o '% CATCLYIORDS: Teade Practices - misleading and deceptive conduct - assumption by all parties as to fitness of premises as to slrength of concrete floor - premises offered for use as warehouse - absence of misleading element in defendant's conduct - effect of silence of lessor. Landlord and tenant ~ warehouse - term of lease - obligation on lessee to carry on a particular hustness - poasible implication of warcanty of fitness foc that purpose evcluded by other terms of lease. Trade Practices Act 1974 ss.52, 53(aa), 53A. BRADFORD HOUSE PTY. LTD., GORDON HAROLD POOLE AND RICHARD DOWNIE v. LEROY PASHION GROUP LIMITED LEROY PASHTON GROUP LIMITED v. BRADFORD NOUSE PTY. LTD., GORDON HAROLD POOLE and RICHARD DOWIE LEROY TASHION GROUP LIMITED v. McGEE O'CALLAGHAN, GILL & Co. PTY. WED. VG No. 7& of 1982 Smithers J. 4 March 3983 Melbourne. ee a rd tee mer a ses coon e oe ee a et tee ee - ren IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT PEGTSTRY GENERAL DIVISTON Judge Making Order: Dale of Order: Where Made: JP Crem ee meee nance oe paper Teen mere ones Between: VG No. 78 of 1982 BRAPFORD HOUSE PTY. LTD., Smithers J. 4 March 1983 Melbourne. And: GORDON HAROLP POOLE and RICHARD DOWNIK (Applicants) LEROY FASIMTON GROUP And: And: LIMITED (Respondent } LEROY FASHION GROUP LIMITED (Cross-claimant) BRADFORD NOUS" Pry. Tb. , And: GORDON FAROLD PAGLE and RICHARD DOWNIE (Cross-respondents) LEROY FASHTOW GROUP And: LIMTTED (Cross-claimant) McGEE O'CALLAGIAN, GILL & CO. PTY. LTD. (Cross-respondent) ORDER THE COURT ORDERS TIJAT: The application be dismissed. There be judgment for the respondent on the cross-claim an the sum of $29,400.00 The applicant pay the respondent's costs of the application and the cross-claim. The cross-action hy the respondent against the 'cross-respondent be dismissed and the costs thereof be reserved. IN THE FUDRRAL COURT OF AUSTRALTA VICTORTA DISTRICT REGISTRY GENERAL DIVISION Coram: Smithers J. 3 March 1983 Woe en ete ne cp ere ee ee + Between: VG No. 78 of 1982 BRADFORD HOUSE PTY. LTD., And: GORDON TIAROLD POOLE and RICHARD DOWNIE (Applicants) LEROY FASHION GROUP lz i] [any And: LIMITED (Respondent) LEROY FASHION GROUP LIMITED (Cross-claimant) BRADFORD HOUSE PTY. LTD., And: GORDON HAROLD POOLE and RICHARD DOWNIF (Cross-respondents) LEROY FASHION GROUP And: LIMITED (Cross-—claimant) McGEE O'CALLAGHAN, GTLL & CoO. PTY. LTD. (Cross-respondent) wpe eee ot REASONS FOR JUDGMENT In this matter the applicants Bradford House Pty. Ltd., (the company) Gordon Harold Poole and Richard Downie, (the guarantors) seek relief against the Leroy Fashion Group Limited (the respondent) in respect, first of certain alleqed breaches of ss.52, 53{aa) and 53A of the Trade Practices Act 1974 (the Act) in relation to the leasing by the respondent to the company of premises known as 84 City Road, South Melbourne and secondly of an alleged breach by the respondent of a covenant in the lease concerning the fitness of the premises, in particular the floor thereof, to withstand the strains thereon of the operations of the company in the carrying on of its business. The premises comprised an area of about 14,500 square feet on which there was a brick building with partitions and a concrete floor. The term of the lease was three years commencing on 1 March 1980 with an option of a further three years. The company carried on business as a printer in a large way. At the beginning of 1980 it required expanded space. In January 1980 Mr. Poole observed a notice on the premises stating that the same, described as a warehouse and showroom, were available on lease and that the agents were McGee S& O'Callaghan, Gill & Co. Pty. Ltd. (the cross-respondent) of South Melbourne. Mr. Poole telephoned ee ns as - wee wee tee 3. the agency and arranged to meet one, Mr. Edwards, the agent's representative handling the matter, at the site. This he did on either Friday 11 January or Monday 14 January 1980. Mr. Poole was favourably impressed with the premises. le observed that the floor was concrete. There was a loading bay facing Bright Street, the northern boundary of the building. There were two partitions across the floor area with openings therein to permit passage and another partition closing off the office area. Mr. Edwards took Mr. Poole all over the premises including a loft. Mr. Edwards asked Mr. Poole what was the purpose for which his company required the building. Mr. Poole, a reliable witness, said that his company had recently won a contract with the TAB in Victoria which made it necessary for it to extend its forms division. Printing of commercial forms constituted a substantial part of the company's business. He told Mr. Edwards that the company needed an area of 10,000 to 15,000 square feet where it could store printed and unprinted materials. Mr. Poole said that the company had ordered from America 400 tonnes of board in reel form and it was