Reserve Capital v Seascapes Supermarket WA Pty Ltd [No 2] - [2025] WASC 146

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   RESERVE CAPITAL -v- SEASCAPES SUPERMARKET WA PTY LTD [No 2] [2025] WASC 146
CORAM:   HOWARD J
HEARD:   11 - 20 MARCH; 24, 29 APRIL; 6 - 7, 24 - 28 MAY; 16, 20 & 21 AUGUST 2024
DELIVERED          :   2 MAY 2025
PUBLISHED           :   2 MAY 2025
FILE NO/S:   CIV 2858 of 2018
BETWEEN:   RESERVE CAPITAL (ACN 139 470 929)
Plaintiff
AND
SEASCAPES SUPERMARKET WA PTY LTD
First Defendant
LEILA CLAIRE PIGGOTT
Second Defendant
LEWIS ANTONY PIGGOTT
Third Defendant
LIGHTWEST INVESTMENTS PTY LTD
Fourth Defendant

Catchwords:

Sale of a suburban supermarket business - Misleading and deceptive conduct - Whether any of three representations was made in a written business profile document - Meaning of words used in the document - Whether representations were made to the effect of those pleaded to have been made in the document on other occasions - Whether a case on a representation sought to be agitated by the plaintiff was within its pleading or the way the parties ran the trial - Whether any of the representations pleaded were as to future matters - The first representation alleged found not to be made by the document - Plaintiff unsuccessful in establishing its case on any of the three representations

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)
Competition and Consumer Act 2010 (Cth) s 4(1), s 18
Fair Trading Act 2010 (WA) s 4, s 18

Result:

Dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	Mr N D C Dillon
First Defendant	:	Mr C S Williams
Second Defendant	:	Mr W A S Keane
Third Defendant	:	Mr C S Williams
Fourth Defendant	:	Mr W A S Keane

Solicitors:

Plaintiff	:	Disputes Legal
First Defendant	:	Solomon Brothers
Second Defendant	:	McNally & Co
Third Defendant	:	Solomon Brothers
Fourth Defendant	:	McNally & Co

Case(s) referred to in decision(s):

Ackers v Austcorp International Ltd [2009] FCA 432
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; (2014) 317 ALR 73
Australian Competition and Consumer Commission v Woolworths Group Ltd [2020] FCAFC 162; (2020) 281 FCR 108
Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279
Betfair Pty Ltd v Racing New South Wales [2010] FCAFC 133; (2010) 189 FCR 356
Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2014] WASCA 180; (2014) 47 WAR 522
BPESAM IV M Ltd v DRA Global Ltd [2020] FCA 738; (2020) 381 ALR 252
Brockway v Pando [2000] WASCA 192; (2000) 22 WAR 405
Caffey v Leatt-Hayter [No 3] [2013] WASC 348
Cargill Australia Ltd v Viterra Malt Pty Ltd (No. 28) [2022] VSC 13
Christie Agency Pty Ltd v Wiseman Advertising Pty Ltd [2004] NSWSC 395
CPA Australia Ltd v Dunn [2007] FCA 1966; (2007) 74 IPR 495
Gunn v Meiners [2022] WASCA 95; (2000) 22 WAR 405
Harrington-Smith v Western Australia [No 2] [2003] FCA 893; (2003) 130 FCR 424
Jango v Northern Territory (No 2) [2004] FCA 1004
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Makita (Aust) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Reserve Capital v Seascapes Supermarket WA Pty Ltd [2022] WASC 56
Telstra Corporation v Singtel Optus [2018] VSCA 347
Tobacco Institute of Australia Ltd v The Australian Federation of Consumer Organisations Inc [1992] FCA 962; (1992) 38 FCR 1
Warwick Entertainment Centre Pty Ltd v Silkchime Pty Ltd [No. 2] [2012] WASC 275

INDEX

Overview

A. Facts found

B. The principal witnesses

B.1 Mr Satyawan as a witness

B.1.1 Mr Satyawan and the OSR

B.1.2 Structuring of the transaction

B.1.3 Statements made by Mr Satyawan while trying to sell the business

B.1.4 Statements made to Ms Patel

B.1.5 Conclusions as to Mr Satyawan as a witness

B.2 Ms Dewi as a witness

B.3 Mr Piggott as a witness

B.4 Ms Piggott as a witness

B.5 The course of the expert evidence of Mr Lewis called for Reserve Capital

B.6 Mr Lewis as a witness

C. Findings on discrete factual matters in dispute

C.1 Whether interest was payable on a loan agreement to Mr Satyawan's mother

C.1.1 Enquiries with Banks

C.1.2 The loan agreement with Mr Satyawan's mother

C.1.3 Draw downs and repayment of the loan

C.1.4 Consideration of whether interest was incurred or payable

C.2 The meeting on 30 January 2016

C.2.1 The evidence

C 2.2 The meeting on 30 January 2016: consideration

C.3 The meeting on 11 February 2016

C.3.1 The evidence

C.3.2 The meeting on 11 February 2016: consideration

D. Issues in dispute

D.1 Management Representation

D.1.1 The first plea on the Management Representation

D.1.2 The meaning or meanings of the words used

D.1.3 Conclusions as to meaning and the first plea on the Management Representation

D.1.4 Evidence as to management of the Seascapes IGA at the time of the Business Profile

D.1.5 Findings as to whether the words used were misleading or deceptive at the time of the Business Profile

D.1.6 Was the Management Representation made as to a future matter

D.1.7 Representations to the same effect as the Management Representation made outside of the Business Profile

D.1.8 The Management Representation cases pleaded against Mr Piggott

D.1.9 The Management Representation cases pleaded against Ms Piggott

D.1.10 The Management Representation cases pleaded against Lightwest Investments

D.1.11 Reserve Capital's reliance

D.1.12 Disposition of the Management Representation

D.2 Profit Representation

D.2.1 The first plea on the Profit Representation

D.2.2 The pleaded case as to why the 'historical' Profit Representation was misleading or deceptive

D.2.3 SOC [13.1.1] Recording of sales

D.2.4 SOC [13.1.2] Removal of cigarettes from 2015 financial statements

D.2.5 SOC [13.2.1] Costs of sales valued at $694,380.71

D.2.6 SOC [13.2.2] Single customer

D.2.7 SOC [13.3] Gross profit percentage at 34.9%

D.2.8 Was the Profit Representation made as to a future matter

D.2.9 The other Profit Representation cases pleaded against Seascapes

D.2.10 The Profit Representation cases pleaded against Mr Piggott

D.2.11 The Profit Representation cases pleaded against Ms Piggott

D.2.12 The Profit Representation cases pleaded against Lightwest Investments

D.3 Wages Representation

D.3.1 The first plea on the Wages Representation

D.3.2 Consideration of the first plea on Wages Representation

D.3.3 Wages Representation in the Business Profile as to future matters

D.3.4 The other Wages Representation cases pleaded against Seascapes

D.3.5 The Wages Representation cases pleaded against Mr Piggott

D.3.6 The Wages Representation cases pleaded against Ms Piggott

D.3.7 The Wages Representation cases pleaded against Lightwest Investments

D.4 The pleaded implied term

E. Relief sought by Reserve Capital

E.1 An order that the Contract is void and the Lease is void; damages under SOC [20.4.3]

E.2 Damages claimed by SOC [20.4.1]

E.2.1 Difference in value at date of purchase

E.2.2 Trading losses

E.2.3 Consequential costs and expenses

E.2.4 Unpaid wages

E.2.5 Motor vehicle expenses

E.2.6 Interest to Mr Satyawan's mother

E.3 Opportunity loss

Overall disposition

HOWARD J:

Overview

This case concerns the sale by the first defendant (Seascapes) of a supermarket business in Halls Head in this State (Seascapes IGA or the Business).
The Seascapes IGA is on land (Premises) that at all material times has been, and is, owned by the fourth defendant (Lightwest Investments).[1]
[1] Further re-amended substituted statement of claim dated 29 November 2023 (SOC) [5.2].
The sale of the Business was completed on 21 March 2016 and the plaintiff purchaser (Reserve Capital) has operated the Seascapes IGA since.
At the same time that Reserve Capital became the owner of Seascapes IGA, it entered into a lease with Lightwest Investments for the Premises.
Principally, Reserve Capital claims that it was misled into purchasing the Seascapes IGA by three misrepresentations (Representations) made in a business profile prepared in 2015 (Business Profile)[2]. It is alleged that the Business Profile:
[2] Ex 2 at PDF page 5 - 10. I have referred to each exhibit tendered from the trial bundle as an Ex, bearing its trial bundle number. Unless otherwise indicated, references to page numbers are to the PDF number within the particular exhibit.
…
7.3represented that the Seascapes IGA operated under management with minimal hands on input being required by any proprietor/purchaser ('Management Representation')[;]
7.4represented that in 2015 Seascapes IGA had returned:
7.4.1 a gross profit of $1,288,840;
7.4.2a gross profit margin of 34.9% ('Profit Representation');
7.5 represented that in 2015 Seascapes IGA expenditure on wages was $312,292 ('Wages Representation').[3] (original emphasis)
[3] SOC [7.3] - [7.5]. I adopt the defined terms used in the SOC and will refer to the Representations as 'Wages Representation', 'Management Representation' and 'Profit Representation', collectively 'Representations', throughout my reasons.
Broadly, the defendants admit that each of the Representations was made,[4] but dispute whether all of the defendants made all of the Representations.[5] In any event, the defendants say that none was, relevantly, misleading or deceptive.[6]
[4] As will be seen, there is a significant dispute as to whether the Management Representation as pleaded was made in the Business Profile.
[5] Re-amended defence of the first and third defendants dated 13 February 2024 (Defence of first and third defendants) [9.2] and [9.4]; Re-amended defence of the second and fourth defendants dated 9 February 2024 (Defence of second and fourth defendants) [9.2] and [9.4].
[6] Defence of first and third defendants [12], [13.1] - [13.4], [13.6], [13.8] and [14]; Defence of second and fourth defendants [12], [13.1] - [13.4], [13.6], [13.8] and [14].
Reserve Capital alleges the Representations constituted misleading or deceptive conduct, in contravention of s 18 of the Competition and Consumer Act 2010 (Cth) (ACL) and s 18 of the Fair Trading Act 2010 (WA) (FTA).[7] Reserve Capital says that each of the Representations conveyed a representation as to future matters[8] and the purchaser of Seascapes IGA could expect to achieve similar outcomes as those represented.[9]
[7] SOC [15].
[8] Competition and Consumer Act 2010 (Cth) (ACL), s 4(1) and Fair Trading Act 2010 (WA) (FTA), s 4.
[9] SOC [8.5].

