Tasmanian Ports Corporation Pty Ltd v Resources Australasia Pty Ltd

[2024] TASSC 72

[2024] TASSC 72

COURT:	SUPREME COURT OF TASMANIA
CITATION:	Tasmanian Ports Corporation Pty Ltd v Resources Australasia Pty Ltd
(No 2) [2024] TASSC 72
PARTIES:	TASMANIAN PORTS CORPORATION PTY LTD
v
RESOURCES AUSTRALASIA PTY LTD as trustee for
the Resources Australasia Unit Trust
FILE NO:	1668/2021
DELIVERED ON:	28 November 2024
DELIVERED AT:	Hobart
HEARING DATES:	25 November 2024
JUDGMENT OF:	Blow CJ
CATCHWORDS:

Torts – Interference with property – Trespass to land – Remedies – Damages – Mesne profits – Market rent – Whether contractual discount should be taken into account.

Aust Dig Torts [1468]

Cases cited:
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27, 239 CLR 175
Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342, 82 NSWLR 420
Inverugie Investments Ltd v Hackett [1995] 1 WLR 713
Plenty v Dillon (1991) 171 CLR 635
Port of Melbourne Authority v Anshun (1981) 147 CLR 589
Rivers v Bondi Junction – Waverley RSL Sub-branch Ltd (1986) 5 NSWLR 362
Smethurst v Commissioner of the Australian Federal Police [2020] HCA 14, 272 CLR 177
Sydney Local Health District v Macquarie International Health Clinic Pty Ltd [2020] NSWCA 274, 105

NSWLR 325.

REPRESENTATION:

Counsel:

Plaintiff:	A Walker
Defendant:	P J Hayes

Solicitors:

Plaintiff:	Minter Ellison
Defendant:	Hiways Lawyers

Judgment Number:	[2024] TASSC 72
Number of paragraphs:	31

Serial No 72/2024 File No 1668/2021

TASMANIAN PORTS CORPORATION PTY LTD v RESOURCES AUSTRALASIA

PTY LTD as trustee for the Resources Australasia Unit Trust (No 2)

REASONS FOR JUDGMENT BLOW CJ
28 November 2024

1             These proceedings relate to a dispute between a landlord and a tenant. The plaintiff company, Tasmanian Ports Corporation Pty Ltd, is the owner of land at the port of Bell Bay. The defendant company, Resources Australasia Pty Ltd, leased part of that land in 2020. The plaintiff alleged breaches of the lease, commenced an action for the recovery of the premises and damages, and was successful. On 11 November 2024 I ordered that judgment be entered for the plaintiff against the defendant for the recovery of the leased land, and for the recovery of sums to be assessed in respect of (a) mesne profits in respect of land for the period from 19 March 2021 until it is vacated by the defendant or earlier assessment; (b) damages for trespass in relation to adjoining land of the plaintiff; and (c) an "Incentive Amount" referred to in an "Incentive Deed" executed by the parties and dated 11 March 2020: Tasmanian Ports Corporation Pty Ltd v Resources Australasia Pty Ltd [2024] TASSC 60.

2             The assessment of the sums referred to was listed for hearing on 25 November 2024. The plaintiff abandoned its claim for damages for trespass in relation to land adjoining the leased land. I made final orders in the proceedings on that day and stated that I would subsequently publish my reasons for those orders. I subsequently noticed that I had made an arithmetical mistake, and made an order varying the sum to be recovered by the plaintiff from the defendant. These are my reasons for my orders.

3   The orders that I made on 25 November 2024, as subsequently varied, are as follows:

1      A declaration that the plaintiff is entitled to retain the sum of $265,773.64 paid by the defendant and held by it, and to have recourse to that money in partial satisfaction of its claim for mesne profits.

2      That judgment be entered for the plaintiff against the defendant for $102,127.60.

3      That the plaintiff's application for the assessment of damages for trespass on the land of the plaintiff adjacent to the land leased by the defendant to be further adjourned is refused.