due to arrive in five or six weeks. Mr. Poole said:- «+» I was asked the type of business and the type of equipment we would be putting in and I explained that we would be bringing down three or four presses and it appears the interest was more with our company as to how long we had been established and whether we were a creditable company because that was the Line of questions, more than on what we were going to use it for. I discussed the We te ne en a eee = ae eae - -- - wer 4. fact that we would be using a large quantity of pranting board which had to be moved around. I discussed with Mr. Edwaids that we would have to work out traffic ways for materials plus areas for machinery ..." Mr. Poole said he would like Mr. Cass, the company's production manager to look at the premises and an appointment was made. Mr. Poole, Mr. Cass and Mr. Edwards met at the premises. Mr. Cass made thorough measurements and considered the possible lay out of the machinery and storage areas and the traffic lanes along which the fork lift would pass in handling the paper board in carrying on the company's business. He regarded the premises as admirable. Mr. Poole told Mr. Edwards that the paper board would be moved abcut the premises by fork lift and that there would be a turn around of about twenty tons of board each week. It was explained to Mr. Edwards that the openings in the partitions would have to be enlarged to permit the passage of the forklift. Mr. Edwards said there would be no difficulty about that. When asked whether when Mr. Edwards was told ahout those matters, or if Mr. Edwards gave any reply, Mr. Poole said:- "... No, Mr. Edwards said very little on these points. He was interested in the business and what we were going to use the building for, but he was more interested I Felt at the time in getting details of my company. That was fair enough." nate ne pene ee ee ee wee ee eee eee - - - He was asked: - MR BYRNE: "When you told Mr. Edwards the sort of use that you intended to put the building to, did he say anything which caused you to have any reservations ahout the strengih or sufficiency of the floor? --- No, he did not." Asked whether Mr. Edwards asked any questions as to the sort of loads that the fork Lift would carry Mr. Poole said "No, he did not". Mr. Poote was asked whether before deciding to take the premises he had any belicf as to whether the floor would be sufficiently strong to withstand the strains and weight of moving the stocks of paper around the premises, he said, "Yes, I believed that it would have been strong enough. IT had no reason to believe otherwise." Asked how he came by that belief he said:- "My reasoning was that it was a commercial building. The use that we would put it to would be no more than that we would put and have put to any other commercial building in that area, and I have put to any other buiijiding in the Jast 30 years, and I have not had this sort of problem. The equipment we were using was not in the printing trade considered to be heavy equipment. The machinery itself is relatively light and the forklift itself is not one of the larger types. It is a medium type forklift which you will see in virtually any printing establishment every day." In cross examination the following passage occurred. Te appears to put the applicant's case as strongly as it can be put. MR NEESHAM: "How did he deceive your what did you do? --- He leased premises with a floor which was unsuitable for a comnercial or light industrial floor and he led me to believe tho premises were to that standard. How did he lead you to believe that the premises were to that standard? --~ He asked me the type of business we were conducting. I then told him the type of business I wished to conduct at these premises. I went through it in qreat detail, explaining the particular contract. he was involved, even by standing around when we were putting passage ways thoroughfarcs down, Laying machinery down. Tn my opinion as a professional agent for a company that is either selling or leasing industrial or commercial properties, his knowledge should be such that if he leases or sells that property to me, that property should be to that standard. What I was putting to you was this: that as you see the situation, is not what you are really saying that Mr. Edwards was under a duty to you to find out what the condition of the floor was and to tell you? --- I feel Mr. Edwards had a duty, if he was leasing me a commercial or industrial premises, to know that they were to that standard. In this case I believe the floor was not. Whether Mr. Edwards knew or not, I am not dehating that point. When your statement of claim accuses Mr. Edwards of concealing the fact that the concrete floor of the premises was incapable of standing the weight required, you do not believe he had concealed anything, do you? -~~ I cannot answer that question. Mr. Poole and