Bacchus Gift Pty Ltd v Martrak (Vic) Pty Ltd and Reardon
[2010] VCC 541
•4 June 2010
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
COMMERCIAL LIST
Case No. CI-07-03139
| BACCHUS GIFT PTY LTD | Plaintiff |
| v | |
| MARTRAK (VIC) PTY LTD | First Defendant |
| and | |
| MICHAEL HUGH REARDON | Second Defendant |
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| JUDGE: | HIS HONOUR JUDGE GINNANE |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 28-30 October and 2 and 4 November 2009 |
| DATE OF JUDGMENT: | 4 June 2010 |
| CASE MAY BE CITED AS: | Bacchus Gift Pty Ltd v Martrak (Vic) Pty Ltd & Reardon |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 0541 |
| Revised 10 June 2010 |
REASONS FOR JUDGMENT
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Catchwords: CONTRACT for sale of hotel – warranty about sales – whether warranty breached – whether misleading or deceptive conduct – Trade Practices Act 1974, section 52; Fair Trading Act 1999, section 9.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C R Northrop | Bazzani Scully Brand |
| For the Defendants | Mr C R Hanson | Paul B Connor |
| HIS HONOUR: |
1 On 17 July 2006, Bacchus Gift Pty Ltd (“Bacchus Gift”) purchased the hotel business known as the North Fitzroy Arms Hotel (“the hotel”) from Martrak (Vic) Pty Ltd (“Martrak”) as trustee for the North Fitzroy Arms Unit Trust for $750,000, made up of $575,000 for the goodwill and $175,000 for the plant, equipment, fittings and other assets.
2 Bacchus Gift took a three-year lease of the hotel from Mr M Reardon, who is the second defendant. The lease contained options, which if exercised, gave Bacchus Gift a right of tenancy of twenty years.
3 Mr M Reardon was the sole director of Martrak. He is an accountant and his practice includes acting for proprietors of licensed venues. He has experience in the operation of hotels and, through business entities, at the time of trial operated three hotels.
4 Mr V Cernjak is the director of the plaintiff and also has experience in the operation of hotels.
5 The Contract of Sale was executed under seal and was dated 11 July 2006. Clause 25 was headed “Liquor Licence” and a number of its sub-clauses dealt with the transfer of the hotel liquor licence. Clause 25.7 stated:
“The Vendor and the Vendor’s Director warrant to the Purchaser that:
(a)
The use of all parts of the premises as an Hotel and for the hours of trade set out on the General Liquor Licence as at the date of this Contract, are, and will as at the settlement date, be authorised under the provisions of the relevant Planning Scheme; and
(b)
All conditions of any Planning Permits issued in relation to the premises (and which have been acted on) have been complied with and will continue to be complied with by the Vendor up to the settlement date.
(c)
The financial information contained in the trading figures annexed to the Contract for period from 1 July 2004 to 30 June 2005 and from 1 July 2005 to 28 February 2006 is true and correct in all respects and the figures referred to in the said financial statements relate solely to the operation of the business at the premises by the Vendor.”
6 The financial information referred to in Clause 25.7(c) was two profit and loss statements for the hotel for the two periods, 1 July 2004 to 30 June 2005, and 1 July 2005 to 28 February 2006. Mr M Barry, an hotel broker acting on behalf of the defendants, provided this information on behalf of Bacchus Gift to Mr Cernjak before he executed the Contract of Sale.
7 Because of the details of sales contained in the profit and loss statements, the plaintiff alleges that the defendants, by providing them, represented that:
(a) income to the hotel business from the sale of drinks was: (i) $775,937.12 for the period from July 2004 to June 2005;
(ii) $495,255.49 for the period from July 2005 to February 2006;
(b) income to the business from the sale of food was:
(i) $385,909.00 for the period from July 2004 to June 2005; (ii) $381,332.28 for the period from July 2005 to February 2006; (c) the net profit of the business was:
(i) $240,330.32 for the period from July 2004 to June 2005; (ii) $174,852.14 for the period from July 2005 to February 2006. 8 These aggregate figures provided to Mr Cernjak amounted to average weekly sales of $22,826 for the period 1 July 2004 to 30 June 2005, and $25,478 for the period 1 July 2005 to 28 February 2006, which covered a period of thirty- four weeks. They also recorded average weekly sales of beverages of $14,921 for the financial year 2004-2005 and $14,566 for the period 1 July 2005 to 28 February 2006.
The Plaintiff’s Causes of Action
9 The plaintiff’s case as pleaded alleges that in breach of the warranty contained in clause 25.7(c) of the Contract of Sale, the financial information contained in the profit and loss statements was not true and correct in respect of income received by the hotel from the sale of drinks, food, or in respect of the net profit.
10 Second, the plaintiff alleges that the provision of the financial information to the plaintiff constituted representations about the income of the business from the sale of drinks, food and the net profit which were false and constituted conduct which contravened s.52 of the Trade Practices Act 1974 and s.9 of the Fair Trading Act 1999. Mr Reardon is alleged to have been knowingly concerned or involved in, and therefore liable for, those contraventions.
11 The plaintiff claims loss and damages, being the difference between the true value of the business and the amount that it paid to purchase it. Mr Wilkinson, an accountant called to give expert evidence on behalf of the plaintiff, said that the true value of the hotel at the date of purchase was $86,000 based on an earnings before interest and tax valuation, leaving a damages claim of $664,000, together with transaction costs associated with the cost of borrowing part of that amount.
12 The plaintiff identified the critical issue as whether the financial statements provided to Mr Cernjak in April 2006 accurately recorded the sale of beverages at the hotel.[1] The plaintiff did not press the allegation that the financial information provided to the plaintiff about the sale of food was incorrect. The case put at trial was therefore narrower than pleaded and relied on the statements of the sale of beverages to prove that the profit and loss statements provided to the plaintiff were not true and correct.
[1] T 445 L15-20.
13 The defendants deny the allegations, and argue that the financial information that was provided to Mr Cernjak was accurate and in accordance with the taxation documents, including Business Activity Statements (“BAS statements”) lodged with the Australian Taxation Office (“ATO”).
