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Dorsen v Brysten [2001] VUCA 5; Civil Appeal Case 15 of 2000 (27 April 2001)

IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
(Appellate Jurisdiction)

CIVIL APPEAL CASE No.15 of 2000

BETWEEN:

SIMON DORSEN
Appellant

AND:

FREDERICK BRYSTEN
Respondent

Coram: Chief Justice Vincent Lunabek
Justice Bruce Robertson
Justice John von Doussa
Justice Daniel Fatiaki
Justice Oliver Saksak

Counsel: Mr. Kalkot Mataskelekele for the Appellant
Mr. Robert Sugden for the Respondent

Hearing date: 26 April 2001
Judgment date: 27 April 2001

LANDLORD AND TENANT – Tenant’s covenant – Covenant to carry on business and quiet enjoyment of premises – Breach of covenant by direct physical interference accompanied with other abuse – Dismissal of counterclaim – Damages for the loss of lease and enjoyment of premises – whether assessment of damage for loss of profits excessive.

JUDGMENT

1. This is an appeal by the Defendant/Appellant Simon Dorsen from a judgment of the Supreme Court given at Port-Vila on 24^th November 2000. The judgment was in favour of the Plaintiff/Respondent, Mr. Frederick Brysten for a total sum of VT1,895,000 for damages for breach of the implied covenant for quiet enjoyment of his store premises.

2. The landlord and tenant relationship started in the early 1980s. In 1981, the Respondent leased a shop from the Defendant/Appellant for 5 years. In 1986 the lease was renewed for 5 years with an option for the plaintiff to obtain the lease for a further 5 years. The Respondent carried on a business of ice- cream making and general store from the premises. There was a habit of the defendant and his family to take goods from the store. They would later be paid for but increasingly it became the fact that the sum owing was deducted from rent. The credit also took the form of cash advances to the defendant.

3. In 1991, the plaintiff ceased to pay rent as the amount owing for cash and credits exceeded the rent the plaintiff owed.

4. In October 1991, the plaintiff required payment for the goods and cash advances. The next day the defendant was violent towards the plaintiff, damaged the property in the shop and required him to leave. There were another incident of assault and damage after the plaintiff had moved out, relating to the alleged removal by him of the electricity connection cable. The plaintiff moved out over the next two months. He set up a shop nearby but the location was not as favourable and profit went down. He lost the benefit of the option for a further five years in the original shop.

5. On 5^th October 1999, a defence was filed to the specially endorsed writ denying the breach of the covenant, denying any demand to leave the premises and counterclaiming for the plaintiff voluntarily quitting of the premises before the end of the lease. The full statement of claim was lodged sometime in August 2000. The defence and counterclaims were filed on September 2000. The counterclaim alleged that the plaintiff had agreed in March 1990 to buy the whole property for VT7.5 million. 10% was to be paid by December 1990. The rent was to be reduced from 50,000VT to 40,000VT per month until the deposit was paid.

6. The pleading alleges the agreement was put in writing in December 1990 with a purchase price of VT7.5 million, VT3 million payable by December 1991 and balance by December 1992. The monthly rent was to 40,000VT with 10% of the purchase price payable on signing. It was alleged by the defendant that at that time of the signing there was verbal agreement for postponement of the payment of the 10% deposit to March 1991. It is also alleged that the plaintiff loaned 250,000VT to him repayable within a week and in return a one-year extension of the lease would be granted from December 1991 to December 1992.

7. The defendant alleges that these agreements were breached by the plaintiff. It is against this background that evidence was brought. The primary Judge noted that nearly all the documents in this case came from the plaintiff. His Honour noted further that the plaintiff had been meticulous in keeping records of his business, particularly as regards the goods and cash taken from his shop by the defendant and his family. The defendant has nothing but his recollection in this regard.

8. The primary Judge finds that the plaintiff clearly had an option to extend the lease for five years beyond December 1991, (Doc. P2). The Judge noted “why should the plaintiff enter into any arrangement for a one-year extension when the five-year option was already there”. The Judge was satisfied that the option was exercisable at the plaintiff’s wish and not with the consent of the defendant. The primary Judge found that the plaintiff did cease to pay rent in July 1991 when the sums owed by the defendant for goods and cash exceeded the rent owing.

9. A letter was sent by the plaintiff to the defendant to this effect in mid-October 1991. The defendant when he realised he could not get his rent went to the shop the same day and threw coconuts at the plaintiff smashing some merchandises and required the plaintiff to leave.

10. Given the history of the abuse of credit at the store and this assault and damage, the Judge concluded that the plaintiff/respondent was entitled to treat the lease as fundamentally breached and moved out. This the Judge said the plaintiff did. The trial Judge accepting the evidence of the plaintiff noted the actions of the plaintiff were not actions of a man who holds no fear. The trial Judge found that there was a further worse assault when the defendant went to the plaintiff’s premises and assaulted the plaintiff. The trial Judge did not accept the evidence of the defendant and gave judgment for the plaintiff and dismissed the counterclaim.

