Curtin v Meadlow Holdings P/L
[2001] QCA 145
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- Unreported Judgment
- Appeal Determined - Special Leave Refused (HCA)
- Curtin v Meadlow Holdings P/L[2001] QCA 145
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Curtin v Meadlow Holdings P/L[2001] QCA 145
Curtin v Meadlow Holdings P/L[2001] QCA 145
SUPREME COURT OF QUEENSLAND
CITATION: | Curtin v Meadlow Holdings P/L [2001] QCA 145 |
PARTIES: | RUSSELL BERNARD CURTIN (appellant/appellant) v MEADLOW HOLDINGS PTY LTD ACN 009 746 696 (respondent/respondent) |
FILE NO/S: | Appeal No 4907 of 2000 DC No 2822 of 1999 |
DIVISION: | Court of Appeal |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 20 April 2001 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 27 March 2001 |
JUDGES: | Thomas JA, Byrne and Dutney JJ Separate reasons for judgment of each member of the Court, each concurring as to the orders made |
ORDER: |
|
CATCHWORDS: | LANDLORD AND TENANT – RIGHTS AND LIABILITIES – FORM AND CONTENTS OF LEASE – TERMINATION OF TENANCY – lease of premises terminated for failure to pay rent – where clause in lease gave lessee 7 days after determination of lease to remove any ‘moveable fixtures fittings and furnishings’ – where lessor changed locks – where various items of property left on premises by lessee after expiration of 7 day period – where lessor retook possession and dealt with goods TROVER AND DETINUE – ACTION FOR CONVERSION – where lessee made counterclaim alleging conversion of items of property left on premises by lessor TROVER AND DETINUE – ACTION FOR CONVERSION DAMAGES – VALUE AT TIME OF CONVERSION –where respondent valuer adopted minimum value of goods – where this did not reflect market value approach REAL PROPERTY – FIXTURES – WHAT ARE FIXTURES – DEALING WITH AND AFFECTING FIXTURES – BETWEEN LANDLORD AND TENANT – whether various items of property left on premises ‘fixtures fittings and furnishings’ – construction of clause – interpretation of terms – whether items fixtures – whether they became property of lessor BAILMENTS – DUTIES AND LIABILITIES OF BAILEEE – NEGLIGENCE – GRATUITOUS BAILMENT – where lessor in control of premises and contents – where damage caused to goods Uniform Civil Procedure Rules 1999 (Qld), Rule 184 City West Centre Pty Ltd v Galaxy Media Pty Ltd (1998) 9 BPR 16, 313, considered Dean v J Thomas & Son [1981] Qd R 62, considered GM & MY Campbell & Co Pty Ltd v Cotton [1992] ANZ Conv R 610, considered Jigrose v Drummond [1994] ANZ Conv R 212, considered Kosciusko Thredbo Pty Ltd v FCT (1987) 87 ATC 5118, considered McMahon’s Transport Pty Ltd v Ebbage [1991] 1 Qd R 185, distinguished Ocean Line v Macquarie Bank CA No 6935 of 1996, 26 September 1996, considered |
COUNSEL: | The appellant appeared on his own behalf D L K Atkinson for the respondent |
SOLICITORS: | The appellant appeared on his own behalf Hunt & Hunt for the respondent |
- THOMAS JA: The appellant was a lessee who ran a snackbar takeaway business in the Brendale Seven Day Shopping Centre pursuant to a lease dated 5 December 1994. The respondent was the lessor. It will be convenient to refer to the parties as the lessee and the lessor respectively.
- The lessee fell into arrears in the payment of rent. In June 1997 the lessor commenced proceedings in the Magistrates Court claiming rent and other payments due under the lease. Subsequently on 4 October 1997 the lessor terminated the lease and retook possession of the premises by changing the locks and excluding the lessee. The lessee then brought a counterclaim seeking inter alia damages for conversion of various items of the lessee's property which had been left on the premises. In due course the claims were determined by a magistrate who found the lessee liable for rent and various other payments under the lease. The magistrate gave the lessee the benefit of setting off various entitlements proved by the lessee totalling $2,016, but found against the lessee's claims in conversion. In the result there was a judgment (including costs) in favour of the lessor for $16,956-89.
