Georgopoulos v Normetals Pty Ltd - [2020] SASC 18

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
GEORGOPOULOS & ANOR v NORMETALS PTY LTD
[2020] SASC 18
Judgment of The Honourable Justice Lovell
13 February 2020
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
TORTS - TROVER AND DETINUE - REMEDIES - ACTION FOR CONVERSION - DAMAGES - MEASURE OF
DAMAGES - GENERAL PRINCIPLES - MITIGATION OF DAMAGES - PLAINTIFF'S DUTY TO MITIGATE
In 2008, the appellants’ storage/work depot was broken into and numerous items stolen. The appellants were overseas on holiday at the time of the theft. The thief, who remains unknown, assumed the identity of a local builder and sold the stolen property as scrap metal to the respondent. Upon returning from holiday, the appellants and police located some of the missing property at the respondent’s scrap metal yard. Some of the property had already been sold or crushed. The appellants brought a claim in conversion seeking damages of $100,000. The Magistrate found conversion proved and awarded damages in the amount of $34,116. Both parties appeal against the quantum of damages.
Whether the Magistrate erred in assessing the quantum of damages - liability - whether the appellants failed to mitigate their damages - whether the magistrate erred in rejecting the expert valuer’s opinion - highest and best use
Held, allowing the appeal:
1. The Magistrate did not err in finding all the property stolen was delivered to the respondent's property.
2. The Magistrate was correct to find that the respondent had not established that the appellants failed to mitigate their loss.
3. The Magistrate erred in his assessment of damages.
Magistrates Court (Civil) Rules 2013 (SA) r 106, referred to.
Devries & Anor v Australian National Railways Commission (1993) 177 CLR 472; Jones v Dunkel (1959) 101 CLR 298; Australian Securities and Investments Commission v Fortescue Metals Group Ltd (No 5) [2009] FCA 1586; Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204; Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185; Livingstone v Rawyards Coal Co (1880) 5 AC 25; Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625; Electricity Trust of South Australia v O’Leary (1986) 42 SASR 26; Jansen v Dewhurst [1969] VR 421; Bellgrove v Eldridge (1954) 90 CLR 613; Murphy v Brown (1985) 1 NSWLR 131; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768 ; Nanosecond Corporation Pty Ltd & Anor v Glen Carron Pty Ltd & Anor (No 2) [2018] SASC 188; Aerial Advertising Co v Batchelors Peas Ltd (Manchester) [1938] 2 All ER 788, considered.

GEORGOPOULOS & ANOR v NORMETALS PTY LTD
[2020] SASC 18
Magistrates Appeal
LOVELL J.
Overview

In September 2008, the appellants’ storage/work depot at Wingfield was broken into and numerous items stolen. The appellants were overseas on holiday at the time of the theft. The thief, who remains unknown, assumed the identity of a local builder and sold the stolen property as scrap metal to the respondent. The respondent was duped by the thief. Upon returning from holiday, the appellants and police located some of the missing property at the respondent’s scrap metal yard. Some of the property had already been sold or crushed.
The appellants (plaintiffs) brought a claim in conversion in the Magistrates Court seeking damages of $100,000. The respondent (defendant) admitted to receiving some, but not all, of the stolen items, and paying the thief scrap metal prices. The respondent challenged the appellants’ valuation evidence alleging that none of the items stolen had value over the scrap metal price. On 5 October 2018, the Magistrate found the appellants had proved their claim in conversion for all stolen items and awarded damages in the amount of $34,116. The appellants appealed against the quantum of damages. The respondent cross-appealed alleging errors by the Magistrate in finding that all of the stolen property had been received by them; it also appealed the quantum of damages.
On 25 January 2019, the Magistrate ordered the appellant to pay the respondent’s costs. The Magistrate found the respondent to be the successful party when applying the formula in rule 106 of the Magistrates Court (Civil) Rules 2013 (SA), as although the Magistrate had ruled in favour of the appellants, the appellants had claimed well over the amount awarded. The Magistrate ordered the respondent to pay pre-judgment interest at a rate of 5% calculated from the date of issue of the appellants’ claim. The appellants appeal the order for costs. They also appeal the pre-judgment interest award.
Grounds of Appeal
The appellants appeal on three main issues.
Assessment of damages
The appellants submit the Magistrate was in error in assessing the quantum of the appellants’ damages at $34,116 as he:
1Failed to give adequate consideration to the expert valuer’s report and erred in rejecting the expert opinion of the valuer and his valuation of the stolen property.
