G & A Lanteri Nominees Pty Ltd v Fishers Stores Consolidated Pty Ltd
[2007] VSCA 4
•6 February 2007
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 977 of 2002
| G. & A. LANTERI NOMINEES PTY. LTD. & ANOR. | |
| Appellants | |
| v. | |
| FISHERS STORES CONSOLIDATED PTY. LTD. & ORS. | Respondents |
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JUDGES: | CALLAWAY, ASHLEY and NEAVE, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 9 & 10 October 2006 | |
DATE OF JUDGMENT: | 6 February 2007 | |
MEDIUM NEUTRAL CITATION: | [2007] VSCA 4 | |
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Landlord and tenant – Lease of supermarket in shopping centre – Covenant that supermarket would remain open for business – Supermarket closing down 31 months before end of term, but tenant continuing to pay rent – Whether breach of covenant to remain open caused diminution in value of shopping centre – Whether evidence of amount of such diminution - Breach of contract – Date at which damages are to be assessed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellants | Mr M.D.G. Heaton, Q.C. with Mr D.J. Currao | Russo Pellicano Carlei |
| For the 1st and 2nd Respondents | Mr P.G. Lacava, S.C. with Mr P.G. Crennan | Ryan Maloney Anderson |
| For the 3rd Respondent | Mr M.J. Rivette | Minter Ellison |
CALLAWAY, J.A.:
This is an appeal against a judgment given in the Trial Division on 26th August 2005. The learned trial judge decided a threshold issue relating to s.141 of the Property Law Act 1958; the principal issue in the case, which concerned the measure of damages for breach of a covenant that a supermarket located in a shopping centre would remain open for business; and various other claims made by the appellants in relation to rent, municipal rates and outgoings. Except as explained below, the appeal is concerned only with the quantum of damages for breach of the covenant to remain open.
The background to the dispute is set out, and the parties are identified, in the opening paragraphs of the reasons below, which I gratefully adopt:
“1.On the corner of Eighth Street and Lime Avenue, Mildura, stands a small shopping centre called Mildura City Plaza. Between 1990 and 29 November 2002 it was owned by the plaintiffs in this proceeding, G & A Lanteri Nominees Pty Ltd and Lanjo Pty Ltd, companies associated with a Mr Giuseppe Lanteri. Until some of the events with which this case is concerned occurred it comprised a supermarket, eight other smaller shops and an area on its first floor which was, at some time, used as a night club. Up until 5 April 2002, the supermarket was operated by Fishers Stores Consolidated Pty Ltd, it having taken an assignment of the lease on 1 January 1993 from Bi-Lo Pty Ltd which had previously operated the supermarket. Fishers was a company whose head office was in Merbein but which operated a number of supermarkets in country New South Wales and Victoria, including one in Deakin Avenue, Mildura, a short distance from Mildura City Plaza.
2.Fishers’ performance of its obligations under the lease was guaranteed by two of its then directors, Alan Fisher and his father, George William Fisher. George Fisher died in November 2001. Alan Fisher is his legal personal representative. There was no issue at trial as to Alan Fisher being liable as guarantor, both on his own behalf and as the legal personal representative of his late father’s estate.
3.For some considerable time prior to 2002, Fishers’ management was concerned at the profitability of the supermarket and from time to time from about 1999 onwards unsuccessfully sought reductions in rent from its landlords. Mr Lanteri, on their behalf, rejected Fishers’ requests as, as he said in his evidence, he had a large mortgage and the bank was not giving him any reduction in its interest rates.
4.On 15 January 2002, solicitors for Fishers wrote a letter to the plaintiffs’ agent, Roccisano Estate Agents, advising that it would cease trading at the shopping centre on 5 April 2002. After another letter on 3 April it closed the supermarket on 5 April leaving a large unoccupied space in the shopping centre.
5.On 10 July 2002, the plaintiffs issued this proceeding against Fishers, Bi-Lo and Alan Fisher as guarantor, on his own behalf and as representing his late father’s estate. The plaintiffs’ claim against Fishers and Bi-Lo was for damages for breach of a covenant contained in clause 4.3 of the lease that the demised premises would be conducted as a supermarket during the whole of the term of the lease. Subsequently the proceeding was amended to include a claim for various miscellaneous sums allegedly owing under the lease by Fishers.
6.The plaintiffs’ claim against Bi-Lo was eventually compromised without any effect on the rest of the proceeding. It took no part in the trial.
7.Whilst the proceeding was pending the plaintiffs sold the freehold of the shopping centre for $3.95m to Sofal Pty Ltd, a company associated with Mr Illario Dimasi. The contract of sale between the plaintiffs and Sofal was dated 30 August 2002 and provided for settlement on 29 November 2002. Subsequently, Sofal accepted a surrender of Fishers’ lease effective from 30 November 2002 in consideration of a payment by Fishers of $200,000.
8.After Fishers vacated the supermarket, and after the freehold of the shopping centre was sold to Sofal but before Fishers surrendered the lease, a new tenant, the Warehouse Group (Australia) Limited, began to occupy the space previously occupied by the supermarket after extensive works were effected to make it suitable for its needs. It operated a large variety store. These works, their authorisation and the Warehouse Group’s occupancy were all matters upon which considerable evidence was led on the trial. In the event very little of it had any effect on the ultimate result.
9.By their defence to the proceeding, Fishers and Alan Fisher pleaded that the plaintiffs were not entitled to seek to enforce any covenants in the lease as the benefit of all such covenants and the right to enforce them had passed to Sofal by virtue of its having acquired the freehold of the shopping centre pursuant to its contract of sale with the plaintiffs. They relied on s 141 of the Property Law Act 1958.
10.This pleading by the defendants caused the plaintiffs to take two procedural steps to seek to protect their position. First, they requested Sofal to join as a plaintiff in the proceeding. Sofal declined that request and so was joined as a fourth defendant for conformity. In the event it took no part in the proceeding but agreed that it would abide the judgment of the Court.
11.Secondly, the plaintiffs joined Gallagher Holcroft Lawyers, the firm of solicitors which acted for them in respect of the contract of sale of the shopping centre to Sofal, as a fifth defendant. Their claim against Gallagher Holcroft was for breach of their retainer and/or negligence in not ensuring that their right to continue this proceeding against Fishers and Alan Fisher was not compromised by the sale of the shopping centre to Sofal.
