Dawson Street Auto Centre Pty Ltd as trustee for Dawson Street Unit Trust v 4Cyte Pathology Pty Ltd

1. [1]

   PRICE AJA: By summons filed on 23 May 2025, the plaintiff, Dawson Street Auto Centre Pty Ltd as trustee for Dawson Street Unit Trust, appeals from a judgment of Magistrate Mansour (“the Magistrate”) in the Local Court delivered on 29 April 2025 dismissing the plaintiff’s claim. The appeal is brought pursuant to s 39(1) of the Local Court Act 2007 (NSW), which provides for an appeal to this Court as of right but only on a question of law. The powers of this Court are set out in s 41 of the Local Court Act. The plaintiff has not sought leave under s 40 of the Local Court Act, to appeal on a question of mixed law and fact. Section 39(1) provides as follows:

2. [2]

   These proceedings concern a commercial lease of a premises located at 49 Dawson Street in Lismore (“the Premises”). The plaintiff as Lessor and the defendant, 4Cyte Pathology Pty Ltd, as Lessee, entered into a lease in respect of the Premises commencing on 16 August 2021 (“the original lease”). The lease was for a term of one year from the commencement date, expiring on 15 August 2022 with an option to renew for a further term of one year. The lease stipulated that the permitted use of the Premises by the defendant was as a “drive through coronavirus testing centre”.

The proceedings in the Local Court

1. [3]

   On 6 June 2023, the plaintiff commenced proceedings against the defendant in the Local Court, seeking payment of the balance of unpaid rent owing under the lease. The defendant resisted payment of the rent and cross-claimed against the plaintiff on the basis that it had validly terminated the lease as the plaintiff failed to reinstate the Premises within a reasonable time which had suffered significant flood damage. The matter came before the Magistrate at Lismore Local Court on 15 October 2024 and 29 January 2025.

2. [4]

   By its amended statement of claim (“ASOC”) the plaintiff claimed damages against the defendant in the sum of $22,656.00 together with interest at the prescribed rate of 10% under item 10 of the lease. That claim sought recovery of the balance of the rent owing under the lease for the period of 1 March 2023 until 16 August 2023, being the expiry date of the term. The relief also included costs on an indemnity basis according to cl 17 of the lease.

3. [5]

   It is convenient to set out the relevant paragraphs of the ASOC which are as follows:

4. [6]

   In its amended defence, the defendant denied that the plaintiff was entitled to be paid any rent for the period it specified because the lease was lawfully terminated on 8 February 2023 as a consequence of the plaintiff’s failure to reinstate the Premises.

5. [7]

   The defendant as cross-claimant filed a cross-claim against the plaintiff as cross-defendant by which it sought from the plaintiff the amount of $44,659.92. That amount consisted of the rent paid by the defendant from the period of 28 February 2022 to 8 February 2023, which are respectively the dates of the first flood and when the lease was terminated. In view of Ground 6 of this appeal, it is necessary to set out the claim for rental abatement in the cross-claim at pars 14-18:

6. [8]

   The plaintiff in its defence to the cross-claim denied that the defendant suffered any loss or damage as when they exercised the option a new lease came into existence which accepted the condition of the Premises as at August 2022, and that any right to issue a rental abatement or reinstatement notice had been waived. The plaintiff further pleaded that following installation of the portable office, the defendant continued to use the Premises and did not suffer any loss or damage.

7. [9]

   The Magistrate delivered her judgment on 29 April 2025 in favour of the defendant. The Magistrate concluded that the plaintiff failed to abate the rent because the Premises had sustained significant damage from the floods and was rendered unusable by the defendant. The defendant succeeded in part on its cross-claim for overpaid rent against the plaintiff and judgment was entered in the amount of $7,778.98 plus interest. The plaintiff was ordered to pay the defendant’s costs on an ordinary basis up to and including 13 February 2024 and thereafter on an indemnity basis.

The Magistrate’s judgment

1. [10]

   The Magistrate’s judgment contains a summary of the relevant factual background which is not disputed and the reasons for her Honour’s findings. Her Honour recognised that the evidence provided by the parties was by way of agreed documents and that there was little evidence in dispute: at J[16].

2. [11]

   The Magistrate identified at J[4]-[5], that in February and March 2022, Lismore was affected by two significant flooding events. Her Honour considered that the Premises suffered some damage from the first flood that occurred in February, but that the defendant was able to continue operating its business. However, her Honour accepted that the second flood in March 2022 rendered the Premises unusable by the defendant. Her Honour detailed that the damage to the buildings included a smashed door, broken windows and significant internal water damage leading to mould and odours. Her Honour also stated that electricity was no longer available through the internal power points.