2Failed to consider adequately, or at all, the concept of highest and best use.
3Failed to consider the appellants’ unusual circumstances of having property which they had not had formally valued stolen where there was evidence given that the property could not be insured against such loss.
4Gave no or no significant consideration as to the value of specific substantial and large units of property as having detailed value.
Pre-judgment interest
In relation to the pre-judgment interest, the appellants submit that the Magistrate erred in:
1Considering the issues of costs before considering the interest payable to the appellants when the assessment of damages is integral to the ultimate quantum of the judgment.
2Failing to have any or sufficient regard in considering the period over which the interest should be calculated.
Costs
The appellants submit that the Magistrate erred in awarding costs against the appellants as he failed to inform himself appropriately in the exercise of the discretion as to costs.
Cross-Appeal
The respondent filed a Notice of Cross-Appeal which raised two central issues:
1Whether the Magistrate erred in assessing the quantum of the appellants’ damages as being $34,116 in that:[1]
1.1.the award of damages was manifestly excessive and against the evidence and/or the weight of the evidence;[2]
1.2.the Magistrate erred in assessing damages by reference to 30% of the value placed on the appellants’ property by the appellants’ expert valuer;[3] and
1.3.the Magistrate erred in finding that the respondent had received all of the appellants’ property the subject of the claim.[4]
2Whether the Magistrate erred in failing to reduce the appellants’ damages to reflect the appellants’ failure to mitigate their loss by collecting, or arranging for the return of, their property from the respondent.[5]
[1]    This appears as paragraph 3 of the Notice of Cross-Appeal.
[2]    This appears as paragraph 3.1 of the Notice of Cross-Appeal.
[3]    This appears as paragraph 3.2 of the Notice of Cross-Appeal.
[4]    This appears as paragraph 3.3 of the Notice of Cross-Appeal.
[5]    This appears as paragraph 4 of the Notice of Cross-Appeal.
Background
The appellants’ property, that was the subject of the theft, had been stored outside in the open, and exposed to the elements, for at least ten years before it was stolen. Amongst various other smaller items stolen, there were six major items:
1Steel beams
2Overhead crane
3Flat top trailer
4Car trailer
5Caravan
6Railway carriage
The price paid by the respondent to the thief for the property was scrap value price. Whether all the property stolen had been delivered to the respondent’s premises was an issue at trial and on appeal.
The appellants’ claim was based on the valuation of an expert valuer, Mr Dempsey. None of the property was available for inspection as, by the time the property was located at the respondent’s depot, some of the property had been sold. The appellants alleged that the caravan had been crushed and the car trailer had been cut into pieces. The respondent alleged that the appellants had failed to mitigate their damages by not collecting some items which had been found at its premises.
The appellants, having been successful on liability, only challenged the assessment of damages and the other consequential orders. The respondent cross-appealed the assessment of damages submitting that the Magistrate awarded excessive damages. One of the grounds of the Cross-Appeal challenged the Magistrate’s findings that all the appellants’ property, said to have been stolen, was delivered to and then converted by the respondent. Given the nature of the items, and the way in which the trial was conducted, this ground is a challenge to some of the Magistrate’s findings on liability. The finding has consequences in relation to the assessment of damages. It is therefore convenient to deal with the Cross-Appeal, and those arguments relating to liability, first.
Liability
What items were delivered to the respondent?
The respondent submitted both at trial and on appeal that the evidence did not establish that all the items alleged to have been stolen existed. It submitted that the appellants had produced no pre-theft valuations, purchase receipts or insurance details nor was there, in the appellants’ business records, any adjustment to a depreciation schedule or accounting records more broadly, relevant to the theft. The respondent also challenged the Magistrate’s finding that, even if all the items existed, not all stolen items were delivered to its premises and then converted. The respondent, at trial and on appeal, accepted that it received some, but not all, of the stolen items.
The Magistrate heard evidence from both Mr and Mrs Georgopoulos, in addition to that of Ms Papacharalambous, about what items were stolen from their yard. Some of the items had been purchased decades before the theft; other items were purchased many years before the theft. Two of the items (the trailers) had been manufactured by the appellants from purchased materials. In those circumstances, a lack of records was hardly surprising. The appellants at trial relied on their own evidence. Their evidence was generally supported by photographs taken at various times. The appellants were vigorously cross-examined about the items and the value of the items. The Magistrate found that he “had no reason to doubt” the evidence of the appellants and Ms Papacharalambous and he accepted their evidence about the items stolen. Clearly the Magistrate had the benefit of hearing the oral evidence. It could not be said that he has palpably misused his advantage.[6] On my review of the transcript, I consider his decision to be correct.
