Sacrifice Scooters Pty Ltd v Goudie
[2021] VSC 882
•3 June 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S ECI 2019 03832
| SACRIFICE SCOOTERS PTY LTD (ACN 145 287 305) | Plaintiff |
| v | |
| BRADLEY GOUDIE | Defendant |
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JUDGE: | Efthim AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 April 2021 |
DATE OF JUDGMENT: | 3 June 2021 |
CASE MAY BE CITED AS: | Sacrifice Scooters Pty Ltd v Goudie |
MEDIUM NEUTRAL CITATION: | [2021] VSC 882 |
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DEFAMATION – Publications made on social media – Judgment entered in default of appearance – Assessment of damages – Loss of profits.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L E P Magowan | Choice Legal Pty Ltd |
| No appearance for the Defendant |
HIS HONOUR:
On 17 December 2019 the plaintiff, Sacrifice Scooters Pty Ltd, obtained judgment in default of appearance in an action for defamation. The plaintiff now seeks to have its damages assessed. The defendant, Bradley Goudie, was notified of the hearing for an assessment of damages but did not appear at the hearing.
For the purposes of this application the plaintiff replies upon the affidavit of its accountant, David Cassarino, sworn 5 March 2021 and the affidavit of its director, Daniel Lawrence Mills, sworn 17 March 2021.
Background
The plaintiff is in the business of the design, manufacture, promotion and sale of scooters and related paraphernalia with a particular emphasis on Australia, the United States, the United Kingdom and continental Europe. Its business is generally but not exclusively targeted at children and young people, being the major market for scooters and related paraphernalia. The plaintiff is heavily reliant on social media, in particular YouTube and Instagram, for the purposes of promotion and marketing.
Mr Mills deposes to the position of the defendant as follows:
Mr Goudie is an active scooter rider. He lives in New Zealand and is in the business of publishing his YouTube and Instagram accounts in relation to scooters through the aliases “Scooter Brad” and “Scooter Review”. His on-line publications are sponsored. Mr Goudie, is I believe, in his mid-20s. His publications would be the largest scooter related publications in the world. I understand that his YouTube and Instagram accounts are among the most popular, if not the most popular, scooter related accounts on the internet. Mr Goudie describes himself as a “full time scootering journalist” (see Publication 3, Schedule 3 to the Statement of Claim). His publications are generally targeted at children and young people.
Mr Goudie is, I believe, the most well-known and prominent “journalist” and media identity on the internet in relation to scooters. He literally has hundreds of thousands of followers. By way of example, as at 2 June 2020, he has 361,000 subscribers to his YouTube channel 'Scooter Brad' and 240,000 followers on his Instagram account ‘scootabrad’.
The defendant, through his YouTube account and Instagram, published three articles. The first on 7 May 2017, the second on 31 August 2018 and the third on 4 September 2018.
These publications were alleged to be defamatory because they included the following statements:
- Sacrifice Scooters are unsafe;
-Sacrifice Scooters must not be ridden by people who weigh over 35 kilograms;
- Sacrifice Scooters are prone to snap;
-Sacrifice Scooters are more prone to snap than scooters from other comparable brands;
-Sacrifice Scooters had a street name of “Snaprifice”; and
-Sacrifice Scooters are renowned in the market for their poor quality and/or high propensity to snap, such as to be known by their street term “Snaprifice”; and
-Sacrifice Scooters will, or have a propensity to, snap within a month.
Damages
Mr Mills deposes that he founded the company in 2010. By 2017 the business had grown significantly. It had been recording significant increases of sales year on year and was very profitable. The defendant had a large and successful global distribution network. It had either the largest or one of the largest distribution networks in continental Europe, the UK and Ireland. It also had a substantial distribution network in the United States and Canada.
After the first publication occurred there was a marked decline in the plaintiff’s sales and profitability. The word “Snaprifice” began to regularly appear online. In relation to the plaintiff’s own social media accounts, the plaintiff was receiving literally thousands of adverse comments.
Through 2017 and 2019 the plaintiff had developed, with a UK-based professional scooter rider, Claudius Vertesi, a signature-branded scooter known as “CV Signature Range”. Mr Vertesi was at the time one of the leading professional scooter riders. Mr Vertesi had significant input in relation to the design and manufacture of the “CV Signature Range” scooters. That range was brought into the market in or around August 2018. As a result of the second publication the plaintiff did not have the success in relation to the launch that was anticipated. That brand was unsuccessful and the plaintiff received considerable negative commentary on its social media accounts and it was necessary to block users.