3. [12]

   The Magistrate noted at J[6] that the defendant had installed a portable office at their own expense on the Premises in order to recommence operating its business from 19 April 2022. Her Honour stated that the portable office was installed following the second flooding event and that the defendant did not use the internal building: at J[6], [22].

4. [13]

   The Magistrate recounted that in about July 2022, the defendant exercised the one-year option under cl 32 of the original lease to renew the lease for a further term, extending the lease period to 16 August 2023: at J[7].

5. [14]

   The Magistrate said that the defendant ceased operating its business from the Premises on or about 21 October 2022. Her Honour went on to identify the reasons for this as a lack of government funding and demand for testing: at J[8].

6. [15]

   On 31 October 2022, the defendant issued a reinstatement notice to the plaintiff and made a rental abatement demand due to the damage caused to the internal area: at J[8].

7. [16]

   On or about 8 February 2023, the defendant advised the plaintiff that they were terminating the lease and paid rent up to and including 1 March 2023: at J[9].

8. [17]

   The Magistrate then turned to cl 7 of the lease and stated that whilst the clause provided that “the Lessee will keep the premises in good repair, damage attributable to flood is excepted. That is, the [L]essee bears no obligation to repair damage to the premises caused by flood”: at J[19].

9. [18]

   The Magistrate referred to the special conditions which were annexed to the lease and pointed out that it included a condition that “the lessor must maintain the structural elements of the roof, the ceiling, the external walls, the flooring foundation, and must repair structural defects in a timely fashion”: at J[23]. Her Honour went on to say that as the special conditions formed part of the lease, and specifically referred to the maintenance of the building, it was clear “there was an expectation by [the plaintiff] that [the defendant] would utilise this building”: at J[24].

10. [19]

    The Magistrate at J[25] referred to the evidence of the defendant’s director and directing mind, Mr Robert Warren, in respect of the lease and its annexures to “be unconvincing and unreliable”. Her Honour did not accept Mr Warren’s evidence that the defendant had not suffered any loss or damage and rejected his suggestions regarding the possible motivations for the defendant terminating the lease: at J[29]. Her Honour further found in relation to Mr Warren’s evidence at J[31]:

11. [20]

    The Magistrate said there was no doubt that the motivation for the defendant to pay the additional costs associated with the portable office was to provide an essential service to the community of Lismore: at J[36]. Her Honour stated that the cost of the hire of the portable office equated to approximately $16.06 per day: at J[42].

12. [21]

    The Magistrate at J[38]-[39] referred to the contents of two emails sent on 4 April 2022 by Ms Kathryn Theunissen, an employee of the defendant, to Mr Warren. The first email sent on 4 April 2022 at 12:01pm from Ms Theunissen to the plaintiff stated “… what would be the plan for the building/site, as sadly it’s not in a position where we [the defendant] can operate from”. In response to this email, her Honour noted that Mr Warren simply stated “I understand the premises were cleaned on Saturday … [c]an you let me [know] of anything else that needs to be done”. Her Honour found that Mr Warren was “completely nonresponsive to the request from [the defendant] as to what was going to be done”: at J[38].

13. [22]

    In relation to the second email sent on 4 April 2022 at 4:03pm, the Magistrate at J[39] recounted that Ms Theunissen stated “… there were a few things that we may need sorted please” and referred to “the building being insecure, the smashed door and some other debris in the driveway”. Further, her Honour also noted that Ms Theunissen’s email included that “[w]e are also looking at putting a portable office on the site for us to operate from rather than use the internal building. Would this be okay for us to do”: at J[39].

14. [23]

    In relation to the emails sent on 4 April 2022, the Magistrate stated (at J[40]):

15. [24]

    Under the heading “Legal Principles” the Magistrate referred to Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [14] (Allsop P) and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 (“Toll”): at J[44]. Her Honour discussed at J[49], Versus (Aus) Pty Ltd v ANH Nominees Pty Ltd [2015] VSC 515 and at J[50], Jin Dun Pty Ltd v Di & Li Australia Pty Ltd [2014] VSC 562, which had been relied on by the plaintiff. In referring to the principle that a person will not be permitted to take advantage of his or her own wrongdoing her Honour cited Gnych v Polish Club Ltd (2015) 255 CLR 414; [2015] HCA 23 at [45] (French CJ, Kiefel, Keane and Nettle JJ): at J[47]-[48].