12.After further pleading amendments the proceeding went to trial as a claim by the plaintiffs against Fishers and its guarantors, Alan Fisher and his late father’s estate, for damages for breach of covenant and for a number of miscellaneous amounts totalling about $50,000 allegedly owing by Fishers pursuant to the terms of the lease. In the alternative, the plaintiffs maintained a claim against their former lawyers, Gallagher Holcroft for damages for breach of retainer and/or negligence in the event that they were unsuccessful against Fishers solely by reason of the contract of sale to Sofal which they drafted, not protecting their interests adequately.
13.Fishers and Alan Fisher conceded the breach of covenant relied upon by the plaintiffs but denied that the plaintiffs suffered any damage as a result of it. They also claimed that on a proper accounting between them and the plaintiffs, taking into account the effect of the ouster of Fishers as tenants by the Warehouse Group whilst Fishers was still entitled to possession under the lease, Fishers had a set-off against the plaintiffs such as to extinguish or substantially diminish any claim for any amounts which might have been owing under the lease.
14.Gallagher Holcroft denied any breach of retainer or negligence and claimed, in their defence, that they took all steps necessary to protect the plaintiffs’ rights within the terms of that retainer.”
The judge held that there had been no breach of retainer or negligence on the part of Gallagher Holcroft. Judgment was entered in their favour against the plaintiffs. The plaintiffs were ordered to pay their costs as between party and party up to 30th July 2004 and thereafter on an indemnity basis and the first and third defendants were ordered to indemnify the plaintiffs in respect of that order to the extent of 20 per cent. In this Court the plaintiffs are the appellants, the first and third defendants are the first and second respondents and Gallagher Holcroft are the third respondent.
At the outset of the hearing of the appeal, the Court raised three preliminary matters with the parties. The first related to Sofal, which was the fourth defendant below. It was a necessary party to the appeal and had not been served. It is unnecessary to go into the reasons, because the matter was rectified in the course of the morning. All that remains is for the Court to make an order joining Sofal as a party to the appeal. That is so that the appeal will be properly constituted and Sofal will be bound by our judgment. The substantive dispute is between the appellants and the first and second respondents.
The second preliminary matter related to so much of the notice of appeal as challenges the Bullock order[1] made in relation to the third respondent’s costs. A Sanderson order[2] is sought but there are no grounds of appeal specifically relating to that relief. There is a question whether leave to appeal is required under s.17A(1)(b) of the Supreme Court Act 1986, so attention will have to be given to Etna v. Arif[3] and other cases. At the request of all the parties, those issues were deferred pending resolution of the dispute between the appellants and the first and second respondents. Counsel for the third respondent was excused pending that determination and his client’s costs of the first day of the hearing were reserved.
[1]Bullock v. London General Omnibus Co. [1907] 1 K.B. 264.
[2]Sanderson v. Blyth Theatre Co. [1903] 2 K.B. 533. For recent discussions in this Court, see Berrigan Shire council v. Ballerini (No. 2) [2006] VSCA 65 and the cases there cited.
[3][1999] 2 V.R. 353, especially at 376 [60] and following.
The third preliminary matter related to the likelihood that part of the appeal, most likely the part relating to the third respondent’s costs, would need to be determined by Ashley and Neave, JJ.A. as a court of two judges. The parties consented to that course.
Clause 4.1 of the lease required Fishers to conduct a supermarket or similar business on the demised premises and clause 4.3 required it to cause the supermarket to remain open for business for at least the usual trading hours of the shopping centre. It was the anchor tenant, occupying 40 per cent of the gross lettable area of the centre. The importance of such a tenant is not to be gainsaid. The anchor tenant is a magnet that attracts passing trade, assisting the profitability of the specialty retailers in the centre and enhancing their ability to pay rent. The willingness of Fishers to continue to pay rent during the remainder of the term in no way altered the fact that, when it ceased trading on 5th April 2002, it committed a breach of clause 4.3 of the lease. The principal issue at the trial, and the only issue to be determined at this stage of the appeal, is the measure of damages for that breach.
The first and second respondents submitted that the damages should be assessed as at the date of breach. The appellants submitted that they should be assessed as at the date of their sale of the freehold to Sofal on 30th August 2002. The appellants acknowledged that assessment as at the date of breach is the ordinary rule but contended that assessment as at the date of sale would better reflect the underlying principle upon which damages are awarded, namely compensation. The innocent party is to be placed, so far as money can do so, in the same position as if the contract had been performed. See Johnson v. Agnew[4] and Johnson v. Perez[5].
[4][1980] A.C. 367 at 400–401 per Lord Wilberforce.
[5](1988) 166 C.L.R. 351 at 386–87 per Dawson, J.
In Brunswick Developments Pty. Ltd. v. Shock Records Pty. Ltd.[6] Shock Records repudiated an agreement to take a lease. The owner of the freehold claimed damages, including loss of rent and diminution in the value of the freehold as a result of not obtaining Shock Records as a tenant. Sundberg, J. said:[7]
“The usual measure of damages is the difference between the rent reserved by the lease and that recovered on a reletting of the premises: Lamson Store Service Co Ltd v Russell Wilkins & Sons Ltd (1906) 3 CLR 672. But the general principle is that stated by O’Connor J in Buchanan v Byrnes (1906) 3 CLR 706 at 721, that the landlord can recover damages for the loss of the benefit of the lease. Or as Deane J put it in Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 55, the landlord can ‘in accordance with ordinary contractual principles sue the tenant for damages for loss of the benefit of the tenant’s covenant to pay future rent and outgoings’. Where, as here, the landlord does not re-let but sells, I see no reason why it should not recover the difference between the value of the premises with the tenant in occupation and their value without a tenant. That accords with the general principle that a person who has sustained loss by reason of a breach of contract is entitled to be placed in the same position, so far as money can do it, as if the contract had been performed: Robinson v Harman (1848) 1 Ex 850 at 855; 154 ER 363 at 365; The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 81, 98, 117, 134. In Peet & Co v Rocci [1985] WAR 164, where the lessor had not re-let but had sold the premises at a loss, Rowland J said, at 178:
‘ … there are several ways one may assess damages for breach of a lease agreement and in the end the method adopted may have to depend upon the circumstances of the existing case and the attitude taken by the lessor. In my view in this case the true measure of damages is the difference between the value of the premises as a going concern with a tenant in possession pursuant to the contractual term and one without a tenant in possession at the relevant time at which such valuation is to be made being either the date of the breach or the date of acceptance of that breach.’” (Emphasis added.)