Mr. Edwards discussed terms for a tenancy. As a result of these events Mr. Poole wrote to Mr. Edwards as follows:- wesc cen GN eee 14 January 1980 "Dear Wayne, This letter is to confirm that we accept the terms for the lease of 64 City Road; South Melbourne. My interpretation of the terms are:- RENT: $25,009.00 per annum plus Board of Works and Council rates. (3 year lease with 3 year option x aqreement or determination) RENT REVIEWED: 18 months COMMENCEMENT DATE: 1.3.80. FITTINGS: Owned by Leroy that are Bradford House's obligation to maintain:- Gas Heating Cooling Fans Conveyance Belt Security System Directors Guarantee's: Directors Guarantce's will pe given by Company Directors. (Solicitors Armstrong & Gillman) Yours sincerely," The reply from McGee, O'Callaghan, Gill & Co. Pty. Ltd. was as follows:- 15 January 1980 "Dear Sir, Re" Property 64 City Road, South Melbourne We confirm that the owner of the above property has accepted your offer to lease the property. The details are as follows: Lessor: Tex: Further Term: Commencement. Date: Rental: Outgoings: Renta] Reviews: Guarantees: Chattels: Lessor's Solicitors: FN ee tn ee ee ete ee ee ee ee 8. Leroy Fashion Group Limited 71-75 City Road South, Melbourne. Three (3) years. Three (3) years. ist March, 1980. $25,000 per annum payable in calendar monthly instalments. We are holding one calendar month's rental in our Trust Account and we enclose our recent endorsed "subject to lease". The lessee to be responsible for the payment of M.M.B.W. and Council rates. At the expiration of each period of eighteen (18) months. The rental to be reviewed by agreement Fetween the parties. In the absence of agreenent the rental to be determined by an independent Valuer appointed by the President of the Australian Institute of Valuers. The costs of the determination to be shared equally between the Lessor and Lessee. The Directors of the Lessee Company shall give their personal guarantees to the observance and performance of the covenants of the lease. The following chattels are included in the demised premises and are to be operated and maintained by the Lessee. Gas Heating equipment Cooling Fans Conveyor Belt Security System Messrs. Arnold Bloch Liebler & Co. Solicitors, 324 Little Lonsdale Street, Melbourne. (Attention: Mr. J. Fust) Ln nicrerewien 9. The lessor shall now request its Solicitors to prepare the Lease Agreement for forwarding to your Solicitors. Yours faithfully, McGEE 1 0 'CALLAGHAN, GILL & CO. PTY. LTD. The company went into occupation on 1 March 1980. After some further correspondence not material the lease was submitted by the respondent's solicitors to the applicant's solicitors and the lease and relevant guarantees executed by the parties. Work at the premises proceeded, at first, quite satisfactorily. But in May 1980, Mr. Poole observed thac the floor at the opening of one of the partitions vas breaking up. The following passage describes the situation:- MR BYRNE: "Perhaps you might tell his Honour, in your own words, in what sense dil it break up? How d@id it manifest itself? --- The whee] of the forklift went straight . through the floor one day. Io was not there at the time. It appeared it was hollow under that piece of cement and the pressure of a wheel broke away and they had a broken area that would be about 18 inches in circumference and about 4 inches deep. This started to get larger. When you observed that, did you take any steps as between yourself and the landlord to bring it to his attention? --- Not immediately, no. Did this hole in the floor, as you have described it, surprise you? --- Yes, it did. What happened then? --- We tried initially when this happened, we felt there was just one area where we had this problem, and we filled it with cement and tried to cover it up, but what happened around it, it kept breaking, so we qot a steel plate and we Jaid steel plate under advice from a contractor as the best vay to assist that eee re nese ' 19. problem in that thoroughfare area. The advice was not to keep putting cement down. What area was affected in the first instance, then? --- It was an area that was four or five feet by about three feet. What happened then? ~-- Then other areas started to breakdown in a similar manner. Were any particular areas, associated with particular activities, suffering? --- Jt was the traffic areas. The production areas, as we call them, in the plant, around the machines, physically where the machines were, in those areas we never had any problems, it was purely the traffic areas and you started to get an isolated spot that was breaking away. Once it started it continved and was very difficult to stop. The areas where the machines were standing, it was just a dead weight, no traffic, so there was no problem? ~-- That is correct. What about the areas where the rolls of board were standing, in the City Road end, how was that area? -~-- They