OAC v Coogee Diggers

1. [1]

   Although presented to the Court as a dispute between a landlord and a tenant in relation to the purported termination of a lease, at its factual heart, these proceedings are about water ingress and its cause.

2. [2]

   The premises in question are located on the corner of Carr and Byron Streets, Coogee, being the land contained in folio identifier 1482/7520111 (Property). The Property is owned by the defendant, Coogee Diggers Limited (Coogee Diggers).

3. [3]

   Coogee Diggers was formerly known as Coogee Randwick RSL Club Limited. As these names suggest, Coogee Diggers operates a Returned & Services League of Australia Club on part of the Property, originally by the name Coogee RSL and now Coogee Diggers. Coogee Diggers also operates a commercial gym and swimming pool on the Property. I refer to the principal area occupied by Coogee Diggers as the Building.

4. [4]

   The Property previously included a bowling club and a large part of the Property included a lawn bowling green. As appears to be a not uncommon experience, lawn bowls became less popular in the Coogee area in the early part of this century and the lawn bowling green ceased to be used and fell into disrepair.

5. [5]

   The plaintiff (OAC), is a childcare centre operator, being part of a larger group of companies which operate childcare centres under the banner Only About Children.

6. [6]

   On or around 7 April 2013, Coogee RSL and Coogee Diggers Childcare Pty Ltd (a related company of OAC) entered into a Deed of Agreement for Lease (Deed of AFL) for the construction and leaseback of a childcare centre to be constructed on part of the Property in place of the old lawn bowling green.

7. [7]

   On or around 3 January 2014, Coogee Diggers and OAC entered into a lease (Lease) for the now constructed childcare centre – described as the Premises. Clause 26.1 of the Lease also granted to OAC a licence to use part of the Property adjacent to the Premises described as the Outdoor Area (Outdoor Area Licence). The term of the Lease is 30 years, expiring on 2 January 2044.

8. [8]

   A further licence was granted by Coogee Diggers to OAC dated 29 April 2015 (Second Licence) to use an area of approximately 100 square metres that contains a brick building which was the old bowling clubhouse (OBC). The term of the Second Licence was from 3 January 2015 to the end of the term of the Lease.

9. [9]

   Set out below are two photographs which usefully depict the before (in the bottom photograph) and after (in the top photograph) situation. In the top photograph the Premises are labelled “OAC Childcare Building”, the Outdoor Area is labelled “OAC Childcare Playground” and the Building is labelled “Coogee Diggers Building”.

10. [10]

    The minutes of meeting of directors for Coogee Diggers dated 18 April 2015 record water ingress into the Club from the “childcare centre”. In or about mid 2020 communications commenced between Coogee Diggers and OAC about water ingress. There is a significant dispute about how many times water entered the club from the area of the childcare centre and also the path it took.

11. [11]

    Under cover of a letter dated 23 June 2022, Coogee Diggers purported to terminate the Lease by reason of OAC’s alleged repudiatory conduct related to a change of control in OAC’s ultimate owner. OAC disputes the purported termination of the Lease and commenced these proceedings on 17 August 2022 as a defensive action to prevent the termination and forfeiture of the Lease.

12. [12]

    On 22 August 2022, interlocutory relief was granted to prevent the termination or forfeiture of the Lease and the Licences. On 23 February 2024, the relief was extended until 5 business days after judgment.

13. [13]

    Coogee Diggers has since cross-claimed including in relation to damage allegedly suffered by reason of flooding from the area of the childcare centre. It is contended that OAC breached various clauses of the Lease as well as committed trespass and nuisance. The claim as ultimately advanced and quantified by Coogee Diggers’ quantity surveying expert in a joint report with his counterpart retained by OAC and filed near the end of the hearing was for a little over $500,000, although it was accepted in oral closing address by counsel for Coogee Diggers that at least one of the items costed (item 1 insufficient drainage - $25,184) was outside the scope of works proposed by the structural engineers. The quantum of the claim was thus for less than $500,000. OAC has already paid in excess of $106,000 to Coogee Diggers on a without admissions basis which it is accepted is not refundable but can be set off against any damages awarded in favour of Coogee Diggers.

14. [14]

    The proceedings were heard between 4 and 20 August 2025. Mr S Docker SC and Mr J Rodgers appeared for OAC. Mr D P O’Connor and Mr J Su appeared for Coogee Diggers.

15. [15]

    At the commencement of the hearing on Monday 4 August 2025, the Court conducted a view of the Property in the company of counsel, solicitors and several of the experts engaged by the parties. The purpose of the view was to assist the Court in understanding the evidence that was thereafter to be given. It is not necessary to record in any detailed way what was observed on the view, including that which was observed in the men’s change room! All areas of the Property were visited. The view assisted in understanding the photographic evidence subsequently tendered.

16. [16]

    For the reasons set out below:

17. [17]

    The parties should seek to agree orders to give effect to these reasons, including as to whether Coogee Diggers is entitled to recover any additional amounts in light of my primary conclusions, and as to costs. I will determine any remaining issues on the papers.

Overview of the issues

1. [18]

   A very large number of issues were raised by the parties in their pleadings. The issues were narrowed substantially on the eve of the hearing. A number of issues were not pressed by Coogee Diggers which in turn narrowed the matters raised in response by OAC. For example, the reshaping of the issues removed any claim by OAC for relief against forfeiture.

2. [19]

   An issue was raised at the commencement of the hearing by senior counsel for OAC in relation to a disconformity between the pleaded nuisance claim and the claim as opened, including in Coogee Diggers opening written outline. This was dealt with by the parties in a sensible way by a Further Amended Cross-Claim being prepared which I gave leave to file during the hearing. OAC filed a defence to this Further Amended Cross-Claim. The parties are to be commended for the sensible and cooperative way in which this issue was dealt with.

3. [20]

   Put broadly, there are three issues for the Court to determine:

   1. (1)

      Termination of the Lease – has Coogee Diggers validly terminated the Lease by reason of OAC’s alleged repudiatory conduct? Determination of this issue largely depends on the proper construction of the change in control provisions of the Lease;

   2. (2)

      Did OAC breach some or all of the covenants in clauses 7.3, 8.1, 11.2, 12.1 and 12.2 of the Lease and, if so, what damages should be awarded to Coogee Diggers for that breach?

   3. (3)

      Has OAC committed a trespass or nuisance by reason of the water ingress and, if so, what damages should be awarded?

4. [21]

   These broad issues mask a number of sub-issues – both factual and legal – in respect of each. I identify those sub-issues in the relevant locations later in these reasons.

Overview of the witnesses called

1. [22]

   Both parties relied on lay and expert evidence.

2. [23]

   For OAC, affidavit evidence was read from Brett Kovac (Mr Kovac), Sonia Lee (Ms Lee), Benjamin Harris (Mr Harris), Rowan Hookway (Mr Hookway), Sara Afaghi and Matthew Mulcahy. All but the last two were cross-examined.

3. [24]

   I did not understand Coogee Diggers to advance any submissions on the credit of any of the lay witnesses who were cross-examined. I formed the impression that each of the witnesses was doing their best to assist the Court. I broadly accept their evidence save to the extent that there is objective material that casts doubt on the witnesses recollection, in which case I rely on the objective material.

4. [25]

   OAC also tendered a number of reports from Michael Brown, a registered surveyor (Mr Brown). Mr Brown was not required for cross-examination.

5. [26]

   Coogee Diggers read affidavit evidence from Peter Gallagher, the CEO of Coogee Diggers (Mr Gallagher). Mr Gallagher was cross-examined over a couple of days. A sustained attack was levelled at his evidence in OAC’s closing submissions.

6. [27]

   I approach Mr Gallagher’s evidence with considerable caution. He did not present as an overly impressive witness. He was prone not to answer simple questions but rather make statements he thought would assist Coogee Diggers. In at least two respects he admitted that his evidence was not correct. First, in relation to evidence in his affidavit that the Coogee Diggers purchased particular gym equipment as a result of the water ingress where he annexed a quotation in respect of that equipment. In cross-examination he admitted that in fact equipment from a different manufacturer (for a different price) had been purchased.

7. [28]

   Second, and more importantly, Mr Gallagher admitted that the statements set out in his 23 February 2022 email to Mr Kovac of OAC (extracted later in these reasons) to the effect that the gym continues to be inundated with water due to excess stormwater from OAC childcare flooding in through the bowling club door, was in fact false. A reader of his affidavits would have had the impression that the statements were true and the contrary was belatedly extracted out of Mr Gallagher after some obfuscation on his part. This aspect of his evidence is particularly troubling because the Court cannot even place reliance on Mr Gallagher’s contemporaneous communications.

8. [29]

   Criticism was also made of Mr Gallagher’s conduct in relation to the disclosure given by Coogee Diggers in the proceedings. Very few documents were produced by Coogee Diggers, and OAC was required to issue a subpoena to Coogee Diggers’ accountants to obtain documents that on any view, should have been produced by Coogee Diggers as part of basic compliance with its disclosure obligations. Mr Gallagher admitted as much in cross-examination. In circumstances where I would infer that Coogee Diggers’ legal representatives were involved in assisting Coogee Diggers give disclosure, it is not possible for me to reach any concluded view on the extent to which Mr Gallagher was responsible for the shortcomings in disclosure.

9. [30]

   In any event, I do not need to reach any concluded view in this respect – the other aspects of Mr Gallagher’s evidence give me sufficient cause to treat his evidence with great caution.

10. [31]

    This raises significant issues for the damages case advanced by Coogee Diggers. Mr Gallagher was its principal witness.

11. [32]

    The expert evidence can be grouped into three disciplines.

12. [33]

    First, from two stormwater engineers, Michael Dawson for OAC (Mr Dawson) and Morgan Nguyen for Coogee Diggers (Mr Nguyen). Each examined the stormwater drainage systems in the Outdoor Area and more generally on the Property. Each modelled the likely path of water in and around the outdoor area and the Property more generally.

13. [34]

    Second, from two structural engineers, Con Thanopoulos for OAC (Mr Thanopoulos) and Dr Tran Ng for Coogee Diggers (Dr Ng). Each expressed opinions on what were said to be structural engineering matters, although it appeared there was some overlap with the opinions expressed by Messrs Dawson and Nguyen.

14. [35]

    Third, from two quantity surveyors, Tobias Seeto for OAC (Mr Seeto) and David Madden for Coogee Diggers (Mr Madden). They costed certain work designed to rectify damage allegedly caused to the Coogee Diggers’ premises.

15. [36]

    Pursuant to pre-trial directions made by Williams J, each of the experts met with their relevant counterpart and produced a joint report setting out the matters on which they agreed (which were few), where they disagreed together with a brief explanation of why. Supplementary reports were prepared during the hearing from the structural engineers and the quantity surveyors as a result of some developments during the hearing.

16. [37]

    At the hearing, expert evidence was given concurrently in the three relevant disciplines. The process was quite efficient for which the experts, the parties and their legal representatives are to be commended.

17. [38]

    I formed the view that each of the experts was doing their best to assist the Court. The differences between them were, to a significant degree, the product of the assumptions that each was asked to make or in fact made. The stormwater and structural engineering experts also suffered from the not uncommon, but significant, problem of not being present when the alleged water ingress occurred. The opinions expressed by each were in a sense speculative and in a number of cases no more than what was theoretically possible. None of this is meant as a criticism of any of the experts. It is simply the reality of the situation faced by the Court. There is a limit to the use to which this expert evidence can be put.

18. [39]

    The joint expert report of the quantity surveyors (Joint QS Report) was not received until the end of the first week of the hearing. On the Monday morning of the second week of the hearing, counsel for Coogee Diggers informed the Court that “we have a problem”. The essence of the “problem” disclosed was that it occurred to Coogee Diggers on receipt of the Joint QS Report that the scope of work which had been prepared by OAC’s legal representatives, agreed to by Coogee Diggers’ legal representatives and then costed by the quantity surveyors, did not accurately reflect the work which Coogee Diggers contended should be carried out. Coogee Diggers sought leave to rely on a further report of Dr Tian Ng dated 10 August 2025.

19. [40]

    On 11 August 2025, after hearing brief argument – in circumstances where OAC’s lawyers had only had the new report for a matter of hours – I expressed the preliminary view that I would allow the new report subject to any further objection made by OAC to particular parts of the report.

20. [41]

    No doubt having had the benefit of more time to consider the new report, on the morning of 12 August 2025, OAC provided extensive written submissions in relation to the significance of the matters raised in the new report and their impact on further conduct of the hearing. I then heard further argument on whether Coogee Diggers should be permitted to rely on the new report. Counsel for Coogee Diggers sought time to obtain instructions on the matters raised by OAC which I granted. Coogee Diggers then only pressed aspects of the new report which Coogee Diggers indicated they could meet. Further joint reports were then prepared by the structural engineers and the quantity surveyors.

Failure to call witnesses

1. [42]

   OAC contended that Coogee Diggers had failed to call any witnesses to attest to the condition of the Property during the period prior to Mr Gallagher returning to work at the Coogee Diggers in 2019, and in particular whether there were any water ingress issues prior to the development of the childcare centre in late 2013.

