if the court so chooses, any time schedule within which the works or any part should be carried out and;
  4. (4)
    identify the extent to which either/or both party shall pay the costs and outlays of the other parties.

[83] It is also noted that the parties agreed that they will appoint an independent expert capable of dealing with the matter and that the independent expert will be able to adjudicate on any dispute which might arise, in relation to the carrying out of the works.

[84] Finally, the parties seek, if necessary, by amendment to the pleadings, that the court make declarations other than orders in respect of costs, with regard to the works required and the party responsible for such works.”

The Judgment

  1. [93]
    Notwithstanding his own observation that the “arrangement” did not reflect a “clear agreement”, his Honour heard the case and ultimately arrived at conclusions that were expressed in these orders:[32]

“(1) That there be a declaration as to the defects identified at the motel premises known as Raintree Motel situated at 12-14 Bowen Road, Rosslea in the State of Queensland.

  1. (a)
    Structural defects in rooms 1 to 8 and 10 to 30 relating to shower recesses which cause or allow water to leak from the shower stalls into adjoining areas, including bedrooms, adjacent rooms, skirting boards, walls and wall recesses.
  2. (b)
    Rectification works as required to the surface finish in areas surrounding the swimming pool and adjacent covered areas.
  3. (c)
    Rust to the bases of pipe columns at the front entry to the said motel.
  4. (d)
    Poor and damaged portions of the boundary fence between the said motel and adjoining property.
  5. (e)
    Replacement or repair of the external windows and/or frame.
  6. (f)
    Replacement or repair of the cold room.
  7. (g)
    Repairs as necessary to the dropped ceiling in the under-croft over the walkway on the right-hand side of the driveway entrance to the said motel.
  8. (h)
    Replacement of loose and cracked pavers constituting part of the driveway and carpark, and defects as may be identified in the substrata underneath the driveway and carpark pavers.
  1. (2)
    That there be a declaration as to the party responsible for the works to be performed pursuant to declaration 1 as may be directed by an independent expert.
    1. The defendant is to be responsible for the costs of works required pursuant to declarations (1)(a), (c), (d) and (f).
    2. The plaintiff is responsible for the costs of works required pursuant to declaration (1)(b) and (g).
    3. The defendant is responsible for the costs of works required pursuant to declaration 1(e) should the independent expert direct the removal and replacement of external windows and frames.
    4. The plaintiff is responsible for the costs of works required pursuant to declaration (1)(e) should the independent  expert direct resealing of the existing external windows and frames.
    5. The plaintiff is responsible for the costs of replacing loosed, loose or cracked pavers constituting part of the driveway and carpark pursuant to declaration (1)(h) as directed by the independent expert.
    6. The defendant is responsible for the costs of rectification of the substrata of the driveway and carpark pursuant to declaration 1(h) as directed by the independent expert.
  2. (3)
    That there be a declaration that the timeframe for works to be performed pursuant to declarations (1) and (2) as herein as may be directed by an independent expert.
    1. Insofar as declaration (1)(a) is concerned, two bathrooms per month, beginning within 30 days of any direction or determination of the independent expert.
    2. Insofar as declarations (1)(b), (c), (d), (e), (f) and (g) are concerned, works are to be commenced within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction.
    3. Insofar as declaration (1)(h) is concerned, any works required pursuant to a direction determination of the independent expert should be commenced within six months of such determination direction and completed within nine months.”

Problems with the “Arrangement” - and the orders made pursuant to it

  1. [94]
    Some immediate observations should be made about this “arrangement”.  First, it is not open for parties to a proceeding to contract out of that which is required by law, nor to dictate to Judges the nature of their function.  That is what happened here.  It was said that the object of this exercise was for the parties to obtain a declaration.  The purpose of a declaration is to provide certainty.  It should not be made contingent, as Order 2 was, upon the proleptic and subjective judgment of another individual, such as an “independent expert”.
  2. [95]
    Such orders are always going to be attended by uncertainty.  If the parties wished to cede responsibility for decision making to an expert, they did not need to involve the Court.
  3. [96]
    The course proposed did not, as explained in greater detail by Bond J (at [12] and [13]) conform with conventional requirements of litigation which has, as its objective, the exercise of judicial power with a view to achieving final resolution of a dispute.  I agree with the further comments made by Bond J at [14].
  4. [97]
    Some of the learned trial Judge’s orders resolved issues in the landlord’s favour.  These may have been just as flawed as, it will be found, were most of the orders impugned by this appeal.  There is, however, nothing in the nature of a cross appeal or notice of contention that would allow us to engage with them, but the making of those orders did remove some controversial items from our consideration, such that the focus of the appeal narrowed as expressed in the notice.

Ambit of Appeal

  1. [98]
    Relevantly, that notice read:

“2. GROUNDS -

  1. (a)
    The learned primary judge erred in fact and law in declaring that the defendant is to be responsible for the costs of works required by:
  1. (i)
    structural defects in rooms 1 to 8 and 10 to 30 relating to shower recesses which cause or allow water to leak from the shower stalls into adjoining areas, including bedrooms, adjacent rooms, skirting boards, walls and wall recesses:
  2. (ii)
    rust to the bases of pipe columns at the front entry to the said motel;
  3. (iii)
    poor and damaged portions of the boundary fence between the said motel and adjoining property;
  4. (iv)
    replacement or repair of the cold room;
  5. (v)
    replacement or repair of the external windows and/or frames should the independent expert direct the removal and replacement of external windows and frames; and
  6. (vi)
    replacement of loose and cracked pavers constituting part of driveway and carpark, and defects as may be identified in the substrata underneath the driveway and carpark pavers as directed by the independent expert;
  1. (b)
    The learned primary judge erred in fact and law in declaring that the timeframe for works to be performed pursuant to the above declarations be as may be directed by an independent expert;
  2. (c)
    The learned primary judge erred in fact and law in declaring that insofar as the declaration identified at (a)(i), above, is concerned, that the works be performed at two bathrooms per month, beginning within 30 days of any direction or determination of the independent expert;
  3. (d)
    The learned primary judge erred in fact and law in declaring that insofar as the declarations identified at (a)(ii)-(v), above, are concerned, that the works commence within two months of direction determination of the independent expert and, unless otherwise agreed in writing, completed within four months of any such determination direction;
  4. (e)
    The learned primary judge erred in fact and law in declaring that insofar as the declaration identified at (a)(vi), above, is concerned, any works required pursuant to a direction determination of the independent expert should be commenced within six months of such determination direction and completed within nine months; and
  5. (f)
    The learned primary judge erred in fact and law in overruling the landlord’s objection to the tender of parts of the tenant’s expert evidence.”[33]
  1. [99]
    At the outset, it can be noted that the grounds of appeal do not, in terms, impugn Order 1.  That is, no express issue was taken with the findings as to “defects” that were recorded in that order.  Impliedly, however, Ground 2(a) does require determination as to whether there was, on the evidence, some problem (a “defect”) that required one of the parties, pursuant to the lease, to perform “works”, such that responsibility for those works could be allocated under the lease – as Order (2) purported to do.  As will be seen below, his Honour purported to find “defects” at various places around the motel, even though there was insufficient evidence enabling him to do so within the scope of anything contemplated by the lease.  And the appellant did specifically seek orders that declarations made in Order 1 should be set aside.[34]  For those reasons, where there is functional relevance in doing so, parts of Order 1 will also be set aside.
  2. [100]
    Ground 2(a) queries whether his Honour’s orders were correct and specifically takes issue with the attribution to the landlord of responsibility for repairs to and works at six different areas of the Motel, and in that way challenges Order 2(a)-(f).
  3. [101]
    Grounds 2(b)-(e) complain about declarations that nominated specific dates by which those works were to be completed, and in that way challenge Order 3.
  4. [102]
    Ground 2(f) complains about the admissibility of some expert evidence.  As will be seen, this ground functionally affects only his Honour’s findings about one of the six areas in dispute (the shower system).
  5. [103]
    The landlord then seeks various orders, including orders that set aside declarations as to things which were found to be its responsibility, and declarations that, in fact, the tenant is the party responsible under the lease for those things.

