Davis v Perry O'Brien Engineering Pty Ltd

The Sellers, who owned Earthpro Pty Ltd, an earthmoving and civil contracting business, agreed to sell their shares in the company to Mr O’Brien and Mr Perry through their respective trustee companies. The Buyers entered into a Sale and Service Agreement (SSA) with the Sellers, but the Sellers provided inaccurate financial information and failed to disclose the true financial position of Earthpro. The Buyers sought damages for the misleading or deceptive conduct, claiming that if they had not been misled, they would not have completed the transaction. The court was required to decide whether the Sellers engaged in misleading or deceptive conduct, whether the Buyers would have entered into the transaction if accurate information had been provided, and what damages, if any, the Buyers were entitled to claim.

The court found that the Sellers breached their contractual obligations by providing inaccurate financial information and failing to disclose the true financial position of Earthpro. The Sellers provided misleading information about the company’s financial performance, profitability, and the extent of its creditors, which led the Buyers to believe that the business had a better financial standing than it actually did. The court also found that the Buyers would not have completed the transaction if they had been given accurate information about Earthpro’s financial position. The court held that the Sellers engaged in misleading or deceptive conduct, which led to the Buyers entering into the SSA under false pretenses.

In terms of damages, the court assessed the Buyers’ damages as the difference between the price actually paid and what price would have been if accurate financial information had been disclosed. The court found that the Buyers were entitled to compensation for the difference between the price they paid for the shares and the actual value of the shares based on the true financial information. The court also noted that the counterfactual scenario, where the Buyers were given accurate information, was relevant to the analysis of the case. The court held that the Sellers were liable for the damages claimed by the Buyers.

The court directed the parties to agree on, or submit forms of order to reflect, the findings made in the decision. The matter was adjourned to a later date to hear submissions and to enter judgment.