Facts: Lease of office premises by Tabcorp, the plaintiff (P), to Bowen Investments, the defendant (D), contained an agreement that the tenant was not to make or permit any substantial altercation or addition to the demised premises without the written approval of the landlord. The tenant applied for consent to rip out the foyer but was told the application could not be considered yet, until a site meeting. Despite this, the tenant did the proposed work without consent and the landlord sued for breach of contract.
Held (trial judge, FCA): Awarded damages based on the diminution in value of the building caused by the work.
Held (FCFCA): Increased damages comprising restoring foyer to its original condition, as well as rent lost during the restoration period.
Held (HCA): Dismissed the appeal. The High Court held that diminution in value damages will not restore the P to the same situation, as if the contract had been performed. In addition, the Court referred the to Robinson principle and said that putting the plaintiff in the same position had the contract been performed does not mean “as good a financial position”. In addition, the Court said that the test of “unreasonableness” which would preclude an award of rectification damages would only be satisfied by “fairly exceptional circumstances.”