Damjan Zugic v Vesuvius Australia Pty Ltd

1. [1]

   HER HONOUR: This matter has been referred to me by the Registrar for directions to be made in respect of expert evidence.

2. [2]

   These proceedings were commenced in December 2013 and have a complicated and difficult procedural history which is the subject of judgments by Darke J in Davidovic v Vesuvius Australia Pty Ltd [2014] NSWSC 1066, Stevenson J in Davidovic v Vesuvius Australia Pty Ltd (No 2) 2016 NSWSC 1679 and Davidovic v Vesuvius Australia Pty Ltd (No 3) [2017] NSWSC 76 and Parker J (Unreported, Zugic v Vesuvius Australia Pty Ltd, 4 September 2017).

3. [3]

   The proceedings concern leasing negotiations between V & M Davidovic Pty Ltd (V&M) and Vesuvius Australia Pty Ltd in respect of two sites:

4. [4]

   In the last mentioned judgment, Parker J heard a Motion by the plaintiff to amend his pleading, and by the defendant to dismiss the proceedings for want of prosecution. The Statement of Claim had, prior to the hearing before Parker J, sought the following relief:

5. [5]

   By the proposed Amended Statement of Claim, the plaintiff proposed (amongst other amendments) to:

6. [6]

   Paragraph 56 of the Statement of Claim was to be deleted. It had pleaded:

7. [7]

   Whilst there were no submissions or argument before Parker J in respect of these amendments, the defendant submits that there was to be no claim or pleading of a breach of the agreement in respect of the Doyle land, nor could there be, because it was accepted in earlier proceedings that it was properly terminated. I take this to be a reference to the judgment of Biscoe AJ in Vesuvius Australia Pty Ltd v V & M Davidovic Pty Ltd [2011] NSWSC 539 in which his Honour noted that V&M accepted that the lease in respect of the Doyle land had been terminated, either by Vesuvius Australia Pty Ltd issuing a Termination Notice of the Deed of Option to Lease, or the acceptance by V&M of the defendant’s repudiatory conduct in issuing a Termination Notice and V&M proceeding to terminate the lease itself. Such an acknowledgment by V&M does not appear to me to preclude V&M seeking damages in respect of the termination, and indeed both V&M and Vesuvius Australia Pty Ltd sought damages in those proceedings as I understand it.

8. [8]

   During argument before Parker J on 29 August 2017, the plaintiff’s counsel agreed to further amend the proposed pleading by deleting a claim for damages pursuant to s 68 of the Supreme Court Act 1970 (NSW), commonly referred to as Lord Cairns’ Act damages.

Current pleading

1. [9]

   The Amended Statement of Claim was filed on 11 September 2017. The plaintiff seeks the following relief:

2. [10]

   It is pleaded that, in 2006, the defendant was interested in relocating its manufacturing operations to the Sylvester land (at [6]-[8], Amended Statement of Claim). However, from September 2006 to April 2008, the defendant turned its attention to the Doyle land and V&M went to considerable lengths to develop the Doyle land to the defendant’s satisfaction, including purchasing the adjacent lot for $1,595,000 to facilitate access and arranging for third parties to redevelop the site including project managers, surveyors, electricians, architects, traffic engineers and consulting engineers.

3. [11]

   On 6 October 2007, V&M and the defendant executed a Deed of Options for Lease in respect of the Doyle land under which V&M granted the defendant an option to lease the Doyle land for 20 years with an option for a further 20 years at an initial annual rent of $560,000 per annum plus GST. The deed obliged V&M to carry out Works on the Doyle land. The defendant paid a deposit of $560,000 in accordance with the Deed of Options for Lease and V&M continued to carry out the Works on the Doyle land. The defendant exercised its option under the Deed and V&M undertook additional work at the defendant’s request including obtaining additional space for further car parking spaces.