were all right where they were standing, it was only when you had movement backwards and forwards in the traffic area. Was any part of the entry into the Brown Street store, the store facing Brown Street, affected? --- The entry from the Brown Street store, yes, it was affected the same way. What about where the loading was, the Bright street side of the premises? -~- Yes, the loading bay broke down in areas." Thereafter the state of the floor steadily deteriorated. The company applied various remedies but it became so bad by mid 1981 that almost every day the company's business was brought to a standstill while the whole staff was engaged in extricating the loaded fork Lift which was bogged in a hole in oT ess a ii. the floor. By Noverber 1981 the company was losing about twelve to fifteen hours a week in production of printed material. The fork lift itself was damaged. The company notified the respondent of the failure of the floor and requested that the respondent carry out the necessary repairs. A representative of the company inspected the damaged floor and expressed dismay saying that the floor was a disgrace. He indicated that he would take the matter up with the respondent's management but nothing came of this. On 6 August 1981 the respondent gave notice of re-entry pursuant to clause 7.1 of the lease. The company vacated the premises in November 1981. The notice of re-entry was given in respect of non payment of rent. It was with a view to stirring up the respondent to take real interest in the company's difficulties that the company ceased to pay rent in May 1981. It paid no rent thereafter. But this manoeuvre on the part of the company came to nothing. It led ultimately to the notice of re-entry mentioned above. In these circumstances the company contended that it had established that the respondent through Mr. Edwards and perhaps by advertising the premises for let as a warchouse and by submitting a lease containing clause 4.1(a) and (b) had engaged in misleading conduct contrary to ss.52, 53(aa) and 53A of the Act. I am unable to so find. To my mind 12. everything that occurred between Mr. Poole and Mr. Edwards was consistent with the respondent presenting the premises to the company on terms that the respondent would consent to its use as a printing establishment. It did nothing to represent or create the impression that the premises or in particular the floor, would sustain the strains to which the company would subject it in the course of the conduct of the business by it in its own way. It 1s said that the respondent through Mr. Edwards concealed the fact that the floor was "incapable of with- standing the weight required of it" by the company for the purpose of conducting its business, and misled it in that respect. It is said that once Mr. Edwards had been told of the nature of the company's business and in particular that rolls of paper or board would be moved around the premises by means of a forklift there was a duty upon him to inform the company that the floor would not stand the traffic, or that it might not stand the traffic, or that the respondent had no knowledge of the strength of the floor. On the evidence I cannot find a basis for concluding that there was any such duty. It is clear on the evidence that Mr. Poole at no time gave Mr. Edwards information of any precision as to the degree of strain likely to be imposed on the floor. Even when Mr. Poole was describing the company's business procedures jt was clear to Mr. Poole that Mr. Edwards was not giving the attention that one would expect from a man expected to give Fe eee perm ETT ITS Ef emt tt een me re ee eee ee -- 13. important assurances concerning the suitability of the premises. Rether it appeared that his real interest was in testing the applicant's financial quality as a prospective tenant. And it is impossible to find in the evidence any suggestion that Mr. Poole was actually seeking from Mr. Edwards any assurance as to the strength of the floor. Certainly Mr. Edwards said nothing on the subject. It appears to me that the highest the applicant company's case that the respondent engaged in misleading or deceptive conduct can be put is that the respondent, through Mr. Edwards, continued to offer to the applicant company a tenancy of the premises after it had been given an outline of the way in which the applicant carried on and would carry on its business, including an intimation that the use of a fork lift to convey substantial loads of otherwise unspecified weight would be involved. But this is entirely consistent with the applicant company being left to decide for itself, and deciding for itself, whether it should regard the premises, including the floor, as satisfactory for its purposes. The applicant company was the only party with precise knowledge of the weight to be carried and the manner of carrying it. The essence of the