Kurc v Eyecare Pty Ltd [2004] VCAT 1139

Kurc v Eyecare Pty Ltd [2004] VCAT 1139 - VCAT 2004 case summary — Zoe

[9]

1 Burke Road provides a major through-road link between Ivanhoe in the north and Caulfield in the south, across Melbourne's inner-eastern suburbs. It intersects at Camberwell with Riversdale Road which is a major east-west link from Central Melbourne to the inner and middle eastern suburbs. At that point of intersection, Burke Road is also crossed by Camberwell Road, running from the north-west to the south-east across the intersection of Burke Road and Riversdale Road and joining Burwood Road, Hawthorn at the north-west end with Toorak Road, Hartwell at the south-east end. The crossroads created by these three thoroughfares known as Camberwell Junction has been a centre of commerce and transport in this part of Metropolitan Melbourne for well over 100 years and since the earliest days of settlement. The now long gone public house situated at the Junction gave the locality of Camberwell its name. The Junction is a low point with the ground rising to the east along Riversdale Road and to the north and south along Burke Road itself. The Junction is now the centre of a major complex of strip shopping. To the east, between Riversdale Road and Prospect Hill Road (the next intersecting street running to the east from Burke Road and half-way up the hill to the north) some two blocks of 19th and early 20th Century houses have been demolished to create a large open space on which a supermarket (Safeway) and a discount department store (Target) are erected with a large surrounding car park. Shops line both sides of Burke Road from Riversdale Road north to the top of the hill, past Prospect Hill Road and an intersecting rail line which passes below the road. The shops on the eastern side, between Riversdale Road and Prospect Hill Road command the highest rentals because of their proximity to the large car parking facilities and anchor retailers. There are less extensive off-street car parking complexes to the rear of the shops on the western side of Burke Road. The majority of the shops on the east side of Burke Road in the block from the Junction to Prospect Hill Road have rear accesses letting out onto the large car park.

[96]

25 Pursuant to leave granted the applicant filed amended points of claim on 8 April 2004. The principal amendment was to include a claim for relief against the amounts paid for Goods and Services Tax under protest. Eyecare filed amended points of defence and counterclaim on 15 April. In that amended pleading it elaborated upon the `mistakes' which it said Mr Lethlean made and which it contended invalidated his original determination. It said that his first mistake was to assume that comparable rentals which served as the basis of his original determination `were inclusive of GST, when, in fact, the comparable rent was for exclusive of GST'. It said his second mistake was to calculate a rent rate of 708m2 based upon the first mistake. The third mistake it said was failing properly to identify the premises by excluding 29m2. The fourth mistake it said was the assumption that the permitted use under the lease could not be changed. It said Clauses 4.1 and 8.9 of the lease allowed such change. The fifth mistake it said was Mr Lethlean's assumption that an inability to change permitted use would affect the rental value of the property. It denied that Mr Lethlean was functus officio after publication of the original determination, saying that he `merely exercised his right (and fulfilled his obligation) to correct some of the mistakes in the original determination' which he had described. Once again, it asserted that Mr Lethlean could rely on some form of `slip rule'. It said that the $152,000 original determination was exclusive of Goods and Services Tax and that in any event Clause 3.2, the outgoings clause, required Mr Kurc to pay the Goods and Services Tax. The prayer for relief sought declarations that neither of Mr Lethlean's determinations was binding on the landlord and a declaration that the current rental for the premises as at 1 July 2002 was $190,320 per annum exclusive of GST or such other figure as the Tribunal might decide. As a fall back position Eyecare sought a declaration that the revised determination was binding but that Mr Kurc was obliged to pay the Goods and Services Tax. Finally, it sought a declaration that both determinations fixed the rent `exclusive of GST'. It also sought orders remitting matters to Mr Lethlean to re-determine the rental upon the basis contended for by Eyecare.

[97]

26 On the same day Eyecare filed and served amended points of claim against Mr Lethlean. These amended terms after alleging the background facts as I have already narrated them, asserted that there were terms in Mr Lethlean's retainer to make the rent determination that he would `exercise all the due care and skill of a qualified and registered valuer; reasonably protect the interests of the applicant and the respondent; [and] not act in a manner patently contrary to the interests of the applicant or the respondent'. Eycare alleged that Mr Lethlean knew or ought to have known that his rental determination would effectively fix the rent for the entire term of the lease and if he undervalued the current rent `[Eyecare] would suffer loss and damage' and hence Eyecare was `vulnerable to loss from' Mr Lethlean's conduct in making the determination. Finally it said that Mr Lethlean knew or ought to have known that Eyecare was relying upon him `to properly and accurately determine the market rent of the premises'. The pleading repeated the allegation of five mistakes in the original determination and with some elaboration Eyecare alleged that both determinations `undervalued the current market rent of the premises for the first 12 months of the term of the renewed lease' hence said Eyecare, Mr Lethlean breached the terms of his retainer and was negligent in breach of his duty of care. The points of claim concluded if either of the determinations were found to be binding, Eyecare will suffer loss and damage for which Mr Lethlean is responsible. If the Tribunal were to hold that the tenant is not liable to pay the Goods and Services Tax in addition to the rent, Eyecare also claims this as loss and damage against Mr Lethlean together with any amounts ordered by Eyecare to be repaid to Mr Kurc, the loss of capital value to the premises and any irrecoverable costs of the proceeding. The prayer for relief sought a series of orders to recoup Eyecare for the various heads of loss and damage which it alleged against Mr Lethlean.

