Craig Hargraves Investments P/L (ACN 008 185 117) v Australian Business Insurance Advisors P/L (ACN 081 402 379) - [2011] SASCFC 159

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
CRAIG HARGRAVES INVESTMENTS P/L (ACN 008 185 117) v AUSTRALIAN BUSINESS INSURANCE ADVISORS P/L (ACN 081 402 379) & ORS
[2011] SASCFC 159
Judgment of The Full Court
(The Honourable Justice Anderson, The Honourable Justice Kelly and The Honourable Justice Stanley)
20 December 2011
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - OTHER MATTERS
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT
Appeal against a decision of a District Court Judge – appellant entered into Deed of Sale with the first respondent to purchase the first respondent’s client files – the purchase price was payable by way of three instalments, subject to a contractually defined reconciliation process – after the first instalment was paid the appellant learned that ASIC had banned the second respondent from providing financial services for two years - the appellant did not pay the second instalment as it took the view that the second respondent had engaged in actionable misrepresentation and misleading or deceptive conduct during the sale – the first respondent brought proceedings in the District Court claiming the monies due under the Deed – the appellant counterclaimed it had suffered loss and damage as a result of the misrepresentation - the District Court Judge gave judgment in favour of the first respondent.
Whether the appellant was out of time to undertake the contractual reconciliation provided in the Deed – whether there was misleading or deceptive conduct on the part of the respondents – whether the learned trial judge erred in rejecting the expert and other evidence as to the value of the assets acquired by the appellant – whether the appellant had failed to prove it had suffered any loss as a result of the ASIC banning order.
Held: appeal dismissed - the appellant is not relieved of the obligation to pay the balance of the purchase price – it was open to the Judge to find there was no misleading or deceptive conduct – it was open to the Judge to reject the evidence as to the value of the assets – the Judge’s finding that the appellant had failed to prove any other loss was open on the evidence.
Corporations Act 2001 (Cth) s 946A, s 946C, s 947B, referred to.
Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896; Geste v Pereira (1991) 161 LSJS 260, applied.
Tanwar Enterprises Pty Ltd v Cauchi & Ors (2003) 217 CLR 315, distinguished.
BCCI v Ali [2002] 1 AC 251; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Lake v Simmons [1927] AC 487; McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; Fox v Percy (2003) 214 CLR 118, discussed.
Byrnes & Anor v Kendle (2011) 243 CLR 253; Legione & Anor v Hateley (1983) 152 CLR 406; Ciavarella v Balmer (1983) 153 CLR 438; Yorke v Lucas (1985) 158 CLR 661; Robinson v Harman (1848) 154 ER 363; Wenham v Ellis (1972) 127 CLR 454; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, considered.

CRAIG HARGRAVES INVESTMENTS P/L (ACN 008 185 117) v AUSTRALIAN BUSINESS INSURANCE ADVISORS P/L (ACN 081 402 379) & ORS
[2011] SASCFC 159
Full Court: Anderson, Kelly and Stanley JJ

ANDERSON J. I would dismiss the appeal for the reasons given by Stanley J.
It is my view the judge should not have relied on the comments in Mr Lonergan’s textbook without providing the expert Mr Crase with the details of the textbook opinion so that the expert had the opportunity of commenting on the questions raised by His Honour. The expert should have been informed that those questions were not merely questions from the judge but the opinion of someone which the judge may take into account.
I appreciate, as Stanley J says, that the general effect of Mr Lonergan’s views was put by the judge in the questions he asked. Stanley J sets out those questions in his reasons, and he summarises the passage in Mr Lonergan’s book which the judge relied on.
It was not necessary for the judge to inform himself from Mr Lonergan’s book because he found that the assumptions underlying Mr Crase’s opinion had not been made out.
However, the judge then also rejected Mr Crase’s opinion based on what Mr Lonergan says about rules of thumb, namely, that they must be used with caution. In those circumstances it is in my view a large step to reject Mr Crase’s evidence because he had been qualified as an expert in the valuation of businesses and gave his opinion based on his qualifications and experience including his use of a rule of thumb.
The judge’s criticism at [164] is that Mr Crase merely “proffered rough and ready means towards negotiating a contractual price”. His Honour then said:
Whilst rules of thumb can be of interest in attempting to determine fair value of a business or business assets they should be regarded with professional caution for the reasons provided by Lonergan.
His Honour refers in a footnote to the work of Mr Lonergan at pages 251 to 254 of the third edition of his book. That section is contained within a short chapter in Mr Lonergan’s book entitled “Valuation of Businesses”. It is the same in the fourth edition.
Whilst it could be said that any rule of thumb should be regarded with some degree of caution as a matter of commonsense, that is not quite the same as saying that in this particular business a particular rule of thumb used by the expert was wrong or unreliable. The judge appears to reject the particular rule of thumb apparently on the basis of what Mr Lonergan says in his book about rules of thumb generally. Mr Crase was familiar with the nature of the business and applied what he regarded as a correct multiplier. There is no evidence to the contrary.
If the expert had been informed that His Honour’s questions were based on comments by the author from his textbook the expert first, may or may not have accepted that the work was authoritative, and second, may have justified why any rules of thumb chosen in this particular instance were appropriate. He was simply not given that opportunity.
As I have said, the judge found ultimately that in any event the assumptions upon which the expert based his opinion had not been established. I have no criticism of that finding. If the assumptions behind an expert opinion are not made out then the expert opinion cannot be accepted. On that basis the judge was entitled to reject the expert opinion.
In my view the correct approach in this matter would have been, given that one party was unrepresented, to ask the expert whether he was familiar with Mr Lonergan’s work. The actual passages from the textbook which were influencing the judge should then have been put to the expert to allow his response. The judge would then have to evaluate the evidence of an expert who had been cross-examined as against the opinion contained in the textbook and not tested by cross-examination.
In this case in the end result it does not matter but in my view it is important that the procedure which I have outlined is followed. This is not a case of taking judicial notice because it is not a fact that is “so generally known as to give rise to the presumption that all persons are aware of it”: per Isaacs J in Holland v Jones (1917) 23 CLR 149 at 153. It is not a case of judicial notice. It is rather a case where the unchallenged evidence of Mr Crase has been discredited by the untested opinion of a textbook writer which was not put to him in those terms. It gives rise to potential procedural unfairness in my view, although that is not the determining factor here.
KELLY J. I would dismiss the appeal for the reasons given by Stanley J. I also agree with the comments made by Anderson J

STANLEY J:
Introduction

This is an appeal from the District Court.
The second respondents, Terry Franke and Wendy Franke (the second respondents) were the directors and shareholders of the first respondent, Australian Business Insurance Advisors Pty Ltd (ABIA). ABIA was a financial advisor. It advised its clients in relation to the purchase and renewal of insurance and superannuation products. The income of the business was derived from the payment of upfront and annual trailing commissions paid when a client purchased an insurance or superannuation product recommended by ABIA. The commission was paid by the provider of the product.
The appellant, Craig Hargraves Investments Pty Ltd (the appellant) is in the same business as ABIA, however, its business is significantly larger than that of ABIA. Craig Hargraves (Mr Hargraves) is a director of the appellant and holds the controlling interest in it.
In late September 2006 ABIA and the appellant entered into a Deed for Sale and Purchase of Assets (the Deed), pursuant to which the appellant purchased from ABIA its client files and all of the renewal commissions thereafter to be received with respect to ABIA’s clients. The Deed presents some particular difficulties of construction. I will refer to these in more detail later in these reasons. It included certain warranties. Included amongst the warranties was the following:
4.3 The Business is and was conducted by the Vendor in accordance with all applicable laws and is compliant with all relevant laws, regulations, and requirements of the Australian Securities and Investments Commission and the Financial Planning Association of Australia Ltd. The conduct of the Business by the Vendor did not and does not contravene any laws and no allegation of any contravention of any applicable laws is known to the Vendor.
Pursuant to paragraph 4(d) of the Deed, the obligation of the appellant to pay the purchase price was made conditional upon there being no breach at the completion date of any of the warranties.
The purchase price was $313,000. It was payable by way of three instalments, but subject to a contractually defined reconciliation process. The first instalment of $100,000 was payable upon execution of the Deed. It was paid. At about that time, ABIA transferred its client files to the appellant. Thereafter, the appellant treated and worked ABIA’s client files as its own.
The second and third instalments were due to be paid on 1 March 2007 and 1 October 2007 respectively. These payments were in the sum of $106,500 each subject to the reconciliation referred to above.
This was a device agreed between the parties for the protection of the appellant. The purchase price was negotiated between the parties as a multiple of annual commissions. The appellant agreed to pay ABIA the sum of $313,000 calculated on the basis of three times annual renewal commissions of $171,000, less a payment of $100,000 each to the second respondents. These monies were payable pursuant to a deed of settlement entered into between the second respondents and the appellant simultaneously with the Deed, the effect of which was to establish, at least notionally, contracts of employment between the second respondents and Poynter Hargraves Financial Consultants Pty Ltd (a company associated in some way with the appellant) for a period to 30 June 2007. In this context, the parties agreed that the appellant would pay a further sum of $30,000 to compensate any tax disadvantage the second respondents suffered by reason of this arrangement.