A. Facts found

The paragraphs in this Section principally set out my findings of fact. Where a particular finding has turned on a resolution of contested evidence, I have explained separately (principally in Section C) my reasoning for making the finding I have.
At all material times, Seascapes:
1.was incorporated;
2.commenced to operate the Seascapes IGA as a new business from September 2013;
3.ran the Seascapes IGA prior to its sale to Reserve Capital; and
4.was engaged in trade and commerce under s 18 of the ACL and s 18 of the FTA.[10]
[10] SOC [2.1] and [2.3]; Defence of first and third defendants [2], Defence of second and fourth defendants [2].
At all material times the second defendant, Leila Piggott, was the sole director of Seascapes.[11]
[11] SOC [2.2]; Defence of first and third defendants [2]; Defence of second and fourth defendants [2].
The third defendant, Lewis Piggott, acted as the agent for Seascapes.[12] As will be seen, it is controversial, on the pleadings, whether Mr Piggott had another role, and, in particular whether he also acted as agent for Lightwest Investments.
[12] SOC [4.2]; Defence of first and third defendants [4.1]; Defence of second and fourth defendants [4.1].
As noted above, Lightwest Investments owns, and at all material times owned, the Premises. Reserve Capital entered into a lease with it at the time of the acquisition of the Business.
At all material times, Lightwest Investments had two directors, Peter Fairweather and Ms Piggott.[13]
[13] SOC [5.4]; Defence of first and third defendants [5.2]; Defence of second and fourth defendants [5].
At trial, Seascapes and Mr Piggott were represented by the same firm and counsel. Ms Piggott and Lightwest Investments were represented by another firm and counsel.
From 2015, and at all material times, Reserve Capital was a company incorporated under the Corporations Act 2001 (Cth).[14]
[14] SOC [1.1]; Defence of first and third defendants [2]; Defence of second and fourth defendants [2].
The directors of Reserve Capital were, and remain, the spouses, Effendi Satyawan and Henny Dewi.[15]
[15] SOC [1.2]; Defence of first and third defendants [2]; Defence of second and fourth defendants [2].
As will be seen, throughout the relevant events Mr Satyawan was the prime actor for Reserve Capital.
Both Mr Satyawan and Ms Dewi had studied in Australia and obtained Bachelor of Commerce degrees.[16]
[16] ts 306 and ts 542.
After their study, they left Australia and returned to Indonesia. In about 2003, they came back to Australia to settle with their then child, and then children.[17]
[17] ts 306 and ts 542.
From 2010 to 2013, Mr Satyawan ran a bookshop (although it was not clear through which, if any, corporate entity) and sold that business in about 2013.[18]
[18] ts 307.
As part of selling the Seascapes IGA, Seascapes engaged a business broker, Ascend Corporate Pty Ltd (Ascend).
It is common ground that Seascapes:
1.supplied information to Ascend for its preparation of the Business Profile;[19] and
2.authorised Ascend to distribute the Business Profile.[20]
[19] Business Profile: Ex 2 at pages 5 - 10.
[20] SOC [8.2.1]; Defence of first and third defendants [8.1]; Defence of second and fourth defendants [8.1].
Reserve Capital pleads that Ms Piggott provided authority to compile or distribute the Business Profile.[21] That is put in issue by the defendants.[22]
[21] SOC [8.1.2] and [8.2.2].
[22] Defence of first and third defendants [8.3]; Defence of second and fourth defendants [8.2].
Although formally disputed, I find that the Business Profile contained information relating to the sale of the Seascapes IGA as a going concern.[23]
[23] SOC [6.3] and [7].
It was common ground that, by the Business Profile, Seascapes made both the Profit and the Wages Representations as they were pleaded and defined in the SOC.[24]
[24] SOC [7.4], [7.5] and [8.4.1]; Defence of first and third defendants [7.4] and [8.2]; Defence of second and fourth defendants [7.4] and [8.1A].
The Management Representation pleaded in the SOC was that the Seascapes IGA 'operated under management with minimal hands on [sic] input being required by any proprietor/purchaser'.[25] There was a dispute as to whether the Business Profile made the Management Representation as pleaded.[26]
[25] Those words do not appear in the Business Profile.
[26] SOC [7.3]; Defence of first and third defendants [7.3]; Defence of second and fourth defendants [7.3].
However, it is common ground that under the heading: '5. Proprietors [sic] Involvement & Staffing'; the Business Profile stated 'Owner/Proprietor ‑ Operates under management with minimal hands on [sic] input'.[27]
[27] Business Profile: Ex 2 at PDF page 7.
As will be apparent, the SOC defines the Management, Profit and Wages Representations as having been made by the Business Profile. The SOC then asserts that representations to similar effect were made on subsequent occasions.[28]
[28] SOC [9.3].
Mr Satyawan's unchallenged evidence was that he had looked at different businesses for sale after selling the bookshop with a view to buying another business. In the course of that search, his evidence was that he had seen an advertisement of the Seascapes IGA placed by Ascend and had seen the Business Profile.[29]
[29] ts 307 - 308.
Mr Satyawan saw the Business Profile in about the middle of December 2015.[30] I find from Mr Satyawan's evidence that the Business Profile he was sent contained the four appendices which appeared in the document he gave evidence as to having received from Ascend.[31]
[30] Business Profile: Ex 2 at PDF page 4.
[31] The appendices appeared as attachments to the Business Profile (Ex 2) at PDF pages 11 - 15.
Seascapes and Mr Piggott accepted in closing, and I find, that Reserve Capital received the Business Profile from Ascend.[32] This had previously been put in issue by the defendants' pleadings.[33]
[32] Written closing submissions of first and third defendants dated 28 June 2024 (Closing submissions of first and third defendants) [42].
[33] SOC [6.3] and [8.3]; Defence of second and fourth defendants [6.2] and [8.3]; Defence of first and third defendants [6.2] and [8.4].
Mr Satyawan's unchallenged evidence was that initially he was put off by the business being in Halls Head when he and Ms Dewi lived in Rossmoyne and had, at that time, a young child.[34]
[34] ts 309 and ts 345.
To that end, Mr Satyawan had asked Ascend on 14 December 2015 whether they had anything closer to Rossmoyne.[35]
[35] Ex 3.
Mr Satyawan's evidence was that on about 1 January 2016, he entered into a loan agreement with his mother by which he borrowed $1.5 million with a minimum repayment of $20,000 per year and interest of 10% per annum accrued on the balance owing at the end of each financial year (Purported Loan Agreement).[36]
[36] ts 905. The Purported Loan Agreement in written form was initially marked for identification and then tendered as Ex 470, subject to the defendants' objections as to its authenticity.
The defendants do not accept the genuineness of the Purported Loan Agreement and, in particular, do not accept that Mr Satyawan, or Reserve Capital, was under any obligation to pay Mr Satyawan's mother interest at 10% as purportedly documented.[37]
[37] Closing submissions of first and third defendant [199] - [203]: Closing submissions of second and fourth defendant (Closing submissions of second and fourth defendant) [221].
For reasons set out below, I find that Mr Satyawan and/or Reserve Capital did not come under an obligation to pay the interest as claimed.
At the beginning of 2016, Mr Satyawan saw a Gumtree advertisement for a supermarket business.[38]
[38] ts 310.
That Gumtree advertisement led to a meeting on 30 January 2016 at the Seascapes IGA.[39] I have made findings as to what occurred at that meeting more fully in C.2.2 below.
[39] ts 312, ts 554 and ts 1205.
I find that there were text messages between Mr Satyawan and Mr Piggott between 11.46 pm on 29 January to 4.36 pm on 30 January 2016.[40]
[40] Ex 84 at PDF pages 1 ‑ 4.
I find that Mr Satyawan and Ms Dewi (and their children) met Mr Piggott at the Premises on 30 January 2016.
For the reasons set out in C.2.2 below, I find that the following occurred at that meeting on 30 January 2016:
1.Mr Satyawan, and maybe Ms Dewi and their children, walked through the Seascapes IGA without Mr Piggott; and
2.Mr Piggott may have said something to the effect that the Business was in a growing area, and, or that the area was a safe one.
After the meeting on 30 January 2016, Mr Satyawan sent to Mr Piggott by text message (at 4.36 pm) his email address.[41]
[41] Ex 84 at PDF page 4.
On 31 January 2016 (at 3.16 pm), Mr Satyawan sent a text message to Mr Piggott which asked whether he was selling the Bertram IGA as well, to which Mr Piggott responded 'no'.[42]
[42] Ex 84 at PDF page 4.
On 31 January and 1 and 2 February 2016, by text message Mr Satyawan asked Mr Piggott for the financials for the Seascapes IGA.[43]
[43] Ex 84 at PDF pages 5 - 6.
From a text message exchange on 3 February 2016:
1.Mr Piggott indicated he was putting information together and would send it to Mr Satyawan the next day (4 February 2016);[44] and
2.Mr Satyawan said he would see Mr Piggott at 11 am on 4 February 2016.[45]
[44] Ex 84 at PDF page 6.
[45] Ex 84 at PDF page 6.

