Antill v Estate of Parkinson [1990] QSCFC 91

IN THE SUPREME COURT OF QUEENSLAND FULL COURT BETWEEN : APPEAL 6 OF 1990 HARLEY JOHN ANTILL and TONI MARGARET ANTILL (Plaintiffs) Respondents AND: JEFFREY ERVIN and MARGARET WEARNE as Executors of the Estate of KEITH PARKINSON Deceased (Defendants) Appellants CHIEF JUSTICE DERRINGTON J de JERSEY J Reasons for Judgment delivered by de Jersey J on 21st November, 1990. The Chief Justice and Derrington J agreeing with the reasons and concurring as to the order "APPEAL DISMISSED WITH COSTS. ( I [1990] QSCFC 91 -- 1 of 11 -- IN THE SUPREME COURT OF QUEENSLAND Appeal No. 6 of 1990 Before the Full Court The Chief Justice Mr. Justice Derrington Mr. Justice de Jersey BETWEEN: HARLEY JOHN ANTILL and TONI MARGARET ANTILL (Plaintiffs) Respondents AND: JEFFREY ERVIN and WARREN WEARNE as Executors of the Estate of KEITH PARKINSON Deceased (Defendants) Appellants JUDGMENT - de JERSEY J. Delivered the 21st day of November, 1990 CATCHWORDS: Counsel: K.S. Howe for appellants D.C. Andrews for respondents Solicitors: Carberry and McQuire town agents for Greg Delaney and Neil Hoore for appellants Wilson and Copley for respondents Hearing dates: 18th and 22nd October, 1990 -- 2 of 11 -- IN THE SUPREME COURT OF QUEENSLAND Appeal No. 6 of 1990 BETWEEN : HARLEY JOHN ANTILL and TONI MARGARET ANTILL (Plaintiffs) Respondents AND: JEFFREY ERVIN and WARREN WEARNE as Executors of the Estate of KEITH PARKINSON Deceased (Defendants) Appellants JUDGMENT - de JERSEY J. Delivered the 21st day of November, 1990 The appellants are the executors of the estate of the now deceased lessor of premises at 129 Ferry Road, Southport. The respondents were the lessees of the premises, of which they took possession on 1st May, 1984 for a three year term. They left the premises at the end of November, 1984, alleging that the lessor was in serious breach of the lease. A learned District Court Judge held that the respondents were entitled to terminate the lease, and awarded them $4,222 damages. He dismissed the counter-claim, by which the appellants had claimed $35,367 lost rental, interest and re-leasing costs, on the basis that the respondents had repudiated the lease. Prior to entering into the lease, the respondents discovered that the premises had a serious water leakage problem. During an inspection on a rainy day, the male respondent (Mr. Antill) saw that water was flowing through the premises, and that the -- 3 of 11 -- 2 walls were soaked. The respondents hoped to use the premises for manufacturing purposes. Mr. Antill explained to the owner's agent, one Chapman, that water leakage into the premises was not acceptable, for safety reasons - the employees using electrical equipment, to avoid electrical problems with the equipment, and to avoid rusting of the product. Mr. Chapman, on behalf of the now deceased owner Mr. Parkinson, agreed to have the problem rectified. It was Mr. Parkinson's failure to rectify the problem, despite efforts to do so from time to time, which led to the respondents' leaving the premises seven months later. The lease came about in this way. On 25th March, 1984, Mr. Antill signed an offer to lease the premises. It set out all material terms for a lease, and referred to the preparation of a formal lease on those terms. The offer specified that acceptance of it would create a binding lease on those terms. The terms included this provision: "Owner to rectify leaks prior to occupation". The parties signed a formal lease on 28th May, 1984. That formal lease did not, however, refer to the lessor's obligation to rectify the leaks, which had not been rectified prior to the respondents' taking possession on 1st May, 1984. Neither did the lease refer to the offer to lease dated 25th March, 1984 (which did refer to rectification of leaks prior to occupation.). The Judge nevertheless held that the obligation to rectify leaks had continuing contractual force. He held that the offer to lease and the lease should be read together, as constituting the true agreement between the parties, which -- 4 of 11 -- 3 therefore included the undertaking to rectify leaks prior to occupation. The appellants contended at the trial that the respondents had waived the need for the lessor to comply with that undertaking. The undertaking in terms obliged the lessor to rectify the leaks prior to occupation . The respondents took possession knowing that the rectification work had not been done by then. Mr. Antill, whose evidence the Judge accepted, said that when he entered into possession the weather was good, and that he was "a trusting individual" and had confidence that Mr. Parkinson would rectify the problem in accordance with his word. The Judge pointed out that the entry into possession on 1st May, 1984 was to the advantage of both parties, and that Mr. Parkinson's subsequent efforts to rectify the water problem, taken with the respondents' persistent subsequent requests that it be fixed, were inconsistent with a view by the parties that Mr. Parkinson was no longer obliged to attend to the problem once the respondents had gone into possession. The Judge held that the need for rectification prior to occupation had been waived, but not the need