[6](1999) V.Conv.R.¶54-604. Sundberg, J.’s name is misspelled.
[7]At 67,272.
It will be observed that, in the first passage that I have italicised, Sundberg, J. stated the issue to be determined in a way that was neutral so far as the date of assessment was concerned and that, in the second italicised passage, Rowland, J. specified the date of the breach or its acceptance. In Costain Property Developments Ltd. v. Finlay & Co. Ltd.[8] , to which the appellants also referred, a deputy judge in the Queen’s Bench Division assessed damages as at the date of sale of the reversion but gave no reasons for choosing that date.
[8](1988) 57 P. & C.R. 345.
One argument in favour of the date of sale was that, by analogy with personal injury and fatal accident cases, actual facts are preferable to an estimate of the probability of their occurring. I do not accept that analogy, not least because the price at which the shopping centre was sold to Sofal cannot simply be equated with the market value. It may have been, and probably was, affected by specific factors. It is like a comparable sale, and as such, I should have thought[9], may be taken into account in determining the value of the property as at the date of breach. It is important not to confuse the question of the date as at which damages are to be assessed with the permissibility of looking at later events for the purpose of making that assessment.
[9]Mr Close did not concede the propriety of taking into account later sales, but the point need not be decided. It is not essential to my conclusion about the date at which to assess damages and it does not bear on the difference, if any, between the capitalization rates with Fishers trading and Fishers not trading. Mr Brown allowed the sale to Sofal to affect his capitalization rate as at 30th August 2002, because “there is no better test of the market than the sale of the subject itself”. Mr Milne expressed a similar opinion.
Another argument in favour of the date of sale was that the impact of Fishers’ abandonment had worsened during the period between 5th April and 30th August 2002. Whether or not that might have been a sufficient reason in other circumstances to prefer the date of sale, it is insufficient if the analysis of the evidence in [45]-[47] below is correct. We are concerned with the underlying value of the shopping centre as an investment, not with the temporary effects of Fishers’ premature departure. They are temporary because it has to be assumed that Fishers would not have renewed the lease.
I am not persuaded that we should depart from the ordinary rule that damages for breach of contract are to be assessed as at the date of breach.[10] I agree with the learned trial judge, who reached the same conclusion.
[10]If that date is selected, interest pursuant to s.60 of the Supreme Court Act 1986 will run from the date of filing of the writ. If the date of sale is selected, as Ashley, J.A. pointed out in the course of the hearing, there might be good cause to order that interest run from the date of sale.
The issue for determination is therefore whether the shopping centre was worth less on 5th April 2002 with Fishers paying rent and outgoings but not trading in comparison with its value on the same date with Fishers paying rent and outgoings and also trading. That issue is to be resolved by expert evidence. As Mr Lacava conceded, the expert might either value the property as at 5th April 2002 on each scenario and subtract one value from the other or, if an appropriate methodology were available, proceed directly to an assessment of the diminution of value. Whichever method is adopted, it is important to bear in mind that valuation is not an exact science. Even if arithmetical calculations are made, it involves matters of judgment on which reasonable opinions may, and notoriously do, vary.[11] The answer must, to some extent, be conjectural.[12]
[11]Compare Karenlee Nominees Pty. Ltd. v. Gollin & Co. Ltd. [1983] 1 V.R. 657 at 669.
[12]Spencer v. The Commonwealth (1907) 5 C.L.R. 418 at 432 per Griffith, C.J.
Conflicting expert evidence was given at the trial as to whether there was a difference in the value of the shopping centre with Fishers as the anchor tenant, trading as it was obliged to do by clause 4.3 of the lease, compared with its closing down, as it did on 5th April 2002. Evidence was also given that adopted the date of sale to Sofal as the critical date. I shall not refer to that evidence, because of the conclusion I have reached on that point.
The appellants called two valuers, Mr Barnden and Mr Brown. Each of them wrote a letter. Mr Barnden prepared two valuation reports and Mr Brown prepared one. Both of them were examined in chief, cross-examined and re-examined at the trial. The first and second respondents also called two valuers, Mr Close and Mr Milne. Mr Close wrote three relevant letters and Mr Milne wrote five. Mr Close prepared a valuation report. Mr Milne did not. Like the appellants’ witnesses, each of them was examined, cross-examined and re-examined.
Both Mr Barnden and Mr Brown considered that there was a difference in the value of the shopping centre with Fishers trading and Fishers not trading. They said that the presence of an anchor tenant was important, because it attracted custom to all the tenancies at the shopping centre. Mr Barnden added that Fishers’ premature departure left a large ugly void or black hole and had a substantial impact on the perception of the shopping centre, from a tenant’s point of view, as a desirable place to trade and, from a customer’s point of view, as a desirable place to shop. It substantially affected the level of certainty attributable to the continuity of rental income from tenancies at the centre. That uncertainty had, in turn, an adverse effect on the risk profile, and therefore the value, of the centre.
Mr Brown also said that Fishers’ premature departure increased the uncertainty and risk of the rental income from the tenancies at the shopping centre and that that uncertainty and risk had a detrimental effect on its value. In his opinion, the value of the shopping centre as at 5th April 2002 was $4,200,000 with Fishers trading and $3,985,000 with Fishers not trading. That is a difference of $215,000. Those were the figures on which the appellants relied at trial, and again on the appeal. They did not rely on the estimates of value made by Mr Barnden but did refer to his observations as the only local valuer to give evidence.
Mr Milne provided a critique of the appellants’ valuers’ reports. He emphasised the opportunity available to the appellants, prior to the sale of the property in August 2002, to do what was ultimately done by Sofal, namely to seek a new tenant while Fishers continued to pay the rent, to refurbish the premises and to negotiate a surrender fee. He considered that the uncertainties and risks of owning the shopping centre were the same, on 5th April 2002, whether Fishers were trading or not.
Mr Close was also of opinion that there was no difference in the value of the shopping centre with Fishers trading or Fishers not trading.[13] There was no difference in value because, in any event, Fishers would be leaving in two years and seven months and, with that knowledge, there was already uncertainty and risk. The likely purchaser would be an entrepreneurial investor and the vacant supermarket provided an opportunity to address design aspects of the shopping centre and obtain an alternative anchor tenant while Fishers continued to pay the rent. The opportunity was not such as to increase the value of the centre, but it meant that Fishers’ premature departure was not the unmixed detriment for which the appellants contended.