matter in my opinion is that Mr. Poole inferred from his own observation and from the fact that the premises were commercial in character and were presented as such, that they, and in particular the floor, were suitable for his purposes. But none of this involved any et ver tay pee me we ee ee ee sot 14, conduct of a misleading or deceptive nature on the part of Mr. Edwards or the respondent. For all that appears they may well have believed like Mr. Poole that the floor would he sufficiently strong for the purposes in hand. Even had Mr. Edwards permitted Mr. Poole to think that he, Mr. Edwards dié have that belief, such conduct would not have been misleading or deceptive in any sense. The situation was one in which the applicable rule was caveat emptor. Although on the leasing of a chattel there may be implied by law a warranty of fitness for a particular purpose, the ruJe in relation to the demise of Jand is that even where land is let for use in a particular way there is no implied warranty that it is fit for such use. See lalsbury 4th Ed. Vo. 27 pp.205, 210, Hill v. Harris [39657 2 Q.B. 601, Elder v. Auerbach [1950] 1 K.B. 359, Holiday Wise Koala Pty. Ltd. v. Queenslodge Pty. Ltd. [1977] W.R. 164 Woodfall 25th Ed. p.1460 Cruse v. Mount [1933] Ch.D. 278. The foregoing observations appear to me to apply with equal force and effect to the applicants' allegations in support of their claim under s.53({aa) of the Act that the respondent falsely represented that the services associated with the tenancy, namely the concrete floor, were capable of withstanding the weight which was required by the applicant company to conduct the business. They apply similarly to the alternative claims under s.53A of the Act that the respondent 15. represented or made a false or misleading statement that the premises possessed performance characteristics or other characteristics or available facilities which in fact they did not have, namely that the concrete floor was capable of withstanding the normal use by the company in the conduct of its business. I am satisfied therefore that no case has been made out for relief under ss.52 and 53(aa) or 53A of the Act. Alleged Breach of Term Implied in the Lease I turn then to the claim made that it was a term of the lease that the premises and in particular the concrete floor thereof would be of such a standard and quality that it was capable of withstanding normal industrial use of it by the company in conducting its business as a printer. It is argued that there is in the lease an implied provision that the floor of the premises was sufficiently strong to carry the weight of the loaded forklifts used in the ordinary and proper conduct of the applicant company's business. It is conceded by Mr. Byrne for the applicants that in the absence of an express covenant no warranty of fitness of the premises for any particular purpose is implied by law even where it was known to the lessor, when the lease was entered into, that the lessee was leasing the premises for the 16. exclusive purpose of using them in some particular way. See Cruse v. Mount [1933] Ch.D. 278. It was contended, however, that the situation is different where the lease not only permits the use of the premises in a specified way hut contains a covenant by the lessee that he will so use them. And in this case there is such a covenant. The relevant provisions are in clause 4.1] (a) and (b) of the lease. They are in the following terms:- 4.1 THE Lessee further covenants with the Lessor as follows - (a) The lessee snall use the demised premiscs only for the business use or purpose specified in the Schedule hereto and shall not without the prior consent of the Lessor use the demised premises or permit them to be used for any other purpose whether industrial commercial or residential and whether temporary or permanent. (b) Throughout the term of this Lease the Lessee shall carry on and conduct in and from the demised premises and in a businesslike and reputable manner a business falling within the use or purpose specified as aforesaid and shall keep the demised premises open for business on the days and during the hours usual for business of that kind in the area in which the demised premises are situated and shall keep the demised premises and the said business properly and sufficiently stocked fitted and equipped with good quality merchandise fittings plant and equipment suitable and appropriate for the conduct of such a business." It is quite clear that at all times both lessor and lessee contemplated that the premises were to be used for the conduct of the lessee's printing business and that a forklift would be PIS pre ee mee ee er a a ~- . = 5 apne ewnte 17. used to move rolls of paper and other materials around the premises. Use by it of the premises in any other way was excluded. Use by him for the conduct of the business of "printers" was not only premissible but also compulsory. In this context Mr. Byrne contended that there is necessarily implied a term that the premises and in particular the floor were suitable for that business, and in particular, were sufficiently strong to permit the business being carried on according to the normal method cf the applicant in the conduct of such a business in such premises. It is said that applying the words of Jordon C.J. in Heinmann v. The Commonwealth (1938) 38 S.R.