16. [25]

    The Magistrate rejected the defendant’s argument that the exercise of the option to renew created a new lease whereby the defendant was no longer bound to reinstate the Premises: at J[52]. Her Honour stated that the principles in the Victorian decisions although they referred to “mostly” the statutory construction of the Victorian Retail Lease Act 2003 (Vic) were relevant those being (at J[52]):

17. [26]

    The Magistrate found that a necessary part of the permitted use of the Premises as a drive through coronavirus testing centre “required a secure structure for the business to operate”: at J[43]. Her Honour accepted that the defendant could not operate its drive through centre following the second flood: at J[43]. Her Honour said that when considering the meaning of the word “centre”, this conveys a use beyond merely cars driving along a driveway with the drivers interacting with a person: at J[53]. Her Honour concluded that “a necessary part of this permitted use involved the use of the secure building”: at J[53].

18. [27]

    As to the special conditions and diagram annexed to the lease, the Magistrate said (at J[54]):

19. [28]

    The Magistrate regarded at J[55], that it was immaterial in consideration of the plaintiff’s claim that the defendant was able to conduct its business by hiring portable offices. Her Honour found that the provision of the “portable office did not displace the obligation by [the plaintiff] to reinstate the premises” and that “the second flood event gave rise to an obligation by [the plaintiff] to reinstate [the Premises], including the building”: at J[56].

20. [29]

    The Magistrate found that the plaintiff was “on notice that the building was unusable as at April 2022 by way of the emails received from [the defendant]” and that they made “no effort to reinstate the premises until late 2022”: at J[56]. Her Honour made findings that the defendant had notified the plaintiff that reinstatement was required on or about 9 November 2022 and was entitled to do so: at J[57].

21. [30]

    The Magistrate stated that a reasonable time was given prior to the termination of the lease on 8 February 2023. Her Honour found that the lease was terminated lawfully under cl 4(b) of the lease: at J[58].

22. [31]

    The Magistrate found that the rent for the entire period should be abated by $16.06 per day as the Premises was not reinstated by the plaintiff. Her Honour also found that the lease was lawfully terminated on 8 February 2023, and the rent for the period of 9 February to 1 March 2023 should be abated by 100%. Her Honour stated (at J[65]):

23. [32]

    Her Honour calculated the total amount to be $7,776.98. Her Honour made the orders at [9] above.

The appeal

1. [33]

   The plaintiff’s summons identifies six grounds of appeal. The plaintiff seeks the following orders:

2. [34]

   Order 3 relates to the costs judgment of the Magistrate delivered on 12 June 2025, whereby her Honour ordered that the plaintiff pay the defendant’s costs on an ordinary basis up to and including 13 February 2024 and on an indemnity basis from 14 February 2024.

3. [35]

   Rather than dealing with the grounds of appeal in chronological order, the plaintiff’s principal argument is found in Ground 3 which the plaintiff submits reflects the central issue in the appeal. Grounds 3, 4 and 5 may be conveniently dealt with together.

4. [36]

   The defendant filed a notice of contention which raises the following ground:

5. [37]

   The plaintiff did not object to leave being granted to the defendant to file the notice of contention out of time.

6. [38]

   The appropriate standard of appellate review applicable to the determination of this appeal is the correctness standard held in Warren v Coombes (1979) 142 CLR 531 at 551-552 (Gibbs ACJ, Jacobs and Murphy JJ); [1979] HCA 9. Under the correctness standard, it is for this Court to determine for itself the correct outcome while making due allowance for “such advantages” as may have been enjoyed by the Magistrate: see Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [23]-[29] (Gleeson CJ, Gummow and Kirby JJ); Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55] (Bell, Gageler, Nettle and Edelman JJ); Moore (a pseudonym) v The King [2024] HCA 30; (2024) 98 ALJR 1119 at [14]-[15] (Gageler CJ, Edelman, Steward, Gleeson and Beech-Jones JJ).

Grounds 3, 4 and 5

1. [39]

   Grounds 3, 4 and 5 of the appeal are as follows:

2. [40]

   In written submissions, the plaintiff pointed out that the defendant exercised the option to renew the lease in July 2022, about four months after the Premises sustained damage by the floods. The plaintiff noted that the option was exercised outside the period specified under the lease. The plaintiff contended that the exercise of an option to renew a lease results in a new lease coming into existence rather than the mere extension of the terms of the original lease. The plaintiff cited Gerraty v McGavin (1914) 18 CLR 152 at 163 (Isaacs J); [1914] HCA 23 (“Gerraty”). A further submission was made that, as a general principle, it is the terms of the new lease that govern the parties’ relevant obligations during its term, including in relation to damage and repair. The plaintiff placed reliance on Agtan Pty Ltd v Caltex Australia Petroleum Pty Ltd [2018] VSCA 169 (“Agtan”) and Callaghan v Merivale CBD Pty Ltd [2005] NSWSC 985; (2006) NSW ConvR 56-155 at [34] (Burchett AJ) (“Callaghan”).