for rectification thereafter. Over the next seven months, some rectification work was done, but the problem was not removed. Two months after the respondents took possession, there was substantial rain, which led to Mr. Parkinson's men working on the roof and guttering, and fixing the leakage into .the walls. But with subsequent rain, flooding of the floor recurred. Cutting back of vegetation did not solve the problem. Mr. Antill subsequently saw seepage through cracks in the concrete slab, and notified Mr. Parkinson, -- 5 of 11 -- 4 who assured him that "everything would be fixed", but it was not. Indeed, in September, Mr. Parkinson told Mr. Antill that a seepage problem in the corridor "could not" be fixed, which Mr. Antill did not accept. Then in a letter of 27th November, 1984, Mr. Parkinson's solicitors asserted that he "clearly (had) no legal responsibility on the point of the flooding". They asserted that it was "a problem affecting the general locality and .. no fault of (their) client." The Judge saw this as an indication that Mr. Parkinson "did not intend to take any further steps to alleviate the problem". The Judge held that the appellants had, in these circumstances, breached what amounted to a condition of the agreement between the parties. He also held that the undertaking was of such crucial importance as to go to the root of the contract. The Judge held the respondents entitled to terminate the lease for the breach of that obligation. He noted that the respondents' manufacturing process depended on dry working conditions, especially for safety reasons; that Mr. Parkinson had failed to rectify the water problem, despite repeated attempts, over some seven months; and that with the forthcoming wet season, the position in November, when the respondents terminated, was critical . The first major submission for the appellants was that, accepting the Judge's characterisation of the obligation - as a condition, or so important as to go to the root of the contract, the respondents could not lawfully have terminated the lease except for breach continuing after service of a notice making time "of the essence" with respect to that obligation. The -- 6 of 11 -- 5 respondents did warn Mr. Parkinson, in advance of moving out, of their intention to vacate the premises because of the water problem, by letter dated 16th November, 1984, and orally (by Mr. Antill) in early November. But they did not serve a notice of the nature now claimed by the appellants to have been necessary. Such a notice was not necessary in this case. That is because of the Judge's characterisation of the obligation, as "essential" in the sense discussed in Associated Newspapers Ltd, v. Bancks (1951) 83 C.L.R. 322, 337, and what amounted to his conclusion that Mr. Parkinson repudiated that obligation.' The repudiation of such a covenant entitles the innocent party to rescind without giving a notice making time of the essence. See Laurinda Ptv . Ltd, v. Capalaba Park Shopping Centre Ptv. Ltd. (1988-9) 166 C.L.R. 623, 642-3. The Judge directed his attention to whether the nature of the obligation and the nature of the breach justified termination. He did so against the background of a submission by the appellants that they did not "repudiate the contract". He described the obligation as a condition, of "crucial importance", and as "going to the root of the contract". There was ample basis for that characterisation. As the Judge said, the business required dry working conditions, for safety reasons especially; and Mr. Antill had emphasised the importance of that consideration to Mr. Chapman, Mr. Parkinson's agent. As to the nature of the breach, the Judge observed that the problem was not resolved "despite repeated undertakings and attempts" by Mr. Parkinson, over some seven months. The Judge had earlier -- 7 of 11 -- 6 referred to Mr. Parkinson's statement, concerning seepage in the corridor, that that problem "could not be fixed". (That has significance to an assessment of the owner's attitude to his obligation, even though that area of seepage may have been of little importance to the respondents, and in any case Mr. Antill responded that "that wasn't good enough.") The Judge had also referred to Mr. Parkinson's solicitors' statements in the letter of 27th November, which he reasonably read as an indication that Mr. Parkinson "did not intend to take any further steps to alleviate the problem". In all these circumstances, the Judge rejected the defence submission that Mr. Parkinson had not "repudiated the contract", and went on to hold that the respondents were entitled to terminate the lease. That must have involved the conclusion that Mr. Parkinson had repudiated this obligation to rectify the leaks. The giving of a notice making time of the essence was therefore not a necessary pre-requisite to termination. Mr. Howe, who appeared for the appellants, conceded that the Judge held that the lessor's breach of the essential obligation to rectify was of a repudiatory character. He did however challenge that characterisation. He referred especially to Mr. Parkinson's efforts from time to time to repair the leaks, and to Mr. Antill's agreement in his evidence that