4. [12]

   However, in April 2008, the defendant turned its gaze back to the Sylvester land as a better site for its needs than the Doyle land. The defendant sent V&M a proposal to lease the Sylvester land instead of the Doyle land for 20 years plus 20 years at an annual rent of $744,000 per annum. It is pleaded that the defendant represented that V&M would cease to be bound by the terms of the Deed of Options for Lease, including its obligation to carry out Works on the Doyle land and that V&M would instead undertake capital improvements on the Sylvester land. It is pleaded that V&M relied on these representations and ceased to carry out its obligations under the Deed and instead carried out works on the Sylvester land. Paragraph 32 of the Amended Statement of Claim pleads:

5. [13]

   It is then pleaded that, on 8 April 2010, the defendant commenced proceedings against V&M in the Supreme Court of New South Wales No. 2010/84991 seeking recovery of the deposit paid pursuant to the Deed: [42], Amended Statement of Claim. V&M filed a Cross-Claim in those proceedings seeking damages for misleading and deceptive conduct and unconscionable conduct and sought to have such damages set off against the claim for return of the security deposit.

6. [14]

   It is pleaded that the defendant did not ultimately proceed to lease the Sylvester land but leased different premises in Port Kembla.

7. [15]

   The following portions of the Amended Statement of Claim plead damages:

8. [16]

   Leave to amend the Statement of Claim having been granted by Parker J, the parties proceeded to file their lay evidence. In August 2018, attention turned to expert evidence. The plaintiff proposed that experts calculate loss on four scenarios.

9. [17]

   The defendant queried the relevance of these scenarios having regard to the pleadings. The plaintiff responded:

10. [18]

    The defendant did not agree and proposed a narrower scope for expert opinion. The plaintiff replied:

11. [19]

    The defendant submitted that the plaintiff, having properly abandoned its claims in relation to the Doyle land, is now attempting to revive that claim by quantifying damages which are outside the pleadings. The plaintiff submitted that, whilst he is not entitled to claim equitable compensation for any breach of the Doyle agreement, he remains entitled to include loss or expense which arose from the Doyle land as equitable compensation from the claim in relation to the Sylvester proposal.

12. [20]

    The plaintiff seeks to appoint an expert to opine on the following matters.

13. [21]

    The defendant seeks to confine the appointment to the following matters.

14. [22]

    The plaintiff is seeking equitable compensation which he says flows from the defendant’s failure to proceed with the Sylvester Proposal. At a conceptual level, equitable compensation is determined by equitable principles and these do not necessarily reflect the rules for assessment of damages in tort or contract: Pilmer v Duke Group Ltd (in liq) (2001) 75 ALJR 1067. Assessment will reflect what the justice of the case requires according to considerations of conscience, fairness and hardship and other equitable features such as laches and acquiescence: Day v Mead [1987] 2 NZLR 443 at 462 (CA).

15. [23]

    As such, it is open to the plaintiff at a conceptual level to contend that such compensation may by calculated by reference to the sequence of events set out in the Amended Statement of Claim, being the abandonment of the Doyle land in favour of the Sylvester land and all that that entailed. Indeed, it would be open for the defendant to require the plaintiff to bring to account the financial ramifications of abandoning the Doyle land in calculating equitable compensation in respect of the Sylvester land if, for example, by abandoning the Doyle land, V&M avoided a loss.

16. [24]

    At a pleading level, the plaintiff has pleaded the facts which would support the plaintiff examining the financial ramifications of abandoning the Doyle land in favour of the Sylvester land but has not squarely particularised this in the paragraphs of the Amended Statement of Claim which plead damage. However, in circumstances where the preparation of evidence is not complete and a hearing date has not been allocated, it is open to the plaintiff to provide further particulars of loss. I am not going to preclude the plaintiff from quantifying his claim as he sees it for equitable compensation.

17. [25]

    This case has had an extremely difficult procedural history, but the plaintiff has now remedied the defaults of his predecessors in title to V&M’s causes of action against the defendant. The time has come for both sides of this dispute to finalise preparations of the case for hearing as expeditiously as can be done so that this dispute, and all aspects of this dispute, can be finally determined by this Court.

Orders

1. [26]

   I make the following orders.

   1. (1)

      I make the orders in accordance with the plaintiff’s Request for Expert Evidence Directions which are initialled by me and placed with the papers with the following amendments.

   2. (2)

      Direct the plaintiff to provide any further particulars of the claim for equitable compensation by 22 October 2018.

   3. (3)

      Stand the proceedings over to the Registrar’s List on 25th February 2019.

   4. (4)

      Grant liberty to apply.