Cost of fixtures and fittings
61The Tribunal's reasons. At [31 - 32], the Tribunal gave the following reasons for rejecting Mr Fathullah's claim, in his Amended Application, for an amount of $7,500 representing the cost of the fixtures and fittings that he had installed:-
31 The Applicant seeks payment of a sum of $7,500 in respect of fixtures and fittings. Of this amount, a sum of $600 is said to refer to "sundry items" in respect of which no satisfactory evidence of has been provided to establish the nature or cost of such items. This component of the claim cannot therefore be allowed.
32 The balance amount of $6,900 relating to fixtures and fittings is for the claimed costs of a counter, hot food bar and shelves. A receipt from Petra Equipment in the sum of $400 being the cost of the hot food bar was placed into evidence, as was a hand written piece of paper which seems to be dated 22 February 2012 from someone called "Yacine.a" which refers to sale which took place at Liverpool of "46 bays with 6 shelves" for a total amount of $3,500. In relation to the counter, a receipt dated 3 February 2012 from a person "Raj" indicating that on that date there was a cash payment of $3,000 made by "Nehad", was put into evidence. These post dated and somewhat vague receipts are clearly an unsatisfactory basis for establishing any loss suffered by the Applicant. What further complicates this component of the claim is that, during giving evidence at the hearing, the Applicant conceded that he been able to successfully recover these items from the mortgagee. There was no further evidence as to what the Applicant had done with these items or whether these items had subsequently been sold or otherwise utilised by him. In these circumstances, there is simply insufficient evidence to establish the extent of any loss suffered by the Applicant in relation to the fixtures or fittings which were installed at the Premises.
62Three further aspects of the evidence on this question are usefully mentioned here.
63First, Mr Fathullah's affidavit contained assertions by him that he paid the amounts claimed in respect of the hot food bar ($400), the shelves ($3,500) and the counter ($3,000). These assertions were not challenged in cross-examination or contradicted in the Respondents' evidence.
64Secondly, the evidence included a number of photographs showing the counter and shelves in place at the Premises. The Tribunal accepted that they had been taken during the week commencing 21 November 2011.
65Thirdly, on the receipt for $3,000 signed 'Raj' and referring to the counter, the surname 'Singh' is discernible. The relevance of this will appear shortly.
66Mr Fathullah's case in the appeal. In the witness statement that we admitted into evidence at the hearing of the appeal (see [18] above), Mr Fathullah testified as follows: (a) during June 2012, he retrieved his fixtures and fittings from the mortgagee of the Premises; (b) he stored them until November 2012 in a garage belonging to a friend, Muhaini Ismail; (c) he paid a total of $1,000 in cash as removal and storage fees; and (d) on or about 5 November 2012, he sold the fixtures and fittings to M & N Halal Meat & Indo Pak Groceries for the sum of $3,000.
67Attached to this witness statement were (i) a statement by Mr Ismail that he rented his garage to Mr Fathullah from June to November 2012 at a monthly rental of $200; (ii) a statement by Tahsin Syed, on the letterhead of M & N Halal Meat & Indo Pak Groceries, that on an unspecified date he bought 'a service counter and the shelves' from Mr Fathullah for $3,000; and (ii) a copy of a photograph that, according to Mr Fathullah, showed the counter and shelves after their installation in Mr Tahsin's premises.
68During cross-examination by Mr Varma, Mr Fathullah stated that he had advertised the fixtures and fittings for sale on a website and that Mr Tahsin had responded to this advertisement.
69In his submissions, Mr Soltan argued that the Tribunal had erred in law in stating at [32] that 'These post dated and somewhat vague receipts are clearly an unsatisfactory basis for establishing any loss suffered by the Applicant'. He claimed that this reflected 'a legally erroneous view that a post dated receipt for a service will disentitle the recipient of the receipt from using it as a basis to quantify his loss'.
