Mortlake Developments v L & L Darcy Services [2009] NSWSC 793

New South Wales Supreme Court

CITATION : Mortlake Developments v L & L Darcy Services [2009] NSWSC 793

HEARING DATE(S) : 7 August 2009 JUDGMENT OF : McDougall J at 1

EX TEMPORE JUDGMENT DATE : 7 August 2009

DECISION : See paragraphs [8] to [13] of the judgment.

CATCHWORDS : CONTRACTS - lease - damages for arrears of rent, loss of rent and remediation of leased property - mitigation of loss.

CATEGORY : Procedural and other rulings

Mortlake Developments Pty Ltd (Plaintiff) PARTIES : L & L D'Arcy Services P/L (First Defendant) Leslie John D'Arcy (Second Defendant) Lesley Anne D'Arcy (Third Defendant)

FILE NUMBER(S) : SC 50071/09

COUNSEL : G Wilkinson (Plaintiff) Leslie John D'Arcy (In person) (Defendant second)

SOLICITORS : Jeffrey & Jeffrey Solicitors (Plaintiff)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

McDOUGALL J

7 August 2009 (ex tempore – revised 10 August 2009)

50071/09 MORTLAKE DEVELOPMENTS PTY LIMITED v L & L D'ARCY SERVICES JUDGMENT 1 HIS HONOUR: The plaintiff is the owner of land at Mortlake. It leased that land to the first defendant. The lease commenced on 3 June 2005 and terminated on 2 June 2006. The first defendant held over thereafter on a monthly basis until 1 February 2008. The second and third defendants (whose position can be ignored from here on) guaranteed the obligations of the first defendant under the lease. 2 By clause 6.1 of the lease, the first defendant was required to use the lease premises only for the purposes of temporary storage and sorting of dry waste building material. It was required to take material, after sorting, to an approved recycling tip. It was also required to keep the premises clean and in good order and to ensure that all waste and rubbish was promptly removed. Further, the first defendant was required to make good damage to the land or any part caused by it or by people under its control. 3 The plaintiff's case is that the first defendant did not comply with the obligation to take material to a tip and to leave the land clean and in good order. Further, the plaintiff says, the first defendant is in arrears for rent from 4 April 2007 until 1 February 2008. 4 The amended summons and commercial list statement were served on the first defendant on 14 June 2009. It has not filed any notice of appearance. Nor has it filed a commercial list response. The plaintiff now moves for judgment against the first defendant. 5 I am satisfied that the lease was made and that it contained the clauses on which the plaintiff relies. I am satisfied also, on the affidavit of Mr Edwards, a director of the plaintiff, that the first defendant is in arrears of rent in the sum of $17,293.05. I am also satisfied, on the affidavit of Mr Edwards and on the affidavit of an expert Mr Kariotoglou, that the cost of making good the land (by removing the first defendant's waste material, or waste material brought there by the first defendant) will be of the order of $696,600 together with GST; a total of $766,260. Further, I am satisfied that the plaintiff is entitled to some allowance, by way of damages, for the reasonable time that it would take to make good the land. 6 The plaintiff's case is that, through impecuniosity, it was unable to commence remediation until almost 18 months after the first defendant vacated the premises. I am not sure that the entire cost of this period of vacancy can be sheeted home to the first defendant. I am, however, of opinion that the plaintiff is entitled to an allowance for a reasonable time to assess the state of the land and undertake the remediation, so that the land can be put back on the market and relet. Obviously, there is not much point in seeking to relet the land until it is in a lettable state. 7 The evidence is scanty, and in the circumstances it seems to me difficult to do more than make a rough assessment. I think that a period of approximately three months to assess the state of the land and carry out the work, and a period of one month thereafter to relet the premises, would do substantial justice between the parties. 8 Accordingly, I find that the plaintiff is entitled to judgment for arrears of rent of $17,293.05, cost of making good the land in the sum of $766,260 and loss of use of the land for four months at the monthly rate of $2,082. If my arithmetic is correct (and that is always a dubious assumption) this last sum would be $8,328.00. 9 The plaintiff is also entitled to interest on the out-of-pocket component of those sums: rent and loss of use. It is not in my view entitled to interest on the cost of making good, except to the extent that it has paid money out for that purpose. The evidence does not disclose how much (if anything) has been paid to date. 10 The plaintiff also claims its costs on the indemnity basis. Clause 14 of the lease entitles the plaintiff to all its costs arising from any default on the part of the first defendant. I am satisfied that, on the proper construction of that clause, the plaintiff is entitled to be fully indemnified, including in relation to the costs of these proceedings. 11 It follows that there should be judgment for the plaintiff against the first defendant for the total of the sums to which I have referred together with interest calculated in the manner that I have indicated. There should also be an order for costs, on the indemnity basis. 12 It appears that the second and third defendants are bankrupt. In those circumstances, the plaintiff should be left to its rights to prove in their bankruptcies. There seems to be little point (and less legal basis) for continuing these proceedings against them. 13 I direct the plaintiff to bring in short minutes of order to give effect to these reasons. I stand the proceedings over to Friday next, 14 August 2009, at 10 am for orders. **********