Leeda Projects Pty Ltd v Zeng  VSCA 192 (Tate, Kaye and McLeish JJA) – A case of no direct pecuniary loss presents challenges for the assessment of unliquidated damages for delay ||| MTECC News Edition 20.16
Leeda Projects Pty Ltd v Zeng  VSCA 192 (Tate, Kaye and McLeish JJA) – A case of no direct pecuniary loss presents challenges for the assessment of unliquidated damages for delay
Zeng purchased the 87th floor of the Eureka Tower as a shell for $5.8 m for use as a private art gallery and occasional residence. She engaged Leeda to do the fit out for $1.16 m. The contract did not specify a date for completion and liquidated damages were stated to be “nil”. After some 3½ years the works were completed and the architect certified $211,944 as final payment which Leeda claimed in VCAT. Zeng counterclaimed for delay for loss of use and enjoyment, alternatively wasted expenditure.
The Tribunal attributed 130 weeks of delay to Leeda’s breach of an implied term to complete within a reasonable time but found that Zeng had not suffered any pecuniary loss, (she owned other residences) and awarded nominal damages of $100 only.
The Supreme Court allowed Zeng’s appeal and held that she was entitled to $357,500 for loss of use and enjoyment by reference to the market rent, “as the usual default position”, whether or not any actual loss of rent was suffered.
The Court of Appeal disagreed and held that the award of damages based on rental in this case was contrary to the compensatory principles of contract damages – Robinson v Harman and the rule in Hadley v Baxendale. (The award of rent would not put Zeng in the same position as if the breach had not occurred and it could not be considered to arise naturally from the breach, nor could it be supposed to have been in the contemplation of the parties at the time they made the contract).
The Court of Appeal upheld Zeng’s Notice of Contention that she was entitled to wasted costs of $283,802 (owners corporation fees, rates and utilities) during the period of delay when she was deprived of the opportunity to use and enjoy her apartment.
There may be another basis for recovery in such circumstances – interest incurred for the period of the delay in respect of capital outlay. See the decision Yates v Mobile Marine Repairs Pty Ltd  NSWSC 1463 discussed at - and  of the judgments of Kaye JA and McLeish JA respectively. (The Tribunal had rejected Zeng’s application late in the hearing to amend to include such a claim.)