Preliminary Issue - Inadequate reasons

  1. [104]
    In the landlord’s submissions to this court, a complaint is made that, “with respect to each of the findings and orders [made against the landlord], the Court erred in failing to give reasons, or adequate reasons for the orders made.”[35]
  2. [105]
    It is true that, in respect of some of the decisions made, the judgment does not disclose any basis upon which his Honour’s conclusions were reached.
  3. [106]
    However, the tenant points out - correctly - that this complaint (about inadequate reasons) does not fall under any of the grounds identified in the notice of appeal, and no application was made to amend that notice.
  4. [107]
    In any case, the Court approached this appeal on the basis that it was a rehearing on the evidence before his Honour.[36]  Since this Court has reached (and explained) its own conclusions on each ground, it is not necessary further to consider the arguments made under this heading.

Ground 2(a): an error “in declaring …”

  1. [108]
    These grounds are directed at the subparagraphs of Order 2.  However, before descending to the particulars contained therein, it should be noted that all of the declarations effected in those subparagraphs are introduced by the words “as may be directed by an independent expert”.
  2. [109]
    As already noted,[37] the object of this entire exercise was to obtain declarations.  As also already noted,[38] the “arrangement” struck was ill suited for this purpose.  That which could be declared, legally, were rights and obligations that could be found in a lease to which the parties had bound themselves.  Into this arrangement the parties sought to introduce – and invest with certain discretions – an “independent expert” who is not mentioned in the lease.  There was no basis on which such an expert could be identified – his Honour’s orders do not purport to do so.  Nor do (or could) the orders identify the relevant “expertise”, nor provide any timeframe according to which this expert might be hired or retained.  There is no indication as to who – if anybody – is obliged to retain this expert.
  3. [110]
    The uncertainty introduced by the very concept of the expert may be illustrated by notionally assuming, for example, that for the purposes of Orders 2(c)-(f), the expert – whose discretion is unfettered by anything in the order - decided that there was, in their view, no need to “direct” anything.  That would mean, arguably at least, that there was – contrary to that which was expressed in Order 1(e) and (h) – no “defect” in the first place.
  4. [111]
    Bond J elaborates at [15] and [16] of his judgment, and I respectfully agree with that which his Honour has written.  Notwithstanding the concurrence of the parties, the “arrangement”, insofar as it abdicated any responsibility to an “independent expert” amounted to an invitation for his Honour to do something that was not within his power.  Orders that works be performed (pursuant to declarations) by an independent expert were made in error.  Order 2, by reason of this overarching and impermissible inclusion, must also be set aside in its entirety.  The observations made by Bond J at [83] are apt.  It will, however, still be convenient to give individual attention to the particulars of this ground; they are considered at [131] to [181] below.

Grounds 2(b), (c), (d) and (e)

  1. [112]
    Ground 2(b) contends that the learned trial judge erred in fact and law “in declaring” that the timeframe for works be performed pursuant to the declarations be as directed by the independent expert, and Grounds 2(c), (d) and (e) go on to complain about specific timeframes imposed.
  2. [113]
    As the appellant points out, declarations are non-executory.[39]  A declaration is a “formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs.  It is to be contrasted with an executory, in other words, coercive judgment which can be enforced by the courts”.[40]
  3. [114]
    To the extent that the orders made purported to set deadlines for the performance of works, they give every appearance of at least attempting to be coercive.  In this way, they were uncharacteristic of declaratory relief.
  4. [115]
    It can be accepted that trial counsel for the respondent was clearly under the impression that it was open for his Honour to make orders in the terms given, hence his submission to that effect.[41]  It is not, however, possible to reconcile this submission with his disavowal of any request for “specific performance”.  And he must have been disabused, upon receipt of the appellant’s counsel’s submissions, of any idea that such orders were contemplated within the “arrangement”.  Those submissions made it clear,[42] in terms repeated in this Court, that the appellant did not accept that there was power to incorporate timeframes into any of the anticipated declarations.[43]  The opportunity was then presented to revisit the “arrangement”, but things were allowed to proceed to a conclusion that, it is by now clear, cannot stand.
  5. [116]
    It follows that in different, but ultimately effective ways, Grounds 2(b), (c), (d) and (e) all raise valid complaints.  They are made out, notwithstanding the contribution made by the appellant landlord to the error which provides the basis for its success on these grounds.  Order 3, concerned as it was with unenforceable timeframes, must be set aside in its entirety.

Consequences

  1. [117]
    It does not, however, follow that the appellant landlord then receives all of the orders it sought – which basically amounted to declarations that the respondent tenant was responsible for everything that was ruled by his Honour to be the landlord’s responsibility.  Given that the “arrangement” was conceived in a legal wilderness, the path to finality was never going to be that straightforward.  What is now required, on a rehearing and on the basis that the pivotal order (Order 2, which attributed responsibility for specific defects to one or other of the parties) has been set aside, is that the Court should proceed pursuant to s 119(2)(b) of the District Court of Queensland Act 1967 (Qld) and make orders which ensure the determination on the merits (to the extent that this can be done), of the real questions in controversy between the parties.
  2. [118]
    To this end, it remains convenient to consider separately and determine (by way of an appropriate order in each case) the questions raised as itemised in Ground 2(a)(i)-(vi).  That is, the Court will address the question as to whether, on the evidence adduced, a declaration can and should be made as to the responsibility, under the lease, for the defects identified under those headings in the notice of appeal.
  3. [119]
    In order to do that, it will be necessary to consider the terms of the lease.  It will also be necessary to consider sufficiency of evidence in respect of each of the defects alleged.  And it is in that context that the Court will consider Ground 2(f) (the admissibility of the expert evidence) although, as will be seen, the determination of the issue raised in that ground will have bearing only on one of the items in dispute.

The Lease

  1. [120]
    Relevant parts of the lease are reproduced.  They include:

1.1 The Meaning of Certain Words

Landlord’s Property: all the plant and equipment, fixtures and fittings of the Landlord.

This Clause includes the following types of items (this is not an exhaustive list):

  • Services;
  • toilet amenities;
  • the floor, wall and bathroom tiles;
  • all paving and sealed driveway and parking areas;[44]
  • drainage and conduits;
  • gas and electrical sittings and wiring;
  • other property in, or fixed to the Motel that is not the Tenant’s Property.