[99]

28 When the proceeding came on for hearing Mr Hopkins, Counsel for Eyecare Pty Ltd gave notice of proposed amendments to his client's points of claim against Mr Lethlean. Mr Hopkins said that Eyecare's measure of damage was according to the contractual rules laid down by Hadley v Baxendale (1854) 9 Ex 351, 354. He then said that Eyecare wished to add allegations that in light of the acquisition of a residence in Toorak by Eyecare's Principal, Mr Hocking, it intended to sell 596 Burke Road. This allegation was made in support of the contention that if successful against Mr Lethlean, Eyecare could recover not only the present value of the rental which it might be deprived of by reason of Mr Lethlean's determination (if it was found to be negligent or in breach of Mr Lethlean's contract with Eyecare) but also for a loss in the capital value of the premises at 596. Since as Mr Hopkins conceded, his client's claim was based on a contractual measure of damages as set out in Hadley v Baxendale and there was no suggestion that any of the particular matters to be alleged with regard to the finances of Eyecare had been made known to Mr Lethlean, the damages which Eyecare could recover upon the establishment of a breach by Mr Lethlean would be limited to the damage flowing naturally or in the ordinary circumstances from a breach of this type (this being the first limb of the rule in Hadley v Baxendale). This meant that the success of the claim for capital loss depended not upon proof that Eyecare in fact intended to sell the premises but rather upon whether a loss on resale is the sort of thing that might flow in the ordinary cause of events from an unduly low rental determination made in breach of the valuer's duty to the landlord. I refused leave to make the amendments alleging Eyecare's intention to sell. I did however grant leave for two other amendments to be made to the counterclaim, the first, specifically alleging the execution by the parties of the `application for rental determination' delivered to the President of the REIV and repayment of the necessary fee and secondly, the addition of a particular damage suffered by Eyecare as a result of Mr Lethlean's alleged negligence:

[131]

39 Without expressing a view that the power granted by this provision would if available to Mr Lethlean have authorised him to publish his revised determination, one may ask what authority he had to publish it without such authority? The Commonwealth Administrative Appeals Tribunal established pursuant to the Commonwealth Administrative Appeals Tribunal Act 1975 now has powers similar to those given to this Tribunal by Section 119 of our statute. See Section 43AA of the Administrative Appeals Tribunal Act 1975. This provision was inserted by an amending statute in 1995. Prior to the enactment of Section 43AA the Tribunal had to consider what power it had to correct errors in its determinations which came to light. In Pontin v The Repatriation Commission [1991] AATA 38; (1991) 13 AAR 292 Senior Member Dwyer set aside a mistaken dismissal of an application purportedly made by way of a consent order. She concluded that the Tribunal had inherent power to correct such a mistake where the correction was requested by one party and not objected to by the other. She said that the power to correct the order would not necessarily be found in the `slip rule' (as provisions similar to Section 119 are described in Court Rules) `even if that rule is available to this Tribunal' [1991] AATA 38; (1991) 13 AAR 292, 296. The learned Senior Member considered that the Tribunal must have incidental powers such as are necessary for the exercise of its jurisdiction under the Administrative Appeals Tribunal Act [1991] AATA 38; (1991) 13 AAR 292, 300. In Dillon v The Department of Trade (1986) 4 AAR 461 Deputy President Todd considered a request to amend a determination of the Tribunal under the Freedom of Information Act 1982 of the Commonwealth. Mr Todd doubted that the Administrative Appeals Tribunal could simply adopt its own slip rule on the basis of its power to regulate its own procedure in accordance with Section 33 of the Administrative Appeals Tribunal Act because all the powers under that Section were prefaced with the words `in a proceeding'. Mr Todd concluded that correction or amendment of a Tribunal determination could only occur after the proceeding was concluded. Mr Todd concluded that even without a statutory slip rule the Administrative Appeals Tribunal had the following powers of correction:

[274]

106 The complaint was correct but not really to the point. Until the proceeding is completed the costs cannot be quantified. In so far as Eyecare has incurred costs in prosecuting this proceeding against Mr Lethlean, that is, in my view, a matter of costs and not damages and should be determined in accordance with the costs rules applying to this proceeding. Its costs of defending and counterclaiming in the proceeding against Mr Kurc however are in a different case. Mr Hopkins said that this proceeding was rendered inevitable by Mr Lethlean's action in issuing two inconsistent rental determinations. Therefore, said Mr Hopkins, since the outlays caused by the proceeding were outlays which would follow in the ordinary course of events from Mr Lethlean's breach of retainer, they were properly recovered under the ordinary contractual measure of damages. So much may be granted. Nevertheless, it is open to question whether the entirety of the costs of this proceeding as between Mr Kurc and Eyecare can be attributed to Mr Lethlean. It would have been open to Eyecare to accept the original determination as final and binding as between it and Mr Kurc and then launch proceedings against Mr Lethlean alone seeking compensation for the consequences of the error and breach of duty which I have found with regard to the original determination. Eyecare might fear that this proceeding would fail in the event that the Tribunal or a Court found that the first determination was not final and binding as between a landlord and tenant. This consideration might have led Eyecare to bring proceedings against both Mr Kurc and Mr Lethlean, seeking a determination as against Mr Kurc that the original determination was not final and binding and as against Mr Lethlean that if the determination was final and binding it was made in breach of duty and Eyecare should be compensated. Eyecare took neither of those courses. Through the agency of Mr Iles it conducted an intensive lobbying campaign upon Mr Lethlean. Mr Iles agreed that he made the post-determination representation in the `hope' that something along the lines of the revised determination would result. Whilst Mr Hocking expressed himself as `flabbergasted' at the issue of the revised determination, he did not suggest that he was not well aware of what Mr Iles was doing. The evidence showed that he was. A large part of the complexity of this proceeding can, it may be argued, be placed at the feet of Eyecare.

At a glance

Court

Decision date

Before

Source

Judgment (277 paragraphs)

Kurc v Eyecare Pty Ltd [2004] VCAT 1139 (16 June 2004)

Parties

Cases Cited (10)