The Stuart Park (D580060) Reserve Trust v Peedoms Lawyers Pty Limited [2012] NSWSC 1133

Supreme Court New South Wales

Medium Neutral Citation: The Stuart Park (D580060) Reserve Trust v Peedoms Lawyers Pty Limited [2012] NSWSC 1133 Hearing dates: 13-17, 20-23 August 2012 Decision date: 21 September 2012 Before: Grove AJ Decision: 1) There should be verdict and judgment for the plaintiffs in the action. 2) By reason of contributory negligence, there should be a reduction of 25 per cent against damages assessed. 3) The plaintiffs are not entitled to recover the costs referable to the failed suit for rectification and such costs are to be excluded from any assessment of damages. 4) Both parties have leave to make submissions limited to the claims for damage and costs listed hereunder in accordance with directions which will be given forthwith after hearing from the representatives in respect of a suitable timetable: a) The legal costs paid by the Council to the defendant and Kells Lawyers. b) The costs of reinstating the defendant's registration. c) The assessment of damages for lost rent on the part of the Council on the basis that the building destroyed by fire has been rebuilt and let, as against what has and will be received from Emibarb pursuant to its lease whereby, because of the error, rent is initially calculated as ground rent only. d) The legal costs of this action. SUPPLEMENTARY JUDGMENT 1) There should be judgment for the plaintiffs in the action for damages for a sum assessed by addition of the following ingredients: (a) $7,642 (invoices for fees paid less 25 per cent); (b) Interest on the components of $7,642 from the respective dates of payment (in accordance with published rates or as agreed); (c) $450,000 plus GST for lost rental to date ($600,000 less 25 per cent); (d) Interest on past loss of rental as it accumulated from 2006 to 2012; (e) $720,000 plus GST ($960,000 less 25 per cent) 2) The defendant ordered to pay the plaintiffs' $29,278.77 for the costs of the restoration of the defendant to the register. 3) Subject to the specific order for payment of the costs of restoration of the defendant to the register and subject to any successful application pursuant to liberty granted, the defendant is to pay 80 per cent of the platintiffs' costs of the action as agreed or assessed. 4) Liberty to apply forthwith in relation to variation of the costs order, cause to be shown. 5) The plaintiffs are directed to bring in and file a minute of judgment in accordance with the foregoing including any order amending the order for costs in the event of successful application to vary pursuant to the liberty to apply. TERMS OF JUDGMENT MADE BY COURT 1. Judgment for the Plaintiffs against the Defendant. 2. The Defendant is to pay the Plaintiffs the following amounts: a) $450,000.00 (being $600,000.00 less 25%) on account of damages for lost past rent; b) $45,000 for GST (if payable) on the amount in sub-paragraph (a) above, but subject to the regime set out in Order 4 below; c) $144,478.00 on account of interest upon damages for lost past rent; d) $720,000.00 (being $960,000.00 less 25%) on account of damages for lost future rent; e) $72,000.00 for GST (if payable) on the amount in sub-paragraph (d) above, but subject to the regime set out in Order 4 below; f) $7,642.00 on account of damages for legal fees thrown away; and g) $6,129.00 on account of interest upon damages for legal fees thrown away. 3. The Defendant is to pay to the Plaintiffs the amount of $29,278.77 on account of the costs of the proceedings to restore the Defendant's registration as a corporation. 4. Further to Order 2 above (and specifically in relation to the items set out at sub-paragraphs 2(b) and 2(e)): a) Within 30 days of these orders, the Plaintiffs are to render a taxation invoice to the Defendant in relation to the damages component of the final orders which bears or possibly bears Goods & Services Tax ("GST"); b) The obligation on the part of the Defendant to pay the GST component of the award of damages is subject to the orders set out in sub-paragraphs (i) to (v) below: i) If, within 6 months of the date of these orders, the parties agree that GST is not payable upon the Court's award of damages in favour of the Plaintiffs, the Plaintiffs are to notify the Defendant in writing of their position in that respect, at which point the Plaintiffs are to refund to the Defendant the GST component received by the Plaintiffs; ii) If, within 6 months of the date of these orders, the parties agree in writing that GST is payable, the Plaintiffs will be entitled to retain the GST component received from the Defendant; iii) If, at any time prior to the expiry of the 6 month period, the Plaintiffs obtain a ruling from the Australian Taxation Office (ATO), which ruling indicates that the Plaintiffs will be liable to remit GST to the Commissioner of Taxation in relation to the damages award against the Defendant, the Plaintiffs are to provide a copy of that ruling to the Defendant and the Plaintiffs will be entitled to retain the GST component received from the Defendant; iv) If, after the expiry of the 6 month period following these orders in these proceedings, the parties have not agreed on the GST position and if the Plaintiffs have not obtained a ruling from the ATO indicating an obligation on their part to remit GST or if any such ruling indicates that GST is not payable, the Plaintiffs are immediately to refund to the Defendant such of the amount received under any final orders, which related to a GST component on the award of damages for lost rent; and v) Each party is to bear their own costs and expenses of negotiating the above issues and/or seeking any ruling from the ATO. 5. The Defendant is to pay 80% of the Plaintiffs' costs of the action as agreed or assessed up to 10 June 2011. 6. The Plaintiffs are to pay the Defendant's costs of the action on a full indemnity basis from 11 June 2011. 7. Notwithstanding Order 6 above, there is no order as to costs, with the intent that each of the parties bear their own costs, of and incidental to the listing of the matter before the Court on 26 September 2012, including in relation to the costs of the Defendant's Notice of Motion filed on 26 September 2012 of the Plaintiffs' Notice of Motion filed on 26 September 2012. Catchwords: NEGLIGENCE - solicitor - preparation of lease - mistake in formula for rent calculation - restaurant on crown land administered by local council - destruction of building by fire - different premises rebuilt - tenant advantaged by paying lower rent as a result of mistake - whether agreement on rental would not have been reached having regard to stances in negotiation - significant loss demonstrated but not amenable to precision in calculation - informed estimation - rulings on isolated other heads of damage - reasonableness of plaintiffs incurring large costs in pursuit of rectification suit when was destined to fail - damages assessed Cases Cited: Austotel Management Pty Limited v Jamieson (1995) 57 FCR 411 Fink v Fink [1946] HCA 54; (1946) 74 CLR 127 Hayden Theatres Pty Limited v Penrith City Council [1998] NSWLEC 50 Jacfun Pty Limited v Sydney Harbour Foreshore Authority [2012] NSWCA 218 NSW v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 Paino v Paino [2008] NSWCA 276 Permanent Trustee Company v FAI General Insurance Co Ltd [2001] NSWCA 20; (2001) 50 NSWLR 679 Placer (Granny Smith) v Thiess Contractors [2003] HCA 10; (2003) 196 ALR 257 Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 Unity Insurance Brokers Pty Limited v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 Uszok v Henley Properties (NSW) Pty Ltd [2007] NSWCA 31 Category: Principal judgment Parties: The Stuart Park (D580060) Reserve Trust (First Plaintiff) Wollongong City Council (Second Plaintiff) Peedoms Lawyers Pty Limited (Defendant) Representation: Mr J Gormly SC with Mr V Bedrossian of counsel (First & Second Plaintiffs) Dr A Bell SC with Mr N Owens of counsel (Defendant) FCB Workplace Law (First & Second Plaintiffs) Yeldham Price O'Brien Lusk (Defendant) File Number(s): 2009/297413