Congram, I.D. v Rochdale Pty Ltd

[1988] FCA 116

PUEENSLAND DISTRICT REGISTRY	1	QLD. G83 of 1987
1
GENERAL DIVISION	1

BETWEEN:

IAN DAVID CONGRAM, JANITA RUTH WATLING,

NORMAN CONGRAM, and SHIRLEY JOYCE CONGRAM

Applicants

AND:

ROCHDALE PTY. LTD.

First Respondent

AND:

MICH~L GOLDSMITH

i Second Respondent

SPENDER J.

BRISBANE

l	17 MARCH 1988.
!	REASONS FOR JUDGMENT

This application involves the sale of a franchise for a

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i	gourmet sausage business.
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The original business was established by the first

! respondent, Rochdale Pty.Ltd., in premises at 153 Scarborough

Street, Southport, it having converted an existing run down

butcher shop into a combined butcher and sausage specialist shop.

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The business, which traded under the name "The Sausage

Specialist", was a business of gourmet sausage manufacturing, wholesaling and retailing.

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The directors of the first respondent at the relevant time were Mr. Goldsmith and Rr. Dufty. Mr. Dufty was primarily

involved in the sausage making and butchering side of the

business, while Mr. Goldsmith, the second respondent in these

proceedings, was responsible for the managerial, promoting and

advertising side of the business.

Mr. Goldsmith establlshed the "Sausage Specialist" similar lines to a scheme operating in along

Adelaide and Sydney. He

was granted exclusive rights to the recipes in Queensland.

Rochdale Pty.Ltd. was incorporated ln August 1984. The business

known as the "Sausage Specialist" was conducted at Southport from

June or early July 1984 untll late 1984.

With a view to franchising the operation, an

advertisement was inserted in the "Courier-Mail" on 22 August

1984 in the following terms:-

I "THE SAUSAGE SPECIALIST

SPECIAILITY (sic) SHOP/EXCLUSIVE DISTRIBUTORSHIP

In line with our expansion into Queensland we are
now seeking to establish 2 only
manufacturing/retail outlets inthe Brisbane area.
WE OFFER full training in production methods and

formulas - professional advice in relation to

D.P.I. requirements including site selection and

administration. Supply of all ingredients,

stationery, shop	equipment, uniforms, display
materials and signage etc. etc.	Plus initial and

ongoing participation in group advertising,

!

3.

i

product launch and promotion. This is a proven

business fully secured by contract and will nett

in excess of $2000 per week to a hard working

ambitious couple or partnership. Capital

requirement is in the region of $40-$45,000 a

I	proportion of which my be offset by lease - some
finance is available to suitable

~ applicants.

Please telephone Mike Goldsmith (075) 32-5435 bus

I hrs. (075 ) 57 2923 afhrs.”

The aim of franchising the business was to set up a

network of outlets throughout the State,	based on a similar model
to that operating in South Australia.

Mr. Congram, an applicant in these proceedings,

responded to this advertisement, and met Mr. Goldsmith	on	the
Gold Coast on	27 August	1984, where the parties discussed the

prospect of Mr. Congram establishing a specialist shop of his own

based along the same lines as the business at that time conducted

by the first respondent at Southport. At that meeting, the

figures for such a franchise business were discussed and a letter
was sent the following day by Mr. Goldsmith, giving examples of

anticipated trading results. The full text of the letter is as

follows :  -

“As per our recent	discussion I have outlined two examples
of anticipated trading results	for you:
(A)	INTERSTATE! SHOP
Turnover = $16,000.00 P.W.
O’Heads = $1,800.00 Wage S

200.00 Rent	~~~~~~
20.00	Power & Telephone
35.00	Insurance etc.
50.00	Dep. on equip (Approx.)
25.00	Repairs, Maint.. Printing etc.

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150.00 Advertising

4,850.00 Cost of raw ingredients

$7,130.00 TOTAL

- NETr $8,870.00 P.W.

