Piscioneri v Smith

[2003] WASC 4

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   PISCIONERI -v- SMITH [2003] WASC 4

CORAM:   ACTING MASTER DIXON

HEARD:   7 NOVEMBER 2002

DELIVERED          :   10 JANUARY 2003

FILE NO/S:   CIV 2754 of 2001

BETWEEN:   ARMANDO PISCIONERI

Plaintiff

AND

RODERICK JOHN SMITH
Defendant

Catchwords:

Assessment of damages - Expenses incurred prior to breach - Turns on its own facts

Legislation:

Nil

Result:

Damages assessed in the sum of $10,130.57

Category:    B

Representation:

Counsel:

Plaintiff:     Mr A J Prentice

Defendant:     Mr M D Evans

Solicitors:

Plaintiff:     Mossensons

Defendant:     Corsers

Case(s) referred to in judgment(s):

Anglia Television Ltd v Reed (1972) 1 QB 60

Case(s) also cited:

Nil

1. ACTING MASTER DIXON:  This is an assessment of damages pursuant to a default judgment entered against the defendant on 19 February 2002.

2. Briefly, by way of background, in mid to late 2001 the plaintiff and the defendant, both of whom are professional photographers, entered into a partnership trading as "Sterling Smith Photography" and "Diamond Photo Imaging".  A company was duly incorporated by the name of Stirling Smith Photography Ltd of which the plaintiff and defendant were directors.  The business was conducted at 7 Cantonment Street, Fremantle, at premises leased by the defendant.  Subsequently there was a falling out between the parties.  On or about 26 October 2001 the defendant gave the plaintiff notice to quit the premises and on or about 8 November 2001, changed the locks on the premises.  The plaintiff then commenced proceedings against the defendant seeking, amongst other things, "damages for breach of a Deed of Partnership, Shareholders Deed, the Constitution of Sterling-Smith Photography Pty Ltd and collateral agreements".  On 19 February 2002 a default judgment was entered against the defendant with damages to be assessed.

3. The plaintiff has set out in his affidavit sworn 3 April 2002 the loss and damage that he claims to have suffered by reason of the defendant's breach.  No affidavit evidence has been adduced by the defendant in response thereto however submissions dated 4 November 2002 have been lodged by the defendant's solicitors that admit much of the loss and damage claimed by the plaintiff and set out the basis upon which other loss and damage is disputed.

4. Those items of loss and damage not disputed by the defendant are those set out in the plaintiff's affidavit at pars 4 (admitted in part in the sum of $308.00), 10 ($40.00), 11 ($72.45), 13 ($223.00), 14 ($170.00) and 21 (admitted in part in the sum of $26.65) in the total sum of $840.10.

5. The defendant's principal objection, as set out in the submissions, is that much of the claimed loss and damage cannot be recovered because it comprises expenses that were incurred by the plaintiff prior to the defendant's breach of contract.  For example, in par 4 of his affidavit sworn 3 April 2002, the plaintiff deposes to having paid PVM Photolab Service to install a VE23 printer/processor at the Cantonment Street premises in early July 2001 and then, following the breakdown of the partnership, to dismantle it and take it to the plaintiff's premises at 6/20 Elder Place, Fremantle in November 2001.  The cost incurred in July 2001 was $1177.00.  The defendant says in his submissions that that sum is not recoverable because it was incurred prior to the breach.

6. I do not think this that the defendant is correct in asserting that such losses cannot be recovered.  The issue is not when the losses were incurred but whether monies spent by the plaintiff were wasted or thrown away by reason of the breach.  I was referred by the plaintiff to Anglia Television Ltd v Reed (1972) 1 QB 60 at 63 in which Lord Denning, in the context of a claim for the recovery of wasted expenditure incurred prior to a contract having been concluded, said as follows:

   "It seems to me that the plaintiff in such a case has an election: he can either claim for loss of profits; or for his wasted expenditure.  But he must elect between them.  He cannot claim both.  If he has not suffered any loss of profits – or if he cannot prove what his profits would have been - he can claim in the alternative the expenditure which has been thrown away, that is, wasted by reason of the breach."

