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Supreme Court of the ACT Decisions |
Downlaod RTF IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY HIGGINS J DAMAGES - Quantum - Where no admissible evidence as to cost of item properly claimed - Reasonable amount allowed - Interest on residual value of fitout - Where defendant liable for cost of temporary accommodation - Interest payable from date of vacation of premises. ACT v Vucetic (Supreme Court of the Australian Capital Territory, Higgins J, 29 November 1991, unreported); referred to Arnall v Cheminees Phillippe Australia Pty Limited (Supreme Court of the Australian Capital Territory, Higgins J, 18 August 1995, unreported); referred to Collin v Botany Crane & Fork Hire Pty Limited and Anor [1993] ACTSC 9; (1993) 113 FLR 83; referred to CANBERRA, 9, 10 March 1998 (hearing), 20 March 1998 (decision) #DATE 20:03:1998 Appearances Counsel for the Plaintiff: Mr D Shavin QC with Mr R Vivekananda Instructing Solicitors: Australian Government Solicitor Counsel for the Defendant: Mr M F Adams QC with Mr R J Weber Instructing Solicitors: Blake Dawson Waldron Order: The parties have leave to make further submissions as to the calculation of interest and costs. 1. On 2 October 1997 I made certain rulings concerning the claim for damages by the plaintiff against the second defendant. Those rulings were intended to enable the second defendant to agree with the plaintiff as to the quantum of damages to be awarded. That agreement was not designed to affect the right of either party to challenge those rulings on appeal. It was intended to enable consensus to be reached on the quantum of damages if the rulings I made were to be accepted as correct. Regrettably, not all matters have been so resolved. Happily, most have been. Further, during the hearing concerning those matters on 9 and 10 March 1998, further matters became agreed subject, of course, to the reservation I have mentioned. I will now refer to those items not now the subject of agreement. "ANAO Expenses" ""Item 3. Damage to Safe $1520 4. The plaintiff sought leave to point to a document reporting to its solicitors that the "damage to safe" was, in fact, the accidental triggering of an anti-theft device which necessitated work to replace and reset the device. The device was triggered by the movement of the safe. Even allowing for the weight which can be attached to business records, this statement, made only to the plaintiff's solicitors, was not from a contemporaneous source. There was no invoice or record of payment nor even any secondary documentation supporting the instructions given to the solicitors. There is, therefore, no evidence supporting this claim. However, even so, it is not clear to me why ANAO, the owner of the safe, could not have arranged for the safe to be moved without triggering the device in question. Item 5. Storage Charges $2911 Unfortunately, the question raised in the judgment, namely, the reason for such expense was not addressed. Consequently, there is no further material enabling the expense to be allowed, even assuming that it has been proved that it was incurred. Item 36. Storage Charges $9181 These charges were no better supported than Item 5 (supra). They cannot be allowed. Item 39. Carpet Charge $2832 8. The nature of the claim has now been better explained. It was, in fact, not "cleaning" but rather treatment to prevent static electricity build-up. Why that was necessary or relevant to ANAO's occupation of Medibank House is not clear. The plaintiff cannot locate or point to any contemporaneous record to support this claim and it must therefore be rejected."DSS Expenses" ""Item 27. D&N Floor Coverings $35,176 That carpet was supplied and laid may be accepted. The cost of it, however, is supported only by a memorandum to the plaintiffs solicitors making a claim in that sum. There is a report supporting the need for carpet replacement. I am, therefore, left in a position where I can conclude, and I do, that carpet replacement was necessary but I have no admissible evidence as to cost. 11. It is not the law that, as a result, the plaintiff must fail to recover any damages for this item. The difficulty of assessment does not justify a refusal to award anything, see ACT v Vucetic (Supreme Court of the Australian Capital Territory, Higgins J, 29 November 1991, unreported), Arnall v Cheminees Phillippe Australia Pty Limited (Supreme Court of the Australian Capital Territory, Higgins J, 18 August 1995, unreported). Some expense must have been incurred. The carpet must have been at least of fair average quality suitable for a reasonably busy office. The carpet supplier and layer, whoever it was, could not be regarded as being so charitably inclined as to make a gift of a substantial area of good quality new carpet to the Commonwealth. I must not award more than is claimed. I have the advantage of having inspected the place where the carpet was laid. Bearing in mind that reasonable carpeting would be needed, DSS being a high traffic operation, I think $30,000 is a fair estimate of the reasonable cost of new carpeting. Item 35. Atlas Air - Computer Room air conditioning unit $11,869 12. During the course of this hearing, those representing the plaintiff were able to locate documentary support for this expense. I will therefore, allow $11,869. That allowance was conceded as appropriate by those representing the second defendant, at least as a matter of calculation. Legal - Lease Renewal Expenses $4500""13. This claim concerned the allowance which should be conceded for legal fees for the exercise of the option to renew the Silverton Centre Sublease. The plaintiff says that the sum should be nothing or close to it. Only a letter would be required. The second defendant says the sum referred to above is more realistic. Not only is there no evidence of the usual legal cost of commercial lease renewals pursuant to an option but necessarily, the expense to be anticipated must be, to a degree, uncertain. 15. If there is no dispute between the parties a minimal cost may be expected. However, drawing on judicial notice of the realities of legal practice, I cannot see less than $1,000 being charged by solicitors for a tenant seeking to exercise an option. I think it likely there would be some negotiation, at least upon the subject of future rental. Further, given APG's attitude to improving accommodation standards, I think it reasonable to suppose that there would have been some attempt to improve the lease conditions. The probabilities are that considerably more than $1000 in then current dollar values (ie at date of breach) would have been both anticipated and warranted. I would therefore, as a matter of impression, allow $2,500. Pre-commitment Lease fees $81,471 17. This represents expenses, originally assessed at $88,106, claimed for negotiating new leases for the Silverton departments, principally in relation to Centenary House. This is after allowance for the chance that new leases might need to be negotiated before the end of the sublease and its optional further term in any event. The plaintiff argues that although it may be that this claim is for a greater expense than would be incurred in respect of a building already set up, like Sir Keith Campbell Building, the negotiations saved money on the eventual fitout of Centenary House. 