[13]He did make an adjustment of $25,000 because of a particular term in one of the leases, relating to premises occupied by a cheesecake shop. That may be put to one side because the judge held that it was irrelevant and his Honour’s conclusion is not challenged on the appeal.
The appellants also relied on the evidence of four lay witnesses: Mr Giuseppe Lanteri, a director of both the appellant companies; Mr Antonio Roccisano, a director of Roccisano Real Estate; Mr Illario Dimasi who, as we already know from paragraph 7 in [2] above, was the human embodiment of Sofal; and Ms Wendy Thomson, who worked with Roccisano Real Estate until February 2003. She was the commercial property manager and later the commercial asset manager, responsible for managing the commercial property rent roll, collecting rent and outgoings for landlords, organizing repairs of commercial properties and dealing with landlords and tenants.
The determination of value is a question of fact, to be decided upon the evidence of experts conversant with the subject matter.[14] That does not mean that the judge is bound by the expert evidence.[15] Mr Heaton took us to the lay evidence referred to above, not as direct evidence of value but as evidence of facts and observations to be taken into account in evaluating the expert evidence. He and Mr Currao summarized the evidence on which they relied as follows in their outline of submissions[16]:
[14]Spencer v. The Commonwealth at 432 per Griffith, C.J.; Harris v. Minister of Public Works (1912) 12 S.R. (N.S.W.) 149 at 155 per Pring, J.
[15]Doherty v. Commissioner of Highways (1974) 7 S.A.S.R. 57 at 83 per Zelling, J.
[16]I have reproduced these paragraphs with minor editing.
“Mr Lanteri
17.Mr Lanteri’s evidence reveals that:
(a)Fishers Stores were aware of the potentially detrimental impact their abandonment could have on the value of the shopping centre;
(b)after receiving Fishers’ letter that they would be closing the doors, the appellants requested their agents to try and find a new tenant for the supermarket and consider any alternative uses of the supermarket space.
Mr Dimasi
18.Mr Dimasi, through companies of which he was a fifty per cent shareholder, owned more than six commercial properties in Mildura.
19.In or about December 2001, Mr Dimasi offered the appellants’ agent, Tony Roccisano, $4.8 million for the shopping centre subject to undertaking a due diligence on the leases of the tenancies at the shopping centre.[17] He withdrew his offer immediately upon finding out that Fishers Stores were vacating from the supermarket.
[17]It was not clear at what stage Mr Dimasi learned that Fishers were unlikely to renew the lease.
20.During re-examination, Mr Dimasi described the dramatic effect Fishers Stores’ abandonment had on the other tenancies and on the price he was prepared to pay for the shopping centre in this way:
‘Unfortunately from Lanteri’s point of view it gave me a strong position to negotiate the price down to – or to offer the price of 3.5 million from the original 4.5, indicating to Mr Lanteri that the space was vacant, the tenants weren’t stable, I indicated that there was a lot of disruption to the centre. So I used that there as a strong negotiation tool to get the price down as much as I possibly could, Mr Lanteri got me back up to 3.95 on that. But after the negotiations were completed and we signed off on that then I had to move pretty quickly to get that space filled to stabilise the building, the tenants and carry on continuous negotiations with other tenants within the building so that they would stay there or not move around as much as they first indicated to me.’
Mr Roccisano
21.In or about November or December 2001, Mr Roccisano of Roccisano Real Estate provided Mr Dimasi of Sofal Pty Ltd a floor plan of the shopping centre together with a tenancy schedule. The tenancy schedule had details of the amount of rent and outgoings payable by each tenant at the shopping centre, together with details of the terms or duration of their respective leases.
22.Mr Dimasi told Mr Roccisano to offer the appellants $4.8 million for the shopping centre subject to a due diligence. The due diligence comprised providing Mr Dimasi with copies of the title and the leases, and any relevant information in regards to the shopping centre.
23.Later, Mr Roccisano told Mr Dimasi that Fishers Stores had given notice that it was going to cease trading from the shopping centre in April 2002. Mr Dimasi responded by saying he was withdrawing his offer.
24.Mr Roccisano gave evidence of the importance of finding a new anchor tenant a quickly as possible.
Ms Thomson
25.Between the time of receiving notification from Fishers Stores that it was going to cease trading on 5 April 2002 and the sale of the shopping centre on 30 August 2002, Ms Thomson:
(a)took steps, without success, to find a new anchor tenant for the shopping centre;
(b)looked at some alternative uses for the supermarket area including a possible reception or function centre, a gymnasium and as possible offices.
26.From around February 2002, the tenants of the shopping centre were complaining that they needed their rent reduced and saying that they can’t survive without an anchor tenant.
27.Ms Thomson also wrote a letter dated 11 April 2002 to the appellants’ then solicitors, the third respondent, describing the nature of some of the tenants’ complaints. The letter relevantly said:
‘Since Saturday 6th April 2002 there has [sic] been very few people coming to the complex, most tenants have reported that their sales have dramatically dropped. The usual foot traffic appears to have ceased. Some of the tenants have reported receiving phone calls from customers asking them if they are still open.
The tenants are in panic mode as to this situation and are requesting urgent assistance for a marketing campaign by Fishers or the landlord to attempt to restore some of their business … ‘”
Both sides had taken a statement from Mr Dimasi. In the statement taken by the first and second respondents, which was tendered at the trial and sworn by Mr Dimasi to be true and correct, he said that with the knowledge that Fishers would not be renewing their lease, his view as to the value of the shopping centre and the price he would pay to acquire it would have been no different had Fishers been trading. He also said that Fishers’ having vacated the premises gave him greater flexibility in negotiating with a new tenant and the ability to show prospective tenants a vacant property.[18] Those statements have to be borne in mind in evaluating his evidence in re-examination.
[18]Compare [41] below.