3. [41]

   The plaintiff submitted that by reason of cl 32 of the original lease, on the exercise of the option, the new lease contained a provision identical to cl 4 of the original lease. The plaintiff contended that cl 4 and specifically cl 4(b) could not reasonably be construed as applying to damage, or destruction of, the Premises that occurred prior to the new lease coming into existence. In support of this submission, the plaintiff advanced four arguments:

4. [42]

   The plaintiff submitted it follows that the defendant had no right to serve a notice requiring reinstatement of the Premises or thereafter terminate the lease relying on cl 4(b). The plaintiff contended that the Magistrate erred in finding that the defendant was entitled to terminate the new lease. The plaintiff further submitted that her Honour erred in law in finding (at J[64]-[65]) that the rent should abate under cl 4(d) because that clause did not apply.

5. [43]

   In oral submissions the plaintiff’s counsel, Mr Simpson, pointed out that when the option was exercised there were no separate negotiations or agreement as to the terms of the new lease. The terms of the new lease were identical to the terms which were agreed in August 2021 and cl 4(b) then did not apply to pre-existing damage.

6. [44]

   Mr Simpson submitted that it would be wrong when the option is exercised “to say, we can now review in some way the terms, or we now have to re analyse the terms, so that they provide differently, depending on what the parties know now, as against when they were originally agreed”: Tcpt, 11 November 2025, p 10(39-44).

7. [45]

   In submissions in reply, Mr Simpson contended that the surrounding circumstances to be considered were those in August 2021 when the terms of the option being an irrevocable offer were determined.

8. [46]

   The defendant referred to the Magistrate’s various factual findings at J[24], [31], [36], [43], [53]-[54], [56], and contended that having regard to the surrounding events and circumstances it was open to her Honour to have construed the terms of the new lease as entitling either party to exercise rights under cl 4 of the new lease in relation to the extant flood damage occurring during the term of the original lease.

9. [47]

   The defendant submitted that in relation to the issues of contractual construction, the ordinary principles of contract law apply to commercial leases. The defendant relied on Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[52] (French CJ, Nettle and Gordon JJ) (“Mount Bruce Mining”).

10. [48]

    In oral submissions the defendant’s counsel, Mr Bateman, argued that the plaintiff’s submission that the context and surrounding circumstances in relation to the renewed lease were solely restricted to those that existed “a year earlier” in August 2021 was wrong: Tcpt, 11 November 2025, p 29(9-17).

11. [49]

    In response to Mr Simpson’s contention that the option was an irrevocable offer, Mr Bateman submitted that the option “was not an irrevocable offer because it was not exercised in accordance with what might have triggered an irrevocable offer”: Tcpt, 11 November 2025, p 42(4-5). The option was exercised out of time so that the plaintiff was not obliged to grant the option.

12. [50]

    As to Ground 4, the defendant noted that the plaintiff did not challenge the finding that a reasonable time had elapsed between the giving of notice during the term of the new lease and the termination by the defendant on 8 February 2023, as the Magistrate found at J[57].

13. [51]

    The parties accepted that Grounds 4 and 5 would turn on the resolution of Ground 3.

14. [52]

    Before venturing further, it is convenient to set out below the relevant terms of the original lease.

15. [53]

    Item 4 under the heading “Rent” of the lease provided for an initial rent base of $44,000.00 per annum (inclusive of GST) commencing on 16 August 2021 and payable on the first day of each month in advance.

16. [54]

    Clause 4 of the original lease is in the following terms:

17. [55]

    Clause 30 of the lease provides:

18. [56]

    Clause 32(a) of the lease stated:

19. [57]

    A special condition, titled “Maintenance, Repair and Refurbishment (Other than the provisions of Conditions 4 & 7)” (“Special Condition M, R & R”) provided that the “Lessor must maintain the structural elements of the roof, the ceiling, the external walls, flooring foundation, and must repair structural defects in a timely fashion”.

20. [58]

    It has long been held that when an option to renew is exercised, the lease obtained is a new lease: Gerraty at 163 (Isaacs J); The Minister v The New South Wales Aerated Water and Confectionary Company Ltd (1916) 22 CLR 56 at 78 (Isaacs J); [1916] HCA 48; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41 at [8] (French CJ). It is also clear from the terms of cl 32(a) and the correspondence between the parties that the terms of the new lease were to be the same as the original lease, save for an increase in the annual rent. At the centre of the dispute is the proper construction of cl 4 which was incorporated in the new lease by the exercise of the option.

