n September 2015, Mr Smith and his husband (the Smiths) purchased the penthouse of the Eureka Tower in Melbourne. On 24 June 2016, the Smiths entered into a contract with Design & Style Pty Ltd (DS) to fit out the penthouse as a commercial property to be leased as office space. An express term in the contract stated that the property would be renovated in order to be rented out for commercial use. It also included a term stipulating that the work would be completed in 1 year.

Design & Style took its time in doing the job. Indeed, there was a delay period of 130 weeks between the date when the works should have been completed and the date when completion was actually achieved.

According to Mr and Mr Smith, they suffered the following losses because of the breach of contract:

• $422,500 for lost rental income at the rate of $3,250 per week.
• $255,347.85spent on owners' corporation charges and council rates during the 130 weeks delay period, both of which, by law, are payable by the landlord (NOT the tenant).
• $60,000 to cover the increased costs of the Smiths' personal loan, taken to finance the renovation of the penthouse. The repayment of the loan was supposed to commence after 12 months, when the Smiths thought they would be receiving $3,250 per week which would be used to repay the loan. Because of the 130 weeks delay, the Smiths had to extend the loan which meant an increase of the total loan price by $60,000.

Your task (5 marks)

DiscusswhetherMr and Mr Smithare entitled to receive compensation for their losses (as detailed above) and, if so, how much.