7. Lord Denning went on to say that in such a case the plaintiff could recover wasted expenditure whether incurred before or after entry into the contract so long as it was expenditure as would reasonably have been in the contemplation of the parties as likely to be wasted should there be a breach of the contract.

8. In the course of the assessment of damages the defendant's position was that the plaintiff is seeking to recover both lost profits and wasted expenses.  It is the case that by par 15 of his affidavit the plaintiff seeks to recover losses caused by his inability to trade at either the Cantonment Street and Elder Place premises during the period 10 November 2001 to 26 November 2001.  I note that there is also a reference to loss of custom in par 20 of the affidavit however this was not pressed by the plaintiff at the hearing.

9. No amount is set out by the plaintiff as regards the loss suffered due to the inability to trade during the relevant period though there are annexed to the plaintiff's affidavit a copy of the plaintiff's profit and loss statement for the period from 1 July 2000 to 30 June 2001 together with a schedule of the plaintiff's takings in the period from 30 November 2001 to 8 March 2002 after he had returned to premises at Elder Place.  I was asked by the plaintiff to make an assessment of the plaintiff's loss by reference to those documents, perhaps by taking the plaintiff's net profit over that period and dividing it by twenty six to arrive at a loss for the two week period.  As I indicated at the hearing of the assessment of damages, however, I am not prepared to make any allowance in this respect.  As I have already indicated the plaintiff does not say what losses he has in fact suffered.  It is not clear whether the plaintiff says that no income was earned by him during this period or whether there was simply a reduction in his income.  It may be for example that whilst he was unable to operate from either premises during that period, he carried on work elsewhere that earned income.  In light of this I do not believe that I can make any sensible assessment as to the damage said to have been suffered.

10. In light of that the defendant's counsel indicated at the hearing that the objections based upon expenses having been incurred prior to the breach would not be maintained and that those expenses could be allowed, bearing in mind that by and large there was no objection to the amount of the expenses or that they had in fact been incurred.  This applies to those expenses claimed in the plaintiff's affidavit at pars 4 (in the part sum of $1,177.00), 5 ($286.00), 7 ($82.50), 8 ($1,365.00), 9 ($100.00), 12 ($374.21), 17 ($360.00), and 18 ($1,342.00) in the total sum of $5,086.71.  That in fact resolved the bulk of the defendant's objections.

11. There remain a few outstanding issues in respect of the balance of the plaintiff's claim.  These are as follows:

Accounting Fees

1. In par 16 of his affidavit the plaintiff deposes that "in order to incorporate the company, we employed an accountant, David Tilley to prepare the requisite documentation.  Annexed hereto marked 'L' is a true copy of his accounts totalling $4,252.40".  These accounts are set out on pages 33‑35 of the plaintiff's affidavit.  The first account on page 33 is dated 1 October 2001 in the sum of $1,182.00 (and not $1,140.00 as appears in the defendant's submissions) and is directed to the company.  The plaintiff says that he is entitled to recover one half of that account.  The defendant says that the plaintiff is not entitled to claim any part of that account as it is an account directed to the company and not the parties.  The second account in the sum of $3072.40 appears on pages 34 and 35 of the annexures to the affidavit and is dated 10 November 2001.  That account is addressed to the plaintiff and the defendant personally, care of the company.  The plaintiff claims one half of that account in the sum of $1,536.26.  The defendant conceded this in the course of argument and so I allow $1,536.26 in respect of that second account.

2. As regards the first account, on the materials before me it is not clear whether the plaintiff and the defendant are personally liable in respect of that account or whether the liability attaches to the company, and whether that account has been paid and if so, by whom.  All that appears from the plaintiff's affidavit is that "we" instructed the accountant.  I think it probable that in that context "we" means the plaintiff and the defendant.  In any event, on the evidence before me I am not satisfied that the plaintiff has paid the account or has any liability to pay the account.  I would not make any allowance in that respect.

Refurbishment of Premises

1. By par 21 of his affidavit the plaintiff sought the sum of $3,369.65 in respect of the cost of refurbishing the premises at Elder Place, following the breakdown of the partnership.  The plaintiff did not maintain this claim at the hearing save in respect of the amount of $26.65 admitted by the defendant.  I therefore allow $26.65 in this respect.

