Polyaire Pty Ltd v 167 Prospect Highway Pty Ltd

2025/00415291

CONTRACTS – in February 2022, 167 Prospect Highway Pty Ltd (the respondent) sued Polyaire Pty Ltd (the appellant) for damages in the sum of $13,134,974.25 (plus interest and costs), for breach of lease (including indemnity obligations under the lease) granted by the respondent as lessor to the appellant as lessee – the lease was of warehouse premises in Seven Hills (the Lease) – the claim was consequent upon a fire at the premises occupied by the appellant (Unit 2), which destroyed two warehouses owned by the respondent (Unit 2 and Unit 17)– the two issues remaining for determination at first instance were: (1) the proper construction of various of the Lease terms; and (2) the quantum of lost rent and outgoings (on the assumption that the appellant was liable for those by way of damages for breach(es) of the Lease) – the primary judge held that the appellant was liable to indemnify the respondent pursuant to cl 10.3 of the Lease for the damage suffered or incurred by the respondent as a result of the fire which occurred on the Premises and which escaped onto the adjacent Unit 17 premises (and, but only in relation to the Unit 2 premises, pursuant to the obligation to reinstate the warehouse pursuant to cl 12(a)(ii) of the Lease) – the primary judge concluded that the appellant was liable to indemnify the respondent pursuant to cl 10.3 of the Lease for the damage suffered or incurred by the respondent as a result of the fire which occurred on the premises and which escaped onto the adjacent Lot 17 premises (and, but only in relation to the Unit 2 premises, pursuant to the obligation to reinstate the warehouse pursuant to cl 12(a)(ii) of the Lease) – the primary judge held that judgment should be entered in favour of the respondent for damages in the sum of $15,180,146.68, plus interest calculated in accordance with cl 12.1(e) of the Lease and costs – whether the primary judge erred failing to find that cll 7.1 and 7.2, as a matter of interpretation, qualify the Lease as a whole such that the exceptions in cl 7.2(b) apply to all the pleaded causes of action unless the damage was a result of or substantially contributed to by an act or omission of the appellant – whether the primary judge erred in finding that the storage of the pallets was an act or omission which caused the fire, which was a material and a proximate cause of the fire, resulted in the fire and played a substantial part in causing the fire – whether the primary judge erred in finding that the use of the premises by the appellant gave rise to the need for repairs/replacement – whether the primary judge erred in finding that the appellant breached cl 12.1 (a)(ii) of the Lease – whether the primary judge erred in finding that the appellant was liable to indemnify the respondent pursuant to cll 10.3 and 12.5 of the Lease in lieu of finding that cl 10.3 was incoherent and otherwise should be read with cll 7.2(a) and (b) of the Lease.

167 Prospect Highway Pty Ltd v Polyaire Pty Ltd [2025] NSWSC 1144