I	(B) LOCAL SHOP Turnover = $4,700.00 P.W-
0' Heads = $750.00 Wages

120.00 ~~~ ~ ~ Rent

20.00 Power Sr Telephone

20.00 Insurance

50.00 Dep on equip

25.00	Repairs, Maint., Printing etc.
100.00	Advertising
1,400.00	Cost of ingredients etc.

$2,485.00 TOTAL

- m $2,215.00 P.W.

A s you can appreciate these examples are from each "end of

the scale". However, you may adjust the figures for wages etc.

to your own particular operation.

Please do not hesitate to contact me should you require

further information."

Mr. Ian Conqram visited the shop premises at 153

Scarborough Street, Southport, on 9 September 1984, accompanied

by his father, Mr. Norman Congram. Further discussions took

place concerning the applicants establishing a similar business

to that conducted and, ultimately, the applicants entered into a

franchise agreement with the first respondent on 5 October 1984

for consideration of $25,000.	On the same day, they entered into
a partnership agreement amongst themselves.	By virtue of the

franchise agreement, the applicants became sole distributors

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operating under the trade name "The Sausage Specialist" in a

designated area.

Pursuant to the agreement, the respondent company

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undertook to advise on the selection oL a site f o r the business and appropriate shop fittings, and to provide training to the

distributor and his staff for an initial period of not less than

10 days and then as necessary from time to time.,

m respect of advertising, the company agreed in the

franchise agreement o "(a)dvertise on a large scale for a period

of one month in such newspapers, magazines, radio, television,

directories, pamphlets or other media as it may consider

appropriate devoting to such purpose a sum of not less than

THREE THOUSAND DOLLARS ($3000.00), such advertising to commence

not later than two(2) weeks after the commencement of business."

The appllcants then acquired a run down butcher shop at

Paddington, Brisbane, the agreement for the sale of the business

belng entered into on 11 October 1984. The applicants also

signed a deed of assignment of the lease of the shop premises at

Paddlngton on 10 November 1984.

When the franchise agreement was entered Into, the

applicants were provlded with a manual for the conduct of the

distributorship. The Marketing and Distributlon Method Manual

provided, amongst other thlngs, a recommended retail/wholesale

price list.

The applicants commenced operating the business at

Paddington in approximately November 1984. The applicants claim

that despite the hours	of work that were put into the business
and advertising undertaken	by themselves locally, it became

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apparent that the margins and turnovers previously discussed for

the business were not achievable, .

The misrepresentations pleaded by the applicants to which evidence was addressed at the hearing are as follows:-

1.   That the turnover of the first respondent's butcher shop in

r Southport was about $5,000.00 per week.

2.   That the business was really booming.

3 . That at the top of the scale an interstate shop would provide

net profit of $8,870.00 per week.

4 .	That at the bottom end of the scale a local shop would
provide a net profit of $2,215.00 per week and a turnover of

$4,700.00 per week.

5.	In the said letter [of 28 August 19841, that the mark up on
the cost of ingredients achievable by way of sales was 235%.

Other representations originally pleaded, such as

representations regarding the frrst respondent having the

exclusive right to use certaln sausage recipes and that	a plan
was in operation	to provide 14 exclusive territories within
Queensland for sale of	sausages made to such recipes, were n o t

pursued at the hearing of this matter.

The first respondent has taken no part in these

proceedings. The second respondent was t all materlal times the

director and manager of the first respondent. As agalnst the

second respondent, it is pleaded that at all material times the

second respondent f o r himself and for the first respondent was

aware of the falsity of the statements referred to or,

alternatively, made the same recklessly, not caring whether they

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were true or false. It is also plcaded that the sccond

respondent procured or, alternatively, was directly or indirectly

knowingly concerned In or party to the contraventions by Rochdale

Pty.Ltd. of the Trade Practices Act 1975,

Mr. Ian Congram gave evidence that he discussed the

existing business at Southport with Mr. Goldsmith. He said that

he was told "that the takings that they were taking was in the

vicinity of $5,000.00" per week and that "business wa booming".

