Haviv Holdings Pty Ltd v Howards Storage World Pty Ltd

The case of Haviv Holdings Pty Ltd v Howards Storage World Pty Ltd involves a dispute between the parties over damages for breach of contract and trade practices. Haviv Holdings (Haviv) claimed damages from Howards Storage World (HSW) for breach of a franchise agreement, as well as for misleading and deceptive conduct under the Australian Consumer Law. The court had to determine several issues regarding the calculation of damages for Haviv’s loss of net profits and the assessment of lost gross profit.

The legal issues before the court included whether Haviv's "scenario 2" claim for damages was tenable on the evidence, whether Haviv had proved any loss of net profits from the Burwood store caused by the breach, and how the net lost profits should be assessed, among others. The court examined the evidence presented by expert accountants, Darel Hughes and Brendan Halligan, who used different methods to calculate the damages. HSW argued that Haviv's evidence was insufficient to prove causation and that certain assumptions made by Hughes were flawed.

In its reasoning, the court found that Haviv had indeed suffered loss due to HSW's breach of the franchise agreement. It noted that the Burwood store, despite being unprofitable in its first two years, was a long-term business proposition. The court preferred Halligan's method of calculating damages over Hughes', primarily due to the latter's flawed assumptions about the continued operation of the Burwood store post-breach and the treatment of expenses. The court determined that the damages should be assessed from 29 November 2004 until the end of the option period on 17 July 2022, using specific discount rates and a gross profit percentage. The refurbishment costs and rent were also adjusted according to the court's findings.

The court issued an order adjourning the proceedings for further directions and instructed that the exhibits may be returned. This decision highlights the importance of accurate evidence and the proper application of expert methods in calculating damages for breach of contract.