[6] Devries & Anor v Australian National Railways Commission (1993) 177 CLR 472 at 479 per Brennan, Gaudron and McHugh JJ.
However, it is correct to observe that those findings of the Magistrate do not, of themselves, establish that all the items stolen were delivered to the respondent.
At trial, the respondent called its Managing Director, Mr Schueler. Invoices created by the respondent at the time it received some items were tendered. Mr Schueler, like the appellants, was overseas at the time the appellants’ property was delivered to the defendant’s scrap metal yard; he could only give evidence of the company’s usual business practice. The invoices, while documenting the transactions, did not record the items received; they recorded only the amount of scrap metal processed. The Magistrate found, correctly in my view, that Mr Schueler’s evidence could not assist on the question of whether all the items stolen were delivered.
Material gathered by the police during the course of their investigation was tendered.[7] This material established that the thief stole property from a number of premises other than the appellants’, used a number of carriers to carry out his plan (not paying any of them) and that various items were delivered to a number of scrap metal dealers. However, as the Magistrate observed, this information was simply an overview of what had occurred over a number of days; it did not assist in determining what was delivered to the respondent’s premises.
[7] Exhibit P12.
This material included a statement from Mr Cross, the crane driver who delivered items from the appellants’ land to the respondent’s business. He was not called but his statement was tendered.[8] The Magistrate relied on this statement to draw the inference that all items stolen were delivered to the respondent’s premises. The respondent submitted that the Magistrate was in error in doing so. It submitted that the Magistrate’s finding on this point was speculative.
[8] Exhibit P13.
Mr Cross’s statement establishes that he was contacted by a man named Andrew (the thief) who arranged for him to attend the property and take items to the respondent’s premises. He attended but found the gates locked. He spoke to Andrew and it was arranged he attend the following day. Mr Cross stated:[9]
It was arranged that they would return on the following day at which stage the gates were open.
The drivers found the gates were open and the padlocks were not noticed to have been cut.
The steel on the property was loaded as requested by Andrew and one trip to Normetals by each vehicle was subsequently required to clear the block.
A semitrailer was required to convey an old car carrier.
[9] Exhibit P3.
The Magistrate made the following findings:[10]
I think the statement of Martin Cross in Exhibit P3 is a more accurate version of how the property was removed. The statement suggests Martin Cross was the only crane operator engaged by the Thief and that Martin Cross used two trucks to remove the property. One truck was his and the other truck came from James Contract Supplies Pty Ltd. Further to this, the statement says the Thief instructed Cross to take the property to the premises of Normetals. What I apprehend from this is the property was removed from the plaintiff’s depot and was delivered exclusively to the premises of Normetals by Cross and James Contract Supplies Pty Ltd. I am satisfied on the balance of probability that all of the plaintiff’s property was removed from the depot by Martin Cross and James Contract Supplies Pty Ltd and I am satisfied the plaintiffs [sic] property was delivered to the defendant only.
[10] Georgopoulos & Anor v Normetals Pty Ltd, judgment of Magistrate J Fahey, 5 October 2018, file No. AMCCI-14-3327 at [16].
As mentioned, the evidence of the appellants and Mr Schueler did not assist on this point. The respondent did not call the employees who were working at the premises at the time the material was delivered. An employee, Jarrod, is named on the initial invoices produced when the thief was paid; he is still employed by the respondent but was not called to give evidence. Indeed, no employees were called. The rule in Jones v Dunkel[11] has relevance in this matter.
[11] (1959) 101 CLR 298 at 308, 312, 320-321.
Two potential inferences arise from the application of the rule in Jones v Dunkel.[12] First, the unexplained failure by a party to call a witness may, in appropriate circumstances, support an inference that the uncalled evidence would not have assisted the party's case. Secondly, the failure to call a witness may also permit the court to draw, with greater confidence, any inference unfavourable to the party that failed to call the witness, if that uncalled witness appears to be in a position to cast light on whether the inference should be drawn.To put that another way, where an inference is open from facts proved, the unexplained failure of a party to call a witness or tender a document may be taken into account as a circumstance in favour of drawing the inference.
[12] (1959) 101 CLR 298 at 308, 312, 320-321; Australian Securities and Investments Commission v Fortescue Metals Group Ltd (No 5) [2009] FCA 1586 at [102].
