Before SKOIEN SJDC
[1999] QDC 230
•17 August 1999
IN THE DISTRICT COURT
HELD AT BRISBANE
QUEENSLAND
[Before SKOIEN SJDC]
[David Levenspiel -v- Ian John Lawrence Eaton and Mallet Investments Pty Ltd] 1999 QDC 230
Plaint No 3115 of 1997
BETWEEN:
DAVID LEVENSPIEL
Plaintiff
AND:
IAN JOHN LAWRENCE EATON
First Defendant
AND:
MALLET INVESTMENTS PTY LTD
(formerly Suncolor Film Laboratory Pty Ltd)
Second Defendant
JUDGMENT
Judgment delivered: 17 August 1999
Catchwords: Trade Practices Act s.52; misleading conduct in sale of business; damages.
Counsel: Mr. Cooke Q.C. and Mr. Varitimos for the plaintiff
Mr. Diehm for the defendants
Solicitors: Cranston McEachern for the plaintiff
Butter, McDermott & Egan for the defendants
Hearing Dates: 5,6,7,8,9,12,13, 14, 29 July 1999
IN THE DISTRICT COURT
HELD AT BRISBANE
QUEENSLAND
Plaint No 3115 of 1997
BETWEEN:
DAVID LEVENSPIEL
Plaintiff
AND:
IAN JOHN LAWRENCE EATON
First Defendant
AND:
MALLET INVESTMENTS PTY LTD
(formerly Suncolor Film Laboratory Pty Ltd)
Second Defendant
REASONS FOR JUDGMENT -SKOIEN S.J.D.C.
Delivered the Seventeenth day of August 1999
Background Facts
At material times the second defendant, under the name Suncolor Film Laboratories, operated a number of film processing mini labs in Queensland. It had retail outlets at Bundaberg, Nambour and the Transit Centre in Brisbane, as well as one attached to its main laboratory at Maroochydore. The first defendant (Eaton) was employed as the general manager of the business. He had worked in that capacity for several years. In the financial years ending 30 June 1993 and 30 June 1994 the business at the Transit Centre had operated at a loss for Suncolor. It had during this time been operated by a manager and staff supervised from Maroochydore by Eaton.
In late 1994 Suncolor resolved to sell its businesses and in varying stages placed them upon the market. The plaintiff (Levenspiel) saw an advertisement for the sale of the Transit Centre business in the Businesses for Sale section of the Courier Mail newspaper on Saturday 4 March 1995. The advertisement had been placed by Peter Fites Real Estate, an agency engaged by Suncolor, through Eaton. Mr Antonatos (known as Mr Jim Anton to the parties) was the agent in the employ of the real estate agency responsible for the sale of the business. Anton had been briefed by Eaton for that purpose. He had been provided with a copy of a financial analysis document, variations of which appear as exhibits 7 and 9.
The advertisement (exhibit 2) read:
PHOTO LAB City Centre 5 day, under mment T.P. $300,000 PA plus. Suit hus. & wife should net $80,000 pa $139,000"
In March 1995 Levenspiel telephoned the real estate agency in response to the advertisement. He enquired where the shop was and he visited it before calling to see Anton early in the following week. At that time he obtained from Anton a copy of the financial analysis document. By 9 March he had spoken to his accountant (Mr. Carson), and by 10 March received advice from him. By late March 1995 Levenspiel had met and spoken with Eaton and made an offer to purchase the business which was not accepted by Suncolor. Negotiations did however recommence between Eaton and Suncolor and there were several contacts between them. In July 1995 there was a further meeting between Levenspiel and Eaton. On 7 August 1995 Levenspiel signed the contract (exhibit 12) for the purchase of the business. On 15 September 1995 the contract was settled. Levenspiel then ran the business, consistently at a loss, finally closing it down on 31 October, 1996.
Levenspiel has a rather unusual and wide work history. He served in the army in his earlier years, rising from the ranks to hold a commission in the S.A.S. In the 1970's he took up employment in a family owned motor vehicle dealership. He left that business and purchased a milk run which he operated for a period of time before taking up an administrative position within a milk vendors association. He later left that position and together with his wife became involved in operating petrol stations. This was seemingly a very successful enterprise and within a few years he was able to withdraw himself from the day to day operations of those businesses to take up the operation of a charter boat business in the Whitsundays. He ran that for about three years until 1987, when he commenced preparations for a round the world sailing voyage. Those preparations took about three years. He was then engaged in the voyage for a period of about four years. It was on his return to Australia that he became interested in purchasing another business to operate.