The judge accepted the opinion of Mr Close and Mr Milne that there was no difference in the value of the shopping centre with Fishers trading or not trading and awarded only nominal damages for the breach of clause 4.3. His Honour’s reasons are too long to set out in full, but three paragraphs are of particular importance:
“51.Mr Brown’s view that Fishers ceasing to trade must have had an adverse effect on the value of the shopping centre is inherent in his choosing a higher capitalisation rate when considering its value with the supermarket closed. By increasing the capitalisation rate by .5% over that he would apply if the supermarket was open he quantified that opinion but he gave no cogent reason for choosing .5% as against .3% or .7% apart from referring to the ‘uncertainty and greater risk associated with the supermarket being closed.’ Whilst it is a legitimate exercise of a valuer’s judgment to express such an opinion, it must be recognised for what it is and not given more weight than is appropriate in an overall assessment of the evidence. Mr Brown’s opinion is essentially unexplained. Particular care must be taken to guard against any assumption that the plaintiffs must necessarily have suffered loss by the closure of the supermarket in breach of a covenant to keep it open. Whilst such a loss might be expected in some circumstances it must still be proved in the actual conditions prevailing to entitle the landlord to an award of other than nominal damages.
…
62.The evidence of Mr Milne and Mr Close is to be preferred to that of Mr Brown. In particular the experience of Mr Close with respect to the valuation of shopping centres and supermarkets placed him in a superior position to all the other valuers called with respect to the particular valuation questions relevant to this case. Also, his explanation as to why he considered that there was no significant difference in the value of the shopping centre freehold (except for the Cheesecake Shop deduction[19]) was much more convincing than Mr Brown’s evidence which lacked any real explanation as to why he chose the higher capitalisation rate which led to the lower value in his opinion under the scenario in which Fishers closed the supermarket.
63.Mr Milne’s opinion that Fishers ceasing to trade whilst still paying rent opened up opportunities for investors which would not have existed if Fishers had continued to trade to the end of its lease, with a consequent positive effect on the value of the property, is compelling. This is particularly so when no realistic answer to it was provided by the plaintiffs and it was corroborated by Mr Close.”
[19]See fn.13 above.
Referring to those and other paragraphs, Mr Heaton submitted that his Honour had made nine identifiable errors. They were, he said, as follows:
(a)Mr Brown’s opinion that the closure of the supermarket would adversely affect the value of the shopping centre was wrongly characterized as an assumption, when it was in fact a reasoned conclusion.
(b)Contrary to a passage in the reasons that I have not set out, Mr Brown did elaborate on the “certainty”, from the point of view of a landlord, if Fishers continued to trade until November 2004.
(c)Contrary to paragraphs 51 and 62 in [24] above, Mr Brown did explain why he chose the higher capitalization rate leading to a lower valuation following Fishers’ closure.
(d)Again contrary to those paragraphs, Mr Brown did explain his opinion that the closure of the supermarket led to “uncertainty and greater risk” and provided reasons for that opinion.
(e)In another passage I have not quoted, the judge said that Mr Brown capitalized the “actual rental being received”. In fact he capitalized the market rent.
(f)In saying that a prudent lessor would be likely to do what was ultimately done by Sofal[20], Mr Milne impermissibly used hindsight or allowed subsequent events to turn a possibility into a certainty.
(g)The appellants’ criticisms showed that, when critically evaluated, Mr Close’s opinion was flawed, was not prepared in accordance with proper valuation principles and lacked both logic and common sense. The judge should have accepted those criticisms.
(h)Far from Mr Close’s opinion being more convincing than Mr Brown’s evidence, the latter should have been preferred because it was logical, bore a rational relationship to the lay evidence and was consistent with common sense and proper valuation principles.
(i)The opportunity on which Mr Milne placed such emphasis was “laced with a number of uncertainties”, for example, who the next anchor tenant would be; when the tenancy would begin; on what terms, including terms relating to rent and outgoings; any financial incentives that might need to be offered; and which specialty tenants might vacate in the meantime as the result of Fishers’ closure.
[20]See [19] above.
So long as counsel’s submissions are borne in mind in the course of reaching our own conclusions, there is no need to decide whether the judge erred in all or any of the ways that were suggested. This is not an appeal from an exercise of discretion. We must consider the evidence for ourselves and, if we are persuaded that his Honour erred, it is our duty to substitute our own opinion. Mr Heaton submitted that we were in as good a position as the judge and Mr Lacava appeared to accept that proposition.[21] For the most part, it is correct, but we should not ignore the considered opinion of the trial judge. He saw the expert witnesses give their evidence and was able to form an impression of such matters as the apparent conviction with which they defended their opinions and the care they showed in answering questions. His Honour did not rush to judgment. He considered the case for six months and his conclusions on all issues except those relating to valuation have been accepted.[22]
[21]Counsel for the appellants referred to Fox v. Percy (2003) 214 C.L.R. 118 at 124 [20]-[31] per Gleeson, C.J., Gummow and Kirby, JJ.; Husain v. O & S Holdings (Vic) Pty. Ltd. [2005] VSCA 269 at [14] per Nettle, J.A.; and Forder v. Hutchinson [2005] VSCA 281 at [48] per Nettle, J.A.
[22]I put to one side the part of the appeal relating to the costs orders.
I turn to consider the expert evidence, particularly that of Mr Brown and Mr Close, in more detail. I shall make no direct reference to Mr Barnden. The appellants did not rely on his valuation. The other parts of his reports are taken up by other witnesses.
It is unnecessary to refer to Mr Brown’s letter.[23] His report, dated 7th December 2004, valued the shopping centre as at 5th April 2002, 30th August 2002 and 29th November 2002, when the Warehouse Group commenced trading from the former supermarket area pursuant to its lease from Sofal. He did so using both the capitalization of income and discounted cash flow methods but, for 5th April 2002, he preferred the capitalization of income method. The object was to estimate market value, adopting the definition of that term by the Australian Property Institute:
“’Market value’ is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arms length transaction, after proper marketing, wherein the parties had each acted knowledgably, prudently and without compulsion.”
The valuation included building fixtures, fittings and building plant that would normally pass in the event of a sale.
[23]See [16] above.
Mr Brown’s figures are set out at [18] above. He noted that Fishers would not have renewed the lease in November 2004 and calculated that the rent Fishers were paying was substantially above the market rent.[24] He examined sales transactions of centres with like characteristics to the Mildura City Plaza and three sales in Mildura that had been referred to by Mr Barnden. Comparable sales were no doubt important in estimating the value of the shopping centre in April 2002 but, as previously explained, the issue for determination was whether the shopping centre was worth less with Fishers paying rent and outgoings but not trading in comparison with its value with Fishers paying rent and outgoings and also trading. For that purpose, under the capitalization of income method, the capitalization rate was crucial.[25]
[24]Estimated at $194.08 per square metre compared with $140.00 per square metre.