Mr. Parkinson appeared to be willing to seek to rectify the leaks. Such circumstances, he contended, meant that one could not reasonably conclude that Mr. Parkinson, by the end of November, was renouncing his obligation. -- 8 of 11 -- 7 The Judge clearly considered, however, that by the time of the respondents' departure from the premises at the end of November, assertions by Mr. Parkinson that "everything would be fixed" and the like had become hollow. That explains the Judge's reference to Mr. Parkinson's statement, with regard to the leaking into the corridor, that it "couldn't be fixed", which had potential significance even though that leakage produced no real problem for the respondents. It is also consistent with the Judge's reference to Mr. Parkinson's solicitors' letter of 17th November, in which they denied that Mr. Parkinson was under any legal obligation to rectify the flooding^' leading to the Judge’ s conclusion that Mr. Parkinson did not intend to take any further steps to alleviate that problem. From August, Mr. Parkinson's response to complaints about leaking from Mr. Antill had become sporadic. No further rectification work was carried out after that. In response to Mr. Antill's statement that a complete re construction of the floor was necessary, Mr. Parkinson responded rather blandly that "everything can be fixed",. . It was not, .of course, and when in early November, Mr. Antill told Mr. Parkinson orally that he was sick of the problem and was going to move out, in view of Mr. Parkinson's failure to rectify the problem over a long time, Mr. Parkinson made no response at all, and that may be thought somewhat inconsistent with a continuing willingness or anxiety on his part to seek to resolve the problem. Overall, therefore, the evidence of Mr. Parkinson's willingness to rectify the problem, evident especially in the early months of the tenancy, did not preclude the Judge's finding -- 9 of 11 -- 8 that the lessor's breach ultimately assumed a repudiatory character. The appellants also challenged the Judge's according continuing contractual force to the obligation to "rectify leaks prior to occupation" notwithstanding that it was not included in the lease. The Judge did this by reading the lease and offer to lease together, as constituting the true agreement. He might also have regarded the offer to lease, accepted by the owner, as a collateral contract. Either approach would have been appropriate in view of the special importance to the respondents of compliance with the undertaking, which Mr. Parkinson - through Mr. Chapman - appreciated; the specific terms of the undertaking in the offer to lease; and its provision that its terms would be the terms of the formal lease. A particular point taken by the appellants was suggested inconsistency between that obligation and ell. 35 and 22 of the lease. Clause 22 obliged the lessor "to keep the roof and exterior walls ... weatherproof", "on written notice from the lessee and within a reasonable time thereafter". Rectification of leaks is different from keeping premises weatherproof, which assumes that they are weatherproof to begin with. Clause 34 says there is no warranty that the premises "are now or will remain suitable or adequate for all or any of the purposes of the lessee", and that all warranties "as to suitability and adequacy" implied by law are negatived. There is no inconsistency between that exclusion and this undertaking, which obliged the lessor to rectify leaks (and thereby bring about that "adequacy") prior to occupation, albeit that that time limitation was waived. -- 10 of 11 -- 9 The appellants also challenged the Judge's conclusion that the "true agreement" covered both lease and offer to lease, thereby including the obligation to rectify the leaks. While one would ordinarily regard such a lease as an exclusive record of the parties' obligations, this particular obligation need not necessarily have been set out in the lease, and there are clear indications that the parties meant it to survive the execution of a lease. It was explicitly set out in the offer as a lease condition, and the offer specified, as the terms of any lease, those set out in the offer, should it be accepted. The conduct of the parties subsequently, in requesting rectification of leaks and attempting it, is consistent with there being a subsisting obligation in that regard. Further, as the Judge mentioned, where the lease and offer differed as to rental, the parties chose to adopt the provisions of the latter. In summary, the terms of the offer envisaged that it would have a continuing role in defining the parties' obligations, the subsequent conduct of the parties was consistent with its having that role, and it was not necessary that a provision of this character find its way into the formal lease document. The Judge's view as to the scope of the agreement between the parties is sustainable. It remains to mention that the Judge's conclusion as to the extent of the waiver involved in the respondents' taking possession notwithstanding that the leaks had not been rectified, was one which was open on the evidence to which I earlier referred . I would dismiss the appeal with costs. -- 11 of 11 --