Tenant’s Property: all property, plant and equipment, fixtures and fittings owned and used by the Tenant in the operation of the Tenant’s Business excluding any items of property that are the Landlord’s Property.

This Clause includes the following types of items (this is not an exhaustive list):

  • movable furniture;
  • office equipment;
  • individual air conditioning units (NOT the Air-conditioning Equipment);
  • hot water systems;
  • carpets or loose floor coverings;
  • shower screens;
  • curtains and blinds;
  • telephone handsets and system;
  • light fittings;
  • vanity units and washbasins;
  • built in cupboards and shelves;
  • swimming pool pump and filter in chlorinator and pipes above ground and underground; and
  • other property in, or fixed to the Motel that is not the Landlord’s Property.

1.4 Other References

  1. (n)
    All obligations under this Lease must be performed punctually and properly.

6. USE OF THE MOTEL

6.1 What the Tenant Must Do

The Tenant must, at its own cost:

  1. (a)
    Permitted Use: use the Motel for the Permitted Use only; and
  2. (b)
    Trading Hours: keep the Motel open for business each and every day of the Term subject to any restrictions imposed by law; and
  3. (c)
    Operation of Business: conduct the Tenant’s Business at all times in good faith, in a reputable manner and to the best of the Tenant’s ability; and
  4. (d)
    Compliance with Laws: comply with all laws in relation to the Motel, the Tenant’s Business or Permitted Use; and
  5. (e)
    Licenses/Permits: take out and maintain all licenses, permits and registrations required by any Competent Authority for the carrying on of the Tenant’s Business; and
  6. (f)
    Air Conditioning Equipment:
    1. comply with and observe any requirements of the Landlord and any person contracted to maintain and service the Air-conditioning Equipment; and
    2. promptly notify the Landlord of any fault in the operation of the Air-conditioning Equipment; and
  7. (g)
    Services: keep and maintain the roof guttering, waste pipes, drains, water supply, plumbing, conduits and other equipment or services in a clear and free flowing condition. If necessary the Tenant must employ licensed tradesman to clear any blockages; and
  8. (h)
    Grease Traps: have all grease traps in the Motel serviced regularly; and
  9. (i)
    Refuse: cause all waste, trash, refuse, food and other garbage to be removed daily outside of normal trading hours; and
  10. (j)
    Infectious Diseases: where any infectious disease occurs in the Motel which requires notification under Legislation:
    1. give the required notices to the Competent Authority and give notice to the Landlord; and
    2. thoroughly fumigate and disinfect the Motel; and
  11. (k)
    Fire Safety:
    1. comply with all laws and requirements of any Competent Authority relating to fire safety; and
    2. comply with any notice given by the Landlord in respect of fire safety; and
  12. (l)
    Signs: only use advertisements or signs that are usual for the Permitted Use and complies with the law or the requirements of a Competent Authority; and
  13. (m)
    Pest Control: have regular pest inspections and treatments to control all pest insects and vermin in the Motel; and
  14. (n)
    The Tenant shall:
    1. within 21 days of whenever being requested in writing to do so, provide to the Landlord copies of the trading and profit and loss accounts of the Motel business for the respective 3 years ended on 30 June last prior to the date of such request;
    2. after reasonable prior notice permit the Landlord’s valuer to enter the Motel and inspect its contents and records and truthfully respond to his enquiries to enable him to value the Landlord’s interest in the Motel.

provided always that no such request shall be made by the Landlord unless it proposed to sell the subject property or seeks to refinance its loan secured thereon (in which latter case the Tenant’s obligations under this Clause shall be fulfilled by forwarding such copies to the Landlord’s nominated proposed lender.

  1. (o)
    Driveways and Parking Areas: maintain and repair all driveways and parking areas.

(To remove any doubt the Tenant does not need to carry out any work of a structural nature.)[45]

7. MAINTENANCE REPAIR AND ALTERATIONS

7.1 What the Tenant is Responsible For

The Tenant must at its cost:

  1. (a)
    keep the Motel (includes the exterior façade of the Building, exterior and interior windows and doors and all plate glass, glass fixtures, carpets and signage) and the Landlord’s Property clean and in good repair; and
  2. (b)
    keep the Tenant’s Property  clean and in good repair; and

7.2 What the Tenant is Not Responsible For

  1. (a)
    Despite the provisions of Clauses 7.1, the Tenant is not responsible for:[46]
    1. Structural repairs, unless the repair is required because of act or negligence of the Tenant or the Tenant’s Agents; and[47]
    2. Latent defects; and
    3. The replacement of the Landlord’s Property.

  1. (b)
    To remove any doubt the following are examples of the types of items that the Landlord and the Tenant will be respectively obliged to replace when the item comes to the end of its life.

Items the Landlord must replace

  • drains;
  • guttering;
  • underground pipes;
  • tiles (either wall, floor or ceiling) where retiling is involved as distinct from replacing sundry broken and cracked tiles;
  • air conditioning ducting;
  • toilet cisterns and pedestals;
  • shower systems excluding shower screens.

Items which the Tenant must replace

  • light bulbs and fittings;
  • moveable items (chairs and tables);
  • carpets;
  • hot water systems;
  • built in vanity units and wash basins;
  • built in cupboards, desks, port racks and cabinets; and
  • curtains and blinds.

7.3 What the Landlord is Responsible For

  1. (a)
    The Landlord must:
  1. (i)
    ensure that the Motel and the Landlord’s Property are kept in a good structural state and condition;[48] and
  2. (ii)
    maintain the Motel and the Landlord’s Property where that maintenance is required as a result of the latent defects; and;
  3. (iii)
    replace the Landlord’s Property.”

Interpretation of leases

  1. [121]
    The starting point is always the language of the document itself.
  2. [122]
    The interpretation of language used in any such document is informed by principles repeated in cases such as Pialba Commercial Gardens Pty Ltd v Braxco Pty Ltd & Ors, where it was observed that a lease:[49]

“is to be interpreted in accordance with well established principles for the interpretation of commercial contracts.  The parties’ respective obligations … must not be considered in isolation from one another or from the provisions of the lease as a whole.  Their intention is to be ascertained objectively[50] from the words of the lease, considered in the context of the purpose and object of the transaction, including its genesis, background context and the market in which the parties were operating.[51]  The lease is to be construed with a view to making commercial sense of it, as a commercially sensible construction is more likely to give effect to their intention.”[52]