The Magistrate, as he was entitled to do, relied upon the evidence of Mr Cross. In my view, the inferences drawn by the Magistrate were clearly open to him. I reject the submission that the inferences drawn by him were speculative. The inferences naturally arise from Mr Cross’s statement. There was no evidence to contradict the inferences drawn by the Magistrate. Even without the assistance of the rule in Jones v Dunkel,[13] it was open for the Magistrate to draw the inference he did. As the respondent did not call the employee Jarrod, or indeed any employee, the Magistrate was able to more readily draw the inference that he did.
[13] (1959) 101 CLR 298.
I reject the submission that it was equally likely that a number of carriers may have attended the appellants’ property and removed some of the items, taking them to a different scrap metal dealer.
There was one further issue that assisted in determining the question of what was delivered to the respondent’s premises. This involved the question of whether the car trailer, which was undoubtedly cut into at least two pieces, was cut by the thief at the appellants’ property or cut at the premises of the respondent. This also affected the question of damages.
Mr Georgopoulos gave evidence, from photographs, that he could see evidence of “cutting” having occurred at the respondent’s premises. Mr Schueler gave evidence that cutting would not be in accordance with normal business practice. The Magistrate had the benefit of hearing both witnesses and accepted the evidence of Mr Georgopoulos. The respondent was not able to point to anything which suggested that the Magistrate had palpably misused this advantage. Further, as the Magistrate pointed out, Mr Cross said nothing about cutting any of the items; indeed, he stated that a semi-trailer was required to convey an old car carrier.
It was open to the Magistrate to make the findings he did and, in my view on reviewing the evidence, the findings are correct.
I reject Ground 1.3 of the Notice of Cross-Appeal.[14]
[14] This appears as paragraph 3.3 of the Notice of Cross-Appeal.
Did the appellants mitigate their damages?
The respondent submitted that the Magistrate erred in failing to find that the appellants had not mitigated their damages. That is, the Magistrate failed to reduce the appellants’ damages to reflect their failure to collect, or arrange for the return of, the property that the respondent had in its possession.
This submission was largely, but not totally, based on the assumption that not all stolen items were received by the respondent. The Magistrate found against the respondent on that point. In my view, he was correct in doing so. However, that finding does not totally dispose of the respondent’s submission.
Evidence at the trial established that at least some of the appellants’ property was located at the respondent’s premises. While the respondent did not initially concede that such property was indeed the appellants’, eventually it conceded that some items may have been the appellants’. It had undoubtedly “scrapped” some of the appellants’ property by this stage (as found by the Magistrate but denied by the respondent). The respondent relied upon a letter of 24 January 2011 written by the respondent’s solicitors to the appellants’ solicitors.[15] The letter, having denied possession of many of the items, accepted that some of the steel beams (unspecified), the flat top trailer, the car carrier trailer and some square tubing angle irons (unspecified) were in its possession. The respondent admitted receiving and disposing of part of the railway carriage. The letter confirmed that in respect of the identified items, the respondent was “ready, willing and able to have these goods returned” to the appellants. No arrangement was made either by the appellants or the respondent to collect or have delivered those items. The respondent submitted that the failure to make those arrangements demonstrated that the appellants had failed to mitigate their loss.
[15] Exhibit D9.

There are a number of problems with the respondent’s submissions.
Arguably, the question is not one of mitigation of damages but rather whether the items at the time of the letter had been converted. In dealing with the tort of conversion, Dixon J, in Penfolds Wines Pty Ltd v Elliott,[16] said:[17]
The essence of conversion is a dealing with a chattel in a manner repugnant to the immediate right of possession of the person who has the property or special property in the chattel. It may take the form of a disposal of the goods by way of sale, or pledge or other intended transfer of an interest followed by delivery, of the destruction or change of the nature or character of the thing, as for example, pouring water into wine or cutting the seals from a deed, or of an appropriation evidenced by refusal to deliver or other denial of title. But damage to the chattel is not conversion, nor is use, nor is a transfer of possession otherwise than for the purpose of affecting the immediate right to possession, nor is it always conversion to lose the goods beyond hope of recovery. An intent to do that which would deprive “the true owner” of his immediate right to possession or impair it may be said to form the essential ground of the tort.
[16] (1946) 74 CLR 204.
[17] Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 229.
The letter of 24 January 2011 indicates an acceptance by the respondent that it possessed goods rightfully owned by the appellants; there was no denial of title. At that time, arguably, the respondent had not converted those items. However, that point was not argued at trial or on appeal.
