Robert John Downing v WIN Television

Which rent should be used in assessing damages? 13In my opinion, it is appropriate to use the rent payable under the variation of lease. Although WIN had erected a tower on Mrs Fitch's land before the variation was agreed to, it did not use that tower until 2008. The evidence suggests that it was not in a position to do so before that time because it had not resolved the issue of a power supply. WIN led no evidence to explain why it agreed to the variation. In those circumstances, I think it is reasonable to infer that the variation was required to permit WIN to do something which was necessary to enable it to operate its tower in the way it had done previously on Mr Downing's land. It is difficult to understand why WIN would have agreed to pay additional rent otherwise. 14Mr Stack, who appeared for WIN, attempted to resist the conclusion of the previous paragraph on two grounds. First, he pointed to what he said were comparable leases where the rent payable was commensurate with the rent payable under the initial lease. Secondly, he said that the onus was on Mr Downing to prove his loss, and consequently it was for him to establish that the initial rent was not an appropriate comparable. As a fall back position, Mr Stack submitted that damages should only be assessed on the basis of the varied rent from the time that that rent took effect. 15I do not accept Mr Stack's submissions. WIN did not start using the tower on Mrs Fitch's land for transmitting television and microwave signals until after it had agreed to pay the varied rent. In the absence of some other explanation, the rent that WIN was paying at that time is the best evidence of the value of the land for that use. If WIN had agreed to pay the varied rent for some other reason, then that was a matter peculiarly within WIN's knowledge. WIN must have appreciated that the rent payable under the lease from Mrs Fitch would be used as a comparable. Indeed, WIN accepts that it is the best comparable. In those circumstances, I think that it was for WIN to call evidence to rebut the inference that the additional rent was paid for the use of the land to transmit television and microwave signals. For the reasons I have given, the rent payable by WIN under the lease with Mrs Fitch was the best comparable. In addition, for reasons which I will explain, I do not propose to award interest to Mr Downing on the rent payable to him for the period before 1 March 2006. Taking those matters into account, I do not think the rent payable to Mrs Fitch should be discounted as the measure of Mr Downing's loss because WIN was able to negotiate lower rents for other sites.

Until when should damages be payable? 16In my opinion, WIN should pay damages based on the lease from Mrs Fitch until the end of April 2008. I accept Mr Elliott's submission that WIN continued to be a trespasser past that time because its tower remained on Mr Downing's property, WIN continued to exclude Mr Downing from the site occupied by it (because the site was fenced and the gate permitting access was locked) and WIN continued to arrange for periodic inspections of the site. However, in my opinion, Mr Downing is only entitled to nominal damages in respect of those trespasses. WIN received no benefit from the site past the end of April 2008. From that time, Mr Downing asserted an entitlement to retain the tower on his property. Given that, he can hardly complain that WIN left it there until the issue was resolved by the court. It was in Mr Downing's interest as much as WIN's that the site remained secure, so that neither of them was exposed to the risk of being sued in the event that someone obtained access to the tower and was injured climbing it. Similarly, it was in the interests of both of them that the site be inspected from time to time to ensure that that state of affairs continued. Mr Downing gave no reason for why he needed access to the site. The site was only approximately 150 square metres in size and was not suitable for use for any other purpose. 17It follows that Mr Downing is entitled to substantial damages for trespass for the period 1 February 2001 to 30 April 2008. The assessment of those damages necessarily involve a judgment which carries with it a degree of imprecision. Accepting that, an award of damages in respect of that period should be seen as including a nominal amount for the period after 30 April 2008.