  1. [123]
    The use of the word “structural” in clauses 6.1(o), 7.2(a)(i) and 7.3(a)(i), excited the possibility that the meaning given to this word had the capability to be influential in resolution of the dispute, and we were referred to many authorities in which it had been considered.
  2. [124]
    The landlord argues, by reference to a number of cases, that this term is concerned with the “essential appearance, stability and shape” of a building,[53] “the wholeness of the building”, the “stability of the whole”,[54] “that part of the total building that supports the loads and stops the building falling down”,[55] and “elements that are load bearing or must resist actions” such as dead loads, live loads, wind, groundwater or rainwater.[56]
  3. [125]
    Under this interpretation, the term “structural” is a narrow one that does not extend to the “fitting out, equipping, decorating” or features of a building that generally make it habitable.[57]  It follows, it is said – and no doubt emphasised because of its potential relevance to the shower systems – that installations relating to water and piping[58] are more properly viewed as a “structure which has been constructed within another structure”,[59] and not, therefore, the landlord’s responsibility.
  4. [126]
    The tenant contends for wider interpretation of the word – one that takes into account, so it is said, the commercial purpose of the lease.[60]  The tenant cites several cases[61] - and in particular Granada Theatres v Freehold Investments (Leyonstone) Ltd - which, so it is submitted, allow the term to relate to features of the building beyond those that relate to load bearing. [62]
  5. [127]
    That much might be accepted, but there were difficulties with the extent to which the argument developed from that point.  It was, in essence, argued that virtually any repair to any part of the structure of the Motel was a “structural repair”.  This interpretation was developed during the hearing of the appeal, when it was maintained, for example, that even the Motel’s windows were “structural” and therefore, owing to clause 7.2(a)(i), the tenant could not be responsible for their repair.[63]  This proposition cannot be reconciled with an objective reading of clause 7.1(a) which expressly obliges the tenant to keep “windows” and all “plate glass” and “glass fixtures” clean and in good repair.  It would offend both logic and the principles identified in [122] above to read the lease as imposing, in 7.1(a), an obligation (to keep windows in repair) that was removed immediately by 7.2(a) (because windows are a structural repair).  Such an approach would effectively make impossible any division of obligations as between landlord and tenant.
  6. [128]
    In fact, the reconciliation of the parties’ diverging contentions will depend always upon the particular document whose interpretation is in question.  As put by Nicholas J:

“There are many cases which discuss the meaning of “structure”, “structural alteration”, and “structural repairs”, but all are with regard to the legislation, lease, or agreement in the particular case. Sometimes they afford helpful, but not determinative, guidance for the approach to be taken. In the end, the question is one of interpretation to ascertain the obligation of the party with regard to the words used in the clause in context, and to the surrounding circumstances”.[64]

  1. [129]
    Even though considerable energy was invested into argument about the meaning of the term in this case, its significance was reduced once the relevant issues were identified properly.
  2. [130]
    By the terms of the lease, as well as not being responsible for “structural repairs”, the tenant is not liable for “latent defects”.[65]  On this point, too, the attention of the parties was occupied at length both in the trial and before us.  As will be seen, however, the Court has not found it necessary to reach any conclusions about the interpretation of this term in order to determine the issues which remained relevant on appeal.

Ground 2(a)(i) and 2(f)

Responsibility under the lease for the shower system, and objection to expert evidence

  1. [131]
    Mr David Hopmeier is a licensed commercial builder, building inspector and architect.[66]  He has been registered as such since 1973.[67]  He had inspected “somewhere… over 4000” buildings for the purpose of finding defects or identifying a requirement for maintenance.[68]
  2. [132]
    His qualification to do this was never challenged – in fact, counsel for the landlord acknowledged, at the trial, that he was a “superbly qualified architect”.[69]
  3. [133]
    His services had been commissioned by Mr Suthers, who was a director of the tenant, and the finance and administration manager of the Motel.[70]  Mr Hopmeier swore an affidavit to which he exhibited five documents; four of them were reports prepared for Mr Suthers.  The first was described as “report dated 7 December 2015”.  He then exhibited a “further report”, a “second further report” and a “third further report”.  The “further reports” were really just iterations of the 7 December report, each with a little more information added into it, sometimes addressing specific items.[71]
  4. [134]
    Mr Hopmeier recorded that he had attended the Motel on a number of occasions and carried out inspections of the premises.  He also stated:

“6. I confirm as follows:

  1. (a)
    the factual matters stated in the report are, as far as I know, true; and
  2. (b)
    I have made all enquiries considered appropriate; and
  3. (c)
    The opinions stated in the report are genuinely held by me; and
  4. (d)
    The report contains reference to all matters I consider significant; and
  5. (e)
    I understand my duty to the court and have complied with the duty.”[72]
  1. [135]
    His first report indicated the purpose of his inspection was to provide advice to the property owner.  It also included this:

The Scope of the Inspection: The inspection comprised a visual assessment of the property to identify major defects and to form an opinion regarding the general condition of the property at the time of inspection. An estimate of the cost of rectification of defects is outside the scope of the Standard and therefore does not form part of this report.”[73]

  1. [136]
    It was also qualified by the proposition that it was:

“…not a structural report. Should you require any advice of a structural nature you should contact a structural engineer.”[74]

  1. [137]
    Mr Hopmeier was called by the tenant.  He gave oral evidence which established his expertise, then left the courtroom while the objection to his evidence was argued and considered.  He did not return, and was not required for cross examination.  It follows that he was not challenged about any of his opinions or the basis for them.
  2. [138]
    At the end of the argument the learned trial judge indicated that he intended to “allow reliance to be placed upon the reports, both as observations and opinion.”[75]  Mr Hopmeier’s affidavit was admitted[76] as an exhibit and his reports, subject to one item which was excluded, were included as part of the same exhibit.[77]  Although another expert’s report had been prepared on behalf of the landlord,[78] and part of Mr Hopmeier’s report had been prepared in response to it, the landlord did not call that witness nor indeed adduce any other evidence.[79]  Subject to the question of admissibility, this means that issues such as responsibility for the shower system fall to be resolved on the basis of Mr Hopmeier’s uncontradicted evidence.
  3. [139]
    At their core, the arguments against the admissibility of this evidence rest upon a complaint that it was admitted without satisfying the tests articulated in the decision in Makita (Australia) Pty Ltd v Sprowles.[80]
  4. [140]
    I respectfully adopt this summary of the relevant principles prepared by Bond J in Sanrus Pty Ltd & Ors v Monto Coal 2 Pty Ltd & Ors (No 5):

“In Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [85], Heydon JA stated that for expert opinion evidence to be admissible, it must meet the following criteria:

  1. (a)
    it must be agreed or demonstrated that there is a field of “specialised knowledge”;
  1. (b)
    there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert;
  1. (c)
    the opinion proffered must be “wholly or substantially based on the witness’s expert knowledge”;
  1. (d)
    so far as the opinion is based on facts “observed” by the expert, those facts must be identified and admissibly proved by the expert;
  1. (e)
    so far as the opinion is based on “assumed” or “accepted” facts, those facts must be identified and proved in some other way;
  1. (f)
    it must be established that the facts on which the opinion is based form a proper foundation for it; and
  1. (g)
    finally, the expert’s evidence must explain how the field in which the expert has expertise - as established pursuant to (a), (b) and (c) – applies to the facts assumed or observed so as to produce the opinion propounded.”[81]
  1. [141]
    Application of these principles may support an argument such as that made by the landlord, namely that an inadequate statement of the expert’s reasoning should lead to a conclusion that his evidence is inadmissible.
  2. [142]
    However, the “statement of reasoning” rule does not always require a perfect articulation of expertise tracking through to conclusion.  As explained in Dasreef Pty Ltd v Hawchar:

“But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying “specialised knowledge” based on his or her “training, study or experience”, being an opinion “wholly or substantially based” on that “specialised knowledge”, will require little explicit articulation or amplification once the witness has described his or her qualifications and experience, and has identified the subject matter about which the opinion is proffered.”[82]

  1. [143]
    In his report, Mr Hopmeier observed that there was an ongoing problem with water leaking through the walls adjoining showers and into the rooms.  He noted that in some cases temporary repairs had been done, but thought that they had basically been ineffective and that the problem was ongoing.[83]
  2. [144]
    He included in his report a table which detailed his observations as to the condition of the shower and the condition of the wall outside the shower in 29 of the 30 rooms at the Motel.
  3. [145]
    Under the heading “Condition of shower” he noted, in the case of at least nine rooms that there were “signs of water leaks” under the shower screens.[84]  Under the heading “Condition of wall outside shower & other matters” he recorded observations as to water staining of carpet, rust to nails, water damage to plaster board and skirting, wood rot in skirting, moisture on the floor and deterioration to the wall frame and signs of rusted fixing in the wall.  His report included photographs which illustrated the types of damage that he had recorded.
  4. [146]
    It was only after this process that he offered the opinion:

“… that after 30 years the bathrooms & in particular the showers are past their use by date. Most buildings only have a practical design life of around 20 years & in particular wet areas & high use areas. Therefore, I would consider that all bathrooms need upgrading up to current standards….”[85]

  1. [147]
    It was and is maintained, however, that this opinion was not admissible because there was insufficient explanation as to the manner in which it had been formed.[86]
  2. [148]
    The plain difficulty with this submission is the fact that, as just explained, Mr Hopmeier did explain the exercise he undertook, and recorded the results.  He could have been challenged about his interpretation of them, although exactly how such a challenge might have been mounted is not clear.  The landlord’s argument was developed at trial with submissions that included a complaint that there was “no explanation whatsoever as to canvassing the possible explanations for that rust accumulating, why it’s so obvious that it wasn’t the result of previous roof leaks, for example…”[87]
  3. [149]
    It would have been open to cross-examine Mr Hopmeier and ask him to comment upon the proposition that the repeated discovery of water stains on the carpet adjacent to individual shower screens located in different rooms might all have been the result of leaking from the roof.  The decision not to do so was almost certainly a wise one, but it left intact the potential for his observations (as itemised in his report) to form the basis for his conclusion about a “use by date”.  This was not a case in which it was necessary for the link between the observations and the conclusion to be tracked in any greater detail than it was.  The basis for the opinion was sufficiently discoverable for the opinion to be rendered admissible.
  4. [150]
    And once admitted, this unchallenged and uncontradicted evidence became decisive.  As noted above, clause 7.2(b) of the lease obliged the landlord to replace the shower system when it came “to the end of its life”.  Mr Hopmeier’s opinion, as recorded in his reports, was that the system was past its “use by date”.  Those concepts are not complex.  That opinion would, if admissible, be sufficient to fix the obligation for replacement of the shower system onto the landlord.
  5. [151]
    It is true that argument at the trial did not dwell at length upon the apparently straightforward connection between the conclusion that the showers were “past their use by date” and the fact that the lease specifically contemplated that the shower system might one day come to “the end of its life”.  His Honour did not, apparently, dispose of the matter on this basis.  The proposition that the tenant might succeed on this ground was, however, engaged.[88]  The landlord did not claim that it was prejudiced if this Court was to resolve the matter on this basis.[89]
  6. [152]
    In those circumstances, given the concessions made about the witness’s expertise and the lack of any evidence that might point in a different direction,[90] then the conclusion that the shower system is “at the end of its life” is one that should be drawn.  It follows that under the lease defects in the showers are the responsibility of the landlord.
  7. [153]
    To remove doubt, Ground 2(f) insofar as it relates to that part of the expert evidence about the shower systems should be dismissed.  And given that Mr Hopmeier’s opinions have not informed any other orders made by the court, Ground 2(f) can be dismissed in its entirety.
  8. [154]
    To the extent that Ground 2(a)(i) complains about attribution of responsibility, it would have been dismissed.  However, as decided above, the landlord was correct to say that there was an error in law “in declaring” as his Honour did, because the whole of the declaration made in Order 2 was flawed.[91]  That Order (including 2(a) which relates to the shower systems) has, as explained, already been set aside.  To ensure achievement of the Court’s objective,[92] Order 1(a) should also be set aside.  In place of those orders there should be orders in these terms:
    1. (a)
      The parties are directed to bring in agreed minutes of order declaring the landlord’s responsibility for the shower system defects in terms consistent with this Court’s reasons within 14 days of the date of these reasons.
    2. (b)
      If the parties are unable to reach agreement so as to permit compliance with the previous direction, they must file written submissions as to the appropriate form of declaration, limited to two pages, within a further seven days, and the Court will resolve on the papers the orders which should be made in final disposition of the appeal.

Ground 2(a)(ii)

Rust to pipes

  1. [155]
    The pipes in question support a roof at the front entrance to the Motel. In that way, they might be described as “part of the total building that supports the loads and stops the building falling down”, which is one of the expressions advanced in order to ascribe meaning to the word “structural”.[93]
  2. [156]
    In any case, these pipes do not sit comfortably in a list of the other items identified as examples of “tenant’s property”.[94]  They should be seen as part of “the motel landlord’s property” that the tenant is responsible for keeping “clean and in good repair” and the landlord is responsible for keeping “in a good structural state and condition”.[95]  The functional question therefore is whether it was established that the defect alleged can itself, in this context, be described as “structural”.
  3. [157]
    The evidence under this heading is spare.  In its totality, it reads:

“At the porch at front entry to Motel, the steel pipe posts supporting the roof to this area were noticeably rust [sic] at bases particularly the centre one. These were also noted in Abscan Report. It appears to have been more extensive at this time, so it appears that some repairs have been carried out, however more needs to be done. These need treatment & painting. If they deteriorate further they will need more major repairs.”[96]

  1. [158]
    At its highest then, the evidence amounts to an observation about an area of the Motel which requires “treatment and painting”.  The expert opined that the area is one which might, given its location, potentially need “more major” repair.  Such repair may well be of a “structural” nature.  But at present the evidence is insufficient for it to be concluded that the “noticeable rust” was a “structural” defect.  It is, however, an area that should be kept “clean and in good repair”.
  2. [159]
    Other than in his orders, the learned trial judge made one reference to the “rusted bases of pipe columns at the front entry of the motel”.[97]  His Honour did not make any finding that could resolve this issue in favour of the tenant.
  3. [160]
    It follows that the specific complaint made in Ground 2(a)(ii) has been made out.  As already noted, Order 2 is in any case set aside in its entirety, but it was also incorrect in that it purported to allocate responsibility for this defect to the landlord.
  4. [161]
    This Court will, on this rehearing, make a declaration as to the party who is responsible for this problem.  That process could be fraught, since the evidence, already thin, is now five years old.  However, no party sought to place any further evidence before the Court, so it is necessary to proceed on the basis of the evidence as it stands.  That permits the Court only to declare that the tenant is liable under clause 7.1 of the lease for the treatment of rust and painting of pipe columns at the front entry of the motel.[98]

Ground 2(a)(iii)

The fence

  1. [162]
    In addressing Ground 2(a)(iii), it was pointed out that no evidence established the location of the fence.  Nothing demonstrated whether it was jointly owned with the neighbouring property such that s 19 of the Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld) might apply.
  2. [163]
    That is, the precise location of the fence has not been clarified, by either party, in the whole course of a dispute which began in 2015.  In the circumstances, senior counsel for the tenant conceded that, even though his Honour had made an order that was ostensibly in the tenant’s favour, neither party should have a declaration made in its favour.[99]  It follows that the particular complaint made in Ground 2(a)(iii) is made out.  Orders 2 and 3 are, as already indicated, set aside in their entirety.  In the circumstances, no further order is required.  On the basis that Order 1(d) is also, in effect,[100] impugned by Ground 2(a)(iii), it too should be set aside.