Assuming the issue is one of mitigation, it can be accepted that the appellants had an obligation to take reasonable steps to mitigate or minimise the loss they suffered as a result of the tort. The onus of proof on the issue of mitigation lies on the respondent.
The first problem for the respondent is that it denied and continues to deny that it received all of the appellants’ property. On the findings of the Magistrate, the respondent had possession of all of the property. Mitigation, if it could be proved, could only, on the respondent’s own case, have applied to that property it admitted possessing. Leaving aside the flat top trailer, it never proved at trial how much steel it had, nor how many angle irons or square tubing it retained.
More importantly the respondent admitted eventually selling the property, suggesting that the failure of the appellants to collect the property meant that they had abandoned it. Given the tone of the correspondence between the parties up to 24 January 2011, the proposition that the appellants had abandoned the property is simply fanciful. Further, on appeal, counsel for the respondent conceded that not only had the respondent sold the property, it had retained the proceeds of the sale. That is, despite conceding that it had sold the appellants’ property, it never paid the appellants as it considered they had abandoned the property. I reject the respondent’s submissions.
If the respondent had not committed the tort of conversion at the time of the letter of 24 January 2011, by selling the property it knew was owned by the appellants, the respondent committed the tort of conversion of those items.
The Magistrate found, correctly in my view, that, on the evidence, the appellants were not responsible for the respondent’s decision to dispose of the appellants’ property. The Magistrate was correct to find that the respondent had not established that the appellants failed to mitigate their loss. Indeed, on the evidence, such a finding was inevitable.
I dismiss Ground 2 of the Cross-Appeal.[18]
[18] This appears as paragraph 4 of the Notice of Cross-Appeal.
Assessment of damages
Both parties appealed the Magistrate’s assessment of damages. The appellants relied on a valuation of the stolen items conducted by Mr Dempsey, a Certified Practising Valuer. Mr Dempsey is employed by Pickles Valuation Services. Mr Dempsey’s qualifications were not disputed; the valuation method he adopted was contested. The Magistrate found, correctly in my view, that all of the property stolen from the appellants was transported to the respondent’s premises. The Magistrate also found, correctly in my view, that a car trailer was cut at the respondent’s premises, not the appellants’. The Magistrate therefore had to assess damages on the basis of those findings. The items stolen were: a caravan, an overhead crane, steel beams, a railway carriage, a flat top trailer, a car carrier (trailer), steel work benches, steel sheets, a steel ladder, a number of square steel tubes, a number of angle irons, a steel channel, floor plates, flat bars, a number of second hand truck tyres (stored inside the railway carriage) and a steel cupboard containing a number of tools.
Mr Dempsey valued the items, in total, at $101,220. As the claim was brought in the Magistrates Court, the appellants’ claim was limited to damages of $100,000.
The Magistrate found, in effect, that there was insufficient evidence to establish a number of underlying assumptions made by Mr Dempsey. The Magistrate found that he could not rely on Mr Dempsey’s valuations but accepted that his evidence established the “upper range” of damages. The Magistrate rejected the respondent’s submissions that the items only had scrap metal value. Doing the best he could on the evidence, the Magistrate assessed damages at 30% of Mr Dempsey’s valuation. Both the appellants and the respondent challenge that assessment.
Before turning to the valuation and the evidence, it is necessary to consider the evidence of the appellants about the stolen items. For many years the appellants ran a car carrying business. They had a contract with GMH. The business employed a number of drivers. Mr Georgopoulos drove trucks and it appears that Mrs Georgopoulos ran the office side of the business. The business was conducted from the Wingfield premises. In addition, Mr Georgopoulos also built trailers. Business in the 1980s was good and expansion was considered.
A local business, Sims Metal, decided to sell its shed including an overhead crane. The appellants bought the shed and overhead crane with the intention of re-erecting the shed on their Wingfield property and using the shed and crane as part of the expansion of the business. Plans for the erection of the shed were drawn and council approval obtained. The steel beams, steel sheets and overhead crane valued by Mr Dempsey were the items purchased for the expansion. The appellants lost the GMH contract and the expansion of the business did not go ahead. The car carrying business gradually declined and by the late 1990s Mr Georgopoulos concentrated on building trailers. The car carrying trailer valued by Mr Dempsey was built by Mr Georgopoulos and sold as part of his ongoing business. The owner eventually sold it back to Mr Georgopoulos; he intended to fix it and resell it. The flat top trailer valued by Mr Dempsey was built by Mr Georgopoulos. It was not finished nor was it roadworthy. He intended to complete the trailer at some time in the future.