19. All that may well be so. However, it seems to me that, in reality, no more than a reasonable fee should be allowed. There is nothing to suggest that the claimed expense is "reasonable" by comparison with the other options reasonably open to accommodate ANAO. Although some search expense may be accepted as inevitable, I would not allow more than the $22,733 conceded by the second defendant. Projected Cost of General Refurbishment - offset of $1,052,382 The plaintiff contended that to allow an offset for this sum would, effectively, give a windfall benefit to the second defendant. It would give an offset for refurbishment without an allowance for the new fitout required to replace the old one. I agree. I think the second defendant ultimately conceded that to be so, at least implicitly. 23. The analogy is with a motor vehicle negligently damaged and written off. If the owner is entitled to the then lost value of it, the defendant cannot claim an offset for maintenance which should have been expended upon it in the future. Conversely, the owner cannot claim the cost of a new but similar motor vehicle if it exceeds the lost value. "Interest on Residual Value of Fitout" 24. This is to some extent related to the previous contention. The second defendant argued that, whilst the plaintiff is entitled to the value of the fitout at the Silverton Centre lost because of the vacation of the Centre, it should not have interest on that lost value from that date. The reason advanced was that the second defendant has been held liable to pay for the temporary accommodation of the Silverton departments pending their removal to permanent (at least to 2003) accommodation to the extent that those expenses exceeded the ongoing cost of continuing at the Centre. 25. It seemed to me, however, that the reason advanced does not affect the entitlement of the plaintiff to pre-judgment interest. A party is, subject to the Court's discretion, prima facie entitled to pre-judgment interest, not only for monies expended, but also upon the value of an asset from the date of its destruction (see, eg. Collin v Botany Fork & Crane Hire Pty Limited and Anor [1993] ACTSC 9; (1993) 113 FLR 83. If, for example, stores are utilised to replace goods damaged or destroyed, the result is no different, in principle, from the payment of money to purchase replacement goods for such use. The owner of the stores, in running down stock, loses the current market value of that stock. That loss occurs on utilisation. 26. It is no different when loss of a fitout is considered. The fitout had a current value. It was, notionally, "destroyed" (less salvage) on vacation of the Centre. That was when the value of it was lost. The claim for compensation for that loss, agreed as a matter of calculation at $1,388,198, represents a sum to which the plaintiff became immediately entitled. The plaintiff did temporarily relocate the Silverton departments. It has been held entitled to receive compensation for the additional expenditure reasonably and proportionately incurred, less any salvage able to be obtained. 28. It is analogous to the situation where a chattel, used to further the commercial interests of the owner, is wrongfully destroyed. The owner, as I have explained previously in my Reasons dated 2 October 1997, is entitled not only to the value of the chattel at the date of its loss, but also the cost of the temporary hire of a replacement "chattel" so far as is reasonably necessary and proportionate. That is simply a mitigation of loss otherwise likely to be greater. The value of the destroyed chattel, however, should notionally remain available to the owner to invest in a permanent replacement chattel. 29. However, the owner is neither entitled to the cost of the replacement chattel whether or not it exceeds that value foregone nor obliged to expend the "lost value" on it. It follows that if judgment for the lost value is to be given, prima facie the owner is entitled to interest pre-judgment on the lost value from the date of that loss. The temporary accommodation compensates for loss flowing from lack of availability of the income producing asset, not loss of its value. 30. Interest is, nevertheless, discretionary. For example, a party who has unreasonably delayed taking proceedings may be denied a full award of interest. I pointed out in my Reasons of 2 October 1997 (at 45-54) that the rate of interest allowable is, though subject to a practice direction specifying a usual commercial rate, still discretionary. 31. Further, as Miles CJ pointed out in Collin v Botany Fork & Crane Hire Pty Limited, supra, at 91, delay in bringing proceedings may make it fair to reduce the sum otherwise payable for interest. 32. In the present case, it is not alleged that the plaintiff failed to seek redress as soon as practicable. It is not alleged that it unreasonably delayed relocating the Silverton departments to permanent accommodation. 33. It seems to me that interest on the residual value of the fitout should be allowed from the date of the vacation of the Centre until judgment at the rate I decided in my previous Reasons to be the applicable rate."Conclusion" It follows from the above that there will be a verdict for the plaintiff against the second defendant, calculated as follows: TABLE Residual fitout $1,388,198.00 ANAO expenses 619,867.00 DSS expenses 278,494.00 DASETT expenses 33,851.00 APG expenses 149,326.00 Valuation 6,580.00 Legal ($2,500 for future) 9,465.00 Make Good 129,000.00 Advertising for Permanent Accommodation 3,021.00 Precommitment Lease fees 22,733.00 ____________ $2,640,535.00 ____________ Allowances Electricity $64,168.00 Security 22,478.00 Outgoings 3,806.00 __________ 90,452.00 less $90.452.00 ____________ Net sum for judgment $2,550,083.00 ____________ 34. It seems to me that sum is the appropriate figure for judgment. I will, before ordering judgment, hear the parties as to the calculation of interest. That calculation will be somewhat complex in view of the differing dates of the accrual of allowances and incurring of expenses. I will hear the parties further as to costs.
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