Case: James v Hutton [1949] 2 All ER 243
Outcome: applied
The present case closely resembles that of James v Hutton [1949] 2 All ER 243, in which the Court of Appeal refused to award more than nominal damages to the plaintiff lessor in circumstances where the outgoing sub-tenant had "modernised" the fa&ccedil;ade of the demised premises. In that case the assignee of a lease was granted a licence by the landlord to construct a new shop front to business premises. The licence contained a covenant that the assignee would, if so required, reinstate the premises in their original condition. The landlord gave the assignee notice to reinstate the premises but the assignee failed to do so. At first instance the landlord was awarded damages calculated by reference to estimates of the probable costs of restoration work. The assignee was successful on appeal. The Court of Appeal applied the general rule as to damages for breach of contract, namely that the landlord could only obtain compensation for damage actually suffered. Speaking for the Court Lord Goddard CJ said (at 246): "We see no ground here for assuming that the landlord in the present case has suffered any damage at all. She has got back a shop ...provided with a modern and convenient front, and there was no suggestion that the work had not been carried out properly. We do not for one moment suggest that it might not be possible for a landlord, in circumstances such as these to give evidence that she or her superior landlords at the end of the term desire to carry on or to let the premises for the purpose of carrying on a business for which the altered shop front would be inappropriate and the old one suitable. In that case she might well say that it is of value to her to have the shop back in its former condition and she would suffer damage if the tenant's or assignees' covenant to restore was not carried out, but if it is a mere matter of getting back a shop which has been altered and there is no suggestion that any damage whatever has been caused to the landlord thereby, it appears to us that she has suffered no damage by reason of the tenant's or assignee's failure to comply with her requirements to reinstate." 102 The expert evidence, which I accept, acknowledges the existence of differing subjective views as to the aesthetic merit of the former foyer and the one which has replaced it. The applicant has erected and leased the building for commercial purposes. It is an investment property. The evidence supports the conclusion that, apart from the loss of lettable space on the ground floor caused by the movement of one wall in order to expand the size of the foyer, the applicant has suffered no diminution in the lettable value of the building by reason of the works undertaken by Tabcorp in the foyer area. This work has not had any adverse effect on the lettable value of the property while it is being leased by Tabcorp. At the end of that lease the building will be lettable to another tenant or tenants. It is likely that, at that time, refurbishment of the foyer will be necessary (as it would be necessary had it been retained in its original condition) in order to take account of architectural developments and the need to "freshen up" the building to make it attractive to potential tenants. 103 At that time there will have been a loss of net lettable area. That loss has been quantified at about $26,000. The cost involved in removing the existing wall and relocating it in its former position so as to restore the lettable area is of approximately the same order. Mr Robinson gave uncontested evidence that the building work necessary to restore the foyer to its original proportions would be $33,820. The applicant is entitled to damages in this amount. Nominal damages are also appropriate having regard to Tabcorp's failure to abide by its obligations under Clause 2.13 of the lease. I would award the applicant $1,000 under this head.