- The lessee then unsuccessfully appealed to the District Court. The appeal to this court is against the District Court's dismissal of that original appeal. Leave to appeal was granted by this Court on 3 July 2000.
- The appeal turns largely on the proper construction of clause 4(d) of the lease. The following provisions are relevant:
- The Lessee shall have the right on or before the date which is seven days (7) after the date of expiration or sooner determination of this Lease to take down, remove and carry away any moveable fixtures fittings and furnishings which the Lessee shall have affixed directed set up to and/or upon the demised premises with the Lessor's consent and for that purpose shall be entitled to the full rights of ingress and egress from the demised premises. Any damage to the demised premises by the taking down removal or carrying away of such moveable fixtures fittings furnishings shall be repaired and made good by the Lessee at its own expense AND in default thereof the Lessor may effect such repairs and make good the said damage at the Lessee's expense and the Lessee shall indemnify and keep indemnified at all times the Lessor against such expense.
The Lessor shall have the right to demand and receive a deposit by way of security of an amount as shall be considered reasonable in all the circumstances by the Lessor before the commencement of such removal and carrying away aforesaid. Such security deposit may be used by the Lessor to repair and make good any damage caused by the Lessee and in any other event shall be returned to the Lessee. In the event that the Lessee fails to remove its property as aforesaid, it shall be and become the sole property of the Lessor.
- In relation to any improvements of a structural or immoveable nature made to the demised premises by the Lessee in accordance with these presents it is hereby agreed that:
- the Lessor shall have the right to purchase (exercisable by written notice served on the Lessee within seven days of the determination of this Lease) the improvements for such sum as may be agreed upon by the parties hereto in default of agreement for such sum as shall be determined by a registered valuer appointed by the parties hereto jointly or by an arbitrator appointed pursuant to paragraph (o) hereof;
- if the Lessee shall not exercise the foregoing right, then the Lessee shall remove and dissemble such improvements, at its own expense and without damage to the demised premises and shall indemnity the Lessor at all times against such expenses and the costs of rectifying and repairing any such damage PROVIDED THAT the Lessor shall be entitled in such events to demand and receive a deposit by way of security of an amount as shall be considered reasonable in all the circumstances by the Lessor AND this amount may be used by the Lessor to rectify and repair any damage aforesaid not attended to by the Lessee and in any other event shall be returnable to the Lessee."
The counterclaim for damages for conversion
- The counterclaim alleged that during his occupation of the premises the lessee brought onto the premises various items of property. It further alleged that the lessor had converted to its use all of such items and that by reason thereof the lessee had suffered loss and damage to the extent of the market value of such goods. From the conduct of the trial the following items may now be regarded as having been in issue between the parties:
| Item | Value alleged by lessee | |
| $ | ||
| 1 | Sandwich bar | 79 |
| 2 | Westinghouse Frost-free upright Freezer | 211 |
| 3 | Panasonic Microwave Oven | 644 |
| 4 | Sharp XEZ 110 Cash Register | 250 |
| 5 | Sharp XEA 130 Cash Register | 375 |
| 6 | Roband TX4 Toaster | 630 |
| 7 | Radio | 20 |
| 8 | Krups Drip Percolator | 100 |
| 9 | Clock K Mart | 10 |
| 10 | Three (3) Tankar prints | 450 |
| 11 | Dummy Lens | 80 |
| 12 | Kemlock Refrigerator Display Cabinet | 1,856 |
| 13 | "Oscar" Food processor | 150 |
| 14 | Straw holder | 40 |
| 15 | Malted milk mixer | 150 |
| 16 | Flavour holder | 40 |
| 17 | Coffee grinder | 550 |
| 18 | "Brasilia" model coffee machine | 2,350 |
| 19 | "Brother" 390MC fax machine and phone | 1,048 |
| 20 | Counter | 10,612 |
| 21 | Ironweed meat slicer | 900 |
| 22 | Bakbar E32 Turbo Fan oven | 2,300 |
| 23 | Deep fryer | 600 |
| 24 | Stock in trade | 2,750 |
| 25 | Cold Room | 7,896 |
| TOTAL: | $34,091 | |
- There is no doubt that the lessor appropriated the property. It is common ground that the lessor, in reliance upon legal advice, believed that all the lessee's items that remained on or in the premises seven days after termination of the lease became its property. The lessor gave away some of the items to Mr Orreal, who had assisted the lessor in the retaking of possession. Some goods were thrown out because they did not appear to be functional; some others were stored in a shed. A claim of abandonment had originally been raised by the lessor, but this was not pressed. No relevant statutory provision was raised or relied on to justify the lessor in dealing with the items as it did. Counsel for the lessor, Mr Atkinson, acknowledged that in relation to the vast majority of the above items the only defence of the lessor is that the items became the lessor's property pursuant to the provisions of cl 4(d).
