BURNETT & ORS and ML HOLDINGS PTY LTD
[2007] WASAT 18
•24 JANUARY 2007
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION: BURNETT & ORS and ML HOLDINGS PTY LTD [2007] WASAT 18
MEMBER: MR T CAREY (MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
WRITTEN SUBMISSIONS FILED 9 MAY 2006
DELIVERED : 24 JANUARY 2007
FILE NO/S: CML 370 of 1998
CML 953 of 1998
CML 957 of 1998
CML 958 of 1998
CML 1070 of 1998
CML 1082 of 1998
CML 1083 of 1998
CML 733 of 2003
CML 734 of 2003
CML 735 of 2003
CML 736 of 2003
CML 737 of 2003
BETWEEN: LYNDA JOYCE BURNETT
TERESA MARIA HEYDER
LYNETTE FLORYAN HAMPTON
YVONNE DORIS HUTTON
BRUCE ANDREW ROBINSON
DOROTHY ROSEMARY OSBORNE
MARRAPODI HOLDINGS PTY LTD
FRANCESCO MARRAPODI
VIOLA SANCTA MARRAPODI
ANTONINO CANALELLA
LYNSAY VONDA CANALELLA
CORINTHIAN PTY LTD
ApplicantsAND
ML HOLDINGS PTY LTD
Respondent
Catchwords:
Commercial tenancies – Assessment of damages or compensation arising from findings of liability by former Commercial Tribunal – Failure to identify and particularise losses – Failure to lead evidence to distinguish effect of compensable as distinct from noncompensable causes of business losses – Application for costs
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 12(2), s 12(2)(c), s 14(e), s 14(i)
State Administrative Tribunal Act 2004 (WA), s 7, s 87(2), s 167
State Administrative Tribunal Regulations 2004 (WA), reg 28
Result:
Applicants awarded nominal damages only
Costs claims allowed
Category: B
Representation:
Counsel:
Applicants: Mr M Fatharly
Respondent: No appearance
Solicitors:
Applicants: Kott Gunning
Respondent: Mr B W Ashdown until 3 November 2003
Case(s) referred to in decision(s):
Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1
Bilek and Vata Investments Pty Ltd [2005] WASAT 153
Brown v Jam Factory Pty Ltd (1981) 53 FLR 340
Calabar Properties Ltd v Stitcher [1983] 3 All ER 759
Cerini v McLeods (A Firm) [2004] WASC 45
Hawksbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
Each of the applicants was a tenant in a retail shopping centre owned by the respondent. Each experienced significant problems with its occupation which were claimed to have caused or contributed to a downturn in business and in many cases the closure of the business. It was alleged that the problems resulted from breaches of the respondent's contractual or statutory obligations as lessor.
The applicants' cases were dealt with in the former Commercial Tribunal, which, following a hearing in November 2003, delivered its decision on liability on 17 December 2004. Questions as to the quantum of losses suffered were reserved. Those questions were transferred to this Tribunal upon its commencement.
The Tribunal identified the positive findings of liability in favour of the various applicants. It noted in relation to those findings that the applicants failed to identify or particularise their losses. Where losses arose from a number of causes, some of which were compensable and some not, they failed to file any evidence which might form the basis for assessing substantive damages. The findings of liability were recognised by awards of nominal damages.
The applicants' claim for costs was quantified and the Tribunal allowed it.
Introduction
In each of these matters, the former Commercial Tribunal delivered a decision on 17 December 2004 (CT decision). The CT decision made findings in respect of various claims made by the applicants against the respondent on liability and reserved for further consideration issues of assessment and quantification of loss.
The State Administrative Tribunal (Tribunal) came into existence pursuant to s 7 of the State Administrative Tribunal Act 2004 (WA) (SAT Act). By virtue of s 167 of the SAT Act, these matters were transferred to the Tribunal, and by reason of the transitional provisions in reg 28 of the State Administrative Tribunal Regulations 2004 (WA), they are taken to have commenced in the Tribunal. This is the decision on the issues reserved by the former Commercial Tribunal.
The respondent is an Australian registered company. Only one of the respondent's directors has an Australian address on ASIC records of the company, and it appears that all directors are based in Singapore. The respondent was represented by either an agent or legal representative for virtually the entire pre‑hearing period, which dated back to 1998. Two days prior to the final hearing in November 2003, the respondent's solicitor filed a notice of solicitor seeking to act. Apart from an attendance to confirm the withdrawal of the solicitor and counsel previously retained by the respondent, there was no appearance at the hearing on behalf of the respondent, and the hearing proceeded in its absence.
