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Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd

Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd

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Case Copied 19 June 2019 59 min read

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2018 0027

KEYS CONSULTING PTY LTD (ACN 069 620 686)	First Applicant
and
ANTONIO SCATURCHIO	Second Applicant
v
CAT ENTERPRISES PTY LTD (ACN 100 325 460) & ORS (according to the attached Schedule)	Respondents

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JUDGES:	MAXWELL ACJ, NIALL JA and MACAULAY AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	30 October 2018
DATE OF JUDGMENT:	19 June 2019
MEDIUM NEUTRAL CITATION:	[2019] VSCA 136
JUDGMENT APPEALED FROM:	[2017] VCC 1661 (Judge Macnamara)

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CONTRACT – Misleading or deceptive conduct – Sale of business – Whether representations induced entry into agreement – Measure of damages – Whether judge erred in valuing business at nil – Whether judge erred in deducting post-sale benefit – Onus on purchaser to establish value at date of sale – Appeal allowed – Damages award set aside – Australian Consumer Law (Competition and Consumer Act 2010, sch 2) ss 18, 236, 237, 243.

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr D J Williams QC with Mr R L Moore	McNab McNab & Starke
For the Respondents	Mr D G Robertson QC with Mr A W Sandbach	Goldsmith Lawyers

MAXWELL ACJ
NIALL JA
MACAULAY AJA:

Introduction and summary

In July 2013, Keys Consulting Pty Ltd (‘Keys’)[1] sold a business to CAT Enterprises Pty Ltd (‘CAT’).[2] A dispute about that sale was determined by judgment in the County Court on 5 February 2018, following the publication of reasons for judgment, in two parts, in late 2017 and early 2018.[3] From that judgment the applicants sought leave to appeal.
[1]The first applicant.
[2]The first respondent.
[3]Reasons for findings concerning liability were published on 16 November 2017: Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd [2017] VCC 1661 (‘Liability reasons’). Following a further hearing on 12 December 2017 on the appropriate relief to be granted, reasons concerning the remedies to be granted were published on 24 January 2018: Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd [2017] VCC 1912 (‘Remedy reasons’).

Since around the mid-1990s, Antonio (Tony) Scaturchio[4] had conducted a business installing and removing signs for real estate and other commercial purposes within the metropolitan area of Melbourne. He conducted that business through the medium of several companies which he controlled, one being Keys and another being Sign Install Pty Ltd (‘Sign Install’).
[4]The second applicant.

Most of the sign installation work was done for an advertising firm, Briner Ads Pty Ltd (‘Briner’). Keys was the contracting party with Briner but Sign Install carried out much of the work on Keys’ behalf.

Keys undertook two types of sign installation work for Briner. One type was residential real estate signage (‘residential signage’); the other was general commercial signage (‘commercial signage’). The commercial signage often involved larger signs and more complex installations than was required for the residential signage.

Keys was not Briner’s only installer of signs. For the commercial signage, there were two or three other contractors that Briner used regularly. Generally speaking, Briner would seek quotations…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] VSCA 136
Decision Date: 19 June 2019

CaseChat Overview and Summary

Keys Consulting Pty Ltd, the plaintiff, sought damages against CAT Enterprises Pty Ltd, the defendant, for losses incurred as a result of alleged misleading or deceptive conduct in relation to the sale of a business. The case was heard in the Supreme Court of Victoria. The plaintiff claimed that the defendant made false representations about the business's financials and assets, leading the plaintiff to enter into the sale agreement. The defendant denied these allegations and argued that the business was sold in a fair and transparent manner.

The primary legal issues before the court were whether the defendant's representations constituted misleading or deceptive conduct under the Australian Consumer Law, and if so, what the appropriate measure of damages should be. The court had to consider whether the judge at first instance erred in valuing the business at nil and whether it was appropriate to deduct a post-sale benefit from the damages award. The onus was on the plaintiff to establish the value of the business at the date of sale.

The court found that the defendant had indeed engaged in misleading or deceptive conduct, which induced the plaintiff to enter into the sale agreement. However, it was held that the judge erred in valuing the business at nil at the date of sale. The court determined that the onus was on the plaintiff to establish the value of the business at the time of the sale, which the plaintiff failed to do. Furthermore, the court found that it was inappropriate to deduct a post-sale benefit from the damages award. Consequently, the appeal was allowed, and the damages award was set aside. The case was remitted to the court of first instance for a re-assessment of the damages.

Orders