The appellants bought the caravan and used it as an office at the Wingfield premises. The railway carriage was used for storage of various items.
For the purpose of his valuation Mr Dempsey was provided with a letter of engagement, photographs of some of the items and various quotations for replacement items (new). He had access to the Pickles database and, of course, he used his buying and selling experience.
Mr Dempsey’s report dated 14 October 2013 was tendered[19] and he gave evidence at the trial. He valued the items as at 30 August 2008.
[19] Exhibit P2.
Mr Dempsey’s report stated the methodology he adopted. He stated that he adopted a “market approach” which was “to collect valid and recent sales on comparable plant and equipment on an appropriate basis”.[20] When considering the market approach, a valuer would have regard to the “age and condition of the asset” and “market conditions”.[21]
[20] Exhibit P2 at 15.
[21] Exhibit P2 at 17.
Mr Dempsey also stated that he applied the “highest and best use” approach. Highest and best use of an asset is defined by:[22]
“The most probable and legal use of personal property which is physically possible, appropriately supported and financially feasible, and results in the highest value” in the appropriate marketplace.
[22] Exhibit P2 at 21.
In relation to these particular assets Mr Dempsey stated that the valuation was on a “retrospective basis” and a “sight unseen” basis with descriptions and images of the assets supplied by the client.[23] On those assumptions Mr Dempsey considered that the assets were in a “fair condition”. “Fair” was defined as:[24]
… equipment which because of their condition are being used at some point below their fully specified utilization because of the effects of age and/or application and which may require general repairs and some replacement of minor elements in the foreseeable future to raise them to become utilized to or near their original condition.
[23] Exhibit P2 at 13.
[24] Exhibit P2 at 13.
There is an obvious tension between the description of the items as being in a “fair condition” and the suggestion that the items were valued at their “highest and best use”. As can be seen from the earlier description of the appellants’ business, a number of the items, but not all, required work, and no doubt expense, to get them into a condition where they could be used for their “highest and best” use. Items such as the two trailers and the overhead crane were not able to be operated according to their highest and best use without further expense.
It was against that background that the Magistrate had to assess damages. Mr Dempsey, when giving evidence, did not clarify precisely how he valued each item. For example, how much work was required to get the car carrying trailer back into a roadworthy condition was not made clear nor was it costed. This problem also arose with the flat top trailer and the overhead crane. This made the task of assessing damages very difficult for the Magistrate. The tension between the highest and best use for the items and the actual condition of the items was never resolved properly in the evidence.
The Magistrate considered these issues. He found:[25]
… the party calling expert evidence must tender sufficient evidence to support the assumptions of fact relied upon by the expert if the evidence is to be admissible. If the trier of fact does not accept the primary evidence, then the expert evidence is admissible, but the disconformity should be considered in determining the weight of the evidence.
Mr Dempsey did not testify as to the condition of the plaintiff’s property and explicitly stated his valuation of the goods at their highest and best use is an assumption. At no point did Mr Dempsey testify that ‘highest and best use’ was the actual condition of the goods in question. In fact, no evidence was tendered regarding the condition of the property. I am of the view that the plaintiffs have not tendered sufficient evidence to prove, even partially, the basis of Mr Dempsey’s assumption that the property was fit for highest and best use and so I am not convinced the value placed on the property by the valuer is reliable. It follows, therefore, that I must reach my own assessment of the plaintiff’s damages.
[25] Georgopoulos & Anor v Normetals Pty Ltd, judgment of Magistrate J Fahey, 5 October 2018, file No. AMCCI-14-3327 at [28]-[29].
The Magistrate, in these passages, appears to have made a number of findings which are arguably in error. On review of the transcript it is not correct to say that Mr Dempsey did not testify as to the condition of the property as there are occasions when he did. In re-examination Mr Dempsey addressed the condition of some of the items as follows:[26]
[26] T36.33-37.24.
QMr Anders also pointed out these items have been stored outside. Did your valuation take account of that.
AThe valuation took into account that yes, especially with the steel, that there would be some effect of being outside. General wear and tear as such is what I would call it. There was some apportioning of that, not across everything because of course the crane etcetera was valued on being at its highest and best use which would be certainly detrimental if it had been sitting outside for a number of years, motors etcetera.