The Attendance at the Bridal Expo

1. By par 6 of his affidavit the plaintiff deposes to the cost of marketing Sterling Smith Photography at the Bridal Expo in the sum of $2,667.50.  The plaintiff says that he is entitled to at least one half of that account.  The defendant has noted that the account, which appears as annexure C to the plaintiff's affidavit, has been amended in pen so that the original addressee "Stirling Photography" has been crossed out and replaced by "Sterling Smith Photography".  It is also said in the submissions that the cost was incurred prior to the breach, a point that is no longer maintained by the defendant.  In the course of the assessment the defendant also argued that as this was a debt of the partnership, the plaintiff could only recover one half of the account.  I do not think this is the case.  The position is that this is a wasted cost by virtue of the breach of the partnership agreement by the defendant and there is no reason why the plaintiff should bear any part of it.

2. Nor do I think that anything turns on the amendment of the addressee on the account.  It appears from par 9 of the plaintiff’s earlier affidavit sworn 14 November 2001 that the plaintiff and the defendant arranged for the new business to be promoted at a bridal exhibition "at the Burswood" in July 2001.  I infer in this respect that the bridal exhibition referred to in that affidavit is the Bridal Expo to which the account relates.  Although it is not clear from the plaintiff's affidavit whether the account has been paid or remains outstanding, I also infer from the fact that the plaintiff makes no mention of the account having been paid that it remains outstanding.  It is clear in this respect that where an expense has been incurred but not yet paid by a plaintiff, the amount thereof may be included in the damages where the plaintiff is under a legal liability to the third party.  Although the evidence before the Court is sketchy, on balance and on the basis of the plaintiff's liability for the amount of the account I consider that the plaintiff is entitled to recover from the defendant the amount of the account in the sum of $2,667.50.

3. Based upon the matters set out above, the amount at which I would assess damages is $10,130.57.  The breakdown of this sum can best be set out in table form as I have done below:

Item by reference to paragraph of plaintiff's affidavit sworn 3 April 2002	Amount Claimed	Amount Allowed
Par 4 – the fees of PVM Photolab Service	$1,485.00	$1,485.00
Par 5 – the fee of Ames WA Manufacturing	$286.00	$286.00
Par 6 – the Bridal Expo account	$2,667.50	$2,667.50
Par 7 – the fee of Expo Hire	$82.50	$82.50
Par 8 – carpet tiles	$1,365.00	$1,365.00
Par 9 – hire of ute	$100.00	$100.00
Par 10 – hire of removal truck	$40.00	$40.00
Par 11 – hire of ute	$72.45	$72.45
Par 12 – telephone and facsimile connection fees at Cantonment Street	$128.00	$128.00
Par 12 – telephone and facsimile connection fees at Cantonment Street	$246.21	$246.21
Par 13 – telephone connection fees at Elder Place	$223.00	$223.00
Par 14- electrician's fees	$170.00	$170.00
Par 15 – trading losses	No  amount specified	Nil
Par 16 – accountant's fees	$4,240.00	$1,536.26
Par 17 – the fees of Property International	$360.00	$360.00
Par 18 – cost of Stirling Photography Stationery	$1,342.00	$1,342.00
Par 20 – loss of custom	No  amount specified	Nil
Par 21 – refurbishment of Elder Place premises	$3,369.65	$26.65
$10,130.57

1. The final issue to be dealt with concerns a payment of $4,336.51 made by the defendant to the plaintiff on 16 November 2001.  As I understand the defendant, he says that that payment related to money spent by the plaintiff on the Cantonment Street premises prior to moving in and that by reason of those payments having been made prior to the breach, the plaintiff had no entitlement to those monies.  It is also said that that sum should be taken into account in the assessment of damages.  I understand the defendant to mean in that respect that that sum should be deducted from the damages as otherwise assessed.

2. I do not accept the defendant's arguments in this respect.  The fact that those costs were incurred prior to the breach is irrelevant.  The plaintiff has not sought to recover those costs in this assessment of damages and I see no reason to take that sum into account in assessing the plaintiff's damages.