2. [43]

   It was not in dispute that there were persons who were available to give evidence on these issues. The two most likely candidates in this regard were Mr Steve Despea, a former long term President of Coogee Diggers (Mr Despea) and Ms Sarina Jackson, a director and Coogee Diggers’ solicitor in these proceedings (Ms Jackson).

3. [44]

   No real explanation was provided as to why they were not called. I infer that the view that was taken was that Coogee Diggers had adduced sufficient evidence in the form of the minute of directors meeting of Coogee Diggers for 18 April 2015 as being the only record of water ingress issues together with Mr Gallagher’s contention that in his experience– although he did not work at Coogee Diggers at the time – only serious maintenance issues were recorded in the directors’ minutes.

4. [45]

   In circumstances where one of the important issues in the case is whether the water ingress has anything to do with the activities of OAC, which necessarily raises the issue of whether there was any water ingress pre-OAC, and there was then – principally photographic evidence – suggestive of water ingress pre-OAC, it is fair to expect Coogee Diggers to properly prove the position.

5. [46]

   Further, the matter was squarely raised during the hearing and no application was made to call either Mr Despea or Ms Jackson. As set out above, Ms Jackson is Coogee Diggers’ solicitor in these proceedings.

6. [47]

   In the circumstances it is appropriate to draw an inference that their evidence would not have assisted Coogee Diggers.

Overview of the development of the Property

1. [48]

   Coogee Diggers own the Property and the four level Building erected on it. As set out above, Coogee Diggers operates a registered club from the Building.

2. [49]

   The Building is on the corner of Byron and Carr Streets, Coogee.

3. [50]

   The club was established in 1935. An aerial photograph of the Property in 1943 shows the building that contains the Coogee Diggers existed but not the OBC or the bowling green (as detailed below).

4. [51]

   As presently constructed, level 1 is the entrance and gaming area. Level 2 is the new fitness centre and the main trading floor of the club which comprises restaurants, bars, a function room and offices. Level 3 is the old gym and the pool area. Level 4 is the childcare centre. It is located on the site of the old bowling green and adjoins the level 3 facilities but is located to the west of the Building, further up Carr Street.

5. [52]

   The experts retained by Coogee Diggers have been asked to assume that the Pool, which is immediately below the old bowling green and the slab below the bowling green, was constructed in about 1963.

6. [53]

   It was originally thought by all of the experts retained in the proceedings that the slab below the former bowling green had been waterproofed. Pursuant to a court ordered inspection in early 2025, Mr Thanopoulos observed that there was no waterproofing. The slab was constructed with reinforced concrete in peaks and valleys which run west to east sloping towards the east.

7. [54]

   There are 10 valleys in the slab. These valleys are also evident when looking at the underside of the slab, being the ceiling above the pool. I have extracted photographs of this area later in these reasons.

8. [55]

   On the top side of the slab in each valley are the sub-soil drains, referred to by the parties as the Agg Drains. More particularly, the Agg Drains are terracotta drain pipes with slots in them to allow water to flow in and out of them. A photograph of an Agg Drain is set out below.

9. [56]

   The Agg Drains were designed to collect water in the valleys and drain it to the east. They were installed when the bowling green was constructed. The outlets of the five southern Agg Drains drain onto the roof of the south-eastern gym. The outlets of the five northern Agg Drains drain into the Coogee Diggers Building, typically via a downpipe from near the eastern end of each drain. Each internal outlet has a plug in its eastern end, designed, obviously enough, to prevent the water leaking.

10. [57]

    Whilst the principal focus in the case was on the present condition of the Property and the buildings on it, both sides – mainly OAC – placed some reliance on its historical development and so it is necessary to say a little about that. The central relevance of the pre-lease condition of the Property (and the Building) from OAC’s perspective, appeared to be whether there was likely any water ingress into the Building prior to the construction of the childcare centre. OAC made detailed submissions in relation to the development of the Property, none of which was disputed by Coogee Diggers. What follows is drawn, in large part, from those submissions.

11. [58]

    The chronology relevantly begins in about 2006/2007.

12. [59]

    A survey plan dated 18 August 2006 prepared, it would appear, by Coogee Diggers in relation to a proposed redevelopment, clearly depicts the lawn bowling green to the western end of the Property together with what was described as the OBC, on the north-eastern corner of bowling green where it meets Carr Street. There is an awning clearly depicted on the survey at the front of the OBC where it meets the bowling green. To the right of the OBC entrance, looking at it, is an area that was apparently used to store lawn bowls. Immediately to the south of the bowls storage room were steps leading to a landing on the bowling green level and further to the south were metal steps to the bowling green from a courtyard on level 2.

13. [60]

    Immediately behind the bowling green to the east and south of the OBC is a gym area which came to be known as the south-eastern gym.

14. [61]

    On the pool level (level 2) there is the pool (located below the bowling green) with a pool plant room adjacent to it in the north-western corner with a sauna, steam room and men’s change room and showers adjacent to the pool and to its north. Further to the east there is an auditorium and further east still there is a functions room depicted. There is also the upper gym under the OBC to the north-east of the Pool, accessed by steps on level 2.

15. [62]

    There are stairs from level 2 going down to level 1 to a corridor leading to the Carr Street entrance to the Building, the south-eastern gym to the south-east of the Pool (with the courtyard to its east) and the boxing room to its south-west.

16. [63]

    On or about 9 February 2007, Council approval was obtained for certain internal works to the Building. By this time the bowling green had fallen into disuse. A modification application was subsequently submitted and approved. The work carried out at this time included:

17. [64]

    An occupation certificate was issued in respect of this work on 3 June 2008.

18. [65]

    At or about this time, the door to the OBC also appears to have been moved to the north, closer to Carr Street. A large rectangular hole was also cut into the floor of the former atrium of the OBC (Void).

19. [66]

    Aerial photographs dated 14 November 2009 and 8 January 2013 show the completed roof over the south-eastern gym, the roof of the awning in front of the former doorway of the OBC, the untiled porch in front of the OBC and a path on the northern side of the bowling green and the courtyard to the east of the south-eastern gym.

20. [67]

    A number of photographs produced by Coogee Diggers showed that there was a substantial renovation of the pool area (including the ceilings, columns and walls and the changerooms) in about October 2011. The photographs showed the renovation work at various stages. As at November 2011, the pool area, and its surrounds including the change rooms, were “brand spanking new”. There is no evidence of any staining, spalling and concrete cancer on the bowling green slab soffit.

21. [68]

    Prior to the commencement of work on the childcare centre, Mr Hookway – the project manager engaged to manage the construction of the childcare centre – caused a number of photographs to be taken of the Property, and in particular the Building and other structures.

22. [69]

    Mr Hookway’s evidence was not seriously challenged. He observed evidence of moisture buildup and seepage at the base of external walls, water seepage on the floors, mould, evidence of leaking, discolouration of paint and grout, cracks and various stages of concrete spalling in the ceilings and walls of the locations depicted in the photographs.

23. [70]

    More particularly, the photographs show:

24. [71]

    These photographs were reviewed by Mr Thanopoulos – OAC’s structural engineering expert – who observed, amongst other things, that the photographs evidence water ingress and water permeation to the bowling green slab soffit and evidence concrete cancer in multiple locations, including the north-south expansion joints or construction joint in the pool area. Importantly, this is prior to any work commencing on the construction of the childcare centre, and about 18 months after the renovation of the entire pool area. I set out below four of the photographs – the red circles depict areas identified by Mr Thanopoulos.

25. [72]

    Construction of the childcare centre took place during 2013, no doubt after the execution of the Deed of AFL in April 2013. Development consent was in fact granted by Council to Coogee Diggers on 22 July 2008 with a commencement date of 1 August 2008 and a lapsing date, if construction had not commenced by then, of 1 August 2013.

26. [73]

    The consent was for the construction of a single storey childcare facility on the bowling green catering for 90 children.

27. [74]

    The terms of the consent dealing with landscaping were conditions 4, 82 and 83. They provided:

28. [75]

    Conditions 60 to 63 dealt with drainage and stormwater as follows:

29. [76]

    Photographs show that work on the childcare centre had commenced by August 2013. On 21 November 2013, a final occupation certificate was issued for the childcare centre and associated works.

30. [77]

    The occupation certificate contained a schedule of attachments which relevantly included a Work as Executed Site Plan and Work as Executed Tank Details by Bee & Lethbridge dated 28 October 2013. These documents depict the as constructed subsurface drainage system. The as built drawings show the subsurface drainage system as consisting of three surface drainage pits through the centre of the Outdoor Area of the childcare centre, draining to the on-site detention pit (OSD) located on the northern pathway to its western end. There were no pits on the northern or western side of the Outdoor Area. A fourth pit is located on the pathway outside the OBC. As originally constructed, this pit was not connected to the stormwater system.

31. [78]

    I set out the plan below.

32. [79]

    Mr Paul Bekker certified that the as built subsurface drainage system complies with the intent of conditions 60-75 of the DA.

33. [80]

    Photographs produced from OAC’s records taken on 2 December 2013 depict the completed Outdoor Area including grates on the surface drainage pits, artificial grass laid, plants and trees planted in wooden planter boxes, raised areas and sand pits. The area in front of the OBC has been tiled as has the path along the northern edge of the Outdoor Area. I set out below two photographs of the Outdoor Area, the first also depicting the northern path. Both photographs also depict some of the vegetation that had been planted. This is obviously relevant to the issue of whether OAC breached the Lease or engaged in the tortious conduct alleged. The short point is that all of the plants were planted prior to the Lease commencing.

34. [81]

    I set out below a plan showing the overlay of the childcare centre and Outdoor Area with the Coogee Diggers facilities below – principally the swimming pool.

Relevant provisions of the Lease

1. [82]

   The Lease commenced on 3 January 2014 and was for a period of 30 years. The lessee under the Lease is OAC. The relevant party to the Deed of AFL was Coogee Diggers Childcare Pty Ltd which it was accepted was another company in the Only About Children group of companies. There was no explanation as to how OAC came to be the party to the Lease. The different parties, in this regard, has some significance in the breach of the Lease and tortious claims advanced by Coogee Diggers.

2. [83]

   The Lease is of the “Premises” which is defined to mean the premises defined “in Item 5”, which, is defined to be the Childcare Centre premises located at corner of Carr and Byron Streets, Coogee as cross hatched on Annexure “B”.

3. [84]

   Annexure B was as follows:

4. [85]

   Significantly, as indicated at the bottom of Annexure B, the area of the Premises “is limited in depth to the horizontal plane at RL.58.208 is unlimited in height”. A similar depth restriction applies to the licensed Outdoor Area. The significance in this regard is that the Agg Drains were at a level below RL.58.20 and thus were outside the area of the Premises or the Outdoor Area.

5. [86]

   The following provisions of the Lease assumed significance in the case:

Emergence of the water problem and the parties’ dealings

1. [87]

   The first report of water ingress at the Property is in the minutes of meeting of Directors of Coogee Diggers on 18 April 2015. This is at or about the time that the Second Licence was entered into. The relevant entry in the minutes reads:

2. [88]

   Coogee Diggers relies on the contemporaneity between the recording of water entry and the conclusion of construction/OAC’s occupation as suggesting a link between the two. On the other hand, OAC contends that the photographs of the Building prior to the commencement of construction of the childcare centre and the expert evidence interpreting those photographs, coupled with the failure of Coogee Diggers calling any person to give evidence that there was no water ingress prior to the commencement of the childcare centre, would lead the Court not to be satisfied that the Building was relevantly watertight prior to the construction of the childcare centre.

3. [89]

   There is nothing in the evidence to suggest that Coogee Diggers raised the issue with OAC at the time.

4. [90]

   In the context of the evidence as a whole it is difficult to place any great reliance on this entry. No witness was called by Coogee Diggers to give some further context as to the “Leaks” referred to. The entry is very brief. To what extent was there water ingress – the use of the word “leaks” perhaps suggests not much water ingress. The failure to raise the issue with OAC also suggests a lack of seriousness. The stated source of the “leaks” was “from Childcare centre” which is a non-specific reference to the area above the Coogee Diggers building. There was no further evidence to explain where in particular – through the OBC? Further, was it in the context of a period of extreme rain where there was ponding on the Outdoor Area? Mr Gallagher’s evidence that in his experience only significant matters were raised at such meetings does not take the matter any further. Mr Gallagher was not at Coogee Diggers at that time.

5. [91]

   On 22 August 2016, Mr Harris of OAC took some photos over the back fence of the Agg Drains where they meet the roof above the south-eastern gym. The photos clearly show ferns protruding from the drains. I extract one of the photographs below:

6. [92]

   The same level of vegetation is shown in photos from October 2017. No vegetation is visible in photos from July 2019, suggesting that at some stage between these two dates, the vegetation was cleared. Later photographs show that the vegetation returned.

7. [93]

   Prior to July 2016, OAC had covered each of the pits in the Outdoor Area with rubber pour material. In June 2020, Mr Harris caused those drain covers to be replaced. Mr Harris admitted that he does not have any specialist qualifications with respect to drainage and was simply replacing new for old in circumstances where the existing worn pit covers were thought to pose a safety risk to children. No consent to carry out the work was sought from Coogee Diggers. The drains were also cleared of debris, sand and old toys at the time. There was some issue between the parties about how porous or permeable the new rubber covers were. The issue is not that significant in circumstances where OAC’s expert, Mr Dawson gave evidence that the covers only allowed approximately 10 percent of water to permeate.

