Gigi Entertainment Pty Ltd v Schmidt

Gigi Entertainment Pty Ltd (the appellant) appealed to the Court of Appeal of New South Wales against a decision of the Supreme Court of New South Wales concerning the calculation of loss of bargain damages following the termination of a retail lease. The dispute arose after the landlord, Mr Schmidt (the respondent), took possession of the premises and continued to operate the business himself, as permitted by the lease, following Gigi Entertainment's breach of an essential term.

The primary legal issues before the Court of Appeal were whether the trial judge had erred in calculating the loss of bargain damages and whether expert evidence tendered by the appellant, which had been rejected by the trial judge as irrelevant, should have been admitted. The appellant contended that the expert evidence was relevant to establishing a basis for calculating the loss of bargain damages, particularly in light of the landlord's subsequent occupation and operation of the business.

The Court of Appeal, comprising Beazley P, Ward JA, and Sackville AJA, dismissed the appeal. The Court reasoned that the measure of loss of bargain damages in this context was the difference between the rent reserved by the lease and the market rent for the remainder of the term, and that the landlord's subsequent use of the premises did not alter this fundamental calculation. The Court found that the rejected expert evidence was not relevant to this established measure of damages and therefore upheld the trial judge's decision. The Court also vacated an earlier order made by the Registrar of the Court of Appeal.