[25]It is important to understand that, once the rate is adopted, the calculations follow. The adjusted net rent, to which the capitalization rate is applied, is the same whether Fishers are trading or not: see ss.10.2 and 11.2 of the report and Mr Close’s letter of 18th January 2005. Mr Close made the same point in cross-examination. The detail in Mr. Brown’s report does not alter the fact that we are reading the report to place a dollar value on the difference, if any, between Fishers trading and Fishers not trading.
In s.9.1 of his report Mr Brown said:
“Under this approach the assessed net income generated by the centre is capitalised at an appropriate market capitalisation rate to establish the property’s market value. The capitalisation approach involves adopting a stabilised market net rent for the property, i.e. I have assumed that the centre is fully leased at market rents. The net return has been capitalised at a market derived capitalisation rate.
Having considered the sales evidence which demonstrates a market yield range between 8.50% to 10.81%, I am of the view that an appropriate capitalisation rate for the subject assuming the supermarket remains trading is 9.50%. Given that the supermarket discontinues its operation but continues to pay the rent, I have adopted an analysed market yield of 10.00%.”
When he turned to the discounted cash flow method, he adopted discount rates of 10.50% with the supermarket remaining in operation and 11.00% with the supermarket not remaining in operation “to reflect the uncertainty and greater risk associated with the centre’s income”. In cross-examination Mr Brown explained that that referred to the income from the specialty shops.
It was s.9.1 of Mr Brown’s report that led the judge to make the criticisms he did in paragraph 51 of his reasons, set out in [24] above. It would not be correct to say that the .50% differential was a figure plucked from the air, and his Honour did not do so, but it was simply a conclusion. Very little explanation, particularly direct explanation, was offered in the report itself. Presumably, the reason for the differential was the same as the reason for the differential adopted for the discounted cash flow method, namely to reflect the uncertainty and greater risk associated with the income from the specialty shops. In the part of the report valuing the centre as at 5th April 2002, with the supermarket not trading, there was simply a reference back to s.9.1 in s.11.2 and a statement of Mr Brown’s belief that the differential fairly reflected the fact that the major tenant had ceased to trade.
The only other indications of Mr Brown’s reasoning are to be found in the part of the report valuing the centre as at 30th August 2002 and in the conclusions. In the former, under the heading “Rental Allowance”, Mr Brown said:
“I have adjusted the rental for the Cheesecake Shop (G04/05) reducing it by 50% as per its lease agreement if the supermarket is not trading. This will continue until the expiry of the supermarket lease at which time the rent will revert to market levels.
I have also reduced the rental of G06 and G18 to reflect a reduction in turnover levels for these tenants. I feel a prudent investor would reduce these levels of rent to ‘encourage’ the tenant to remain in occupation until the situation can be rectified, which I have assumed is the expiry of the supermarket lease.
It is my opinion that due to the supermarket no longer being in operation the pedestrian traffic into the internal mall would be nil, hence I have assumed the internal tenancy (G36) will no longer be able to trade. Upon expiry of the supermarket lease, I have made it an explicit assumption of this valuation scenario that the tenancy area will be incorporated into the new major tenancy area at a gross rental of $140 per square metre.”
In the latter he said:
“In the circumstance of the supermarket not trading (which is in breach of the lease requirements) this does place pressure on tenants particularly those reliant on the anchor tenant drawing people to the centre.
I believe however that some of the on street tenancies should reasonably be able to deal with the situation without any significant impact on their operations. Reasonably the first floor tenant would be totally unaffected given the use as a nightclub.”
It is not fair to read a valuer’s report as if it were a legal instrument, but it is not hard to see why the judge said that Mr Brown’s opinion was essentially unexplained. In particular, there is no explanation in the report or in his oral evidence for the figure, 0.50%, that he adopted as an appropriate differential.
In examination in chief Mr Brown explained why, in his opinion, there had to be some differential:
“In this case you’ve applied a different rate to Fishers in, and Fishers out? --- Yes.
Why is that and what differences do you see as to the scenario of Fishers in, and Fishers out? --- Well, the whole concept of a shopping centre is that you have an anchor tenant that draws people to the centre. In the majority of these types of developments, the anchor tenant is secured and then the other tenants are then found to fill the centre. The whole concept is that the anchor tenant is the magnet to the centre and that the speciality shops hang off the foot traffic that is generated or business that is generated by the anchor tenant. In this instance the anchor tenant has decided not to trade, which is contrary to the lease and therefore whilst the rent is still being paid the loss of business that that tenant would draw to the centre would have an impact on the other shops. Whether the tenant was trading profitably or not trading profitably wouldn’t be material to the fact that they would still be drawing people to the shopping centre. I see – particularly the fact that the lease has a requirement that the tenant trade, and that is not an unusual requirement, that really in essence is putting the whole thing in context, you are the anchor tenant and you must trade. So to say there is no difference between them trading and not trading I find difficult to comprehend.”
Later he added that the other tenants’ bargaining position was strengthened with the anchor tenant not trading and that a purchaser would take that into account. In cross-examination he described the situation with Fishers trading as “less stressed”.
In re-examination Mr Brown said:
“As I said, I think previously with Fishers still trading, albeit with the knowledge that they intend to leave, does provide some certainty in terms of cash flow. You have two and a half years to receive the market rent and the profit rent, and you have a period of say six months prior to Fishers vacating in which to source another tenant, a date on which vacant possession can be offered in terms of the property, and hopefully securing a tenant on a longer term basis with a better covenant and adding value to the property. That’s the way I see it if it could be done in an ordered manner, as opposed to the circumstance that you’re presented with a property where really you have to deal with it there and then.”
It must be remembered that Fishers, although not trading, were continuing to pay the above-market rent reserved in the lease.
Mr Close’s report, dated 9th June 2004, also valued the shopping centre as at April 2002. The same definition of market value was adopted and the capitalization of income method was used. Mr Close acknowledged that Fishers and three other tenants were paying rentals above the market rate. He did not consider discounted cash flow analysis appropriate, particularly in the absence of an anchor tenant with a fixed ten to twenty year term, but he checked his calculations by the direct comparison method, analysing value rates from comparable sales. His capitalization rate was 11.50%. He estimated the market value of the shopping centre at $4,050,000. Disregarding the cheesecake shop[26], the value was the same with Fishers still trading (which he called “scenario 1”) and with Fishers having ceased trading but continuing to pay the rent during the remainder of the term (“scenario 2”).
[26]See fn.13 above.