- Special consideration however needs to be given to the last two items. Item 24 (stock in trade $2750) is conceded by Mr Atkinson to be incapable of amounting to "fixtures, fittings or furnishings under cl 4(d)". His client's defence in relation to that item is that the loss of the stock in trade was not due to any fault on the part of the lessor. This issue will be separately considered in due course. Item 25 (cold room with an alleged value of $7896) is the only item which had a substantial degree of affixation to the premises. It had been the property of the previous tenant and was taken over by the lessee when he commenced his occupancy of the premises. The cold room was capable of removal, but according to the evidence would be unlikely to be of value unless other premises could be found for which its particular dimensions were suitable.
- Nearly all of the remainder of the items were mere chattels which were not fixed to the premises in any manner. The counter and salad bar, although an item of substantial size, was not fastened to the floor. Rather, it was a free-standing item described as resting on its own weight, and able to be moved around. The first aid box and the fire extinguisher were fixed for their designated purposes and were readily detachable. The other items would seem to be typical items of plant and paraphernalia used in a snack bar takeaway shop. They included a coffee grinder, malted milk mixer, microwave oven, refrigerator, toaster, radio, clock, pictures hanging on the wall, and various other items.
- Although the counterclaim alleged in the alternative that the items fell within cl 4(d) of the lease and that the lessee was refused permission to retake his property, at the hearing before the Magistrate the lessee disclaimed any reliance upon cl 4(d). He alleged that the lessor had become a bailee of the goods that had been left behind and that at common law the lessor was liable for their conversion. As already noted, the relevance of cl 4(d) was the potential defence it afforded to the lessor. The magistrate seems to have assumed that all the above items (except the money and the stock in trade) were covered by cl 4(d). At any rate he acted on that footing and gave no reasons for such a conclusion, focussing instead on the fact that the evidence failed to show any refusal by the lessor of any request on behalf of the lessee to retake possession of his property. However it is clear that the claim then relied on by the lessee was a common law claim of conversion and that the magistrate failed to address the necessary issues arising on that claim. The essential question was whether the items in the list, or any of them, were "moveable fixtures fittings and furnishings" within the meaning of cl 4(d). In my opinion the onus was on the lessor to show that it had acquired the property to such items through the operation of that clause.
Construction of Clause 4(d)
- Clause 4(d) gives the lessee a right to "take down, remove and carry away any moveable fixtures, fittings and furnishings which the lessee shall have affixed, directed, set up to and/or upon the demised premises with the lessor's consent". It may be mentioned in passing that the word "directed" is nonsensical, and is probably a mistyping of the word "erected". Whether "directed" is ignored or treated as "erected", it is to be noted that the other verbs in this part of the clause, ("affixed" and "set up"), both contemplate something more than bare placement or mere presence of a chattel on the premises.
- The first paragraph of cl 4(d) appears to relate to the recovery of items whose removal might cause some damage to the premises, whilst the second paragraph gives the lessor the right to demand a security deposit to cover damage reasonably expected to occur from such removal. The prospect of damage being caused by the exercise of the lessee's right is expressly contemplated in several parts of the clause.