The Plaintiff’s Purchase of the Hotel and his Reliance on the Profit and Loss
Statements14 Mr Cernjak gave evidence that Mr Reardon had been his accountant for a number of years, although not at the time of the sale. He said that he learned of the possibility of purchasing the North Fitzroy Arms Hotel from Mr Barry, the hotel broker, who faxed the two profit and loss statements to him. He had originally negotiated to buy both the freehold and hotel business. Mr Reardon withdrew the freehold from sale and negotiations proceeded in respect of the leasehold and the business. Mr Cernjak assumed that the sale price would be three times the net profit of the hotel before tax. Mr Barry suggested the figure of $750,000.
15 Mr Reardon gave evidence that the hotel was operating quite profitably and was not on the market for sale before he commenced discussions with Mr Cernjak. He said that he had told the plaintiff that the hotel was doing very well and trading with sales of $20,000 per week. Mr Reardon gave evidence that he was led to believe that the hotel was trading in the mid twenty thousands because of the trading figures he received each week from the manager of the hotel, Mr A McDonough.
16 Mr Cernjak gave evidence that Mr Reardon told him that he used the Bevinco Audit Reports, to which I refer below, to monitor his sales, because he was running the business under management, i.e. he did not live in or work in the hotel, so he needed to make sure that the business was matched with the Bevinco Audit Reports, but Mr Cernjak said that he would not require that service because he was running the business himself. Mr Reardon said that the Cernjaks did not appear interested in the services offered by Bevinco.
17 Mr A McDonough prepared daily takings records after printing out the till receipts for each day with a breakdown of cash, EFTPOS transactions and purchases on accounts. He sent a weekly sheet containing the aggregate of these daily takings records to Mr Reardon, who arranged for the entry of this information into the computer on a MYOB software program at his accountancy practice in North Melbourne.[2]
[2] T 363.
18 Mr McDonough, who is now employed by Mr Reardon at another hotel, gave evidence that just before the hotel was sold to the plaintiff, its total takings were between $25,000 and $30,000, including GST, a week on average and that that had been the case for the previous year and a half.[3]
[3] T 341 L10-13.
19 Mr Cernjak said that he had received the financial figures and used them to calculate the purchase price that the plaintiff would offer and to obtain finance. Mr Reardon initially gave evidence that he did not believe that he had provided the financial statements to Mr and Mrs Cernjak before he accepted the plaintiff’s offer to purchase the hotel on 22 April 2006.[4] I accept Mr Cernjak’s evidence on this issue. The purchase price was clearly calculated by multiplying the gross yearly profit shown in the financial statements by three. In addition, the financial statements bear a facsimile imprint with the date 3 April 2006, some nineteen days before the plaintiff’s offer to purchase was accepted. Later in his evidence, Mr Reardon accepted that that date suggested that Mr Cernjak had received the financial statements on 3 April 2006, which was before making his offer.[5]
[4] T 201 L25-27.
[5] T 279 L20-23.
20 I find that the plaintiff, through Mr Cernjak, did rely on the profit and loss statements provided on behalf of the first defendant, in deciding to enter into the contract to purchase the hotel.
21 Mr Cernjak financed the amount of $675,000 by a bank bill rolled over every three months at 6.66 per cent interest, and later obtained a replacement financial facility at a lower interest rate.
The Plaintiff’s first months operating the Hotel
22 Mr Cernjak, together with his wife Mrs Z Cernjak, commenced to operate the hotel on 24 July 2006. Immediately they found the takings lower than the financial statements had led them to expect. Mr Cernjak said that in the first week of trading it was pretty clear that the actual takings of the business were not as suggested by the financial documents provided to him.
23 The plaintiff’s trading figures for the first six weeks were: $17,151; $18,815; $19,504; $19,962; $18,340 and in the sixth week $26,841.[6] In the sixth week there was a high level of sales on three days. The first six weeks’ sales averaged $20,102 per week.[7]
[6] Defendants’ Court Book - pages 162-4.
[7] T 70.
24 Mr Barry visited the hotel within about a week after Mr and Mrs Cernjak commenced to operate it and Mr Cernjak told him that “look, its not doing very well unfortunately”.[8]
[8] T 17 L2-3 and T 311.
25 Mr Reardon and Mr McDonough visited the hotel about ten days after the settlement, and Mr Cernjak told them that the trading in the previous week was “not all that good”. Mr McDonough said that the visit was to collect an item that he had left behind. Mr Cernjak gave evidence that they told him that “we hear you’re not doing very well”[9] and that he confirmed that that was the case. Mr Cernjak said that he had done under $20,000 per week. Mr Reardon said that he asked Mr McDonough “when was the last time you think we did under $20,000?” and Mr McDonough replied “not the last two or three years”[10].
[9] T 17 L 7-9.
[10] T 239 L19-22.
26 Mr Cernjak, through Mr Barry, arranged a further meeting with Mr Reardon so that he could discuss why the performance of the business was not the same as Mr Reardon experienced. This meeting occurred on 2 August 2006 between Mr and Mrs Cernjak and Mr Reardon and Mr Barry. Mr Cernjak said that he told Mr Reardon and Mr Barry that he and Mrs Cernjak were not happy with the performance of the business and asked him why he thought that they were not doing the same business as Mr Reardon had. Mr Reardon said that he could not explain it.
27 Mr Reardon said that Mr Cernjak told him that he had made a mistake in purchasing the hotel, that he was not suited to it, that patrons did not like him and Mrs Cernjak, and that he wanted Mr Reardon to buy the hotel back. Mr Reardon said that that was not possible. Mr Reardon was in the process of purchasing another hotel. Mr Barry’s evidence of the meeting was to similar effect.
28 A short time later, Mr Cernjak found documents left by the previous operators of the hotel. These documents were Audit Reports prepared by Bevinco Victoria (“the Bevinco Audit Reports”), which included the period July 2004 to February 2006. They reported weekly income from the sale of alcoholic beverages. The income recorded in the Bevinco Audit Reports was significantly less than the amounts for sales of alcoholic beverages specified in the profit and loss statements, which had been provided to Mr Cernjak.
29 After Mr Cernjak found the Bevinco Audit Reports, he arranged another meeting later in August 2006 which he, Mrs Cernjak, Mr Reardon and Mr Barry attended. Mr Cernjak presented the plaintiff’s trading figures and pointed out how the Bevinco figures were in line with those figures and not in line with the profit and loss statements provided by the defendants to the plaintiff. Mrs Cernjak gave evidence that her husband told Mr Reardon:
“…we cannot meet our financial ends because we borrowed the money to purchase this hotel and it is …impossible to go on and we don’t know what to do.”[11]
[11] T 96 L5-8.