Ground 2(a)(iv)

Cold Room

  1. [164]
    Again, there was very little evidence from which any conclusion could be drawn about this location.[101]  It reduced, in effect, to the inclusion in Mr Hopmeier’s report of a photograph of the cold room and accompanying description which reads “rust around base of cold room and over door head”.[102]
  2. [165]
    To the extent that this evidence concerns a “room”, it can be taken that it forms part of the “plant and equipment, fixtures and fittings” and can properly be described as property of the landlord.  It was something which the tenant was required to keep “clean and in good repair” and for which the landlord was responsible to keep “in a good structural state and condition”.
  3. [166]
    On the scant basis of a reference to “rust”, it is not possible to certify that, to the extent that this rust is a defect, it is one that strikes at the structural condition of the Motel.  The evidence does not, without more, establish that it detracts from the “wholeness” of the building, nor even that it affects, at present, the tenant’s commercial use of the premises.  Rust no doubt has the potential to do that, and if the evidence went further it might have been something which required the attention of the landlord.  But this evidence does not yet allow for that conclusion to be drawn.  On the other hand, if the area is rusty it is not clean, and it is the tenant who should be keeping it that way.
  4. [167]
    The specific complaint made in Ground 2(a)(iv) is made out.  As already held, Orders 2 and 3 are in any case, set aside.  In place of that part of Order 2(a) which related to the cold room, it is appropriate[103] to declare that the tenant is liable - under clause 7.1 of the Lease - for maintenance of the cold room and the repair of those parts of the cold room that have been damaged by rust.

Ground 2(a)(v)

Windows

  1. [168]
    Mr Hopmeier gave some detailed treatment to the condition of the windows of the Motel units.[104]  He observed:

“I noted when inspecting the exterior of windows to all other units that most of the seals to glass in all windows is breaking down & perishing, this is common with age & will generally lead to water leaks.  Also the anodising on the security screen to all windows was breaking down & the aluminium under corroding with will reduce the effectiveness of security screen.  It would therefore that most windows may have to be replaced in the near future.”[105]

  1. [169]
    As noted above, clause 7.1(a) of the lease makes clear that it is the responsibility of the tenant to keep the “exterior facade of the Building, exterior and interior windows”, in good repair.
  2. [170]
    There is therefore no difficulty in assigning to the tenant responsibility for the maintenance of windows and anything relating to the glass in them.  That is, no doubt, why his Honour made Order 2(d), which confirmed the tenant’s responsibility for their resealing.[106]
  1. [171]
    Resolution again turns upon the interpretation of the lease and the evidence available.  The proximity, in clause 7.1(a) of the terms “exterior façade” and “exterior … windows” means that the façade should be taken to include windows and their security grills.  The landlord is entitled to a declaration to that effect, but that is as far as it goes.  The evidence does not provide a basis for any further order.
  2. [172]
    The complaint made in Ground 2(a)(v) is made out.  Orders 2 and 3 have already been set aside.  That part of Order 2(c) which related to windows and frames should be replaced with a declaration that the tenant is, pursuant to clause 7.1 of the lease, responsible for the maintenance and repair of windows and security grills.

Ground 2(a)(vi)

Driveway/Carpark

  1. [173]
    The lease provides that this area is the property of the landlord who must therefore keep it in “a good structural state”.[107]  It is interpolated that keeping something in a “good state” might mean something different from merely keeping it free from “defects” – that is, something might be in a poor state without necessarily being “defective”.
  2. [174]
    That this part of the premises might become a subject matter for controversy was contemplated by those who drafted the lease.  As noted above, clause 6.1(o) provides that maintenance and repair of all driveways and parking areas is the responsibility of the tenant.  This is followed, however, by the qualification that “(To remove any doubt the tenant does not need to carry out any work of a structural nature.)”.
  3. [175]
    The inclusion of the sentence in parenthesis suggests it was contemplated that the driveway/parking areas could suffer from a structural defect which would, by reference to the other terms in the lease, be the responsibility of the landlord.
  4. [176]
    The alternative construction is that the parenthesised sentence applies to all of 6.1, is no more than an emphasis of the dichotomy proposed in 7.2, and that no such exception is specifically contemplated in the case of a driveway.
  5. [177]
    However, when read as a whole, there is little else in clause 6 that could give rise to consideration of “structural” issues.  It is concerned with other requirements that relate to the safe and legal operation of the Motel.  Clause 6(o) is the only part of that clause which involves the concept of “repair”.  “Repair” is an activity that might involve projects that are similar to (and therefore, as contemplated in the lease, not to be confused with) “work of a structural nature”.  Inserted for the purpose of certainty, the parenthesised qualification following paragraph (o) does, to my mind, pertain particularly to “driveways and parking areas”.  It is, therefore, specifically contemplated that such areas may require “work of a structural nature”.
  6. [178]
    It follows that the driveway and carpark might properly be regarded as part of the “structure”.
  7. [179]
    However, once again, the evidence that might have provided the basis for a declaration was lacking.
  8. [180]
    Mr Hopmeier observed that:

“The car park should be relatively level & direct water to collection areas as required. It is obviously not the case in this situation. Paving was used extensively in the early 80’s, however, has since been found basically unsuitable for areas where cars are driven over it [sic], it is laid on compacted fill & it is virtually impossible to compact this evenly, so when cars drive over it the pavers basically settles in softer spots, leaving it uneven & with puddles in it. With time these get deeper & the water held in these after rain softens fill below & allow the pavers to move against each other & chip & become [uneven]. The deterioration accelerates with time. As paving is basically an unsuitable material & these days are quite expensive I would suggest the whole area needs to be replaced with concrete [sic].”[108]