There was no direct evidence that Mr Satyawan and Mr Piggott met on 4 February 2016 but, as will be seen immediately below, Mr Piggott sent a number of emails with attachments to Mr Satyawan on 4 February 2016.
On 4 February 2016, by email (at 4.22 pm),[46] Mr Piggott sent to Mr Satyawan the IGA franchise agreement Seascapes had with Metcash Food & Grocery Pty Ltd (Metcash).[47]
[46] Ex 4.
[47] Ex 5.
At 4.26 pm, Mr Piggott sent to Mr Satyawan a draft lease with Lightwest Investments as landlord, but there was no tenant nominated in that draft (Draft Lease).[48] The Schedule to that draft had completed the Items for the Term and Rent Review Date(s).[49]
[48] The email sent from Mr Piggott to Mr Satyawan at 4.26 pm on 4 February 2016 was Ex 6 and the Draft Lease was Ex 8.
[49] Draft Lease: Ex 8 at PDF page 40.
At 4.45 pm, Mr Piggott sent to Mr Satyawan a 'Summary of Profit and Loss Statements' for the 2014 and 2015 financial years, which included 'Add Backs'.[50] That summary was included in the body of the email and replicated the summary in the Business Profile,[51] except that the 4 February 2016 email:
1.showed the 'adjustment to rent/outgoings' for the 2015 financial year as $110,000 (rather than $104,106 in the Business Profile) which reduced the 'Total Add Backs' to $6,188 (rather than $12,082 in the Business Profile); and
2.resulted in an 'Adjusted Profit' of $518,407 (rather than $524,301 in the Business Profile).[52]
[50] Ex 9; ts 317.
[51] Business Profile; Ex 2 at PDF page 8.
[52] Business Profile: Ex 2 at PDF page 8.
At 4.52 pm, Mr Piggott sent to Mr Satyawan the four Business Activity Statements (BASs) for Seascapes for the financial year 2015.[53]
[53] Ex 10.
On 5 February 2016, by email (at 8.23 am), Mr Satyawan asked Mr Piggott some questions about the terms of the Draft Lease.[54] Included in that email was a question about the outgoings and the market review mechanism in the draft.
[54] Ex 6.
At 8.31 am, Mr Satyawan asked Mr Piggott for further financial information for Seascapes IGA, principally for the six months between July 2015 to December 2015. [55]
[55] Ex 17.
At 1.27 pm, Mr Piggott responded that the outgoings were $71,302.60 and attached a document headed 'Outgoings Budget 2015/2016'.[56]
[56] The email sent from Mr Piggott to Mr Satyawan at 1.27 pm on 5 February 2016 was included in the email chain at Ex 6 and the attachment headed 'Outgoings Budget 2015/2016' was Ex 7.
At 1.51 pm, Mr Satyawan:
1.asked Mr Piggott some questions about the franchise arrangements with IGA (which I infer is with Metcash);
2.suggested that if there was no goodwill in the purchase price there would be no stamp duty required; and
3.stated that the lease agreement should be between Mr Piggott's company and Mr Satyawan.[57]
[57] Ex 16.
On 8 February 2016, by email (at 4.10pm), Mr Piggott forwarded on to Mr Satyawan an email from Seascapes' accountant (Matthew Fogarty) which attached Seascapes' tax return for the 2014 financial year;[58] which Mr Fogarty stated in the email had been lodged and paid in full - he was not challenged on that statement - and I find accordingly.
[58] The email sent from Mr Piggott to Mr Satyawan at 4.10 pm on 8 February 2016 was Ex 19 and the attached tax return for the 2014 financial year was Ex 20.
At 4.11pm, Mr Piggott forwarded on to Mr Satyawan an email from Mr Fogarty which attached Seascapes' 2015 financial statements.[59]
[59] Mr Fogarty's forwarded email sent from Mr Piggott to Mr Satyawan at 4.11pm on 8 February 2016 was Ex 21 and the 2015 financial statements was Ex 22.
At 4.28 pm, Mr Satyawan asked Mr Piggott (amongst other things):
1.What would happen if we decide the purchase price will have no goodwill component?
We would just put a higher price on the plant/equipment?
The original set up cost is about [$600,000], would it be reasonable for the tax man to go over that figure?
…
3.We still waiting for the figures/ [BAS] from July - Dec 2015. Would you be able to get it for me today?[60]
[60] Ex 18. I have kept the quoted exchanges in their original form and have edited them to correct typographical, grammatical and stylistic errors only where contextually necessary throughout.
On 10 February 2016 (at 6.30 pm), Mr Piggott sent an email to Mr Satyawan,[61] which attached:
1.the BAS for the first quarter of the 2016 financial year;[62] and
2.what was described as the 'Consolidated Hourly Productivity Report' for each of the quarters ending 30 September 2015,[63] 31 December 2015[64] and up to 10 February 2016[65] (in the quarter which would end 31 March 2016).[66]
[61] Ex 23.
[62] Ex 24 at PDF page 1.
[63] Ex 24 at PDF page 3.
[64] Ex 24 at PDF page 4.
[65] Ex 24 at PDF page 5.
[66] Ex 24 at PDF page 3 and following; ts 327.
As may be seen above, from the conclusion of the meeting at the Premises on 30 January 2016 until the email referred to immediately above, there were many text messages and emails passing between Mr Satyawan and Mr Piggott. Mr Satyawan did not give any evidence of any oral conversation between him and Mr Piggott in that time (i.e. just prior to the face-to-face meeting on 11 February 2016).
On 11 February 2016, there was a meeting between Mr Satyawan, Ms Dewi, Mr Piggott and Ms Piggott and their infant son at a coffee shop in Ardross.[67] I find this was the second meeting that Ms Dewi attended[68] and was the first meeting that Ms Piggott attended.[69]
[67] ts 328, ts 547, ts 1213 and ts 1291.
[68] ts 546.
[69] ts 1245.
With the exception of the fact that it occurred and who attended, most of what was discussed and agreed, if anything, at this meeting remained controversial.
For the reasons set out below, I find that the purchase price being agreed at $875,000 plus stock to be valued at a stocktake was the only relevant thing which occurred at this meeting on 11 February 2016.
It appears from a text message which Mr Satyawan sent to Mr Piggott on 11 February 2016 (at about 6.25 pm), that Mr Satyawan expected to sign an offer and acceptance for the Business the next day, 12 February 2016.[70]
[70] Ex 84 at PDF page 10.
On 12 February 2016, Mr Satyawan and Mr Piggott went to the offices of Ascend and met with Nigel Gill.[71]
[71] ts 333, ts 380, ts 385 and ts 1214.
At that meeting an agreement for sale of business was signed (February Sale Agreement).[72] As will be seen, identifying the one document which captures the true agreement for the sale is not without its difficulties.
[72] February Sale Agreement: Ex 33; ts 380 and ts 385.
Clause 2.1 of the February Sale Agreement provided for a Gross Purchase Price of $875,000 plus stock at value.[73]
[73] February Sale Agreement: Ex 33 at PDF page 1.
Clause 6 of the February Sale Agreement referred to a lease with Lightwest Investments and nominated the rental as $140,000 excluding GST plus outgoings per annum with a term of '10 + 10 + 10'.[74]
[74] February Sale Agreement: Ex 33 at PDF page 2.
The February Sale Agreement incorporated the Australian Institute of Business Brokers (WA Division) 2012 General Conditions for the Sale of Business 'so far as they are not varied by or inconsistent with the express terms hereof'.[75]
[75] February Sale Agreement: Ex 33 at PDF page 4.
By the Special Conditions to the February Sale Agreement 'Annexure A' formed part of this contract. 'Annexure A' made plain that the February Sale Agreement was subject to, and conditional upon, a number of matters, including Reserve Capital's 'acknowledgment of their acceptance of the lease provided for the premises'.[76]
[76] February Sale Agreement: Ex 33 at PDF pages 4 - 5.
Mr Satyawan appeared to have no independent recollection of what was discussed at the meeting outside the terms of the February Sale Agreement and its 'Annexure A' (which referred to the offer being conditional on Reserve Capital entering into a lease on certain terms).[77]
[77] February Sale Agreement: Ex 33 at PDF page 5; ts 335 - 336.
Mr Satyawan gave evidence about what happened, to his observation, between Mr Piggott and Mr Gill at the conclusion of that meeting.[78] He said that Mr Piggott and Mr Gill began discussing whether commission was payable on the stock and, to his observation, their demeanour became 'tense' and Mr Piggott appeared to be angry with Mr Gill.[79] This evidence was contentious.
[78] ts 336 - 337.
[79] ts 523.
Following the meeting at Ascend, Mr Piggott and Mr Satyawan went to meet Mr Fogarty at his office (still on 12 February 2016). Mr Fogarty was, at that time, the accountant for Seascapes.[80] Mr Fogarty gave evidence that he too was the accountant for a number of entities within the second and third defendants' group, including Bertram IGA.[81]
[80] ts 523, 1317 - 1318 and 1215.
[81] ts 1178, 1306 and 1323 - 1324.
I find that by the time of the trial, Mr Fogarty was no longer the accountant for any of the Piggotts' businesses.[82]
[82] ts 1178 and 1306.
Mr Satyawan gave evidence that at the meeting with Mr Fogarty there was discussion as to the structuring of the deal.[83] That evidence was contentious and will be returned to below.
[83] ts 337 and 380.
Following that meeting, Mr Satyawan sent a number of emails and text messages to Mr Piggott on 12 February 2016.
By an email sent to Mr Piggott (at 2.59 pm), Mr Satyawan annexed an Office of State Revenue (OSR) fact sheet for Business Acquisitions and then stated:
Please see the attachment. (it is WA govt documentation on stamp duty) We were actually right from the beginning
The duty need to be paid on the business transfer is only the following 'business asset[']:
…
There is No P/E and No stock in the list.
If we sell it as going concern, we don't even pay the GST on the P/E
That is why everybody prefer to have them on going concern basis.
But to be on the safe side, I think we should do the P/E as non going concern and pay the GST on top of it.[84]
[84] Ex 30.
Mr Satyawan sent a text message to Mr Piggott (at 3.18 pm), which stated that there was no stamp duty on plant and equipment and stock alerting him to the email Mr Satyawan had sent to him at 2.59 pm (immediately above).[85]
[85] Ex 84 at PDF pages 10 - 11; ts 387.
Mr Satyawan sent Mr Piggott a further email (at 3.41 pm), which said:
I have just rang [sic] OSR and make a general enquiry on stamp duty They do say stamp duty applicable on
Goodwill
P/E
but no stock
And they say any arrangement like 2 companies buying the business goodwill and P/E separately, they would combine both transaction as an aggregate value and charge stamp duty on top of it
The only way they will not charge a stamp duty is on P/E that is 'Chattel', it is not a fixture nor part of leasehold[86]
[86] Ex 28.
Later on that same day, Mr Satyawan sent Mr Piggott a second further email (at 4.41 pm). The email is of some significance and so I have set it out in full here:
The contract suggestion would be as follows:
Purchase of Goodwill : $20,000
Purchase of stock : At value
Lease of equipment : 3 years @ $285,000 p.a (Total of $855,000) with a balloon to purchase $1
I would then prepay $285,000 x 3 bank cheques on the settlement day. And you would give me an [sic] receipt and invoice for each annual equipment lease.
Benefit of doing this:
I can expense the equipment over 3 years, you can spread the revenue over 3 years as well. It is a lot quicker than depreciation for me and a slower capital gain for you
We need to prepare another small contract between [Reserve Capital] and [Seascapes] for the equipment lease. Maybe put a clause of early termination to own the equipment earlier if that necessary [sic][87]
[87] Ex 34; ts 338 and cross‑examination of Mr Satyawan commencing at ts 388 and following.
At 7.02 pm, Mr Satyawan sent a text message to Mr Piggott which said:
Hi Lewis, I got a better idea: goodwill $5000 p/e $60,000 Stock at value. Then 810,000 would go as a management and consulting fee to Seascape supermarket wa Pty Ltd ($270,000 pa for 3 years) I would prepay the whole amount on the settlement day and you invoice me for the next 3 years. This way you will incur a loss in your book value. I get to pay reasonable amount stamp duty. At the end of the day it doesn't really matter if the cost comes as a depreciation or management fee. It's still a cost. Tell me what you think[.][88]
[88] Ex 84 at PDF pages 11 - 12.
Mr Satyawan accepted that what was proposed in this last text message was:
1.his idea to reduce stamp duty; and
2a sham as there were no consulting services.[89]
[89] ts 388.
Mr Satyawan sent to Mr Piggott, by email on 14 February 2016 (at 9.19 pm), a link to a business article about capital gains tax.[90] The subject of the email was 'you might one to take a look at this:'.[91] I infer that 'one' was a typographical error for 'want'.
[90] Ex 31; ts 389.
[91] Ex 31.
A few minutes later (at 9.24 pm), Mr Satyawan sent to Mr Piggott another email. That email, amongst other things, noted that stamp duty was applicable on a hire purchase and said, 'so when we actually choose to do a hire agreement, it is not supposed to be hire purchase'.[92]
[92] Ex 32; ts 389.
Mr Satyawan accepted that notwithstanding the proposal in these emails, the agreement between the parties was not a lease of equipment.[93]
[93] ts 388.
Mr Satyawan did not accept it was his idea alone.[94]
[94] ts 388.
It was a requirement of Metcash that Reserve Capital prepare a business case or plan and Mr Satyawan prepared such a document.[95] He sent that document, by email, in draft to Mr Piggott for any comments on 17 February 2016.[96]
[95] Business Plan: Ex 36; ts 389 - 420.
[96] Ex 35.
It does not appear that Mr Piggott suggested any significant amendments, and I so find.
An agreement for sale of business was executed by Mr Satyawan and Mr Piggott (on the face of the document on 1 March 2016) and was submitted to the OSR (Final Contract).[97] Mr Satyawan prepared this document and the duty which was assessed on it (eventually) was paid.[98]
[97] The Final Contract was Ex 114 and a copy of the Final Contract stamped by the OSR was Ex 41; ts 341.
[98] ts 341.
A number of contracts were drafted as to the sale of the Business.
There was a typed agreement for sale of business (as a going concern) between Reserve Capital and Seascapes which showed the gross purchase price at $375,000 made up of:
1.Goodwill of $10,000;
2.Plant and equipment of $65,000; and
3.Stock estimated at $300,000;[99]
and which was signed, it appeared, by Mr Satyawan and Ms Piggott (both signatures being witnessed by Mr Piggott).[100] It was executed by Mr Satyawan on 1 March 2016 with a settlement date of 21 March 2016.
[99] Ex 42.
[100] Ex 42 at PDF page 3.
Mr Satyawan created that document and accepted in cross‑examination that the $375,000 was not the real purchase price for the Business.[101]
[101] ts 393.
I accept Mr Satyawan's unchallenged evidence that he met Mr Piggott at the McDonald's in Myaree and raised the question of amending the market rent review and reducing the rent in the Draft Lease.[102]
[102] ts 341 ‑ 342.
Mr Piggott signed a Disclosure Statement under the Commercial Tenancy (Retail Shops) Agreements Act 1985 on 1 March 2016 (on behalf of Lightwest Investments).[103] Mr Satyawan also signed the document on 1 March 2016 and the signed copy was returned back to Mr Piggott by Mr Satyawan by email on 2 March 2016 (at 3.58 pm).[104]
[103] Ex 45 and Ex 46: The Disclosure Statement was split between two documents in the trial bundle, so that pages 1 ‑ 10 were in Ex 45 and pages 11 ‑ 20 were in Ex 46.
[104] Ex 44.
I accept Mr Satyawan's evidence that he signed the Disclosure Statement at the meeting at the McDonald's in Myaree.[105] That would mean that the meeting took place on about 1 March 2016.
[105] ts 341.
Item 11 of the Disclosure Statement had the rent review at 4% annually 'including options. No market review'.[106]
[106] Disclosure Statement: Ex 45 at PDF page 8: the italicised words were in handwriting.
On 2 March 2016 (4.10 pm), Mr Satyawan sent an email to Mr Piggott[107] which attached what appears to be a pro forma agreement for sale of business (as a going concern) filled out in Mr Satyawan's handwriting.[108] It was dated 24 February 2016, with a settlement date of 21 March 2016.
[107] Ex 47.
[108] Ex 48; ts 391.
That showed the gross purchase price at $335,000, broken up as follows:
1.Goodwill of $10,000;
2.Plant and equipment of $25,000; and
3.Stock estimated at $300,000.
On 7 March 2016 (at 11.59 am), Mr Piggott sent a further draft lease to Mr Satyawan and asked him to 'compare the schedule attached to the [previous one] I sent.[109]
[109] Ex 52.
The amended draft lease attached to Mr Piggott's email of 7 March 2016[110] had deleted the market rent review date from Item 12 in the Schedule.[111] The Rent and Term items in the Schedule in the lease sent 7 March 2016[112] were unchanged from the Draft Lease sent by Mr Piggott on 4 February 2016.[113]
[110] Ex 53, ts 342.
[111] Ex 53 at PDF page 40.
[112] Ex 52.
[113] Ex 6 and Ex 8; as found at [48] above.
By email on 8 March 2016 (at 8.35 am), Mr Satyawan sent to Mr Piggott a document prepared by him and described as an 'Invoice Sample for hire'.[114] Mr Satyawan accepted that, as there was no equipment hire as part of the consideration 'in reality', this was a 'fake document'.[115]
[114] Ex 56.
[115] ts 392.
On 8 March 2016, (at 8.36 am), Mr Satyawan sent to Mr Piggott an email attaching a spreadsheet prepared by him (Mr Satyawan) which was described as 'breakdown of payment'.[116]
[116] Ex 55; ts 392.
Reserve Capital pleads that it entered into a lease of the Premises with Lightwest Investments on about 11 March 2016;[117] which the defendants accept was entered into on 1 March 2016, with a commencement date of 21 March 2016.[118]
[117] SOC [10.2].
[118] Defence of first and third defendants [10.2]; Defence of second and fourth defendants [10.2].
There was a series of emails between Mr Satyawan and Mr Piggott on 16 March 2016.[119] In the first of those (at 8.13am), Mr Satyawan asked who should be nominated as payee on the bank cheque for $800,000. Mr Piggott responded (at 10.17am) and said in Seascapes' name.[120]
[119] Ex 65.
[120] Ex 65.
In response, Mr Satyawan (at 11.00 am) said:
I'm afraid we should not deposit the cheque in Seascape supermarket p/l
Each month we would exchange cheque right
It would be better if that 800k is going to another company or other party[121]
[121] Ex 65.
Before taking over the Business on 21 March 2016 (and prior to the stocktake on 20 March 2016), Mr Satyawan's evidence was that after completing the contract and while he was getting ready to take over the Business he had a few telephone calls and a few meetings with Mr Piggott,[122] but they were mainly about opening supplier accounts to retain established discounts.[123]
[122] ts 343.
[123] ts 343 - 344.
I interpolate to say here that Mr Satyawan gave no evidence of any oral representations being made to him after the meeting at the McDonald's in Myaree on 1 March 2016 and prior to the stocktake occurring on 20 March 2016. I find that no such representation, whether to the effect of those pleaded as in the Business Profile or otherwise, were made in this period.
Mr Satyawan and Ms Dewi attended the stocktake at the Seascapes IGA on 20 March 2016.[124] Ms and Mr Piggott also attended. At the end of that stocktake Mr Piggott produced a tax invoice of the stocktake value at handover in the sum of $258,454.64.[125]
[124] ts 394.
[125] Ex 79.
Mr Satyawan gave evidence of there being a short conversation in a break during the stocktake. Mr Satyawan's evidence was that the discussion:
1.was mainly about the payment for the balance of the purchase price;
2.included Ms Piggott saying that she had thought about moving to the area; and
3.included Ms Piggott saying that the shop runs by itself with Jo Nesbitt as a reliable store manager.[126]
[126] ts 345.
Mr Satyawan was not cross-examined on that evidence as to what was said in the break at the stocktake.