Just as the difference between Mr Brown’s two capitalization rates determined the outcome of his report[27], so too Mr Close’s conclusion followed in part from his view that the adjusted net annual rental would be $470,000 in both scenarios. That was first explained in s.1.6 of the report as follows:
“Our rationale as to a similar rental is based on the fact that the anchor tenant has a lease term certain of only two (2) years and seven (7) months. Consequently, given the apparent poor trading performance of the supermarket, it is likely that a specialty shop trader would not commit to the subject plaza with the knowledge of the unlikely prospects of the anchor tenant recommitting, and therefore would be well aware of the uncertainty in respect of the short to medium term trading environment, based on either scenario.
…
In our view, both scenarios reflect the circumstances of risk to income, due to the short lease term certain of the anchor tenant, and the overall poor trading prospects. Therefore, we believe that the subject property is unlikely to attract a prospective investor at a yield or capitalization rate commensurate with more passive shopping centre style investment, being secured by an anchor tenant pursuant to say a 10 – 20 year lease, and therefore providing a retailing environment to attract associated speciality shop traders.
Accordingly, in consideration of an appropriate capitalization rate, we have had regard to the overall investment profile of the centre, which as noted above, effectively represents a similar profile under both scenarios; the overall centre design, which again is identical under both scenarios; the reserved rental levels, albeit adjusted to reflect our assessed combined net annual rental, which we note is identical under both scenarios; the prospects of attracting an alternative anchor lessee, and re-establishing the centre, including likely capital costs associated with re-design/refurbishment works; and importantly to prevailing yields, as subsequently summarised under the heading Comparable Sales Evidence.”
[27]See fn.24 above.
Later, in s.6.6.1 of the report, Mr Close repeated that the fact that the anchor tenant had only two years and seven months to go meant that the property did not offer the usual investment attributes associated with a supermarket-based shopping centre. There were prospects of extended vacancies, particularly in respect of the area occupied by the supermarket. A prudent investor would recognize those elements and accordingly a capitalization rate of 11.50% was appropriate. After setting out his calculations in a table, he continued:
“We consider the above valuation rationale to be appropriate for both scenarios, as it recognises the principle of capitalizing a fair rental in perpetuity, and employs the application of a specific capitalization rate to reflect the risk of maintaining an income in perpetuity; the prospects of rental growth; the likelihood of vacancies; the requirement for capital expenditure for refurbishment works to maintain a level of rental, etc.”
Although it involves some repetition, it may be as well to set out s.6.6.3, Mr Close’s conclusion, in full:
“Having regard to our specific terms of reference, we conclude that our assessments effectively provide similar values. This result reflects the investment profile of the centre under both scenarios, with each scenario providing no security of tenure; a poor trading environment; and the overall prospects of vacancies, minimal rental growth, and therefore a risk to income in perpetuity. Consequently, we believe a prudent investor would not vary their view as to value, albeit possibly allowing for a minor adjustment for a rental shortfall due to the lease provisions of tenancy G04 & G05.
Significantly, a prudent purchaser is unlikely to commit to the property on the basis of the existing tenancy profile and overall centre design, particularly in view of the inherent poor trading performance over a number of years, and the obvious tenancy mix/centre design, which has proven to be unsuccessful. Accordingly, we believe a prudent purchaser would consider a highest and best use concept, which we note may include addressing the poor design aspects of the centre (being effectively the internal mall), and attracting an alternative anchor lessee due to the past poor trading performance of the supermarket, and the obvious competition from the nearby Safeway and Coles supermarkets.
Therefore, due to the likelihood of maintaining a similar rental level (although nonetheless recognizing the likelihood of a number of existing tenants ‘putting pressure’ on management for a rental concession under scenario 2), we believe that similar values would apply, as the actual approach to value must be based on longer term/maintainable rental levels, rather than capitalizing an actual rental due to a specific reasons. Consequently, we believe a new speciality shop lessee is unlikely to commit to the centre with the common knowledge of the poor trading performance of the anchor lessee; the short lease term certain remaining; and importantly, the unlikely prospects of the lessee exercising the option period. Therefore, given this situation and our earlier comments under the heading Synopsis, we confirm our assessments, subject to scenarios 1 and 2, as follows.” (The valuations followed.)
I mentioned earlier that Mr Close also wrote three letters. One, dated 2nd April 2003, preceded his report but was consistent with it. The others, dated 18th August 2004 and 18th January 2005, reiterated his view that the centre provided poor investment prospects whichever scenario applied and therefore the yields should be the same.
In his letter of 18th January 2005, a further argument[28] was advanced:
“Furthermore, given our view as to a likely purchaser, being that of an entrepreneurial investor, rather than a passive investor, the fact that the anchor lessee had vacated pursuant to scenario 2 may well provide the catalyst to commence refurbishment/redevelopment proposals, and/or the restructuring of tenancies during the period of Fishers’ obligation to maintain the rental reserved under the original lease.”
Mr Milne was similarly of the view that Fishers’ early departure afforded an opportunity to look for a new anchor tenant, and undertake refurbishment/fit out works for such a tenant, whilst Fishers continued to pay rent and then to negotiate a surrender fee with Fishers. It is possible to overestimate the opportunity provided. Neither refurbishment nor fit out could be undertaken if Fishers insisted on the covenant for quiet enjoyment.[29] There was earlier certainty that Fishers would not renew the lease, but that was unlikely in any event, and a better prospect of negotiating the surrender of a lease which provided for a rental substantially above the market rate and contained a covenant to make good at the end of the term, but Fishers’ closure added an element of urgency to finding a new anchor tenant.
[28]It should be noticed that this argument, first adumbrated in Mr Close’s letter of 2nd April 2003 and then developed in his letter of 18th August 2004, is different in kind and, like Mr Brown’s reasons considered at [45] - [47] below, relates to the short term.
[29]See, however, paragraph 8 in [2] and [23] above. In fairness to Mr Milne, it should also be noted that he referred to “the opportunity to negotiate access to re-fit or refurbish the tenancy whilst a rental income was still being received for the space” (emphasis added). There was a risk of a “black hole” at the end of the term. Although the opportunity referred to in this paragraph must be kept in perspective, it is not to be discounted. See fn.34 below.