Causes of Action
The claim is based on s.52 of the Trade Practices Act 1974, alternatively for deceit, alternatively for breach of contract. At the beginning of the trial I was told that the claim in contract was not being pursued. While the claim based on deceit was maintained, the submissions for Levenspiel conceded that success in deceit would not attract any damages in excess of those recoverable under s.52. I was therefore asked to make findings on liability for the tort of deceit but not to assess damages specifically under that head.
Section 52 is as follows:-
(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Section 51A provides:-
(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
(2)For the purposes of the application of subsection (2) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
(3)Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.
Section 82(1) provides:-
(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of part ... V ... may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
and it is material also to note that s.75B, when read with s.82, empowers a court to award damages against any person knowingly concerned in a contravention of the Act by a corporation. See Enzed Holdings Ltd. v. Wynthea Pty. Ltd. (1984) 4 FCR 450. It was on this basis that the claim under s.52 against Eaton was pursued.
The conduct on which Levenspiel relied as being misleading or deceptive or likely to mislead or deceive was:
(a)The advertisement in the Courier Mail (exhibit 2);
(b)The provision of the analysis sheet (exhibit 7) to Levenspiel when he asked about the business;
(c)The oral representations made to Levenspiel by Anton;
(d)The oral representations made to Levenspiel by Eaton in March and July 1995 together with his references to the analysis sheet;
(e)The failure of Eaton or anyone else on behalf of Suncolor to disclose the current trading performance of the business;
(f)The representations of current customers on a document called the Transit Centre debtors list,
and it was alleged that he was induced by each of those matters to enter into the contract.
The Representations
The advertisement speaks for itself as to the represented capacity of the business to achieve a turnover of at least $300,000 per year and a net annual profit of $80,000. What of the reference to husband and wife? That is, of course, an integral part of those representations and in my opinion qualifies it in two ways; first that the represented sums of money would be obtainable by an owner/operator, that is, someone operating the business with the interest and energy expected of an owner; second it indicated that the figures would be obtainable by a staff of two people. Levenspiel understood the representations that way although he contemplated that one extra casual employee would be necessary.
When Levenspiel spoke to Anton on or about 8 March 1995 he was shown the financial analysis sheet (exhibit 7) which showed the profit and loss figures of the business for the 1993/1994 financial year and disclosed a net profit of $59,428. Anton suggested that for an owner operated business that figure could be adjusted upward to justify an expected net profit of $80,000 and demonstrated how that could be achieved.
At about the end of March 1995 Levenspiel met Eaton at his office in Mooloolaba. Levenspiel asked for the figures for the business for the months following 30 June 1994 but Eaton told him that they were with the accountant and unobtainable. However after leaving Levenspiels presence for a few minutes he returned with a piece of paper on which some figures were written which purported to be for the previous few months and which demonstrated a monthly turnover averaging $25,000 (that is, suggesting an annual turnover of $300,000). He said that the figures were slightly up on the 1993/1994 figures so that the 1993/1994 figures could be used as a basis for negotiations. Levenspiel accepted that.
Levenspiel queried the fact that the 1993/1994 figures showed a net profit of $59,000 whereas the advertisement referred to a net profit of $80,000. The two of them then went through the figures in exhibit 7 adding in expenses which an owner/operator (two full time staff plus one casual) would not incur. Eaton also said that a 10% increase in the figures could be expected within two years. Together they calculated a net profit figure of $100,359, before payment of wages. On the evidence it is clear that both Levenspiel and Eaton were using as the net profit figure what the business could earn before payment of wages, whether they were wages payable to husband and wife owner/operators as Eaton was contemplating (with one employed casual) or were truly wages payable for two full time staff as Levenspiel was contemplating (he providing the casual assistance as well as the management).
I found the evidence of the mathematics indulged in by Levenspiel and Eaton to be rather confusing but to my mind the important feature is that it was a justification by Eaton of the representations of the turnover and net profit in the advertisement. He did not, on the evidence I accept, retreat from those representations. In fact he represented a likely increase in profit. Whether or not Levenspiel should have accepted the adjustments as accurate, the fact is that he did. I also note that it is decidedly odd that Eaton was content to let Levenspiel work on the 1993/4 figures when, as he conceded in cross-examination, he had ready access to the businesss monthly figures. They could have been supplied to show the actual trading position (or material aspects of it) up to February 1995 and for the subsequent months as they unfolded up to the date of the contract in September 1995.