30 Mr Reardon gave evidence that he explained the difference between the Bevinco Audit Reports and total sales reports, and stated that the Bevinco Audit Reports were not devised to be sales reports. According to Mr Reardon, Mr Cernjak said that he might be in trouble staying in business, and raised with Mr Reardon whether he was prepared to buy back the business. Mr Reardon said that he could not do that.
31 There was a further final meeting in about September 2006 after legal letters had been exchanged, to try to resolve the situation between the Cernjaks and Mr Reardon.
The Sales achieved by the Plaintiff
32 Mr Cernjak gave evidence that the takings figures were low for about six months, although became higher at Christmas, as was usually the case in hotels. Although takings had gradually improved in the time since he took over the hotel, they were about $5,000 less per week than had been represented to him. Mr Cernjak said that a drop in takings was not to be expected when new owners took over.[12]
[12] T 62-65 and T 70.
33 According to the plaintiff’s financial statements, including the profit and loss statement for the year ended 30 June 2007 (which was a forty-nine week year, as the plaintiff commenced trading in the hotel on 24 July 2006), the plaintiff achieved sales of $774,933.04, of which $453,653.95 was for sales of beverages at the bar and the bottle shop. These figures were net of GST and represented average weekly sales of $15,814.96, and $9,258.24 for the sale of beverages.
34 The plaintiff closed the hotel for a fortnight at Christmas, whereas Mr Reardon said that he did not close the hotel except in one year for a week at Christmas to redo the bar floor.[13] Mr Reardon did not state the year, but Mr Cernjak said Mr Reardon had closed the hotel for ten days at Christmas “the year before”[14] which I took to be Christmas 2005.
[13] T 205 L28-31.
[14] T 74 L9-13.
35 To attempt to take account of this difference in the number of weeks between the plaintiff and the first defendant as to when the hotel was open, it is appropriate to calculate the plaintiff’s weekly averages for the year ending 30 June 2007 on the basis of forty-seven weeks’ trading. This approach results in average weekly sales of $16,487.93, and for beverages $9,652.21.
36 In 2008, according to the plaintiff’s financial documents, it achieved sales of $894,782.73, of which $520,487.74 related to the sales of beverages in the bar and bottle shop. These figures represented weekly averages, calculated on a fifty-week trading year, of $17,895.65 and $10,409.75 respectively.
37 In contrast, the first defendant’s financial statements suggested that the results in the twenty months of operations to the end of February 2006 had been:
• 2004-2005 average total weekly sales of $22,826.00 and $14,921.86 of that from the sales of beverages and the bottle shop; • In the thirty-four week period July 2005 to February 2006, which was the period of the second set of figures given to the plaintiff, the equivalent figures were $25,478.00 and $14,566.33. However, in light of the evidence about the hotel closing for ten days at Christmas “the year before”, I will also calculate these figures on a thirty-three week period. This results in figures of $27,022.12 and $15,007.74 respectively. 38 The Bevinco Audit Reports for the year ending 30 June 2005 record total sales of $498,166.92, which produces average weekly sales of beverages at $9,580.00, and for the thirty-four weeks between 1 July 2005 and 28 February 2006 total sales of $405,927.97 and average weekly sales of $11,939.05, or $12,300.84 based on thirty-three weeks’ trading.[15] These figure contrast with the profit and loss statement provided to the plaintiff, which, for the corresponding period, showed average weekly sales of beverages of $14,566.33, being a difference of $2,627.28 or $2,265.49.
[15] Appendix 2 to the affidavit of Peter Bruce Wilkinson of 29 January 2009.
39 In summary, the weekly figures of the sales of beverages at the hotel, net of GST, were as follows:
(a)
sales by the plaintiff: 24 July 2006 to 30 June 2007, $9,652.21, and for 2007-2008, $10,409.75.
(b)
sales recorded in the first defendant’s profit and loss statements provided to the plaintiff: $14,921.86 for 2004-2005, and $14,566.33 for thirty-four weeks between 1 July 2005 to 28 February 2006, or if thirty- three weeks are taken as the trading period, $15,007.74;
(c)
sales recorded in the Bevinco Audit Reports: $9,580.00 for 2004-2005 and $11,939.05 for the period 1 July 2005 to 28 February 2006.
Sale of Food
40 The decline in income from food sales after the plaintiff commenced to operate the hotel also requires consideration, although as previously stated, no case has been pursued about warranties given in respect of the sale of food. Bevinco did not audit food sales. However, the profit and loss statements disclosed food sales of $385,909.00, or average weekly sales of $7,421.32 a week, for 2004-2005, and $381,332.00, or $11,215.65 a week, for the period between 1 July 2005 to 28 February 2006 for thirty-four weeks, or $11,555.51 for thirty-three weeks.
41 The plaintiff achieved sales of food of $321,279.09 for the period 24 July 2006 to 30 June 2007 and, based on a forty-seven week trading period, average weekly sales of $6,835.72, and for the year 2007-2008, food sales of $374,295.00, and based on a fifty-week trading period, average weekly sales of $7,485.90.
42 On those figures there was a significant drop in food sales of more than $4,000.00 a week between the first defendant’s average weekly sales in the thirty-four week period ending 28 February 2006 and the average weekly sales achieved after 24 July 2006 for the remainder of the financial year ending 30 June 2007. However, when compared with the first defendant’s food sales for the 2004-2005 year, the drop was much less - $586.00.
43 Thus, the hotel’s sales of food suffered a large decline in the first year in which the plaintiff operated the hotel, but in 2007-2008 achieved somewhat of a return to the sales levels achieved by the first defendant.
44 I did not receive submissions about the significance of this decline in food sales. It may be that the plaintiff did not pursue that issue because the Bevinco Audit Reports did not provide any information about food sales. However, it is a matter of some significance that I am asked to find that false profit and loss statements have been provided to the plaintiff by the defendants, but not asked to make any finding about the reason for the immediate decline in food sales when the plaintiff commenced to operate the hotel. The food sales provided a significant part of the profit of the hotel.
Offers to Purchase the Hotel
45 After the last of the meetings between Mr Reardon and the Cernjaks, in about September 2006 they decided to put the property back on the market. Mr Barry sought buyers.
46 Mr Barry obtained a written offer to purchase the hotel from Mr David Clark dated 3 October 2006 for $650,000. Mr Barry knew Mr Clark and had previously tried to sell businesses to him. Mr Clark had been successful in conducting businesses.