21. [59]

    The plaintiff placed reliance on Agtan, as authority for the general principle that it is the terms of the new lease (an option being exercised) that govern the parties’ relevant obligations during its term, including in relation to damage and repair. It is unnecessary for present purposes to recount the facts of Agtan. It is clear that Santamaria and McLeish JJA with Hargrave JA dissenting in part, in the Victorian Court of Appeal considered the proper construction of the relevant clauses of the new lease, in particular cll 4, 19.1 and 36.1, by having regard to the language used by the parties and the circumstances and commercial purpose or objects to be secured by that lease. Clause 4(b) of the new lease provided for an express acknowledgement that “there was no subsisting breach of any term of the Original Lease at the date of this deed”. Clause 19.1 imposed an obligation to keep, maintain and effect repairs to the premises “as necessary” but was qualified by having regard to the condition of the premises at “the date of commencement of the lease” and subject to the “fair wear and tear” exception. Critical to the majority’s reasoning in Agtan was that objectively it was clear from the language used in cl 19.1 by incorporating a qualification condition of the commencement date in combination with the acknowledgement under cl 4 and operation of cl 36.1 (option to renew), that the commencement date in the new lease should be the preferred construction. In my opinion, the construction of the new lease in Agtan which involved different terms to the new lease in the present case is of little assistance in determining the issues of construction that are raised in this appeal.

22. [60]

    The same observation may be made on the reliance placed by the plaintiff on what was said by Burchett JA in Callaghan at [34]. That case may be distinguished on the basis that Burchett JA found there was a lack of evidence to prove that the condition of certain items had materially deteriorated when compared to the commencement date of the lease. In the factual circumstances of that case, Burchett JA examined the obligation to repair and maintain articulated by Fletcher Moulton LJ in Lurcott v Wakeley and Wheeler [1911] 1 KB 905 at 916-919, and observed it was to keep the premises “in good condition or in thorough repair”, and not to exceed that obligation by putting the premises in a better state than when it was originally leased.

23. [61]

    It is evident at J[44] that the Magistrate understood that an objective approach was required to determine the rights and liabilities of the parties under cl 4 of the new lease. However, it appears that her Honour became distracted in her application of the relevant principles of construction by an analysis of two Victorian cases which her Honour considered at J[52] to be relevant (see [24]-[25] above), although acknowledging that “the decisions referred to mostly concern the statutory construction of the Victorian Retail Lease Act 2003”.

24. [62]

    The principles that apply to the construction of commercial contracts are well established: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] (French CJ, Hayne, Crennan and Kiefel J) (“Electricity Generation Corporation”); Mount Bruce Mining at [46]-[52] (French CJ, Nettle and Gordon JJ); Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16] (Kiefel, Bell and Gordon JJ) (“Ecosse”); Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 276 CLR 500; [2023] HCA 6 at [27] (Kiefel CJ, Gageler, Gordon, Gleeson and Jagot JJ). More recently, the Court of Appeal has emphasised it is uncontroversial that in construing a commercial lease the settled principles as to the construction of commercial contracts are to be applied: Willis Australia Ltd v AMP Capital Investors Ltd (2023) 113 NSWLR 1; [2023] NSWCA 158 at [48]-[50] (Ward P, Beech-Jones JA and Griffiths AJA) (“Willis”); Saipan Holdings Pty Ltd v City Gym Sydney Pty Ltd [2023] NSWCA 55 at [128] (Ward P, Gleeson JA and Simpson AJA agreeing).

25. [63]

    The applicable principles to the present case were set out concisely by the joint judgment of French CJ, Nettle and Gordon JJ in Mount Bruce Mining at [46]-[51]:

26. [64]

    The joint judgment went on to say at [52], that their Honours’ observations were not intended to state any departure from the law summarised in Electricity Generation Corporation, where the plurality (French CJ, Hayne, Crennan and Kiefel JJ) said at [35]:

27. [65]

    The words of cl 4 must be construed in the whole of the context in which they are found. As Barrett AJA (Beazley P and Ward JA agreeing) stated in Papantoniou v Stonewall Hotel Pty Ltd [2018] NSWCA 85; (2018) 19 BPR 38,547 at [40]:

28. [66]

    Although courts must strive to give commercial contracts “a commercial and business-like interpretation”, their ability to do so is constrained by the language used by the parties: Jireh International Pty Ltd t/as Gloria Jeans Coffee v Western Export Services Inc [2011] NSWCA 137 at [55] (Macfarlan JA, Young JA and Tobias AJA agreeing) (“Jireh”); Newey v Westpac Banking Corporation [2014] NSWCA 319 at [91] (Gleeson JA, Basten and Meagher JJA agreeing) (“Newey”). If, after considering the contract as a whole and the relevant surrounding circumstances known to both parties, the Court concludes that the language of a contract is unambiguous, then the Court must give effect to that language unless to do so would give the contract an absurd operation: Jireh at [55]; Newey at [91]; Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [73]-[75] (Leeming JA, Gleeson and White JJA agreeing). But in a case, where there is an ambiguity as to the operation of a clause and the Court is presented with more than one alternative construction, the construction to be preferred is that which accords with the parties’ intentions, objectively ascertained by reference to the text, context and purpose of the contract and which takes appropriate account of the surrounding circumstances together with the commercial purpose or object which the contract intended to secure: Electricity Generation Corporation at [35]; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 at [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Toll at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Mount Bruce Mining at [46]-[51] (French CJ, Nettle and Gordon JJ), [108]-[109] (Kiefel and Keane JJ); Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 at [69]-[86] (Leeming JA, Ward and Emmett JJA agreeing).