On 23 February 2006, a senior member of the Tribunal made orders in each matter to the following effect:
1.The applicant was required to give forthwith written notice to the respondent of its intention to proceed with its application, with specific reference to seeking a determination as to the damages and award of costs, and to file a declaration of service.
2.By 30 March 2006, the applicant was to file certain documents in relation to the damages and costs claims.
3.In the absence of a request by the respondent to be heard on the assessment of damages and costs, the Tribunal "shall determine the matter on the documents".
The requisite declaration of service was filed in each case, and no request has been received from the respondent to be heard.
Factual background
Between 20 January 1995 and 25 March 2002, the respondent was the owner of the Wanneroo Central Shopping Centre (Centre). The Centre is a "shopping retail centre" for the purposes of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (the Act), and each applicant occupied a "retail shop" in the centre pursuant to a "retail shop lease" with the respondent as the "landlord", in each case as those terms are defined by the Act. The bases of liability relied upon by each applicant were in large part, but not entirely, the same.
At this point, it is convenient to reproduce that part of the CT decision which appears under the heading "Facts – Overview" and refers to the most significant claims.
"The Applicants made many complaints about the way in which the Centre was being operated. The complaints were wide ranging. The major issues were ‑
the buildings and common areas were not kept clean, tidy and well maintained;
the car park was not maintained; there were many potholes and the deteriorating surface was hazardous to customers and tenants;
water leaked from the roof whenever it rained;
inadequate and ineffective air‑conditioning, especially in summer;
failure to promote the Centre and fill shop vacancies; and
representations in 1995 and in 1996 that the centre was to be redeveloped.
The applicants' evidence painted a vivid picture of a shopping centre in decline, especially between 1995 and 1999. The air‑conditioning was inadequate and ineffective. It failed to maintain an adequate temperature and often broke down. In February 1998, it ceased to operate for a week. For four weeks in a row, during late night trading, it switched off.
The air‑conditioning repairs component of variable outgoings was very high. For the 1997‑1998 financial year the air‑conditioning component of the aggregate variable outgoings for the specialty shops was 7.3% ($52,066 of $711,710). In the 1998‑1999 financial year, the budget for air‑conditioning represented 5% of the anticipated aggregate variable outgoings. In the 1999‑2000 financial year, air‑conditioning represented 6.1% of the variable outgoings. Ms Lawford produced a document (Exh. A11 p.119) which provided a comparison of the proportion of each item of aggregate variable outgoings with the PCA Benchmark Survey of WA Shopping Centres for 1998. It showed that for the 1999‑2000 financial year, air‑conditioning as a component of total variable outgoings ranged from 0.44 to 1.61%, the median being 0.79%, whereas at the Centre it represented 6.1%.
Documentary evidence from the files of the agents for ML Holdings corroborated the applicants' evidence regarding ongoing problems of water leakages and air‑conditioning. Indeed, a pre‑purchase report prepared by an engineering firm, Wood and Grieve, in December 1994, on the building services and structure, had identified issues which were to become problem areas in the following years, where it noted ‑
'In respect of the roof -
(a)roof cladding to western specialty shops showing early signs of surface rusting, requires ongoing maintenance; the degree of patching and number of penetrations indicate future water leaks are a certainty with [sic] significant, maintenance works.
In respect of air‑conditioning and ventilation -
(b)systems were a low capital cost solution and have not been adequately maintained; supply air quantities and resulting cooling to each tenancy is below the level required for shops of this type, lack of insulation in ceiling spaces contributing to high temperatures.
In respect of storm water disposal from roofs -
(c)capacity for storm water disposal from roofs is considered minimal; potential for significant overflow into the building.'
In February 1995, Challenge Bank made a written complaint to ML Holdings' agent regarding the air‑conditioning, referring to 'hot and stuffy conditions', and noting the internal temperature on a specified day as 28 degrees celsius internally, when the external temperature was 32 degrees celsius. The Bank did not renew its lease when it expired, and sought permission to install its own air‑conditioning for the balance of the lease term.
