LEWY and ORS v MOSS NOMINEES PTY LTD [1996] NSWCA 325

LEWY v MOSS NOMINEES PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

PRIESTLEY and CLARKE JJA and GILEs AJA

3 October 1996, 10 October 1996

[1996] NSWCA 325

Landlord and tenant — commercial lease — failure to pay rent.

COMMERCIAL LEASE — TENANT'S FAILURE TO PAY RENT OVER CONSIDERABLE PERIOD — tenant ejected from premises — substantial part of term of lease still to run — proceedings brought against tenants' guarantors for amount comprising unpaid rent, land tax, water rates and damages. CONTRACT- breach of fundamental term of lease — repudiation by tenant — lessor accepts repudiation — trial judge finds lessor entitled to recover loss of bargain damages against guarantors for tenants' breach of covenants and conditions of lease.

GUARANTORS AND INDEMNITY — appellants as Directors and Shareholders executed lease as guarantors — guarantors held liable for damages equal in amount to those for which tenant liable.

ON APPEAL — question of construction of lease and guarantee — whether lessor entitled to recover damages for loss of bargain under particular clauses of the lease and guarantee contained in the lease — whether repudiation in damages clause meant accepted repudiation or simply repudiatory conduct.

Appeal from O'Keefe CJ in Comm D on question of the construction of a lease of commercial premises and of guarantee contained within the lease. Held: dismissing the appeal, 1. on the question of the guarantee and the liability of the guarantors, the relevant clauses of the lease supported the trial judge's findings. The lessee covenanted to compensate the lessor for damages suffered during the terms of the lease in respect of breaches of essential terms of the lease and the obligation remained unaffected by the way the lessor treated the lessee's repudiatory conduct (ie by termination of the lease). 2. The provisions of the particular clauses of the lease made the lessee liable for loss of bargain damages for breach of the covenants and conditions contained in the lease. Moschi v Lep Air Services Ltd (1973) AC 331 and Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; 2. "repudiation" in the relevant clause was used in the sense of accepted repudiation.