He also says that they discussed an advertising and promotions campaign, and PIT. Goldsmith's plans to franchise the business throughout Queensland. Mr. Congram was at the time employed as a research officer with the Livestock and Meat Board. He is now

the manager	of a	butcher shop which trades as the "Paddo
Butcher".

Mr. Congram says that he took the second lot of figures

in the letter of 28 August 1984, referred to as the anticipated

trading results of	a local shop, as referring to the shop	at
Southport, i.e.	the $4,700.00	turnover as being the average of
$5 ,000 .00	per week earlier mentioned by	Mr. Goldsmith.

In late September 1984, Mr. Congram prepared a document

called "Financial Structure and Profit Projectlons for the

Sausage Specialist" to	be established at 10 Collingwood Street,
Paddington. He states that he prepared the prolections based	on

the figures provided by Mr. Goldsmith, in particular, the letter

of 28 August 1984. However, he says that, although he believed

and relied on those figures, he treated them conservatively by

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reducing conslderably the mark-up and gross sales. This	is the
explanation he advances in respect	of the following passages
in the document:-

"Sausages are intended to be the major part of the

business and it is confidently anticipated that sales in excess of $2500 will be achieved in a short period of time.

Rochedale Pty.Ltd. claim to base their retail	...
sausage prices on a mark up of 235%. A mark up of

I only 185% has been used here."

Factors that Mr. Congram pointed to as having a

significant bearing on the failure of the business were the lack

of training and advertising and promotion which were to be

provided by Rochdale Pty.Ltd. pursuant to the franchise

agreement. Under the initial agreement, $3,000.00 worth of

advertlslng was to be provided. Ultimately, the first respondent

gave the applicants a refund in respect	of the shortfall.	It
appears that little	or no training was provided	to the applicants
in either the sausage making side	of	the business or the

management of the shop, Due to the lack of training, it was

decided that, Hrs. Janita Keating (nee Watling), an applicant in

these proceedings and who was concerned with the day to day

operations of the Paddington shop, would do a night course in

sausage and smallgoods making at a T.A.F.E. college.

In an attempt to improve the profitability of the

business, the applicants acquired for themselves the recipes for

the sausages, obviating the need	to purchase spices from the	,
franchisor.

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When questioned on how hc thought the business was going

in the first few months after it started, Mr. Congram stated that

"it was very stagnant, and	on the overall profitability it was
covering general operating expenses	but it was not covering any

overhead costs or - any of the capital costs of setting up the business." Mr. Congram claims that the turnover achieved never

averaged $5,000.00 per week and that the highest sale was

$3,000.00 in one week.

Counsel for the respondent in cross-examination referred

Mr. Congram to correspondence with Mr. Goldsmith and	Hr.
Goldsmith's	solicitors in April 1985, which appear to show no
dissatisfaction with the business	on the part of the applicants.
The following passages are extracts	of these letters:-

"We had an excellent week in the shop breaking our

sales records in only four days of trading."

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"Thirdly, our business is proving to be quite

successful and I would like to start and subdivide

I and sell off part of our territory."

Mr. Norman Congram and Mrs. Shirley Congram, the parents

of Mr. Ian Congram, are also appllcants In these proceedings. They Invested capital

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In the venture and became partners in the

business. They acknowledged that Ian was the driving force

behind the business venture and that their role initially was one

of providing financial support for their son. However, when it

became apparent that the business was not trading successfully,

they assumed a more active role, working voluntarily in the

business. Although Hr. Congram Snr. had some contact with Mr.

Goldsmith, MT. & Mrs. Conqram essentially relied on their son,
Ian, in terms of gauging the profitability of the business and

the viability of the franchise.

Mrs. Keating had met Mr. Goldsmith and visited the shop

but says in her evidence that no specific statement was made to

her with respect	to the turnover or profitability of the business
by Mr. Goldsmith.	However, she says that general discussions

took place in a meeting with Mr. Goldsmith to the effect that there was a high turnover and it was a good business. Further, she says that she believed what Mr. Goldsmith said with respect to the achievable profit margin as communicated to her through

Mr. Ian Congram.