In late February 1995, ML Holdings' agent reported to ML Holdings that contractors had been unable to determine the cause of the periodic tripping of the circuit breaker, which the agent said resulted in the Centre being without air‑conditioning for long periods in hot weather, until the serviceman arrived.
In April 1995, the air‑conditioning contractor, Mechanical Projects Services Pty Ltd, recommended two options for the air‑conditioning system, noting 'the existing plant and services were installed in 1977/8 and are nearing the end of their operating life. This is represented by an increase in service and maintenance costs over the previous few years.' It noted that the replacement of the chillers in January 1995 should be seen as an interim measure only towards a total upgrade of the air‑conditioning system. The options recommended were either a total replacement of the system serving the Centre, or on‑going replacement over a fixed period of 3 years. Neither option was implemented.
In March 1996, when Chiller No. 1 broke down, 2 options were again presented: either repair by rebuilding the compressor at a cost of $13,600, or the purchase of a new compressor at a cost of $22,100. ML Holdings approved the first option, and the cost of repairs was passed to the tenants of the Centre as a part of the Centre's variable outgoings for that financial year.
In February 1998, ML Holdings' agent sought permission from ML Holdings to refund to the Chinese Restaurant its share of the air‑conditioning power consumption cost, on the basis that the Chinese Restaurant had an air‑conditioning unit of its own in its premises. ML Holdings' agent wrote to ML Holdings -
'... when we have done this for other tenancies we have attempted to pass the amount foregone in terms of recovery onto other specialty tenants who do benefit from the common Centre air‑conditioning.
As the air‑conditioning plant continues to deteriorate over the future years more and more tenants will probably see the need to install their own air‑conditioning units, in fact we are receiving requests all the time.
The down side of this is that the actual cost of running the main Centre air‑conditioning will need to be recovered from fewer and fewer tenants, therefore increasing their variable outgoings.'
In August 2001, the Centre's air‑conditioning contractor, Alert Building Services, noted that the air‑conditioning plant was nearing the end of its serviceable life, and wrote -
'The plant has reached the point where it would probably be more economical to replace the chillers with more efficient equipment thus reducing service and repair costs and power consumption.'
In about 1996‑1997, new shopping centres opened in suburbs adjacent to or in the vicinity of the suburb of Wanneroo.
In March 1997, tenants in the Centre requested that rent and variable outgoings be reduced, referring to the inability of the Centre to attract shoppers, resulting from the construction of new shopping centres close by, and by the loss of market share to the new surrounding shopping centres.
In April 1997, ML Holdings' agent, Stanton Hillier Parker, reporting to ML Holdings, noted that 5 tenants had vacated the Centre in the past few months, including Challenge Bank.
In a joint letter to ML Holdings from tenants of the Centre in about May 1998, ML Holdings was requested to maintain and clean the car park, fill shop vacancies, and undertake a programme for the upgrading and maintenance of the Centre, so as to enable the Centre to compete with other shopping centres in the area.
From the time that ML Holdings purchased the Centre in 1995, the prospect of expansion or redevelopment was under consideration, and decision‑making regarding expenditure on maintenance and repairs at the Centre appears to have been made with that prospect in sight. Following ML Holdings' purchase of the Centre, Wood and Grieve prepared a report on the issue which addressed the issue identified in the prepurchase report, namely whether the roof mounted plant was potentially overloading the roof structure. Wood and Grieve concluded that the purlins supporting air‑conditioning units 8, 9 and 10 were 'over‑stressed', and recommended that they be removed, or relocated. ML Holdings' agent at that time, Sallmanns, confirmed instructions from ML Holdings, as follows -
'... it was impractical to expend large sums on strengthening the roof at this point until a decision was taken on the future expansion option for the shopping centre. To this end Wood and Grieve should be contacted and asked to prepare a brief letter explaining the re‑structure [sic] was not in danger of collapse and that as it had been in situ for some 18 years, no rectification work was required in the short term. They should be asked to recommend that it would be more prudent to finalize a decision on the future extension proposals, prior to expending money on the Centre.'