- A variety of clauses may be found in leases which endeavour to regulate the often confusing and contentious claims to property left behind when a lease is terminated. There are a number of cases in which clauses with some similarity have come before the courts, but I have found none directly in point. The cases include City West Centre Pty Ltd v Galaxy Media Pty Ltd (Windeyer J, 1998 9 BPR 16, 313); GM & MY Campbell & Co Pty Ltd v Cotton (1992 ANZ Conv R 610); Ocean Line v Macquarie Bank (Mackenzie J, SC Qld, CA No 6935 of 1996, 26 September 1996); and Jigrose v Drummond (1994 ANZ Conv R 212). In City West Centre v Galaxy Media Windeyer J noted that the expression "the lessee's removable fixtures" was not a happy expression to include chattels of whatever nature, notwithstanding that the definition of that term in the lease included "all of the tenant's removable items or removable fixtures which are part of the alterations …" His Honour considered that the word "removable" in this context indicated removing from attachment. His Honour also noted that at common law, chattels that a tenant brings onto leased premises can be removed at will by the tenant, and should be removed prior to the termination of the lease, but that the failure to so remove the chattels prior to termination does not bring about any change of ownership. That of course might be altered by the specific terms of the lease, but forfeiture should not lightly be implied, and clear words would be necessary to achieve that effect. Each of these points in my view has some relevance in the present matter, although of course the terms of the lease may be readily distinguished.
- The present lease is not distinguished by any consistent pattern of thought or terminology. The terms "plant", "equipment", "fixtures", "fittings", "furniture", "machinery", "stock in trade", "partitions", "improvements", "fittings", "stock materials", "furnishings", "goods", "chattels or effects" are used throughout the lease in different combinations and with no coherent pattern. This can be seen in particular by reference to clauses 2(b), 2(s), 2(y), 2(z), 2(cc), 2(mm), 4(d), 4(e) and 4(k). Reference was made to cl 2(z) which obliges the lessee to obtain the lessor's consent before installing "heavy" items of "plant, equipment, machinery, stock in trade, partitions, fixtures, fittings or furnishings". This is of course an example of items which might be affixed or set up by the lessee only with the lessor's consent, but there does not appear to be any particular co-relation between cl 2(z) and cl 4(d).
- When read in combination, cl 4(d) and 4(e) can be seen to deal with both the moveable and immoveable additions or improvements that the lessee has lawfully made to the premises. Clause 4(e) gives the lessor an election to retain the benefit of structural improvements, but only if it is prepared to pay for them. If the lessor does not exercise that right, then the lessee is permitted to remove such improvements subject to indemnifying the lessor against any damage caused. In my view, neither clause is concerned with mere chattels. The distinction between the two clauses is essentially that cl 4(e) is concerned with the removal of structural items and cl 4(d) with the removal of non-structural items. The term "immovable improvement" is nonsensical in the context of a clause which provides for the removal of such improvements, but it is probably included to emphasise the structural connotation. Broadly speaking, the drafter of the lease seems to have attempted to deal with items roughly equivalent to tenant's fixtures in cl 4(d) and with landlord's fixtures in cl 4(e).
- It may be noted that at common law those items which the tenant fixed to the premises for the purpose of trade and which did not become part of the structure itself would be "tenant's fixtures" which the tenant would be entitled to remove at the expiration of the term.[1] Furthermore, tenants are entitled to take away chattels that they have brought on to the land.[2] The question here is the extent to which cl 4(d) destroys a tenant's prima facie entitlement to tenant's fixtures and chattels upon the premises.
- Mr Curtin, who argued his case in person, submitted four principal reasons why cl 4(d) does not apply to the items in question.
- Firstly he submitted that there was no evidence that any of the items had come upon the premises with the lessor's consent, and that accordingly they do not meet the requirement of the clause. The point is potentially a good one. Mr Atkinson's response to it is that the point was not raised below, and that had it been raised it might have been met by evidence. The matter was not put to Mr Bowden (the lessor's representative) and it had not been pleaded. It is a point which in my view should have been pleaded by the lessee if he intended to rely upon it as a special reason for the non-application of the clause in question. Therefore, Mr Atkinson's submission on this part is in my view correct. The matter was not litigated, and the absence of evidence of consent by the lessor to the use of these items on the demised premises is not a point that can now be relied on by the lessee. Mr Atkinson further submitted that in any event tacit consent should be implied to the lessee's use upon the premises of ordinary plant and equipment used in the conduct of a "snack bar/takeaway" shop, which was expressly permitted in the lease itself. In response, Mr Curtin submitted that written consent was necessary to satisfy the requirement of the clause, citing Kosciusko Thredbo Pty Ltd v FCT (1987) 87 ATC 5118, 5123-5124, GM & MY Campbell Pty Ltd v Cotton [1992] ANZ Conv R 610 per Derrington J, and Lees & Leach Pty Ltd v Commissioner of Taxation (1997) 404 FCA per Hill J. It is unnecessary to determine whether the consent would need to have been written, but I am prepared to say that as at present, I see no good reason why the lessor's consent under cl 4(d), as stated above, could not be oral or for that matter implied by a course of conduct. However, this particular point fails simply because it was not litigated and cannot now be raised.
