Monachbrook Pty Ltd and Watson v Goodfellow

[1995] QCA 60

IN THE COURT OF APPEAL	[1995] QCA 060
SUPREME COURT OF QUEENSLAND

Appeal No. 128 of 1994

Brisbane
[Monachbrook Pty. Ltd. & Anor. v. Goodfellow]

BETWEEN:

STEPHEN FREDERICK GOODFELLOW

(Plaintiff) Respondent

AND:

MONACHBROOK PTY. LTD.

(First Defendant) First Appellant

AND:

RAYMOND ERIC WATSON

(Second Defendant) Second Appellant

Davies J.A. Pincus J.A. Lee J.

Judgment delivered 15/03/1995
Judgment of the Court.

APPEAL ALLOWED. JUDGMENT FOR $61,199.59 BELOW SET ASIDE AND IN LIEU, THE FOLLOWING IS ENTERED: JUDGMENT FOR THE RESPONDENT AGAINST FIRST APPELLANT FOR $10,948.73 AND AGAINST SECOND APPELLANT FOR $4,500.00. THE RESPONDENT TO RETAIN HIS COSTS BELOW BUT APPELLANTS TO HAVE THEIR COSTS OF THE APPEAL.

CATCHWORDS: PRACTICE AND PROCEDURE - JUDGMENT SUMMONS - r.153 District Court Rules; whether plaintiff's claim is for debt or liquidated demand; nature of loss resulting from termination of lease.

Counsel:	Mr. R. Douglas Q.C. and with him Mr. M. Bland for the appellants. Mr. J. Lee for the respondent.
Solicitors:	Ken Hooper and Associates for the appellants. Goodfellow and Scott for the respondent.

Hearing Date: 4 November 1994
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 128 of 1994

Brisbane

Before Davies J.A. Pincus J.A. Lee J.

[Monachbrook Pty. Ltd. & Anor. v. Goodfellow]

BETWEEN:

STEPHEN FREDERICK GOODFELLOW

(Plaintiff) Respondent

AND:

MONACHBROOK PTY. LTD.

(First Defendant) First Appellant

AND:

RAYMOND ERIC WATSON

(Second Defendant) Second Appellant

REASONS FOR JUDGMENT - THE COURT

Judgment delivered the 15th day of March 1995

This is an appeal from a judgment entered pursuant to an order of a District Court judge made on 7 June 1994. The order was made pursuant to r.153 of the District Court Rules. The sole question argued in this appeal was whether the respondent's claim for $61,199.59, or the whole of it, was a claim for a debt or liquidated demand within the meaning of r.153. In the end counsel for the appellants accepted the difficulty of contesting, and in effect conceded, that part of that sum, $10,948.73, was such a claim; though they submitted that, for another reason to which we shall refer later, the second appellant's liability in respect of this sum should be limited to $4,500.00.

On 21 May 1991 the respondent became the owner of retail shop premises of which the first appellant was already the lessee pursuant to a lease dated 25 February 1991 with the respondent's predecessor in title. By guarantee, presumably executed at about the same time as the lease, the second appellant promised to pay all monies payable pursuant to the lease and to perform all covenants, conditions and obligations binding on the lessee.

On 14 February 1992 the lease, which was for a term of five years, was validly determined by the respondent. On 17 or 19 February the appellants and the respondent entered into an agreement whereby:

1.   It was acknowledged that up to 14 February 1992 an amount of $24,226.02, together with a sum for variable outgoings, was jointly and severally owed by the appellants to the respondent; and it was agreed that that sum should be paid by specified instalments on specified dates. There was also an acceleration clause in the event of default in payment of any instalments.

2.   The first appellant and the respondent agreed to a monthly tenancy, substantially on the terms of the former lease, subject to:

- immediate payment into a trust account of the
rental to the end of February;

- the monthly rental thereafter being $4,166.66, together with variable outgoings, until 28 February 1993, thereafter to be adjusted in accordance with the terms of the former lease;

- a guarantee by the second appellant of the liability of the first appellant under the tenancy agreement limited to $4,500.00;

- an agreement by the appellants to pay the respondent the amount of any loss or damage which he might suffer or had suffered as a result of the termination of the lease, including any base rental which the respondent would otherwise have received during the term of the lease.

By 19 June 1992 an amount of $12,499.98 was due for rental after 1 March 1992. Accordingly on that day the parties varied the obligations of the appellants with respect to rental after that date as follows:

1.    For rental due up to 30 June 1992 the respondent would accept $9,500.00 by an immediate payment of $3,000.00 and three monthly instalments of $2,166.66;

2.  

Thereafter he would accept as monthly rental $2,500.00,
in lieu of $4,166.66, provided that he could, at any
time, elect that such reduced rental should thereafter
cease and that the higher rental should be payable.
It is common ground that the tenancy agreement so
constituted and varied continued until 28 September 1992.
After that date rental owing under the tenancy agreement
amounted to $10,948.73 consisting of $3,615.40, being the
balance of the above sum of $9,500.00, and $7,333.33, being
the rental due, at $2,500.00 per month, from 1 July 1992 to
28 September 1992. This total amount was plainly a sum for
which judgment could be given pursuant to r.153. However as
the whole of it relates to payments guaranteed by the second
appellant under the varied agreement his liability for that
sum must be limited to $4,500.00.

The balance of the sum for which judgment was given below, $50,250.86, consisted of rental at $4,166.66 per month from 29 September 1992 to 31 March 1994 less the base rent received by the respondent from his new tenant from 13 July 1993 to 31 March 1994. It does not appear from the material filed why the respondent claimed loss only up to 30 March 1994 or why he did not obtain another tenant between 29 September 1992 and 13 July 1993.

This additional amount must have been claimed pursuant to the term of the February agreement, to which we have already referred, whereby the appellants agreed to pay the respondent the amount of any loss or damage he might suffer or had suffered as a result of the termination of the lease.

It may also include damages for loss of the bargain made by the February agreement as varied. However described, it is a claim for unliquidated damages. If the claim is, as it appears to be, one in respect of loss suffered as a result of termination of the lease, a relevant amount in calculating those damages is the amount which a reasonable person in the respondent's position would have obtained by way of rental over the term of the lease after its termination. Although the rental in fact obtained from the first appellant pursuant to the tenancy agreement up to 28 September 1992 and the amount obtained by the respondent from his new tenant from 13 July 1993 are prima facie evidence of the amounts which could reasonably be obtained during those periods, that does not make the claim a claim for a liquidated sum because the damages fall to be assessed at the date of termination of the lease, 14 February 1992, and those sums are no more than prima facie evidence of amounts to be brought to credit in arriving at the assessment of those damages. Moreover that assessment would require assessment of the reasonableness of the respondent's having failed to obtain a substitute tenant between 29 September 1992 and 13 July 1993.

For these reasons the claim to the extent of $50,250.86 was not a claim for a debt or liquidated demand and consequently was not recoverable in proceedings pursuant to r.153. The result is that there should be judgment for the respondent against the first appellant for $10,948.73 being part of his claim against that appellant and against the second appellant for the sum of $4,500.00 being part of his claim against that appellant. As to the balance of the claim the application should have been refused. We would accordingly allow the appeal and set aside the judgment for $61,199.59 entered pursuant to the order made below. In lieu judgment should be entered for the respondent against the first appellant for the sum of $10,948.73, and against the second appellant for the sum of $4,500.00 being part of the respondent's claim against that appellant. The respondent should retain his costs below, but the appellants should have their costs of appeal.