(N.S.W.) 691 at 695, it is essential to imply that term "in order to make the contract operative according to the intention of the parties as indicated by the express terms". And in my view if the provisions of clause 4(1\(a) and (b).stood in the contract as independent provisions there would be much to be said in support of this submission. See the observations of Maugham J. in Cruse v. Mount (supra) at p.283. It would be arguable that the officious bystander would unhesitatingly declare that it went without saying that the lessor guaranteed that the premises were capable of sustaining the strains involved in reasonable conduct of the business. But the provisions of clause 4.1(a) and (b) do not stand alone. There is in particular clause 4.12 which relates to heavy machinery, plant and other equipment. It provides that the lessee shall not bring such machinery, plant or equipment upon the premises yrs «ee unless reasonably necessary or proper for the conduct of the lessece's use of the demised premises as herein provided and in no event shall any such machinery, plant or equipment by virtue of its nature, weight or size or through noise or vibration in its operation, or "on" any other way be such as to cause or in the reasonab]® opinion of the Jessor be likely to cause any structural or other damage to the floors or walls or any other part or parts of the demised premises. Before bringing any such safes machinery plant or equipment upon the demised premises or the common areas the lessee shaJl inform the lessor of the lessee's intention so to do and the lessor may direct the routing installation and location of all such machinery plant and equipment and the lessee shall observe and comply with all = such directions.". It is clear from clause 4.1? that the parties did deal with the possibility that the floor of the premises might not sustain the operation of heavy machinery, plant and equipment which might ordinarily be used in the conduct of the lessee's business. It 1s apparent that the burdeiu of avoiding damage to the floor due to the weight, size, noise or vibration in operation of heavy machinery brought on, even where reasonably necessary for the conduct of the applicant's business as a printer, is imposed on the applicant company. And it is to be observed that the burden extends not only to damage caused by the weight, size, noise and vibration in operation but also to damage caused by such machinery, plant and equipment "on any other way". This last phrase must be read as "in any other way". So read, the burden is on the lessee not to bring on to the premises machinery, plant or equipment of such a kind that in its operation damage to the OS er nm ree ees eee ern eae meee er aoe ee - - woos o_o 19, floors and other parts of the premises is caused. To my mind the clause on its proper construction inevitably imnoses upon the lessee the obligation to prevent damage caused by the operation of the relevant machinery, planc or equipment. It is a guestion whether within the moaning of clause 4.12, the fork lift used by the applicant is to he regarded as heavy machinery, plant or equipment. This is a question of fact. In my opinion the forklift its to be so regarded. Its unloaded weight docs not appear in evidence. Tt was of course stoutly constructed of steel, with a wheel base of 1080 mm. built to carry a battery weighing 775 kg. and with a mast when collapsed of 1800 mn. capable of extension Lo a height of 3925 mm. It is strong enough to carry at least 750 kg. waight of three rolls of paper stacked onc on top of the one below. In my opinion in the relevant context such an item of equipment must be regarded as heavy. 1t does not appear that the damage actually caused to the floor by the operation of the fork lift would have occurred if the fork lift had been operated unloaded. The damage actuvaJly caused must therefore be regarded as damage caused by operating the fork lift when loaded with heavy loads. It is my view that, within the meaning of clause 4.12, damage caused by virtue of the operation of the fork lift when loaded is damage which pursuant to clause 4.12 it was the lessee's obligation to prevent or avoid. Clause 12 appears to me lo he directed to the protection of the premises from damage and to extend to me 20. damage which may be caused by the operation of a heavy machine an the course of its normal use as such in the conduct of the business of the