Wood and Grieve's response was to the effect that the capacity of the roof did not comply with Australian Standards 1170.1 for dead and live load; that, 2 persons standing in close proximity to the air‑conditioning units on the roof would overstress the purlins. Wood and Grieve noted the agent's instructions that major renovations to the western end of the Centre were likely to occur in the next two years. On that basis, it recommended that access to the roof be limited to one person; that warning signs be erected. Wood and Grieve also warned of the possibility of 'serviceability failure to the roof' if it was subjected to a storm, and recommended that more permanent measures be taken to ensure that the roof complied with appropriate standards if the redevelopment did not proceed. That was in May 1995. No redevelopment had occurred by the date of the hearing. Nor was there any evidence given of any measure taken to ensure that the western roof of the Centre complied with the relevant Australian Standards.
In February 2000, the recommendations by ML Holdings' agent to ML Holdings as to the quantum of expenditure on an air‑conditioner for 'LA Hair Fashions' were informed by how much could be recovered on the sale of a particular unit 'if redevelopment proceeds within 18 months.'
Repairs of potholes in the car park, which were anticipated to cost several thousand dollars, appear to have been delayed for seven months in 1995, on the basis of the redevelopment plans."
Findings of the Commercial Tribunal of respondent's liability
Consistent with the layout of the CT decision, I list below relevant positive findings of liability, firstly in respect of the application of Corinthian Pty Ltd (Corinthian), most of which apply to some or all of the other applicants, and then with reference to the other applicants. For ease of reference, a code name and number, and paragraph reference in the CT decision, is given for each finding.
Corinthian
COR1 [56‑58 of CT Decision]
The respondent breached s 12(2)(c) of the Act by including in variable outgoings leasing costs associated with the replacement of three cooler units in November 1994. This finding applies to all applicants.
COR2 [97, 146‑150]
The respondent breached s 14(e) of the Act by failing to maintain the car park within a reasonable period after receiving notice from the relevant applicants requiring rectification. This finding applies to Corinthian, Burnett and Heyder, Osborne, Marrapodi and Canalella (the defined terms for each of the applicants other than Corinthian are noted later in these reasons).
COR3 [109]
The applicant breached its covenant of quiet enjoyment by "either or both of the state of the air‑conditioning in February 1998, and during summer months, and water leakages and damage in May 1998", which amounted to substantial interference with Corinthian's occupation of its shop.
COR4 [120]
The respondent breached a term of the lease requiring it to maintain the common areas by its failure to maintain the car park. This finding applies to all applicants.
Linda Joyce Burnett (Burnett) and Teresa Maria Heyder (Heyder)
BUR1 [133]
The respondent breached s 14(e) of the Act by failing to adequately maintain the roof of the building within a reasonable period after receiving notice from the lessee requiring rectification.
BUR2 [137 & 138]
The respondent breached its covenant of quiet enjoyment, essentially by reason of the grounds founding COR3.
Dorothy Rosemary Osborne (Osborne)
OSB1 [155]
The respondent breached its covenant of quiet enjoyment by reason of the air‑conditioning problems during the summer months between 1995 and 2000.
OSB2 [156]
The respondent breached its covenant of quiet enjoyment by reason of water leakages between 1995 and 1999 inclusive, but particularly on seven specified dates in 1998 and 1999.
Lynette Floryan Hampton (Hampton)
No additional findings were made in the applicant's favour.
Yvonne Doris Hutton (Hutton) and Bruce Andrew Robinson (Robinson)
HUT1 [169]
The respondent breached its covenant of quiet enjoyment by reason of the air‑conditioning problems during the summer months between January 1995 and February 1998 inclusive.
Antonino Canalella and Lynsay Vonda Canalella (collectively Canalella)
CAN1 [175]
The respondent breached s 14(e) by failing within a reasonable time of being notified of a problem with automatic doors to rectify the matter. This finding appears to apply to notices given on two occasions, on 28 August 1998 and 28 June 1999.
CAN2 [184]
The respondent breached its covenant of quiet enjoyment by reason of the air‑conditioning problems during the summer months between January 1995 and February 2000.
CAN3 [185]
The respondent breached its covenant of quiet enjoyment by reason of water leakages during wet weather. Although it is not clear, I have inferred the period of the breaches to be the whole of 1995 – 2000.
Marrapodi Holdings Pty Ltd and Francesco Marrapodi and Viola Sancta Marrapodi (collectively Marrapodi)
No additional findings were made in the applicants' favour.
The positive findings can be further distilled into groups of "all", "most" and "individual", as follows:
All
a)Unwarranted inclusion in variable outgoings of capital expense item – s 12(2)(c).
b)Failure to maintain car park, in breach of the lease.