The contract (exhibit 12) attached a list of current customers. It was entitled Transit Centre Debtors List. The truth of that list is warranted in the following terms in the special conditions to the contract:
C.1 The vendor covenants and warrants that:-
(i)As at the date of the contract the business provides retail photographic services to the persons listed on the annexure hereto entitled Transit Centre Debtors.
The submission of Mr. Diehm for the defendants was that the warranty formed part of a restraint of trade clause which was so wide as to be void. He submitted that the warranty was restricted to this restraint of trade clause and could not be relied on for any other purpose. I reject that. The warranty in clause C.1(i) is clear and unambiguous. Whether the trade of the business purchased by Levenspiel was effectively protected by the clause is another quite separate question.
Basis for the Representations
There is no dispute that Anton was the agent for sale of the business. His recollection of the events was very vague and it is obvious that the figures for turnover and net profit which Anton put in the advertisement came from Eaton. Anton was unable to contradict Levenspiels evidence that he suggested mathematical adjustments to the figures shown in the financial analysis document which would justify the net profit of $80,000 and I find that he offered those suggestions to Levenspiel. There was no evidence that Anton had any reason to believe in the truth of the figures for turnover or net profit other than what he was told by Eaton.
Eaton was the employee of Suncolor actually charged with the responsibility of negotiating with Levenspiel. His evidence of the basis on which he suggested the turnover and net profit figures to Anton was interesting and significant. In cross-examination he said that the figure of $80,000 came off the top of my head and that:
Based on the fact that there is a turnover (sic. - I think he meant to say net profit) figure of 60,000, its not out of the realms of possibilities for an owner/operator to grow that to a figure of 80,000" (my emphasis).
In fact by February 1995 the business had been in obvious financial trouble for a considerable time and that situation continued up to the date of the contract on 7 August 1995. There was evidence of the difficulty in keeping up with the competition in a highly competitive business. There was a mass of evidence about the decline in gross income, the falling off in business as evidenced by the decline in roll volume (that is, the number of rolls of film processed, which formed the backbone of the business) and the consistent anxiety of Suncolor to sell the business. The evidence on these facts is so clear that it is quite unnecessary to descend into any great detail. It is sufficient to set out the following comparison between the figures shown in the financial analysis document (exhibit 7) and the Suncolor figures for 1994/95:-
(a)net development and printing sales decreased from $218,000 to $185,000;
(b)gross profit decreased from $59,000 to $27,000;
(c)total net loss increased from $7,000 to $35,000.
Eatons evidence was that a substantial reason for the poor performance was difficulty with staff. However it is interesting to note that in November 1994 he reported enthusiastically to the board of Suncolor about the prospects of improvement under a dedicated new staff (exhibit 50A). However the figures showed no improvement in the ensuing months.
Eatons evidence in no respect amounted to a justification, as at the stage of negotiations or at the date of contract, of the accuracy of the represented turnover and net profit figures. His evidence was that the solution to the businesss economic woes was the energy and zeal which would be expected to be applied by an owner/operator which would grow the business back to the 1993/94 figures within a year and a further 10% in the following year. However when pressed on how one might achieve this I thought he was rather long on rhetoric and rather short on detail. I remained unpersuaded that even the most enthusiastic and imaginative management could bring about very much improvement in the fortunes of the business.
That conclusion is fortified by the events which ensued. Under Levenspiels management the business ran consistently at a loss. That loss continued despite a transfer to the business of some accounts served by Suncolor itself most of which were, in any event, loss making accounts. He gave evidence, which I accept, of his genuine attempts to improve the business by means such as the distribution of hand bills, by canvassing, by sales promotions, by improvements to the shop, to staff appearance and staff morale, by the training of the staff and by his own efforts. Witnesses were called who gave evidence of their satisfaction with his service.
Evidence was led by the defence of some dissatisfaction by customers with the service given to them by the business under Levenspiels management. It would be surprising if some complaints did not occur in any business. The most serious complaint led to the loss of a valuable customer, the Australian Postal Institute. However it is noteworthy that many individual members of the A.P.I. continued to be served by the business and I also felt that Levenspiel was not given a completely fair opportunity to investigate and remedy the dissatisfaction. Finally, even with the loss of the A.P.I. custom the businesss roll volume was maintained. I am not persuaded that Levenspiels management was poor. So it cannot be said that the reason the represented figures for turnover and profit were not achieved was his poor management.
