Bevillesta Pty Ltd v Sovereign Motor Inns Pty Ltd

Bevillesta Pty Ltd appealed a decision of Austin J in the Supreme Court of New South Wales concerning damages awarded to Sovereign Motor Inns Pty Ltd under a lease agreement. The dispute centred on Bevillesta's alleged breach of a covenant to use its best endeavours to maintain and service the air-conditioning plant at a hotel, which Sovereign claimed resulted in a significant loss of trade.

The primary legal issue before the court was the extent to which Bevillesta's breach of the best endeavours covenant had caused financial loss to Sovereign, and how that loss should be quantified. Specifically, the court had to determine the appropriate apportionment of damages, considering the impact of the air-conditioning problems in conjunction with other issues such as elevator malfunctions and building presentation. The court also considered the admissibility and weight of expert evidence in assessing general loss of business.

The court reasoned that Bevillesta had indeed breached its covenant regarding the air-conditioning plant, and this breach had caused a loss in trade to Sovereign. Austin J had accepted expert evidence, particularly from Mr Vains, which indicated that the air-conditioning problems were the most significant factor contributing to the hotel's reduced net results, although elevator issues also played a role. The court applied the principle from *Ratcliffe v Evans* [1892] 2 QB 524, which allows for evidence of general loss of business as a natural and direct result of a wrongful act, provided reasonable certainty and particularity are achieved in the proof of damage. Austin J's methodology for calculating the variance between actual and estimated results, and his apportionment of 50.01 percent of the loss to the air-conditioning issues, were found to be sound and based on expert evidence and common sense.

The appeal was allowed for the limited purpose of varying the costs order made by Austin J. The order regarding the further hearing costs was set aside and replaced, with Bevillesta ordered to pay Sovereign's costs of that further hearing, while Sovereign was to pay Bevillesta's costs of the main proceedings. The orders confirming the quantum of damages and the initial costs order were confirmed. Bevillesta was also ordered to pay Sovereign's costs of the appeal.