Tabcorp Holdings v Bowen Investments

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Citation: Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8

This information can be found on blackboard.

Contents

Background facts

  • Defendant [Tabcorp, appellant, tenant] leased office space off the Plaintiff [Bowen, respondent, landlord].
    • Clause 2.13 of the lease forbade the Defendant from renovating in any way without approval of the Plaintiff.
  • The Defendant renovated the foyer of the property despite not having written approval and knowing that it needs to get approval before it does so.
  • The Plaintiff sued for breach of contract.

Argument

  • The Defendant argues that the damages he owes are only the difference between the value of the property with the old foyer and the value of the property with the new foyer (this is what the Trial judge ruled).
  • The Plaintiff argues that the damages he is owed are the cost of restoring the foyer to its original condition, which are much much greater (this is what the Full Court ruled).

Legal issues

Judgement

  • "the general rule for assessing damages for breach...is the cost of putting the premises into the state of repair required by the covenant[1]."
  • The point of the clauses was to give the Plaintiff an option to get an injunction against the Defendant if the Defendant attempts to renovate. This is an equitable remedy to ensure the performance of a contract rather than the payment of damages for breach.[2]
  • The Defendant assumed that "anyone who enters into a contract is at complete liberty to break it provided damages adequate to compensate the innocent party are paid."
    • This is incorrect, and the Defendant neglected to think about the equitable remedies.
  • Regardless, it should be pointed out that when the common law requires the damages to place the Aggrieved party in the same situation it would be in as the contract had not been performed, the 'same situation' does not mean the same financial situation!
  • Relies on Bellgrove v Eldridge:
    "In the present case, the respondent was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her. This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract[3]."
  • Similarly, it follows that "here, the Landlord was contractually entitled to the reservation of the premises without alterations not consented to; its measure of damages is the loss sustained by the failure of the Tenant to perform that obligation; and that loss is the cost of restoring the premises to the condition in which they would have been if the obligation had not been breached[4]."
  • The Plaintiff wins.

References

  1. (2009) 236 CLR 272; [2009] HCA 8 [9]
  2. (2009) 236 CLR 272; [2009] HCA 8 [12-13]
  3. (1954) 90 CLR 613, 617
  4. (2009) 236 CLR 272; [2009] HCA 8 [15]
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