lessee. When reference is made to damage caused by the operation of an industrial machine or piece of equipment that reference can hardly be to damage other than that resulting from operating the machine in performing those tasks which fall to it in the conduct of the business. In the case of a fork lift those tasks necessarily involve moving rolls of materials relevant to the conduct of the business. It is my view therefore that the provisions of clause 4.12 relate directly to the circumstances of this case. Tt must be construed as creating a burden on the lessee additional to that of clause 4.1(b). Not only must the tenant conduct the business of "printers" in a businesslike and reputable manner but he must at the same time avoid damage to the floor caused by the operation of heavy machinery brought on to the premises by him, even though such machinery might have been brought on as reasonably necessary for the conduct of the use of the premises. Mr. Byrne contended that on its proper construction clause 4.12 should be regarded as a provision operating only to prohibit the bringing on to the premises of heavy or dangerous machinery and is not concerned with "the way the premises are used". I understand this to mean that if a piece of machinery, plant or equipment were brought on to the premises in accordance with the terms cf the lease, then, the clause did not have any application to the FRC UME re in peeineann ere tne eT eee pee me re ~ eee wee eee 2). circumstances that in the operation of thet machinery, plant or equipment damage might he caused to the premises. I am unable so to understand clause 4.12. It is expressly concerned with heavy machinery reasonably necessary for the conduct of the applicant company's business. It permits such heavy items to be brought on, but only conditionally, the conditton being that any such item should not be such as to cause damage to the premises by virtue of its nature, weight ox s1ze or through noise or vibration in operation or in any other way. lt was also contended by Mr. Byrne that if regard be had to the provisions of clause 4.7(a) it is seen that damage by an item of equipment brought on to the premises as being reasonably necessary for the conduct of the applicant company's business and used properly for that purpose was damage for the repair of which under the lease, the lessee had no liability. Such damage was the result of fair wear and tear. Clause 4.7(a) is in the following terms:- "4.7 REPATRS MAINTENANCE AND CLEANING The lessee shall at all times during the term at the Lessee's own expense and without any notice or demand from the Lessor ~ (a) well and sufficiently and substantially repair cleanse maintain mend and keep as at the commencement hereof the demised premises and al] additions made thereto and damaged by fair wear and tear fire flood lightning storm tempest Act of God riot civil commotion explosion direraft accident objects falling from aircraft operation of 22. war and aneviitable accident excepted PROVIDED THAT the Lessee shall not be liable to do work of a structural nature except such as may be occasioned by the act neglect or default of the Lessee or by its use or occupancy of the demised premises." It appears to me however, that the provisions of clause 4.12 exclude from the circumstances the subject of clause 4.7(a) damage caused by the operation of heavy items of machinery, plant and equipment. Clause 4.7(a) is a clause dealing generally with the repair of damage suffered by the premises. It provides an imunity from liability on the part of the lessee from damage caused by fair wear and tear and certain other events. But clause 4.]2 is directed specifically to the prevention of damage by heavy machinery, plant and equipment. I see no inconsistency between the operation of clause 4.7(a) and clause 4.12. The one provides for an immunity in respect of damage caused by conduct contemplated by the lease. The other prohibits a class of conduct. The conduct prohibited is bringing on heavy machinery, plant and equipment of a kind that will in its operation cause damage to the premises. In the light of the proper construction of the clause as discussed above, heavy items of machinery, plant and equipment brought on to the premises as being reasonably necessary for the conduct of the applicant company's business offend against clause 4(12) although when first "brought on" their propensity to do damage by vibration or otherwise in their operation was not apparent. 