8. [94]

   I set out below some photographs showing the existing pour material, some of the toys that were found in the pits and the new pour material:

9. [95]

   At or about this time – mid to late June 2020 – work was carried out by OAC to increase the size of the grate in front of the OBC entrance. A large square cover was installed. This work was carried out by Mr Harris and a colleague. The work was carried out because of a perceived safety concern with the existing grate. Mr Harris accepted in cross-examination that he did not seek the consent of the Coogee Diggers to do the work and that in doing the work he was not considering its impact on drainage.

10. [96]

    I set out below a photograph of the old grate followed by the new grate:

11. [97]

    On 14 July 2020, Mr Gallagher sent an email to Mr Harris at OAC in the following terms:

12. [98]

    There was a dispute on the evidence as to what was said in the earlier conversation between Mr Gallagher and Mr Harris that is referred to at the start of Mr Gallagher’s email.

13. [99]

    Mr Gallagher said that there was a general discussion about water ingress and drainage issues.

14. [100]

    According to Mr Harris, the earlier conversation took place on 1 July 2020 and was brief. The only area discussed was the purported water leak in the male shower room of the gym. There was no discussion about drainage issues. The first mention of that, according to Mr Harris, was in the 14 July 2020 email.

15. [101]

    I prefer the evidence of Mr Harris in this regard. In addition to Mr Gallagher being an unreliable witness, the objective evidence of what investigative work was carried out shortly thereafter is inconsistent with there being a general discussion as opposed to one related to the male shower room.

16. [102]

    Mr Gallagher was extensively cross-examined on this email and whether he visited the outdoor area prior to writing the email. His evidence was a little unclear in this regard (see T 207ff). Mr Gallagher also suggested in cross-examination that, notwithstanding what appears to be the quite clear terms of his email as to the area of water ingress, there was water coming into other areas of the gym at this time. I do not accept this evidence of Mr Gallagher. Had he observed water ingress into other areas he likely would have said so in his email. Further, the follow on investigative work would also have looked at the other areas.

17. [103]

    On 30 July 2020, the drains in the outdoor area were cleared of debris and flushed clean through to the main pit. It was observed that the main pit to the street was slow which would be investigated when the water recedes in the main pit.

18. [104]

    On 30 July 2020, Mr Harris emailed Mr Gallagher saying that he was meeting a plumber on site next Wednesday “to get the camera down a few drains and inspect the issues”. Mr Gallagher was asked if he was able to join. The email was sent by Mr Harris in response to Mr Gallagher’s email of 14 July 2020 set out above. Mr Harris did not accept in cross-examination that his failure to deny in his 30 July 2020 email any of the matters in Mr Gallagher’s 14 July 2020 email was because he agreed with the statements made in Mr Gallagher’s email.

19. [105]

    On 12 August 2020, a meeting took place on site attended by Mr Gallagher, Mr Harris and representatives of SB Plumbing. A number of photographs were taken by those present. They show, among other things, mould and discolouration on the ceiling of the men’s change room showers in the area where there is a construction joint, as well as a crack in the brickwork above the men’s showers. Photographs were also taken of the grate in front of the OBC.

20. [106]

    The SB Plumbing invoice records that on 12 August 2020 their work was largely investigative. On 19 August 2020 representatives of SB Plumbing returned to the Property. SB Plumbing’s invoice records the following work on that occasion:

21. [107]

    Mr Gallagher could not recall accompanying Mr Harris or SB Plumbing on 12 August 2020 onto the outdoor area but said that he would have.

22. [108]

    No work appears to have been carried out to the pit outside the OBC at this time. There is also no suggestion of any investigations being carried out in relation to water ingress in any other areas of Coogee Diggers apart from the men’s change rooms.

23. [109]

    The next correspondence is not until 24 March 2021 when Mr Gallagher wrote to Mr Harris, copy to Mr Kovac, the following email in reply to Mr Harris’ brief 30 July 2020 email, with the subject heading “Coogee Diggers Drainage – OAC Childcare”:

24. [110]

    It was agreed that the reference to the “blocked stormwater pit” in the above email was to the pit immediately outside the door to the old bowling club. Attached to this email were a couple of photographs – one of part of the Outdoor Area and another of the grate outside the OBC. On 24 March 2021, there was heavy rain in the area of the Property – 300mm of rain in six days between 19 March 2021 and 24 March 2021. I extract the two photographs below:

25. [111]

    In his affidavit evidence sworn in December 2022, Mr Gallagher stated that on 24 March 2021, he observed several levels of the gym were flooded “from water cascading into the building from multiple sections of the gym roofing areas. The Diggers had to promptly close a large section of the gym.”

26. [112]

    He also stated that he accessed the childcare playground and observed “significant water pooling which I estimate to be 15cm on top of the childcare playground, the slab that roofs the Coogee Diggers Pool and is adjacent to the Diggers.”

27. [113]

    Further, he stated in his affidavit:

28. [114]

    When tested on his recollection in cross-examination, Mr Gallagher said he had an actual recollection of:

29. [115]

    It appears that Mr Gallagher also took two photos of the ceiling and floor of the cardio gym on 24 March 2021. The photo of the floor area where it meets the window in the cardio gym shows several buckets which were presumably placed there to catch dripping water. (I extract photos of this area later in these reasons).

30. [116]

    Mr Gallagher was challenged on what he says in his affidavit and in cross-examination he observed on 24 March 2021 and in particular his apparent observation that water was flooding into the OBC through the doorway. It was put to Mr Gallagher that had he observed this he would have taken a photo of it and there are no such photos and no reference to this in the 24 March 2021 email. Mr Gallagher did not agree with this suggestion.

31. [117]

    Mr Gallagher’s general unreliability, the lack of any photographic evidence, the lack of any reference in his email or in his affidavit causes me to seriously doubt that Mr Gallagher in fact observed flooding into the OBC through the doorway.

32. [118]

    On 25 March 2021, Mr Harris, responded to Mr Gallagher’s 24 March 2021 email as follows:

33. [119]

    The photographs attached to this email were of the northern façade of the Building and the top of the Building where it meets the northern façade. Large cracks are evident in these photographs although Dr Ng and Mr Thanopoulos appeared to ultimately agree that these cracks were not the cause of the water ingress into the men’s changeroom.

34. [120]

    The chain of emails on 24 and 25 March 2021 proceed on the basis that there was water leaking into the men’s showers, but there is obviously disagreement as to where it is coming from.

35. [121]

    On 29 March 2021, Sydney Emergency Plumbing attended the Property. The invoice issued by Sydney Emergency Plumbing records the following work:

36. [122]

    Sydney Emergency Plumbing again attended the Property on 1 April 2021. The invoice issued (dated 6 April 2021) records the following work:

37. [123]

    On 1 April 2021, and no doubt after the visit by Sydney Emergency Plumbing, Mr Gallagher sent a lengthy email to Mr Harris, copy to Mr Kovac with the same subject as his earlier email. The email stated:

38. [124]

    Again, several photographs were attached to the email. I extract several of the photographs below, including Mr Gallagher’s narrations:

39. [125]

    As set out in the email and as depicted in some of the photographs, it was at this time that Mr Gallagher discovered that the pits on the Outdoor Area had been covered. Mr Gallagher admitted in cross-examination that it was at this time that he formed the view that the flooding was OAC’s fault.

40. [126]

    On 12 April 2021, SBP Plumbing attended for what was described in its invoice as “Roof gutter and Stormwater pits cleaned 12 Monthly”. Two items are identified as having been carried out:

41. [127]

    A meeting occurred at the Property on 21 April 2021. Mr Gallagher, Mr Kovac, plumbers and another director of Coogee Diggers were present. There was a dispute on the evidence about the purpose of the meeting and what was said at it. Mr Gallagher’s evidence was that the purpose of the meeting was to discuss how OAC’s plumbing contractors were carrying out regular maintenance to drainage pits. Mr Kovac contended that the purpose of the meeting was for Mr Gallagher to show Ms Jackson – a director of Coogee Diggers – around the Property and that discussing the water issues was as aside.

42. [128]

    The email sent by Mr Kovac on 22 April 2021 (extracted below) tends to support Mr Gallagher’s account that the meeting was a substantive one to discuss the water ingress issues.

43. [129]

    Mr Gallagher’s evidence of what was discussed was as follows:

44. [130]

    Mr Kovac denied that this was the totality of the discussion on the issue on 21 April 2021. He also denied that Mr Gallagher said that the stormwater drainage pit lids need to be unsealed immediately. It is not necessary to resolve these disputes as to what was said. What thereafter occurred is quite clear.

45. [131]

    On 22 April 2021, Mr Kovac sent a lengthy email to Mr Gallagher under the subject heading “Meeting follow up”. The email was as follows:

46. [132]

    Mr Kovac was heavily cross-examined to suggest, in substance, that his response was predicated on he, on behalf of OAC, accepting responsibility for the water damage that Mr Gallagher said had occurred.

47. [133]

    At [5] of his 4 April 2024 affidavit, Mr Kovac had stated:

48. [134]

    In cross-examination Mr Kovac denied that OAC was accepting the accuracy of the damage that Mr Gallagher had alleged and responsibility for rectifying it. Mr Kovac said that he could have worded the email differently insofar as it referred to OAC lodging an insurance claim. In re-examination he said that he should have written “we will lodge an insurance claim to assess if we are responsible for any damage.”

49. [135]

    I have some difficulty in accepting this evidence of Mr Kovac. The entire tenor of the email is predicated on OAC accepting responsibility and setting out what it was doing to rectify the issues. This emerges most clearly from the second last paragraph of the email. This is perhaps readily understandable from a relationship perspective as opposed to a considered acknowledgement on OAC’s part that it was responsible for causing the damage.

50. [136]

    There is nothing to suggest that OAC had conducted investigations by this time which revealed that OAC’s actions were in fact causing the damage. Further, no formal claim had been made by Coogee Diggers on OAC at this time.

51. [137]

    I do not place much significance on Mr Kovac’s response in terms of determining now who is responsible for whatever water ingress there was. I regard the evidence as indicating an acceptance by OAC, more from a relationship perspective, that it would pay for certain works now and would put in an insurance claim in respect of other claimed damage. OAC obviously had no idea whether its insurer would accept the claim. There was nothing to suggest at the time that it was obvious that the water ingress (to the extent there was some) was OAC’s fault. The evidence led at the hearing suggests that it is far from obvious when a formal claim was made shortly thereafter by Coogee Diggers on OAC, the clam was referred to OAC’s legal team and insurance company for review – the claim was not simply accepted by OAC!

52. [138]

    On 13 and 20 May 2021, Sydney Emergency Plumbing attended the Property to jet spray the Agg Drains (both external and internal) under the outdoor area to remove roots from those drains. The photographs taken show considerable root removal in the area of the external Agg Drains.

53. [139]

    The invoice from 13 May 2021 records the following:

54. [140]

    The invoice for 20 May 2021 records the following:

55. [141]

    Aerial photographs from May 2021 show hedge plants fully grown, dense and closely together. Trees are also visible on the playground area of the Outdoor Area. I set out below one photograph of part of the Outdoor Area showing the mature plants.

56. [142]

    On 14 May 2021, Mr Kovac sent an email to Mr Gallagher advising him that OAC had ordered garden beds to rehouse the plants on the Outdoor Area.

57. [143]

    On 28 May 2021, Mr Gallagher sent an email to Mr Kovac as follows:

58. [144]

    On Monday 31 May 2021, Mr Kovac responded by email as follows:

59. [145]

    Mr Gallagher responded later that day by providing quotes in relation to 1 and 2 above and stating that he had followed up with Sydney Emergency Plumbing in relation to 3.

60. [146]

    In early June 2021, OAC agreed to pay for installation of new stormwater grate pits in the outdoor area. The agreed quote was $6,500. By email dated 4 June 2021, Mr Kovac asked Mr Gallagher “when the plumbers would like to complete the work”. He followed Mr Gallagher up on 22 June 2021 as set out below.

61. [147]

    On 11 and 12 June 2021, work was commenced by OAC removing the existing wooden planter boxes and plants and replacing them with metal planter boxes with solid bases. This work continued for several months. The below photographs show the work in progress.

62. [148]

    On 16 June 2021, Mr Gallagher sent a further lengthy email to Mr Kovac in relation to water damage. Mr Gallagher agreed that this was when he first made Coogee Diggers’ claim on OAC. The email was as follows:

63. [149]

    Mr Kovac’s immediate response was that he would review the email “and speak to our management team to formalise a response for you”.

64. [150]

    On 22 June 2021, Mr Kovac emailed Mr Gallagher with an update on the matters being worked through. The email was as follows:

65. [151]

    On 22 June 2021, Mr Gallagher responded to Mr Kovac in the following terms:

66. [152]

    The pit in front of the OBC was not replaced before the 23 February 2022 rain event. As set out in the email above, Mr Gallagher wanted the work in relation to the pit to be completed at the same time as the resealing of “the join over the showers that has been leaking water”. This last statement from the email suggests that the water is coming in through the joint.

