H & Q Café Pty Ltd v Melbourne Café Pty Ltd

The case involved H & Q Café Pty Ltd, the plaintiff, and Melbourne Café Pty Ltd, the defendant. The plaintiff sought damages for misleading and deceptive conduct under the Australian Consumer Law and for breach of a contractual warranty. The dispute arose from the sale of a café business, where the plaintiff alleged that the defendant made false representations about the business's past sales figures and profitability, leading to the plaintiff entering into the sale agreement. The matter was heard in the Federal Court of Australia.

The primary legal issues before the court were whether the defendant's representations about the café's past sales figures and profitability were misleading or deceptive, thereby contravening s18 of the Australian Consumer Law. Additionally, the court had to determine if the plaintiff had proven its alternative claim for breach of a contractual warranty, and if so, to what extent the plaintiff was entitled to damages. The court also had to consider the business's performance since the sale, which had been running at a loss.

The court found that the defendant's representations about the café's past sales figures and profitability were misleading and deceptive, and thus in breach of s18 of the Australian Consumer Law. The representations were considered false as they did not reflect the true state of the business at the time of the sale. Furthermore, the court determined that the plaintiff had established a breach of the contractual warranty. Given the business had been operating at a loss since the sale, the court assessed the plaintiff's claim for damages, taking into account the business's actual performance and the representations made by the defendant. The court concluded that the plaintiff was entitled to recover damages for the losses incurred due to the misleading and deceptive conduct and the breach of warranty.

The court ordered Melbourne Café Pty Ltd to pay H & Q Café Pty Ltd damages in the amount of $300,000, representing the losses suffered by the plaintiff as a result of the misleading and deceptive conduct and the breach of warranty. The order also included costs of the proceedings.