47 An employee of Mr Reardon prepared a profit and loss statement for the hotel for the period of September 2005 to August 2006, indicating takings of $27,000 a week, whereas Mr Cernjak maintained that the takings were in the order of $18,000.[16] Mr Cernjak conveyed this concern to Mr Clark. Mr Barry gave evidence that he showed Mr Cernjak’s figures to Mr Clark, but also showed him Mr Reardon’s figures for the period up until the plaintiff took over the hotel so that he could see that there was a decline in the figures.
[16] Exhibit A.
48 Mr Barry gave evidence that Mr Cernjak also showed Mr Clark figures for the hotel’s sales for about six to seven weeks with an average of $18,000 to $19,000 a week in takings. Mr Barry told Mr Clark that Mr Cernjak had expressed concern about the profit and loss statement for the period September 2005 to August 2006.
49 Mr Cernjak was provided with a copy of the profit and loss statement prepared by Mr Reardon. He said that he told Mr Barry that he could not possibly accept the type of figures in the profit and loss statements and give them to the person who was buying the hotel business because he might end up in legal trouble himself for providing false documents.
50 Mr Clark made a written offer of $650,000 on 3 October 2006. The offer was made subject to the condition of:
“The Purchasers, their solicitors, Accountants and Advisors being satisfied with the results of a full due diligence investigation in regard to all aspects of both the property and the business within (30) days from the date of the acceptance of this offer.”
51 Mr Cernjak said that he never received a copy of the written offer, but was aware that it had been made. Mr Clark said that Mr Cernjak would not accept the offer unless he received an additional sum of $100,000 from Mr Reardon. Meetings occurred between Mr Clark and Mr and Mrs Cernjak. Ultimately, Mr Cernjak did not accept Mr Clark’s offer.
52 Mr Clark did not give evidence. Mr Barry said that he had been very ill.
53 Mr Barry thereafter took another three or four people through the hotel without receiving any offer that he considered was worthwhile to put to Mr and Mrs Cernjak.
54 On 29 November 2008, another potential purchaser, Mr David Bunney, who had twenty years’ experience in the hotel industry, including operating hotels, made an offer to purchase the hotel for $460,000. The offer was conditional upon, and subject to, formal contracts being entered into upon conditions which were acceptable to the purchaser. He received a verbal response in the negative that the figure was not high enough, and an indication that a figure of around $550,000 would be.
55 Mr Bunney was given a copy of hand-written pages of the plaintiff’s sales takings for the months after July 2008 which showed that the takings over a four-week cycle were about $20,000 a week on average, with wages of $44,000 a quarter.[17]
[17] T 372 and Exhibit 5.
56 Mr Bunney also said that, in addition to the hand-written pages, Mr Cernjak showed him a book with a plastic cover that contained daily takings or a list of each week’s takings. Those figures indicated that the hotel was achieving sales of about $21,000 to $22,000 a week.
57 Mr Reardon visited the hotel a few months after settlement to attend a function. He said that from his observations, the Cernjaks ran the hotel in a different manner than it had previously been conducted. The Cernjaks stood back and did not try and enter conversations, but tried to retain the service levels. The menu and style of food had changed substantially and as a result, a slightly different clientele was likely to be attracted. However, he conceded that they were good hotel operators.
The Bevinco Audit Reports
58 The principal evidentiary basis of the plaintiff’s claims against the defendants are the Bevinco Audit Reports. Mr Cernjak, in his evidence, referred to the fact that they actually showed how much alcohol was consumed for the particular week.[18]
[18] T 19.
59 The plaintiff called as a witness, Mr P Clark, who ran the Bevinco business. He described it as a hospitality consultancy business, which monitored and managed stock usage in retail premises, particularly in beverages. Bevinco staff attend premises and carry out a detailed stock audit. They check that the venue is paying the correct price for stock and receiving the stock that it has ordered. They monitor stock flows into and out of the venue. The staff count the stock and obtain information left by the staff of the venue, such as invoices and other stock flow information. They normally download sales data and other information from the venue’s computer systems. They prepare the Bevinco Audit Reports, and leave them on site.
60 Bevinco was first engaged to audit the hotel in August 2003 and conducted audits regularly until the sale of the hotel business to the plaintiff. They each cost $220. Some were compiled by Mr Clark, but mainly by one or other of four staff. The four staff were no longer employed by Bevinco and Mr Clark did not know their whereabouts. The Bevinco Audit Reports do not reveal their authors.
61 The Bevinco Audit Reports included a section entitled “Report Specifics” which was a statement of alcohol stocks and details of the revenue generated by alcohol sales for the previous week. There was also a section entitled “Category Analysis”. I set out below an example of the “Report Specifics” and “Category Analysis” from the report for the week 25 May to 1 June 2005:
Report Specifics
62 The report shows sales of $8,825.82 (GST exclusive) for the period, and a stock on hand value as at 1 June 2005 of $16,708.24.
Category Analysis
Category Sales $ % of total Stock Value $ % of total
sales stock
Liquor $631.36 7.15% $2,528.63 15.13% Wine $1,740.00 19.71% $9,399.83 56.26% Champagne $391.82 4.44% $232.15 1.39% Bottled Beer $639.82 7.25% $1,080.14 6.46% Draught Beer $5,393.73 61.11% $3,262.82 19.53% RTD’s $0.00 0.00% $188.17 1.13% Cider $29.09 0.33% $16.50 0.10% Energy Drinks $0.00 0.00% $0.00 0.00% Total $8,825.82 100.00% $16,708.24 100.00% “General Comments :- Refer attached variance reports
1. The venue result has slipped this week [to] a Bevinco rating of 94.7%. With sales also being lower.
2. The lower venue result is due to average performance in two categories only Draught beer and Wine.
3. All other categories performed very well.
4. Your wine loss is probably the most concerning at 3.445 litres of 6.5%. All of the loss revolves around two products – 2 bottles of Scotchman Hill Sauv Blanc and 2 bottles of Elderidge Cab Sav.
5. The rest of the category is recording a bit of wine by the glass miss- keying but as a category performed well.
6. These are entries in the wastage book that advise the Scotchman Hill was sold has (sic) Hamlin Bay SB by the glass and Crossings SB by the glass. These products however are still reporting as short as well, not oversold as you would expect.
7. This means that The Scotchman Hill was either not sold as something else or the Hamlin Bay and Crossings are short a bottle each.
