D & M Pelle Holdings Pty Ltd v Cottrell Pty Ltd (No 2)  ACTSC 82 (29 August 2005). Breach of exclusivity in lease; breach of quiet use and enjoyment. Experienced Canberra retailer’s lease breached and damaged Intangible Asset (‘IA’) Value of good flexible lease. Lease (paying higher rent vs anchor grocery store) added value to landlord and tenants assets i.e. principles of IFRS 16 (not adequately covered).
Parties to Dispute: Both parties legally represented.
- Provide detailed report to consider “wider market influences on the business” i.e. isolate causation factors back to the alleged dispute; and
- Peer Review Plaintiff and Defendants expert’s figures in regard to the calculation of losses and damages for the terms of the lease available to the Plaintiff.
Type of Dispute:
Matter thrown out of Appeal Court by three Judges according to Plaintiff.
Description of Dispute:
Delicatessen business paid double the rent the supermarket traded at, had multiple options at current market rent, adds value to property and business assets under IFRS 16. Immediately after the supermarket was allowed to trade across exclusive lines and business went into decline. Losses would continue to accrue the longer D & M Pelle Holdings continued to trade. One needed to conduct “forensic” analysis of causation factors including:
1. Economic factors;
2. Catchment factors (demographic factors);
3. Industry matters;
4. The centre, traffic flows, turnover levels, etc;
5. Key anchor (before and after); other competitors;
6. The Plaintiff’s business; and
7. The operator
Involved significant modelling, use of best benchmark sources, “cause effect” modelling and calculation of loss flowing.
At Pt. 38, Connelly J in D & M Pelle states, “There is some degree of discrepancy in the approaches by the three experts who reported on this question, although their conclusions are not wildly out of step”.
Damages of $799,000 were awarded, plus costs. If my degree of accuracy (yes they are still in my Expert’s Reports) in this 2003 matter was just 4.6% off the amount awarded, which included loss of future profit for I believe 2 X 5 year terms, it means the court seemed to prefer my more assertive opinion of future loss, probably because my forensic analysis of the business data metrics was easier to understand. As stated, the SC awarded $799,000.00; it went to appeal and was thrown out I am informed. And three Appeal Court Judges said: “Bring it back and the amount will be increased”.
On appeal thrown out by three Appeal Court Judges.
Our figure which included present value of “future loss” modelling was the closest to quantum awarded. The Judge remarked how close the three Tenant’s Experts opinions were.