67. [153]

    On 8 July 2021, Mr Gallagher emailed Mr Kovac regarding the water damage issues. His email relevantly stated:

68. [154]

    Mr Kovac’s prompt response was:

69. [155]

    Ms Lee – OAC’s Head of Legal team – sent her own email to Mr Gallagher on 8 July 2021, stating, relevantly:

70. [156]

    In August and September 2021, Coogee Diggers carried out repairs to the roof of the OBC and the south-eastern gym, which was leaking through its apron flashings and needed a sheet of the roof replaced on the southern end. On 14 September 2021, ANZ Roofing issued an invoice to Coogee Diggers for $825.00. The Services Description was as follows:

71. [157]

    On 23 September 2021, Guild’s lawyers wrote to Mr Gallagher advising that Guild was in the process of appointing an independent engineer to attend the premises and survey the damage. He sought Mr Gallagher’s availability for a site visit, suggesting late October or November 2021 in the expectation COVID 19 restrictions may have eased by then.

72. [158]

    The lawyers for Coogee Diggers responded on 12 October 2021 requesting that all further correspondence be directed to them and advising that Coogee Diggers was in the process of obtaining its own report which would be forwarded once available. The engineer retained by Coogee Diggers was Marek Blaszczakiewicz (Mr Blaszczakiewicz) who carried out a site inspection on 25 November 2021 and then prepared a report dated 23 May 2022 which was sent to OAC as part of the breach notice on 30 May 2022.

73. [159]

    By November 2021, it would appear that OAC had removed all of the plants and trees that were previously on the outdoor area and had replaced them with plants or trees housed in steel planter boxes which had steel bases thus preventing any roots growing into the subsoil as was previously the case. I set out below a photograph of the Outdoor Area at this time.

74. [160]

    On 29 December 2021, Mr Kovac sent an email to Mr Gallagher reminding Mr Gallagher that he was to come back to Mr Kovac about the “stormwater cleaning” – whether OAC or Coogee Diggers was to arrange it.

75. [161]

    On 22 or 23 February 2022, there was heavy rainfall in the Coogee area. 141.2 mm fell on 23 February 2022. This was claimed to have led to a further inundation of water into part of the gym at Coogee Diggers. Mr Harris attended the Premises on 23 February 2022. Mr Gallagher emailed Mr Kovac on 23 February 2022 in the following terms:

76. [162]

    Mr Gallagher admitted in cross-examination that the second and fourth paragraphs were untrue. He admitted that he did not observe stormwater flooding in through the OBC door. He said that it was out of frustration that he “incorrectly stated that in regards to the doorway”. He said he observed water coming through the fence. “It was coming through the skillion roof in the south-east area of the gym” because the sand had blocked the gutters. This was a prime example of Mr Gallagher’s unreliability as a witness. The statements made in the email were not clarified in his affidavit evidence or evidence in chief and had to be drawn out of him in cross-examination. The statements are in fact contrary to the case propounded by Coogee Diggers in these proceedings – namely that the problem was fixed once the covers were removed from the pits and the roots removed from the Agg Drains.

77. [163]

    This evidence is an example of the unstable evidentiary basis of Coogee Diggers’ case. It is premised, to a not insignificant extent on the evidence of Mr Gallagher – an inherently unreliable witness, prone to inaccuracy and exaggeration. The statements are not concerned with a peripheral issue but a central one. They show Mr Gallagher to be a person who was prepared to make fake statements in contemporaneous communications as to his observations.

78. [164]

    Mr Kovac responded to Mr Gallagher’s email about 20 minutes later as follows:

79. [165]

    It was Mr Harris that attended the site at the request of Mr Kovac to install sandbags across the front of the clubhouse. Mr Harris took a number of photographs which I refer to below. He said he observed a small amount of water on the floor of the OBC but did not see any water cascading through the doorway. I accept this evidence.

80. [166]

    On 23 February 2022 there was a further exchange of emails between Mr Gallagher and Mr Kovac. Mr Gallagher first wrote:

81. [167]

    Mr Gallagher admitted in cross-examination that the last paragraph was also untrue.

82. [168]

    Mr Kovac responded:

83. [169]

    Mr Kovac arranged for sandbags to be placed across the doorway to the OBC. This is consistent with there being some water ingress into the OBC at the doorway, which is also consistent with the photographic evidence I refer to below. It is to be remembered that at this time the pits were no longer covered, the Agg Drains had been cleared of roots and the plants were now in garden beds such that the roots could no longer enter the subsurface and reach the Agg Drains.

84. [170]

    A number of photographs taken on 23 February 2022 by Mr Harris were in evidence. They show, amongst other things:

85. [171]

    On 24 February 2022, Mr Kovac emailed Mr Gallagher stating:

86. [172]

    As foreshadowed, it appears that further work was then carried out by OAC on the back (eastern) fence of the outdoor area to seek to prevent sand escaping to the roof of the south-eastern gym. This work appears to have been completed by 8 March 2022. Photographs from this time show plants again growing out of the Agg Drains.

87. [173]

    On or about 13 March 2022, the grate in front of the OBC was again replaced. The work was carried out by Sydney Emergency Plumbing and billed to OAC. The work included locating the Agg Drain below the grate and connecting a PVC pipe to that Agg Drain. Prior to that time there was no connection to the drainage system. A photograph of the connection is set out below:

88. [174]

    It is at this stage in the chronology that the change in control consent request was made, leading to the breach notice.

The correspondence regarding change in control, alleged breach and purported termination

1. [175]

   On 12 May 2022, Mr Sam Winter, the Chief Development Officer of OAC sent the following email to Coogee Diggers:

2. [176]

   Attached to the email was a letter in the following terms:

3. [177]

   On 30 May 2022, the solicitors for Coogee Diggers sent a letter to the Proper Officer of OAC in the following terms:

4. [178]

   Approximately five minutes later a further letter was sent to OAC as follows:

5. [179]

   Attached to this second letter was a “Notice of Breach of Covenant” pursuant to s 129 of the Conveyancing Act 1919 (NSW) (CA). The Notice set out a number of alleged breaches of the Lease and required that they be remedied within a reasonable time which Coogee Diggers stated to be 30 days, or prior to 5pm on 29 June 2022.

6. [180]

   Solicitors then became involved on OAC’s side. On 14 June 2022 they sent a response to Coogee Diggers’ solicitor’s letter of 30 May 2022. Relevantly, the response stated:

7. [181]

   A Notice of Termination was then issued by Coogee Diggers on 23 June 2022. The Notice relevantly stated:

8. [182]

   By letter dated 4 August 2022, the solicitors for OAC responded further to Coogee Diggers’ Notice of Breach of Covenant. The letter indicated that OAC would, on a without admissions basis, shortly pay the Coogee Diggers the sum of $106,084.94 with respect to items 2, 4, 7 and 9 of the Scott Schedule attached to the Blaszczakiewicz Report attached to the Notice of Breach. The money was paid shortly thereafter and it was agreed at the hearing that the amount could be set off against any award of damages which I find in favour of Coogee Diggers.

9. [183]

   The proceedings were commenced on 17 August 2022.

Further alleged water ingress

1. [184]

   On 16 November 2022, Mr Gallagher wrote to Mr Kovac by email, in the following terms:

2. [185]

   On 30 November 2022, Mr Kovac responded to Mr Gallagher in the following terms:

The extent and cause of the water ingress

1. [186]

   The critical and most difficult factual issue litigated at the hearing was the cause of the water ingress into the Building.

2. [187]

   I have expressed the issue in this general way in circumstances where it did not appear to be in issue between the parties that there was some water that had entered the Coogee Diggers Building in the period after the commencement of the Lease.

3. [188]

   How much water had entered, when, how and whose fault this was, is very much in issue between the parties.

4. [189]

   It should be kept firmly in mind that Coogee Diggers is the party propounding various causes of action seeking damages to repair what it contends are areas of the Building that are water damaged, and as such bears the ultimate legal onus on these issues. The case relevantly propounded by Coogee Diggers was that water travelled from the Outdoor Area to the OBC doorway and entered the OBC and then travelled down into the Building.

5. [190]

   I say “relevantly” in this regard because although a good deal of evidence was adduced at the hearing as to water ingress into the area of the south-eastern gym, and whether this was caused by sand and toys blocking the gutter or was due to the poor state of the skillion roof in this area or other causes, no claim is made by Coogee Diggers in relation to this area. Accordingly I do not need to make any findings as to the extent and cause of water ingress into the south-eastern gym.

6. [191]

   The case theory advanced by Coogee Diggers was grounded in the following propositions:

7. [192]

   Determination of these issues, obviously enough, involves the consideration of the entirety of the evidence - being documentary, lay evidence and expert evidence from the stormwater engineers and the structural engineers. Counsel for Coogee Diggers accurately characterises the case propounded as a mosaic.

8. [193]

   In circumstances where none of the experts were on site at the time of alleged flooding much of the opinions they have expressed are dependent on assumptions as to what occurred during the alleged flooding events. This imposes a significant limitation on the utility of their evidence particularly given, as mentioned below and elsewhere in these reasons, the unreliability of the evidence as to what occurred.

9. [194]

   I consider first what conclusions can be reached from the lay evidence – oral, photographic and documentary. I then consider the expert evidence from the stormwater engineers and the structural engineers.

10. [195]

    When questioned in closing address, counsel for Coogee Diggers contended that I should find that water ponded in times of high rainfall and flooded or cascaded into the OBC intermittently from 2015 and reached its zenith with OAC having to sandbag the entry to the door to stop the water ingressing in. The last part of this submission was quickly retreated from as the events occurred in early 2022, being at a time when on Coogee Diggers’ case, the problem was fixed. The short point is that the highest the water ingress could be said to have occurred was “intermittently”. No great detail was provided.

11. [196]

    Much of the evidence as to what in fact occurred was given by Mr Gallagher. His evidence was subject to a sustained attack by OAC as being unreliable. OAC contended that Mr Gallagher’s unreliability as a witness, causing the Court not to accept his evidence, was fatal to the case propounded by Coogee Diggers.

12. [197]

    There is much force in these contentions. Mr Gallagher was, as set out elsewhere in these reasons, an unsatisfactory witness.

13. [198]

    The short point is that there is no reliable evidence as to the occasions on which water entered the Building, where it entered and where it went. In my view this is fatal to the case relevantly propounded by Coogee Diggers.

14. [199]

    Two occasions were principally dealt with in the evidence – 24 March 2021 and 23 February 2022. As for the first of these occasions, there is no reliable evidence of surface water travelling from the Outdoor Area to the door of the OBC and then entering the lower levels of the gym. Mr Gallagher took a photograph of the Outdoor Area which shows some pooling or ponding of water and a photograph taken in the upper gym area showing buckets suggestive of water ingress on this occasion.

15. [200]

    No photographs were taken of the OBC doorway. No photographs were taken by Mr Gallagher of the other areas of the gym where he contends he observed water ingress, including through the south-eastern gym/gym annex roof. The evidence given by Mr Gallagher in his affidavits and under cross-examination was far more detailed than his contemporaneous email. In the absence of any corroboration – and there is none – I do not accept the expansive evidence given by Mr Gallagher in his affidavits or under cross-examination. Mr Gallagher was not a reliable historian.

16. [201]

    I do not regard Mr Nguyen’s evidence as corroborating Mr Gallagher’s evidence in this regard. Mr Nguyen’s evidence is from modelling based on assumptions.

17. [202]

    In addition to the lack of probative evidence from Mr Gallagher, a further difficulty with the contention that water travelled from the Outdoor Area to the OBC and into the Building on or about 24 March 2021, is the fact that on the case propounded by Coogee Diggers, it should not have happened again after the drain covers were removed and the tree roots removed from the Agg Drains. Yet it appears it did.

18. [203]

    A number of plausible contentions were advanced in this regard. A significant one, in light of what occurred in February 2022 was that water travelled east along the northern path to the OBC doorway. The survey evidence supported this contention.

19. [204]

    I am simply not persuaded on the oral evidence that there was any water ingress on or about 24 March 2021 from the Outdoor Area into the Building via the OBC doorway. The evidence falls well short of satisfying me of this.

20. [205]

    The documentary and photographic evidence also does not assist Coogee Diggers about what occurred on 24 March 2021 or at any earlier time. The documentary evidence is not clear and is from Mr Gallagher and uncorroborated.

21. [206]

    In relation to the second of these occasions – 23 February 2022 – Mr Gallagher admitted that the assertions made in his contemporaneous emails of what he apparently saw – were false. Whilst the photographic evidence shows that there was some water ingress into the OBC, it appears to be relatively minor. More importantly, there are no photographs of any surface water travelling from the Outdoor Area to the OBC doorway. Mr Harris says that he did not observe any such thing. The photographic evidence suggests that water travelled along the northern pathway. I am not satisfied of any relevant water ingress on 23 February 2022.

22. [207]

    There is thus no reliable evidence to support the case theory advanced by Coogee Diggers of water pooling on the Outdoor Area due to the covered pits and blocked drains, travelling across the Outdoor Area to the OBC doorway, into the OBC and then travelling down into the gym.

23. [208]

    An important aspect of the case propounded by Coogee Diggers was that there was no further water ingress after the pits had been uncovered and the drains cleared of roots. The photographic evidence of the ceiling in the upper gym – as interpreted by the experts – contradicts this, suggesting that there has been further water ingress.