  1. [181]
    As Bond J observes,[109] Mr Hopmeier purported to express some other ostensibly relevant opinions, but the learned trial Judge was correct, in the circumstances, to refrain from acting on them.  The balance of the evidence reduces to Mr Hopmeier’s assertion that the carpark should be “relatively level” and is “obviously not”.  He made observations about what is now understood to be the “basic unsuitability” of paving, and a suggestion as to how things might be improved, but there is insufficient evidence to found a conclusion that there is a defect of the kind for which the landlord (or anyone) is responsible.  Order 2 is already set aside; 2(f) would in any event have been set aside for want of evidential foundation.  On the evidence there is no basis for any further order.  On the basis that Order 1(h) is captured by Ground 2(a)(vi) of the notice of appeal, it is set aside as well.
  2. [182]
    I propose the following orders:
    1. (a)
      The appeal is allowed on Grounds 2(a); 2(b); 2(c); 2(d) and 2(e).
    2. (b)
      Ground 2(f) is dismissed.
    3. (c)
      Orders 2 and 3 are set aside.
    4. (d)
      Orders 1(a), 1(d) and 1(h) are set aside.
    5. (e)
      In place of Orders 2 and 3, the Court orders that:
      1. The parties are directed to bring in agreed minutes of order declaring the landlord’s responsibility for the shower system defects in terms consistent with this Court’s reasons within 14 days of the date of these reasons;
      2. If the parties are unable to reach agreement so as to permit compliance with the previous direction, they must file written submissions as to the appropriate form of declaration, limited to two pages, within a further seven days, and the Court will resolve on the papers the orders which should be made in final disposition of the appeal;
      3. It is declared that the respondent is liable under clause 7.1 of the lease for the treatment and painting of pipe columns at the front entry of the Motel as identified at pages 15-16 of the report of Mr Hopmeier dated 30 August 2016;
      4. It is declared that the respondent is liable under clause 7.1 of the lease for maintenance of the cold room and the repair of those parts of the cold room that have been damaged by rust;
      5. It is declared that the respondent is liable under clause 7.1 of the lease for maintenance and repair of seals to the windows and of the security grills; and
    6. (f)
      The parties are directed to file submissions on costs, limited to four pages, at the same time as the minutes of order referred to in (e)(i) (or the submissions in (e)(ii) if that becomes applicable), and the Court will resolve on the papers the orders which should be made in final disposition of the appeal.

Footnotes

[1]  Appeal Record Book (volume 2), page 460, trial transcript T1-2, lines 18-19.

[2]  Appeal Record Book (volume 2), page 460, trial transcript T1-2, lines 21-24.

[3]  Appeal Record Book (volume 2), page 461, trial transcript T1-3, lines 28-30.

[4]  Appeal Record Book (volume 2), page 463, trial transcript T1-5, lines 7-8.

[5]  Appeal Record Book (volume 2), page 463, trial transcript T1-5, lines 10-11.

[6]  Appeal Record Book (volume 2), page 463, trial transcript T1-5, lines 18-20.

[7]  Appeal Record Book (volume 2), page 464, trial transcript T1-6, line 11.

[8]  Appeal Record Book (volume 2), page 461, trial transcript T1-3, lines 35-40.

[9]  Indeed, the parties had fallen into dispute about the extent of their agreement by the end of the trial: see Supplementary Record Book, page 20, trial judge’s reasons at [27]-[29].

[10]  See Supplementary Record Book, page 34, trial judge’s reasons at [86].

[11]  For example, a lease could be drafted so that relevant covenants obliged a party to have repairs of a particular nature done as directed by an independent expert appointed pursuant to a specified mechanism.  Such a lease could justify a declaration of rights by reference to what the expert might direct.

[12]  Chapter 11 of the Uniform Civil Procedure Rules would have authorised the appointment of a single expert to express an opinion on an issue.  The reception of such a report would have authorised a subsequent order made by reference to it.  Similarly, Chapter 13 Part 7 of those rules would have authorised the Court to refer particular questions arising in a proceeding to a referee for inquiry and report.  Such an exercise of power might, if the referee’s report was accepted, have authorised a subsequent order made by reference to the referee’s report.  But the orders made by the primary judge were plainly not orders made pursuant to those rules.

[13]  See reasons of Callaghan J at [143]-[146], [150].

[14]  See reasons of Callaghan J at [139]-[142], [147]-[149].

[15]  See reasons of Callaghan J at [138], [143]-[152].

[16]  Order 2(a) also dealt with other defects, but the nature of its deficiencies is such that it is not necessary to seek to craft an order which preserves any part of it.

[17]  See reasons of Callaghan J at [155] to [158].

[18]  Appeal transcript, page 1-46 line 40 to page 1-47 line 16.

[19]  Appeal Record Book (volume 2), page 457 (emphasis added).  All passages from Mr Hopmeier’s report have been reproduced verbatim, except for necessary modifications indicated by square brackets.

[20]  Appeal Record Book (volume 2), page 608.

[21]  Supplementary Record Book, page 34, trial judge’s reasons at [86].

[22]  Supplementary Record Book, pages 26-27, trial judge’s reasons at [45]-[47].

[23]  Supplementary Record Book, pages 26-27, trial judge’s reasons at [45]-[46].

[24] The process began on 17 December 2015 when the tenant, issued a demand that the landlord should perform the relevant tasks.  The landlord denied liability and in turn demanded that the tenant carry out the works.  The landlord issued to the tenant a Notice to Remedy Breach of the Covenant under s 124 of the Property Law Act 1974 (Qld) (PLA) on 18 December 2015.  After receiving that notice, the tenant commenced these proceedings by a claim (subsequently amended) which sought various orders and was met by a defence and a counter claim (also subsequently amended).  Bond J has recorded this process in more detail at [3]-[7].

[25] Appeal Record Book (volume 2), page 463, trial transcript T1-5, lines 18-20.  Emphasis added.

[26] Appeal Record Book (volume 2), page 461, trial transcript T1-3, lines 36-40.  Emphasis added.

[27] Appeal Record Book (volume 2), page 463, trial transcript T2- 5.  Emphasis added.

[28] Appeal Record Book (volume 2), page 461, trial transcript T1-3, lines 30-40.

[29] Appeal Record Book (volume 2), page 602, trial transcript T2-84-T2-85, lines 40-3.

[30] Appeal Record Book (volume 2), page 153.  Emphasis added.

[31] Emphasis added.

[32] That is, those which remain relevant for the purposes of this appeal.  Some amendments have been made to correct what are inferred to be typographical errors.

[33] The expert to whom reference is made in Ground 2(f) was David Hopmeier, a licensed commercial builder, building inspector and architect.  He was the principal (and for the most part only) source of evidence about the defects identified in Grounds 2(a)(i) - (vi).

[34] See reasons of Bond J at [22](a); [45] and [75].

[35]  Appellant’s amended outline of argument at 9 [31].

[36] See District Court of Queensland Act 1967 (Qld) s 118(8).  No submissions were directed to the applicability of s 118(3); the case must be taken to have proceeded on the basis that it “related” to property of the value contemplated in pleadings, which exceeded the relevant jurisdictional limit in s 118(2)(b).  Further, as will be seen, the appellant did have reasonably arguable points to make – indeed, the appeal has been allowed in part because of them.  And the manner in which the case was conducted and decided exposed some misunderstandings as to the way in which matters like this can be litigated– had leave been required it would have been appropriate to grant it in order that such misconceptions might be corrected.

[37] At [86].

[38] At [94]-[96].

[39] Appellant’s amended outline of argument at [30].