- Mr Curtin's second and third points are best considered together. They are to the effect that the items in question do not amount to "fixtures, fittings or furnishings" under the clause. On the evidence (leaving aside the cold room) the items plainly are not fixtures, and apart from possible argument on a few items including the hanging pictures, I do not think that they could be regarded as "fittings". The lessor's sole argument is that the items fall within the term "furnishings". The most favourable combination of words relied upon by the lessor is "furnishings which the lessee shall have … set up … upon the demised premises". For reasons earlier given, I have great difficulty in thinking that in the context of this particular clause chattels which are used as "plant" in the conduct of the business should be regarded as "furnishings". I do not find it necessary to refer to the various arguments advanced by Mr Curtin in relation to the "function test" that may be applied to items of "plant" but note in passing that the items in question generally satisfy Lindley LJ's description of "plant" –
"… in its ordinary sense, it includes whatever apparatus is used by a business man for carrying on his business, - not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or moveable, live or dead, which he keeps for permanent employment in his business."[3]
- As earlier noticed, the distinction between "plant" and "furnishings" is maintained in other parts of the lease. The absence of any reference to plant in clause 4(d) may therefore be seen as bearing some relevance. Most of the items in question are plainly "plant", and I do not think that it should be accepted that they are "furnishings" under cl 4(d). I reject Mr Atkinson's submission that a furnishing is anything that the lessee "furnishes" that is to say supplies or provides on the premises.
- Mr Curtin's fourth submission was that if cl 4(d) is construed as the lessor seeks, it is a penalty clause. It is unnecessary to determine this question, but on the present state of submissions I find it difficult to think that a clause which gives a reasonable opportunity of retrieval of such items and which provides an attempted regulation of what might otherwise be chaotic dispute should be condemned as a penalty.
- However, reasonably clear words are needed to achieve a forfeiture of a tenant's property. My essential conclusions may be summarised as follows. Clause 4(d) of the present lease does not cover mere chattels. The items to which that clause relates are those as to which there has been some degree of affixation to the premises, but not to the extent that it affects the structure of the premises. Items of the latter kind are covered by cl 4(e). Broadly speaking cl 4(d) is concerned with items akin to tenant's fixtures, whilst cl 4(e) is concerned with items akin to landlord's fixtures. Both clauses are concerned with items the removal of which might cause some damage to the premises.
- The lessee is entitled to succeed in a claim for conversion of any of his own chattels that were not affixed to the building. It is a question of fact which of the items listed in the counterclaim satisfy these requirements. It is the lessor who bears the onus of displacing the prior ownership of the lessee with respect to such items.
- The task then is to determine which of the items are covered by cl 4(d).
- It is not seriously contested that items 1 to 24 are free-standing articles that were not affixed to the premises. It was not suggested that affixation exists through the plugging in of electrical devices to general power outlets, or that items which presumably hang on a screw or its equivalent (such as the clock, the prints, and the dummy lens) were other than portable chattels. I consider that items 1 to 24 remained the property of the lessee. The cold room however, although described as "pre-fab", would seem to have comprised a tenant's fixture. The demounting of this item would apparently be a reasonably substantial exercise.[4]Whilst the matter is not completely clear, on the balance of probabilities the evidence suggests that the cold room was firmly affixed to the premises and that it is covered by cl 4(d). The lessor therefore obtained title to it and the lessee fails in his claim for conversion of this item.