24. [209]

    Finally, there is also no reliable starting point in the sense of no reliable evidence that there was no water ingress issues into the Building prior to the construction of the childcare centre. The only evidence was given by Mr Gallagher, who introduced the minutes of the Directors Meeting on 18 April 2015. His direct evidence has been proved to be unreliable and thus should not be accepted. More importantly, Mr Gallagher was not working at Coogee Diggers for most of the relevant period, including as at 18 April 2015. He cannot give any probative evidence as to the practice at this time with respect to recording matters in the minutes. Others could perhaps have given evidence of this but were not called. The entry in the minutes is also quite brief and does not permit any reliable conclusions to be reached as to where the water was coming from and how.

25. [210]

    The photographic evidence of the pool area from 2011 – showing areas of concrete cancer on the roof of the pool area (underside of the slab) is also inconsistent with the theory advanced by Coogee Diggers in relation to water penetrating the slab by reason of pressure buildup caused by covered grates/pits and the Agg Drains blocked by invasive roots.

26. [211]

    Having considered all of the evidence, I am simply not satisfied that Coogee Diggers has made out its case that water travelled from the Outdoor Area to the OBC and into the Building or its case in relation to water penetrating the slab.

The expert evidence

1. [212]

   It is convenient to address the evidence of the stormwater experts (Mr Dawson and Mr Nguyen) by reference to the matters they were asked to address in the joint report.

2. [213]

   They were asked to address three broad issues with a number of questions being asked referable to each broad issue. Little agreement was reached between the two.

3. [214]

   The three broad issues were:

4. [215]

   I consider each in turn.

5. [216]

   The experts were asked to answer eight questions on this issue. I do not propose to separately consider each of these eight questions.

6. [217]

   One important area of disagreement between them concerned whether, in the event of heavy rainfall, surface water would travel from the Outdoor Area to the doorway of the OBC. Mr Dawson’s opinion was no, whereas Mr Nguyen’s opinion was yes. Whilst Mr Dawson accepted there was some evidence of water entering the OBC on 23 February 2022, he was of the view that this was minor and that the water ingress was likely due to water ponding at the zero threshold tiled area at the OBC doorway, and that this water likely originated from the localised tiled catchment rather than the Outdoor Area. In oral evidence, Mr Dawson put forward an alternate source for this water – the northern pathway. As observed elsewhere, Coogee Diggers disavowed any suggestion that what was accepted was minor water ingress was as a result of water ponding on the Outdoor Area and then travelling to the OBC doorway.

7. [218]

   Mr Nguyen said that the existing drainage on the Outdoor Area was inadequate and blocked and that as such surface water would travel to the lowest point – the OBC doorway. An important aspect of Mr Nguyen’s evidence was that he was instructed that there was no water ingress prior to the construction of the childcare centre and that the water ingress ceased after the pit covers were removed and the drains cleared of roots. I am not satisfied that either of these assumptions have been made good on the evidence.

8. [219]

   Each of Mr Dawson and Mr Nguyen prepared DRAINS (a computer modelling program) modelling of the surface water flows. Mr Nguyen’s modelling showed surface flows from the Outdoor Area to the OBC doorway, whereas Mr Dawson’s modelling did not.

9. [220]

   Unsurprisingly, the differences in the model outputs was due to certain differences in the assumptions input into the modelling:

10. [221]

    Neither expert’s modelling could be said to closely replicate the actual conditions. As to the soil type, it appeared to be agreed that the soil below the artificial grass was type 1, but Mr Dawson’s contention that the artificial grass was permeable did not withstand scrutiny as it was not based on any assessment of what in fact was installed. Neither expert did any assessment of the as installed conditions. The photographic evidence showed some pooling or ponding which was inconsistent with soil type 1.

11. [222]

    Mr Nguyen’s use of 1987 rainfall data was said by him to be based on the fact that he was analysing a drainage system built in the old days at a time when the childcare centre was not built and when the 2019 data was not available. I do not understand this explanation. Mr Nguyen admitted, however, that the 2019 data – as used by Mr Dawson – was more up to date for an event in 2021.

12. [223]

    As for blockages, the evidence was not clear as to the extent of the blockages. Coogee Diggers’ ultimate submission was that the drains were “certainly blocked enough to seriously compromise the drainage system”. No attempt was made to translate this submission into the input assumption made by Mr Nguyen.

13. [224]

    Mr Nguyen ran his model using all of Mr Dawson’s inputs save for soil type 1 assumption and his model produced results consistent with water travelling from the Outdoor Area to the OBC doorway. This does not, in my view, advance matters too far. In the absence of any analysis of the actual installed conditions, it is difficult to place, in my view, any great reliance on the DRAINS modelling.

14. [225]

    Mr Dawson also contended that there were other points of potential ingress, including the roof of the OBC (as a result of overflowing gutters) and the walls of the OBC.

15. [226]

    In Mr Nguyen’s opinion, water could enter the rooms below the OBC through the expansion joints between the eastern and western sections, as these joints create an opening in the OBC floor. The more relevant question, however, is how does the water get to the OBC.

16. [227]

    As for Mr Dawson’s other potential areas of ingress, as I understood Mr Nguyen’s evidence, whilst he accepted that there could be water ingress in these areas, the ingress would not be substantial.

17. [228]

    The expert evidence in this regard really goes no further than what is possible: the more probative evidence is the evidence, or perhaps lack of evidence, of what in fact happened.

18. [229]

    Mr Dawson was of the opinion that water ingress in the walls, floor and ceiling of the swimming pool has been as a result of a deteriorated building joint and is not attributed to the construction of OAC. In relation to ingress to the ceiling, walls and floor of the men’s change rooms and showers this is as a result of a deteriorated building joint on the northern façade wall of the Club.

19. [230]

    In Mr Nguyen’s view, the water ingress during the flood events was due to the failure of OAC to properly maintain the drainage system. Two matters appeared to be principally relied upon by Mr Nguyen in this regard – namely that the affected areas in question are located beneath the childcare playground and therefore any drainage issues in the playground area above would likely have caused water ingress during the flood events. Second, once the blockages were cleared and the drainage system was restored to proper working order, no further reports of water ingress has occurred.

20. [231]

    Again, the opinions expressed by each of the experts was largely based on the assumptions that each was asked to make. To my mind, the most probative evidence in this regard is the photographic evidence from the period prior to the construction of the childcare centre. The photographs show water ingress into the pool area and other areas on the underside of the slab. This is inconsistent with the theory advanced by Mr Nguyen.

21. [232]

    Given that no claim is adduced for repairs to this area, it is not strictly necessary to consider it.

22. [233]

    Mr Dawson said that it was difficult to determine the extent of water ingress into the south-eastern gym area in the events of 24 March 2021 and 23 February 2022. In his opinion, any ingress is likely due to the non-compliance of the gym drainage system, rather than rainfall on the OAC site. Mr Dawson contended that the box gutters and eave gutters were non-compliant and would overflow internally in the event of a blockage, rather than to an appropriate external area.

23. [234]

    Mr Nguyen acknowledged the absence of an overflow device on the box gutter, as noted by Mr Dawson, and that this can result in internal overflow and damage during a blockage, but contended that the source of the blockage appears to be debris – such as sand and toys – from the childcare playground. He expressed the view that it is the responsibility of the childcare manager to ensure that such blockages do not occur and that without such a blockage, the box gutter would function as intended, with no water ingress.

24. [235]

    The acknowledged deficiencies explain the water ingress. Mr Nguyen’s further opinions that debris was responsible has an element of speculation and depends, at least in part, on Mr Gallagher.

The structural engineering experts

1. [236]

   It is convenient to provide an overview of the evidence of Mr Thanopoulos and Dr Ng by reference to the items set out in the Joint Report of Structural Engineering Experts dated 18 July 2025.

2. [237]

   Both Mr Thanopoulos and Dr Ng agreed that the current number of drainage pits and their size are inadequate to service the Outdoor Area. This point does not, however, go too far as no claim is made for a new drainage system. Rather, the claim is for damage caused by water ingress.

3. [238]

   Both also agreed, in light of the invasive testing carried out earlier this year, that contrary to what was previously thought to be the position, there is no waterproofing membrane to the slab.

4. [239]

   Dr Ng contended that the sub-soil drainage system was completely blocked/obstructed by plant roots, causing water to pond above the concrete slab, resulting in water permeating through the slab and reaching the reinforcement, initiating reinforcement corrosion and leading to concrete spalling. He admitted in cross-examination, however, that he could not sustain that opinion in the face of photographic evidence that, at least at times, there were not hedge roots along the full length of the eastern boundary.

5. [240]

   Both Mr Thanopoulos and Dr Ng agreed that water would enter the OBC because of the absence of a hob or vertical separation between the OBC apron slab and the clubhouse itself. They also agreed that water would travel down into the gym area through the void.

6. [241]

   Each of Mr Thanopoulos and Dr Ng speculated as to the strength of the concrete used in the slab when constructed and the significance of this in terms of permeability of this slab. No concrete core samples were taken. In the absence of this, the statements by the experts do not go anywhere.

7. [242]

   Having reviewed the photographs, both agreed they showed evidence of staining, reinforcement corrosion and drainage along the construction joint in the swimming pool ceiling. They agreed this was caused by water ingress. Dr Ng’s theory that this was caused by the drains being blocked by roots was accepted to no longer be open. There was no concrete cancer in the north-south joint above the pool in July 2022 but there was in June 2024. One explanation, according to Mr Thanopoulos and Dr Ng, was that the cancer started after July 2022.

8. [243]

   Mr Thanopoulos and Dr Ng appear to agree that there is evidence of concrete cancer in the area of the construction joint in the men’s changeroom. They also agreed that there is evidence of reinforcement corrosion in the area of the beam soffits above the pool. This last aspect appears to be due to poor workmanship.

9. [244]

   Having considered all of the evidence of Mr Thanopoulos and Dr Ng, as well as the evidence of Mr Dawson and Mr Nguyen, I am not satisfied that any activities of OAC caused any concrete cancer in the slab.

10. [245]

    In relation to the issue of overloading in the Outdoor Area, there was agreement that the additional sand fill adjacent to the eastern boundary fence should be removed. The area to be removed was highlighted in yellow in a subsequent joint report. The yellow highlighted area makes it clear that it was only the northern raised area that should, in their opinion, be removed.

11. [246]

    Finally, in response to some questions from me, Mr Thanopoulos and Dr Ng agreed, having reviewed the photographs of the ceiling in the upper gym from November 2021, June 2024 and 11 July 2025 that the photographs suggest there has been further damage caused to the ceiling, suggestive of further water ingress since the period when the Agg Drains were cleared of invasive roots and the covers over the grates/pits of the Outdoor Area were removed.

Conclusions on water ingress and its causes

1. [247]

   Having regard to the lay and expert evidence that I have set out above, I am not satisfied that Coogee Diggers has proved the case it propounds. The case principally fails because of the lack of any probative evidence to make good the claims propounded. Whilst there is some evidence of water ingress into the Building, there is no probative evidence as to when, where and how. Importantly, there is evidence suggestive of water ingress after Coogee Diggers contends the problems with the Outdoor Area were fixed. There are other potential sources of the ingress into the OBC.

2. [248]

   In relation to the slab damage, there is evidence of damage due to water ingress prior to construction of the childcare centre.

Termination of the Lease - the alleged repudiation

1. [249]

   Coogee Diggers puts the repudiation claim in two ways:

2. [250]

   Coogee Diggers purported to accept OAC’s repudiatory conduct and elected to terminate the Lease by letter dated 23 June 2022. OAC denied that it had engaged in any repudiatory conduct on a number of bases, including:

3. [251]

   There could be no breach until the transaction completed which did not occur until 1 July 2022. Further, there would be no breach if Coogee Diggers’ refusal to provide consent was unreasonable.

4. [252]

   I have set out above the relevant provisions of the Lease. I have also set out above the relevant communications between the parties.

5. [253]

   There was no relevant dispute between the parties as to the nature of the transaction entered into of which notice was given. There was no dispute that the transaction occurred upstream (in the corporate sense) of OAC and did not involve any change in the entity that owned the shares in OAC.

6. [254]

   As notified by OAC to Coogee Diggers on 12 May 2022, on 3 May 2022, the current owner of Nemo (BC) Holdco Pty Ltd (HoldCo), an upstream holding company of OAC, entered into a conditional sale agreement for the Only About Children business to BlueTang OpCo Pty Ltd (BlueTang) an Australian subsidiary of Bright Horizons Family Solutions Inc (Bright Horizons), a public company traded on the New York Stock Exchange with net assets of US$1.2 billion.

7. [255]

   It was in fact HoldCo’s holding company, Nemo (BC) Cayman LP (Nemo), not HoldCo itself, that entered into the transaction for the sale of HoldCo’s shares in BlueTang.

8. [256]

   The downstream corporate structure is that HoldCo owned all of the shares in Nemo (BC) Mid Co Pty Ltd (MidCo), which owned all the shares in Nemo (BC) BidCo Pty Ltd (BidCo), which owned all the shares in OAC Group Pty Ltd (OAC Group), which owned the only share in OAC.

9. [257]

   OAC’s sole shareholder remained OAC Group. There was no change in the beneficial ownership of the share in OAC.

10. [258]

    Central to the determination of the repudiation claim is the proper construction of clause 16.2 of the Lease and what amounts to a repudiation.

