Acure Funds Management Ltd v Landquist
[2021] WADC 36
•23 APRIL 2021
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: ACURE FUNDS MANAGEMENT LTD -v- LANDQUIST [2021] WADC 36
CORAM: REGISTRAR KINGSLEY
HEARD: 27 NOVEMBER 2020
DELIVERED : 23 APRIL 2021
FILE NO/S: CIV 589 of 2020
BETWEEN: ACURE FUNDS MANAGEMENT LTD
Plaintiff
AND
ANNE-MARIE LANDQUIST
First Defendant
GRAEME JOHN LANDQUIST
Second Defendant
Catchwords:
Practice - Breach of lease - Assessment of damages
Legislation:
Nil
Result:
Damage assessed
Representation:
Counsel:
| Plaintiff | : | Mr Darwish |
| First Defendant | : | In person |
| Second Defendant | : | In person |
Solicitors:
| Plaintiff | : | Holding Redlich |
| First Defendant | : | Not applicable |
| Second Defendant | : | Not applicable |
Case(s) referred to in decision(s):
Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64
Luxer Holdings Pty Ltd v Glentham Pty Ltd [2007] WASCA 209
REGISTRAR KINGSLEY:
Background
The plaintiff's claim relates to a lease dated 20 February 2014 of Shop 23 in The Village, Australind (the Lease)
In March 2017 the defendants by assignment became the tenants of Shop 23. In October 2018 the plaintiff became the landlord under the Lease.
The plaintiff pleads the defendants have failed to perform their obligations under the Lease in that they have failed to pay rent and other charges.
On 8 November 2018 the plaintiff terminated the Lease, re‑entered and took possession. In addition to rent and other charges, the plaintiff claims money owing under the 'make good obligations' under the Lease.
On 10 June 2020 by way of a summary judgment application, judgment was entered for the plaintiff for $9,917.01 and damages to be assessed.
By a chamber summons dated 27 August 2020 the plaintiff sought an order the defendants pay, by way of damages, $189,334.29.
The assessment of the damages is to be determined on the papers.
The evidence
The plaintiff has filed the affidavit of Craig Butler sworn 1 July 2020 and the defendants have filed the affidavit of Anne-Marie Landquist affirmed 31 July 2020.
Mr Butler is the managing director of VPG Property (WA) Pty Ltd which company provides property management, leasing and sales services to owners of retail, commercial and industrial properties in Western Australia.
Mr Butler deposes to having more than 15 years' experience as managing and leasing retail, commercial and industrial properties in Western Australia. Mr Butler deposes to having managed retail shopping centres and negotiated leases with commercial and retail tenants.
Mr Butler deposes that following the Lease termination by the defendants, he gave consideration to the 'make good' work to be done in relation to Shop 23. He obtained a quote for the work and based on the quotation, the 'make good' for restoring the tenancy is estimated at $46,438.50. The work has yet to be done.
Mr Butler goes on to depose as to the marketing activity he has undertaken to re-let Shop 23. Mr Butler states that the vacancy of Shop 23 has been advertised by multiple means, that prospective tenants have been directly approached, and rental incentives have been offered.
Mr Butler deposes that he estimates it will take up to 24 months to re‑let Shop 23 because the retail leasing environment over the past three years has been generally sluggish and COVID-19 has further reduced leasing enquiries. The Landquists appear to confirm this estimate in that as they submit 'In the two years that the plaintiff has owned the shopping centre they have not leased a vacant tenancy other than to shift existing tenants into larger premises'.
Anne-Marie Landquist in her affidavit affirmed 31 July 2020 refers to three issues. Firstly the electrical work required, secondly, the timeliness of advertising and thirdly, that two nearby shopping centres have flourished from the period 2017 to 2020 whilst the Australind shopping Centre has stagnated. As to the electrical issue, Ms Landquist states that to the best of her knowledge, all electrical equipment was in good working order and as nobody has entered the shop, they cannot be held responsible for costs related to removal, reinstatement or repairs to electrical fittings.
Ms Landquist states that the installation of new ceilings is inconsistent with requirements for 'make good' on other tenants where ceilings were removed or left in place with various other shops.
Ms Landquist states that storms in May and June of 2020 caused extensive damage to the shopping centre including water leaking into the ceiling of the shop next door to Shop 23 causing a large portion to collapse.
Ms Landquist deposes that a 'For Lease' sign was not placed in the window of the shop until 8 May 2020 and whilst vacancies in the Australind Shopping Centre are advertised on the Real Commercial website, Shop 23 was not included until June 2020. Ms Lindquist also states that the Australind shopping Centre has 15 tenants with nine vacant tenancies and that two shopping centres, in reasonably close vicinity, appear to be attracting current and prospective tenants.
Discussion
The ordinary principles of contract apply to leases and the general contractual principle is that the innocent party suing for breach of contract is to be placed in the same position, so far as money can do it, as if the contract had been performed (Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64). The measure of damage is represented by the contractual rent, less the rental value of the premises at the time of breach. (See McGregor on Damages (17th ed, 2003) [23-038]).
Mitigation of damage is applicable to a lessor's claim. If a lessor fails to mitigate in that, acting reasonably, it should have, but did not, re-let the premises, the lessor's damages for loss of future rent, outgoings and other amounts will be reduced by the amount it would have received had it re-let. The onus is on the lessor to prove that it has suffered damage: the onus is on the lessee to prove that the lessor has failed to take reasonable steps to mitigate its damage, and to demonstrate the extent to which there has been a failure to mitigate. (See Luxer Holdings Pty Ltd v Glentham Pty Ltd [2007] WASCA 209.)
In my opinion, the defendants have not discharged their obligation to show that the lessor has failed to take reasonable steps to mitigate its loss. Mr Butler has stated as to what steps he has taken to advertise the property which has not been contradicted in any meaningful way.
In relation to 'make good', the tenant is liable to the landlord for a sum to cover the fair and reasonable cost the landlord will (or would) incur. The measure applies even if the landlord does not intend to do the work or has not yet undertaken that work. Whilst the defendants state that all electrical items were in good working order when they left Shop 23, the uncontradicted evidence of Mr Butler is that as part of the 'make good' obligation, the fridge pump and motor, and electrical items will be removed.
Whilst the defendants assert that the ceiling and floor does not require any 'make good' because of what has occurred at other tenancies, the Lease at cl 10.7 requires the tenant to 'make good' including ceilings and floors. Mr Butler has deposed, that in his experience, the 'make good' obligation includes removal of ceiling and install new flooring.
Mr Butler has estimated the 'make good' costs including an allowance of $17,600 for repairs to the existing grease trap and extracting an air‑conditioning unit. There is no evidence by the defendants to show that those costs had not been reasonably estimated.
Conclusion
In my opinion, the plaintiff has made out its claim for damages in the sum of $189,334.29 and damages are assessed in that figure.
The plaintiff is also entitled to costs on the assessment to be taxed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
MEB
Associate
23 APRIL 2021
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