8. There were no notations regarding the Elderidge Cab Sav and it is short by over 2 bottles.
9. Draught beer loss is also higher this week at 25.91 litres or 4.8%.
10. On top of this loss goes wastage of 10.56 litres or 2.0%, complimentary drinks of 0.5% and staff drinks of 0.8% for a total of 3.3% down from last week’s 5.5%.”
63 The Bevinco Audit Reports typically noted discrepancies between the stock used and the stock sold. A rating of 100 per cent was given to the venue for a particular week if it sold or recorded a legitimate usage of 100 per cent of the “legitimate product movement”.[19]
[19] T 112
64 The General Comments section often included comments on the level of sales.
65 The Bevinco Audit Reports commonly included a variance report. The format of the variance reports included:
(a)
a “used” column which was compiled by contrasting opening stock and closing stock and taking into account the flow of product into or out of the venue;
(b)
an “over short” column which recorded the difference between what was used and what was sold;
(c) an “on hand (cost)” column; (d) a “sold retail” column which recorded information taken from the tills; (e)
a “pour cost” and an “ideal pour cost” column which provided a cost of goods and a profitability index; and
(f)
a “revenue” potential column calculating the revenue that would have been gained if the product had remained in the business.[20]
[20] T 112-113.
Were the Bevinco Audit Reports admissible under the Evidence Act 1958?
66 The defendants objected to the tender of the Bevinco Audit Reports if they were tendered to show that the true turnover of the business was as shown in them. Their counsel pointed to the fact that he was not able to have the makers of the reports available for cross-examination, because Mr Clark could not say where they were.
67 I formed the view that the documents were admissible as truth of their contents pursuant to a combination of s.55(1) and s.55(6) of the Evidence Act 1958, which provide:
“55 Admissibility of documentary evidence as to facts in issue
(1)
In any legal proceeding (not being a criminal proceeding) where direct oral evidence of a fact would be admissible, any statement contained in a document and tending to establish that fact shall be admissible as evidence of that fact if—
(a)
the maker of the statement had at the time of the making of the statement personal knowledge of the matters dealt with by the statement, and is called as a witness in the proceeding; or
(b)
the document is, or forms part of, a record relating to any business and made in the course of that business from information supplied (whether directly or indirectly) by persons who had, or may reasonably be supposed to have had, personal knowledge of the matters dealt with in the information they supplied, and the person who supplied the information recorded in the statement in question is called as a witness in the proceeding.
. . .
(6)
Notwithstanding anything to the contrary in paragraph (b) of sub-section (1) or in sub-section (2) the condition that the person who supplied the information be called as the witness need not be satisfied where it cannot reasonably be supposed (having regard to the time which has elapsed since he supplied the information and to all the circumstances) that he would have any recollection of the matters dealt with in the information he supplied.”
68 I formed the view that the auditors who prepared the Bevinco Audit Reports had, at the time of compiling them, personal knowledge of the matters contained in them, but that it could not reasonably be supposed, having regard to the time that had elapsed since they made the reports, that they would have any recollection of the matters dealt with in the reports. The Bevinco Audit Reports were therefore admissible under s.55(1)(a) and (6) of the Evidence Act.
69 The Bevinco Audit Reports may also have been admissible under s.55(1)(b) of the Evidence Act.
70 I also agreed with the plaintiff’s submission that the documents were admissible as potentially relevant documents, received by and available to, the first defendant in the course of running its business and were available to the defendant. However, I accept that because the makers of the reports were not available for cross-examination, I have to consider what weight I should give to the Bevinco Audit Reports. That, in my view, was to be resolved by a consideration of the evidence of the purpose of the reports and any evidence called on behalf of the defendants that suggested that the reports did not, or could not, record all the hotel’s beverages sales.
The purpose of the Bevinco Audit Reports
71 Mr P Clark did not regard the Bevinco Audit Reports as a financial tool, because they were not reconciled against bankings or against the cash and receipts of the business. He said that if you were looking for proof of the veracity of sales, the Bevinco Audit Reports would have to be compared with the hotel’s bankings.[21]
[21] T 126 L 5-7.
72 Mr Reardon gave evidence that the defendants used the Bevinco Audit Reports for stock control and not for more general financial purposes. He said that he did not pay attention to the sales information recorded in the Bevinco Audit Reports as they were based on a different week cycle than his financial records, which were conducted on a Monday to Sunday cycle, whereas the Bevinco Audit Reports were compiled on Wednesdays or Thursdays for the previous seven days. The Bevinco Audit Reports only included sales of alcohol.
73 Mr Reardon stated that he was aware that there was a difference between the amounts recorded in the Bevinco Audit Reports and in the hotel’s MYOB journal. This was a software package used in the hotel, to which I will refer in greater detail later.
74 Mr McDonough said that as hotel manager he used the Bevinco Audit Reports to see what stock the hotel was holding, the floor costs, what he should be charging and how much he was paying for stock. He did not pay much attention to the “Category Analysis” on the front of the reports, because the hotel operated on a different week cycle than was the basis of the Bevinco Audit Reports. Mr McDonough said that he never compared the sales reported by the Bevinco Audit Reports and the daily takings of the business – he only looked at them to see stock levels and what stock was held in the venue.[22]
[22] T 364 L9-12.
75 Evidence was given about the wastage report, or book, kept at the hotel. This was a folder, notebook or sheet kept on, or near the bar, in which items that had been broken, or otherwise consumed but not sold for a particular reason, were recorded. Sometimes staff left notes in the wastage book or folder, for example, recording the provision of complementary drinks. Any usage of beverages that was not recorded in the tills was cashed off and recorded on the wastage sheet. Bevinco staff took the wastage report sheets away each week.[23]
[23] T 359 L12-20.
76 The Bevinco Audit Report, which covers the week 4 to 11 August 2004 stated:
“Liz also believes that the champagne shortage is a result of ‘champagne on arrival’ that was included in a function per head cost and not processed through the till or mentioned in the wastage book.”
77 The Bevinco Audit Reports in their general comments section, often referred to the wastage sheet. Reference to the wastage recordings is often in respect of the wastage of draught beer.
78 To take some examples, the report of 19 January 2005 stated that the venue needed a new wastage book in the bar.
79 The Audit Report of 23 February 2005 stated:
“As discussed with Andy, next week we will break down the wastage
recorded even further into three categories:
(a) Wastage (b) Staff drinks (c) Complementary/Giveaways.”