29. [67]

    It is axiomatic that a lease must be read as a whole having regard to all of the words used in every clause and in particular the special conditions, “so as to render them all harmonious one with another” and that the Court should construe it “fairly and broadly, without being too astute or subtle in finding defects”: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109-110 (Gibbs J); [1973] HCA 36, citing Hillas & Co Ltd v Arcos Ltd [1932] All ER 494; (1932) 147 LT 503 at 514 (Lord Wright). Preference is given to a construction supplying a congruent operation to the various components of the whole and as to avoid it making commercial nonsense or even commercial inconvenience: Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [16] (Gleeson CJ, McHugh, Gummow and Kirby JJ); Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56 at [82] (Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ), citing Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313-314 (Kirby P).

30. [68]

    The plaintiff’s argument that the new lease properly construed did not apply to flood damage which occurred prior to the new lease placed emphasis upon the language of cll 4(b) and (d). True it is that “shall be destroyed or damaged” are words expressing the future tense as are the words “so as to render”. The words “shall fail to rebuild or reinstate” in cl 4(b)(ii) also express the future tense. The tense of the words “[u]pon the happening” in cl 4(d) depends on their context and may be consistent with a past or future tense. However, the Special Condition M, R & R stands unhappily with the plaintiff’s proposed construction as the verb “must” expresses a present obligation of maintenance and repair of “the structural elements of the roof, the ceiling, the external walls and flooring foundation”. When the new lease is considered as a whole, I am unable to conclude that its language is unambiguous or susceptible of only one meaning: Mount Bruce Mining at [48].

31. [69]

    It is important to observe that the words employed in the heading of Special Condition M, R & R “(Other than the provisions of Conditions 4 and 7)” are not used to limit the plaintiff’s obligations. A construction that cl 4(a) restricted the obligation to maintain and repair would result in Special Condition M, R & R being “nugatory or ineffective” (see also [83] below). As Lockhart and Hill JJ said in Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402 at 411; [1996] FCA 474:

32. [70]

    Before considering the evidence of the surrounding circumstances, Mr Simpson’s argument that the relevant circumstances were those in August 2021 as the option for renewal in cl 32(a) was an irrevocable offer is rejected. An option for renewal is construed “as being an irrevocable offer by the grantor that may be accepted by the grantee at any time during the period specified”: Willis at [61] (Ward P, Beech-Jones JA and Griffiths AJA). The period specified in cl 32(a) was “not more than six months or not less than three months prior to the expiration of the lease”. The option was not exercised during this specified period but was exercised on 28 July 2022 which was out of time. The plaintiff was under no obligation to renew the lease.

33. [71]

    The surrounding circumstances known to the parties as found by the Magistrate included the following:

34. [72]

    Having regard to the surrounding circumstances known to the parties and including the purpose and object of the transaction, a reasonable business person in the position of the plaintiff and defendant would have understood at the time of entry into the new lease that the special condition to maintain and repair the building applied to the damage caused by the floods during the original lease. They would have understood that the terms of cl 4 applied to the extant flood damage in addition to any future damage.

35. [73]

    The plaintiff’s construction that cl 4 and the terms of the special condition did not apply to the floods in February and March 2022 would result in a “commercial nonsense” or “working commercial inconvenience”. There was simply no point in the Special Condition M, R & R not applying to the pre-existing damage as at the time the new lease was entered into, the building was unusable. It follows that I do not agree with the plaintiff’s argument of commercial absurdity.

36. [74]

    The Magistrate correctly found that the defendant was entitled to notify the plaintiff under cl 4(b)(ii) of the new lease to reinstate the Premises. Her Honour was mistaken when she referred at J[57] to the notice being given “on or about 9 November 2022”. The notice under cl 4(b)(ii) was provided by the defendant’s general counsel, Mr James Willison, by letter dated 31 October 2022 to the plaintiff. However, nothing turns on the incorrect date. Her Honour correctly found at J[57] that a “reasonable time” was given and the lease was terminated lawfully by the defendant on 8 February 2023 pursuant to cl 4(b) of the lease.

37. [75]

    For these reasons, I reject Grounds 3, 4 and 5.

38. [76]

    Having made these findings, it is unnecessary to deal with the defendant’s notice of contention and submissions concerning the 4 April 2022 emails.