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Mrs. Keating was employed full time in the business from

October 1984 untll December	1985, when the partnership was
dissolved, effective a s from March 1986.	Mrs. Keating had the

responsibility of the day to day running of the shop at

Paddington, lncluding the making of sausages, servlng in the

shop, handling of accounts and some promotlon and advertising,

although she admits that such promotions were only on a small
scale and essentially local	in character, as she could not afford

the time away from the business. A butcher was also employed

full time to take care of the meat sales of the business. Mrs.

Keating says that the shop never achieved the turnovers of the

order referred to as the local shop in the letter of 28 August

1984. She says that the basis of the trading was in meat, with

sales of gourmet sausages constituting only approximately 2 0 % .

Mrs. Keating gave four reasons why she thought that they

were unable to achieve the turnover suggested. First, that she

did not understand the product; secondly, that she had no

training for promotion of the product and for running the

business generally; thirdly, that they ran into competition from
the master butchers; and finally, the high price they had to pay
for the spices from the franchisor, Rochdale Pty.Ltd., and later

a Mr. Graham. Mrs. Keating acknowledges that they were working

initially with	a mark-up of	185% and a turnover of	$2,500.00, but
with a view to increasing	this	to	235% and $5,000.00

I respectively.

Mr. M.R. Kember also acquired a franchise from Rochdale

Pty.Ltd.. In hls evidence he stated that he was told the

turnover achieved at the Southport shop was approximately

$5,000.00 per week. He subsequently acquired a shop at Burleigh

Heads and traded there pursuant to the franchise. However, he

says that the turnover achieved on the sale of sausages was only

approximately $1,300.00 per week.	He states that he could not
achieve the figures he clalmed were represented by	Mr. Goldsmith
because the product, gourmet sausages, could not	be sold in that

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quantity.

Mr. R.J. Graham acquired the shop at 153 Scarborough

Street, Southport, from Rochdale Pty.Ltd.	in late 1984. He says
that in the first five weeks after	he took over the business, the

maximum turnover achieved was $2,500.00 and a range of mark-up of

approximately 150%-180%. When asked by counsel for the

applicants the reason why he thought his figures had dropped from , -

those apparently being nchicved earlier according to Mr.

Goldsmith, he stated:-

"1 do not think my figures did drop from his; I do

not think the figures were ever there."

In his opinion there was not a sufficient market for the

gourmet sausages, as the product	was too expensive. The purchase
of the business from Rochdale	Pty.Ltd. also included servicing
the franchise agreements in respect	of the shops at Paddington
and Burleigh Heads.

Mr. Goldsmith denied in his evidence that he ever

represented to the applicants that the business at Southport was

making $5,000.00 per week. He claims that the account books of

the business accurately recorded the takings of the business, and

that he represented the takings to be as per the books. The

figures achieved in the few months that the business was operated

by the first respondent are somewhat unclear, given that it

appears that two sets of books were maintained with a view to

defrauding the revenue. However, the book which is claimed to be

the one accurately representing the trading figures, shows a

range of trading both wholesale and retall for sausages and meat

at between $3,000.00-$4,000.00 per week.

Considering the representation as to the takings of the '

business, Mr. Goldsmith admitted in his evidence that, if he had

said the business was making $5,000.00 per week, that would have

been wrong, Similarly, the suggestion that the turnover

fluctuated between $3,800.00 and $5,300.00 would a l s o not be

supported by the figures in the takings book.

Mr. Goldsmith hlmself, in response to a question I posed

stated:-

"It would	not be correct to say that the business
[Southport shop] will	nett $2,000 a week -

probably not, your Honour, no."

In respect of the figures contained in the letter August 1984, Mr. Goldsmlth says of 28

he based the figures in the first

part of the letter in respect of the interstate shop on figures

that appeared in an article in Business Review Weekly which had

reviewed a sausage specialist shop trading interstate. No

complaint of the applicants is directed specifically	to the
figures as they appear	In the first part of the document.