Sales of Alcohol at Functions
80 An explanation given by Mr Reardon for the discrepancy between the sales figures shown in the Bevinco Audit Reports and those contained in the profit and loss statements provided to the plaintiff, was that the Bevinco Audit Reports did not record all the beverage sales at functions conducted at the hotel. Functions adopted various methods of pricing; some recorded fixed price food with drinks on a tab; some had an agreed fixed price or package, and others provided for payment on consumption.
81 Mr Reardon said that sales of alcohol at functions would not show up as sales of particular alcohol lines, but would be recorded as a function sale. However, he conceded that such sales were recorded by the hotel’s tills and in the computer systems as a beverage sale.
82 Mr Reardon gave evidence that some alcohol sales were recorded on a functions button, as a function beverage sales line and that Bevinco did not report such sales in its Audit Reports. Function sales would not be recorded as a specific category of beverage.[24] He said that when staff hit the till item, function beverage and deposited a sum of money from a sale, the sale would not link back to a specific alcohol product.[25]
[24] T 258.
[25] T 259 L6-10.
83 There was one example of that occurring in the Bevinco Audit Reports. The Audit Report of 2 July 2004 states:
“This week there was a miscellaneous beverage sale of $1,541 rung up
on the till.”
84 However, Mr Reardon could produce no other records of this category of function sales[26] and I am not prepared to accept his evidence in this respect.
[26] T 259 L19-21.
85 I do accept Mr McDonough’s evidence that the consumption, or use, of drinks at functions was recorded on wastage sheets, which he thought was also included on some of the Bevinco Audit Reports.[27] This evidence gained support from the defendants’ supplementary Affidavit of Documents sworn by Mr Reardon on 13 February 2008, in which he referred to an exercise book, in which employees recorded wastage of beverages, that were used but not recorded through the till, and that this included beverages consumed by patrons at functions, which were not rung up on the till individually.
[27] T 357 L17-19 and T 358 L14-18.
86 Mr Reardon also stated that there were sales of non-alcoholic beverages, such as soft drinks and coffee and sales at functions, which had not been recorded in the till. However, he accepted that sales of soft drinks were $7,000 for the year.[28]
[28] T 226, T 267- 268
Submissions and Conclusions about the Bevinco Audit Reports
87 The plaintiff submitted that the statement of sales of alcohol in the Bevinco Audit Reports was the only contemporaneous document recording sales that had been produced in the proceeding. They had been prepared by an independent person and no attack on their accuracy had been substantiated. The defendants had provided no adequate explanation of why sales at functions would not be included in the Bevinco Audit Reports. There was a vast difference between the amount of the sales of alcohol contained in the Bevinco Audit Reports and the sales recorded in the defendants’ profit and loss statements.
88 The defendants submitted that the Bevinco Audit Reports should not to be treated as a record of the hotel’s beverage sales. The defendants were not able to have the makers of the Bevinco Audit Reports available for cross- examination. The defendants submitted that the Bevinco Audit Reports were not suitable for assessing the actual beverage sales of the hotel and were not used for that purpose. The onus was on the plaintiff to show that the Bevinco Audit Reports were so suitable.
89 The defendants relied on the fact that Mr Reardon had told the Cernjaks of the Bevinco Audit Reports, although he suggested that they might not continue to use them. They argued that it was unlikely that he would have told them of the reports if he had anything to fear from their contents.
90 The defendants relied on the use to which they put the Bevinco Audit Reports and the fact that they did not record the till line that was attributable to drinks sold at functions. However, Mr McDonough agreed that in respect of functions, the sales would be put through the till and then taken off, and Bevinco informed of the alcohol usage.
91 Mr McDonough stated that he and his staff would work out how much alcohol had been used for a function by putting it through the till, taking it off and then telling Bevinco what the hotel had used. He said:
“We had a sheet, like a clipboard behind the bar for basically any stock that didn’t go through the system so that Bevinco had a report of it, an idea of what was used.”[29]
[29] T 345 L20-23.
92 I considered the defendants’ explanation, as to why the Bevinco Audit Reports did not include all or the great majority of alcohol sales at the hotel, did not provide a complete answer to the differences between the level of sales recorded in those reports and the level of sales recorded in the profit and loss statements provided to the plaintiff. However, I have to keep in mind that the authors of most of the reports were not called to give evidence and that stocktaking, rather than keeping a record of sales revenue, was a significant purpose of their compilation.
Financial Records and Documents Relied on by the Defendants
93 In their Defence, the defendants relied on a number of financial records to substantiate the information contained in the 2004-2005 and 2005-2006 profit and loss statements provided to the plaintiff. These included:
(a)
the plaintiff’s records of takings at the hotel produced by a MYOB software program;
(b) the tendered, as opposed to the discovered, BAS statements; (c)
the Integrated Client Account Records maintained by the Australian Taxation Office;
(d)
the Taxation Returns of the North Fitzroy Arms Unit Trust and the Reardon Family Trust.
The BAS Statements
94 I will first consider the defendants’ reliance on the BAS statements. The defendants’ defence was based particularly on the argument that the information in the financial statements provided to the plaintiff was consistent with the financial information included in BAS statements lodged with the ATO and in the North Fitzroy Arms Unit Trust’s taxation and financial statements. The defendants argued that it was unlikely that a taxpayer would overstate its income to the ATO, resulting in the overpayment of income tax. Both the discovered and tendered BAS statements had the same figure for the amount deducted for PAYG employee tax and that amount was recorded as having been paid on the first defendant’s Integrated Client Account to which I refer below.
95 The difficulty confronting this argument was that the BAS statements, upon which the defendants relied (Exhibit 3), which I will refer to as the “tendered BAS statements”, were only produced on the third day of the trial and after Mr Wilkinson had been cross-examined on his report, which had been based on the BAS statements, which the defendants had discovered. I will refer to them as the “discovered BAS statements”.
96 The discovered BAS statements bore the name “North Fitzroy Arms”, while the tendered BAS statements bore the name “North Fitzroy Arms Unit Trust”.
97 The amount of sales recorded on the discovered BAS statements was substantially consistent with the aggregate of the beverage sales recorded on the Bevinco Audit Reports and the food sales contained in the profit and loss statements that the first defendant provided to the plaintiff. However, as I have observed above, the food sales also suffered a substantial decline.