70He submitted also that (a) the photos tendered by Mr Fathullah depicted the service counter that had been purchased, (b) 'common sense' led to the conclusion that 'this service counter has incurred cost to the Applicant' and (c) it was 'natural' that the receipt for the counter should be post-dated.
71In response to a claim (made in Mr Varma's submissions filed after the hearing) that the cost of the counter was only $600, Mr Soltan argued that the photographs were sufficient in themselves to show that the counter must have cost significantly more than that amount.
72With reference to the observations made by the Tribunal (at [32]) about Mr Fathullah's retrieval of the hot food bar, shelves and counter from the mortgagee, Mr Soltan argued as follows: (a) in view particularly of the Respondents' conduct in granting a lease to Mr Fathullah when they knew that in all probability the mortgagee would take possession of the Premises, he should have been awarded the full value of these items, without being subject to any duty to try to resell them; (b) it was not his fault that he did not succeed in selling these items until after the Tribunal's hearing; and (c) if the amount obtained on his resale of them did have to be taken into account, his witness statement provided sufficient evidence to enable the Appeal Panel to calculate how much should be deducted from his costs incurred in purchasing them.
73On this basis, Mr Soltan maintained, as his primary submission, that we should award under this head of damages the total figure of $6,900 spent by Mr Fathullah in purchasing the hot food bar, shelves and counter. In the alternative, he maintained that the proceeds of the sale of these items ($3,000) should be deducted from the claim, but the cost of storage ($1,000) should be added to it, producing a figure of $4,900. He further submitted that interest should be added.
74In support of these submissions, Mr Soltan cited the Appeal Panel's decision in O'Neill v Henry (RLD) [2010] NSWADTAP 40. In this case, a sublessee of retail shop premises (Mr O'Neill) who had been locked out of them unlawfully by the sublessor (Mr Henry) claimed damages representing (amongst other things) the cost of equipment that he had recently purchased ('Head 2') and the value of stock on hand ('Head 3'). At [46 - 58], the Panel dealt as follows with these heads of damage:-
Reassessment of Heads 2 and 3
46 On both of these matters, Mr O'Neill's submissions are: there was uncontested evidence as to the value of the goods, most of which were purchased within a relatively short time prior to the lockout; he had been denied access, by virtue of the lockout, to the goods, thus denying him an opportunity to have them valued; any alleged difficulty in having them valued should not be a bar to recovery, given that the courts have acknowledged that difficulty in quantifying damages is no bar to recovery. As to the last point, the submissions refer to Turner, Australian Commercial Law (23rd ed), 203 which cites Jones v Schiffman [1971] HCA 52; (1971) 124 CLR 303 at 308 per Menzies J; Chaplin v Hicks [1911] 2 KB 796; and Howe v Teefy (1927) 27 SR (NSW) 301.
47 We will begin with Head 3, and then turn to Head 2, where there is a difference of opinion.
48 Head 3. Mr O'Neill's first affidavit filed in the proceedings referred to the loss of the 'value of food and like items' and said, as to their amount, 'not yet ascertained'. At this point, there was no satisfactory evidence of loss. In his second affidavit (Ex B), he attached what he described as a 'true copy of a list of food and other stock which was on the Premises at the time I was locked out'. He said 'I have put the list together from my records and memory of what was in the Premises and have priced the stock and other items from purchase records and from my recollection of the costs thereof'. He claimed a total of $6,320. The main item was for drinks ($3,500).
49 He did not file any business records, receipts or other documentation supporting the stock claims. Mr O'Neill's solicitor asked him at hearing to explain why he did not have any formal financial records and had not completed a tax return re the business. He said that he was waiting for these proceedings to come up, and that left in the shop was a drawer full of invoices that he would need to file tax returns (tspt, 16/03/09, 11.04).
