by their nature would otherwise involve demand for car parking services in the central
business district of Sydney. I think that it would be artificial to attribute the reduction in
revenue to the pandemic, rather than the orders. Whilst the pandemic can be seen as the
underlying cause of the making of the orders, I think that viewing the matter in a
practical and commonsense manner, the relevant changes in behaviour amongst
members of the public ought to be regarded as effectively caused by the orders which
mandated that change in behaviour. I have therefore concluded that Secure’s business
carried on in or from the car park was materially adversely affected by reason of the
laws, policies or actions of an Authority within the meaning of cl 21.1 of the lease. Secure
thus became entitled to a reduction in the current Base Rent.
116. The entitlement was to a reduction “in proportion to the loss or damage caused to the
Lessee”. In my view, the loss or damage referred to is the loss or damage suffered by
reason of the relevant laws, policies or actions of an Authority; it is the measure,
expressed in monetary terms, of the material adverse affect caused by the laws, policies
or actions.
117. In the course of submissions, the parties suggested various ways in which the relevant
loss or damage might be calculated using the financial records of Secure that were in
evidence. Some of the suggested calculations were based upon comparisons of revenue
figures alone. I do not think that such an approach is suitable in seeking to measure an
amount of loss or damage. It is necessary in my view to take into account expenditure as
well as revenue. This is reinforced by the evidence that shows that, as its revenue
declined from about late-March 2020, Secure took steps to reduce some of its costs,
including labour costs. I have therefore attempted to quantify the extent to which
Secure’s profit and loss position was adversely affected by the public health orders.
118. As Secure was regularly incurring losses in the operation of the car park, the exercise is
one of quantification of the extent to which the public health orders caused it to incur
larger losses than would otherwise have been incurred.
119. Based upon its profit and loss statements (with adjustments made for May 2020 to
reflect a rent amount of $188,522.73), Secure sustained losses in March, April and May
2020 of $41,820.41, $59,322.22 and $65,774.56 respectively. Those figures for March,
April and May 2019 were $38,944.33, $38,448.96 and $27,353.95. There were thus
increases in the amount of loss in each of those months of $2,876.08, $20,873.26 and
$38,420.61 – a total increase of $62,169.95.
120. Looked at another way, the losses incurred in those months were a total amount of
$166,917.19, whereas if losses were incurred at the rate of the monthly average of
$33,274.82 (derived from the figures for January to December 2019), the total amount
would be $99,824.46, a figure $67,092.73 less than the actual losses incurred.
121. The above calculations suggest that Secure incurred losses in March, April and May
2020 that were larger than usual by an amount of between $62,169.95 to $67,092.73.
122. As Secure was in possession until only 11 June 2020, the position is more complicated in
relation to June 2020. Adjustments should be made to reflect a rent amount of $69,125
(which is 11/30 x $188,522.73). On that basis, the total expenses for the month were
$86,935.79. Against that, revenue for the month was $49,064.88, leaving a loss of
$37,870.91. However, the expenses include an unusually large amount of $12,244 for
legal fees. These are likely to be legal fees associated with the dispute with HTH
concerning the rent. I think that the loss figure should therefore be reduced by that
amount, to $25,626.91. That is less than the June 2019 loss of $27,871.29, and less than
the 2019 monthly average loss of $33,274.82. In these circumstances, I cannot be
satisfied that Secure suffered any additional loss in June 2020.
123. However, I am satisfied that in respect of the overall period from late-March 2020 to 11
June 2020, Secure sustained larger than usual losses in an amount of no less than
$62,169.95. Further, I am satisfied that that amount of loss or damage was suffered by
reason of the public health orders that operated during that period. Those orders
resulted in a significant reduction in the revenue of the car park. Secure was not able to
reduce its costs commensurately, and it therefore sustained the greater than usual
losses. It follows that Secure was entitled to a reduction in the current Base Rent “in
proportion to” that amount. In my view, that means that Secure became entitled to a
reduction in the Base Rent to that extent. To my mind, a reduction in the current Base
Rent of that amount should be regarded as a reduction in proportion to the relevant loss
or damage caused to Secure.
124. Absent any operation of cl 21.1, the amounts of rent that would be payable on each of 1
April 2020 and 1 May 2020 would have been $188,522.73 (plus GST). Taking into