As will be seen below in D.2.6, Ms Piggott also gave unchallenged evidence about a conversation in this break regarding 'wholesale' customers.
I do not find that there was any discussion on 30 January 2016, nor at that stocktake, as to the accuracy of the Business Profile; nor any discussion of the Business Profile otherwise. I note that neither Mr Satyawan, nor Ms Dewi (who gave some short evidence about the stocktake[127]) gave evidence that there was such a discussion.
[127] ts 549 - 550.
In cross-examination, Mr Satyawan accepted that he probably had about 10 face-to-face meetings with Mr Piggott in January, February and March of 2016[128] and accepted that he did not remember exactly what Mr Piggott said in any one of those conversations.[129]
[128] ts 377 - 378.
[129] ts 378.
On an illegible date, a bank cheque in favour of Mr Piggott in the sum of $800,000 was drawn.[130] No party made anything of the date of the cheque, and I infer it was given to Mr Piggott at about the time of the settlement of the sale.
[130] Ex 72.
On 12 April 2016, by email (at 12.37 pm), Mr Satyawan asked Mr Piggott, amongst other things, whether Mr Piggott had the 'data of the last three months weekly hours in total for [Seascapes IGA]?'.[131]
[131] Ex 90.
Mr Piggott replied to that email (at 1.01 pm),[132] attaching documents which contained the hours worked by staff at the Seascapes IGA between 28 December 2015 and 3 April 2016 (Staff Timesheets).[133]
[132] Ex 91.
[133] Staff Timesheets: Ex 92.
At 2.06 pm, Mr Satyawan:
1.said to Mr Piggott that he would transfer $11,000 and the rent money that night;
2.requested an invoice from Mr Piggott; and
3.stated the '$10,000 swap amount [should] be wired to my mum's account'. [134]
[134] Ex 98; ts 400 and ts 407.
Mr Satyawan wrote to Mr Piggott (at 4.44 pm) and said:
I have just wired:
$19369.41 (rent and outgoings APR) - this goes to Lightwest Investment P/L account
$11000.00 (equipment hire APR) - this goes to Seascapes Supermarket WA P/L account
If you have transferred the $10,000 and have the invoice ready, please let me know
I'll have my mum to check her bank account[135]
[135] Ex 97; ts 399 and ts 406 ‑ 407.
Mr Satyawan wrote to Mr Piggott (at 6.46 pm) and said:
When you do the transfer of $10k please make sure it doesn't come from Leila's or seascapes supermarket wa Pty Ltd bank account. Just to avoid any connection to the original business transactions [136]
[136] Ex 96; ts 398.
On 14 April 2016, Mr Satyawan sent an email[137] to the OSR and attached an agreement for sale of business (as a going concern)[138] which showed a gross purchase price of $375,000 made up of:
1.Goodwill of $10,000;
2.Plant and equipment of $65,000; and
3.Stock estimated at $300,000.
[137] Ex 99; ts 407.
[138] Ex 100.
That document showed the settlement date at 21 March 2016 (estimated) and appeared to be signed by Mr Satyawan and Ms Piggott, with Mr Piggott witnessing both signatures on 1 March 2016.[139]
[139] Ex 100 at PDF page 3.
Mr Satyawan accepted that at the time of sending this document to the OSR he knew that he had agreed to pay $875,000 (not $375,000) and that he knew that the real value of the goodwill and plant and equipment was higher than stated on the document.[140] I find accordingly.
[140] ts 408.
He accepted in cross‑examination that he submitted the document knowing it was not a true record of the agreement he had reached and that he intended to mislead the OSR to avoid paying the correct stamp duty.[141] I find accordingly.
[141] ts 408.
On 27 April 2016, the OSR issued a Duties Assessment Notice in the amount of $1,425 to Reserve Capital on the agreement dated 1 March 2016.[142]
[142] Duties Assessment Notice: Ex 102; ts 408.
Mr Satyawan's evidence was that he did not pay that amount to the OSR.[143]
[143] ts 409.
On 15 May 2016 (at 5.22 pm), Mr Satyawan sent an email to Mr Piggott which, amongst other things, stated:
I made the following payment:
Lightwest $19369.41 (May rent/outgoings)
Seascapes Supermarket $43.22 (Shopping basket $165 ‑ Video Ezy 11 days March $121.78)
Seascapes Supermarket $11,000 (for the equipment hire)
$10,000 should go to:
[Mr Satyawan's mother's bank name and account details]
And also the invoices for equipment hire, only when you are ready.
Just do the whole lot for 80x $10,000 (monthly from April 2016 all the way for 80 months)[144]
[144] Ex 106; ts 409.
Mr Satyawan accepted that this email contained his instructions to Mr Piggott for the payment of the $10,000.[145]
[145] ts 409.
On 23 May 2016 (at 8.15 pm), Mr Satyawan sent to Mr Piggott an email the subject of which was 'Owner role in the business'.[146] That email concluded: 'And also I have received the money in mom's account today. Thanks'.[147]
[146] Ex 109; ts 409.
[147] Ex 109.
From the facts found above, it appears, and I find, that Mr Satyawan took steps to seek to conceal (including from the OSR) the true consideration which Reserve Capital had agreed to and had paid.
It is also apparent, and I find, that Mr Piggott participated in the false round-robin of cheques or payments referred to above.[148]
[148] See the discussion in closing submissions at ts 1410 and following with counsel for Mr Piggott.
Mr Satyawan's evidence was that in June 2016 he sent the 'true version' of the sale agreement between Seascapes and Reserve Capital to the OSR.[149]
[149] ts 410.
On 4 June 2016 (at 5.28 pm), Mr Satyawan sent the following email to the OSR.[150] As will be seen, it is of some significance to my assessment of Mr Satyawan's credibility and so I have set it out in full.
We have just received this duty assessment notice.[151]
It is based on the wrong figure.
I think I might have send you guys the wrong contract by mistake. It has a similar name in my hard drive (contract and contract1). The contract I sent to you was the old contract. It would have a smaller value of plant and equipment of $65,000 because I couldn't get finance at that time then we ended up revising the contract before the settlement because I am able to secure finance to purchase the whole plant and equipment outright instead of hiring it from the old owner which works out to be more economical for us.
I have attached the duty assessment you have sent us and the correct contract on this email.
My apology that it takes me a while to send you this email to rectify the error as we are very busy during the transfer of business ownership.
[150] Ex 112; ts 427.
[151] Mr Satyawan's evidence was that he was referring to the Duties Assessment Notice: Ex 102 and that he had received it between 27 April and 1 May 2016; ts 428.
Mr Satyawan attached to his email to the OSR on 4 June 2016 two documents, one of which was an agreement for sale of business (as a going concern) which had a gross purchase price of $1,159,299.44, made up of:
1.Goodwill of $10,000;
2.Plant and equipment of $865,000; and
3.Stock estimated at $284,299.44 (Final Contract).[152]
[152] Ex 114.
That Final Contract had a settlement date of 21 March 2016 (estimated) and appeared to be signed by Mr Satyawan and Ms Piggott on 1 March 2016 with each of their signatures apparently being witnessed by Mr Piggott.[153]
[153] Final Contract: Ex 114 at PDF page 3.
Mr Satyawan's evidence was that the Final Contract recorded the correct terms of the sale of the Business.[154] Mr Satyawan accepted that Ms Piggott had not signed the Final Contract[155] and Mr Piggott had refused to sign it.[156]
[154] ts 432.
[155] ts 432.
[156] ts 432.
Mr Satyawan accepted that at the time of sending the Final Contract to the OSR on 4 June 2016, he knew that Ms Piggott had not signed the document.[157] Mr Satyawan also accepted that the Final Contract was, in effect, a blended document which he had created from the previous contract which was for $375,000[158] and the first two pages of the Final Contract which he had created to show the true transaction.[159]
[157] ts 433.
[158] Ex 42.
[159] ts 433 ‑ 435.
I find that the Final Contract recorded the true consideration paid by Reserve Capital to purchase the Business.
I find that the Final Contract was stamped and the duty of $38,977.50 was paid by, or on behalf of Reserve Capital, on about 19 September 2018.
Mr Satyawan's evidence was that he gave two‑pages of the Final Contract to Mr Piggott on 7 June 2016 and then sent that document to him by email on 14 June 2016 at 10.17 am.[160]
[160] Ex 119; ts 435.
Mr Satyawan's evidence was that by the end of June 2016 he considered that Reserve Capital had been misled.[161]
[161] ts 437 - 438.
In December 2016, Reserve Capital, through Mr Satyawan, engaged Greg Harrold and Sigma Business Sales to assist with the sale of the Business.[162]
[162] Sigma Appointment Document: Ex 440; ts 368 and 438.
That appointment document[163] listed an 'Asking Price' for the Business as follows:
1.Goodwill of $700,000;
2.Plant and equipment of $400,000; and
3.Stock estimated at $300,000;
for a total of $1.4 million.
[163] Sigma Appointment Document: Ex 440.
Mr Satyawan accepted in cross‑examination that he gave Mr Harrold financial information about the Business.[164]
[164] ts 438.
On 21 December 2016, there was an email exchange between Mr Satyawan and Mr Harrold.[165] In that exchange, Mr Harrold asked some questions about staffing at the Business. As part of the response, Mr Satyawan stated:
…
Owner - come in twice a week, mainly to discuss the managers special, new range, taking documents home.
Tuesday - payrol day - take my wife about 30 minutes
Wednesday - paying suppliers statements
Thursday - allocation day take me 1 hour to finish it[166]
[165] Ex 485; ts 439.
[166] Ex 485; ts 439.
On 22 December 2016, Reserve Capital entered an agreement for sale of business (of going concern) with N U Patel Investments Pty Ltd for a total price of $1,400,000.[167]
[167] 2016 N U Patel Sale Agreement: Ex 441; ts 368 ‑ 369.
As will be returned to below, Neela Patel was the principal of N U Patel Investments and she and Mr Satyawan had many interactions concerning the Business; again which will be returned to below.
The agreement for sale with N U Patel Investments broke the purchase price into:
1.Goodwill of $300,000;
2.Plant and equipment of $800,000; and
3.Stock estimated at $300,000.[168]
[168] 2016 N U Patel Sale Agreement: Ex 441.
It appears from the documents that Ms Patel (and her company) required finance to complete the purchase of the Business and Mr Satyawan accepted that he knew she would be trying to obtain bank finance, and he was giving her information to assist her to get finance.[169]
[169] ts 443.
By a document dated 4 January 2017, it appears that Ms Patel sought information from Reserve Capital by way of a document headed 'Due Diligence of Seascapes IGA - Information Request', listing 59 questions.[170]
[170] Due Diligence Request: Ex 147; ts 445.
Mr Satyawan made a series of responses to Ms Patel's Due Diligence Request; namely:
1.in answer to Question 29 by email to Mr Harrold on 6 January 2017 (at 10.34 am);[171]
2.in answer to Question 50 by email to Mr Harrold on 6 January 2017 (at 11.13 am);[172]
3.in answer to Question 51 by email to Mr Harrold on 6 January 2017 (at 11.13 am);[173] and
4.in answer to Question 52 by email to Mr Harrold on 6 January 2017 (at 11.14 am).[174]
[171] Ex 486.
[172] Ex 487.
[173] Ex 488.
[174] Ex 489.
On 3 March 2017, Mr Satyawan sent to Ms Patel an email[175] which attached some documents.
[175] Ex 160.
In that email Mr Satyawan stated as follows:
Normal Cost = $275,108 (this is the stock value when you are buying at non-promotional level, without allocation and without auto order utilising the promotional deal)
Average Cost = $235,064 (this is the actual stock value of Seascapes IGA, as you can see we have save nearly $40,000 buying the stock when they are on lower price, done through automatic ordering)
Normal Sell = $375,840 (this is the potential sell when you are not running any promotion at all)
Register Sell = $345,432 (this is the potential sell as of today, inclusive [of] the weekly promotion)
When you have normal cost and register sell, GP would be 20.4% only (this when you don't buy any stock during promotion, or miss the deal [week], because most stores are not using auto-order, store manager would not be able to pick this up accurately)
If you don't run the promotion at all Average cost Normal Sell, GP is 37.5%
However we have to run weekly promotion, therefore Seascapes actual GP would be Average Cost & Register Sell = 31.9%, allow 2% for wastage and theft
Look at the attachment for more info.
Please note the stock will not include Direct suppliers stock, which is about $20-30K, and they are at minimum 30%GP some is even running at 50% GP
and it doesn't include the convenience drinks (40-80% GP)
Hope this will answer your financier's question.[176] (original emphasis)
[176] Ex 160.
On 11 May 2017, Reserve Capital appointed as its business broker to sell the Seascapes IGA for a price of $1.1 million.[177]
[177] Ascend Appointment Document: Ex 163 and Ex 445; ts 370 and ts 454.
The $1.1 million price was made up of $900,000 (un‑itemised) plus stock estimated at $200,000.[178]
[178] Ascend Appointment Document: Ex 163 and Ex 445.
In the Ascend agency appointment document, at Item 4, the agent's fee was provided for but with a differential fee if 'a current buyer, Haroon Popal or Neela Patel, proceeds to settlement'.[179]
[179] Ascend Appointment Document: Ex 163 and Ex 445.
At the same time as Ascend was appointed on 11 May 2017, Mr Satyawan sent to Mr Gill an email which attached an interim Profit and Loss Statement for 1 January 2017 - 31 March 2017.[180] The email said, 'Please add back [$]40,000 director fee (it is included in the wages figures)'.[181]
[180] Ex 164.
[181] Ex 164.
On 22 May 2017, a Rob Moralee appears to have made an offer to buy the Seascapes IGA for a price of $775,000.[182] It appears from an email that Mr Satyawan sent to Mr Gill that Reserve Capital was prepared to take an offer of $900,000.[183]
[182] Ex 462; ts 370.
[183] Ex 462 at PDF page 3.
On 26 May 2017, Mr Moralee appears to have made an offer to buy the Seascapes IGA for a price of $800,000.[184] Mr Gill reported to Mr Satyawan that the offer of $800,000 was Mr Moralee's 'final' offer.[185]
[184] Ex 462 at PDF page 2.
[185] Ex 462 at PDF page 2.
On 3 July 2017, Reserve Capital entered an agreement for sale of business (as going concern) with Dilesha Pty Ltd to sell the Seascapes IGA for a price of $890,000.[186] That agreement was made through Mr Harrold of Sigma Business Sales.
[186] Dilesha Sale Agreement: Ex 446.
The $890,000 was broken up into:
1.Goodwill of $1,000;
2.Plant and equipment of $689,000; and
3.Stock estimated at $200,000.
Mr Satyawan sent to Mr Harrold an email on 5 July 2017 which attached a profit and loss statement and balance sheet for the 2017 financial year (2017 Profit and Loss Statement).[187]
[187] 2017 Profit and Loss Statement: Ex 491.
In the email, Mr Satyawan stated that one of the 'add backs', according to his accountant, was 'Wages [$372,150] (owner can replace some of the staff, we are never working in the store, plenty for owner drawings)'.[188]
[188] 2017 Profit and Loss Statement: Ex 491.
The 2017 Profit and Loss Statement showed:
1.total income of $3,561,227.61;[189]
2.total cost of sales of $2,511,460;
3.a gross profit of $1,049,767.61;
4.total expenses of $764,188.15; and
5.an operating profit of $285,579.46.[190]
[189] See Mr Satyawan's evidence in cross-examination at ts 472 - 473 that the sales figures included GST and GST is payable on some of the items sold.
[190] 2017 Profit and Loss Statement: Ex 491.
From those figures, the business recorded a gross profitability of 29.47%.
On 13 July 2017, Mr Satyawan sent to Ms Patel an email[191] which attached the 2017 Profit and Loss Statement.
[191] Ex 167.
The financial statements prepared for Reserve Capital by its accountant for the 2017 financial year[192] showed sales income of $3,400,478[193] and showed the same cost of sales of $2,511,460 as were shown in the 2017 Profit and Loss Statement. The accountant's financial statement showed a gross profit of $889,018.[194]
[192] Ex 426.
[193] Compared with the 2017 Profit and Loss Statements (Ex 491) of $3,561,227.61.
[194] Compared with the 2017 Profit and Loss Statements (Ex 491) of $1,049,767.61.
So the financial statements for the 2017 financial year prepared by Reserve Capital's accountant showed a gross profitability of 26.14%.
On 14 July 2017, Mr Satyawan sent to Mr Harrold an email[195] which attached a 'Stock on Hand Report' which appeared to be printed on the same date.
[195] Ex 492.
In the email, Mr Satyawan stated:
1. Stock on hand at ACTUAL AVERAGE COST
-      The dept sales is not accurate because it is using the current cost not the average cost, therefore it does not take into account the promotional price we bought.
-    It can clearly show it is on 33% GP
-      This stock report mainly shows the [Metcash] stocks it does not includes direct suppliers stock and produce (approximately 30-40k) which is priced at minimum 30% anyway.
2. Price structure from [Metcash]
-      Our RRP structure is very similar to IGA Express
-      Seascapes [IGA's] actual sell price is above that RRP for IGA Express, because we want to boost some GP. There are about 2100 items selling above RRP.
3. Auto order helps lower the average cost
-      You can see in our invoices, the auto order is actually ordering up to 80-90% items on promotion (more than 30% discount) and bulk them for 40-60 days cover days.
-      Auto order will not boost the dairy because it has shorter life. It would boost freezer.
…[196]
[196] Ex 492.
In cross-examination, Mr Satyawan accepted[197] that the stock on hand analysis in that email was similar to the one that he had earlier provided to Ms Patel on 3 March 2017 as found in [151] above.[198]
[197] ts 477.
[198] Ex 160.
On 17 July 2017, Mr Moralee made an offer to buy the Seascapes IGA for a price of $800,000 (to be paid over four years).[199] Mr Gill described the basis of the deal as being a 'vendor loan'.
[199] Ex 448.
On 12 October 2017, Reserve Capital entered into a contract for sale of business with Seascapes Associates Pty Ltd to sell the Seascapes IGA for a price of $531,500.[200] The $531,500 was made up of:
1.Goodwill of $10,000; and
2.Fixtures, plant and equipment of $521,500.[201]
[200] Ex 450.
[201] Ex 450 at PDF page 2.
On 30 November 2017, Mr Satyawan sent an email to Mr Gill[202] which attached two staff rosters of two separate weeks in October 2017.
[202] Ex 170.
The body of the email included the following:
Average per week 280 - 290 hours
Can be reduced by owner hours
The banking lady cost about [$12,000] per year
The cleaning lady is about [$26,000] per year[203]
[203] Ex 170.
Mr Satyawan and Ms Patel communicated by WhatsApp starting on about 12 December 2017.[204] It appears those WhatsApp communications finished in March 2018.
[204] Ex 173.
On 6 December 2017, Mr Satyawan sent an email to Mr Gill and a potential purchaser of the Business[205] which attached staff rosters of two separate weeks in October 2017. Those staff rosters were identical to those that he had earlier provided to Mr Gill on 30 November 2017 (as found in paragraph [172] above).
[205] Ex 171.
In the email, Mr Satyawan said that he was attaching typical weekly rosters and:
…
It is about 280 - 290 hours
Cost us about [$5,000 - $5,500] every week
…[206]
The email then listed out 12 employees by their first name with a short description of their role.
[206] Ex 171.
On 20 December 2017, Mr Satyawan sent the following messages by WhatsApp to Ms Patel:[207]
[207] Ex 173 at PDF page 4.
All suppliers hate metcash
Most of the independent hates them
Perfect storm!
I'm not kidding Neela
This is money making opportunity
Imagine 15% Gp improvement
You would compete with coles or making huge profit
Do you know that our metcash statement is getting smaller and smaller due to a lot of direct suppliers now and fruit/veg new supplier
Cheaper and better
When we deal direct. Our Gp is running at above 33%
And better customer service too
Fruit and veg is about 40%-45%[208]
[208] Each paragraph was a separate message sent between 2:17:19 pm and 2:19:48 pm.