At the same time the appellant paid ABIA the first instalment payment of $100,000 it also paid the second respondents $100,000 each. The further sum of $30,000 has not been paid but was the subject of a claim for rectification granted by the learned trial judge.
The reconciliation required by the Deed was to occur prior to the payments due on 1 March 2007 and 1 October 2007. The reconciliation was to be undertaken in accordance with a formula prescribed in the Deed. The Deed further provided for a final reconciliation to be completed not later than 45 days following the due date. For this purpose, the due date was 1 October 2007. The purpose of the reconciliation was to determine whether the figure of annual commission income of $171,000 upon which the purchase price had been calculated, had been realised in the first year in which the appellant had worked ABIA’s client files. The formula permitted a reduction in the purchase price if the annual commission income received by the appellant in that first year was less than $171,000. It did not permit payment of any higher price than that agreed, namely, $313,000.
As events transpired, these reconciliations did not take place.
On 6 November 2006 a delegate of the Australian Securities and Investments Commission (ASIC) banned Terry Franke from providing financial services for a period of two years. The delegate found, inter alia, that Mr Franke had contravened the provisions of s 946A, s 946C and s 947B of the Corporations Act 2001 (Cth). On 1 February 2008, following a review of this decision by the Administrative Appeals Tribunal, the decision of the ASIC delegate was affirmed.
When Mr Hargraves learned of the delegate’s decision, sometime after it was made in late 2006 or early 2007, he took the view that the appellant would not make any further payment to ABIA in accordance with the Deed. He did so on the basis that he considered that Mr and Mrs Franke, and through them, ABIA, had engaged in actionable misrepresentation and misleading or deceptive conduct during the negotiations, and that ABIA had breached certain warranties contained in the Deed.
Shortly after 1 March 2007, when the appellant failed to pay the second instalment when it fell due, Mr Franke approached Mr Hargraves, who informed him no further monies would be paid. In response, ABIA brought proceedings in the District Court claiming the monies due under the Deed, namely, $213,000. The appellant, by its second further amended defence, claims that it suffered loss and damage as a result of misrepresentation, misleading or deceptive conduct and a breach of contract by ABIA, which loss and damage exceeds any amount due under the contract such that it claims a complete set-off. In addition, by cross-action, it counterclaimed damages on the same basis.
The Court gave judgment for ABIA for the full amount of its claim. It dismissed the counterclaim by the appellant.
The reasons for judgment
The learned trial judge’s judgment in favour of the respondents turned on six matters.
First, the learned trial judge found that on their proper construction, the terms of the Deed providing for the reconciliation made time of the essence. The Deed required the reconciliations to be performed at the time specified in the Deed, and by no later than 45 days after the last instalment was to be paid. As this had not occurred, it was now too late to conduct any reconciliation and accordingly, subject to the defences and cross-claims based on the allegations of misrepresentation and misleading or deceptive conduct, ABIA was entitled to payment of the sum of $213,000.[1]
[1] [2011] SADC 24 at 12-13 [44]-[51].
Second, the learned trial judge rejected the appellant’s allegations of misrepresentation and misleading or deceptive conduct.[2] The appellant alleged that Mr Franke, for and on behalf of ABIA, made a series of representations to Mr Hargraves, as agent for the appellant, the effect of which was that, apart from a minor complaint relating to Mr Franke’s son, Craig, which was the result of malicious allegations by a former director of ABIA, the subject of an ASIC investigation, there were no regulatory issues with the business of ABIA. The learned trial judge found that the representations made by Mr Franke were not misleading or deceptive in that they accurately reflected the position as it existed at that time. In addition, the learned trial judge found that, in any event, there was no reliance by the appellant on any conduct alleged to be misleading or deceptive.[3] In the course of several meetings with Mr Hargraves he offered Mr Hargraves the opportunity to peruse and consider a lever arch file containing documents relevant to the ASIC investigation. The learned trial judge found Mr Hargraves declined to examine these documents on the basis that he was unconcerned by the ASIC investigation because his interest was in purchasing the clients of the business, not the business, and he was reassured that the appellant was protected, in any event, by the contractual warranties in the Deed.
[2] [2011] SADC 24 at 37 [125].
[3] [2011] SADC 24 at 38 [129].
Third, the learned trial judge found that ABIA had breached one of the warranties in the contract in that, as at the completion date, the conduct of the business by ABIA, as a matter of fact and law, was in contravention of regulatory requirements.[4]
[4] [2011] SADC 24 at 42 [148].
Fourth, the learned trial judge found that, with one exception, the appellant had failed to prove that it had suffered any loss, even if it had been misled or deceived by any misrepresentation by Mr Franke.[5] The learned trial judge found that the appellant’s case on damages was predicated on two kinds of loss. First, the assets purchased were in an impaired state, worth substantially less than the purchase price. Second, the appellant suffered consequential loss by reason of the substantial additional expense and inconvenience it had been put to in order to rectify the damage caused to the assets by the making of the banning order. These respective measures of loss were alternatives. The learned trial judge rejected evidence of loss adduced by the appellant from an expert, Mr David Crase, on the basis that Mr Crase’s evidence did not establish any relevant impairment in the value of the client files and commissions purchased by the appellant such that the assets were worth substantially less than the purchase price.[6] Further, the learned trial judge found the appellant had failed to prove there was any substantial loss suffered by it in making good any harm suffered as a result of the banning order, except an amount of $20,000, awarded on a broad-brush basis, for work done by the appellant in mitigation by way of reassuring clients that the banning order did not affect the capacity of the appellant to continue to service the needs of clients who had formerly been serviced by ABIA.[7]
[5] [2011] SADC 24 at 56 [191].
[6] [2011] SADC 24 at 49 [166].
[7] [2011] SADC 24 at 56 [191].
Fifth, the learned trial judge held that in any event, although there was evidence that some clients were lost in the 12-month period following the completion date, there was no evidence of any causal nexus between the loss of those clients and the banning order.[8]
[8] [2011] SADC 24 at 53 [184].
Sixth, the learned trial judge granted ABIA’s plea for rectification of the Deed so as to remove any doubt as to the liability of the appellant to pay to the second respondents the further sum of $30,000 which the appellant conceded was always intended to be paid subject to the appellant’s claim for a setoff and its cross-action for damages.
The issues on appeal
The appeal raises the following issues:
1whether the appellant was out of time to undertake the contractual reconciliation provided in the Deed so as to claw back some of the nominated purchase price (grounds 1 and 2);
2whether there was misleading or deceptive conduct on the part of the respondents (grounds 11, 13 and 14);
3whether the learned trial judge was correct in rejecting the expert and other evidence as to the value of the assets acquired by the appellant (grounds 5, 7, 8 and 9); and
4whether the appellant had failed to prove it had suffered any loss as a result of the ASIC banning order (except for the award of $20,000 by way of mitigation expenses) (grounds 3, 4, 6, 10 and 11).

The appellant did not pursue ground 12 on appeal. This concerned an allegation that ABIA had breached the warranty in clause 3.2.
Construction of the Deed – was time of the essence?
The appellant submitted that the learned trial judge erred in concluding that by the time of the trial it was too late to undertake a reconciliation in that it was no longer permitted by the terms of the contract. I reject the appellant’s submission of a breach of the requirements of procedural fairness. ABIA, which was not legally represented at trial, made a submission to the learned trial judge that it was too late for the appellant to seek a reconciliation. The appellant thereby was put on notice that there was an argument about the construction of the Deed and its effect in relation to any question of a clawback.
The learned trial judge concluded that the terms of the Deed providing for payment to be made by way of further instalments on 1 March and 1 October 2007, consequent upon the appellant undertaking the reconciliation prescribed by the contract, were essential terms of the contract. Whether any underpayment was to be made up or overpayment recovered, respectively, was to depend on a final reconciliation to take place within 45 days of the final payment on 1 October 2007. Further, the learned trial judge reasoned that the requirement for a reconciliation was, in effect, or tantamount to, a contingent condition going to the content of the obligation to make the payment. His Honour concluded that where the contractual obligation to make the payment was subject to the happening of a contingent event by a stipulated time, that time was also to be regarded as essential, whether or not the payment dates were regarded as essential.[9] Accordingly, even if the times of payment were not of themselves essential, the contract made the undertaking of the reconciliation by those stipulated times an essential term of the contract. This followed from the nature of the subject matter of the contract, the fact that the assets were immediately transferred and placed under the control of the appellant, and the lack of any contractual provisions designed to protect ABIA should payment be late, such as an express entitlement to interest.
[9] [2011] SADC 24 at 12 [45].