11. [259]

    It is not in dispute that the ordinary principles of contract, including that of termination for repudiation or fundamental breach, apply to leases: see Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; [1985] HCA 14 at 29 per Mason J, Haxglow Pty Ltd v Mirvac Retail Sub SPV Pty Ltd [2020] NSWSC 233 at [33] per Darke J.

12. [260]

    In 1128 CG Pty Ltd v MH Affordable Homes on Kelly Pty Ltd [2025] NSWSC 563 at [106]-[111], I set out the principles of contractual construction in the following terms:

13. [261]

    In relation to repudiation, I adopt what I recently said in Lewington v Dulyakarn [2025] NSWSC 635 at [100]-[105]:

Determination of the repudiation claim

1. [262]

   I start first with the proper construction of clause 16.2. OAC contended that the clause only applied where there was a change in the shareholding of OAC and has no application to upstream changes such as occurred in the present case. This is said to emerge most clearly from the words used in the clause.

2. [263]

   Coogee Diggers on the other hand, contended that the clause applies to upstream change in shareholding. It was contended that the evident purpose is to prevent the Lease being assigned by stealth through the transfer of the beneficial ownership of the shares in the lessee to other entities. The commercial interest of the lessor that is being protected here is the lessor’s right to decide who should operate the childcare centre from its property. Further, the clause will be of no effect if it can be circumvented by allowing a share transfer to occur at an upstream level of ownership.

3. [264]

   Applying this purpose to the words of the clause, it was contended that the words “shareholders of the Lessee” in clause 16.2(a) should extend to Nemo, and that the words in clause 16.2(a) “take any other action” should be construed broadly as including the assisting or procurement of any transaction that has the effect stipulated.

4. [265]

   I prefer the construction propounded by OAC and reject the construction propounded by Coogee Diggers. OAC’s construction is strongly supported by text of the clause, Coogee Diggers’ construction is not.

5. [266]

   Two matters should be emphasised at the outset. First, there is little utility in my view in talking generally about the purpose underlying a change of control clause in a transaction document such as a lease. The focus should be on the words used by the parties.

6. [267]

   Allied to this first point, as Bell CJ observed in The J & P Marlow (No 2) Pty Ltd v Hayes and McCabe (2023) 112 NSWLR 29; [2023] NSWCA 117 (J & P Marlow) at [76-[80], caution should be exercised by courts in attributing a particular commercial intent or understanding of commercial common sense to parties. Commercial purpose is to be determined objectively with the contract itself supplying the best source for the ascertainment of that objectively determined purpose: J & P Marlow at [75] per Bell CJ. It is not for a court to impute purposes to contractual parties where that purpose is not found in the text or context: J & P Marlow at [91] per Meagher and Kirk JJA.

7. [268]

   As set out above, the proper construction can usually be discerned from the words used. This is such a case.

8. [269]

   The meaning to be ascribed to the parties from the wording of clause 16.2 is, in my view, reasonably clear.

9. [270]

   The wording of clause 16.2(a) clearly refers to “the Lessee” not doing certain things as set out in (i) to (iv). The “Lessee” is obviously a reference to OAC and OAC only. Construing the clause literally in this regard causes some potential difficulties in relation to some of the sub-clauses, for example sub-clause (ii) because the lessee ordinarily will not be able, of itself, to change the beneficial interest of a share in itself. That change would be carried out by the shareholder. These difficulties are not, in any view, relevant to the present debate.

10. [271]

    Sub-paragraph (i) of clause 16.2(a) refers to a transfer of any share on the capital of the Lessee – a reference only to the immediate shareholding in OAC and not some further upstream shareholding. Sub-paragraph (ii) refers to changing the beneficial interest in any such share – again a reference to a share in OAC and not some upstream entity. Sub-paragraph (iii) refers to issuing any new shares – again a reference to OAC.

11. [272]

    Sub-paragraph (iv) is a reference to more generic action having the effect set out in what follows being the tailpiece of clause 16.2(a).

12. [273]

    The tailpiece directs attention to “any action” having the effect that the “shareholders of the Lessee” – again a specific reference to OAC – at the Commencement Date of the Lease would after the action, beneficially hold or control less than 51% of the voting rights or the income or capital participation rights in the lessee or less than 51% of the voting rights at a meeting of directors of the Lessee – again this is a specific reference to OAC and not some further upstream entity.

13. [274]

    The effect set out in the tailpiece is a change in the shareholders of the Lessee at the Commencement Date. At each stage of clause 16.2(a) the words refer to a share in the capital of the Lessee or a change in the shareholders of the Lessee. There is nothing in the words used in clause 16.2(a) to suggest that what was being dealt with was changes in relation to the ultimate holding company of the Lessee.

14. [275]

    These textual indicators are, in my view, quite inconsistent with the construction propounded by Coogee Diggers.

15. [276]

    These textual indicators clearly evince an intention that the purpose of this clause was only to catch changes in control at the level of OAC’s shareholder, not further upstream. It is far too big a stretch, in my view, to suggest the purpose is to catch any change in control at any level of the corporate chain on OAC’s side. The reference at the commencement of clause 16.2(a) to the clause having no application where the lessee is listed on the ASX is a further textual indicator contrary to the broad purpose contended by Coogee Diggers.

16. [277]

    Nothing was pointed to by way of context to suggest a broader construction should be given. There was no evidence led as to what was known by the parties at the commencement of the Lease in relation to the ownership of the lessee. Whilst it would appear that OAC was part of some broader group, no submissions were advanced in this regard.

17. [278]

    Coogee Diggers’ contentions, as summarised above, focused on what it contended was the obvious purpose of the clause – namely to give Coogee Diggers some control over who it is that is operating the childcare centre on the Property. At a broad level so much may be accepted. That purpose is given effect to even on OAC’s construction in that consent would be required for any change in the shareholding in OAC.

18. [279]

    The purpose of a clause usually most clearly emerges from the words the parties have used. The words used here suggest a limited change in control purpose – limited to changes in the shareholding in OAC itself. There is no warrant, in my view, to use broad notions of purpose to force onto the words used a construction which their ordinary meaning does not bear.

19. [280]

    In this regard there is no warrant in my view for reading the words “shareholders of the Lessee” as referring to the ultimate holding company of the lessee. There is also no warrant to read the words “take any other action” broadly as including the assisting or procurement of any transaction that has the effect stipulated”. The clause is directed at action that has the effect, not some lesser involvement. It is also difficult to see how, in the circumstances of this case, such a broad construction of those words would assist Coogee Diggers.

20. [281]

    As set out below, the action taken by OAC went no further than assisting in relation to due diligence and the like. This limited note is understandable in the context of the broader upstream transaction that was taking place. Such action does not have the effect stipulated in the tailpiece of clause 16.2(a).

21. [282]

    The provisions of clause 16.2(b) further reinforce, in my view, the construction I have placed on clause 16.2(a) as relating only to changes in the immediate shareholding in OAC. Clause 16.2(b) continues to refer to the shareholding in the Lessee being transferred, not some upstream transfer.

22. [283]

    Sub-clause 16.2(b)(iii)(A) defines the persons to whom the Lessee proposes to transfer shares etc as the Proposed Transferees and requires them to be proven to be each respectable, responsible and solvent. Sub-clause 16.2(b)(iii)(B) then requires the Proposed Transferees to provide guarantees. It was not explained by Coogee Diggers which entity would be regarded as the Proposed Transferee.

23. [284]

    Contrary to a suggestion made by Coogee Diggers, clause 16.2(c) also supports a contention that clause 16.2 is concerned with changes in the immediate shareholding in the Lessee. Clause 16.2(c)(ii) is clearest in this regard.

24. [285]

    The conclusion that I have reached in this regard is consistent with that reached by Peter Lyons J in Mantra Hotels & Resorts Australia Pty Ltd v Palm Cove Restaurants Services Pty Ltd [2011] QSC 17 (Mantra Hotels) in relation to a clause which bears a number of similarities to clause 16.2. His Honour’s decision in this regard, like mine, is based heavily on the words used by the parties.

25. [286]

    Coogee Diggers contended that the decision in Mantra Hotels provides some support for its construction. Reliance was placed on the fact that the clause under consideration in Mantra Hotels did not refer to “any other action” as is referred to in clause 162(a)(iv) but rather only to “other action”. The absence of the word “any”, in my view, is of no moment.

26. [287]

    Further, at [17] and [18] in Mantra Hotels Peter Lyons J referred to the purpose of the clause and the potential for it to be subverted by upstream changes in control. Whilst his Honour referred to this purpose and possibility of upstream changes, his Honour held, having regard to the wording of the clause, that it did not apply to upstream changes.

27. [288]

    On my construction of clause 16.2(a), it had no application to the transaction in 2022 which it is not in dispute was not in the immediate shareholding in OAC but several levels further up the chain.

28. [289]

    Coogee Diggers contended, as I understood its submissions, that OAC engaged in repudiatory conduct regardless of what I now determined was the proper construction of clause 16.2(a). OAC had, by its letter requesting consent, indicated that it regarded clause 16.2 as applying and then by its letter of 14 June 2022 notifying Coogee Diggers that the transaction would be proceeding even if consent not required, evinced an intention no longer to be bound by its (OAC’s) view of the Lease.

29. [290]

    I do not accept this contention.

30. [291]

    If there is no obligation under the Lease to obtain consent for the transaction – and in my view there was not – it is difficult to see how OAC could have engaged in repudiatory conduct.

31. [292]

    In any event, as set out above, repudiation or renunciation is assessed by whether the conduct of one party is such as to convey to a reasonable person in the position of the other party renunciation either of the contract as a whole or a fundamental obligation under it.

32. [293]

    This directs attention to how a reasonable person would regard the letter of 14 June 2022. Paragraph 2.3, in the context of the upstream broader transaction that was taking place, is really saying no more than that the transaction – being a much bigger transaction than just the acquisition concerning OAC, is going ahead. The remainder of the letter deals with the other breaches that had been raised by Coogee Diggers and responds to them. The letter also does not remove or withdraw the request for consent.

33. [294]

    A reasonable person in my view, would not regard the sending of the letter as a renunciation. Putting to one side all other matters, in circumstances where the request for consent has not been withdrawn, it is difficult to see how OAC was renunciating.

34. [295]

    It is also difficult to see how any action by OAC could be regarded as doing anything to effect a change in shareholding of OAC. The only conduct identified was that stated by Ms Lee of assisting with due diligence and the like. Whilst in a broad sense this could be said to be part of giving effect to the transaction completing, there is nothing to suggest it was this conduct that brought about the effect.

Coogee Diggers’ Property Damage Claims under the Lease

1. [296]

   As refined at the commencement of the hearing, and confirmed in its closing written submissions, Coogee Diggers only presses claims for breach of clauses 7.3, 8.1, 11.2, 12.1 and 12.2.

2. [297]

   I deal with each in turn.

3. [298]

   Clause 7.3 provides:

4. [299]

   As propounded in its closing written submissions, Coogee Diggers complained of OAC’s actions in:

5. [300]

   It was contended that these actions are a breach of clause 7.3 because no statutory authority has granted consent for the alterations. Reliance was placed on the fact that [61] of the Development Consent required that all “stormwater run-off naturally draining to the site must be collected and discharged through this property’s stormwater system”.

6. [301]

   The submissions concluded with the contention that OAC’s “actions have the effect of preventing the proper functioning of the drainage system. [OAC] is liable to [Coogee Diggers] for the cost of removing the alterations and returning the Premises to its initial state”.

7. [302]

   There are a number of problems with these contentions.

8. [303]

   It is not clear what conduct is in fact being complained of. Insofar as it is the initial installation of the artificial grass playground and the planting of the trees with invasive roots, this conduct was not engaged in by OAC. The artificial grass playground and trees were already planted before the Lease commenced.

9. [304]

   Insofar as the complaint includes covering the grates, whilst this was done by OAC, it is far from clear that such conduct is in breach of the Development Consent.

10. [305]

    More fundamentally, it was an important part of the case advanced by Coogee Diggers that the covers have now been removed from the grates, and the invasive tree roots removed, such that there are now no water ingress problems. That work was carried out entirely at OAC’s cost. To adopt Coogee Diggers’ submission – the alterations have been removed and the Premises returned to their initial state. No claim is made by Coogee Diggers for the cost of installing a revised stormwater drainage system.

11. [306]

    Even if there is a breach of the clause – and I am far from satisfied that there is – the breach goes nowhere.

12. [307]

    Clause 8.1 provides, relevantly:

13. [308]

    The same conduct as Coogee Diggers relied upon as breaching clause 7.3 is also said to be a breach of clause 8.1.

14. [309]

    As I understand the contentions advanced, it is said that the covering of the pits was an alteration of the Premises without the prior approval of any statutory authority whose approval is required as well as the consent of Coogee Diggers (clause 8.1(b)). In relation to the invasive tree roots, this amounts to at least a failure to keep all drains free from blockages.

15. [310]

    The damages claimed are:

16. [311]

    In relation to the covering of the pits this was clearly an alteration of the Premises without the consent of Coogee Diggers. Putting to one side for present purposes the positive defences relied on by OAC, clause 8.1 has been breached.