Most
c)Failure to maintain car park within a reasonable period after receiving notice – s 14(e).
(Finding applied to Corinthian, Burnett and Heyder, Osborne, Canelella, Marrapodi).
d)Liability arising from state of air‑conditioning system.
(Finding applied to Corinthian, Burnett and Heyder, Osborne, Hutton and Robinson, Canallela, in each case based on the covenant of quiet enjoyment).
e)Liability arising from water leakages due to state of roof.
(Finding applied to Corinthian, Burnett and Heyder, Osborne and Canalella, in each case based on the covenant of quiet enjoyment, and in the case of Burnett and Heyder on the additional basis of breach of s 14(e)).
Individual
f)Liability arising from failure to rectify automatic doors within a reasonable period after receiving notice in breach of s 14(i).
(Applied to Canalella).
These categories of findings are of assistance in explaining my reasoning on assessment of damages or compensation to which the applicants are entitled, to which I now turn.
Applicants' entitlements to damages
Finding (a) – inclusion in variable outgoings of capital item
The evidence is that the owner entered into an arrangement whereby three second-hand replacement coolers were installed into the fixed air‑conditioning system for the centre on a lease at a total cost of $95 000 over five years. The payments, when made, formed part of the variable outgoings amount, which was charged as between the applicants. In light of the CT finding, each applicant is entitled to an order in reimbursement of the amount paid by it in respect of the capital expense. The problem is that the applicants have failed to identify those amounts. The documents tendered to the former Commercial Tribunal proved payments to the financier up until June 1997, a total of some two and a half years, rather than five years. The documents tendered were stipulated by counsel for the applicants, at least in some respects, to be representative of the whole, but on my reading of the transcript, that was not the case with the remittances to the finance company. In any event, the applicants were given fair warning by me at directions hearings convened by this Tribunal on 3 July 2006 and again on 31 August 2006, and orders were made to the same effect, that it was incumbent upon them to provide particulars and evidentiary references, and where necessary file further evidence in support, of any damages or compensation claimed. In relation to this particular head of damage, I alerted the applicants' counsel to the need to particularise in the case of each applicant the amounts paid by way of its share of the variable outgoings component which had been found unlawful. None of these warnings has been heeded, seemingly as a result of the various applicants' financial circumstances attributed to the failure of their business operated at the Centre. Regrettable as that might be, it does not relieve parties to litigation from their obligations with respect to identifying and substantiating their claims.
Having regard to the Tribunal's obligation to resolve questions fairly and according to the substantial merits of the case (s7 SAT Act), I spent considerable time in trying to identify, amongst the large amount of material which had been filed, documents which would have permitted a positive outcome in light of the CT findings of liability, but was unsuccessful. Apart from the uncertainty arising from the period for which the payments were made to the financier and passed on to tenants as variable outgoings, I found no readily identifiable basis for attribution of the correct proportion of the total to individual tenants. The CT decision states that the Centre comprised two supermarkets and "provision" being "originally made" for 38 specialty retail shops. Some tenants were allowed to install their own air‑conditioning and did not contribute to the expense associated with the main air‑conditioning system. I simply do not know, at various times, which tenants were charged with the variable outgoing in question nor on what basis individual tenants were charged.
In the circumstances I have described, it is not possible for the Tribunal to employ the high degree of speculation which would be required to allow any substantive amount of damages for the breach of s 12(2). I will however allow each applicant the nominal sum of $10 in recognition of the finding of liability.
Findings (b) and (c) - Failure to maintain car park
As indicated above, such a failure was the subject of a finding of a breach of lease in favour of all applicants. It was also the basis for a finding of breach of s 14(e) in the case of five of the applicants which is, itself, a breach of a deemed term of the lease. There is no qualitative difference between the measure of damages or compensation arising from either finding.
It has been said that the object of awarding damages against a landlord for breach of his covenant to repair is, so far as money can, to restore the tenant to the position he would have been had there been no breach: Calabar Properties Ltd v Stitcher [1983] 3 All ER 759 per Griffiths LJ at 768. The facts of each case must be looked at carefully to see what damage the tenant has suffered and how he may be fairly compensated by a monetary award.