In respect of the alleged representation as to the mark

up of the business as being 235%, the letter on its face

discloses this amount. Mr. Goldsmith says in his evldence that

the business was achieving a mark up of 150% at the time and

admltted that a mark up of 235% could not be achieved.

Q.	" ... Now, can we take It from what you are now saying that the mark up shown ln the letter of 28 August 1984 is incorrect - that those mark ups were not at that tlme achievable?
A.	"I am just considering costs of meats and so
forth, but I would say - looking at when I
costed it out - no, you probably would not get

to those mark ups."

Although in his profit projections Mr. Congram used a mark up of only 185%, I accept that he	believed and relied	on the
figures that appeared	in the letter but used the lower mark	up to

be conservative in his estimates.

Concerning the alleged misrepresentation that "business

was booming", I am not prepared to hold that this, in itself,
constituted conduct in contravention of s . 5 2 .

As to credit, 1 accept in general the evidence of Mr. Ian Congram. In particular, I am satisfied that the tenor f the conversation he had with Mr. Goldsmith was that the takings of the Southport shop was about $5,000.00 per week. I do not accept

the denial of Mr. Goldsmith in this regard, and his evidence was

generally unreliable. I am satisfied that the letter	of 28
August 1984 was meant by Mr. Goldsmith to represent actual
achievable returns, and he simply	had no basis for believing that

a mark-up of 235% was achievable. I am satisfied that these

representations as to turnover and profitability induced Mr.

Congram, and through him the other applicants, to enter Into the

franchise agreement and embark on the Collingwood Road Butchery,

as they were intended by Mr. Goldsmith so to do.

AS a consequence of the representations made, the

applicants entered into the franchise agreement, acquired a

butcher shop, and took an assignment of the lease of the premises

at 10 Collingwood Street, Paddington. The profit projection

document prepared by Mr. Congram subsequent o his discussions

with Mr. Goldsmith would no	.doubt have influenced the other
applicants to some extent.	However, it is not necessary that,

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pursuant to s.52, sole reliance be placed on the contravening

conduct to the exclusion of all other factors, provided there was

substantial reliance on the conduct in question and such reliance

was reasonable in all the circumstances.

In the present case the applicants were not simply

relying on thelr own estimates and projections but predominantly

on statements made by Mr. Goldsmith on behalf of the first

respondent.

The appropriate measure of damages under s .52 is the

difference between the amount by which the price paid exceeds the

true value, i.e. how much worse off the applicants are than if

they had not purchased the business. Where	a party has been
misled by conduct in contravention of s.52,	he is entitled to
recover the losses dlrectly consequentlal upon that conduct.	In

Toteff v. Antonas (1952) 8 7 C.L.R.	6 4 7 at 650, Dlxon J.,	as he
then was, said:-

"In an action of deceit a plaintiff is entitled to

recover as damages a sum representing the

prejudice o r dlsadvantage he has suffered in

consequence of hls alterlng his position under the

inducement of the fraudulent misrepresentations

made by the defendant."

The High Court considered this passage in Gates v . City

Mutual Life Assurance Society Ltd.	( 1 9 8 6 ) 6 3 A.L.R.	6 0 0 at p.607
and stated:-

"As his Honour then pointed out, it is a question

of determining how much worse off the plaintiff is
as a result of entering into the transaction which .

the representation induced him to enter than he would have been had the transaction not taken

place. This entitles the plaintiff to all the

conseauential loss dlrectlv flowins from his

reliance on the representation (Potts v. Miller

(1940) 64 C.L.R. 282 at pp.297-8; DO le V=

(Ironmongers) Limited [l9691 2 Q.B. + 8 ) , at least

if the loss is foreseeable (see Gould v. Vaggelas

(1984) 58 A.L.J.R. 560 at p . 5 6 3 1 7 -

In a case such as the present, the consequential losses

include not only the loss sustained in running the unprofitable

business but also the money expended on the purchase and the cost

of borrowing that money, or the loss of its investment. This was the conclusion reached by Fitzgerald J. in Sanrod Pty.Ltd. v.