His Honour concluded:[10]
It is now too late for the defendant, having breached the contract in a most fundamental way – after all, it was only ever entitled, at best, to a damages claim, not to refuse to pay the price – to turn around and insist on a reconciliation process different from that agreed to and provided for in the contract.
This is simply an example of the more general proposition that where a conditional contract fixes a term by which the condition must be fulfilled, then the time so fixed must be strictly adhered to.
(Footnote omitted)
[10] [2011] SADC 24 at 12 [48]-[49].
The appellant submitted that the learned trial judge fell into error in two ways. First, that on the proper construction of the contract, time was not of the essence in respect of the terms providing for the reconciliations. Second, on the basis that where the vendor was in breach, the time for the reconciliations to be undertaken, and indeed the time for payment, had not yet fallen due.
The appellant submitted that time was not of the essence with respect to undertaking the reconciliations required by the contract because the contract did not expressly provide that time was of the essence. Neither did the contract contain express words that the right to a clawback was lost entirely if there was not strict adherence to time. The appellant contended that the timing of the undertaking of the reconciliation was not fundamental to the performance of the whole contract. Mr Riggall, counsel for the appellant, sought to illustrate this proposition by contrasting the time requirement for undertaking the reconciliations in the subject contract with a contract for the delivery of bananas to a wharf for loading. In the latter case, he contended, time is of the essence, whether stipulated or not, because it is fundamental to the performance of the contract that the bananas be delivered to the wharf prior to the ship sailing. The appellant submitted that the term requiring the undertaking of a reconciliation prior to the making of payment was not a term of the same kind. It was not fundamental. Payment could have been made at a reasonable time.
I am against the appellant’s submission in relation to time not being of the essence with respect to the performance of the reconciliations. That time might be essential to the hypothetical contract adopted by the appellant in argument does not gainsay time being an essential term of the contract in this case.
As the learned trial judge noted, the contract is poorly drafted.[11] It presents a number of difficulties of construction. Nonetheless, the terms of the contract seek to govern what is a quintessentially a commercial transaction. The parties were engaged in the sale and purchase of client files and renewal commissions. These were the principal asset of the business conducted by the vendor, ABIA. The contract fell to be construed in accordance with the general principles applicable to any commercial contract. Whether time was an essential term of the contract is a matter of construction.
[11] [2011] SADC 24 at 6 [24].
The correct approach to the construction of contracts is the ascertainment of the intention of the parties. That is to say the intention of the parties expressed, not the subjective intentions which they may have had, but did not express. A court is to have regard to the entirety of the document or documents comprising the agreement, which are to be read as a whole, against the background of the surrounding circumstances and the commercial purpose of the contract, in order to interpret each clause.
The contemporary approach is authoritatively outlined by Lord Hoffmann in Investors Compensation Scheme v West Bromwich Building Society:[12]
I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v Simmonds [1971] 3 All ER 237 at 240–242, [1971] 1 WLR 1381 at 1384–1386 and Reardon Smith Line Ltd v Hansen-Tangen, Hansen-Tangen v Sanko Steamship Co [1976] 3 All ER 570, [1976] 1 WLR 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of ‘legal’ interpretation has been discarded. The principles may be summarised as follows.
(1)Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2)The background was famously referred to by Lord Wilberforce as the ‘matrix of fact’, but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3)The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4)The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax (see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, [1997] 2 WLR 945.
(5)The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Cia Naviera SA v Salen Rederierna AB, The Antaios [1984] 3 All ER 229 at 233, [1985] AC 191 at 201:
‘… if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.’
[12] [1998] 1 WLR 896 at 912-914.
The principles outlined by Lord Hoffmann were succinctly summarised in BCCI v Ali[13] by Lord Bingham of Cornhill:[14]
To ascertain the intention of the parties the court reads the terms of the contract as a whole, giving the words used their natural and ordinary meaning in the context of the agreement, the parties’ relationship and all the relevant facts surrounding the transaction so far as known to the parties. To ascertain the parties’ intentions the court does not of course inquire into the parties’ subjective states of mind but makes an objective judgment based on the materials already identified.
[13] [2002] 1 AC 251.
[14] [2002] 1 AC 251 at 259.
In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[15] the High Court of Australia said:[16]
This Court … has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.[17]
(Footnote added)
[15] (2004) 219 CLR 165.
[16] (2004) 219 CLR 165 at 179.
[17] Affirmed in Byrnes & Anor v Kendle (2011) 243 CLR 253 at 284 [98].
These observations have been repeated in relation to the construction of commercial contracts. In Lake v Simmons[18] Viscount Sumner observed:[19]
Every one must agree that commercial contracts are to be interpreted with regard to the circumstances of commerce with which they deal, the language used by those who are parties to them, and the objects which they are intended to secure.
[18] [1927] AC 487.
[19] [1927] AC 487 at 509.
These words were drawn on in McCann v Switzerland Insurance Australia Ltd,[20] where Gleeson CJ observed:[21]
A policy of insurance, even one required by statute, is a commercial contract and should be given a businesslike interpretation. Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure.
(Footnotes omitted)
[20] (2000) 203 CLR 579.
[21] (2000) 203 CLR 579 at 589.
In Pacific Carriers Ltd v BNP Paribas[22] the High Court stated the general principles in regard to the construction of commercial contracts in the following terms:[23]
The case provides a good example of the reason why the meaning of commercial documents is determined objectively: it was only the documents that spoke to Pacific. The construction of the letters of indemnity is to be determined by what a reasonable person in the position of Pacific would have understood them to mean. That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to Pacific and BNP, and the purpose and object of the transaction. In Codelfa Constructions Pty Ltd v State Rail Authority of NSW, Mason J set out with evident approval the statement of Lord Wilberforce in Reardon Smith Line Ltd v Hansen‑Tangen:
“In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.”
[22] (2004) 218 CLR 451.
[23] (2004) 218 CLR 451 at 461-462.
As Mr Justice Holmes of the US Supreme Court wrote extracurially:[24]
[P]arties may be bound by a contract to things which neither of them intended, and when one does not know of the other’s assent … [T]he making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs, - not on the parties’ having meant the same thing but on their having said the same thing.
(Emphasis in original)
[24] Holmes, “The Path of the Law”, (1897) 10 Harvard Law Review 457 at 463-464 cited with approval in Byrnes & Anor v Kendle (2011) 243 CLR 253 at 285 [100].
The terms of the Deed governing the undertaking of the reconciliations are clauses 5.2, 5.3 and 5.4. They provide as follows:
5.2The parties agree that the purchase price for the Assets is as follows:
Three hundred and thirteen thousand dollars ($313,000) payable as follows;
(a)an amount of $100,000 upon execution of this Deed;
(b)an amount of $106,500 to be paid on 1 March 2007;
(c)an amount of $106,500 to be due on 1 October 2007 such payment to be subject a final reconciliation to be completed in not more than 45 days following the due date.
5.3The parties agree that prior to payment in 5.2 (b) and (c) above, there will be a reconciliation of the renewal commissions with such reconciliation to be calculated in accordance with the formula. The final purchase price shall not exceed the amount calculated by reference to the formula.
5.4Having reconciled the renewal commissions and applied the formula, should there be any reduction in the agreed income, the purchase price will be reduced accordingly, and where appropriate the amounts stated for payment in 5.2 (b) and (c) above will be reduced subject to the Vendor being entitled to the following credit against any loss suffered by the purchaser;
(a)an amount of thirty thousand dollars ($30,000) plus any amount received by the purchaser on account of new business commissions generated before the completion date but received following the completion date;
Clause 1.1 of the Deed defined, inter alia, “formula” to mean “the total amount generated by the renewal commissions between the state of execution of this Deed and the dates of the reconciliations multiplied by three (3) such sum to be net of any GST obligation which may arise, with the final sum therein to be further reduced by two hundred thousand dollars ($200,000).”
In my view the learned trial judge was correct in concluding that time was essential in undertaking the reconciliation.
Clause 5.3 expressly provided that a reconciliation of the renewal commissions calculated in accordance with the formula, will be undertaken prior to the payment stipulated in clauses 5.2 (b) and (c). The contract provided expressly that those payments were to be made on 1 March 2007 and 1 October 2007 respectively. In accordance with the terms of the contract, before those dates the appellant purchaser had control of the asset acquired pursuant to the contract. As the learned trial judge noted, there is no provision in the contract such as an entitlement to interest designed to protect the vendor, ABIA, in these circumstances.[25]
[25] [2011] SADC 24 at 11 [41].
At the end of the day, the task of the Court, in accordance with the objective theory of contract, is to discern the intentions of the parties. I agree with the learned trial judge that the express terms of the contract, coupled with the nature of the commercial transaction, demonstrate that the parties intended the dates of payment to be essential. The amounts of those payments depended upon reconciliations which necessarily were to be undertaken antecedent to the payment. All these factors point to time being essential. The analysis of this contract is not assisted by regard to the terms and circumstances of other notional contracts such as the examples posited by the appellant in argument.
