By Diane Skapinker -
Snapshot
- The recent decision of Morabito v Kingston Industries Pty Ltd raised issues relevant to the construction and drafting of key clauses in industrial leases.
- There was an issue of whether extrinsic evidence is admissible in construing registered leases.
- Practical tips are provided for drafting clauses to avoid potential disputes.
The decision of Peden J in Morabito v Kingston Industries Pty Ltd [2023] NSWSC 1020 provides some useful pointers for solicitors drafting industrial leases.
The plaintiff, Ms Morabito (‘Landlord’), leased an industrial warehouse and carpark in Prestons, New South Wales to the defendant, Kingston Industries Pty Ltd (‘Tenant’), under a registered lease commencing on 1 August 2010. The parties agreed to various extensions of the lease to 14 July 2017 and the Tenant remained in possession as a monthly tenant until 15 December 2017 when it vacated the premises.
On 4 July 2017, the Landlord and her managing agent carried out a ‘pre-vacation inspection’ of the premises which revealed damage to the concrete in the carpark and the warehouse floor.
The Landlord claimed (relevantly) that:
- the moving of heavy machinery around the premises, some having steel tracks rather than pneumatic tyres, without the use of protective measures, such as matting, was a breach of the permitted use by the Tenant;
- the Tenant had not complied with its make good obligations which included replacing 55 per cent of the concrete floor inside the warehouse and the whole of the concrete slab in the carpark at a cost of $344,000; and
- as the Landlord could not re-lease the premises until the concrete slabs had been replaced, the Landlord was entitled to lost rent of $294,416.73 for the 17-month period from when the Tenant vacated the premises until the Landlord leased the premises to a new tenant.
The Landlord was unsuccessful in all its claims.