[40] Zamir & Woolf, The Declaratory Judgment, 4th ed (2011) at 1-02, cited in Macks v Viscariello (2017) 126 ASCR 68 at 191 [659] per Lovell J, Corboy and Slattery AJJ.

[41] Appeal Record Book (volume 2), page 468; trial transcript T1-10, lines 42 - 43 and by reference to the relief sought in the amended statement of claim (Appeal Record Book (volume 1) page 22 at [2]).

[42] Appeal Record Book (volume 1), pages 137 - 138.

[43] The only timeframe which is relevant to the parties now is that set by clause 1.4(n) of the Lease.  It provides that “all obligations under this Lease must be performed punctually and properly”.  It is to be hoped, in order to lay to rest this unfortunate dispute, that the parties will observe that requirement.

[44] Emphasis added.

[45] Emphasis added.

[46] Emphasis added.

[47] Emphasis added.

[48] Emphasis added.

[49] [2011] QCA 148 at 14 [61] per McMurdo P.

[50]Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at [53].

[51]Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 350 per Mason J, citing Reardon Smith Line Ltd v Hansen Tangen [1976] 1 WLR 989; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40].

[52]Thiess Services Pty Ltd v Mirvac Queensland Pty Ltd [2005] QSC 364 at [36] - [37]; citing L Schuler AG v Wickman Machine Tool Sales [1973] 2 All ER 39 at 45 per Lord Reid.

[53]Ibrahim v Dovecorn Reversions Ltd [2001] 2 EGLR 46 at 48-49.

[54]Reilly v Liangis Investments Pty Ltd [2000] NSWSC 47 at 9 [24] per Young J.

[55]Carbure Pty Ltd v Brile Pty Ltd [2002] VSC 272 at 21 [47] per Bamford J.

[56]Wilde and Smith [2010] WASAT 9 at 18 [58].

[57] Appeal transcript T1-26, lines 20 – 23.

[58] Appeal transcript T1-26, lines 35-42.

[59] Appeal Record Book (volume 1), page 88 at [44].

[60] Respondents outline of argument at [15]-[18].

[61] Namely Granada Theatres v Freehold Investments (Leyonstone) Ltd [1958] 1 All E.R. 551 and [1959] 2 All E.R. 176; Advance Fitness Corp Pty Ltd v Bondi Diggers Memorial & Sporting Club Ltd [1999] NSWSC 264; Justelle Nominees Pty Ltd v Martin (No. 3) [2009] WASC 264; J.F. Hillam Pty Ltd v Mooney (1988) 48 SASR 381.

[62] Appeal transcript T1-54, line 39.

[63] Appeal transcript T1-69 – T1-70.

[64]Holus Bolus Pty Ltd v The Wicko Pty Ltd [2012] NSWSC 497 at 13 [30].

[65] Clause 7.2(a)(ii) of the lease.

[66] Supplementary Record Book, page 26, trial Judge’s reasons at [42].

[67] Appeal Record book (volume 2), page 524, trial transcript T2-6, line 22.

[68] Appeal Record book (volume 2), page 525, trial transcript T2-7, lines 30-40.

[69] Appeal Record book (volume 2), page 563, trial transcript T2-45, line 5.

[70] Appeal Record book (volume 2), page 476, trial transcript T1-18, line 6.

[71] The fifth document was a “costs estimate”, not presently relevant.  It should be noted that Mr Hopmeier made reference to the reports of “RPA” Architects” and “Abscan” (AB 455).  That material was never tendered and is not part of the record.  To the extent that Mr Hopmeier has repeated or paraphrased this material it has been ignored as hearsay, and in his absence it is not open to render intelligible any other aspects of Mr Hopmeier’s evidence which were responsive to it.

[72] Appeal Record book (volume 2), page 389.

[73] Appeal Record book (volume 2), 392 – 393.

[74] Appeal Record book (volume 2), 395.

[75] Part of the report of 4 December 2017 was excluded.  Appeal Record Book (volume 2), page 608, trial transcript, T2-90, lines 12-25.

[76] Appeal Record Book (volume 2), page 607, trial transcript T2-89.

[77] Appeal Record Book (volume 2), page 611, trial transcript T2-93, line 15.

[78] The report of a Mr Derbyshire.

[79] Appeal Record Book (volume 2), page 595-596, trial transcript T2-77, line 46 - T2-78, line 34.

[80] (2001) 52 NSWLR 705.

[81] [2019] QSC 210 at 11 [45].

[82] (2011) 243 CLR 588 at 604 [37] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ.

[83] Appeal Record Book (volume 1), pages 412-414.

[84] Appeal Record Book (volume 2), page 412.

[85] Appeal Record Book (volume 2), page 416.  Emphasis added.

[86] Appeal transcript T1-17, lines 35 – 46, appeal Ground 2(f).

[87] Appeal Record Book (volume 2), page 546, trial transcript T2-28, lines 7-9.

[88] Appeal Record Book (volume 1), pages 106-107 at [88]-[92].

[89] Appeal transcript T1-11, line 36; T1-13, line 22; T1-15, line 8; T1-21; T1-22, lines 20-45.

[90] Or anything else that raised a relevant concern about the weight to be given to the opinion.

[91] For the reasons explained at [108]-[111] above.

[92] See [117] above.

[93] Appellant’s amended outline of argument at [10].

[94] For example, moveable furniture, office equipment, carpets or loose floor coverings and curtains and blinds.

[95] Clause 7.3(a) of the lease.

[96] Appeal Record Book (volume 2), page 419.

[97] Trial judge’s reasons at [44].

[98] As identified at Appeal Record Book (volume 2), pages 419-420.

[99] Appeal transcript T1-68, lines 20-21; The landlord’s counsel allowed that if it was a boundary fence then the landlord was responsible for it (appeal Transcript T1-48).

[100] See [16], above.

[101] It is noted that in Mr Hopmeier’s final report there was an account given by him of something that had been said to the tenant by a refrigeration company.  There was also some commentary on a document which was not in evidence.  Although not, apparently, the subject of specific objection, these parts of the report were either hearsay or otherwise inadmissible and were not specifically relied upon by the tenant in support of any argument under this heading.  They have been disregarded.

[102] Appeal transcript T1-52, lines 4 - 5.

[103]District Court of Queensland Act 1967 (Qld), s 119(2)(b).

[104] Appeal Record Book (volume 2), page 423; Appeal Record Book (volume 2), page 448.

[105] Appeal Record Book (volume 2), page 423 (sic).

[106] For the reasons stated, this part of Order 2 was as flawed as the rest of it, and the whole of the order has been set aside, but the tenant’s responsibility is clear.

[107] Clause 1.1.

[108] Appeal Record Book (volume 2), page 424.

[109]  Reasons of Bond J at [80].

Close

Editorial Notes

  • Published Case Name:

    Speets Investment Pty Ltd v Bencol Pty Ltd

  • Shortened Case Name:

    Speets Investment Pty Ltd v Bencol Pty Ltd

  • MNC:

    [2020] QCA 247

  • Court:

    QCA

  • Judge(s):

    Sofronoff P, Bond J, Callaghan J

  • Date:

    10 Nov 2020

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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