In this case, the intention of the parties at the time the contract was made, as expressed in the Deed, was that the vendor, ABIA, was entitled to payment by instalments on the dates expressly stipulated. The payments due on 1 March 2007 and 1 October 2007 were to be in the sum of $106,500 each, subject to reduction in accordance with the formula provided by way of reconciliation. The reconciliation was for the protection of the appellant purchaser. It was the appellant purchaser who was under the obligation to conduct the reconciliation. If the appellant purchaser chose not to conduct the reconciliation for one reason or another, it became obligated to pay the full $106,500 at the time of each instalment, and subject to any adjustment which might flow from the final reconciliation which was to be conducted within 45 days of the final payment due on 1 October 2007. The latter requirement for a final reconciliation to be completed in not more than 45 days following 1 October 2007, is a further indicia that the terms of the contract in relation to reconciliation, made time essential. Again, the purpose of the final reconciliation was to protect the position of the appellant purchaser. The reconciliation had to be completed in not more than 45 days following the date for payment of the final instalment, so that if there was any further adjustment to be made in favour of the appellant purchaser, it would occur within what the parties considered to be a reasonable time. Again, in my view, the learned trial judge was correct in concluding that this condition as to time was essential.
The absence of any countervailing protection for the vendor, ABIA, by way of an obligation to pay interest if the payments required to be made on 1 March 2007 and 1 October 2007 did not occur, only underlines the correctness of the learned trial judge’s reasoning.
I am also against the appellant’s submission that on the proper interpretation of the contract, the vendor ABIA being in breach, the time for the reconciliation and indeed the time for payment had not yet fallen due.
This argument depends upon the provisions of clause 3.3 of the Deed, which provides:
3.3Subject to the Vendor satisfying its obligations under clause 3.2 and satisfaction of the Conditions Precedent, at Completion to the Purchaser must:
(a)pay the Purchase Price to the Vendor in the manner set out in clause 5;
(b)do and execute all other acts and documents which this Deed requires the Purchaser to do or execute the Completion.

The Conditions Precedent are spelled out in clause 4 of the Deed. It provides as follows:
4.The obligation of the Purchaser to pay the Purchase Price for the transfer of the Assets is subject to and conditional upon the satisfaction to the following Conditions Precedent (unless waived in writing by the Purchaser) and the Vendor and Purchaser (where appropriate) covenant that they will use their best endeavours to procure such satisfaction:
…
(d) There being no breach at the Completion Date of any of the Warranties and Representations;
…
The appellant submitted that the learned trial judge having found that, at the completion date, ABIA was in breach of the warranty 4.3, it followed that one of the Conditions Precedent had not been satisfied, and accordingly, the appellant purchaser was not under an obligation to pay the purchase price.
In my view, the appellant is not entitled to rely upon clause 3.3 to relieve it of the obligation to pay the balance of the purchase price. Moreover, clause 3.3 did not relieve it of the obligation to undertake the reconciliations contemplated by the contract.
In my view, the proper construction of the contract as a whole makes the contract conditional upon the vendor and purchaser satisfying the conditions precedent stipulated in clause 4. Clause 4 sets out contingent conditions. Clause 4 sets out terms, the fulfilment of which are necessary for the contractual promises to become binding. Properly understood, clause 3.3 merely provides that if the conditions precedent have not been satisfied then the purchaser is relieved of the obligation to pay the purchase price as there is no binding agreement between the parties.
In this case, however, what occurred is that the appellant purchaser was unaware of the breach of the warranty at the completion date. When the appellant became aware of the breach of warranty upon learning of the banning orders, the appellant did not take steps, as it was entitled to, at its election, to rescind the contract on the basis of a breach of a condition precedent and return the assets to the vendor, ABIA, and demand that the part-payment of the purchase sum be refunded. Instead, the appellant chose, by its conduct, to affirm the contract, albeit, at the same time, breaching the obligations in relation to payment of the balance of the purchase price.
Finally, in this regard, the appellant submitted there was a lack of proportionality to the construction of the contract which deprived it of a right to a clawback. It was submitted that it is inequitable to deprive the appellant of a substantial right by reason only of time. The submission invoked notions of forfeiture and penalty. The appellant called in aid the following passage from the judgment of Kirby J in Tanwar Enterprises Pty Ltd v Cauchi & Ors:[26]
Proportionality in the law’s operation: As in many other areas of legal authority, the law applicable to this case is striving to achieve proportionality in its operation. By this I mean a proper adjustment between the enforcement of the legal rights of the parties, derived from the terms of the contract in which those parties have agreed upon their respective rights and duties, and the perceived substantial merits of the respective positions of the parties, including in respect of the response to the established breach.
On many occasions the law recoils from absolute outcomes, to which logic or the strict letter of the law might seem to point. There are countless illustrations of this tendency within the broadly stated exceptions to general rules acknowledged by statute and the common law. And where the common law was thought to result in consequences considered extreme and disproportionate, equity would sometimes come to the rescue.
(Footnote omitted)
[26] (2003) 217 CLR 315 at 341-342 [81]-[82].
In my view the proposition is misconceived. The general principle enunciated by Kirby J concerning the intervention of equity to ameliorate the consequences of the strict construction of contract or statute was acknowledged by his Honour to apply (1) in exceptional circumstances, and (2) in respect of the sale of land where a question of forfeiture arises. His Honour acknowledged that the basic principles are that a party of full capacity is bound by the legal obligations assumed in a valid agreement with another.[27] Equity will mend no man’s bargain.
[27] (2003) 217 CLR 315 at 350-351 [106].
If the parties agree to be contractually bound by a provision that stipulates that time is essential to their contractual dealings they should be held to their agreement. The exception to this proposition is unconscionable conduct.[28]
[28] Legione & Anor v Hateley (1983) 152 CLR 406; Ciavarella v Balmer (1983) 153 CLR 438.
This case was not concerned with a contract for the sale of land. Moreover, no proper basis for a finding of unconscionable conduct was established on the evidence. This is hardly surprising as it was neither pleaded nor argued.
In these circumstances, the appellant is not relieved of the obligation to pay the balance of the purchase price or of the requirement that it undertake the reconciliation by the due date.
Misleading or deceptive conduct
The appellant submitted that the learned trial judge erred in finding that neither ABIA nor the second respondents engaged in misleading or deceptive conduct. In addition, the appellant submitted that the learned trial judge further erred in concluding that, in any event, the appellant did not rely upon the alleged misrepresentations.
The learned trial judge rejected the appellant’s plea that ABIA and the second respondents had engaged in misleading or deceptive conduct in that:
(i) the second respondents were both aware, as at the time of the negotiations for the sale, of an ongoing ASIC investigation into the business conducted by ABIA;
(ii) as at the time of the negotiations, the second respondents had in their possession a documentary record of the state of the ASIC inquiry as it then stood;
(iii) included in the information available to the second respondents was: that ASIC had commenced an investigation into ABIA and into its directors in about November 2005, that ASIC had required ABIA to produce documents to it on 8 December 2005, that ASIC had conducted an examination of the directors of ABIA on 17 March 2006, the nature of the matters all concerned the subject of the inquiry, and that ASIC had written to ABIA on 3 June 2006 informing it that an order banning Mr Franke from holding a financial dealer’s licence was a possible outcome of the investigation.
After an extensive analysis of the evidence given by various witnesses in relation to this matter, the learned trial judge arrived at the following conclusion:[29]
[29] [2011] SADC 24 at 36-37 [123]-[125].
I am satisfied that the account given by Mr and Mrs Franke and Mr Roberts on this topic is much closer to the truth than that given by the defence witnesses and that, more likely than not, it is accurate as to its essentials. In particular, I am satisfied that during the negotiations Mr Hargraves was told:
(i)that an ongoing ASIC investigation was not yet completed;
(ii)that the Frankes believed (the genuineness of which I accept) that the ASIC investigation was not of serious concern;
(iii)that the investigation had been instigated by Lyndon Holland;
(iv)that the investigation included alleged wrongdoing by the son Craig; and
(v)that there was a folder of ASIC material available and offered to Mr. Hargraves for his inspection.
All of these propositions were accurate. The defendant has not satisfied me that it, through Mr Hargraves, was lead to believe that the ASIC investigation was limited to or involved only a minor or discrete issue concerning Craig Franke. The net effect of Mr and Mrs Franke’s conduct was – there is an incomplete ASIC investigation on foot and the details to date are collected in this folder which you are free to inspect.
I am also satisfied that Mr Hargraves expressed little interest in the topic for the reason the Frankes gave, that is, he was interested in buying the clients only and not the licence of Mr Franke. I am not satisfied, that is, the defendant has not demonstrated, that the plaintiff or the Frankes misrepresented the true position, in this respect, or otherwise engaged in misleading or deceptive conduct in this respect.