From Mr Harrold's emails sent to Mr Satyawan and Ms Patel, it appears that there was a meeting between the three of them on 8 January 2018.[209]
[209] 2018 N U Patel Sale Agreement: Ex 451 at PDF page 1.
At that meeting on 8 January 2018, Reserve Capital entered into a further agreement for sale of business (as a going concern) with N U Patel Investments to sell the Seascapes IGA for a price of $851,000.[210] The $851,000 was broken into:
1.Goodwill of $1,001;
2.Plant and equipment of $599,000; and
3.Stock estimated at $250,999.
[210] 2018 N U Patel Sale Agreement: Ex 451 at PDF page 2 and following.
On 19 January 2018, there was an exchange of WhatsApp messages between Ms Patel and Mr Satyawan[211] as follows:
[211] Ex 173 at PDF page 9. I have indicated the sender of each of the messages using the initials NP (for Ms Patel) and ES (for Mr Satyawan).
[NP:] Effendi you know very well once I get seascapes underway I'm capable of running other stores
And you can be a silent investor without doing the hard work
Knowing your money is safe with me
That is why we are doing this okay
[ES:] I'm not doing any hardwork to be honest
[NP:] Hahahaha
[NP:] We know that [smiling face emoji]
[ES:] If it wasn't you approaching me. I won't be selling it[212]
[212] Ex 173 at PDF page 9, messages between 8:27:23 pm and 8:28:26 pm.
Between at least 8 January 2018 and 28 May 2018, Mr Satyawan and Mr Piggott were in communication via WhatsApp.[213] As part of those communications, Mr Satyawan (at 9.20 pm and at 9.21 pm) on 19 January 2018 sent messages to Mr Piggott about the sales contract between Seascapes and Reserve Capital:
We did our own contract because of the equipment rental
Then my accountant said not to do an equipment rental[214]
[213] Ex 490.
[214] Ex 490 at PDF page 3; ts 457.
There was an exchange of WhatsApp messages between Ms Patel and Mr Satyawan on 28 March 2018 in which Ms Patel said that the owners of another business were 'taking $500k out of the business'.[215] Mr Satyawan responded, 'I don't take 500k haha'.[216]
[215] Ex 173 at PDF page 29 at 4:07:21 pm.
[216] Ex 173 at PDF page 29 at 4:11:48 pm.
On 7 March 2018, Mr Satyawan sent to Mr Gill an email which attached a Profit and Loss Statement for the Business for 1 July 2017 to 31 January 2018.[217]
[217] Ex 175.
In the email, Mr Satyawan said that suggested 'add backs' (to the attached Profit and Loss Statement) included:
…
Working owners wages $55,176
…[218]
[218] Ex 175.
On 12 April 2018, Mr Satyawan sent an email to Mr Gill[219] where in response to Mr Gill's question of 'What wages/super did you draw on 2017 year[?]', Mr Satyawan said 'I think the management wages is about $80k'.[220]
[219] Ex 180.
[220] Ex 180.
On 22 April 2018, Mr Moralee made an offer to buy the Seascapes IGA for a price of $375,000. Reserve Capital made a counter‑offer with a price of $900,000.[221]
[221] Ex 454; ts 372.
On 17 May 2018, Mr Moralee made an offer to buy the Seascapes IGA for a price of $525,000. Reserve Capital made a counter‑offer with a price of $725,000.[222]
[222] Ex 456; ts 517 ‑ 519.
On 13 June 2018, Mr Gill sent an email to Mr Satyawan foreshadowing a cash offer of $550,000 plus stock.[223] There is no evidence that anything came of the foreshadowed offer.
[223] Ex 493 at PDF page 1.
By 13 June 2018, Haydn Baker Business Sales was acting as a business broker to sell the Seascapes IGA. Mr Satyawan forwarded Mr Gill's email to Haydn Baker and stated, 'I would rather sue Piggott at this stage then selling it to someone else'.[224]
[224] Ex 493 at PDF page 1; ts 517 - 519.
On 29 June 2018, Reserve Capital requested Sigma withdraw the Business from sale.[225]
[225] Ex 457; ts 372 ‑ 373.
Mr Satyawan's evidence‑in‑chief was that he withdrew the Business from sale as he did not want 'to be conflicted with the litigation' that was about to occur.[226] It may be noted, in connection with that, that the writ in this proceeding was issued on 26 October 2018.
[226] ts 373.
On about 29 October 2018, Lucy Goodman orally proposed to buy the Seascapes IGA for a price of $600,000.[227] That proposal was communicated to Mr Satyawan by Ascend.[228] There is no evidence that anything further came of that proposal.
[227] Ex 464; ts 373.
[228] Ex 464.
On 19 January 2019, Ms Patel made an offer to buy the Seascapes IGA for a price of $550,000.[229] That offer was directed to Reserve Capital's solicitors with a copy sent to Mr Satyawan.[230]
[229] Ex 460; ts 373.
[230] Ex 460.
Mr Satyawan responded by saying:
I have personally asked you to wait until court judgement before buying Seascapes IGA to avoid any complication/delay on the current litigation process.
Since it is in your own interest to settle Seascapes IGA before any court judgement we would like to see that any valid offer presented must be accompanied with: [and then seven matters were set out] …[231]
[231] Ex 460.
It does not appear from the evidence that the offer proceeded further.

B. The principal witnesses

B.1 Mr Satyawan as a witness

I have considered Mr Satyawan as a witness under the following headings:
1.his interactions with the OSR;
2.his evidence as to the structuring of the deal to purchase;
3.statements he made while trying to sell the Business; and
4.statements he made to Ms Patel.

