Tsolon Investments Pty Ltd v Waffle Pod Footing Systems NSW Pty Ltd [2002] NSWCA 302

New South Wales Court of Appeal

CITATION : Tsolon Investments Pty Ltd v Waffle Pod Footing Systems NSW Pty Ltd [2002] NSWCA 302 FILE NUMBER(S) : CA 40584/01 HEARING DATE(S) : 15/05/02 JUDGMENT DATE : 9 September 2002

PARTIES : Tsolon Investments Pty Ltd (Appellant) Waffle Pod Footing Systems NSW Pty Ltd (Respondent) JUDGMENT OF : Meagher JA at 1; Sheller JA at 2; Heydon JA at 5

LOWER COURT JURISDICTION : District Court LOWER COURT DC 869/00 FILE NUMBER(S) : LOWER COURT Andrew ADCJ JUDICIAL OFFICER :

COUNSEL : Mr B A J Coles QC/Mr D L Warren (Appellant) Mr F C Corsaro/Mr I G B Roberts (Respondent) SOLICITORS : McMahons (Appellant) Minter Ellison (Respondent)

CASES CITED: Sydney Turf Club v Crowley [1971] 1 NSWLR 724 DECISION : The appeal is dismissed; the appellant is to pay the respondent's costs of the appeal.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40584/01 DC 869/00

MEAGHER JA SHELLER JA HEYDON JA

9 September 2002 TSOLON INVESTMENTS PTY LTD v WAFFLE POD FOOTING SYSTEMS NSW PTY LTD Judgment

1 MEAGHER JA: I agree with Heydon JA. 2 SHELLER JA: I have had the benefit of reading in draft the judgment of Heydon JA. I agree with the orders his Honour proposes and his reasons for doing so. 3 Clauses 5.1 and 5.5 of the lease, which Heydon JA has set out, each impose obligations on the lessee which may overlap. Relevantly, under cl 5.1 the lessee covenants to repair the demised premises except in the case of damage by fire "unless any insurance moneys are irrevocable through the neglect or fault or misconduct of the Lessee". Under cl 5.5 the lessee covenants immediately to make good any damage to the building occasioned by its servants' want of care. If insurance moneys are recoverable despite any neglect or default of the lessee, the lessee is not obliged to repair the demised premises where the damage is caused by fire. I do not understand cl 5.5 to override this exception. Clause 5.5 says nothing about insurance moneys. It is concerned with damage to the building occasioned by want of care by the lessee or its servants. It is not concerned with the case, as here, where insurance moneys are recoverable despite that neglect or default. 4 Accordingly, the appeal should be dismissed. 5 HEYDON JA: This is an appeal by the plaintiff below from an order of Andrew ADCJ on 20 July 2001 entering judgment for the defendant after a trial on 26 and 27 June 2001. 6 The plaintiff was registered proprietor of 51-69 Leland Street, Penrith. The property comprised three factory units. Unit 2, the middle unit, was leased to the defendant for four years commencing on 5 June 1997 and expiring on 4 June 2001. Under the terms of the lease the defendant was entitled to manufacture polystyrene building components: clause 4.1. On 6 October 1998, while an employee of the defendant was using a welder, sparks from the welding caused a fire which destroyed unit 2. 7 The plaintiff sued the defendant for negligently causing the fire and claimed $575,424.96 (the cost of reinstating the building) plus interest. Liability was admitted and there was no dispute as to quantum. The property was insured by the plaintiff in its name and the plaintiff's insurer paid to the plaintiff what the plaintiff had lost as the cost of reinstatement. 8 This Court was told, though nothing in the pleadings suggests this, that the action was brought by the plaintiff's insurer pursuant to its right of subrogation. That right of subrogation depended on whether under the lease the plaintiff was entitled to recoup its loss only from the insurance monies and not from the defendant. That in turn depended, at least in the plaintiff's perception, on whether the lease imposed on the plaintiff an obligation to insure the property not only for its own benefit but also for the benefit of the defendant.