The difficulty for the applicants is that, on their own case, a large number of factors conspired to result in a shopping centre which was less attractive to potential customers than it might otherwise have been. Some of the factors are independent, while some others are interdependent. In no particular order, the factors relied upon included:
•Lack of general cleanliness of common areas;
•Unsatisfactory surface of the car park;
•Two recently established shopping centres in the vicinity of the centre;
•Lack of promotion of the centre;
•Air‑conditioning problems;
•Water leakages in wet weather;
•Graffiti in common areas;
•Increasing shop vacancies.
Whilst some of these factors were the subject of findings of liability against the respondent, others were not. The alleged failure by the respondent to promote the centre and fill vacancies is the subject of findings that these were not questions arising under the various leases and therefore fell outside the jurisdiction of the Commercial Tribunal. Despite the applicants' counsel's urgings to that Tribunal that the substantial population growth in the Wanneroo area at the material time militated against any argument that disappointing turnovers might be attributable to the recent opening of other shopping centres in the area, the Commercial Tribunal did find that the competition from those centres was a contributing factor.
Further, the applicants submitted to this Tribunal that the overall deterioration and increasing vacancies over time at the Centre had an effect on the individual tenancies which was more serious than the sum of its parts ‑ the so called "gestalt" effect, where the cumulative effect of the totality of separate events is greater than the weight that might be given to each event as a single entity. The applicants' written submission in relation to assessment of damages went on to emphasise the importance of the effect of vacancies in a retail shopping centre context, and relied upon a passage from Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 per Fox J at 345. However, as I have indicated, the former Commercial Tribunal held that the argument based on failure to fill vacancies was outside its jurisdiction, and therefore any reliance upon it to establish the applicants' entitlement to damages is misconceived. The written submissions then went on to request that the Tribunal "accept that evidence establishes" a number of matters which were relied upon as supporting the existence of the "gestalt" effect. While some of the matters referred to were the subject of positive findings, a number of others were not, and, in at least two cases, was the subject of a negative finding. I refer to the alleged failure by the respondent to ensure the Centre was managed in such a way that its condition did not deteriorate to the point where the flow of customers to shops was substantially altered or inhibited (s 14(b)) or trading within the Centre was disrupted (s 14(c)), and its alleged failure to ensure that the Centre was adequately cleaned and maintained, save to the extent that the applicants succeeded in their car park claim and some other more limited findings in individual cases (s 14(e)).
The above discussion reinforces the fact that in order for the applicant to make out its case for substantial damages, it needed to produce evidence to establish that a particular breach or combination of particular breaches forming the basis of a finding of liability against the respondent resulted in loss which can be identified. That loss, whilst not necessarily amenable to precise calculation, must be capable of assessment on some rational basis. I deal with the inadequacies of the applicants' case in terms of quantifying their losses under the next heading. For the reasons set out there, it is not possible for this Tribunal to award substantial damages for this head of liability. I will however allow each applicant the nominal sum of $10 to recognise the finding of liability.
Finding (d) – loss caused by unsatisfactory state of air‑conditioning system
In the cases of Corinthian, Burnett and Heyder, Osborne, Hutton and Robinson, and Canalella, the finding was one that the respondent had breached its covenant of quiet enjoyment. As was the case with the breach of covenant to repair, the contractual measure of damages for a breach of the quiet enjoyment covenant aims to compensate the tenant, as far as possible, by the extent to which the tenant is worse off than had the contract been performed: Hawksbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185, per Hill J at [52]. Where the breach made the premises unusable by the tenant, the measure of damages apart from the actual suffered while occupying the premises is the diminution in the value of the lease hold interest: Hawksbury Nominees Pty Ltd v Battik Pty Ltd per Hill J at [59]. If a tenant cannot prove loss of profits, he may recover expenditure thrown away, for example, loss of investment: Hawksbury Nominees Pty Ltd v Battik Pty Ltd per Hill J at [53], [56], [58]–[59].
Although examples exist where substantial damages have been awarded for a breach of the quiet enjoyment covenant which, along with other factors, resulted in the lessee's business being affected (for example, Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1), the non‑compensable factors in this case are of such moment that some evidence, probably of an expert nature, was necessary to enable any estimation on a rational basis of the extent of any alleged negative effect on business operations to be attributed to this, or any other compensable breach. I so informed counsel for the applicants at the directions hearings to which I have already referred, and made directions for the filing of particulars and any further evidence relating to the assessment of any head of damage. There have been no particulars nor further evidence filed on behalf of any of the applicants.