Grounds 1 and 2

1. [77]

   Grounds 1 and 2 may be considered together briefly. These grounds of appeal are as follows:

2. [78]

   The plaintiff submitted that an essential part of the Magistrate’s reasons appears to be that the plaintiff was in breach of the lease or otherwise under a legal obligation to reinstate the Premises after the flood in March 2022. The plaintiff argued that the Magistrate did not identify which clause or clauses of the lease imposed this obligation on them. The plaintiff contended that their asserted breach of the lease was the basis for her Honour’s application of the principles about a party taking advantage of its own wrongdoing. Even if cl 4(b) was enlivened, it did not oblige the plaintiff to reinstate the Premises, merely giving the defendant a right to terminate if the plaintiff did not reinstate within a reasonable time.

3. [79]

   The plaintiff contended as to Ground 2 that it follows that there was no “wrongdoing” by the plaintiff to which the maxim nullus commodum capere potest de injuria sua propria (as to a person being unable to take advantage of its own wrongdoing) relied on by her Honour could apply.

4. [80]

   The defendant referred to the emails sent on 4 April 2022 and contended they created an “obligation” on the part of the plaintiff to reinstate the Premises which was the obligation found by the Magistrate and no error had been established. The defendant submitted that her Honour did not accept the plaintiff’s submission that any rights under cl 4(b)(ii) fell away on the exercise of the option which would have benefited the plaintiff by the “fortuitous renewal of the lease” at the end of July 2022. The defendant submitted that no error was demonstrated by the application of the maxim.

5. [81]

   Whilst it is to be accepted that the plaintiff was under no obligation under cl 4(a) of the lease to repair or reinstate the Premises, Special Condition M, R & R obliged the plaintiff to maintain and repair structural defects in a timely fashion.

6. [82]

   The Magistrate referred to the special condition at J[54]. Her Honour also found at J[56] that the plaintiff was on notice that the building “was unusable” as at April 2022 by way of the emails received from Ms Theunissen.

7. [83]

   In Greencapital Aust Pty Ltd v Pasminco Cockle Creek Smelter Pty Ltd [2019] NSWCA 53 at [52], Leeming JA referred to the observations of Sackville AJA in Park v Murray Irrigation Ltd [2018] NSWCA 166 at [79], which recognised as settled law that “a conflict between apparently inconsistent provisions is to be resolved on the basis that one provision qualifies the other and, hence, both have meaning and effect”. That principle was formulated by the High Court in Re Media, Entertainment and Arts Alliance; Ex parte Hoyts Corporation Pty Ltd (1993) 178 CLR 379 at 386-387 (Mason CJ, Brennan, Dawson, Toohey, Gaudron and McHugh JJ); [1993] HCA 40, where it was stated to be “an aspect of the general rule that a commercial instrument must be read as a whole”.

8. [84]

   Clause 4 and the Special Condition M, R & R are to be read together consistently, such that they impose on the plaintiff an obligation to maintain and repair the building when it was rendered unusable from the flood damage.

9. [85]

   In my view, a fair reading of the judgment as a whole, leads me to conclude that her Honour was referring to the plaintiff’s obligation to maintain and repair the structural defects in the building after the plaintiff was notified by the April 2022 emails. Her Honour observed that no effort was made by the plaintiff until late 2022.

10. [86]

    It is the plaintiff’s failure to repair the building that her Honour had in mind when she referred to the maxim.

11. [87]

    In any event, given her Honour’s correct findings (see [74] above), it was unnecessary for her Honour to consider the maxim.

12. [88]

    No error has been established, Grounds 1 and 2 are dismissed.

Ground 6

1. [89]

   Ground 6 involves a discrete question concerning the defendant’s cross-claim. The ground is as follows:

2. [90]

   The plaintiff submitted that there was no pleading in the defence or cross-claim of any qualifying or vitiating factor for the defendant to make out a claim for money had and received citing David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48 (“David Securities”). The plaintiff pointed out that there was no factual finding by the Magistrate of some qualifying or vitiating factor. Specifically, there was no finding that the payments were made under a mistake of fact or law or under duress and in any event, such a finding could not be made out on the evidence. In oral submissions, Mr Simpson contended that even if the defendant was entitled under the lease to an abatement of rent, the defendant’s cross-claim “was an action framed by the defendant in money it had and received”: Tcpt, 11 November 2025, p 15(26-28). It was accordingly necessary for the defendant to show some basis for the pleading to succeed in a claim for money had and received.