In addition, the learned trial judge concluded that even if there was some form of misleading or deceptive conduct by ABIA or the second respondents, it was not relied upon by the appellant in the sense that it did not cause it to enter into a form of contract which it otherwise would not have entered into. The learned trial judge rejected the evidence of Mr Hargraves that he would not have proceeded with the transaction had he reviewed the documentary record of the state of the ASIC inquiry. The learned trial judge was satisfied, on the evidence:[30]
(i) that Mr Hargraves was put on notice of the existence of an ASIC investigation;
(ii) that he was given the means to investigate it further but chose not to; and
(iii) that he could have, at the time, but he did not further negotiate the price or any other contractual terms because any loss of clients, for any reason, was already accommodated, and the warranty in clause 4.3, as amended, provided sufficient further protection.
[30] [2011] SADC 24 at 37 [128].
The learned trial judge’s findings, critical to his conclusion rejecting the allegation of misleading or deceptive conduct on the part of ABIA and the second respondents, was founded on his assessment of the evidence of the various witnesses called by the parties in relation to this issue. In particular, the learned trial judge preferred the evidence of the second respondents and Mr Roberts over that of Mr Hargraves, and to a lesser extent Mr Thatcher, in relation to what was said by the second respondents about the ASIC investigation and the offer to Mr Hargraves of the opportunity to review the file in which the relevant documents pertaining to the investigation had been collated by ABIA.[31]
[31] [2011] SADC 24 at 36 [122]-[123].
In Fox v Percy[32] Gleeson CJ, Gummow and Kirby JJ said:[33]
Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge’s reasons. Appellate courts are not excused from the task of “weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect”. In Warren v Coombes, the majority of this Court reiterated the rule that:
“[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it.”
As this Court there said, that approach was “not only sound in law, but beneficial in ... operation”.
After Warren v Coombes, a series of cases was decided in which this Court reiterated its earlier statements concerning the need for appellate respect for the advantages of trial judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not. Three important decisions in this regard were Jones v Hyde, Abalos v Australian Postal Commission and Devries v Australian National Railways Commission. This trilogy of cases did not constitute a departure from established doctrine. The decisions were simply a reminder of the limits under which appellate judges typically operate when compared with trial judges.
The continuing application of the corrective expressed in the trilogy of cases was not questioned in this appeal. The cases mentioned remain the instruction of this Court to appellate decision-making throughout Australia. However, that instruction did not, and could not, derogate from the obligation of courts of appeal, in accordance with legislation such as the Supreme Court Act applicable in this case, to perform the appellate function as established by Parliament. Such courts must conduct the appeal by way of rehearing. If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute.
Over more than a century, this Court, and courts like it, have given instruction on how to resolve the dichotomy between the foregoing appellate obligations and appellate restraint. From time to time, by reference to considerations particular to each case, different emphasis appears in such reasons. However, the mere fact that a trial judge necessarily reached a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by a court of appeal of the functions imposed on it by statute. In particular cases incontrovertible facts or uncontested testimony will demonstrate that the trial judge's conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings.
That this is so is demonstrated in several recent decisions of this Court. In some, quite rare, cases, although the facts fall short of being "incontrovertible", an appellate conclusion may be reached that the decision at trial is "glaringly improbable" or "contrary to compelling inferences" in the case. In such circumstances, the appellate court is not relieved of its statutory functions by the fact that the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses. In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must "not shrink from giving effect to" its own conclusion. Finality in litigation is highly desirable. Litigation beyond a trial is costly and usually upsetting. But in every appeal by way of rehearing, a judgment of the appellate court is required both on the facts and the law. It is not forbidden (nor in the face of the statutory requirement could it be) by ritual incantation about witness credibility, nor by judicial reference to the desirability of finality in litigation or reminders of the general advantages of the trial over the appellate process.
(Footnotes omitted)
[32] (2003) 214 CLR 118.
[33] (2003) 214 CLR 118 at 126-128 [25]-[29].
In the same case, McHugh J said:[34]
It is a serious mistake to think that anything said in Abalos or Devries necessarily prevents an appellate court from reversing a trial judge’s finding when it is based, expressly or inferentially, on demeanour. Those cases recognise — in accordance with a long line of authority — that it may be done. But there must be something that points decisively and not merely persuasively to error on the part of the trial judge in acting on his or her impressions of the witness or witnesses. Recently in State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In liq), for example, this Court held that undisputed and documentary evidence was so convincing that no reliance on the demeanour of witnesses could rebut it.
(Footnote omitted)
[34] (2003) 214 CLR 118 at 146-147 [90].
The appellant sought to demonstrate that the findings made by the learned trial judge were glaringly improbable or contrary to compelling inferences. It sought to do so in two ways.
First, it submitted that the learned trial judge erred in relying upon the evidence of Mr Franke who had been found to have an irrational and obstinate state of mind.[35] However, this submission misunderstands the finding made by the learned trial judge. The finding of the learned trial judge was a finding in relation to Mr Franke’s state of mind at the time of the trial, not at the time he was making representations to Mr Hargraves. The finding specifically related to Mr Franke’s attitude to the findings of the Administrative Appeals Tribunal. This is not a basis upon which the critical findings of the learned trial judge can be impugned. In my view, there is no justification for overturning the learned trial judge’s finding that Mr Franke was an honest witness who gave a largely reliable account of the essential components of the negotiations.[36]
[35] [2011] SADC 24 at 20 [81].
[36] [2011] SADC 24 at 17-18 [72].
Specifically, the learned trial judge’s rejection of Mr Hargraves’ evidence concerning the ASIC folder was not glaringly improbable. On the contrary, it is entirely credible that Mr Hargraves declined the opportunity to consider the contents of the ASIC file prepared by Mrs Franke given its size, the fact that the appellant was purchasing the client files (and the business name) and not Mr Franke’s licence and the protection it enjoyed by the terms of the contractual warranties and the clawback provision.
Secondly, the appellant submitted that the learned trial judge fell into error in rejecting the allegation of misleading or deceptive conduct by relying on the genuineness of the beliefs of the second respondents. This refers to the learned trial judge’s finding that the second respondents genuinely believed that the ASIC investigation was not of serious concern. The appellant submitted that their mistaken state of mind was not relevant to a claim for misleading or deceptive conduct. A contravention of s 52 does not require an intent to mislead or deceive, and even though a corporation acts honestly and reasonably, it may nonetheless, engage in conduct that is misleading or deceptive: see Yorke v Lucas.[37]
[37] (1985) 158 CLR 661 at 666.
The learned trial judge rejected the allegation of misleading or deceptive conduct on the basis that he found that the critical representations made to Mr Hargraves by the second respondents for and on behalf of ABIA, in the course of the negotiations, were accurate.[38] In particular, the representation that the second respondents believed that the ASIC investigation was not of serious concern was a representation as to their state of mind. The well-known proposition in Yorke v Lucas does not gainsay the validity of the learned trial judge’s finding in this regard. The question of whether the second respondents intended to mislead Mr Hargraves or not is irrelevant. The learned trial judge found that the relevant representation was a representation as to their state of mind. That representation was accurate. Accordingly, there could be no misleading or deceptive conduct on that basis.
[38] [2011] SADC 24 at 36-37 [123]-[124].
For these reasons, I reject the appellant’s attack on the learned trial judge’s conclusion that neither ABIA nor the second respondents engaged in misleading or deceptive conduct. Accordingly, it is unnecessary to decide whether the learned trial judge fell into error in finding that there was no reliance by the appellant upon the representations made by the second respondents, for or on behalf of ABIA, even if those representations did constitute misleading or deceptive conduct. However, in any event, in my view, on the evidence it was open to the learned trial judge to reach that conclusion. It was not glaringly improbable or contrary to compelling inferences. The learned trial judge’s conclusion in this regard depended on his view that Mr Hargraves was prepared to proceed with the purchase of ABIA’s clients on the terms negotiated in the Deed, as ultimately signed, notwithstanding that there was an unresolved ASIC investigation on foot, that Mr Hargraves had not availed himself of the opportunity to ascertain further details about the investigation, and that the second respondents’ view that the investigation was of little concern might ultimately prove, as was in fact the case, to be unfounded.

In my view, these findings were open on the evidence. Notwithstanding that there were arguments to be made against the finding in relation to reliance, most particularly, that Mr Hargraves, having been alerted to the fact of the ASIC investigation, took steps to contact ASIC to learn more of the nature and extent of that investigation, the fact remains, that his enquiries could not have allayed any concern he harboured, yet he went ahead with the purchase nonetheless. In my view, the conclusion was open on the evidence, that Mr Hargraves was prepared to do so not in reliance upon the representations made by the second respondents, but in spite of them. The evidence entitled the learned trial judge to conclude that Mr Hargraves took the chance that there might be more to the ASIC investigation than was being represented by the second respondents for the reasons referred to previously in relation to why Mr Hargraves declined the opportunity to consider the contents of the ASIC file, namely, the fact that the appellant was purchasing the clients’ files (and the business name), and not Mr Franke’s licence, and the protection it enjoyed by reason of the contractual warranties and the clawback provisions in the Deed.