QMr Anders also asked you some questions about a few of the specific items and I will just go through them very briefly. Can I just ask you this, did your valuation take account of the fact or assumption that the caravan was a dual axle caravan.
AThat’s correct.
QYour valuation in respect of the flat top trailer, I note your description on p.19 notes skeletal frame, no axles and electrics. Is it the case your valuation took account of the fact that there were no axles and electrics in the construction.
ASo that trailer in its – was valued as, as it sat there in its current condition.
QThe car trailer, Mr Anders asked you if or he pointed out the number of kilometres that it had covered hadn’t been disclosed to you. How far would the kilometerage covered of a trailer affect its value over time.
AI would put in a different – it’s not normally the kilometres.
QYes.
Nor is it correct to state that “no evidence was tendered regarding the condition of the property”. Both Mr and Mrs Georgopoulos gave considerable evidence about the condition of the property. The appellants accepted that the items had largely been stored outside and therefore at the mercy of the elements, in addition to having been purchased many years before. However, they maintained that the items were generally of value over and above their scrap value. They accepted that work would have been needed to bring some items up to a working standard. They were subjected to vigorous cross-examination on their evidence.
I have considered the context of these findings. I have considered whether the Magistrate meant to confine his comments to only the evidence of Mr Dempsey. While that is a possible interpretation of the Magistrate’s findings I am not satisfied that his remarks should be interpreted in that manner. Even if the remarks were confined to Mr Dempsey’s evidence, the finding that Mr Dempsey did not testify as to the condition of property is incorrect. In my view, the appellants have established error in the Magistrate’s reasons. It is therefore not necessary for me to consider the Cross-Appeal grounds on damages as, error having been demonstrated, I must either assess damages myself, if the evidence allows me to do so, or remit the matter back before a different Magistrate for an assessment of damages.
In my view, the evidence does allow me to assess damages.
Legal Principles
It is well settled that, whether in contract or in tort, the injured party should receive compensation in a sum which, so far as money can do so, will put him in the same position as he would have been if the contract had been performed or the tort had not been committed.[27] The manner in which that principle operates depends on the facts in each case.[28] Generally speaking, the measure of damages in the case of damage to a chattel is the cost of repair but if it is unreasonable from the business point of view to repair the article, or if the article is damaged beyond repair, then the basic measure is the cost of replacement in an available market. Here the items have either been on sold or damaged beyond repair.
[27] Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185 at 191; Livingstone v Rawyards Coal Co (1880) 5 AC 25 at 39; Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625 at 637.
[28] Electricity Trust of South Australia v O’Leary (1986) 42 SASR 26.
The onus is on the injured party to satisfy the court on the whole of the evidence as to which approach is the correct method of assessing damages.[29] The test of what is the appropriate measure in any case is reasonableness in the particular circumstances and that is a question of fact.[30] An injured party’s sentimental attachment to the chattel is an irrelevant consideration.[31]
[29] Jansen v Dewhurst [1969] VR 421 at 426.
[30] Bellgrove v Eldridge (1954) 90 CLR 613; Jansen v Dewhurst [1969] VR 421; Murphy v Brown (1985) 1 NSWLR 131.
[31] Michael Tilbury, Civil Remedies: Remedies in particular contexts (Butterworths, vol. 2, 1993) [12021].
Assessing the value of the items converted
The respondent submitted that Mr Dempsey’s valuations should not be accepted. It submitted that Mr Dempsey did not inspect the items and that he relied upon the appellants’ description of the condition of the items. The respondent submitted that Mr Dempsey conceded that he had “limited” information. Without an inspection, the respondent submitted that Mr Dempsey could not say whether or not the items were “scrap”.
The appellants submitted that Mr Dempsey had the descriptions of the property given by the appellants and he also had some photographs of the items. Mr Dempsey, they submitted, was an experienced valuer and that while inspection of the property, if it had been available, would have been preferable, he was qualified to give an opinion based on “sight unseen”.
Before turning to the assessment of the value of the items, I will deal with one aspect of the respondent’s submissions. The respondent submitted that the Magistrate should have assessed the items as having scrap value only. It submitted that it was in the best position to assess the value of the items (having admitted it received some) and that as only scrap value was paid, that was the value of the items.
The Magistrate rejected this argument stating:[32]
… The price paid by the defendant was the then current price in the market for scrap metal. The plaintiffs’ property was offered to the defendant as scrap and the defendant purchased it as scrap. This was the extent of any assessment made by the defendant.
