The pot was in a hessian sack with a plastic bag around so possibly no drainage for the water/moisture
This sounds like a fungal issue, which could have definitely been the product of the bag. You will likely have to repot into fresh soil, and when you go to water it in, then replace 1/4 of the water with peroxide to kill off any of the remaining infection.
After the treatment and repotting, you can continue to care for it as normal. This article will help: https://www.gardeningknowhow.com/edible/herbs/bay/container-grown-bay-trees.htm
What is the life span for a bay leaf tree?
These trees can live many decades, if cared for properly. Here is an article with more information on their care:https://www.gardeningknowhow.com/edible/herbs/bay/sweet-bay-leaf-tree.htm
It is in a pot on the balconyPort
It is likely a sooty mold growth on the honeydew excretions from an insect pest.
This article explains what is going on. Control the insect pest and you will effectively control the sooty mold.
https://www.gardeningknowhow.com/plant-problems/disease/how-to-get-rid-of-sooty-mold.htm
My bay shrub is very close to the house and drains. It is about 10 feet tall. Would it be best to take it out?
Their roots are actually quite shallow so you will need to decide the depth of your drain system.
Small shrubs should be planted at least 2 feet from a house foundation, medium shrubs about 3 feet and tall shrubs 4 to 5 feet away. An 8-foot shrub next to a six foot shrub should be spaced about 7 feet apart.
Is my bay leaf plant ok with a color change? Leaves have light areas.
Yellowing leaves could be watering issues, disease, pests or even nutrient issues.
These links will help refresh you on care.
https://www.gardeningknowhow.com/edible/herbs/bay/sweet-bay-leaf-tree.htm
https://www.gardeningknowhow.com/edible/herbs/bay/container-grown-bay-trees.htm
https://www.gardeningknowhow.com/edible/herbs/bay/sweet-bay-leaf-spots.htm
The leaves are curling, otherwise it looks healthy.
Curling leaves could indicate a pest issue, disease or even exposure to a herbicide.
Some pests are so small they are difficult to see. Inspect the leaves and bark for any other clues.
Neem Oil is a good treatment for pests.
Here are some links for you.
https://www.gardeningknowhow.com/edible/herbs/bay/sweet-bay-leaf-spots.htm
https://www.gardeningknowhow.com/plant-problems/pests/pesticides/neem-oil-uses.htm
In general, what should I do to make this tree more healthy?
If they have died off; try bending them. Do they bend or just snap off?
If they are alive you may want to leave them still, unless this is how you want to shape your tree.
Trim away brown or damaged leaf tips in the late spring. Prune the top of the bay tree to limit the height as desired.
https://www.gardeningknowhow.com/edible/herbs/bay/cutting-back-bay-trees.htm