The onus falls on the defence to show that Anton, Eaton and Suncolor had reasonable grounds for making the representations (s.51A(2)). On all of the evidence I cannot find that Anton or Eaton (or anyone else on Suncolors part) had any reasonable basis for the representation that the business could achieve a turnover of over $300,000 or, more importantly, a net profit, before wages of $80,000, let alone $100,000. It is also the plain fact that nobody on Suncolors behalf ever informed Levenspiel of the actual trading performance of the business during the 1994/5 financial year.
The representations contained in the Transit Centre debtors list which was annexed to the contract were materially false. Many of the listed customers had not traded with Suncolor for a considerable time. This list was discussed between Levenspiel and Eaton. Eaton admitted in evidence that he took no steps to check the accuracy of the list (other than to cross off a couple he knew to have ceased trading) before the contract was entered into. It cannot be said that he or anyone else on Suncolors behalf had any reasonable belief in the accuracy of the list.
Reliance on Representations
Levenspiel gave evidence that he accepted and relied on each of the representations set out in paragraph 8 of these reasons and that each was instrumental in causing him to decide to buy the business. He said that had they not been made and particularly if he had been made aware of the real financial trading position of the business he would not have signed the contract.
Once it is established that the representations as to turnover and profit were made and that Eaton expressly told Levenspiel that the current financial years trading figures were somewhat better than the 1993/4 figures in the financial analysis document, exhibit 7, (which was untrue) it is probably unnecessary for Levenspiel to rely as a separate matter on the failure of Eaton and Suncolor to tell him the true position. That a failure to disclose can amount to an actual misrepresentation where there is a duty to disclose is well settled: See Henjo Investments Pty. Ltd. v. Collins Marrickville Pty. Ltd. (1988) 79 ALR 83. But it is better simply to consider silence as one of the circumstances constituted by all of the acts, omissions, statements or silence and then to decide whether there has been conduct likely to mislead or deceive. See Demagogue Pty Ltd v. Ramensky (1992) 39 FCR 31 at 41 (per Gummow J.); Commonwealth Bank of Australia v. Mehta (1991) 23 NSWLR 84 at 88 (per Samuels J.A.). I have found that issue in Levenspiels favour.
Having found that the representations were made (and the true position concealed) it is perfectly logical to accept that they each materially induced the contract. Representations of favourable turnover and net profit would be expected to induce the contract. Levenspiels calculations, based on assertions both by Anton and Eaton, satisfied him that the business was worth buying, that he could get a fair return on his outlay. It is easy to accept that the provision of quite an extensive list of allegedly active customers would help to confirm the belief that the business was healthy.
The submissions for the defence were that Levenspiel went to the business as often as he pleased between March and September 1995, that he had access to all relevant financial records (particularly to the roll volume book) and that his decision to buy the business was based on his own research rather than any representation by anyone. I reject that. It is true that Levenspiel frequented the business and that he could refer to the roll volume book. That book was, however, both inaccurate and confusing. But the important fact is that, despite his request to see the up-to-date figures, they were not made available to him. Rather, he was told that the current figures were somewhat better than those contained in the financial analysis sheet, exhibit 7, on which he should rely. It was also submitted that he actually observed that the business was not being run efficiently and that this should have warned him of its true financial position. But given that he was told that the current position was an improvement over the figures in exhibit 7, and given that he was encouraged to use the figures in the document to calculate an even more favourable return to him it is not to the point to identify ways in which the staff was failing to run the business to its best potential. That would only give him reason to think that under his management the business would perform even better than the represented figures. In any event the effect of misleading false representations and failure to disclose the true position is not negated because inquiries could have been made which would have revealed the true position, Sutton v. A.J. Thompson Pty Ltd (1987) ATPR 40-787; Henjo Investments, supra; Hill v. Tooth (1998) ATPR 41-649.
Credibility
I have accepted Levenspiel as a truthful witness whose recollection of material events is accurate. He impressed me as a methodical man who carefully noted matters of importance. On the other hand Anton simply had no material recollection of the events. Eaton, in evidence, revealed a tendency to overstate things in his favour and to understate or seek (unpersuasively) to explain away things which were unfavourable to him and to the defence case. I have mentioned his evidence on ways in which he said the business could have been improved by Levenspiel, which I found to be unsatisfactory. I have noted in paragraph 13 of these reasons the fact that he did not supply Levenspiel with actual trading figures for the current year and I think it most likely that he preferred not to do that. In cross-examination he conceded that he was asked for those figures in July 1998. Other examples were listed at some length in the written submissions for Levenspiel (para 73) and I do think it is necessary to recite them, having broadly accepted their accuracy. I conclude that anxiety to dispose of the business, the urgency of which can be seen in his reports to the board of Suncolor (see ex 50A), led him to make to Levenspiel statements which were untrue, notably the representations as to turnover and particularly as to net profit. He must have known them to be untrue or at the very least could have had no reasonable belief of their truth. His failure accurately to disclose the true financial position of the business cast its financial state in an entirely inaccurate light and he must have realised that at the time.