3. [91]

   The defendant argued that cl 30 of the lease required the defendant to pay rent periodically and there was no entitlement not to pay the rent “especially while the mechanisms at which the rent abatement process might be determined”: Tcpt, 11 November 2025, p 18(32-36). The defendant further argued that despite the framing of the pleadings of the cross-claim containing the words “monies had and received”, the substance of the pleadings as a whole demonstrated that it was not a restitutionary claim by way of an action for money had and received but rather a claim in contract under the lease for the entitlement to the payments of rent “as a result of the failure by the landlord to adhere to the rental abatement claim” under cl 4(b): Tcpt, 11 November 2025, p 37(1-25).

4. [92]

   In the proceedings before the Magistrate, the focus of the hearing was on whether cl 4(b) of the new lease applied to the flood damage and whether the rent should abate under cl 4(d). However, in closing written submissions, the plaintiff referred to David Securities and contended that the defendant was not entitled to recover retrospectively rent paid voluntarily; had not pleaded any prima facie case supporting relief for retrospective abatement and the cross-claim should fail. Paragraph 18 of the cross-claim (see [7] above) pleaded that the plaintiff was “indebted to the [d]efendant for monies had and received”. Her Honour did not expressly deal with this issue but found that the rent for the entire period should be abated by $16.06 per day and for the period 9 February to 1 March 2023 should be abated by 100%. The defendant’s cross-claim for abatement by 100% from 28 February 2022 to 8 February 2023 was largely unsuccessful.

5. [93]

   The defendant’s obligation to pay rent did not immediately cease because of the plaintiff’s failure to repair the building after the flooding: Bishop v Moy [1963] NSWR 468; R & J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2006] NSWCA 177 at [30] (Mason P), [35] (Hodgson JA); Kay v Playup Australia Pty Ltd [2020] NSWCA 33; (2020) 19 BPR 40,037 at [64] (Brereton JA, Macfarlan JA and Simpson AJA agreeing). The defendant was bound under cl 30 of the new lease and was not entitled to withhold any rental payment notwithstanding the damage to the Premises unless the rent had been abated pursuant to cl 4(d).

6. [94]

   It is well recognised that a restitutionary claim “must respect contractual regimes and the allocations of risk made under those regimes”: Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 at [14]-[18], [23], [48]-[49] (Kiefel CJ, Bell and Keane JJ), [164]-[165] (Nettle, Gordon and Edelman JJ) (“Mann”) and the authorities there cited; see also, Coshott v Lenin [2007] NSWCA 153 at [8]-[11] (Mason P, Spigelman CJ and Campbell JA agreeing); Tok v Rashazar [2025] NSWCA 94 at [74]-[79] (Stern JA, Payne and Kirk JJA agreeing).

7. [95]

   The defendant did not contend that the rental payments were made under mistake of either law or fact, duress or illegality but contended the payments were made pursuant to a contractual obligation. However, the grounds for recovery in money had and received claims are not so restricted to qualifying or vitiating factors “such as mistake, duress or illegality” mentioned by the plurality in David Securities at 379 (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ): Coshott Family Pty Ltd v Lyons (2022) 110 NSWLR 44; [2022] NSWCA 216 at [22] (Kirk JA, Meagher JA and Griffiths AJA agreeing) and the authorities there cited. As Free JA recently observed in CBEM Holdings Pty Ltd v Sunshine East Pty Ltd [2025] NSWCA 250 at [159] (“CBEM Holdings”):

8. [96]

   His Honour at [150] of CBEM Holdings cited what was said by McColl JA (with whom Basten and Campbell JJA agreed) in Juul v Northey [2010] NSWCA 211 at [216] (“Juul”):

9. [97]

   Further, Allsop P and Young JA (with whom Sackville AJA agreed) in Ford by his tutor Watkinson v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42; [2009] NSWCA 186 (“Ford”) stated at [121]:

10. [98]

    In the present case, the rent had been paid by the defendant pursuant to a contractual obligation. The defendant’s pleadings for rental abatement in the cross-claim asserted (see [7] above) and its case before the Magistrate was conducted on the basis that it was entitled to recover the rent pursuant to cl 4 of the new lease. Her Honour correctly found that the defendant was entitled to a partial abatement of the rent under cl 4(d). This was not a case, as the plaintiff contends, that the defendant was required to establish the payments were made under a mistake or duress. The evidence established that part of the rent received by the plaintiff in “justice and equity” belonged to the defendant: Juul at [216] and the authorities there cited; Ford at [121].

11. [99]

    I would dismiss Ground 6.

Orders

1. [100]

   For the reasons given above, none of the grounds of appeal have been made out and the summons must be dismissed.

2. [101]

   No submissions were made by the parties that there should be any order other than the costs of the appeal should follow the event.

3. [102]

   Accordingly, I make the following orders:

   1. (1)

      The summons is dismissed.

   2. (2)

      The plaintiff is to pay the defendant’s costs.