B.1.1 Mr Satyawan and the OSR

As found in [121] and [122] above, Mr Satyawan on 14 April 2016 knowingly sent a contract[232] to the OSR which did not reflect the true deal entered into by Reserve Capital. I find Mr Satyawan did so for Reserve Capital's financial gain.
[232] The email sent by Mr Satyawan on 14 April 2016 at 7.44 pm was Ex 99 and the contract attached to that email was Ex 100.
That is, obviously enough, discreditable conduct on his part. Of itself, it would raise the question of Mr Satyawan's honesty and reliability as a witness.
As found in [131] - [136] above, Mr Satyawan on 4 June 2016 sent a further email to the OSR[233] attaching a different agreement; which was the Final Contract.[234]
[233] Ex 112.
[234] Final Contract: Ex 114.
As will be seen, Mr Satyawan's email of 4 June 2016 to the OSR[235] made a number of misleading statements.
[235] Ex 112.
And, as found in [133] - [135] above, the agreement which was sent[236] had not been signed in the way it appeared, to Mr Satyawan's knowledge. In particular, Ms Piggott had not signed it and Mr Piggott had not witnessed her signature on that agreement.
[236] Final Contract: Ex 114.
Again, the sending of that email with that purported agreement was discreditable conduct on Mr Satyawan's part.
I find that the email of 4 June 2016 was sent not to financially benefit Reserve Capital, but rather was sent to mislead the OSR into thinking that it (the OSR) had been innocently misled previously. That is, to protect Mr Satyawan and Reserve Capital.
It may be that a frank acceptance of such discreditable conduct would leave open the possibility that a witness' evidence at the trial, where contentious, might be accepted as honest and reliable, notwithstanding the earlier conduct.
However, I consider it significant the way in which Mr Satyawan gave evidence at the trial about his earlier discreditable conduct. There are two aspects to this. Firstly, Mr Satyawan's insistence at trial that Mr Piggott, at least, shared in the design of the false transaction, which is set out more fully below. Secondly, Mr Satyawan's evidence explaining his email to the OSR on 4 June 2016.[237]
[237] Ex 112.
Mr Satyawan gave contradictory evidence in cross‑examination as to the round-robin of cheques/payments.
Mr Satyawan gave evidence that his suggestion to pay the cheque of $800,000 to another company or party (than Seascapes) was to conceal the true price paid for the Business from the OSR, and that his suggestion that the refund of the $10,000 not come from Ms Piggott or Seascapes was 'not necessarily' to avoid the OSR making a connection or to hide the real nature of the transaction from the OSR.[238]
[238] ts 395 - 396 and ts 398.
Mr Satyawan said that those suggestions were made as a favour to Mr Piggott, for his (Mr Piggott's) benefit in that it meant that Mr Piggott would not need to pay capital gains tax.[239]
[239] ts 395 - 396 and ts 398.
However, as to the payment of the refund of $10,000 into his mother's account, Mr Satyawan agreed that it was to conceal the refund and was for the benefit of himself (ie Reserve Capital) in stamp duty and Mr Piggott in capital gains tax.[240]
[240] ts 399
Mr Satyawan's evidence and the documentary evidence of the steps taken to create a false paper trail and, in particular, a round-robin of cheques/payments will be returned to below.
I have set out at [131] above Mr Satyawan's email to the OSR on 4 June 2016.[241]
[241] Ex 112.
Mr Satyawan accepted that his explanation in this email[242] (that he had sent the OSR the wrong contract by mistake) was not the true reason for sending a further contract and was a lie.[243]
[242] Ex 112.
[243] ts 429.
Significantly, the following exchange in cross‑examination occurred:
Yes. And then the next thing you say is:
I think I might have sent you guys the wrong contract by mistake.
?---It's the wrong reason.
That wasn't true, was it?---It's not [the] true reason.
So that's a lie that you're telling to the [OSR]?---It's a lie to pay more.
Is that a yes?---Yes.
And then you go on to say:
It has a similar name in my hard drive, contract and contract 1.
?---Yes.
Continuing:
The contract I sent to you was the old contract.
?---Yes.
Now, you're trying to lead Mr Bloomfield to believe that you just accidentally - - -?---It's an honest mistake, yes.
Yes. You were trying to convince him it's an honest mistake?---Yes.
But it wasn't an honest mistake, was it?---It wasn't an honest mistake.
No. So you're misleading him again just there?---I'm misleading him into the true contract of the - - -
Yes?---So it's not really a misleading, isn't it? I didn't led him into error. I led him into the correct one.[244]
[244] ts 429.
Mr Satyawan was also cross‑examined about his explanation in the 4 June 2016 email that he had been 'very busy',[245] which had stopped him sending an email to rectify the error:
Well, it's true that you were very busy, perhaps, but that wasn't why you had taken some time to correct the position, was it?---It is true. We had been busy.
No. The reason why it has taken you some time is that between you sending the first version of the contract - - -?---Yes.
- - - to the [OSR] and this email, you had been advised that you should not proceed with the equipment hire structure because it was unlawful?‑‑‑I'm sorry, Mr Keane. I already said no one advised me. I can't keep repeating myself on that bit. I am an honest person. I feel cross if you're accusing me without any evidence.[246]
[245] Ex 112.
[246] ts 431.
The significance of that cross‑examination, in my view, is that it showed Mr Satyawan was a witness who, even in 2024 with the benefit of hindsight, sought to explain and minimise what had been a plain fraud on the OSR.
That attitude might explain Reserve Capital's oral opening where, after referring the Court to the stamped version of the Final Contract sent to the OSR on 4 June 2016,[247] counsel said:
DILLON, MR: … This, your Honour, is the contract in its final form stamped by the Tax Office. If you track down to the bottom, you will see it's signed by [Reserve Capital's] two directors - - -
HOWARD J: This is the final contract?
DILLON, MR: Yes, your Honour. I've got to just explain, your Honour, it's not really anything which is - your Honour is asked to deal with any issues on, but the original contract was - had different allocations of the purchase consideration to be put in different ways. This, though, is the contract we say is the contract which the court can accept as the final contract. It will be up to my friends whether they raise the history or the background as to how we get to this final contract. I understand it's not in dispute, your Honour, that this is the contract terms.
…
HOWARD J: Does anything turn on the fact that it looks like it's something like two and a half years between it being executed and it being stamped?
DILLON, MR: There is a history there, your Honour, it's just - it's - what it - as I said, the parties allocated - tried to deal with this in a way; they allocated - they determined that the - well, they sought to determine that the purchase consideration would be paid through an agreement under which there would be a - payment made for the plant and equipment over a period of time; the impact being to assist the parties in their taxation positions. [Reserve Capital's] directors eventually decided they didn't wish to participate in that and then they rearranged - they had the contract - the terms of it changed so that it was as agreed and paid the tax. I will leave it to my friends whether they want to raise that…[248]
[247] Final Contract: Ex 114 and OSR Final Contract: Ex 41.
[248] ts 285.
As may be seen from this part of its opening, Reserve Capital sought to characterise the false contract sent to the OSR as being a shared matter with Seascapes, at the least. And, suggested that it was somehow to Reserve Capital's directors' credit that they 'eventually decided they didn't wish to participate in that'.[249]

B.1.2 Structuring of the transaction

[249] ts 235.

There are two aspects to this:
1.the structuring of the transaction before the first document was submitted to the OSR; and
2.the creation of cheque/payment round-robins.
I have dealt with the way Mr Satyawan interacted with the OSR immediately above but there is a significance, in my view, to Mr Satyawan's evidence about the structuring of the deal before he submitted the first document to the OSR on 14 April 2016.
Mr Satyawan's evidence‑in‑chief was that Mr Fogarty gave advice to him and Mr Piggott on 12 February 2016 as to the structuring of the transaction. Mr Fogarty, he said, advised them of three options of transaction structures which might be adopted with a view to best minimising tax,[250] they being:
1.the purchase of plant and equipment and goodwill;[251]
2.the purchase of the shares in Seascapes;[252] and
3.an equipment hire option which Mr Satyawan said that Mr Fogarty had advised would save the purchaser stamp duty and would save the vendor paying capital gains tax.[253]
[250] ts 337.
[251] ts 337.
[252] ts 338.
[253] ts 338.
In cross‑examination, Mr Satyawan gave evidence that after the meeting with Mr Fogarty, Mr Piggott suggested, or it was a joint idea, to lower the allocation of the consideration to goodwill and plant and equipment so as to reduce stamp duty or capital gains tax.[254]
[254] ts 386.
After accepting that on the evening of 12 February 2016 he went home and researched Reserve Capital's stamp duty obligations, Mr Satyawan said in cross‑examination 'I want[ed] to clarify what Mr Fogarty said to me'.[255]
[255] ts 386 - 387.
Mr Satyawan gave evidence that his subsequent email of 12 February 2016 (at 4.41 pm),[256] as found in [79] above, was him trying to construct a deal as an equipment hire arrangement based on the information he had received from Mr Fogarty.[257]
[256] Ex 34.
[257] ts 338.
Mr Satyawan then said that, in a subsequent telephone call, Mr Piggott said:
… 'Actually yes, it will be good. You don't have to pay stamp duty. I don't have to pay capital gains tax. It's a win/win solution'.[258]
[258] ts 339.
Significantly, those statements said to be made by Mr Piggott were not put to him in cross‑examination.
Mr Fogarty did not recall attending any meeting with Mr Piggott and Mr Satyawan and did not recall having discussions about structuring a transaction for the sale of the Business.[259]
[259] ts 1317.
Mr Fogarty said in cross‑examination that:
It would be unusual that I would be providing [Mr Piggott] - if that was correct, that I would be providing [Mr Piggott] advice in front of a purchaser of his [B]usiness.[260]
[260] ts 1318.
In cross-examination, Mr Piggott said that he did not actually remember the meeting with Mr Satyawan and Mr Fogarty.[261]
[261] ts 1215.
Mr Piggott's evidence‑in‑chief was that he vaguely recalled a meeting with Mr Satyawan and Mr Fogarty, but there was nothing in that meeting that really stood out or made him remember it in great detail.[262]
[262] ts 1164.
In cross-examination, Mr Piggott thought that the purpose of the meeting was more so for Mr Satyawan to meet Mr Fogarty as he was considering using him as his accountant.[263] He did not remember a discussion at the meeting as to what would be the best tax structure for the transaction.[264] Mr Piggott's evidence was that the equipment hire arrangement was an idea of Mr Satyawan's which he (Mr Piggott) discussed privately with Mr Fogarty as to whether it made any difference from a tax position.[265]
[263] ts 1216.
[264] ts 1216.
[265] ts 1216.
Mr Piggott disagreed that Mr Fogarty had suggested the proposed equipment hire agreement as a way of structuring the transaction.[266]
[266] ts 1216.
Mr Piggott said that there were a 'few' discussions about the structuring of the transaction and said:
… how [Mr Satyawan] wanted to structure it was completely up to him. I just needed to make sure that there was no - that I wasn't paying any extra tax or anything like that on my side. So yes, we would have just ran it past our accountant and say hey, does this work, you know, and that's really it. So I wasn't involved in structuring an offer to us or saying what our side would most likely accept. He was putting things to us, so.[267]
[267] ts 1164.
Mr Piggott's evidence was that he recalled that Mr Satyawan wanted to pay for the Business 'on a lease basis',[268] but that he did not remember how that structuring came about because there were 'too many' proposals from Mr Satyawan.[269]
[268] ts 1171.
[269] ts 1172.
In my judgement the emails and text messages sent on 12 February 2016 by Mr Satyawan (the same day as the meeting with Mr Fogarty) as found in [75] - [80] above do not support, and are inconsistent with, Mr Fogarty having advised Mr Piggott and Mr Satyawan together on the structure of the transaction and, in particular, the matters favouring an equipment hire arrangement.
That is because the first communications from Mr Satyawan to Mr Piggott on that day[270] suggest that an equipment hire arrangement was not then in Mr Satyawan's mind as he thought that stamp duty was not payable on plant and equipment.
[270] The email sent to Mr Piggott by Mr Satyawan on 12 February 2016 at 2.59 pm was Ex 30 as per [76] above; Ex 84 at PDF pages 10 and 11.
That had changed by 3.41 pm on 12 February 2016,[271] and by 4.41 pm, Mr Satyawan was advancing a different structure to Mr Piggott, namely the lease of equipment.[272]
[271] Ex 28.
[272] Ex 34.
Still on 12 February 2016 (at 7.02 pm), Mr Satyawan had yet another idea for the structuring of the transaction: that is through a management and consulting fee.[273]
[273] Ex 84 at PDF page 11.
From those contemporaneous documents on 12 February 2016, I note:
1.Mr Fogarty is not mentioned;
2.the proposal being put at first is not an equipment hire arrangement;
3.within a few hours of proposing an equipment hire arrangement, Mr Satyawan proposes a 'better idea', and one which on no version of the evidence came from Mr Fogarty; and
4.there was no mention of capital gains tax or the position of Seascapes as vendor.
I note, as found at [57] above, that some days earlier, on 8 February 2016 (at 4.28 pm)[274] taxation issues and the structuring of the transaction were already apparently of interest and concern to Mr Satyawan, before any meeting with Mr Fogarty.
[274] Ex 18.
Indeed, it appears from the contemporaneous documents that the vendor's capital gains tax position was not raised by anyone until a couple of days later, on 14 February 2016.[275]
[275] Ex 62.
Principally, by reference to the contemporaneous documents generated by Mr Satyawan on 12 February 2016, I do not accept his evidence that Mr Fogarty had given any advice to Mr Satyawan about structuring the transaction as an equipment hire or lease.

Seascapes and Mr Piggott's submission, with respect, also reflects my understanding of the evidence, or lack thereof, led by Reserve Capital going to this plea.
In those circumstances, I dismiss this claim by Reserve Capital on the basis that it is unsupported by any evidence adduced. I accept, with respect, Seascapes and Mr Piggott's submission that it is not necessary to go on and consider whether the implied term pleaded can be implied on the facts of this case and, in particular, by reference to the nominated clauses of the General Conditions.

E. Relief sought by Reserve Capital

I have found that Reserve Capital does not succeed on any of its claims.
Nonetheless, I have considered what findings I can sensibly make if I am wrong in my judgement on any or all of the Representations.
By its Prayers for Relief, Reserve Capital claimed:
1. As against [Seascapes]:
1.1. the damages pleaded in [20.4.1] above;
1.2. an order or declaration that the Contract is void;
1.3. the damages pleaded in [20.4.3] above;
1.4. the damages pleaded in [22.3] above.
2. As against [Ms Piggott], the damages pleaded in [20.4.1] and/or [20.4.3] above;
3. As against [Mr Piggott], the damages pleaded in [20.4.1] and/or [20.4.3] above.
4. As against [Lightwest Investments]:
4.1. the damages pleaded in:
4.1.1. [20.4.3] above;
4.1.2. further and alternatively, the damages pleaded in [20.4.1] above;
4.2. an order or declaration that the Lease is void.[1214]

E.1 An order that the Contract is void and the Lease is void; damages under SOC [20.4.3]

[1214] SOC Prayers for relief [1] - [4].

As against Seascapes, Reserve Capital sought an order or declaration that the Contract was void.[1215]
[1215] SOC prayer for relief [1.2].
Further, Reserve Capital sought against Lightwest Investments an order or declaration that the Lease was void.[1216]
[1216] SOC prayer for relief [4.2].
I have held above that Reserve Capital does not succeed on any of its claims against either Seascapes or Lightwest Investments.
Apart from identifying an issue for determination as 'should the Contract and/or the Lease be declared void?' in its written opening submissions,[1217] Reserve Capital did not address this relief in its opening or written closing submissions.
[1217] Opening submissions of plaintiff [65.13].
In their oral closing submissions, Seascapes and Mr Piggott submitted that in light of the fact that (at the time of the closing) it had been eight and a half years since the purchase of the Business and Reserve Capital had run it in that time there was not much scope to make orders voiding the purchase or the Lease ab initio.[1218] It was submitted that damages would be a complete remedy.[1219]
[1218] ts 1474.
[1219] ts 1474.
Reserve Capital, in its oral closing as to whether the orders it sought in respect of the Contract and the Lease should be made ab initio or from the date of the court order said:
So it would be hard for us to say ab initio. It would have to be an order, I think, from the date that you made your final decision.[1220]
[1220] ts 1617.
It is fair to say that no party regarded an order that the Contract or Lease be declared void as being realistic (as judged by the lack of attention that relief received).
If I had found for Reserve Capital, I would not have made an order voiding the Contract or the Lease either ab initio or from the date of final orders.
In respect of the Contract, I consider that damages would have been a full remedy. Further, the effluxion of time from the date of purchase would be another very significant factor militating against the grant of such an order or declaration.
In relation to the Lease, the same matters would be against such an order. Further, the Lease, unless extended by Reserve Capital, expires in March 2026. That is, by the time of final orders, the Lease would have comparatively little time to run.
If I am wrong about one or more of the Representations and should have found, for example, Seascapes to be liable, but was correct to dismiss the case against Lightwest Investments, my preliminary view is that Reserve Capital would be entitled to recover damages for losses (if proved) which took into account the payments to be made or made under the Lease.
I express this on a preliminary basis as no argument was addressed to these issues.
However, if I should have found Seascapes to be liable and also should have found Lightwest Investments to be liable, I would not have separately awarded damages as claimed by SOC [20.4.3] as I consider that all such damages would be picked up in the damages award that Reserve Capital would have been entitled to against Seascapes. I have not considered the damages claimed under SOC [20.4.3] further.