Liability
It follows that Anton, Eaton, and therefore Suncolor, breached s.52 of the Trade Practices Act. I also decide that Eaton made the representations as to turnover and profit knowing them to be untrue or at the very least recklessly, not caring whether they were true or not. It follows that the cause of action against Eaton in deceit has also been made out.
Damages
Despite attempts to improve the business, it ran at a loss for 13.5 months and gave no indication of improving. In these circumstances Levenspiel acted reasonably in closing it down and mitigating his loss. His evidence on this aspect of the case was not seriously challenged nor was his competence in running the business challenged other than in the respect which I have discussed and dismissed in paragraph 22 of these reasons.
In Marks v. GIO Aust. Holdings Ltd (1998) 73 ALJR 12 the joint judgment of McHugh, Hayne and Callinan JJ (forming part of the majority) discussed the effect of s.82. At [34] they noted that the section contains no stated limitation of the kinds of loss or damage that may be recovered and no express indication that some kinds of loss and damage are too remote. At [38] they say:-
It can be seen, therefore, that both ss 82 and 87 require examination of whether a person has suffered (or, in the case of s.87, is likely to suffer) loss or damage by conduct of another person that was engaged in the contravention of one of the identified provisions of the Act. That inquiry is one that seeks to identify a causal connection between the loss or damage that it is alleged has been or is likely to be suffered and the contravening conduct. But once that causal connection is established, there is nothing in s.82 or s.87 (or elsewhere in the Act) which suggests either that the amount that may be recovered under s.82(1), or that the orders that may be made under s.87, should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that ss.82 and 87 may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit or with equity but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies.
and at [41] - [42]:
This is not to say that no help can be had from the common law in deciding what damages may be allowed under s.82 in cases of conduct contravening s.52. Very often, the amount of the loss or damage caused by a contravention of s.52 will coincide with what would have been allowed in an action for deceit. But that is because the inquiry in both cases is to find out what damage flowed from (in the sense of being caused by) the deceit or contravention. Leaving aside questions of remoteness of damages in assessing damages for deceit (a question that was left unresolved in Gould v. Vaggelas (1985) 157 CLR 215 at 223-224, per Gibbs CJ, the damages for deceit will be the sum representing the loss suffered by the plaintiff because the plaintiff altered its position in reliance on the defendants misrepresentation. But the analogy cannot be pressed too far. it should not be pressed to the point of concluding that the only damages that may be allowed under s.82 are those that would be allowed in an action for deceit. The question presented by s.82 is not what would be allowed in deceit, it is what loss or damage has been caused by the conduct contravening the Act.
It follows, then, that a comparison must be made between the position in which the party that allegedly has suffered loss or damage is and the position in which that party would have been but for the contravening conduct. An even this inquiry may not conclude the question. Analysing the question of causation only by reference to what is, in essence, a but for test has been found wanting in other contexts and it may well be that it is not an exclusive test of causation in this area either. But that is not a question which we need to consider in this case. For the moment it is enough to say that s.82 requires identification of a causal link between loss or damage and conduct done in contravention of the Act.
and at [39] they quote with approval a passage from the majority judgment in Gates v. City Mutual Life Assurance Society Ltd. (1986) 160 CLR 1 at 14-15 which clearly recognises that the plaintiff may recover expenses and losses incurred as a result of reliance on the misleading conduct, in these terms:
a plaintiff who is entitled to damages reflecting the loss of benefits he would have obtained under a contract which he could and would have entered into but for his reliance on the contravening conduct of the defendant. Of course he must prove such loss but there is nothing unfair in requiring him to do so.
The appellants failure to prove this loss is fatal also to his claim for other consequential losses which arose out of additional expenses and losses which he sustained as a result of the respondents non-payment of the benefits under the insurance policies.
Their Honours refer [46] to loss which the plaintiff sustaining as the prejudice or disadvantage as a result of altering his or her position under the inducement of the misleading conduct and [48] after referring to a capital loss they accept that apart from that consequential loss may be suffered.