4      That the defendant pay 90% of the plaintiff's costs of and incidental to the action.

The "Incentive Amount" claim

4             It is convenient to deal with this claim first. On 11 March 2020 the parties executed two contractual documents, namely a lease and an "Incentive Deed". The lease provided for the plaintiff to lease the relevant land to the defendant for a term of five years commencing on 1 March 2019 at a rent of $85,000 per annum plus GST, with annual 3.5% rent increases and an option for renewal for one further term of five years. The option was not exercised. The Incentive Deed provided for the rent payments to be reduced by a total of $90,500 plus GST over the first four years of the term of the lease. The rent was payable monthly. Clause 4.1(b) of the Incentive Deed provided that the rent reduction was conditional upon the defendant performing and observing its obligations under the lease.

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5             I held that the defendant breached the terms of the lease by erecting a structure, referred to at the trial as "the awning", without first obtaining the permission of the plaintiff, and by erecting it without first obtaining building approval from the George Town Council. I held that the lease had been validly terminated with effect from 19 March 2021. Up to and including March 2021 the defendant had paid rent at the reduced rate, calculated in accordance with the terms of the Incentive Deed, and not at the rates fixed under the lease. It followed that the plaintiff was entitled to recover the difference between the two amounts, at least in respect of the period between the breaching of the terms of the lease and the termination of the lease.

6             The plaintiff contended that it was entitled to the difference between the two amounts for the months of April 2020 to March 2021 inclusive. It did not contend that, upon the defendant breaching the lease, it became entitled to additional rental monies in respect of past months. The defendant accepted that it had a liability, but contended that it was only for the eight months from August 2020 to March 2021 inclusive.

7             Clause 31 of the lease required the defendant to seek the plaintiff's consent prior to undertaking any works around or to the leased premises. Special condition I said that any works had to be approved by the plaintiff in writing before their commencement. Clause 22 required the defendant to comply with all relevant laws that were applicable to the use of the premises. Clause 24 required it to obtain all required approvals and permits. I held that the defendant breached all of those provisions by erecting the awning without seeking and obtaining the plaintiff's permission, and by doing so without obtaining a building permit under the Building Act 1976. Having regard to the wording of the relevant clauses, it is clear that the breaches of the lease commenced upon the commencement of construction, not upon completion of the work.

8            The evidence at trial did not enable me to make a finding as to precisely when the construction of the awning commenced. The relevant evidence can be summarised as follows:

• On 12 February 2020 Kempe Engineering provided the defendant with a quote for erection of the awning.

• An aerial photograph taken on 8 April 2020 showed no sign of construction having commenced.

• A photograph taken on 28 July 2020 showed that the structure was completed. None of the witnesses who worked for the plaintiff company were aware of the structure before that day. No photos taken between 8 April 2020 and that day were tendered.

• Kempe Engineering sent the defendant company an invoice for the completed construction work on 16 July 2020.

• The defendant's chief executive officer, Mr Murphy, was cross-examined about when the structure was built. It was put to him that it was constructed between March and June 2020. He responded, "No. Between March and July." However he might have meant that the construction took place somewhere in the months from March to July, not that it was started in March and finished in July.

9             I inferred that the awning must have taken several weeks to build, and that it must have been substantially complete by the time of the invoice of 16 July 2020. I was satisfied on the balance of probabilities that its construction had started by 1 June 2020, but was not satisfied that the plaintiff was entitled to the higher rate of rent prior to that date. The quantum of the monthly rent reduction amounts was not in dispute.

10   It followed that the plaintiff was entitled to recover $19,500 in respect of this claim,

calculated as follows:

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June 2020 – February 2021	9 months @ $2,000pm	$18,000
March 2021	$ 1,500
Total	$19,500

11           These figures do not contain any components representing GST. It was common ground that the plaintiff's entitlements in respect of this claim and the mesne profits claim were to be calculated on an "excluding GST" basis, and that nothing was to be added to the judgment sum in respect of GST.

The mesne profits claim

12 In my previous judgment I held, at [77] that the plaintiff was entitled to recover mesne profits to be assessed. I ordered that mesne profits be recovered for the period from 19 March 2021 until the relevant land was vacated by the defendant or earlier assessment. It is common ground that the defendant has not vacated the premises. The plaintiff elected to proceed with an assessment in accordance with r 587 of the Supreme Court Rules 2000. It did not pursue a claim in respect of the period from 19 March 2021 to 31 March 2021, rent having been paid in advance for that month.