[32] Georgopoulos & Anor v Normetals Pty Ltd, judgment of Magistrate J Fahey, 5 October 2018, file No. AMCCI-14-3327 at [34].
I agree with the Magistrate’s reasoning. Indeed, that was the evidence of Mr Schueler. Mr Schueler stated that on occasions, and he gave Santos as an example, almost new items are brought in to be sold as scrap. The respondent does not value items other than as scrap. I reject that argument of the respondent.
Having rejected the respondent’s submission that he should value the items at scrap value only, the Magistrate approached the assessment of damages on the assumption that Mr Dempsey’s valuation represented the upper end of the value of the items. As mentioned earlier, Mr Dempsey’s qualifications were not in issue. The Magistrate assumed that Mr Dempsey had ignored the condition of the items, and that all items had been valued on the “highest and best use” basis. The Magistrate was in error as, in my view, Mr Dempsey did take into account the condition of some of the items. While some items, for example the overhead crane, would have required substantial restorative work to attain their highest and best use, the same could not be said for the steel from which the shed was to be built and, to some extent at least, the flat top trailer. The car carrier may have required substantially more work but it still had reasonable value. This misapprehension of the evidence led the Magistrate to discount Mr Dempsey’s evidence of value by 70%.
I also consider that Mr Dempsey erred in the way he valued some items. For example, there was no purpose in valuing the caravan at its highest and best use. It had never been used as a caravan; it was used as office space. The same can be said for the railway carriage. It had never been used as a railway carriage; it was used for storage. The appellants were not necessarily entitled to the value of a caravan and railway carriage. They were entitled to claim compensation for the replacement of the office and storage area. No evidence was led that the cost of a replacement caravan and railway carriage was the appropriate measure of damage.

This is not a criticism of Mr Dempsey. He acted on instructions and was asked to value the caravan and railway carriage.
Mr Dempsey gave evidence that he took into account the fact that the steel had been exposed to the elements. His assumption that there was sufficient steel to erect the shed was supported by the evidence of the appellants. Clearly, the fact that the steel could be used to erect a shed meant it had value over and about scrap value. That item alone he valued at $35,000. The roof and wall sheeting for the shed was valued at $7,500. The evidence and his report establish that he valued the flat top trailer as he observed it, from photographs, in the yard of the respondent. His report states that the flat top trailer was valued “with no axles and electrics” and that he obtained, from other sources, comparative prices on the same basis.
However, there was no evidence from Mr Dempsey about the cost of restoring the overhead crane to a working condition. Mr Georgopoulos gave some vague evidence on the topic but, in my view, that evidence was of little assistance.
The car carrier was obviously of value above scrap value but how much above is difficult to ascertain on the evidence. Evidence in relation to many of the other items was scant.
The task of assessing damages, given the state of the evidence, was difficult. However, and as the Magistrate observed, the difficulty of assessment is not a bar to recovery of damages. The general principle is that the court must do its best to assess a plaintiff’s loss based on the evidence available to it; that is so even if there are difficulties inherent in the process that result in a significant degree of uncertainty and estimation in the assessment.[33] Here there is evidence of loss and of value although, with respect to some items, the evidence is sparse. The court must do its best to place a value on the loss despite the paucity of evidence. However, as the respondent submitted, the appellants cannot complain if the award of damages is not as high as it would have been had more reliable information been produced.[34]
[33] Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768 at 774 [37]; Nanosecond Corporation Pty Ltd & Anor v Glen Carron Pty Ltd & Anor (No 2) [2018] SASC 188 at [421] per Doyle J.
[34] Aerial Advertising Co v Batchelors Peas Ltd (Manchester) [1938] 2 All ER 788.
Like the Magistrate, I would discount the evidence of Mr Dempsey as he has valued the items on their highest and best use. However, as discussed, there was evidence that some of the items were assessed taking into account that it had been exposed to weather. To put that another way, little was required, if anything, to restore the item to a condition so that it could be used. In my view, the Magistrate erred in applying a discount of 70% to the evidence of Mr Dempsey.
Taking into account all of the evidence, and applying the “broad judicial axe” in assessing damages, I would assess damages at 50% of Mr Dempsey’s valuation.
I assess damages in the amount of $50,610.
Given my assessment, it is unnecessary for me to decide the grounds of appeal relating to interest and costs. I will hear the parties on the question of interest and costs.
Order
1Appeal allowed.
2The award of damages is set aside.
3Damages are assessed in the sum of $50,610.
4Cross-Appeal is dismissed.