Having regard to my conclusion at [45] – [47] below, it is worth setting out the immediately preceding paragraph of that letter too:
“Notwithstanding our general acceptance and understanding of the overall valuation rationale, we nonetheless disagree with the application of a higher capitalization rate in respect of scenario 2, and therefore a lower value. As noted in our overview of the Barnden report, and our subsequent formal valuation, we reiterate that the adoption of a capitalization rate should reflect a fair and maintainable rental in perpetuity, and not a specific rental and/or short term scenario, as represented by say a ‘diminished market perception of the centre’ … or the reduced rental associated with both the ‘cheesecake shop’ tenancy and ‘fish shop’ tenancy.”
In his oral evidence Mr Close conceded the short term impact of Fishers’ ceasing to trade but maintained that there should be no difference between the two scenarios.
Before proceeding to my conclusions, I return to an observation made by the judge in paragraph 51 of his reasons.[30] His Honour cautioned against an assumption that the appellant must necessarily have suffered loss by closure of the supermarket in breach of a covenant to keep it open. It is an easy assumption to make, given the importance of an anchor tenant and agreed descriptions of the appearance of the supermarket and conditions at the shopping centre after Fishers’ departure. It was like “a bomb site”. Mr Close agreed, among other things, that, in the absence of an anchor tenant, there would be “a stigma about the centre” that would create uncertainty so far as a purchaser or the existing landlord was concerned. As we have seen, other tenants were “in panic mode” and had received enquiries as to whether they were closing down. The judge was nevertheless correct. A diminution in value had to be proved on the balance of probabilities, and not just assumed. That does not mean, of course, that lay evidence or common sense[31] should be disregarded in deciding whether to accept, wholly or in part, the competing assessments of Mr Brown and Mr Close. I attach somewhat less weight than his Honour to Mr Milne’s opinion.[32]
[30]See [24] above.
[31]See The Commonwealth v. Milledge (1953) 90 C.L.R. 157 at 162 per Dixon, C.J. and Kitto, J.; Holtman v. Sampson [1985] 2 Qd R. 472 at 474, quoted by Heydon, J.A. in Makita (Australia) Pty. Ltd. v. Sprowles (2001) 52 N.S.W.L.R. 705 at 735 [71]; and Boland v. Yates Property Corporation Pty. Ltd. (1999) 167 A.L.R. 575 at 590 [54] per Gleeson, C.J.
[32]See [41] above.
Mr Brown adopted capitalization rates that resulted in a difference in market value of $215,000. He did not explain the amount of the differential between the two rates. The principal reasons for there being any differential at all were “the uncertainty and greater risk associated with the centre’s income” and “pressure on tenants particularly those reliant on the anchor tenant drawing people to the centre”. The problem with those reasons and the oral evidence set out and summarized at [34] above is the time scale. Mr Brown’s observations are valid in the short term, but it must be assumed that Fishers would not in any event have renewed the lease in November 2004. Longer term uncertainty and risk and any longer term pressure on retail tenants were not caused by the breach of covenant.
The same point may be made by characterizing both valuations as an assessment of the underlying market value of the shopping centre as an investment. An entrepreneurial investor would not be concerned with the next two years and seven months but with a return on its investment over a longer period of time.[33] If
one puts to one side the opportunity created by Fishers’ premature departure, there might well be some difference in value, but that difference would reflect only the temporary advantage of having an anchor tenant that was still trading. In the appellants’ submissions on “No Difference”, handed up by leave in the course of the argument, the factors identified as necessarily diminishing the value of the centre are all short term, once it is assumed that Fishers would not in any event have renewed the lease.
[33]In his letter of 2nd April 2003 Mr Close said that a speciality lessee would likewise undertake commitments based on “the likely medium to long term trading environment, rather than say a short timeframe of 1–2 years”.
There is no reliable evidence of the value of any such temporary advantage. It cannot be derived from the lay evidence referred to above. Both sets of valuations capitalize an assessed market rent. They do not say that an entrepreneurial investor, or any purchaser, would pay a premium of, say, $30,000 for the real but evanescent advantage of there being a short term anchor tenant.[34] That was not the issue at the trial or the task that the valuers were asked to perform.
[34]It would have to be a net advantage because the similarly short term opportunity referred to at [41] above would have to be given some countervailing weight.
For these reasons, in my opinion, the appeal should be dismissed.
ASHLEY, J.A.:
I agree with Callaway, J.A, for the reasons which his Honour gives, that this appeal should be dismissed. I wish to add very little, and only in respect of the principal issue which was debated, to what his Honour has said.
A conclusion that the value of the shopping centre, at date of breach, was no different whether or not Fishers was trading – or, more accurately, that the appellants had failed to establish that there was any difference in value – may be thought to be counter-intuitive. Particularly that is so when attention is directed to lay evidence as to the appearance of the premises after Fishers had vacated, and to evidence of concerns expressed by other lessees thereafter.
On analysis, however, the intuitive impression is seen to be founded upon consideration of transient, and selective, circumstances – rather than upon all the circumstances which bore upon the market value of the premises. It is to be remembered that the methodology[35] used by the principal valuer witnesses to ascertain market value focused upon the long-term return on investment which would reasonably be sought by a purchaser. In applying that methodology it was pertinent that the shopping centre exhibited a number of undesirable features pertaining to set-up and location which were apparently intractable; and that, if Fishers – which was paying a substantially above-market rental[36] - had not vacated in April 2002, it would certainly have done so when the term of the lease ended some two and a half years thereafter. When regard is had to all the circumstances, I think it is not surprising that the long-term return on investment should be considered unaffected by Fishers’ early departure from the premises.
[35]There was more than one, but nothing turns on it.
[36]And continued to do so after it had vacated the premises.
It may be, in the immediate and desolate aftermath of Fishers’ departure, that a shrewd investor might have purchased the shopping centre at some discount to its market value[37]. Whether, and if so how, such an hypothesis could have been converted into a claim, and quantified, is another matter. Callaway, J.A has concluded, on the assumption that such a claim could be maintainable, that there was no reliable evidence before the learned trial judge which permitted its quantification – for the evidence addressed a different matter[38]. I respectfully agree with that conclusion.
NEAVE, J.A.:
[37]Sofal’s purchase, on one view of Mr Dimasi’s evidence, fitted that profile. An alternative scenario is that a shrewd purchaser might have paid a premium in the event that the centre had then been fully occupied, particularly since Fishers at least was locked into paying above-market rent for the term of its lease.
[38]See [47].
I have had the benefit of reading in draft the reasons for judgment of
Callaway, J.A. I agree, for the reasons that his Honour gives, that the appeal should be dismissed.
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