Should the damages include a proportion of sub-licensing fees paid to WIN? 18In my opinion, they should. 19Mr Paris gave evidence that, where property was leased to enable the erection of a telecommunications tower and the lessee had a right to sub-license space on the tower and in any associated building, it was usual for the lessee to agree to pay to the lessor a proportion of the sublicensing fees ranging from zero to 50 percent. Certainly, there was evidence of cases where the lessee was entitled to sub-license space but was not obliged to pay any proportion of the sub-licensing fees to the lessor. On the other hand, in the negotiations between WIN and Mr Downing, WIN offered to pay Mr Downing 50 percent of the sub-licensing fees received by it. Under the lease from Ms Fitch, WIN is obliged to pay 20 percent of the sublicensing fees it receives. 20In my opinion, there is a relationship between the rent payable under a lease and the right of a lessor to be paid a proportion of sub-licensing fees. Other things being equal, the higher the proportion of sub-licensing fees payable to the lessor, the lower the rent that is likely to be payable by the lessee. What combination particular lessors and lessees will choose will depend partly on the anticipated number of sub-licensees and on the willingness of the lessor to take the risk that that number, and the fees that the sub-licensees pay, will turn out to be greater or smaller than anticipated. The important point, though, is that there is a connection between the rent which a lessee agrees to pay and the proportion of sub-licensing fees the lessee agrees to pay which strongly suggests that, absent some good reason, if the lease from Mrs Fitch is the best comparable for the rent that should be paid, it is also the best comparable for the proportion of sub-licensing fees that should be paid. Neither party pointed to a good reason for adopting a different approach. Consequently, Mr Downing should be entitled to 20 percent of the sub-licensing fees received by WIN. 21Two other issues arise in relation to sub-licensing fees. First, Mr Downing claims fees paid not just by Prime Television and the State but a number of other sub-licensees he has identified. Although Mr Stack took objection to that approach, in my opinion there is no reason why Mr Downing should not be able to claim the benefit of all licence fees paid to WIN. 22Second, the evidence in relation to the payment of fees is far from complete. Mr Elliott says that, in those circumstances, I should adopt the approach that has its genesis in the decision of Armory v Delamirie (1722) 1 Stra 505; 93 ER 664 and assess the compensation payable "in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party "whose actions have made an accurate determination so problematic"": Houghton & Anor v Immer (No. 155) Pty Ltd and Anor (1997) 44 NSWLR 46 at 59 per Handley JA (with whom Mason P and Beazley JA agreed), quoting Hodgson J in LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (No 2) (1990) 24 NSWLR 499 at 508. However, in my view that principle does not have any particular application in this case. Mr Downing bears the onus of proof in relation to the damages he claims. The determination of the sub-licensing fees is difficult in this case because WIN's records are incomplete, no doubt in part because of the time that has passed since the relevant events. But I do not think that WIN bears any particular responsibility for that state of affairs. There have been lengthy delays in bringing the dispute to a head, but those delays are the result of the conduct of both parties. There is sufficient material to draw reasonable inferences about what sub-licensing fees were paid. There is no basis for drawing conclusions beyond those inferences. The calculation of the relevant amounts is arithmetically complicated. In those circumstances, it would have been desirable for Mr Downing to lead accounting evidence concerning the calculations. Given that he has not, I think that it is appropriate for me to indicate the approach that should be applied and invite the parties to agree on short minutes of order that give effect to that approach and to hear further argument if they cannot agree. 23There is evidence that WIN sub-licensed space to 5 sub-licensees: the State, Prime Television, Australian Capital Television, Vodafone and Hutchison Telecommunications. 24By an agreement dated 22 November 1995 between WIN and the Minister for Public Works, WIN agreed to sub-license space on the tower and in its building to the State and to give access to the State and its nominated agent, Telstra, to the site. Although the agreement was entered into in 1995, the commencement date was 1 August 1994. The sub-licence was for a period of 5 years from the date it was signed and the Minister was granted three 5 year options, all of which were exercised. The initial fee payable under the sub-licence was $6,321. That fee is subject to annual adjustments in accordance with increases in the CPI and was said to be payable annually in advance. However, the evidence suggests that payments were made quarterly. There is no reason why Mr Downing should not recover 20 percent of the fees payable under the agreement from 1 February 2001 to 30 April 2008. 25There are in evidence invoices showing the amounts paid by the State for the whole period from February 2001 to October 2007, apart from the period May to July 2007. WIN should pay Mr Downing 20 percent of the amounts shown on those invoices. I think that it is reasonable to assume that the fee payable for the period May to July 2007 was the same as the fee payable for February to April 2007 (that is, $2,008). I also think that it is reasonable to assume that the State continued to pay WIN up until the time WIN moved to Mrs Fitch's land at the end of April 2008 and that it continued to pay at the same rate as it paid for the period August to October 2007 (that is, $2,008 per quarter). WIN should therefore also pay 20 percent of those amounts. 