98 The plaintiff’s case had been built, in part, on the discovered BAS statements and on the third day of the trial, the defendants contended that through the defendants’ own mistake, the plaintiff had been labouring under a misapprehension and that the correct BAS statements were as then tendered. Counsel for the defendants stated on the third day of the trial that the BAS statements ultimately tendered had only come to him that morning.[30]
[30] T 223 L16-17.
99 On any view, this was a highly unusual development and required particular scrutiny.
100 The BAS statements produced on the third day of the trial were tendered without objection and without any request by the plaintiff for an adjournment to consider their significance.[31]
[31] T 232; Exhibit 3.
101 Mr Reardon gave evidence that the discovered BAS statements were not those lodged with the ATO. His evidence was that when he had endeavoured to retrieve copies of the BAS statements from his computer, he had applied the wrong set-ups on his MYOB software package, so that the BAS statements thereby produced and then discovered were not copies of the BAS statements filed with the ATO and did not contain an accurate account of the plaintiff’s sales. The defendants’ counsel contended that the discovered BAS statements were obtained from Mr Reardon when he was self represented.
102 Mr Reardon pointed to two aspects of the discovered BAS statements to explain why they were not the authentic BAS statements lodged with the ATO. First, they included a different method of accounting than his MYOB program did: cash rather than accrual. Second:
“It’s – there’s a – we don’t use this as a set-up process that clearly wasn’t working properly. You have to go through and tell it how to allocate things.”[32]
[32] T 215 L23-25.
103 Mr Reardon said that he did not study the discovered BAS statements before they were discovered and made available for inspection.[33] He said that he did not retain hard copies of the BAS statements lodged with the ATO. He was unable to explain why the correct BAS statements were not produced before the third day of the trial.
[33] T 271 L17-22.
104 Mr Reardon’s explanation appeared dubious, bearing in mind that the proceedings have been on foot since August 2007, that the plaintiff had served an expert witness statement of Mr P Wilkinson, relying in part for its conclusions on the discovered BAS statements, and that Mr Reardon is an experienced accountant.
105 However, the authenticity of the BAS statements tendered on the third day of the trial receives support from the information contained on the defendants’ Integrated Client Account (“ICA”) with the ATO, a copy of which was received into evidence. The ICA is part of the ATO’s Tax Agents’ Portal and is a running account, access to which is available to tax agents. It contains a record of a taxpayer’s credits and debits with the ATO. The credits and debits recorded on the ICA of the first defendant, Martrak (Vic) Pty Ltd Unit Trust were consistent with the statements of GST tax payable and the PAYG employee tax withheld stated on the discovered BAS statement for the corresponding periods. To take an example, the ICA recorded GST of $23,018.00 payable and in fact paid on 28 February 2005, and the tendered BAS statement for the relevant quarter, that ending 31 December 2004, declared the same amount of GST payable.
106 The opening section of the ICA recorded Martrak (Vic) Pty Ltd as the current client, that it was represented by M H Reardon & Associates Pty Ltd, that the account name was Haskins Hotel, gave the Tax File Number, the Australian Business Number of the Martrak Family Trust, another eleven digit number and under the heading “Description”, the title “Integrated Client Account”.
107 The Haskins Hotel is the former name of the North Fitzroy Arms Hotel.
108 As previously stated, the tendered BAS statements bore the name of the North Fitzroy Arms Unit Trust, of which Martrak (Vic) Pty Ltd was the trustee.
109 The plaintiff made a number of responses to the defendants’ reliance on the tendered BAS statements. First, that the accuracy of the BAS statements was dependent upon the accuracy of secondary records or documents from which the information contained in the BAS statements had been gained. The defendants had produced no primary documents, such as banking records, recording the deposit of sales revenue. The original entries in the defendants’ MYOB computer program were overwritten each year.
110 Second, it was not clear that all the income recorded in the BAS statements came from the North Fitzroy Arms Hotel. The second defendant operated two other hotels using unit trusts and conducted his business affairs, as he conceded in evidence, so that the minimum income tax would be paid by the Reardon Family Trust, which was the ultimate legal entity through which he conducted his business affairs. The plaintiff particularly relied on the second defendant’s adjustment of the rent paid by the first defendant to the Rae Street Trust, which held the lease of the freehold of the hotel. By increasing the rent, the level of profit made by the first defendant, and ultimately the income received by his family trust - the Reardon Family Trust - could be, and was, controlled.[34] The Reardon Family Trust owned property but had substantial borrowings. It made a loss and did not make a distribution of income. These structures were designed to minimise Mr Reardon’s tax by operating at a loss.[35] The effect of this structure was that no income tax was paid on the profit earned by the North Fitzroy Arms Hotel. The figures in the BAS statements could not therefore be relied on.
[34] T 285.
[35] T 249 L19-22.
111 Third, it was submitted that it was not clear who had entered the sales data into the hotel’s MYOB computer program.
112 Fourth, the defendants’ sales to purchases ratio, on the basis of the discovered BAS statements, revealed that the first defendant achieved far more sales than the plaintiff had achieved from similar levels of purchases. A comparison between the financial statements that the defendants provided to the plaintiff, and the plaintiff’s financial statement in 2007, revealed considerable differences. The figures relied on by counsel for the plaintiff in final submissions, which are taken from Mr Wilkinson’s report, are:
Item 2005 - Martrak 2007 - Bacchus Difference
Beverage purchases $180,493 $175,817 $4,676 Beverage sales $775,936 $453,653 $322,283 113 Fifth, was the confusion caused by the Australian Business Number (ABN) used by the first defendant in the BAS statements.
114 The discovered BAS statements were filed with the ABN of the first defendant, Martrak. However, the tendered BAS statements were filed with the name of the taxpayer given as the North Fitzroy Arms Hotel Unit Trust and contained the ABN of the Martrak Family Trust. This fact was one of the matters relied on by the plaintiff to argue that there was doubt about whether the tendered BAS statements recorded the income of the hotel accurately.
115 To understand the fifth submission, three legal entities associated with Mr Reardon need to be separately identified:
(a) First is the first defendant, Martrak, which was the trustee of the North Fitzroy Arms Unit Trust and operated the hotel on its behalf. (b) Second is the North Fitzroy Arms Unit Trust itself. (c) Third is the Martrak Family Trust. 116 Each of these three entities had separate ABNs. An ABN is a single identification number that businesses use when dealing with government agencies, including the ATO.