The applicants' contention for a "gestalt" effect is a specie of global claim, in relation to which, in the building context, where global claims often arise, it has been said that if any non‑trivial damage for which an owner is not liable is established, a builder's entire claim will be dismissed: Hudson's Building and Engineering Contracts, 11th ed at 8‑204. In any event, in the absence of the particulars and evidence ordered, which might have enabled a rational assessment to be made, the Tribunal's hands are tied.
In these circumstances, it is not possible for the Tribunal to allow any substantive amount of damages for the breach of the covenant of quiet enjoyment by reason of the air‑conditioning failure. I will however allow each applicant the nominal sum of $10 to recognise the finding of liability.
Finding (e) – water leakages
As noted earlier, in the case of each of Corinthian, Burnett and Heyder, Osborne and Canalella, liability was based on the respondent having breached its covenant of quiet enjoyment, and in one case (Burnett and Heyder) on the additional basis of a breach of lease in terms of s 14(e) of the Act. There is no significant difference in the outcome for the assessment of damages or compensation.
The comments made in relation to finding (d) apply equally to this finding. I will allow each applicant the nominal sum of $10 to recognise the finding of liability.
Finding (f) – failure to rectify automatic doors within a reasonable period after receiving notice, in breach of s 14(e)
This finding applied to Canalella only.
My comments in relation to finding (d) apply equally to this finding. I will allow Canalella the nominal sum of $10 to recognise the finding of liability.
Costs
The applicants sought an order for costs pursuant to s 87(2) SAT Act. Although in general a no‑costs jurisdiction, the Tribunal will make costs orders in particular cases. The former Commercial Tribunal as a matter of practice generally allowed costs to successful parties, and in these cases a former owner of a significant shopping centre has been found liable for a number of breaches of obligations in respect of which the applicants have incurred sizeable sums in pursuing their legal rights (cf Bilek and Vata Investments Pty Ltd [2005] WASAT 153). I agree that the applicants should recover a reasonable proportion of their legal expenses.
The applicants' claim for costs has been quantified. Each of the applicants (of which there are seven) incurred more than $29 000.00 plus 10% GST in solicitor/client costs, and although when multiplied by seven this amounts to an extremely large amount of money, it reflects the number and size of some of the issues which the cases involved and the sheer volume of paperwork they engendered. The pity is that that work was not completed to the extent necessary to allow substantive damages awards to be made. The applicants submitted that the $29 000.00 should be reduced to $20 000.00 plus GST to reflect party/party costs, and that there be a further reduction to $15 000.00 plus GST in view of the fact that the applicants did not succeed entirely in the claims on liability. I accept these submissions. As the party/party costs scales include GST (see Cerini v McLeods (A Firm) [2004] WASC 45), I will incorporate the GST in the costs to be awarded.
Orders
The orders of the Tribunal are as follows:
Corinthian (File No/s CML 1083 1998 & CML 737 2003)
1.The respondent is to pay the applicant by way of damages $30.
2.The respondent is to pay the applicant costs fixed at $16 500.
Burnett and Heyder (File No/s CML 1998 & CML 733 2003)
1.The respondent is to pay the applicants by way of damages $30.
2.The respondent is to pay the applicants costs fixed at $16 500.
Osborne (File No/s CML 958 1998 & CML 734 2003)
1.The respondent is to pay the applicant by way of damages $30.
2.The respondent is to pay the applicant costs fixed at $16 500.
Hampton (File No CML 953 1998)
1.The respondent is to pay the applicant by way of damages $10.
2.The respondent is to pay the applicant costs fixed at $16 500.
Hutton and Robinson (File No CML 957 1998)
1.The respondent is to pay the applicants by way of damages $20.
2.The respondent is to pay the applicants costs fixed at $16 500.
Canalella (File No/s CML 1082 1998 & CML 736 2003)
1.The respondent is to pay the applicants by way of damages $40.
2.The respondent is to pay the applicants costs fixed at $16 500.
Marrapodi (File No/s CML 1070 1998 & CML 735 2003)
1.The respondent is to pay the applicants by way of damages $10.
2.The respondent is to pay the applicants costs fixed at $16 500.
I certify that this and the preceding [48] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR T CAREY, MEMBER
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