26WIN entered into two agreements with Prime Television. The first was a deed entered into on 1 June 1993 and related to various television transmitting equipment. The initial term of the deed was 15 years. However, cl 37.1 provided that the deed was deemed to be renewed for a further period of 15 years unless Prime Television gave written notice that it did not require a further licence or it failed to comply with its obligations under the deed. There is no evidence that either of those conditions for expiry of the deed were satisfied. The initial fee for use was $4,533. That fee was subject to adjustment in the event that shared facilities were replaced and was subject to increases in proportion to increases in the CPI. The fees for each year were payable in advance by two equal instalments on 1 January and 30 June of each year. The evidence in relation to payment of the fee is limited. In the absence of any other evidence, I think that it can be inferred that the parties complied with their contractual obligations. In addition, there are documents showing that WIN invoiced Prime Television "for various sites" during the period July 2001 and June 2003. There are also documents that show that WIN invoiced Prime Television $2,486.00 for the half years commencing on 1 July 2004, 1 January 2005 and 1 July 2005 and a vendor profile report showing other payments by Prime Television to WIN. Finally, there is an internal WIN email dated 19 March 2007 from Mr Battaglia to Ms Brown in which Mr Battaglia sets out a breakdown of fees charged to various licensees including Prime Television. That email says that Prime Television was paying WIN $4,973 per annum under the deed at that time. In my opinion, it can be inferred from this evidence that Prime Television paid WIN amounts under the deed during the period 1 February 2001 to 30 April 2008. However, it is less clear how much it paid. I do not think it is possible to determine that amount by taking the starting amount set out in the deed and increasing that amount annually by reference to the increase in the CPI since that is clearly not what happened. The position appears to be that, at least during the period 1 July 2004 to March 2007, Prime Television was paying $4,973 (or $4,972) per annum. That appears to be less than the amount that would have been payable if the original figure in the deed had been increased in proportion to increases in the CPI. In those circumstances, I think Mr Downing should be entitled to 20 percent of $4,973 per annum from 1 February 2001 to 30 April 2008. 27The second agreement between WIN and Prime Television was entered into on 22 June 1999, although the commencement date is expressed to be 1 July 1994. The agreement in evidence is incomplete. It appears to relate to a microwave antenna. The agreement was for a term of 10 years from its commencement with an option for 10 years. The initial licence fee was $7,155 per annum, which comprised $2,550 for the tower, $850 for the building, $2,040 for the microwave antenna and feeders and $1,715 for diesel (presumably to run the power generator). Again, evidence of payments under the agreement is scant. However, there are documents showing the payment of $7,155 on 31 January 2006. In addition, the email dated 19 March 2007 from Mr Battaglia to Ms Brown refers to that amount as being the annual licence fee. I think that it can be inferred from these documents that the option to renew was exercised and WIN received annual fees payable on 31 January of each year during the period 1 February 2001 to 30 April 2008. Mr Downing should be entitled to 20 percent of those amounts. Those amounts include amounts for diesel. There is a question whether that amount should be excluded when calculating the amount to which Mr Downing is entitled on the basis that that payment does not relate to Mr Downing's property. The point was not argued before me. In those circumstances, I do not think that I should make that adjustment. WIN is entitled to keep 80 percent of the total amount paid to it. I think it is reasonable to proceed on the basis that that 80 percent permits WIN to recover the costs it incurs in providing goods and services under the sub-licence. It follows that Mr Downing should receive 20 percent of $7,155 in respect of each year from 1 February 2001 to 30 April 2008. 28The third sub-licence granted by WIN was to Australian Capital Television, which is also a regional television broadcaster. That sub-licence was entered into on 2 July 1998. The commencement date is expressed to be 20 January 1996 and the expiration date to be 19 January 2006, although cl 16 provides for a holding over period. Clause 15 provides for an option to renew. However, there is no evidence that that option was exercised. The licence covers a number of sites. The original licence fee for Mr Downing's site is expressed to be $7,700 per annum payable half yearly in advance. That fee was expressed to be subject to increases in proportion to increases in the CPI. The only evidence of what Australian Capital Television paid WIN is the email dated 19 March 2007 from Mr Battaglia to Ms Brown, which states that the payment was $7,700 per annum. There is also evidence that WIN issued debit notes for the full amount due under the agreement covering the period July 2001 to June 2003. I think that it can be inferred from the email that the sub-licence did not expire on 19 January 2006. In the absence of any other evidence, I think that it should be inferred that Australian Capital Television paid WIN $7,700 per annum half yearly in advance (that is, on 1 July and 1 January of each year) for the period 1 February 2001 to 30 April 2008. Mr Downing should be entitled to 20 percent of those amounts. 29The fourth sub-licence was to Vodafone. That sub-licence was entered into on 24 August 1994 and was expressed to commence on 1 August 1994. It was for a term of 10 years with a holding over period. Clause 7.1 granted Vodafone an option to extend the licence for a further period of 10 years. However, there is no evidence that the option was exercised. The initial licence fee was $3,700 in the first year and $4,200 in the second. In subsequent years, the fee was to increase in proportion to increases in the CPI. The fee was to be paid annually in advance. The position in relation to this sub-licence is similar to the position in relation to the sub-licence to Australian Capital Television. The only real evidence of actual payment is the email dated 19 March 2007 from Mr Battaglia to Ms Brown which states that the licence fee payable by Vodafone at that time was $5,617.70. Again, I think that it can be inferred from that document that the sub-licence did not expire on 1 August 2004 but continued under the holding over provision. I also think that it can be inferred that the fee increased in proportion to increases in the CPI. It follows that Mr Downing is entitled to 20 of the fee payable by Vodafone in accordance with the agreement as increased by increases in the CPI for the period from 1 February 2001 to 30 April 2008. 30The last sub-licence was to Hutchison Telecommunications. That sub-licence was entered into on 4 November 1998 but was expressed to have commenced on 6 February 1995 and to expire on 5 February 2010. The annual licence fee was $2,000 payable quarterly in advance. It was subject to adjustments in accordance with increases in the CPI. Again, the only real evidence of actual payment is the email dated 19 March 2007 from Mr Battaglia to Ms Brown, which states that the licence fee payable by Hutchison Telecommunications at that time was $2,543.20. Again, in my opinion, it follows that Mr Downing is entitled to 20 percent of the fee payable by Hutchison Telecommunications under the agreement as increased by increases in the CPI for the period from 1 February 2001 to 30 April 2008.