Stock in trade
- The lessee had been in arrears of rent for some time and had received notices to remedy his breaches. The evidence however clearly shows that he was not aware that the tenancy would be terminated when it was or the manner in which it would happen. His business was trading normally under the managership of Mr Clements. On the afternoon of Saturday, 4 October 1997 after the shop had been closed, representatives of the lessor including Mr Orreal cut off the old locks and installed new ones. Later that evening a security guard arrived at the lessee's house and gave him a letter saying that the locks had been changed. He advised his manager Mr Clements of this later that night. The lessee stated in evidence that he did not know what the landlord was going to do and that he had done nothing in relation to the furnishings or the stock. He did not speak with the lessor about recovery of property or negotiate for continuation of the lease during the following week, and it was suggested to the lessee by the lessor's counsel that he "just froze".
- Mr Clements gave evidence that the fridges and the cool room were all in good working order up to the time they were locked out. He went to the premises the following morning and noticed that they were flanked by two security guards and that Mr Bowden was in the area. He described it as "well guarded" and refrained from making contact. He later decided that he wished to retrieve his heart tablets, and some trays that belonged to a third party, all of which were on the premises. A few days later (probably Tuesday, 7 October) he spoke to Mr Bowden's secretary. She was unable to find Mr Bowden but rang Mr Orreal who came down, opened up the shop and was present while Mr Clements retrieved the stated items. No other contact was had with the premises by the lessee or any representative of the lessee at any material time thereafter.
- The lessor and his agents apparently deliberately delayed for seven days after changing the locks before going inside the premises. Presumably this was related to the intended assertion of rights under cl 4(d). Although the evidence is unclear, it would seem that on or about 12 October, Mr Bowden and his representatives, and in particular Mr Orreal, started going inside the premises and clearing out and disposing of the property that remained, in the belief that such property was now owned by the lessor. With reference to the first visit at this time, Mr Orreal said that "half the power at least had been turned off". He said he did not know how or why. He observed that "there was a lot of meat had very much spoiled. Most foodstuffs had spoiled and I dumped them". The spoiled food included ice-cream in the refrigerators. Apart from certain items including soft drinks, the stock in trade was completely lost.
- By changing the locks and excluding the lessee the lessor took possession of the premises and their contents. It is not correct to describe the lessor as an involuntary bailee. Having placed itself in control of the building and contents, the applicable duty of care is at least that owed by a gratuitous bailee, although it may be arguable that higher duty was owed because the lessor stood to gain by the possession in question.[5] In the absence of adequate legal argument it is not desirable, and is in any event unnecessary, to pursue this point, as the matter may be determined on the footing that the lessor was a gratuitous bailee of the goods. A gratuitous bailee who fails to return the goods when demanded has the onus of showing that their loss was not caused by his negligence.[6]
- The question then is whether the evidence is sufficient to discharge that onus.
- Plainly somebody turned off the power that was needed to continue the necessary refrigeration. It is not known who did this or why, and the answer in the end can at best be speculation. The circumstances are not such as to make it more probable than not that the power was turned off by the lessee or by Mr Clements before the unexpected changing of the locks. Thereafter the only access to the premises by the lessee or Mr Clements was the brief visit by Mr Clements a few days later under the supervision of Mr Orreal. Indeed, the circumstances leading up to the changed control of the premises make it quite unlikely that the lessee or any of his agents were responsible for this unfortunate event. In this situation it seems clear that the lessor has failed to discharge its onus of showing that the stock perished without any want of care on its part or by its servants or agents. Accordingly, the lessee's claim also succeeds in relation to the stock in trade.
Quantum of damages
- The normal measure of damages in conversion is the value of the goods, this being usually calculated by reference to their market value.[7]There was here no evidence calling for any departure from the normal approach, such as may occur when the goods have no market value or where the plaintiff would want to use replacements that were not readily procurable. The situation here was that the lessee through his own default in failing to pay the rent would not be able to continue that particular business in those premises.
- The magistrate did not find it necessary to deal with the question of damages and made no assessment of witnesses who gave evidence upon it. Mr Atkinson, for the lessor, submitted that it was desirable that this court should, if at all possible, avoid the prospect of a further trial and should do the best it can on the available evidence should it be necessary for an assessment of damages to be made against his client. Mr Curtin whilst not necessarily opposed to the prospect of a further hearing, did not object to this court finalising the proceedings if it found itself able to do so.