Whether the learned trial judge was correct in rejecting the expert and other evidence as to the value of the assets acquired by the appellant
The next aspect of the appeal concerns the learned trial judge’s approach to the assessment of damages.
The appellant submits that the learned trial judge erred in rejecting the evidence of the expert valuer, Mr Crase. Further, the appellant complains that the learned trial judge had regard to the evidence of an expert, Wayne Lonergan, who was not called. The appellant complains that it was denied procedural fairness in that Mr Lonergan’s views were not put to the expert witness called by the appellant, Mr Crase.
At trial, the appellant propounded its damages claim on two bases, each in the alternative. First, that the asset acquired by the appellant was in an “impaired” state, and thereby worth substantially less than the sale price agreed. Secondly, in the alternative, the appellant had suffered consequential loss in that it had been put to substantial additional expense in bringing the client files into compliance with the provisions of the Corporations Act and in managing the business effectively following the announcement of the banning order.
In respect of the first basis upon which the claim for damages was propounded, the appellant relied upon the evidence of Mr Crase. He is an investigating accountant with experience in valuing businesses of the kind conducted by the parties. He provided a report and gave evidence to the effect that businesses of this kind were commonly valued on the basis of a multiple of earnings. His opinion was to the effect that an “unimpaired” business would commonly be sold for a multiple of three times its annual earnings. However, where the business was seen by the market to be “impaired”, as in the case of the business of ABIA once the banning order had been made, its value would be discounted in a range somewhere between one half and one quarter, although in evidence he ultimately settled upon a figure, specific to the business of ABIA, of one third. Further, he told the Court in evidence that this discount incorporated the second basis of the claim for damages. Any further allowance would involve an error of double counting.
The learned trial judge rejected the evidence of Mr Crase essentially for two reasons. First, the learned trial judge rejected the fundamental approach to measuring loss adopted by the appellant on its case. The learned trial judge considered that the proper measure of any loss suffered by the appellant was to determine the difference between the true value of the assets it had acquired and the purchase price agreed in the contract, rather than adducing evidence of the value an expert placed on the business of ABIA on the basis of certain assumptions that provided the foundation for characterising the business as “impaired”.[39] Secondly, for the reason that the appellant had failed to prove the assumptions relied upon by the expert, Mr Crase, for his opinion that the business of ABIA was “impaired”. The appellant failed to establish any relevant impairment in the value of the client files and commissions purchased by the appellant such as would lead to a conclusion that the assets sold were worth substantially less than the purchase price.[40]
[39] [2011] SADC 24 at 47-49 [162]-[166].
[40] [2011] SADC 24 at 53 [184].
In reaching these conclusions the learned trial judge made certain observations in relation to the evidence of Mr Crase as follows:[41]
Mr Crase frankly conceded both in his report and in his evidence that the use of multiples in the manner described by him was very common in the financial planning industry as “a rule of thumb”. I am satisfied that such rules of thumb are used when it comes to negotiating the purchase price of a business…
I do not accept that the rules of thumb adopted by Mr Crase comprise a proper basis on which to value the business itself. All financial planning businesses differ. Mr Crase has not analysed in any way the business of the plaintiff, the nature of its clients, the nature of the insurance and superannuation products held, and the long term value that might be expected to come from the particular clients in the plaintiff portfolio. All Mr Crase has done is proffer a rough and ready means towards negotiating a contractual price. Whilst rules of thumb can be of interest in attempting to determine fair value of a business or business assets they should be regarded with professional caution for the reasons provided by Lonergan.⁷⁸
In addition, Mr Crase has made a number of assumptions which, as far as his knowledge is concerned, lack specificity. These include that there was adverse media publicity regarding the plaintiff’s proprietors at the time of the ASIC banning order, that following the banning order the plaintiff proprietors no longer actively assisted with the retention of clients and that the client files acquired from the plaintiff required extensive review and rectification and significant management time and intervention on behalf of the defendant. There is very little evidence (to which I will come) in support of at least the first and third of these assumptions or which provides any real content or specificity to these assumptions. Indeed, as far as the third of these assumptions is concerned Mr Crase can only have relied on his instructions (see Section 7 of his report) that the defendant had expended $100,000 – a grossly inflated estimation on any view of the evidence (see below). These assumptions form the core of the alleged “impairment” of the sale assets assumed and relied upon by Mr Crase.
I am not prepared to accept the opinion of Mr Crase as providing an accurate valuation, in fact, of the assets sold by the plaintiff to the defendant. As I have said, Mr Crase provides no more than an approach to negotiating a purchase price. It is plain from the evidence of Mr Franke that any attempt to take advantage of the situation so as to negotiate a lower price would not have been successful. The defendant has not provided evidence which analyses the true state of the plaintiff’s business or, at least, the assets that were sold and which attempts to value those assets on a basis somewhat more rigorous than appealing to a rule of thumb.⁷⁹
78.Wayne Lonergan The Valuation of Business, Shares and Other Equity 3^rd ed Business and Professional Publishing at 251-254.
79.A number of such bases are explored in the expert literature, including Lonergan, The Valuation of Business, Shares and other Equity, 3^rd ed, Business and Professional Publishing.
[41] [2011] SADC 24 at 48-49 [163]-[166].
As indicated, the appellant complains that the learned trial judge, in rejecting the evidence of Mr Crase, relied upon the work of Mr Lonergan without affording Mr Crase or the appellant the opportunity to address the opinions of Mr Lonergan relied upon by the Court.
I have had regard to the passage in Lonergan referred to by the learned trial judge in his reasons for judgment. The effect of the passage in Lonergan, to which the learned trial judge made reference, is that it may be customary for people in industry to value certain types of businesses, for example, small owner/manager operations and businesses which have a high instance of similar suppliers and customers and common business methods, on the basis of some “rule of thumb” formula. For instance, some professional practices have historically been sold on a percentage of revenue. These rule of thumb methods have generally emerged as a result of market transactions. While they are used in the marketplace for the buying and selling of businesses, they often have no relationship to the true value of the business as determined in accordance with acceptable valuation methodologies. Accordingly, rules of thumb should be treated with a great deal of professional caution.
It is true that the learned trial judge did not ask Mr Crase whether he was familiar with the work of Mr Lonergan. Neither did he put Mr Crase or the parties on notice that he would have regard to Mr Lonergan’s text, The Valuation of Businesses, Shares and Other Equity, in reaching his judgment. However, the learned trial judge was in a difficult position. The respondents were not legally represented at trial. The respondents’ case was being conducted by Mr Franke. The learned trial judge provided such assistance to the respondents in the course of the trial as was consistent with the court’s obligation to ensure that the parties had a fair trial in circumstances where the respondents were unrepresented. The appellant makes no complaint about that. Its complaint is that its expert was not given the opportunity to answer the opinion of Mr Lonergan relied on by the learned trial judge. However, I have considered the terms of the evidence given by Mr Crase. The learned trial judge explored with Mr Crase the bases of his opinion. In the course of doing so, his Honour put to Mr Crase the general effect of much of Mr Lonergan’s view, without ascribing any proposition by name to Mr Lonergan or his text, as follows:[42]
[42] T863-870.
Q.     I think there is implicit, if not express, in what you already put, but you are putting that in your experience three times annual commissions is a rule of thumb for this type of business as to the price to be paid for it in an unimpaired state.
A.     Yes.
Q.     And a discount of the order that you have indicated, it is also in your experience a rule of thumb to assess the price that a purchaser would be willing to pay on the assumptions of impairment that you have set out in your report.
A.     Yes.
Q.     That a purchaser having knowledge of that level of impairment as assumed you say would ordinarily be prepared to pay in the order of those discounted values that you have provided.
A.     Yes.
…
Q.     What I understand from your evidence, I think, is that at the negotiation stage had there been an awareness of the impairment then you would expect a lower price, of the order that you have given an opinion about.
A.     Yes.
Q.     That would have been negotiated.
A.     Yes.
Q.     And that would have been done, in part opportunistically by the vendors but also in part - by purchasers, I am sorry -
A.     Yes.
Q.     - but also in an attempt to factor in prospective risks.
A.     Correct.
Q.     So what you are suggesting, really, is that a different purchase price would have been negotiated or attempted to be negotiated.
A.     Yes.
Q.     As a matter of fact the risks foreshadowed may not eventuate.
A.     Correct.
Q.     As a matter of fact the purchaser may not need to put in excessive resources over and above what they otherwise might do to manage this new client portfolio.
A.     Correct. Over a period of time?
Q.     Over a period of time.
A.     Yes.
Q.     Again this is just hypothetical but as a matter of fact if those don't eventuate the value of the business, as it turns out, may well not be reduced.
A.     I think that's correct. Save that the value is at a point in time. So at a point in time, if armed with all salient information, then in my view the impairment would have had an impact and a substantial one on the value that a willing but not anxious buyer would be prepared to pay.
Q.     So it is really a question, I think - a question of law or a question of damages law for me - as to whether what you are putting is the proper or appropriate price for that business at a point in time within which it is impaired.