13           With effect from April 2021, the defendant made monthly payments of rent to the plaintiff electronically. Those payments were at the reduced rate provided for in the Incentive Deed, not at the full rate provided for in the lease. The plaintiff sent the defendant cheques for the amount it received each month, but they were not presented. The plaintiff retained the monies received from the defendant. At the time of assessment they amounted to $265,773.64.

14           The plaintiff contended that mesne profits for the period 1 April 2021 until assessment should be calculated on the basis of the monthly rents provided for in the lease. The defendant contended that they should be calculated according to the reduced rates fixed by the Incentive Deed, with the result that the plaintiff should receive nothing by way of mesne profits over and above the amount being held by it. For the reasons that follow, I decided to accept the submissions of the plaintiff as to this issue.

15           As a general rule, when a court assesses mesne profits, the trespasser is obliged to pay market rent for the use or enjoyment of the property: Inverugie Investments Ltd v Hackett [1995] 1 WLR 713; Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342, 82 NSWLR 420; Sydney Local Health District v Macquarie International Health Clinic Pty Ltd [2020] NSWCA 274, 105 NSWLR 325. Both parties accepted that in this case the mesne profits should be equal to the market rent of the premises. They differed as to whether the higher rate fixed by the lease or the reduced rates fixed by the Incentive Deed should be adopted as the measure of market rent.

16           In Sydney Local Health District v Macquarie International Health Clinic Pty Ltd (above) at [92], the New South Wales Court of Appeal said that mesne profits have come to be measured by "the rent or hire that could have been but was not charged" for the occupation of the land trespassed upon. In this case, if the plaintiff had not terminated the lease, the rent that could have been charged in and after April 2021 was the rent fixed by the lease, without any reduction pursuant to the Incentive Deed. The defendant had lost the benefit of the Incentive Deed by committing breaches of the lease in 2020.

17           Counsel for the defendant relied on the evidence as to the circumstances leading up to the execution of the lease and the Incentive Deed. It is clear that the defendant persuaded the plaintiff to enter into the Incentive Deed and conditionally forego some of the rent payable under the lease as a result of it having expended money on an electrical upgrade. However the parties did not agree on an unconditional reduction of the rent, as they could have done. The bargain that they made was conditional upon the defendant performing and observing its obligations under the lease.

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18           It is clear that a court using market rent as a yardstick for the assessment of mesne profits has some flexibility in relation to the quantification of market rent, as the Inverugie and Bunnings cases illustrate. However, on the facts of this case, I think it is in the interests of justice to measure market rent by reference to the amounts that the defendant would have had to pay if it had not become a trespasser in March 2021, and had continued to pay rent in accordance with the terms of the lease.

19           There was no dispute as to the quantum of the monthly payments that would have been payable pursuant to the lease from 1 April 2021 until its expiry on 29 February 2024 excluding GST. The plaintiff claimed mesne profits for the period from 1 March 2024 to 30 November 2024 at the same monthly rate as the rent payable during the final year of the lease. Quantum in relation to those months was not disputed. Both parties were content for me to assess mesne profits as if I were giving judgment on 30 November 2024.

20   I have calculated the sum recoverable by the plaintiff by way of mesne profits as follows:

April 21 – February 22	11 x $7,587.84	=	83,466.24
March 22 – February 23	94,241.02
March 23 – February 24	97,539.46

March 24 – November 24	9 x $8,128.28	73,154.52
$348,401.24
Held	265,773.64
Amount recoverable	$ 82,627.60

The sawdust trespass issue

21           At and before the trial the plaintiff pursued a claim for damages for trespass relating to the storage of sawdust or fines on land of the plaintiff adjacent to the leased land in respect of the period from 1 May 2020 to 30 June 2022 inclusive. The plaintiff stored raw materials on adjacent land of the plaintiff as a trespasser from a date prior to 1 May 2020 until a date well after 30 June 2022. At the time of the trial counsel for both parties asked me to adjourn any assessment of damages in respect of this claim with a view to assessment at a later date.