- Only one qualified valuer gave evidence. This was Mr Austin who was called on behalf of the lessor. Excluding a roller door which is no longer in issue, the cold room and the stock in trade, his total valuation of all items admitted to have been in the possession of the lessor comes to $4265. His valuation was given on the basis of an auction value. This he defined as "a value which is the minimum price one would expect to obtain at a properly advertised and conducted auction sale … on the basis that substantially the whole of those items are offered for sale at the one time providing such action sale is arranged and conducted by Isles Love Auction Centre. Within this context, minimum price relates to gross price under the hammer" (my emphasis). Why the valuation was confined to the minimum price that one would expect to obtain was not explained. It would seem that at such an auction there would be a range between the minimum price and the maximum price one would expect to obtain, and in my view, the market value is not the minimum price but the fair average price that would be expected to be obtained. Mr Austin agreed in cross-examination that he would agree substantially with the amounts claimed by the lessee if they were valued on the basis of "replacement value new". He also agreed that the value would be substantially higher if made on the assumption that a similar business would continue at that location. However the evidence does not justify assessment on these particular premises.
- There was evidence that substantially greater amounts than those suggested by Mr Austin had been paid for the items in question, many of them during the preceding 12 months. Mr Curtin verified the contents of his taxation depreciation schedule and in another document which on their face generally support the amounts that have been claimed. The difficulty is that Mr Curtin did not qualify himself sufficiently as an expert capable of giving evidence of market value. His evidence shows that many of the items were recently purchased, the coffee grinder, for example, being only one month old. However there was evidence from several witnesses establishing that there had been a severe downturn in the takeaway food industry, resulting in an oversupply of secondhand equipment used in such businesses. This tends to make credible the otherwise surprising difference between the new price and the secondhand market.
- Mr Clements gave evidence for the lessee. He was not a registered valuer but had performed appraisals and was familiar with the takeaway trade and the value of relevant plant. He considered that Mr Austin's estimates were equivalent to a "fire sale auction" and that he had given "an absolute rock bottom valuation". He stated that "if you had replacement value you'd pay a lot more for it". However Mr Austin's valuation explains why he adopted a total package auction sale rather than the piecemeal selling of specific items by private treaty. He stated that if any of the major items were withdrawn from sale the overall attraction might not be as great and could adversely affect the return on the balance of the sale. Furthermore, although Mr Clements expressed an opinion of replacement value of some items, some of his estimates failed to contradict those of Mr Austin, and others supported only a relatively minor increase. For example, he considered that the microwave oven which Mr Austin had valued at $150 would be procurable between $150 and $300 and stated "they'd have to be worth $250 each, surely". The Brasilia model coffee machine, he thought, "has to be worth a lot more than $240". However on analysis, it is very difficult to use Mr Clements' evidence as providing an acceptable logical alternative to that of Mr Austin, although it provides good reason for thinking that Mr Austin's estimate at least in some instances may have been unduly conservative. Indeed, Mr Austin's evidence on its face was of the minimum price that would be obtained at a one-off sale of all items, and cannot be accepted as an accurate statement of the full market value.
- Whilst the evidence is somewhat unsatisfactory, I consider that an assessment of damages may be made. It must be based primarily upon the evidence of Mr Austin but should take into account what appears to be an error on the face of the valuation, namely the adoption of a minimum rather than a fair average figure. The fact that Mr Austin's valuation is too low is also supported by other evidence including that of Mr Clements, although that evidence does not permit an item by item adjustment. In the end I consider that on the evidence the market value of the goods specified in items 1 to 24 should be assessed at $5100, which is equivalent to Mr Austin's estimate with an increment of just under 20%.
Value of stock in trade
- There remains the issue of the value of the stock in trade. On this point Mr Atkinson submitted that Mr Clements had estimated that the value of the stock when he closed the premises on the day in question was between $1200 and $1600. Although the evidence is not completely clear, on examination it seems that Mr Clements was referring to the ice-cream and other items in the refrigerators but not to the contents of the cold room. In my view Mr Curtin's evidence sufficiently establishes the value of the stock in trade at the material time to have been in the vicinity of $2750. His evidence concedes that there was no stocktake on 4 October because he did not know that he was to be "taken over". However the stocktake in comparable circumstances at 30 June 1997 supported that figure which he stated to be a conservative estimate. The sum of $350 should be deducted from the $2750 estimate as the magistrate has already allowed the lessee a credit of $350 in respect of soft drinks which the lessor was able to use or sell.
