Reece Australia Pty Ltd v Alamdo Holdings Pty Ltd

Reece leased a warehouse unit at Castle Hill for ten years, with options to renew. It planned to change the use from an indoor trampoline facility to wholesale trade and complete a fit-out.

Article 29 of the lease split responsibility for the approval process. Reece had to lodge the development application and provide all plans, statements and other information required for council to process it expeditiously. If an occupation certificate was not obtained by 23 June 2023, either party had an express right to terminate.

On 15 December 2022, Reece's planning consultant called council to ask what the development application needed. Council said a BCA report for the fit-out was required.

A report was produced quickly and lodged with the application. It said that no major concerns had been identified, but it did not assess the relevant Building Code provisions clause by clause across the fit-out and the existing building. That detail mattered because council needed enough information to assess an application involving an existing building.

The Court said that if the words 'BCA report for a fit out' seemed unclear, Reece was obliged to clarify the requirement. It could not rely on ambiguity while also promising the landlord that it would provide what council needed expeditiously.

Council later issued requests for further information. Reece argued that the formal response periods meant there was not enough time to obtain consent and complete the fit-out before 23 June.

The Court rejected that approach. A regulator's maximum response period did not replace Reece's separate contractual obligation to act expeditiously. The trial evidence showed that other likely information requests were minor and could have been handled promptly or at the same time as other work.

The building was subject to an outstanding fire safety order. Reece knew about it shortly before signing and received assurances from the landlord about the remaining work. On appeal, Reece argued that the order and the landlord's position caused the delay.

The evidence did not establish that connection. Council had asked for the BCA report independently of the fire safety order. Nor was there evidence that council would refuse development consent until all work under the order was complete. The main delay followed the inadequate report and Reece's responses.

The case still shows why base-building compliance and tenant fit-out obligations should be separated clearly in the lease. But a landlord issue does not excuse a tenant from performing its own approval obligations.

Reece purported to terminate on 27 June 2023, four days after the occupation-certificate deadline. Alamdo challenged the termination.

At trial, the Court declared that the termination was invalid and the ten-year lease remained on foot. It entered judgment for Alamdo for $1,552,310.35 in unpaid rent and outgoings. The Court of Appeal dismissed Reece's appeal and ordered it to pay the landlord's appeal costs.

The financial consequence is the clearest practical lesson. A disputed termination can leave a tenant exposed not only to fit-out costs and legal fees, but also to continuing rent and outgoings under the lease it thought it had ended.