Dainford Ltd. (1984) A.T.P.R.40-464 at p.45,358:-

". . .when money is paid in consequence of misleading

conduct, the loss suffered by that conduct

includes not only the money paid but also the cost

of borrowlng that money or the loss from its

investment, as the case may be ... Interest

awarded as a component of damages in such clrcumstances is not for loss of the use of the

money awarded as	damages, but for loss of the use
of the	money paid over in consequence of the

misleading conduct and is directly related to the

mlsleadlng conduct."

It 1 s submitted by the respondents that the failure of

the business at Colllngwood Street, Paddington, was not loss or

damage suffered by the applicants as a consequence of the

respondents' conduct. The factors outlined by	Mrs. Keating in
her evidence	as contributing to the failure of the business, such
as the fact that she did not understand the product and did	ot
receive the training promised, are matters pointed to by the
respondents as the real cause	of the loss sustained rather than
reliance upon the respondents' conduct. The matters mentioned	by

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Mrs. Keating may have caused problems for the applicants in the

running of the business.	However, in my opinion,	the predominant
cause of the	loss suffered by the applicants	was the applicants'

reliance on	the representation concerning profitability and
turnover by Mr. Goldsmith, which figures	he knew to be false. He

certainly had no reasonable basis for believing they were true,

and they were made wlth reckless indifference to the truth.

With respect to the recovery of any trading losses

sustained by the applicants for the period they conducted the

business, it is submitted by the respondents that the applicants

are disentitled from claiming for the	loss suffered as a result
of	the alleged misleading and deceptive conduct due to the

failure on their part to act reasonably to mitigate the loss which they suffered in the business. Even though the buslness was apparently trading at a loss from a very early stage, it was

not unreasonable on the part of the applicants to continue	to
trade, given that it was a new business and it may have	been

antlclpated that, with time, the business would improve. In Gould

v. Vaggelas (1985) 157 C.L.R. 215, Gibbs C.J. said at p.221:-

"There may be cases in which the purchaser

continues to trade, either because he has	no real
alternative or because	he has not become aware of

the nature of the fraud, and in those

circumstances incurs losses which are not

represented by the difference between the price
and value of the business. There is no reason in

principle why the defrauded purchaser should not

recover damages for all the loss that flowed

directly from the fraudulent inducement (unless,

possibly, the loss was not foreseeable). Tf the
purchaser, besides paying more for the business

than it was worth, has suffered additional osses

which resulted	directly from the fraud he ought to
be compensated for them.	Of course, the Court

must be satisfied that the loss did result ' 1

directly from the fraud and not from some

supervening cause such as the folly, error or

misfortune of the purchaser himself, and must
ensure that no additional compensation is given
for losses, when those losses, or the probabillty

of their occurrence, has already been taken into

account in determining the value of the	business."
A	further point raised by the respondents is that

following the failure of the business at Collingwood Street,

Paddington, Mr. Ian Congram subsequently established	a business
of a similar nature in reasonably close proximity	to the original

business, which presently trades as the "Paddo Butcher".

Therefore, it is submitted by the respondents, some account must be taken of the transfer of goodwill from the original buslness in the assessment of damages.

Mr. Ian Congram's evidence on thls point was to the

effect that the	new business established is	a different business
to that	originally conducted, in that it is	a traditional

butchery wlth a large wholesaling business. It is a Class 2

butcher shop. In contrast he says that the applicants were not
permitted to sell to dellcatessens and supermarkets from the

origlnal premises, the premises not being approved for such

purposes.

Mr. Conqram admlts that he still uses some of the

equipment from the old business in the new prernlses, has a

'Sausage Specialist' sign displayed outside the shop, and makes

sausages in accordance with the original recipes, but that

gourmet sausages are only a very small part of the business. Mr.

