When a factory tenant vacated after more than three years in occupation, it cleaned the premises but left in place a partitioned-off office area and conducted no repainting.

Once the landlord regained possession, they removed the partitions as well as a suspended ceiling and had the walls patched and painted. It also carried out some air-conditioning maintenance.

Twin Loop Binding P/L resisted its landlord’s demands to pay $18.6k claiming to be exempted by a special condition that specified its only make-good obligation was to clean the premises.

The landlord contended the tenants obligation to pay arose from other lease provisions namely to repair and maintain the property in its condition as at commencement date and a separate positive obligation to repaint the premises within the last three months of the term.

A magistrate’s decision that upheld the tenant’s argument came before the NSW Supreme Court on appeal.

Justice Des Fagan agreed the make good clause exempted the tenant from responsibility for removal of the partitioning at the end of the term but – in reversing the magistrate’s decision – ruled that it did not absolve its accrued obligations for maintenance and for re-painting during the last three months of the term.

The landlords could therefore recover repainting costs but not for patching and painting where the partitions had been removed.

Neither could they recover for “patching” that was attributable to “fair wear and tear”.

The painter’s invoice simply expressed a lump sum for patching “where necessary” and painting the entire premises.

As a result the landlord could not establish how much of the painter’s charges related to patching on the one hand and painting on the other; and then how much of the patching was attributable to “fair wear and tear” and/or partition removal repair, and how much wasn’t.

Similar issues beset the invoice for air-conditioning “repairs”.

Because the landlord failed to establish the portion of expenses incurred for which the tenant could be held liable under the lease, the appeal court arrived at the same result as the magistrate and dismissed their claim.

The tenant escaped all responsibility for repairs and repainting.

Annetts v Twin Loop Binding Pty Ltd [2015] NSWSC 1605 Fagan J, 30/10/2015
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