17. [312]

    I am not satisfied, however, that any loss has been caused by this breach – the covering of the pits. The causation theory involves accepting that the covering of the pits (coupled with the blocked drains from the invasive tree roots) led to the flooding of the Outdoor Area with the water travelling to the OBC doorway and entering the OBC and then travelling down to the gym. As set out elsewhere in these reasons, I am not satisfied that these contentions have been made out on the evidence.

18. [313]

    In relation to the invasive tree roots, it seems clear that the Agg Drains are not part of the Premises as they are located below RL.58.20 and thus outside clause 8.1(a)(i). In relation to clause 8.1(a)(vi), no submission was advanced of any failure to notify of any defect in or need to repair “the Lessor’s Property”.

19. [314]

    In any event, even if the clause was breached in relation to the invasive tree roots, the same causation of damage problem would arise. I am not satisfied that the existence of the invasive tree roots caused any of the damage claimed.

20. [315]

    Clause 11.2 provides:

21. [316]

    Again, it is the same conduct relied on by Coogee Diggers as giving rise to the breach of clause 11.2. It is contended that those actions were a breach of clause 11.2 because “the installations” were a defect of the Premises caused by OAC. The defects are said to have caused damage in the form of water damage to the Building and blocked drains”.

22. [317]

    The only conduct of OAC was the covering of the grates. It may be accepted that this conduct breached at least 11.2(c) - subject to the positive defences advanced.

23. [318]

    The claim by Coogee Diggers suffers again, in my view, from the causation of damage problem. I am not satisfied that any of the damage claimed was caused by the breach of clause 11.2.

24. [319]

    Assuming I had been satisfied that a breach of clause 11.2 caused loss to Coogee Diggers, one of the positive defences raised by OAC is that any damages for breach of clause 11.2 shall not exceed the amount (if any) by which the value of the reversion in the Premises or Outdoor Area is diminished owing to any breach of the clause pursuant to s 133A(1) of the CA.

25. [320]

    Section 133A(1) of the CA provides:

26. [321]

    Reliance was placed by OAC on what was said by Ward CJ in Eq in Midcoast Petroleum Pty Ltd v Keldros Pty Ltd [2019] NSWSC 970 at [277]-[282], including that the effect of the section is to provide an upper limit to the amount of damages which may be received by a landlord for breach of a covenant to keep or put premises in repair during the currency of the lease.

27. [322]

    No submissions at all were advanced by Coogee Diggers on this point. Further, no evidence was led as to any diminution in value of the Building.

28. [323]

    This would have provided another reason for the award of only nominal damages for a breach of clause 11.2.

29. [324]

    The same actions were also said to breach clause 12.1 which prevents OAC making any alterations to the Premises without consent of Coogee Diggers, such consent not to be unreasonably withheld in respect of non-structural alterations.

30. [325]

    The installation of the pit covers were clearly an alteration of the Premises by OAC without Coogee Diggers’ approval. Subject to any positive defences clause 12.1 has been breached.

31. [326]

    Again, however, the breach has not caused any of the damage claimed.

32. [327]

    Clause 12.2 provides:

33. [328]

    The alleged breach of clause 12.2 gives rise to different issues. It was not in issue between the structural engineering experts – Mr Thanopoulos and Dr Ng – that the sand abutting the eastern fence of the Outdoor Area (but only at the northern end) needed to be removed. Mr Thanopoulos did not agree that the slab was overloaded in this area but rather contended that the fence was not a retaining structure and as such the sand should not rest against the fence. Dr Ng agreed with Mr Thanopoulos in this regard.

34. [329]

    The issue between the parties on breach is whether the eastern fence is a wall or structure within clause 12.2. OAC contended that it was neither. Coogee Diggers contended that it was a structure.

35. [330]

    In my view the fence, if not a wall, is a structure within the meaning of clause 12.2.

36. [331]

    The structure is overloaded in the sense that the sand is pressing against it and the fence is not containing the sand. It was never intended to.

37. [332]

    Accordingly, in my view, clause 12.2 has been breached and OAC is liable for the cost of removing the sand. As set out later in these reasons, the cost of this removal is determined to be $4,745.

Coogee Diggers’ Tort Claims

1. [333]

   Coogee Diggers ultimately pressed claims in trespass and nuisance.

2. [334]

   These tortious claims were, as ultimately pressed, set out in a Further Amended Cross-Claim filed in Court on 13 August 2025. A Defence to the Further Amended Cross-Claim was filed in Court by OAC also on 13 August 2025.

The trespass claim

1. [335]

   The trespass claim centred on OAC’s alleged actions in:

2. [336]

   It was contended that this conduct constituted a trespass to Coogee Diggers reversionary interest in the Premises and the Outdoor Area because OAC’s actions have permanently altered the Premises and the Outdoor Area by preventing the proper functioning of the drainage system. The damage caused was said to be the damage to the drainage system in the form of blocked drains and root-infested pipes. The damage is said to be permanent because until the drains were unblocked and the trees and shrubs removed, the drainage system continued to be affected.

3. [337]

   The damages claimed is “the cost of rectifying the drainage system”.

4. [338]

   OAC contended that the claim in trespass fails because there was no physical intrusion by OAC into Coogee Diggers’ land.

5. [339]

   Reliance in this regard was placed on the following uncontroversial observations of Preston CJ of LEC in Robson v Leischke (2008) 72 NSWLR 98; [2008] NSWLEC 152 (Robson) at [39] and [40]:

6. [340]

   Coogee Diggers’ claim was based, however, on trespass to their reversionary interest. Reliance was placed on the proposition that an action in trespass may be maintained by a reversioner for an injury to the reversion where the plaintiff must prove “such permanent injury as would be necessarily prejudicial to the reversioner”: see Balkin & Davis, Law of Torts (6th ed, 2021, LexisNexis) (Law of Torts) at [5.23]. Permanent injury in this regard is defined as injury which will continue indefinitely unless something is done to remove it: Jones v Llanrwst Urban District Council [1911] 1 Ch 393 at 404 per Parker J.

7. [341]

   In my view there are a number of problems with the claim in trespass.

8. [342]

   It is clear that OAC did not engage in the conduct alleged. It did not install the artificial grass and rubber playground and did not plant trees and shrubs with invasive roots. It is clear that this work was completed prior to the commencement of the Lease and was thus carried out by Coogee Diggers Childcare Pty Ltd – which, although part of the OAC group of companies, is a separate legal entity.

9. [343]

   Perhaps more importantly, it is far from clear what would be the consequences if the alleged trespass was proven. The plants were removed in 2021 by OAC and replaced by plants in self-contained planter boxes such that invasive roots are no longer able to reach the drains. Further, the roots have been cleared from the drains. There is no longer any damage to the reversion in this regard. OAC paid for all of the work in cleaning out the drains and replacing the plants.

10. [344]

    As set out above, the damage claimed in this regard in the closing written submissions of Coogee Diggers was the “cost of rectifying the drainage system”. No submissions were advanced as to what was meant by this, let alone any quantification of the cost of the work involved.

11. [345]

    I reject the trespass claim.

The claims in nuisance

1. [346]

   Coogee Diggers contended that OAC caused nuisance to Coogee Diggers’ Property by:

2. [347]

   Further and in the alternative, it was contended that OAC adopted the nuisance caused by Coogee Diggers Children Pty Ltd as the occupier of the Leased Premises and the Outdoor Area. This is because Coogee Diggers Childcare Pty Ltd constructed the Leased Premises and Outdoor Area, causing the planting of trees and shrubs with invasive roots which caused blockages of drainpipes and a water retention tank causing stormwater to pond, which has caused drainage to the Leased Premises and Outdoor Area. OAC is said to be liable as an occupier which had a duty to repair in clauses 11.2 and 26.1 of the Lease who failed to remove the trees and shrubs with invasive roots.

3. [348]

   The damage claimed by Coogee Diggers is from water ingress causing damage “to the ceiling and also to the walls of the fitness centre facility”.

4. [349]

   Central to the claim based on a failure to repair was the proposition from Wringe v Cohen [1940] 1 KB 229 (Wringe v Cohen) at 248-9 that an occupier may be liable even though they were neither aware of nor by reasonable diligence could have discovered the nuisance.

5. [350]

   OAC defended the nuisance claim on a number of bases.

6. [351]

   First, OAC contended that the evidence does not establish that the covering of the pits caused water to ingress into the building, that the drains were blocked or that to the extent that they were blocked, this caused water ingress into the building. In simple terms, Coogee Diggers has not established the alleged nuisances caused damage to, or material interference with its use to the Property.

7. [352]

   Second, in relation to the covering of the pits, if the Court finds that water ingress occurred as a result:

8. [353]

   Third, in relation to the alleged blocked drains from roots, the trees and shrubs were not planted by OAC. On the alternative occupier claim, it was first contended that Wringe v Cohen was wrongly decided. Second, it was contended that the Agg Drains were not part of the Outdoor Area or Premises, so OAC did not occupy the land they are situated on. Third, Coogee Diggers has not established that the Agg Drains were not a latent defect which falls outside Wringe v Cohen. Fourthly, it has not been established that water ingress occurred due to a failure to repair the Agg Drains. Finally, at most, what is raised is a maintenance issue in respect of the Agg Drains, which is the responsibility of Coogee Diggers.

9. [354]

   The principles relevant to nuisance – save for the contention that Wringe v Cohen was wrongly decided which I deal with below – were not in dispute:

10. [355]

    In Robson at [66], Preston CJ of LEC stated:

11. [356]

    In Wringe v Cohen the English Court of Appeal set out an exception to the general rule that an occupier is not liable for a nuisance which he did not create unless he continued it with knowledge or means of knowledge of its existence. At 248-249, the English Court of Appeal stated:

12. [357]

    The decision has been criticised as being inconsistent with the general principles of the law of nuisance. The learned authors of Fleming’s The Law of Torts (11th ed, 2023, Thomson Reuters) ’at [19.160] state that Wringe v Cohen is out of accord with current authority.

13. [358]

    The principle was mentioned without apparent disapproval by Dixon J in Torette House Pty Ltd v Berkman (1940) 62 CLR 637; [1940] HCA 1 at 657. In Cartwright v McLaine & Long Pty Ltd (1979) 143 CLR 549; [1979] HCA 16 at 556, Gibbs ACJ assumed, without deciding, that the decision should be followed in Australia. His Honour went on to state, that the principle for which it is authority applies only when danger has been caused by want of repair, and is not applicable when the nuisance was caused by the act of a third party. Gibbs ACJ also stated that the decision should “be confined to cases where the nuisance has been caused by the defendant’s failure to repair premises for whose repair he was responsible”.

14. [359]

    Notwithstanding the force of the criticisms of the decision, it is not for me, sitting at first instance, to determine that the decision is not part of the law in Australia. I proceed on the basis that it is.

15. [360]

    In my view the nuisance claims fail on the facts.

16. [361]

    Dealing first with the covering of the pits, it is clear that this was conduct engaged in by OAC. It was accepted by OAC that if I was satisfied that the covering of the pits caused water ingress into the Building, this would be substantial interference with Coogee Diggers enjoyment of its property and, prima facie, a nuisance as it is accepted that this would not be a reasonable use of the Outdoor Area.

17. [362]

    For the reasons set out elsewhere in these reasons, I am not satisfied that the covering of the pits led to any water ingress into the Building. Accordingly, I am not satisfied that the alleged nuisance – in the form of the covering of the pits – caused damage to, or material inference with the Property.

18. [363]

    I deal later in these reasons with OAC’s reliance on clause 17.3 of the Lease.

19. [364]

    Turning now to the alleged nuisance claim based on the blocked Agg Drains caused by the planting of trees with invasive roots, as it is clear that the trees with the allegedly invasive roots were already planted prior to the commencement of the Lease – see, for example, the Occupation Certificate dated 21 November 2013 and the photographs that I have extracted earlier in these reasons.

20. [365]

    Accordingly, the claim that OAC caused nuisance by planting trees with invasive roots, fails.

21. [366]

    The claim based Wringe v Cohen also fails on the facts. This is for several reasons. First, the Agg Drains do not form part of the Premises or the Outdoor Area. They are at an RL lower than the area the subject of the Lease or the licence of the Outdoor Area. OAC is not an occupier of the land on which they were contained. OAC was not under any repair obligations in relation to the Agg Drains.

22. [367]

    Second, for reasons set out elsewhere in this judgment, I am not satisfied that any blockage of the Agg Drains caused any water ingress into the Building and consequent damage.

23. [368]

    Third, there is no evidence that the Building ever became dangerous – perhaps in the sense of liable to collapse.

24. [369]

    The nuisance claims therefore fail.

Damages

1. [370]

   In light of my conclusions on the substantive causes of action advanced by Coogee Diggers, the damages issues largely fall away. Nonetheless, I determine the damages issues below.

2. [371]

   Although propounding a claim for damages, Coogee Diggers’ closing submissions did not contain any detail as to what quantum of damages was sought or indeed any submissions at all on the question of damages. Further, nothing was said as to what damage flowed from what breach – whether tortious or contractual.

3. [372]

   Having regard to my interchange with counsel for Coogee Diggers in closing oral address, I understood Coogee Diggers to press a claim for part, but not all, of the scope of works quantified by the respective quantity surveyors. No submissions were advanced, however, by reference to each item of work as to what cause of action each item related to.