22           When I gave judgment for the plaintiff on 11 November 2024 I directed that the parties were to provide written submissions as to damages and costs. In the plaintiff's written submissions , which were delivered on 14 November, its solicitors said this as to the sawdust trespass claim:

"The plaintiff's position is that an appropriate resolution of this issue within this action is for the Court to make a declaration that the defendant trespassed upon the plaintiff's land outside its leased area by storing raw materials on it throughout the period from 1 May 2020 to 30 June 2022. No further assessment is sought within this action."

23           Subsequently counsel for the plaintiff informed me that it proposed bringing a second action against the defendant in which it would seek to recover damages in respect of this claim. I indicated that I thought the plaintiff might not be able to do that. Counsel then applied for an order to the effect that the assessment of damages in respect of this claim be further adjourned. Counsel for the defendant opposed the making of the declaration sought in the written submission and opposed the further adjournment of the assessment of damages for trespass.

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24           Counsel for the plaintiff submitted that the purpose of an action for damages for trespass is not just to obtain compensation, but also to vindicate the plaintiff's right to the exclusive use of the relevant property. He referred to Plenty v Dillon (1991) 171 CLR 635 at 654-655 and to Smethurst v Commissioner of the Australian Federal Police [2020] HCA 14, 272 CLR 177 at [120]. Those two cases are distinguishable. They both involved disputed contentions that police officers entered onto private property when they had statutory rights to do so. In this case the defendant always acknowledged that the land adjacent to the leased area was land of the plaintiff, and that it had no right to store materials on that land without the plaintiff's permission, but alleged that it had permission. The last of the stored materials appear to have been removed in 2023. In my previous judgment I made a finding, at [97], that the defendant did not have permission to use vacant land outside its leased area, and that it was trespassing.

25           A court has a discretion not to grant a declaration when the circumstances do not justify the intervention of the court: Rivers v Bondi Junction – Waverley RSL Sub-branch Ltd (1986) 5 NSWLR 362 at 376-377. In the circumstances I concluded that no purpose would be served in making the declaration sought.

26           But for the plaintiff choosing not to seek an assessment of damages for the tort of trespass when submissions were delivered on 14 November, I would have been ready, willing and able to assess those damages this week. As far as I know, all the evidence needed for me to assess the quantum of those damages was adduced at the trial. There was substantial evidence as to where sawdust was stored, over what areas, and when. There was evidence of the rent charged in an arm's length transaction to another tenant for comparable vacant land.

27           Adjourning the assessment of damages in relation to the sawdust trespass claim would have meant an adjournment for a hearing before another judge. That is because I am about to reach the statutory retirement age. Such an assessment would have required all the evidence as to the areas occupied by the defendant's sawdust from time to time to be presented afresh. That would have involved a waste of public resources and undue delay in finalising this litigation. It is appropriate for those factors to be taken into account in deciding whether to grant an adjournment: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27, 239 CLR 175. Although refusing to adjourn the assessment of damages in respect of this claim to a later date was likely to preclude the plaintiff from recovering damages for the defendant's tort, I decided that it was not reasonable or just to make the order sought.

Costs
28	As one would expect, the plaintiff sought an order that the defendant pay its costs on a party/party basis. The defendant contended that it should only have to pay 75% of the plaintiff's costs because substantial costs were incurred in relation to the sawdust trespass issue, with that claim for damages later not being pursued.
29	In my view there was some merit in the defendant's submission as to costs. I therefore decided that it was appropriate to depart from the general rule that costs follow the event. The defendant contended that the sawdust trespass issue had occupied about one quarter of the time involved in the trial, but I concluded that that estimate was excessive.
30	I also took into account in the plaintiff's favour the fact that, in my view, the defendant is likely to benefit from the plaintiff's decision not to pursue the sawdust damages claim in this action. I considered it likely that any attempt to revive the claim in a second action would result in the defendant pleading res judicata and or Anshun estoppel: Port of Melbourne Authority v Anshun (1981) 147 CLR 589.

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31          For these reasons I decided that the plaintiff should be entitled to recover 90% of its party/party costs of and incidental to the action.