117 Mr Reardon gave evidence that the Martrak Family Trust did not perform any function at present. It had originally been designed to be the beneficiary of the North Fitzroy Arms Unit Trust, but the beneficiaries of that trust now were the Reardon family.[36]
[36] T 249 L4-11 and T 272 L25-29.
118 Mr Reardon’s explanation for the recording of the incorrect ABN on the tendered BAS statements, as I understood it, was as follows:
(a)
There had been a rush in about July 2000, when the GST regime was introduced, to register for GST, and some uncertainty about who should be registered, especially whether the company, when a corporate trustee, or the trust should be registered.
(b)
The first defendant, Martrak, the North Fitzroy Arms Unit Trust and the Martrak Family Trust were registered and were issued with separate ABNs.
(d)
That there had been confusion, or a change, in the decision as to which Trust would hold the hotel - the change ultimately being from the Martrak Family Trust to the North Fitzroy Arms Unit Trust, with the Martrak Family Trust’ ABN continuing to be used. Mr Reardon’s explanation of this was that the Martrak Family Trust was:
“… the same entity as the North Fitzroy Arms Unit Trust; we had a
change of name. And we had two registrations.”
HIS HONOUR:
Q: “All right, so it went from Martrak Family Trust to North
Fitzroy, or the other way around?---A: From Martrak, to North Fitzroy Arms Unit Trust.” HIS HONOUR:
[37] T 274 L17-21.
Q: “At that time, what when you acquired the…?--- A: No, when we realised that there were two registrations.”[37]
119 In addition to this confusion, in his evidence, Mr Reardon appeared confused about which ABN related to which of his businesses. Thus, in re-examination, he was asked about the ABN ending with the numerals 491, and replied that it was for the North Fitzroy Arms Unit Trust,[38] when in fact it was for the Martrak Family Trust.
[38] T 302 L 3-4.
120 I formed the view that Mr Reardon, although an experienced accountant, in the case of his own business affairs, paid little attention to the administrative detail required on taxation forms.
121 The plaintiff contended that the tendered BAS statements were not for the North Fitzroy Arms Unit Trust, because they used the ABN of the Martrak Family Trust.
122 Counsel for the defendants submitted in reply that there was no confusion in relation to the ABNs and argued that, with the exception of the discovered BAS statements, the ABNs in all the documents remained consistent. While the documents were occasionally completed under the name the Martrak Family Trust, and on other occasions the North Fitzroy Arms Family Trust, the ABN used was the same.[39]
[39] T 511.
123 The total of the sales recorded in the tendered BAS statements for the financial year 2004-2005 corresponds substantially, but not exactly, with the sales revenue declared in the 2005 taxation return of the North Fitzroy Arms Unit Trust and the profit and loss statements provided to the plaintiff for that year.
124 To be more specific, for the year 2004-2005, the BAS statements record sales of $1,286, 868, which, net of GST, amounted to $1,169,880. That latter figure is $17,185 less than the statement of sales of $1,187,065 recorded in the profit and loss statement provided to the plaintiff and which was also the figure recorded in the 2005 taxation return for the North Fitzroy Arms Hotel and in the MYOB Account Transactions records.
125 Although it was not the subject of submissions, the difference of $17,185 may have been attributable to sales which did not attract GST, as some such sales are recorded on the BAS statements. Nevertheless, even allowing for the difference of $17,185, the combination of the tendered BAS statements, the annual taxation return and the records kept on the MYOB software program do provide support for the defendants’ defence in respect of the profit and loss statement for the 2004-2005 year.
126 In the case of the thirty-four week period between 1 July 2005 and 28 February 2006, there is not the same correlation of dates to enable exact comparison between BAS statements and the profit and loss statements provided to the plaintiff, as the third BAS quarter ended on 31 March 2006. However, the profit and loss statement provided to the plaintiff recorded total income of $891,730.37 for the period 1 July 2005 to 28 February 2006 and the tendered BAS statements for the first two quarters of the 2005-2006 taxation year recorded sales of $758,083, which, net of GST, was $689,167. The tendered BAS statement for the third quarter ending 31 March 2006 recorded sales, attracting GST of $292,826, which, net of GST, was $266,206. The 2006 taxation return of the North Fitzroy Arms Unit Trust recorded total business income of $1,321, 647. These figures, if accepted, provide support to the defendants’ case.
127 I did not receive submissions on how significant the recording of a correct ABN is as an indicator that the income and expenditure being recorded were attributable to the entity named in the taxation return. Mr Wilkinson suggested that the tendered BAS statements recorded the income of more than one business, but he agreed that that view was based on speculation. It may be that the recording of an ABN on a taxation return plays a less important role than the accurate recording of the taxpayer’s tax file number. Both the tendered BAS statements and the taxation returns for the North Fitzroy Arms Unit Trust bore the same tax file number. The ICA for Martrak bore the same ABN and tax file number as was used on the BAS statements and Trust taxation returns for the North Fitzroy Arms Unit Trust.
128 The plaintiff also relied on Mr Reardon’s evidence that GST was paid by his businesses by a pooling of GST revenue collected by those businesses into one account. Money was pooled from the different businesses into a separate account and GST was paid from that account.[40] In a Further Supplementary Affidavit of Documents, Mr Reardon swore:
“Bank Records Showing GST Remittances for period 1/07/04 to 3/06/06
The defendants have in their possession various statements from the three different entities showing payment of GST in accordance with Business Activity Statements for the Clyde, Rising Sun and North Fitzroy Arms Hotels. The funds were pooled and paid by from various accounts to the ATO either on a monthly or quarterly basis.”[41]
[40] T 251.
[41] Affidavit of 13 February 2009 - paragraph 8.
129 I do not regard that evidence as assisting the plaintiff’s case as it did not support an argument that Mr Reardon otherwise treated all his businesses as one entity, but rather had one repository for the GST that his businesses collected.
170 The plaintiff has not established that the profit and loss statements provided to it by the first and or second defendants were false or misleading. Therefore, the claims for breach of contractual warranty and for breaches of the Trade Practices Act and Fair Trading Act cannot succeed.
171 My conclusion does not explain why the plaintiff’s sales decreased to the level that they did. However, I have the task of determining, on the whole of the evidence, whether the plaintiff has established its case on the balance of probabilities. I consider that it has not.
172 I therefore dismiss the proceeding.
173 I will hear the parties on costs.
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