CONTRACTS — construction — where leases required tenant to construct a hospital and car park — where leases were terminated by the landlord following event of default by the tenant — where a car park had been constructed but no hospital had been constructed — where contracts form part of a single transaction — post-termination compensation clauses — obligation on landlord to use all reasonable endeavours to relet premises — whether compensation clauses were engaged — whether tenant can enforce post-termination reletting of premises on the same or substantially the same terms — whether there is an implied term — whether clauses void for uncertainty — where efforts to relet would have been futile — whether obligation to use all reasonable endeavours was satisfied — claim by tenant dismissed — where landlord claims loss of bargain damages — where landlord received benefits from termination — identifying loss of bargain damages where landlord receives benefits and also suffers detriment from the loss of the bargain — mitigation of loss — where no loss of bargain damages are established — where landlord also claims damages for breaches of contract that occurred prior to termination — claim for damages for breach of contract upheld in part — whether claims cannot be maintained by reason of Anshun estoppel
Quick Take
1A post-termination obligation to relet premises 'on the same or substantially the same terms' as a terminated lease requires the new lease to include unperformed essential terms of the old lease. Here, those were obligations incorporated from interconnected transaction documents to construct a hospital and complete a car park on an adjoining lot. The construction works were fixed by the variations agreed before termination (the 1997 development approval), not by the original proposal. The landlord is not obliged to compromise on the promised development to make a reletting viable for the defaulting tenant's benefit.
2An obligation to use 'all reasonable endeavours' does not require any steps where they would have such remote prospects of success as to be futile. Such an obligation arising on termination does not last indefinitely, but lapses once a reasonable period passes without prospect of success. On the facts, reletting on terms requiring construction of a commercially unviable $750m–$1b hospital was futile.
3Loss of bargain damages require a whole-of-bargain counterfactual comparison that brings to account benefits the innocent party obtains from termination and its duty to mitigate. Selectively claiming lost rent while ignoring benefits such as the value of car parking spaces taken back on termination will fail. A statutory health body's loss of anticipated public health benefits does not sound in damages. Separately, a discretionary extension of a timetable date operates prospectively and does not extinguish accrued liabilities for delay rent.