G.A. Stephens, the applicants' accountant, gave evidence that

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little goodwill would have existed in the business at Collingwood

Street, Paddington, when it	was closed, in that there is	no
residual value	of a business which	is unprofitable other than the

value of stock-in-trade and chattels.

The loss or damage alleged in the Statement of Claim is

as follows:-

(a) Pursuant to he said agreement the

applicants received property o the value of

approximately $5,000.00 and having paid

$25,000.00 thereunder have suffered	loss of
approximately $20,000.00;

Whilst the applicants have engaged in the business which they were induced to enter into as aforesaid they have suffered and

have continued to suffer losses as follows:-

(i) From commencement the of

operations	to 30th June 1985	-
$36,877.67;

(ii)      For period 1st July 1985 to 30th December 1985 - $8,191.35;

(c) Profits and income that the applicants

appllcatlon of capital and time would have

achieved, the same being thrown away in the

operation of the unprofitable business as

aforesald."

It was submitted that the amount of $25,000.00 paid

pursuant to the franchise agreement was lost, save for an amount

of $5,526.00, belng the value of equipment received and an amount

of $1,026.00 refunded f o r part of advertising. Exhibit 26, on

the other hand, claims in respect of the franchise fees paid, a

loss of $16,350.00.	While I am satisfied that there,	was no
goodwill attaching	to the business whlch consi,stently operated	at

a loss, there is in fact some residual benefit accruing to the

appllcants in the new business (which is in my view a

significantly dlfferent business. from that operated at	the
Collingwood Street shop) in the form	o f some customer goodwill
but, more importantly, in relation to transferred	signs and the
use of the recipes	in that new business. The quantification of
this residual value is intrinsically one	of impression. It seems

to me that I ought to adopt a robust approach in fixing the loss

in respect of the amount paid pursuant to the franchise agreement

at $12,000.00.

Exhibit 27 details I n respect of loss on sale of the

butcher shop a net loss of $10,364.00, and I prefer to act on

thls figure rather than	o the claimed discrepancy	of $13,800.00
as submitted by counsel	for the applicants.

I accept that actual trading losses were Incurred as

follows:-

(a) to 30th June 1985 $18,857.95

(b)	1st July 1985 to 30th
December 1985 $ 8,400.35;

(c) 1st January 1986 to 30th

1986 June $ 2,508.30

I $29,766.60

Further, it seems to me that I ought allow this figure in full,

having regard to the authoritles earller eferred to.

Notwithstanding that the business operated from the outset	at a
loss, there were considerations, including the obligations	of the
lease, which in	my view rendered it not unreasonable to trade as

the applicants did.

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A claim was made in respect of an amount of $11,700.00,

which is said to be the additional wages which could have been

earned for the time spent by Mr. Ian Congram in running the

I	business but for which, because of the non-profitability of the	,
i	business, he was unable to be paid.	The claim was based on 78

weeks at $150.00 per week.	No detailed record was kept of the
hours worked by Mr. Congram and the claim is very much	a broad

brush one. I have no doubt that he did spend considerable hours

attending to the business and	was not paid	for it, but the
details of the claim lack precision.	I allow $6,000.00	for
this item.

I am prepared to allow the economic cost of he loss of

investment funds, calculated at	14.5% on the average loan	by Mr.
Ian Congram between	1 January 1986 to 30 June 1987, in	the sum of
$3,504.85.

I give judgment for the applicants against he

respondents in the sum of $61,635.45, with costs to be taxed.

I certify that this and the do	preceding
pages are	a true copy of the reasons for
judgment herein	o i HIS Honour

Mr. Justice Spender

&m- 4- Associate

I

i

Counsel for applicants: Mr. D. B. Fraser

I

instructed by:  D. Wilcox of Daniel J. Creevey

No appearance for 1st respondent

L

Counsel for 2nd respondent:  Mr. A.J.H. Morris

instructed by:  W.J. Dillon of W.R. Scott &
scott

Date of Hearinq:  18, 19 June 1988 and 28 July
1988.

Judgment:  of Date 17 March 1988

!