50 This explanation was not rejected. It is a plausible explanation, and should be accepted. In our view, no serious issue as to present value arises. These are all items of a usual kind in a business of this type. There is a mix of perishable (e.g. food ingredients) and non-perishable items (e.g. bottled soft drinks). He was not challenged on these valuations. In our view, Mr O'Neill should be compensated in full for the items claimed under this head.
51 Head 2. Mr O'Neill's proof is contained in his second affidavit (Ex B), at annexure 'B'. They are all, in our view, items of a usual kind in a business of this type. He states at para 11 of his affidavit that the amounts he gives represent their 'approximate value'. Receipts were provided for approximately $4,600 worth of the amount claimed.
52...
53 There is a division of views on whether any damages should be awarded to Mr O'Neill in respect of these items. The amounts claimed by Mr O'Neill are supported by receipts. They show the purchase price of the various items, and these amounts are claimed.
54 President's Opinion. As the subject items were ones used in the business, they would, I think, have lost much of their value by the time of the lockout. In my view, Mr O'Neill got the benefit of his expenditure during the entire period his business was a going concern. It was not 'wasted expenditure' in the way identified by cases such as Amann Aviation and McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377.
55 As noted earlier, the Tribunal found that Mr O'Neill had ceased to operate the business as at the date of the lockout. It is not appropriate for there to be an award compensating a tenant in these circumstances for the original price paid for the equipment. Such an award would deliver him a windfall exceeding his actual loss.
56 Subject to adequate proof, Mr O'Neill would, I consider, be entitled to the present value of those items. I do not consider it appropriate for me to attempt an estimate as to the likely value of used goods of this type. This is a matter, it seems to me, that could have been the subject of evidence from Mr O'Neill as a person with some experience in the industry. None was provided. I do not think I should hazard my own guess. It is likely, I suspect, that most of the items would have had little or no market value. So for different reasons to the Tribunal below, I would also not make any award in respect of Head 2.
57 My colleague, Judicial Member Molloy, has a different view. As the difference is one of law, and the judicial members are equally divided, my opinion, as President, must prevail. See ADT Act, s 78.
58 Judicial Member Molloy's Opinion. The claim for loss of the "value of food and like items" is made by the owner/proprietor of the business (see Mr O'Neill's second affidavit). It was not traversed by either respondent and Mr O'Neill was not cross-examined on the matter. Both Mr O'Neill and Mr Henry were in the same business and would be expected to know, or be able to express an educated opinion on, this issue. Thus, absent some disentitling factor, Mr O'Neill's evidence ought to be accepted. It is unremarkable and within his knowledge. In my view this head of damage should be allowed in full.
75Mr Soltan placed particular reliance on paragraphs [46], [50], [53], [54] and [58].
76The Respondents' case in the appeal. In their Notice of Reply to Appeal, the Respondents maintained that Mr Fathullah was not entitled to any damages under this head because he had removed all his fixtures and fittings from the Premises. They added that the photographs were 'irrelevant' because they could have been taken at any time.
77At the hearing, Mr Varma did not address this issue. In their submissions filed after the hearing, the Respondents argued that the Tribunal 'correctly denied' Mr Fathullah's claim for damages under this head, on the grounds that the invoices were 'vague and unsatisfactory, being post-dated and not genuine' and that he 'failed to provide relevant evidence on actual costs, supported by authentic documents'.
78The Respondents also alleged in these submissions that the actual amount paid for the counter was only $600, not $3,000 as claimed. They attached to the submissions a typewritten one-page statement, headed 'To Whom It May Concern' and displaying the typewritten words 'R Singh' in a location where one might expect to find a signature. The gist of the statement was that the maker of it, having been approached by 'Mr Nihad' to provide 'a quote to make a front service counter and few miscellaneous work' at the Premises, had quoted a total figure of $3,000 but had only installed the 'front service counter', for which the sum of $600 was paid.
79Our conclusions. We reject this 'tender' by the Respondents, made in appeal submissions filed by leave after the hearing, of an unsigned document purporting to provide evidence on a disputed factual matter. We also attach no weight to their assertion that Mr Fathullah himself removed the fixtures and fittings because there is no evidence to support it and the finding of the Tribunal was that the mortgagee had removed them.