A.     Correct.
Q.     There is, I appreciate, its own measure of value. Whether that's the value that I should find in law, or whether, as a matter of fact, that was actually worse as events turned out.
A.     That's right. My experience, in line with distressed businesses or other parties, those other parties have taken advantage of situations and they have also considered the risks. Now in my experience you are usually buying it for the reason that is hopefully successful and over time you can remediate it with the clients, so it is a profitable business for you in the future. But, nevertheless, you discount at the outset.
…
Q.     I take you now to 6.11. You may possibly have answered this to Mr Riggall, but 6.11 is basically the nub of your opinion that the value agreed at 513,000 should have been discounted by the three and one quarter and one half, and you have added a valuation to that in your evidence.
A.     Yes.
Q.     And you say that should have been discounted if there had been disclosure of the nature and extent of the impairment of the assets of ABIA at the time of sale. Are you able to give any more explanation as to how you arrive at the quarter or the half or indeed the third in your mind, bearing in mind the nature of the assumptions which are of a fairly general level, that is there has been a banning order, you are instructed it generated publicity, therefore I infer from that you are instructed that clients became aware of it, that's an assumption underlying that. And secondly you are instructed that there was substantial management work required to attempt to repair the damage, as it were. Is there anything more to your quarter, third or a half than just your feel based on your experience.
A.     It's fundamentally based on experience and it is a highly subjective area, as I indicated to the plaintiff, but it is not a matter for which there is just a mild little discount. The risk with an impaired asset can be quite substantial, so it's all about the extent of risk which the purchaser considers may evolve, and that risk is in a number of different forms. It's the potential for tainting of an existing business as well as the risk that the income that they had expected to proceed did not proceed, and thirdly it's the rework required, so it's a range of factors, coupled with the opportunity for a bargain if one knows that there is a time clock and in six weeks one can use that to one's advantage as a buyer, and in my experience that has often been the case. For instance, I have been involved in acquisitions where a business is about to go under, and that's a pretty good time to buy a business because it's when people want to stave off the stigma of insolvency, so they might do a deal which would not otherwise be the case, and it's quite often a very lucrative deal to the purchaser.
Q.     If we take media exposure, as it were, one part of the consideration that would concern a purchaser, have you been instructed or asked to assume any particular particulars or detail about the media in this case.
A.     No.
Q.     The extent of it or the nature of any media publication.
A.     No.
Q.     Have you been instructed about or asked to assume the effect of a banning order on any particular clients of this business.
A.     No, but one would deduce that if there was a banning order, that the banning order would evolve from certain clients being selected as part of an ASIC review process so they may have been contacted directly by ASIC and that would be a cause for concern.
Q.     Have you been instructed with respect to any particular clients and the effect on them and whether they were going to retain business with Hargraves or not.
A.     No.
Q.     Or the reason why they may have left Hargraves.
A.     No.
In my view, while it would have been preferable that the learned trial judge refer expressly to Lonergan’s text in asking the expert questions, in the end, I do not consider this matters. The basis of the learned trial judge’s rejection of the evidence of Mr Crase was well founded. The underlying premise of the appellant’s case on loss and damage was that its loss was to be assessed on the basis of the difference in sale price that might have been negotiated between the parties, in accordance with the valuation evidence of Mr Crase based on his “rule of thumb” opinion, if the sale price had been negotiated after the market became aware of the banning order against Mr Franke. Like the learned trial judge, I consider this approach involved an error of methodology. The true measure of loss was the difference between the sale price negotiated and the true value of the assets acquired. That is to say the difference between the value of the client files and trailing commissions at the time of delivery of the files to the appellant and the value they would have had if they had answered the warranty.[43] That required an assessment based on any lost income stream from clients lost due to the breach of warranty the learned trial judge found had occurred. For the reasons adopted by the learned trial judge, this issue was not proved by the evidence of Mr Crase. Neither was it proved by any other evidence adduced by the appellant.
[43] Robinson v Harman (1848) 154 ER 363 at 365; Wenham v Ellis (1972) 127 CLR 454 at 471; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80-82.
The learned trial judge was not bound to accept the evidence of Mr Crase merely because he was the only expert from whom the Court heard, even if that evidence was uncontradicted.
In Geste v Pereira,[44] Cox J, with whom King CJ and Debelle J agreed, said:[45]
[44] (1991) 161 LSJS 260.
[45] (1991) 161 LSJS 260 at 261-265.
The development of the expert witness, from the time when every witness had to “speak as a knower, not merely a guesser” to the acceptance of a witness who possessed a special skill outside the court’s experience who nevertheless took his place not as an assessor or court-appointed helper but as one of the witnesses in the trial, is traced in the early pages of the seventh volume of Wigmore on Evidence. The opinions of those whom Lord Mansfield called “men of science” (Folkes v. Chadd (1782) 3 Dougl 157, 158; 99 ER 589, 590), that is, persons having a special knowledge or skill, may sometimes be of critical importance in a case. However, judges have always been careful to explain the principle of the matter in a way that does not involve an abdication of the court’s own responsibility to decide the case for itself. The following passage from the judgement of the Lord President in Davie v. Lord Provost etc. of Edinburgh (1953) SC 34 sets out the orthodox position. (The expert concerned had given evidence that an explosion for which the defenders were said to be responsible could not possibly have damaged a house as far away as the pursuer’s.)
“Founding upon the fact that no counter evidence on the science of explosives and their effects was adduced for the pursuer, the defenders went so far as to maintain that we were bound to accept the conclusions of Mr Teichman. This view I must firmly reject as contrary to the principles in accordance with which expert opinion evidence is admitted. Expert witnesses, however skilled or eminent, can give no more than evidence. They cannot usurp the functions of the jury or Judge sitting as a jury, any more than a technical assessor can substitute his advice for the judgment of the Court - S.S. Bogota v. S.S. Alconda (1923) SC 526. Their duty is to furnish the Judge or jury with the necessary scientific criteria for testing the accuracy of their conclusions, so as to enable the Judge or jury to form their own independent judgment by the application of these criteria to the facts proved in evidence. The scientific opinion evidence, if intelligible, convincing and tested, becomes a factor (and often an important factor) for consideration along with the whole other evidence in the case, but the decision is for the Judge or jury. In particular the bare ipse dixit of a scientist, however eminent, upon the issue in controversy, will normally carry little weight, for it cannot be tested by cross‑examination nor independently appraised, and the parties have invoked the decision of a judicial tribunal and not an oracular pronouncement by an expert...
That the Lord Ordinary was entitled to discard the evidence of Mr Teichman I do not doubt. It remains to consider whether he was right in so doing...” (at 40)
See also per Lord Russell at 42. A somewhat similar attitude is evident in the judgement of the High Court in Ramsay v. Watson (1961) 108 CLR 642 –
“That some medical witness should go into the box and say only that in his opinion something is more probable than not does not conclude the case. A qualified medical practitioner may, as an expert, express his opinion as to the nature and cause, or probable cause, of an ailment. But it is for the jury to weigh and determine the probabilities. In doing so they may be assisted by the medical evidence. But they are not simply to transfer their task to the witnesses. They must ask themselves “Are we on the whole of the evidence satisfied on a balance of probabilities of the fact?”. In this case his Honour in his summing-up instructed the jury that this was their task; and no ground is shown for impugning their conclusion.” (at 645)
See also Arthur Robinson (Grafton) Pty Ltd v. Carter (1968) 41 ALJR 327, per Barwick CJ at 332.
Epperson v. Dampney (1976) 10 ALR 227 was a custody case in which child psychiatrists had given evidence about the probable effect on the children of awarding custody to a particular parent. The remarks of Street CJ on the limitations of such evidence distinguish the cases in which by reason of the esoteric subject-matter the court is practically dependent upon experts from those in which it is in a position to appraise the problem for itself -
“The topic is to be evaluated against the background that our system of jurisprudence does not, generally speaking, remit the determination of disputes to experts. Some questions are left to the robust good sense of a jury. Others are resolved by the conventional wisdom of a judge sitting alone. In the course of elucidating disputed questions, aids in the form of expert opinions are in appropriate cases placed before juries or judges. But, except on purely scientific issues, expert evidence is to be used by the court for the purpose of assisting rather than compelling the formulation of the ultimate judgement.” (at 228)
Glass JA at 240 dealt generally with the subject of expert evidence and continued –
“If expert opinions conflict, he will be obliged to choose between them. If there be the opinion of one expert only or an opinion in which more than one expert concurs, it still has no binding force. The tribunal of fact, whether it be a judge or jury, is required to weigh all the evidence and determine the probabilities. It cannot transfer this task to the expert witness (Ramsay v. Watson (1961) 108 CLR 642 at 645). After weighing the expert opinion together with the lay evidence it is still at liberty to reject it in the exercise of its judgment. An expert opinion upon an ultimate issue, even though uncontradicted, does not bind the decision (ibid). A fortiori where, as here, the expert opinion does not touch the ultimate issue for determination.”