11. In assessing damages, the trial judge gave judgment for the plaintiff in the following sums:

“The coconut assault 40,000 VT

The second assault 150,000 VT

Storage and set up costs 75,000 VT

Loss of profit for 1991 130,000 VT

Loss of profit for 1992 500,000 VT

Loss of profit for 1993 – 1996 -

4 x 260,000VT 1,000,000 VT

___________

TOTAL 1,895,000VT

==========

I therefore award the sum of VT1,895,000 to the plaintiff together with the costs of this action.”

12. The appellant lodges his appeal on various grounds. The appellant says that the trial Judge erred in finding that the appellant had breached the lease agreement. Further, if the Judge was correct in finding that there was a breach of agreement, the breach of agreement was not fundamental and did not amount to a repudiation of the lease agreement.

13. It was submitted for the appellant that the alleged breach of the lease agreement took the form of one single incident only which occurred on 10^th October 1991 when the defendant slung a coconut into the respondent’s shop causing damage. Further no other incident was put forward by the respondent in the original writ dated 10^th October 1997 as a basis of the breach of agreement.

14. We are satisfied that the trial Judge based his decision upon findings of facts which are contained on page 4 of the judgment under appeal.

15. His Lordship in effect held that:

“1. There was a history of abuse of credit by the defendant.

2. To stop the abuse the defendant went to the shop violently abused the plaintiff and told him to leave.

3. The violence and the abuse the plaintiff suffered from the actions of the defendant were sufficient to put the plaintiff in great fear.”

16. It is good law that the direct physical interference of any kind such as throwing the coconut on the plaintiff accompanying with shouting and abuse at the plaintiff/lessee would amount to a breach of covenant.

17. In this case the findings together with the primary Judge’s assessment of the effects of the defendant’s acts which he alone could make are sufficient for the trial Judge to have concluded the respondent was justified in treating the lease as at an end. The finding that the defendant told the plaintiff to get out and the assault incidents were findings of the breach of the lease by the defendant that went to the very root of the lease and the trial Judge could well on the basis of all those findings have concluded that the breach of the covenant of quiet enjoyment were so serious as to entitle the respondent/plaintiff to rescind the lease.

18. It is also contended that the trial Judge erred in law and of process when he announced a time limit for the hearing of Supreme Court Case No.153 of 1997.

19. In our judgment that contention has no foundation since there is no miscarriage of justice and the trial Judge considered them appropriate in the circumstances of the case before him.

20. It is further advanced that the trial Judge erred in dismissing the counterclaim. The counterclaim alleges a contract for the sale of the premises to the respondent made on 5 March 1990. The trial Judge noted in his judgment that the efficacy of the agreement depended upon quiet enjoyment of the store and that did not take place.

21. Further the trial Judge rejected the evidence given by the defendant and held that the series of agreements did not show a clear course of conduct containing an enforceable sale of land.

22. In our judgment the trial Judge was correct based on the evidence before him. There is no reason to disturb his findings on that point.

23. It is finally contended that damages awarded are excessive. The Judge’s assessment of the damages is as follows:

i) Coconut Assault 40,000 VT

ii) Second Assault 150,000 VT

iii) Storage and set up costs 75,000 VT

iv) Loss of profit for 1991 130,000 VT

v) Loss of profit for 1992 500,000 VT

Loss of profit for 1993

to 1996 – 4 x 260,000VT 1,000,000 VT

___________

TOTAL 1,895,000 VT

===========

24. The Appellant did not seriously challenge (i), (ii), (iii) and the evidence justified the amounts allowed for these items.

25. Items (iv), (v), (vi) were assessed having regard to the actual profits of the respondent’s business before he vacated the appellant’s shop and comparing them with the actual profits made by the respondent once he re-established a retail outlet for his business elsewhere.

26. The respondent was entitled to damages to compensate him for the loss of the benefits of the lease and the enjoyment of the premise, both for the balance of the term to the end of 1991, and for the period of the renewal option. Those damages must reflect the loss of an advantageous site, and the ability to continue operating his established business at the site to which goodwill attached. However we think that to focus too closely on the actual profits made by the respondent after he moved to new premises can be misleading. Many factors quite unrelated to the wrongful conduct of the appellant will have influenced those profits. There is no real problem in this case in relation to the amount allowed as “lost profit for 1991” as the period at the end of 1991 was short and covered the time that was necessary for the respondent to make a move to new premises and to re-establish a retail outlet whenever he went. But thereafter, i.e. for the years 1992 to 1996, we think that the difference between the “before and after” profits is of little assistance in assessing damages for the loss of the lease. We think the amount of VT1.5 million allowed for these years was too high as to be manifestly excessive. In our view the damage for that period should be reduced to VT750,000. The appeal is therefore, allowed on quantum.

27. The details of the awards are as follows:

The coconut assault 40,000 VT

The second assault 150,000 VT

Storage and set up costs 75,000 VT

Loss of profit for 1991 130,000 VT

Loss of business premises from

January 1992 to December 1996 750,000VT

_________

TOTAL 1.145,000 VT

==========

27. The total sum awarded to the respondent is 1,145,000 VT. There is no order as to costs.

DATED at PORT-VILA, this 27^th DAY of APRIL, 2001

ON BEHALF OF THE COURT

Vincent LUNABEK
Chief Justice