4. [373]

   To identify what I understand to be the amount claimed and the ambit of the dispute between the parties, it is necessary to begin with the scope of works the quantity surveyors were asked to cost.

5. [374]

   Shortly prior to the commencement of the hearing, the parties jointly instructed the quantum experts – being the parties’ respective expert quantity surveyors David Madden (Mr Madden) for Coogee Diggers and Tobias Seeto (Mr Seeto) for OAC – to cost the following scope of works:

6. [375]

   In response to this scope of work, a joint report was produced by Messrs Madden and Seeto. Mr Madden’s total cost was $472,162.22 and Mr Seeto’s $363,874.20.

7. [376]

   This then led to an application by Coogee Diggers to rely on a further report of Dr Ng dated 10 August 2025 significantly expanding the work which Coogee Diggers contended was required to be carried out to fix the water ingress problems. Ultimately, the work set out in this further report was only pressed in two relatively minor respects.

8. [377]

   A Supplementary Scope of Works was issued to Messrs Madden and Seeto adding two items:

9. [378]

   The revised summary table following further conferral between Mr Seeto and Mr Madden was as follows:

10. [379]

    Mr Madden’s new total cost was $522,271.85. Mr Seeto’s was $386,906.96. Mr Madden’s total included some items which counsel for Coogee Diggers accepted were not part of the claim – principally item 1 for $25,184 – and other items which OAC contended were outside the scope of works. On my reckoning, there were only two items of any monetary value in this category – item 5 “Nil set down or concrete hob along the clubhouse façade” which both Mr Madden and Mr Seeto costed at $3,654 and item 19 “Water ingress into the old bowling clubhouse (OBC) and the rooms beneath it” which Mr Madden costed at $3,608 and Mr Seeto did not cost.

11. [380]

    There were two items that made up most of the difference between Mr Madden and Mr Seeto. In concurrent session, the focus was on two of those items, being:

12. [381]

    I deal with each of these in turn.

13. [382]

    First, in relation to item 11, the difference between Mr Madden and Mr Seeto was based on the area of material that needed to be removed. There were two relevant differences – the length of area, north to south, to be removed – and the depth, east to west to be removed.

14. [383]

    The photographic evidence depicted two areas of raised sand beds abutting the fence of the Outdoor Area. One area was to the north of a shed located on the Outdoor Area and the other area to the south. The area which the engineering experts agreed needed to be removed was depicted by yellow shading in a photograph of the Outdoor Area – depicted on page 11 of the Supplementary Expert Joint Report by Quantum Experts (Exhibit Z). The photograph only showed the northern raised area. Further, the area shaded in yellow only covered a part of that raised area and not all of it in terms of its east west dimensions.

15. [384]

    Mr Madden costed removing the entirety of both raised areas. In removing the entirety of the areas in their east/west dimension, his logic or basis was in effect, the safety of the children playing on the Outdoor Area, otherwise there would be a step-down.

16. [385]

    Mr Seeto only costed the particular area which the engineering experts agreed needed to be removed. He also observed in the joint session that he did not believe that sand was abutting the fence in the southern raised area.

17. [386]

    In my view, the position adopted by Mr Seeto should be accepted. This is for the simple reason that he had costed the work which the engineering experts agreed had to be carried out. Whilst the work Mr Madden has identified has a certain logic to it – there are two raised areas – there is nothing in the material of the joint engineering experts to suggest that both raised areas need to be removed.

18. [387]

    Second, in relation to item 14 – there were two aspects to the work where Mr Madden and Mr Seeto disagreed. The first aspect concerned whether certain rubber flooring had to be removed and replaced. Mr Madden said it did and Mr Seeto said it did not need to be replaced because the flooring could easily be removed and then put back in place once the work was completed.

19. [388]

    Mr Madden’s evidence was that he thought the flooring was glued down and would thus be damaged when removed. Mr Seeto gave evidence that he was easily able to remove the rubber flooring which was in the form of rubber tiles.

20. [389]

    The photographic evidence supports Mr Seeto’s recollection. I therefore do not propose to allow for the replacement of the flooring.

21. [390]

    There were several items related to the flooring. Based on my review of the breakdown included as part of the supplementary joint quantity surveyor’s report, items 14.2 ($1,854.67), 14.7 ($2,603.67), 14.22 ($1,976.00), 14.23 ($3.232.00), 14.25 ($2,774.00) and 14.26 ($4,240.00) – totalling $16,680.34 – relate to flooring and should not be included.

22. [391]

    The second aspect in relation to item 14 concerned whether certain cabling removed from walls could be reused. Mr Seeto accepted that it would be best practice to replace the wiring.

23. [392]

    I propose to allow for the replacement of the wiring. This covered items 14.31 to 14.39 totalling $12,050.50.

24. [393]

    On my calculations, the allowance for item 14 should thus be $98,878.66.

25. [394]

    In relation to other items, where the difference between Mr Madden and Mr Seeto were smaller, there was understandably no cross-examination and it was contended by counsel for Coogee Diggers that the Court should simply split the difference and take the mid-point between Mr Madden and Mr Seeto on each item. Senior counsel for OAC did not suggest otherwise. This seems a sensible and pragmatic course to adopt given issues of proportionality.

26. [395]

    Drawing these threads together, the total damages – if all were to be allowed may be summarised as follows:

27. [396]

    The summary extracted above from the supplementary joint quantity surveyors’ report also includes additional costs including scaffolding, preliminaries and contingency. No submissions were advanced by either party as to how the Court would apply these additional costs in the event that, as has transpired, Coogee Diggers is not entitled to all of the amounts claimed.

28. [397]

    The only amount that I have determined that Coogee Diggers is entitled to claim is $4,745 in respect of the bowling green overloading. In circumstances where $106,084.94 has already been paid by OAC to Coogee Diggers and is to be set off against any award of damages in favour of Coogee Diggers, it may be that there is no utility in considering what additional costs are to be added to this item.

29. [398]

    It may be that I have misunderstood some of the items claimed and their relationship to the causes of action, and some may be claimable in light of my substantive conclusions. For example, it is not clear to me what item 4 – which involves further investigative work on the Agg Drains – is related to. I propose to direct the parties to seek to agree orders to give effect to these reasons, which will obviously include considering what amounts are recoverable in light of my substantive conclusions. I will then deal with any remaining issues on the papers.

Clause 17.3 – Watertight Building Covenant

1. [399]

   OAC placed reliance on clause 17.3 of the Lease as an answer to a number of the claims advanced by Coogee Diggers. In particular, it was contended that to the extent that Coogee Diggers has suffered and is continuing to suffer loss and damage because of:

2. [400]

   Clause 17.3 of the Lease provides:

3. [401]

   “Building” is defined in clause 1.1 of the Lease as:

4. [402]

   Items 4 and 5 in the Summary of the Lease are:

5. [403]

   Annexure B to the Lease is as follows:

6. [404]

   The plan also makes clear that the area denoted is limited in depth to the horizontal plane at RL 58.20 and is unlimited in height. It was not in dispute that this was a depth of 20 centimetres below the surface.

7. [405]

   Clause 11.2 is also of some relevance. It provides:

8. [406]

   In support of its reliance on clause 17.3, OAC relied on the decision of Mandie J in AF Textile Printers Pty Ltd v Thalut Nominees Pty Ltd (2007) 17 VR 334; [2007] VSC 73. The case concerned, relevantly, a roof covenant which relevantly provided:

9. [407]

   At [52]-[55], Mandie J stated:

10. [408]

    Coogee Diggers contended in its closing written submissions that OAC’s argument for breach of the Watertight Building Covenant can be answered by reference to the report of Dr Ng dated 9 June 2005 where he concludes:

11. [409]

    In light of the conclusions that I have reached above to the effect that Coogee Diggers has failed to make good any of its claims of water ingress, the impact of clause 17.3 of the Lease does not arise.

12. [410]

    I note, however, that the evidence relied on by Coogee Diggers from Dr Ng, related only to the slab. Whilst the experts agreed, once it became clear that the slab did not have a waterproof membrane, that it was designed to achieve functional water tightness, the fact remains that water is penetrating the slab, which is contrary to clause 17.3.

13. [411]

    Further, Dr Ng’s evidence, and thus Coogee Diggers’ submissions in this regard, say nothing about the OBC. The OBC is far from watertight. Had it arisen for decision, I would likely have upheld OAC’s contentions in reliance on clause 17.3.

14. [412]

    OAC also placed reliance on clause 26.1 of the Lease which provides (emphasis added to identify the part relied upon by OAC):

15. [413]

    No detailed submissions were advanced by OAC nor Coogee Diggers in relation to clause 26.1.

16. [414]

    Clause 26.1 falls to be construed according to the usual principles including the other provisions of the Lease.

17. [415]

    The relevant part of clause 26.1 is emphasised above. It has two parts. The first part is simply that OAC shall not be responsible for the overflow or escape of rainwater from the Outdoor Area. The second part begins “i.e.”, from the Latin id est, meaning “that is (to say)”: J Gray, Lawyers’ Latin: A Vade Mecum (2nd Ed, 2006, The Crowood Press Ltd) at 65, suggesting that what follows is simply restating what went before. The second part is that is not the responsibility of OAC to upgrade the pre-existing stormwater system.

18. [416]

    Construing the two parts together it seems tolerably clear that what was intended by the parties was that OAC would not be liable for any overflow that is due to the incapacity of the existing system, rather than not be liable for any overflow or escape of rainwater from the Outdoor Area howsoever caused.

19. [417]

    So construed, the clause would not have assisted OAC in the present case where, in the case propounded by Coogee Diggers, the escape of water from the Outdoor Area was caused by the covering of the pits and the blocking of the Agg Drains by the invasive roots. It was not a case of the existing stormwater system not having enough capacity.

Failure to mitigate

1. [418]

   OAC contended that Coogee Diggers failed to mitigate its loss by failing to:

2. [419]

   Again, little was said both for and against the failure to mitigate argument.

3. [420]

   Again, given my primary conclusions, the issue does not arise. Had it been necessary to consider the issue I would have been unlikely to have upheld the arguments advanced by OAC, at least as to how they were put as being a failure to mitigate.

4. [421]

   A failure to mitigate concerns avoiding the consequences of a wrong.

5. [422]

   As stated by the learned author of McGregor on Damages (22nd ed, 2024, Sweet & Maxwell) at 10-004:

6. [423]

   Mitigation is concerned with conduct of the plaintiff after the commission of the wrong by the defendant and is to be clearly distinguished from contributory negligence, which relates solely to the steps which the plaintiff might have taken prior to the defendant’s wrongful conduct: see Law of Torts at [27.27].

7. [424]

   The matters relied on by OAC as amounting to a failure to mitigate all appear to raise matters which Coogee Diggers should have carried out prior to the flooding events – by way of general maintenance and the like. They are not matters properly raised as a failure to mitigate.

8. [425]

   Taken at their highest they would support a contention which was also put by OAC, that the nuisance claim is apportionable under the common law or Part 4 of the Civil Liability Act 2002 (NSW) and any liability of OAC should be reduced to reflect the responsibility of Coogee Diggers for the loss and damage found.

9. [426]

   Given my primary conclusions, no question of apportionment arises. It is difficult to consider the issue on the hypothesis that my primary conclusions are wrong as there are a considerable number of potential outcomes, including to different areas of the Building.

10. [427]

    Insofar as damage to the slab is concerned, it is difficult to see how the matters raised by OAC in this regard contributed in any significant way to the damage claimed.

11. [428]

    The position appears to me to be different insofar as the damage concerns water entering through the OBC doorway and thereafter travelling into the areas of the gym. It appears that the OBC was poorly maintained which contributed to water ingress and also to water being able to travel into the areas of the gym, including via the void.

12. [429]

    The evidence and the lack of any submissions makes this a broad brush and impressionistic exercise. Nonetheless, had the issue arisen, I would have determined that any damages as a result of a nuisance caused by water ingress at the OBC doorway should be reduced by in the order of 40% on account of Coogee Diggers’ poor maintenance of the OBC.

Conclusion and orders

1. [430]

   For the reasons set out above, OAC succeeds in its contention that the purported termination of the Lease by Coogee Diggers is invalid. Save for in one small respect, Coogee Diggers has failed in its contentions that OAC breached the Lease and otherwise engaged in wrongful conduct.

2. [431]

   I will direct the parties to confer as to the orders that should be made to give effect to these reasons. This will include whether Coogee Diggers is entitled to recover any of the amounts claimed in addition to the cost of the raised sand bed, and whether there are any issues that I have failed to address or misunderstood. They should also seek to agree costs.

3. [432]

   I will determine any remaining issues on the papers.

4. [433]

   The orders of the Court are:

   1. (1)

      Direct the parties to confer and seek to agree final orders to give effect to these reasons, including as to costs.

   2. (2)

      Direct the parties to provide any agreed orders, or competing orders, to my Associate by no later than 5pm on 3 December 2025.

   3. (3)

      In the event there is no agreement, including as to costs, direct the parties to provide to my Associate by no later than 5pm on 3 December 2025 any submissions and supporting material, such submissions not to exceed 3 pages.

   4. (4)

      Direct the parties to provide to my Associate by no later than 5pm on 10 December 2025 any submissions and supporting material in reply, such submissions not to exceed 3 pages, whereupon the remaining issues will be determined on the papers.