To what interest is Mr Downing entitled? 31Section 100 of the Civil Procedure Act 2005 confers a broad discretion on the court to award interest. The purpose of interest is to ensure that a successful plaintiff who obtains a money judgment is properly compensated for the loss it has suffered. Consequently, a successful plaintiff is generally entitled to an award of interest: Ruby v Marsh [1975] HCA 32; (1975) 132 CLR 642 at 644; Falkner v Bourke (1990) 19 NSWLR 574 at 576. 32In the case of the rent payable by WIN to Mr Downing, I have concluded that the appropriate comparable is the rent that WIN agreed to pay Mrs Fitch and that the appropriate figure is the amount of $14,500 per annum for the year commencing 1 March 2006. Obviously, that is not an appropriate comparable for earlier periods. There are two ways of dealing with this issue. One is to discount the rent payable on 1 March 2006 to reflect the rent payable during an earlier period and to permit Mr Downing to recover interest on the discounted amounts. The other is to award Mr Downing the amount of $14,500 in respect of each year prior to 1 March 2006 but to make no award of interest. I prefer the latter approach. It is simpler. There was no evidence before me concerning an appropriate discount rate, and there is a degree of artificiality in discounting an amount at one rate to obtain its value at an earlier time and then allowing interest on that amount at a different rate to compensate for the delay in payment. In addition, although I have accepted that $14,500 is the appropriate comparable, the other comparables referred to by Mr Stack suggest that it is favourable to Mr Downing. In those circumstances, I do not think it is necessary to discount that amount and then add interest to the discounted amount to fairly compensate Mr Downing for his loss. 33It follows that in respect of the period from 1 February 2001 to 28 February 2007, Mr Downing should recover rent at the rate of $14,500 per annum. Under the lease with Mrs Fitch, WIN pays rent annually in advance. There is no reason not to adopt the same approach in calculating Mr Downing's damages. Consequently, WIN should pay interest on the total amount from 1 March 2006 to the date of judgment at the rate determined in accordance with Practice Note SC Gen 16. For the period from 1 March 2007 to 29 February 2008, the rent should be increased by the increase in CPI for the immediately preceding year and WIN should pay interest on that amount from 1 March 2007. A similar approach should be taken for the 2 months commencing on 1 March 2008 and ending on 30 April 2008. 34In my opinion, Mr Downing is entitled to recover interest on that proportion of the sub-licensing fees that I have held he is entitled to recover from the date that the relevant amounts were paid or payable to WIN. I accept that the calculation of those amounts is arithmetically complicated. However, there is no obvious simpler means of ensuring that Mr Downing is fairly compensated for his loss. Again, interest should be at the rate calculated in accordance with Practice Note SC Gen 16.

Should damages be awarded against Prime Television and the State? 35I have assessed the damages payable by WIN on the basis that it obtained exclusive possession of the relevant part of Mr Downing's property and was entitled to enter into sub-licences with others. In those circumstances, I do not think that Mr Downing can recover more than the amount that I have held that he is entitled to recover from WIN. To permit him to do so would be to permit him to recover twice for the same loss. 36However, on the findings I have made, both Prime Television and the State were trespassers on Mr Downing's land and Mr Downing is entitled to recover damages from them in respect of that trespass if he does not recover the total amount of his damages from WIN. 37In this case, there is no suggestion that WIN will not or is unable to pay the whole of the judgment awarded against it. There is, therefore, no utility in attempting to assess the damages payable by Prime Television and the State. In my opinion, it is appropriate to make no orders against Prime Television or the State but to give Mr Downing liberty to apply in the event that WIN does not pay the full amount of the judgment against it within 28 days from the date that this judgment is entered.

Orders 38The parties should bring in orders consistent with this judgment within 14 days. If they cannot agree on the form of orders within that time, the matter should be re-listed for further argument. 39I will hear the parties in relation to costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 June 2011