80We agree with Mr Soltan that the passage that he cited from O'Neill v Henry (RLD) [2010] NSWADTAP 40 lends significant support to his submissions. It provides authority for the following propositions: (a) any alleged difficulty in having Mr Fathullah's goods valued should not be a bar to recovery, given that the courts have acknowledged that difficulty in quantifying damages is no bar to recovery (see O'Neill v Henry at [46]); (b) the case for accepting his evidence on this question is strengthened by the fact that it was not contested, except by a very late 'tender' that we have rejected (see [46], [50] and [58]); and (c) the receipt accompanying his verified evidence as to the prices that he paid can and should be taken to constitute sufficient evidence (see [51], [53], [54] and [58]).
81We agree also with Mr Soltan's submission that the President's decision in O'Neill v Henry against awarding damages under Head 2 was not based on the informal nature of the evidence as to value adduced by Mr O'Neill, but on the consideration that this evidence related to the value of the goods at the time of purchase and did not take into account that through being utilised in his business they had become 'used goods'. Because Mr Fathullah was compelled to remove the hot food bar, shelving and counter from the Premises very soon after he had installed them, and did not at any stage use them for the purposes of his business, this consideration does not arise in the present proceedings.
82We accordingly conclude that the Tribunal, in ruling at [32] that the 'post dated and somewhat vague receipts' were 'clearly an unsatisfactory basis for establishing any loss suffered by the Applicant', did not take sufficient account of the propositions that we have just extracted from the Appeal Panel's decision in O'Neill v Henry. They produce the outcome that informal documentary evidence of a price paid to a supplier of goods or services, coupled with verified and unchallenged evidence from the purchaser that this price was actually paid, should not be ruled out as insufficient evidence of value in retail tenancy proceedings in the Tribunal.
83This stance taken by the Tribunal constitutes a sufficient error, in our opinion, to warrant granting leave, as sought by Mr Soltan, for this appeal to extend to the merits under section 113(2)(b) of the ADT Act.
84We do not, however, accept Mr Soltan's submission that the award of damages to Mr Fathullah under this head should take no account of the proceeds of his sale of the relevant items to M & N Halal Meat & Indo Pak Groceries. To do so would be in conflict with the well-established and fundamental principle - to which the President specifically referred in the final sentence of paragraph [55] of O'Neill v Henry - that damages should reflect the 'actual loss' sustained by the person to whom they are awarded. It follows that the amount obtained by Mr Fathullah through reselling the hot food bar, shelving and counter and the amount paid by him for storage must be taken into account in calculating damages under this head.
85In the final sentence of paragraph [32] of the principal decision, the Tribunal observed that by virtue of Mr Fathullah's disclosure that he had retrieved these items from the mortgagee, there was 'simply insufficient evidence to establish the extent of any loss suffered by the Applicant in relation to the fixtures or fittings which were installed at the Premises'.
86That evidence has, however, been put before us, in the form of Mr Fathullah's witness statement dated 27 November 2012 and his answers given in cross-examination. It is undoubtedly relevant to the assessment of the actual loss that he sustained. Having admitted it, we are bound to take account of it, because once an appeal has been extended to the merits, the task of the Appeal Panel is to determine 'what the correct and preferable decision is having regard to the material then before it' (see ADT Act, section 115(1) and the discussion of these matters in Building Professionals Board v Hans (GD) [2008] NSWADTAP 13).
87On the question that we have been considering - namely, Mr Fathullah's claim for damages representing his loss sustained on account of purchasing fixtures and fittings that he intended to use in his business in the Premises - the award should take the form for which Mr Soltan argued in the alternative. It should be for $4,900, representing the purchase price of the goods ($6,900) and the cost of their storage ($1,000) less the proceeds of their resale ($3,000).