From that it follows that Levenspiel should recover the value of the unpaid labour he put into the business in the 13.5 months he operated it at a loss. I reject Mr. Diehms submission that he suffered no such loss because the evidence was that Levenspiel would otherwise simply have attended to the maintenance of his boat and departed on another voyage. Perhaps he would but the fact is that, thanks to the defendants breach of s.52, he put himself to work. There is a causal connection between the misleading conduct and his expenditure of labour. For that he should be recompensed. The unchallenged evidence of Mr. Keir, the accountant, was that the value of Levenspiels labour for 13.5 months was $45,000.
It was not suggested that Levenspiel could not recover the capital loss which he suffered, that is the difference between what he paid and the value of what he received. I accept Keirs evidence (exhibit 4) that the business had no value for goodwill either at the date of the contract in August 1995 or when he closed the business on 31 October 1996. It was consistently running at a loss. There was no evidence on which I could reach a contrary finding. So the only value Levenspiel received was the value that could be applied to the plant and equipment and the first question is the date at which it should be valued.
It was submitted by Mr. Diehm that the valuation date should be the date of acquisition of the business, September 1995, to reflect the principle that one takes the price of the property sold and its true value at that time. I reject that because that does not take account of the fact that Levenspiel, induced by misrepresentations to sign the contract to buy the business, tried reasonably to perform that contract until (reasonably as I find) he ceased to do so. During that time the plant and equipment lost value but that was a natural and reasonable consequence of the passage of time during Levenspiels performance of the contract induced by the defendants breach of s.52. To value the plant and equipment at the date of its acquisition by Levenspiel would be to punish him for attempting to achieve the financial results falsely represented by the defendants. Its diminished value is a prejudice or disadvantage suffered by Levenspiel and causally linked to the breach of s.52 (Marks).
The value of the plant and equipment was the subject of conflicting evidence. It is difficult to deny the evidence of Mr. Ackfield of the value of the colour negative processor and the colour print processor. This was the main equipment of the business. Ackfield knew the equipment; he was practised in the art of valuing and selling such equipment; indeed, as an agent receiving a commission from its sale he might be expected to do his best to achieve its proper value. Mr. McEllister, of Agfa, gave evidence of higher value for that equipment. However when analysed he was really saying that it had a potentially higher value, especially as a trade in. A trade in was not possible because Levenspiels business was valueless and closing down. So the value McEllister put on the equipment was speculative; Ackfields was real. I accept the evidence of Ackfield.
Then there was the evidence of Mr. Berry of the value of the remaining items of plant and equipment. It was of little value and I accept his figures. I also accept that some of it was left in situ to avoid the cost of making good the premises and that that was a reasonable approach.
So the net value of the plant and equipment recovered by Levenspiel was:-
(a)Colour negative processor $ 4,300.00
(b)Colour print processor $ 3,000.00
(c)Photocopier $ 3,937.00
(d)Items listed on pages 3 & 4 of the valuation
of Berry (Ex.5B) approximately $ 600.00
Total Value$11,837.00
I have decided (para. 34 of these reasons) that Levenspiels loss included the cost of his labour. For the same reasons he is entitled to recover the trading loss he sustained during the time he operated the business, that is 13.5 months. The assessment put forward on behalf of Levenspiel is based on the evidence of Carson and on exhibit 3. The calculations of Levenspiels trading losses (plaintiffs written submissions paras 125-128) were, it seemed to me, mathematically correct and the basis for the figures was not challenged. The losses amounted to $8,515.
Thus the loss suffered by Levenspiel for breach of s.52 is, according to the above figures:
Purchase price $105,000
Add
legal fees and stamp duty on
purchase$ 3,533
labour foregone component $ 45,000
trading loss$ 8,515 $57,048
Less
plant and equipment $11,837 $45,211
$150,211
=======
Levenspiel is also entitled to interest thereon from 15 September 1995, being the date of settlement. The exception is in relation to the labour foregone component and the trading losses, which interest should be calculated from about mid-April 1996 being the approximate mid point in Levenspiels operation of the business as follows:
(a)from 27 October 1994 10% per annum;
(b)from 1 July 1995 11.5% per annum;
(c)from 1 May 1997 10% per annum;
(d)from 9 July 1998 to date 9% per annum.
Conclusion
I give judgment for the plaintiff against the defendants for $150,211 together with interest as set out in paragraph 42 of these reasons.
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