23. It was submitted also that clause 4.12 did not apply to the fork lift because the applicant company had informed the lessor, in accordance with the proviso set out above, that it did intend to use a fork lift. for moving paper and board supplies about the premises. But clause 4.12 does not provide that heavy machinery, plant and equipment, in respect of which the lessee has given notice that he intends to take it on to the Jeased premises, ceases to be subject to the other provisions of that clause. Clearly the omission of the lessor to give directions pursuant to the proviso did not constitute permission to use the fork lift independently of the requirements of the other portions of that clause. Of course the provisions of the Jease operate harshly against a lessee who operated openly and reasonably in conducting his business on the basis of his belief that the floor was strong enough for the purpose. But that harshness was the price of the granting of the tenancy. Possibly it might have been avoided by an enquiry as to whether the lessor was prepared to guarantee the floor. But of course there was no such enquiry express or implied. The result is that there is no basis on which, in relation to the capacity of the floor to withstand the strains involved in the operation of the company's fork lift, loaded or unloaded, to justify or require recourse to the officious bystander. This possibility of damage to the floor by machinery was not something to which the parties had not directed their minds. The subject with respect to which the the bystander might otherwise have been invited to speak emer e ee ee sae ea re ere eee ae ee - - 24. was made subject to a provision actually contained in the lease. In the result the application must be dismissed with costs. The respondent's cross-claim for rent, interest, MMBW rates, Council] rates and interest must. be allowed. The calculation of the actual amounts has been carried out by counsel. The total due by the applicant company to the respondent in respect of these items is $29,400.00. There must be Judgment for the respondent on the cross-claim for this amount with costs. I would indicate that had the applicant's case been established either on the basis of breach of the provisions of the Trade Practices Act 1974 or the breach of the alleged implied term I would have assessed damages recoverable by it from the respondent at $27,116.00. I would have arrived at this sum on the following considerations. It was the evidence of Mr. Poole that during the period from May 1980 to Novembe: 1981 production had been prevented because of the cracking of the floor during an average of two and a half hours per week. The interference with production during the early part of the time involved was less than two and one half hours per week but in the latter period it was very much more, up to twelve to fifteen hours per week. During these periods production of en ee nt etn ee Re ee ee ee = eee oe ee - a 25. printed forms and other printed matter constituting the applicant's saleable stock was suspended and its machines were idle. iI draw the inference that but for the interference with production resulting from the difficulties with the fork lift arising out of the floor collapse production would have been continuous during working hours. Production was therefore lost. There is no evidence of the value of production that was lost. However, the situation appears to me to be that the applicant was involved in payment to its machine operatives for which it obtained no return in the way of production. Prima facie this was a dead loss. I do not think the company's concession that it did not default in delivering its printed matter on time in those cases where there was a stipulation as to time of delivery affects the situation. The labour and overhead costs incurred during the periods of suspended production were at least $110 per hour. For the period from May 1980 to November 1981, at an average weekly suspension of two and one half hours per week, the total loss would be $20,625.00. In addition the useable floor space of the premises was gradually reduced during the same period. By November 1981 only about 30 per centum of the space could be used and great inconvenience was suffered in the carrying on of the business. There is no evidence from which the value of this loss of space can be precisely quantified but it could hardly have been less than at the annual rate of .86 cents per square foot of the lost space, half the rental rate. Averaging that loss of space at 4500 square feet for the 26. period from May 1980 to November 1981 at .86 cents per square foot the result of $5954.00. Doing the best possible to estimate the damage suffered for loss of use of the space rendered unusable I find that $5954 is the sum which it would be proper to award in respect thereof. In addition to the above the applicant would be entitled to the cost of fork lift repairs, namely $537.94. The total damage to be awarded would thus be $27,116.00. The lease having been lawfully terminated for non-payment of rent in August 1981, damage for cost of removing to new premises would not be recoverable. ry |. te . 7 ze "Lo - Kat 8 i -. 8 Se UR us ot ls wave ee DY Stee, ~ aS 4 2. , fo , | at uY 3 93 Ai Bini , | fa Siri Meee mene, —— ea ER