Orders
- It follows that on the counterclaim the lessee should have been granted judgment for $7500 damages for conversion.
- The judgment currently standing in the Magistrates Court is made up in the following way:
| Rental and other sums owed under lease | $10,041-34 |
| Interest | 1,494-25 |
| Costs of trial | 5,421-30 |
| TOTAL: | $16,956-89 |
It is appropriate that a single judgment be entered notwithstanding that the parties have respectively succeeded on claim and counterclaim.[8] In the result, after setting off the $7500 damages, the plaintiff lessor is entitled to judgment on its claim for $2541-34. The interest thereon is $378-18. Leaving aside the question of costs, the total judgment for the plaintiff should be for $2919-52.
- Quite apart from the fact that judgment for this lesser sum would invoke a lower Magistrates Court scale of fees that than applied by the magistrate, the question of costs needs to be reconsidered in the light of the defendant's success in one of the major issues litigated. I have contemplated directing that there be no order for costs in the Magistrates Court having regard to both parties having succeeded on important issues.[9] But having regard to the fact that the plaintiff has obtained a judgment and the further fact that the defendant was legally represented on the first day but not the second, in consequence of which costs which he would be entitled would be less than those of the plaintiff, I think that a modest assessment of costs in favour of the plaintiff is justified. In the circumstances I would fix these at $1000, resulting in a total judgment for the plaintiff of $3912-52.
- The learned District Court judge erred in dismissing the original appeal. The appeal from that decision should be allowed with costs.
- We were informed that part of the judgment below has been enforced by way of garnishee, but were not advised of the amount. It is therefore not known whether any order will be necessary for the restitution of any monies that may have been overpaid having regard to the level of the present substituted judgment.[10] There will therefore be an order for liberty to apply in case any such further order may be necessary.
- The formal orders will be:
- Appeal from decision of the District Court at Brisbane dated 9 May 2000 allowed with costs including costs of the application for leave to appeal;
- Set aside order of the District Court dated 9 May 2000 and in its place substitute an order that the appeal be allowed with costs; order that the decision of the Magistrates Court held at Petrie in Plaint No 970826 be set aside and replaced with a judgment against the defendant for $3919-52; further order that the respondent Meadlow Holdings Pty Ltd pay the appellant his costs of and incidental to that appeal;
- Liberty to apply.
- BYRNE J: I agree with the Reasons for Judgment of Thomas JA.
- DUTNEY J: I agree with the Reasons for Judgment of Thomas JA.
Footnotes
[1]New Zealand Government Property Corp v HM & S Ltd [1982] 1 All ER 624, 627.
[2]Hobson v Gorringe [1897] 1 Ch 183; compare Penton v Robart (1802) 2 East 88 at 89; 102 ER 302, 303, and other cases cited in Aitken, L “Applications in Equity: Removal of Tenants Fixtures?” (1999) 73 ALJ 834.
[3]Yarmouth v France (1887) 19 QB 647, 658.
[4]Compare McMahon's Transport Pty Ltd v Ebbage [1999] 1 Qd R 185, 196-198.
[5]Jackson v Cochrane [1989] 2 Qd R 23, 25, 27.
[6]Graham v Voight (1989) 95 FLR 146, 154; Mitchell v Ealing Londonborough Council [1979] 1 QB 1; Bowden v Lo (1999) 9 BPR 16, 317.
[7]Hall v Barclay [1937] 3 All ER 620, 623; Caxton Publishing Co v Sutherland Publishing Co [1939] AC 178, 192; Tettenborn,A “Damages in Conversion – Exception or Anomaly?” [1993] 52 Cam L J 128; Dean v J Thomas & Son [1981] Qd R 62, 63.
[8]Uniform Civil Procedure Rules 1999 (Qld) Rule 184.
[9]Colburt v Beard [1992] 2 Qd R 67; Thiess v TC and Channel Nine Limited (No 5) [1994] 1 Qd R 156.
[10]Holdcroft v Market Garden Produce Pty Ltd [2000] QCA 396; CA No 11551 of 1999, 29 September 2000; National Australia Bank Ltd v Bond Brewing Holdings Ltd (1991) 1 VR 386, 597.