E.2 Damages claimed by SOC [20.4.1]

As seen above, Reserve Capital claims damages against each of the defendants by SOC [20.4.1].
That plea is:
20.4.1.[Reserve Capital] has suffered loss and damage as a result of entering into the Contract;
PARTICULARS
(1) But for the contraventions [Reserve Capital] would not have entered into the Contact.
(2) By reason of entering into the Contract, [Reserve Capital's] loss and damage is:
(a) the difference between the true value of the Seascapes IGA as at the date of the purchase and the price paid by the Plaintiff under the Contract;
(b) all consequential costs and expenses incurred as a result of the Plaintiff entering into the Contract;
(c) all losses incurred in operating the Seascapes IGA since settling on the Contract to the date of Judgment;
(d) the loss of the opportunity to have invested in an alternative investment and earned a return on the funds invested and engaged in the operation of the Seascapes IGA.
(3) A schedule of [Reserve Capital's] loss and damage as particularised in (2) will be provided separately.[1221]
[1221] SOC [20.4.1].
Reserve Capital claims, as a consequence of entering into the Contract, it suffered loss and damage:
1.loss being the difference between the true value of the Seascapes IGA as at the date of the purchase and the price paid by Reserve Capital under the Contract;[1222]
2.trading losses, being all losses incurred in operating the Seascapes IGA since settling on the Contract to the date of Judgment[1223] (although I note that Ms Marke's further revised assessment[1224] had losses at $1,512,236);
3.all consequential costs and expenses incurred as a result of Reserve Capital entering into the Contract;[1225]
4.unpaid wages to Mr Satyawan and Ms Dewi;[1226]
5.interest paid or payable on the Purported Loan Agreement to Mr Satyawan's mother;[1227] and
6.opportunity loss, being the loss of the opportunity to have invested in an alternate investment for eight years, until 29 February 2024 and earned a return on the funds invested and engaged in the operation of the Seascapes IGA.[1228]
[1222] SOC [20.4.1(2)(a)]; Ms Marke's Loss and Return Schedule: MFI-2 at [1].
[1223] SOC [20.4.1(2)(c)]; Ms Marke's Loss and Return Schedule: MFI-2 at [4].
[1224] MFI-2.
[1225] SOC [20.4.1(2)(b)]; Ms Marke's Loss and Return Schedule: MFI-2 at [2].
[1226] SOC [20.4.1(2)(b)]; Ms Marke's Loss and Return Schedule: MFI-2 at [2].
[1227] SOC [20.4.1(2)(b)]; Ms Marke's Loss and Return Schedule: MFI-2 at [3].
[1228] SOC [20.4.1(2)(d)]; Ms Marke's Loss and Return Schedule: MFI-2 at [5].
As at 8 March 2024, Reserve Capital claimed it had suffered total loss and damage in the sum of $4,319,048.60.[1229] That claim and Schedule filed 8 March 2024 needs to be read, as I understand it with MFI-2 (as substituted).
[1229] SOC [20.4.1]; MFI-2: Revised schedule of damages.
Further, in Section 4 of her Supplementary Report,[1230] Ms Marke gave an opinion as to what was the 'present' value of the Business.[1231]
[1230] Ms Marke's supplementary report: Ex 495.
[1231] ts 769.
That, however, appears to be beyond the loss and damage claimed by Reserve Capital in its Prayers. And, as I understand it, it assumed that Reserve Capital was suffering on-going trading losses; an assumption which I consider was not established on the evidence (after I would have disallowed Ms Marke's proposed adjustments to Reserve Capital's profit and loss position).
I have not considered that evidence further.

E.2.1 Difference in value at date of purchase

Reserve Capital led evidence from Ms Marke as to the value of the Business at the date of purchase. The defendants led evidence from Mr Hockley on the same issue.
There was a Joint Valuation Report addressed to the valuation of the Business at 21 March 2016.[1232]
[1232] Joint valuation report: Ex 517.
Relevantly, the experts:
1.agreed that there were two applicable valuation methodologies; namely: capitalisation of future maintainable earnings (CFME) and net tangible assets (NTA);
2.agreed that it would be appropriate to use the higher of the CFME and the NTA values;
3.agreed that their respective NTA values were higher than both of their values derived from CFME;
4.agreed that the inventory should be taken as being valued at $258,454;
5.disagreed as to what the NTA value was;
6.agreed that the single biggest 'item of difference' in their NTA valuation was the value to be attributed to plant and equipment; and
7.agreed that the preferred approach on valuing plant and equipment would be to have an independent valuer value it at the time of sale.
If I am wrong in dismissing a Reserve Capital case, then there may be utility in resolving the differences on the NTA valuations between Ms Marke and Mr Hockley.
I have done so on the basis that both Ms Marke and Mr Hockley had reached a higher value for the Business on their respective NTA valuations and agreed that the higher of the NTA (compared with the CFME) method should be adopted.
If Ms Marke adopted the financial information of Seascapes pre‑acquisition,[1233] then using the CFME method she valued the Business at between $235,200 to $277,200.[1234]
[1233] Ms Marke recorded that her instructions threw doubt on the accuracy of Seascapes' 2015 financial statements: Ms Marke's initial report: Ex 494 at [2.3].
[1234] Ms Marke's initial report: Ex 494 at [2.23].
It is to be noted that it appears from Section 10 of Ms Marke's first report[1235] that Ms Marke was requested to use the Seascapes financial records in this regard, but also to make nine contentious assumptions which she set out there.[1236] That is, Ms Marke did not take the Seascapes financial records at face value but rather was influenced by the assumptions.[1237]
[1235] Ms Marke's initial report: Ex 494 at PDF page 58.
[1236] ts 764.
[1237] ts 765.
Unfortunately, it appears that Ms Marke was not briefed to provide an opinion using Seascapes' financial information, pre‑acquisition, without those assumptions. That would have been, I consider, a problem with the reliability of Ms Marke's opinion in this respect; but a flaw which ought not be laid at Ms Marke's feet.
Using Reserve Capital's financial information, post‑acquisition, Ms Marke assessed the value of the Business as between $176,400 to $207,900.[1238]
[1238] Ms Marke's initial report: Ex 494 at [2.22].
It appears that if I was wrong in dismissing a Reserve Capital case which did not go to the accuracy of Seascapes 2015 financial statements, it would not have the effect that Ms Marke's CFME value would be greater than her NTA value.
On the basis that both of her value ranges using the CFME method was below the assessment she made on a NTA basis, Ms Marke would have used her NTA valuation for her opinion of the value of the Business as at the date of sale.
Because on both Ms Marke's and Mr Hockley's valuations, the NTA method produced a higher value, I have not sought to resolve the differences in the way each of them approached the calculation of their CFME valuation.
As said, the principal difference between the NTA valuation performed by Ms Marke and that performed by Mr Hockley is the value attributed by each of them to the plant and equipment.
As found in [132] above, the parties agreed that of the consideration to be paid, $865,000 was allocated or attributed to plant and equipment.[1239]
[1239] Final Contract: Ex 114.
Ms Marke did not accept that the fair market value of the plant and equipment was $865,000 because she understood the original purchase cost of the plant was $667,782.[1240]
[1240] Ms Marke's initial report: Ex 494 at [10.82].
Ms Marke used a value for plant and equipment of $331,725.[1241] In the absence of an independent valuer valuing the plant and equipment she considered that the 'second most reliable' value would be derived from the written down value of the plant and equipment which she calculated as being $331,725 as at the date of acquisition.[1242]
[1241] Ms Marke's initial report: Ex 494 at [2.9].
[1242] Ms Marke's initial report: Ex 494 at [10.82].
Ms Marke explained why $10,000 which had been attributed by the parties to goodwill was not to be taken into account in her assessment of the value of the Business at acquisition date.[1243] I would accept that reasoning.
[1243] Ms Marke's initial report: Ex 494 at [10.80].
It is apparent that Ms Marke assumed that the plant and equipment which was being sold was the same plant and equipment that had been purchased for $667,782. That assumption was not proved nor, relevantly, put to Mr Piggott or Ms Piggott.
Mr Hockley, in making his NTA assessment, assumed that the market value of the plant and equipment was the value attributed by the parties as part of the consideration.[1244]
[1244] Ex 516 [151], [230].
In the Joint Valuation Report, Mr Hockley:
… [acknowledged] the assertion of Ms Marke in that the allocation of the purchase price to specific assets in a transaction is often driven by the future tax treatment associated with those assets, he notes that the value ascribed by the Directors of [Reserve Capital] to the plant & equipment of $865,000 was in circumstances whereby the Directors were under no influence to ascribe any value other than which they believed to be the market value of those assets.[1245]
[1245] Joint Valuation Report: Ex 517, Item 6.
While I would accept that it would have been preferable for the valuers (and the Court) to have had an independent valuation of the plant and equipment as at the time of sale, I consider that the next best assessment is the value that the parties, at arm's length, agreed to be attributed to the plant and equipment.
That is particularly so where, as set out above, there was quite a history between the parties as to what was recorded as the consideration of the components of the Business.
I would not accept the submissions made by Seascapes and Mr Piggott that Reserve Capital should wholly fail in this part of its claim because it did not adduce an independent valuation of the plant and equipment.
Further, as Mr Hockley notes, that value for plant and equipment was carried to Reserve Capital's 2016 financial statements as the value recorded 'at cost'.
Consequently, I would accept the assessment of the NTA valuation being $1,123,454: being $865,000 + $258,454.
A caveat needs to be attached to this assessment. As Seascapes and Mr Piggott submitted, my acceptance of the 'arm's length' valuation of the parties may be questionable depending which Representation I am wrong about.
I consider there is force in Seascapes' and Mr Piggott's submission that:
… if a finding of misleading or deceptive conduct is made … the assumption that the value attributed to assets by two parties dealing with each other at arm's length … may not be a sound basis for attribution of value to the plant and equipment and any goodwill at 21 March 2016.[1246]
[1246] Seascapes' and Mr Piggott's closing submissions regarding matters to which Mr Hockley's evidence relates filed 19 August 2024 [18].
Given that there may be many permutations as to how I might be wrong about which Representation, and no submissions were addressed to this, I do not consider I can take the matter further here.

E.2.2 Trading losses

Ms Marke and Mr Hockley prepared a Joint Loss Report.[1247]
[1247] Joint Loss Report: Ex 518.
As is apparent from the Joint Loss Report, Mr Hockley was not briefed to respond to all aspects of Ms Marke's Supplementary Report[1248] which dealt with her assessment of the value of the losses.[1249]
[1248] Ms Marke's supplementary report: Ex 495.
[1249] Joint Loss Report: Ex 518, Item 1.
In her assessment of the value of the losses, Ms Marke started with the reported trading profits or losses of Reserve Capital over the period and then adjusted those for non‑cash items.[1250]
[1250] ts 768.
The Joint Loss Report identified the following differences between the experts:
1.director fees: the experts disagreed on the treatment of the directors' fees totalling $40,000 in the 2016 financial year; [1251]
2.the experts disagreed over the treatment of motor vehicle costs which had been recorded in the profit and loss statements;[1252] and
3.stock on hand.[1253]
[1251] Joint Valuation Report: Ex 517, Item 4.
[1252] Joint Valuation Report: Ex 517, Item 7.
[1253] Joint Valuation Report: Ex 517, Item 12.
As I understood Ms Marke's evidence, which was relied on by Reserve Capital in respect of stock on hand, it proceeded on an assumption that the Business was loss making and there would be a loss on the stock on hand when Reserve Capital ceased to operate the Business.
As I understand it, that assumption would not be made good if I am correct in not allowing the adjustments to Reserve Capital's financial statements. That is, the premise that Reserve Capital was making a loss and would cease to trade, is not supported if those adjustments are not made. I have not considered the claim for stock on hand further and have not sought to resolve the differences between Ms Marke and Mr Hockley on this matter.
Overall, as will be seen, I would not have made an adjustment for any of: the 'unpaid wages'; interest on the loan from Mr Satyawan's mother; or motor vehicle allowances. It appears, without those adjustments, that Reserve Capital has run the Business at a profit since its acquisition.
Reserve Capital would not then have been able to prove a loss and would not be compensated for the profit it has made.

E.2.3 Consequential costs and expenses

In Ms Marke's Further Revised Schedule of losses which was MFI‑2 dated 8 March 2024, Ms Marke included the following items:
1.stamp duty on the initial purchase of $37,482: Ms Marke and Mr Hockley agreed that the stamp duty of $37,482 should be included in the loss assessment;[1254]
2.unpaid wages: this is considered at E.2.4 below;
3.unpaid interest on loan: this is considered at E.2.6 below; and
4.trade and other creditors - this was considered as 'stock on hand' above and would have been dismissed.
[1254] Joint Loss Report: Ex 518, Item 9.
The tallying of those items led to 'total consequential expenses' from the 2016 financial year up to eight months into the 2024 financial year of $1,963,698.[1255]
[1255] Ms Marke's Loss and Return Schedule: MFI-2.
From that total, Ms Marke deducted the net profit after tax for that same date range which was a 'total' profit of $451,462. That left a 'total loss suffered' of $1,512,236.

