The State's highest court has thwarted a bid by Telstra to duck a $1 million bill after quitting a city office building during the global financial crisis.
The Court of Appeal yesterday ruled in favour of landlord Hossean Pourzand over his actions after the telco moved its last workers out of 215 St Georges Terrace in May 2009.
Telstra's lease was not due to expire until February 2010, but it centralised staff to Stirling Street and then had agents unsuccessfully attempt to find someone to take over 4263sqm on a short sub-lease.
In a two-one decision, the court overturned a 2012 ruling by Supreme Court Justice James Edelman, who found Mr Pourzand breached Telstra's lease rights by starting to refit floors in August 2009.
Court of Appeal president Justice Carmel McLure's judgment revealed how Telstra executives had seized on the allegedly unauthorised work to terminate the lease in September 2009.
A Telstra WA worker, Elena Zuvela, sent photographs of Mr Hossean's refit work to national leasing manager Emily Dean .
Ms Dean replied: "Great find Elena!!! I think we have an excellent case to claim they have taken possession of the premises."
Yet Telstra had delegated its WA leasing affairs to Sydney-based United Group Real Estate Services. United WA property manager Ken Hutchings had agreed Mr Pourzand could carry out cosmetic works.
When Mr Hutchings noticed that Mr Pourzand was changing carpets, the manager warned the landlord he was taking a risk doing it without the telco's approval.
Despite the telco not yet having approved a business case put forward by Mr Hutchings for fixing the building, Mr Pourzand also began replacing the ceiling and removing reinforcement pillars underpinning heavy cabling installed by Telstra.
Mr Hutchings testified he went on leave early in September 2009 not expecting Mr Pourzand to install new ceilings "until it was a deal".
Justice McLure said it was reasonable to expect that Mr Hutchings would have communicated any objection that Telstra had to the works.
"His only warning to Mr Pourzand was that he might not be paid by Telstra," Justice McLure said.
"Mr Hutchings' assessment was that all of the proposed works would be to Telstra's advantage."
Total damages for Telstra busting the lease were $1.27 million.