In Thurston v. Todd (1966) NSWR 321, the question arose in a somewhat different form. The trial Judge had to assess the damages of a quadriplegic plaintiff and that involved reckoning her life expectancy. The medical witnesses gave different estimates. The Judge took a figure that was apparently a compromise. It did not reflect precisely the evidence of any expert. It was argued on appeal that the Judge was not entitled to exercise his own judgement in a field in which he had no special skill. As to this Wallace P. said –
“The argument put in this way is perhaps not without some force and it may be that in an occasional case it will not be legitimate for a tribunal of fact to differ from experts - e.g. in some highly technical field. Perhaps the modern field of nuclear chemistry could be cited as an example. But this cannot be said I think, of such a nebulous and imprecise subject as expectation of life. Here the doctors’ evidence, all given with frankness and reserve, almost invited the tribunal to weigh and balance the various estimates. The selection of a multiplier was a step secondary to the evaluation of the experts’ evidence - the latter being a process which has been undertaken by countless tribunals in practically every jurisdiction known to the law. The consideration of the “lay” factors by the trial judge and a modification of the widely varying experts’ views seem both natural and practical in the circumstances and not in conflict with any principle known to me or to which we were referred. I would therefore not accede to the appellant's submissions.” (at 323)
Similarly per Jacobs JA at 325 and per Holmes J at 330-332.
Fernandez v. Tubemakers of Australia Ltd (1975) 2 NSW LR 190 was a case in which a damages award to a plaintiff was attacked on the ground that, the medical evidence as to causation not having risen above a possibility (“It could have...”), the plaintiff had failed to make out his case. The appeal failed. Glass JA stated the issue thus –
“The question for us is whether evidence was adduced capable of establishing as a matter of probability that the condition of the plaintiff’s hand which existed in August 1971 was caused by the trauma applied to it in February 1971. The issue of causation involves a question of fact upon which opinion evidence, provided it is expert, is receivable. But a finding of causal connection may be open without any medical evidence at all to support it: Nicolia v. Commissioner for Railways (N.S.W.) (1970) 45 ALJR 465, or when the expert evidence does not rise above the opinion that a causal connection is possible: E.M.I. (Australia) Ltd v. Bes (1970) 2 NSWR 238; appeal dismissed (1970) 44 ALJR 360 (n.). The evidence will be sufficient if, but only if, the materials offered justify an inference of probable connection. This is the only principle of law. Whether its requirements are met depends upon the evaluation of the evidence.” (at 197)
See also per Mahoney JA at 198ff. In Dahl v. Grice (1981) VR 513 much the same answer was given by the Full Court of Victoria to the same sort of question.
If, as the lastmentioned cases illustrate, it is open to the trial court to use the “lay” evidence to supplement the evidence of the expert witnesses, it must also be open to the court, at least in some circumstances, to reject the opinion of the only expert witness in the case on the ground that his opinion is inconsistent with the other evidence. Indeed, this must be the corollary to the cases in which the court has found that a workman’s employment caused or contributed to his death or injury notwithstanding the inconclusive character of the medical evidence (e.g. Adelaide Stevedoring Co. Ltd v. Forst (1940) 64 CLR 538) or even the absence of any medical evidence at all (Nicolia v. Commissioner for Railways (NSW) (1970) 45 ALJR 465).
There are a number of criminal cases in which an appeal court has had to deal with the jury’s failure to act on uncontradicted expert evidence for the defence (e.g. Reg. v. Matheson (1958) 1 WLR 474, Taylor v. R (1978) 22 ALR 599; cf. Walton v. The Queen (1978) AC 788), but such cases are complicated by the special provisions relating to a criminal trial and a jury’s verdict of guilty and are, in my opinion, better left to one side.
I think it clear from this review of the authorities that there is no general rule that a trial judge (or a jury if there is one) is bound in law to decide a case in conformity with the expert evidence, even where the evidence is uncontradicted.
Whether in a particular case the judge will be justified in preferring his own opinion to that of the only expert witness in the case is likely to depend on the nature of the evidence. If the expert is giving evidence on a subject quite outside common experience and about which only a person with special training could have any knowledge – whether an analysed specimen contains blood, for instance, or how a nuclear reactor works, or whether someone is suffering from a particular disease - it is not easy to see how such evidence, apparently plausible, could simply be ignored. If the judge should ignore it, or give it insufficient weight, his decision might well be set aside on appeal as perverse. Often, however, an expert’s opinion is based not merely upon his special knowledge but also upon the application of that knowledge to a given set of observed or assumed facts. It may be that at that later stage the judge will be in as good a position as the expert to form a sound judgement or opinion on the matter. An important question, of course, will be whether the expert’s observations or assumptions were correct.

In this case, the learned trial judge found that the assumptions upon which Mr Crase’s opinion was founded had not been proved by the appellant. In my view, this conclusion is not reasonably open to criticism. The appellant did not prove there was widespread publicity of the banning order or, as I will deal with later in these reasons, significant extra work or expenditure undertaken by the appellant of the kind alleged, namely, in the order of $100,000, to review and rectify files and mollify clients. Even if Mr Crase’s methodology had been relevant to the assessment of loss, the foundational assumptions essential to his opinion were not established on the evidence. This is a further basis upon which the learned trial judge was entitled to reject the opinion of Mr Crase.
Finally, in this context, the appellant complained that the learned trial judge placed some reliance on the evidence of Mr Franke that he would not have sold for less than three times trailing commissions even if the business was impaired, without having regard to the evidence of what the appellant would have been prepared to pay in those same circumstances. In my view, this argument is misconceived. True it is that the learned trial judge does refer briefly to the evidence of Mr Franke that any attempt to take advantage of the situation so as to negotiate a lower price would not have been successful.[46] However, this observation was not essential to the learned trial judge’s reasons for decision. On the contrary, as I have explained, the learned trial judge correctly rejected the assessment of loss on the basis of fixing a sale price of any “impaired” asset. It was an irrelevant consideration.
[46] [2011] SADC 24 at 49 [166].
Accordingly, I reject these grounds of appeal.
Whether the appellant had failed to prove it had suffered any loss as a result of the ASIC banning order (except for the award of $20,000 by way of mitigation expenses)
The appellant submitted that having found that ABIA had breached the warranty in clause 4.3, the learned trial judge erred in that the assessment of damages of $20,000 was manifestly inadequate.
The learned trial judge found that the only loss the appellant proved at trial was the loss suffered by it by way of the additional expense incurred by way of mitigation in managing the clients acquired from ABIA for a period after it became aware of the banning order. The learned trial judge found that it was impossible to precisely calculate the cost to the appellant of undertaking this exercise, but applying a broad brush, based on the evidence heard, an award in the sum of $20,000 was made. Otherwise, the learned trial judge found that the appellant had failed to prove any other loss resulting from the breach of warranty.[47]
[47] [2011] SADC 24 at 56 [191].
Specifically, the learned trial judge rejected the evidence called by the appellant from its employees, Mr Turner and Mr Bobridge, concerning the loss of clients. He concluded that he was not satisfied that evidence established the appellant had lost clients as a result of the ASIC inquiry and determination. Accordingly, he was not satisfied that the assets sold to the appellant were in fact impaired in the manner assumed by Mr Crase. As his Honour concluded, this constituted a complete answer to the appellant’s claim for damages based on the Crase report.
The learned trial judge rejected the evidence of Mr Turner and Mr Bobridge on the basis that their evidence failed to establish any cause or connection between any loss of clients that in fact occurred and the ASIC findings and the banning order made against Mr Franke.[48] The learned trial judge found their evidence was of a most general nature containing elements of reconstruction. When tested, they could not prove a single client that had left in the 12 months following settlement did so because the client had learned of the outcome of the ASIC inquiry and the banning order.
[48] [2011] SADC 24 at 51-53 [176]-[183].
In my view, these findings were plainly open on the evidence. They were neither glaringly improbable nor contrary to compelling inferences. I do not consider that the appellant has discharged the onus of satisfying the Court that a proper basis exists to overturn them. This conclusion, together with the construction of the Deed making time of the essence, renders it unnecessary to consider the exhibit D11A, the schedule of commission reconciliations prepared by Ms Woodley.
Likewise, evidence concerning the additional effort that was undertaken to reassure clients was vague and of a general nature. There was nothing to justify the assumption that Mr Crase was asked to make that an amount of $100,000 was expended by the appellant in this endeavour. The evidence of Mr Bobridge that the appellant had to employ a part-time staff member to make telephone calls and to assist with the preparation of files as a result of the problems flowing from the ASIC inquiry and the banning orders was contradicted by the evidence of another employee of the appellant, Jacquie Evans, who said that the work involved was absorbed within the appellant with no additional employees required.[49]
[49] [2011] SADC 24 at 55-56 [190].
For these reasons, I would dismiss these grounds of appeal.
Conclusion
I would dismiss the appeal.