E.2.4 Unpaid wages

Ms Marke was asked what loss had been suffered by Reserve Capital by way of consequential costs and expenses incurred (if any) as a result of Reserve Capital purchasing the Business.[1256] Reserve Capital's solicitors had said to Ms Marke that the following 'may be relevant':
[13.3]Whether the accrued unpaid wages of the director of [Reserve Capital] for performing retail employee duties for the Business should be included in any losses, or otherwise treated as an unpaid consequential cost, to be taken into account as a cost and/or loss and to what extent.[1257]
[1256] Ms Marke's supplementary report: Ex 495 [3.1] at PDF page 10.
[1257] Ms Marke's supplementary report: Ex 495 at PDF page 10.

Ms Marke was instructed to assume that Mr Satyawan and Ms Dewi 'were required to both work 40 hours per week managing the store however did not receive any remuneration'.[1258]
[1258] Ms Marke's initial report: Ex 494 [13.7].
Ms Marke was told to assume those hours were worked by both of them from the date of the taking over of the Seascapes IGA. Without reciting Mr Satyawan and Ms Dewi's evidence, even if I accepted it in full on this issue,[1259] their evidence did not support that assumption. Unsurprisingly, Ms Marke accepted that if there was a change to the number of hours worked it would change her opinion as to consequential losses.[1260]
[1259] Which given the findings I have made about Mr Satyawan's credibility, I would not have done so.
[1260] ts 800.
Rather, Mr Satyawan and Ms Dewi's evidence was that they spent more and more time in the Business following acquisition but were not spending very significant numbers of hours in the Business until some time well into 2017.
In valuing the Business, using Reserve Capital's financial information post‑sale, Ms Marke, in her first report, adjusted the earnings to take into consideration:
… an assessed commercial remuneration based on the General Retail Industry Award Rates from July 2016 for a Level 7 and Level 8 employee based on a fulltime position plus superannuation to total $100,938.[1261]
[1261] Ms Marke's initial report: Ex 494 [13.7].
As I understand it, that adjustment fed into Ms Marke's calculation of the Business' valuation on a CFME method. If I have understood that correctly, then I do not need to consider it further for the reasons I have set out in E.2.1 above.
Ms Marke also, as I understood it, used the 'unpaid wages' in her Supplementary Report when she was considering the losses which had been suffered post‑acquisition by Reserve Capital.
In her Supplementary Report,[1262] Ms Marke stated:
3.14 As outlined in paragraphs 23 to 26 of the Brief dated 30 June 2022, [Reserve Capital's] Directors realised that the wages were higher than the Wages Representations and the sales were too low to generate sufficient revenue to cover the wages and also their obligations under the Lease. Therefore [Reserve Capital's] Directors ([Ms Dewi] and [Mr Satyawan]) took over a number of roles previously completed by other members of staff at the [Business] and also stopped paying themselves a wage for undertaking those roles.
3.15 As the Profit and Loss Statements of Reserve Capital are prepared on a cash basis, the unpaid wages to [Mr Satyawan] and [Ms Dewi] for work actually undertaken are not reflected in my above assessment of the actual operating loss of $271,756 from settlement until 31 March 2022. As outlined in paragraph 23 of the Brief dated 30 June 2022, accrued unpaid wages for [Mr Satyawan] and [Ms Dewi] have been assessed based on the amounts payable to a Retail level 7 employee and Retail level 8 employee in the General Retail Industry Award. The table at paragraph 23 of the Brief provides the weekly wages for each of the different levels as per the Award which I have confirmed and therefore relied on this information in my calculations. I am instructed that both Directors worked more than 38 hours each per week in the Business.
3.16 Based on this assessment, the unpaid wages and superannuation total $625,025 to 31 March 2022.
[1262] Ms Marke's supplementary report: Ex 495.
In the Joint Loss Report,[1263] at Item 10 Ms Marke considered:
… that additional wages costs would have been incurred by the Business had the Directors not stepped in and carried out their roles without paying themselves a wage as a loss mitigation strategy. Ms Marke therefore considers that the unpaid wages for work undertaken by the Directors for no compensation should be reflected in the loss assessment as a consequential loss.
[1263] Joint Loss Report: Ex 518.
In closing, Reserve Capital put this claim to 'unpaid wages' on the basis that what the court was trying to assess was what they (Mr Satyawan and Ms Dewi) had lost which would include their time spent working in the Business.[1264]
[1264] ts 1603.
In its oral closing, Reserve Capital:
1.submitted that no unpaid wages were included in the financial records of Reserve Capital;[1265] and
2.accepted that there was no evidence that there was an agreement between Reserve Capital and Mr Satyawan and, or, Ms Dewi that they were to be paid wages, nor was there a company resolution to that effect.[1266]
[1265] ts 1603 - 1604.
[1266] ts 1607.
That acceptance was in response to the question as to what Reserve Capital said was its legal liability to pay wages to Mr Satyawan and Ms Dewi.
A principal difficulty, as I see it, is that the inclusion of a claim for unpaid wages assumes, at the least it seems, that Reserve Capital had an obligation to pay such wages and had suffered a loss by taking on that liability.
Of course, neither Mr Satyawan nor Ms Dewi were plaintiffs in the action.
Ms Marke's evidence was that she would have allowed remuneration to the directors or wages to them either by wages or directors' fees up to the limit of the benchmark award she had adopted.[1267]
[1267] ts 786.
I would not have taken the 'unpaid wages' into account in calculating the losses which Reserve Capital said it had suffered post‑acquisition. That is, taking Mr Satyawan's and Ms Dewi's evidence at its highest, it did not make out the assumption given to Ms Marke. Further, there is the conceptual difficulty I have identified of there being no evidence that Reserve Capital had any obligation to pay wages.

E.2.5 Motor vehicle expenses

Ms Marke and Mr Hockley did not agree on including motor vehicle costs in the calculation of the profit or loss incurred by Reserve Capital in running the Business.
I would not have allowed that to be taken into account in the calculation of the profit or loss. That is because, for reasons I largely set out to do with the claim to unpaid wages under E.2.4 above:
1.Reserve Capital did not own a motor vehicle;
2.Reserve Capital did not establish any contractual or other liability to provide Mr Satyawan and, or, Ms Dewi with a vehicle; and
3.any 'loss' in respect of the use of a motor vehicle was 'personal' to Mr Satyawan or Ms Dewi, who were not plaintiffs in the action.

E.2.6 Interest to Mr Satyawan's mother

As noted in C.1 above, Ms Marke's calculations initially included a component for this interest in her Supplementary Report.[1268] Mr Hockley was 'unable to confirm the accuracy' of Ms Marke's calculations because he did not consider he had enough information.[1269]
[1268] Ms Marke's supplementary report: Ex 495 [6.12].
[1269] Joint Loss Report: Ex 518, Item 14.
Annexure G to Ms Marke's Supplementary Report[1270] set out certain sums 'payable' by way of that interest. By her revised damages schedule taken as MFI‑2, there was a further, different calculation of unpaid interest. That was $959,245 to the end of February 2024.[1271]
[1270] Ms Marke's initial report: Ex 494 at PDF page 49.
[1271] See Ms Marke's Loss and Returns Schedule: MFI-2 at PDF page.3.
As confirmed in its oral closing, Reserve Capital did not contend, ultimately, that it had paid any interest.[1272]
[1272] ts 1598 - 1599.
I have recited in C.2 above Mr Satyawan's evidence about what was 'outstanding' and being owed by Reserve Capital to his mother by way of principal.
Reserve Capital handed up an 'aide memoire' which became MFI‑511 and which it said came from Reserve Capital's General Ledger and showed repayments of principal. I did not find it an easy document to follow.
Mr Satyawan did not give evidence which supported the entries in MFI‑511. I would have difficulty, therefore, accepting it as accurate.
If I am wrong and Reserve Capital had incurred a liability to pay Mr Satyawan's mother 10% interest on the Purported Loan Agreement, I do not consider that the evidence would allow me to make a robust assessment of what interest was currently payable by Reserve Capital because it is, so far, not clear what the balance of principal was owing which will affect the calculation of the interest.
In any event, as I understand it, Ms Marke's last calculation of interest to be paid was not based on Reserve Capital's last position on what principal was outstanding at particular points in time (for the rolling calculation of interest). So, a further calculation would need to be put before the Court.

E.3 Opportunity loss

Ms Marke dealt with opportunity loss in Section 6 of her Supplementary Report.[1273]
[1273] Ms Marke's supplementary report: Ex 495.
In that section, Ms Marke noted she was responding to the following in the Brief to her dated 30 June 2022.
5.3 What is the loss or value of the opportunity for [Reserve Capital] to have invested in an alternative investment and earn a return on the funds invested and engaged in the purchase and operation of the Business.
17. As regards your opinion requested at 5.3 above, the [SOC] a claim for:
·the loss of the opportunity to have invested in an alternative investment and earned a return on the funds invested and engaged in the operation of the Business.
18. In respect of this head of claim, please assume [Reserve Capital's] directors' evidence will be to the following effect.
18.1 [Reserve Capital] was looking for a passive investment/asset near where its directors lived in Rossmoyne which provided income or revenue and was attracted to supermarkets for their reported rates of return for an investment up to $1.5 million,
18.2If possible, the investment/asset would not require significant management time by [Reserve Capital's] directors who could then engage in other employment or family related duties.
18.3 Although the purchase was to be financed, the finance was by a family or "friendly" party.
18.4 However, the finance for the purchase of the Business was ultimately on terms that the interest payable to the financier was 10% per annum - the interest rate being susceptible to negotiation depending on the anticipated revenue to be earned from the investment/asset.[1274]
[1274] Ex 495 at PDF page 39.
For present purposes I leave aside the assumption from the Brief to Ms Marke in [18.4] quoted immediately above, which, as set out elsewhere in these reasons, I have not found to be made good by the evidence.
Ms Marke then considered a 'return from passive investment'.[1275] In her Further Supplementary Report[1276] Ms Marke further dealt with this topic.[1277]
[1275] Ms Marke's supplementary report: Ex 495 [6.3] and following.
[1276] Ms Marke's further supplementary report: Ex 496.
[1277] Ms Marke's further supplementary report: Ex 496 [3.4].
Ms Marke picked an Australian shares index fund as the 'passive investment'.[1278] While the adoption of such an index fund may have responded to the questions posed to Ms Marke by the Brief to her, I do not consider that the underlying assumption (that Reserve Capital would have purchased an interest in such an index fund) with the purchase price of the Business is made good by the evidence led by Reserve Capital at trial.
[1278] The Vanguard Australian Shares Index ETF (ASX:VAS): Ex 495 [6.4]; ts 778.
Consequently, I do not consider, on the evidence led by Reserve Capital, that it would be a sound basis to award such damages to Reserve Capital on the basis of the index fund.
As an alternative, Ms Marke considered the 'return on alternative supermarket investment' on the basis that:
[6.11]I am instructed that [Reserve Capital] was attracted to supermarkets with an investment value up to $1.5 million. Based on my review of RSM's IGA Benchmark database, I have identified five IGAs that had a comparable business value of up to $1.4m from 2016 to date.[1279]
[1279] Ms Marke's supplementary report: Ex 495 at PDF page 40.
Again, Ms Marke's consideration was in line with the instructions given to her by the Brief.[1280]
[1280] ts 779.
However, again, I do not consider that the instructions given to Ms Marke were borne out by the evidence led by Reserve Capital at trial. Mr Satyawan did not give evidence to the effect that if Reserve Capital had not purchased the Seascapes IGA, it would have purchased another IGA (or other brand of supermarket). I would not have drawn the inference that Reserve Capital (or Mr Satyawan for that matter) was particularly attracted to supermarkets from the evidence led.
Further, the other IGA's from which Ms Marke made her calculation of a possible, alternative return were not, as I read her material initially, identified.[1281] In the course of her evidence‑in‑chief, Ms Marke identified the five IGA's as being at: Carine, Marmion, The Park Hive, Austin Lakes and Leederville.[1282] Ms Marke said that she had identified them because they had a value of around $1.4 million which was close to the $1.5 million that she was instructed would have been used for the alternate investment.[1283]
[1281] ts 779.
[1282] ts 781.
[1283] ts 781.
That has two potential significances in my view.
The first is that it is not plain to me from the evidence whether any or all of the nominated IGA's would have been 'acceptable' to Reserve Capital given Mr Satyawan's evidence about where the subject of the investment had to be.
The second, and more significant, is as to whether any of the five alternative IGA's were for sale in the relevant period and at what point in that relevant period (which would have an impact, I infer, as to the length of period in which such a posited return may have been generated). There was no evidence given about this.
In those circumstances, I would not have found that if Reserve Capital had not bought the Seascapes IGA that it would have expended $1.4 million or thereabouts on an alternative IGA - whether or not one of the five nominated and used by Ms Marke. Further, in those circumstances, I would have been unable to find that Reserve Capital had made good its loss of opportunity case calculated on this basis.
In all of those circumstances, I would not have been satisfied that Reserve Capital had established that it would have purchased an alternative IGA such that it should be awarded a return based on alternative investment opportunity. Nor would I have been satisfied as to the period of time for which such an award should have been made.
The matter was discussed with Reserve Capital's counsel in closing.[1284] Nothing emerged from that discussion which suggests a different conclusion to me.
[1284] ts 1612 - 1613.
Because of the findings I would have made on the claims for the loss of an opportunity, I do not need to go on and consider (on a further hypothesis) the submissions made by the defendants to the effect that the losses from the loss of opportunity would cease upon the point in time at which Reserve Capital, knowing of the true position, could have sold the Business.[1285]
[1285] See, for example, the closing submissions of Seascapes and Mr Piggott [207].

Overall disposition

For the above reasons, I find that Reserve Capital has failed on all of its cases. I would dismiss its claims against all of the defendants.
I will hear the parties as to final orders, including as to costs, as needs be.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TM
Associate to Justice Howard
2 MAY 2025