At about that time, given the rapid decline in sales of the plaintiff’s products, its UK distributor dropped the plaintiff as a customer. That distributor, Shiner Distribution, is one of the largest distributors in Europe. The plaintiff had sold Shiner Distribution, for example, approximately $3 million worth of stock over an 18-month period.
After the third publication, again, there was significant adverse social media commentary in relation to the plaintiff as a consequence of the publication.
Mr Cassarino is a CPA qualified accountant and tax agent and partner of the accounting firm Andresen McCarthy Partners and has acted in that role for 15 years. He has been the accountant, tax agent and strategic advisor for the plaintiff since 2013. He deposes that by having an active interest in the plaintiff as an advisor and having continual dialogue with Mr Mills, the director of the plaintiff, he is aware of the defamatory comments made by the defendant and understands the impact of those comments on the business. He states that the defamatory comments made during 2017 coincided with a dramatic decrease in revenue.
He deposes that from the 2017 financial year the decrease in sales was:
- 31.58 per cent from the 2017 to the 2018 financial year; and
- 50.41 per cent from the 2018 to the 2019 financial year.
Mr Cassarino accepts that the decline in revenue is attributed to multiple factors in addition to the defamatory comments including changing markets, unsuccessful international expansion and increased competition. However, in his view, the majority of the decrease in sales can be attributed to defamatory comments because:
-the plaintiff’s unique selling point and branding, meaning that the business should be relatively unaffected during adverse market conditions;
-while the international expansion did divide management’s time between the expansion and the core business, systems and processes were put in place to allow for the core business to continue operating as it was without as much management involvement;
-the coincidence between the timing of the comments and the decrease in revenue and there being no other material reason for the decrease; and
-since Scooter Brad was silenced (at the start of 2020) the business has returned to form, demand has increased significantly and the business is struggling to fill orders at the date of Mr Cassarino’s opinion.
Mr Cassarino is of the opinion that, if the defamatory comments realised 50 per cent to 75 per cent of their losses incurred, the net loss that can be contributed to the comments is between $955,211.00 and $1,839,592.00 over the 2018, 2019 and 2020 financial years. He calculates the loss as follows:
Financial Year Base (What Gross Profit could have been without the defamatory comments) Actual Gross Profit Total Loss in Gross Profit 75% of loss (defamatory comments) 25% of loss (other causes) 2017 $ 1,840,435 2018 $ 1,840,435 1,143,839 696,596 522,447 174,149 2019 $ 1,666,286 541,714.16 1,124,572 843,429 281,143 2020 $ 1,385,143 753,522 631,621 473,716 157,905 1,839,592 613,197
Financial Year Base (What Gross Profit could have been without the defamatory comments) Actual Gross Profit Total Loss in Gross Profit 50% of loss (defamatory comments) 50% of loss (other causes) 2017 $ 1,840,435 2018 $ 1,840,435 1,143,839 696,596 348,298 348,298 2019 $ 1,492,137 541,714.16 950,423 475,211 475,211 2020 $ 1,016,926 753,522 263,404 131,702 131,702 955,211 955,211
2017 2018 2019 2020 Sales $ 3,888,786 $ 2,660,633 $ 1,319,425 $ 1,546,481 COGS $ 2,048,351 $ 1,516,793 $ 777,711 $ 792,959 Gross Profit $ 1,840,435 $ 1,143,839 $ 541,714 $ 753,522
Mr Cassarino has expressed the knowledge he used in arriving at this figure as follows:
Applying a dollar figure to the loss is difficult. I have used the following method to calculate the potential cost the comments had on the business:
-I have chosen to use the Gross Profit to calculate the net loss as the fixed costs (including wages) have been historically relatively consistent and not quantity or revenue affected.
-I have used the 2017 Gross Profit as the Base Gross Profit for the 2018 Financial Year.
-This assumes that the Gross profit would have been the same in 2018 as it was in the 2017 Financial Year without the comments.
-From there I worked out the difference between the Base and the Actual Gross profit which gives me the “loss in gross profit”.
-With assuming that the majority of the Gross Profit loss is attributed to the defamatory comments, I have attributed 50% and 75% of the loss because of the comments.
-For subsequent Financial Years (the 2019 and 2020 financial years), I have reduced the Base by losses possibly caused by other factors (by 25% of the previous financial year’s loss and 50% of the previous year’s loss) in the previous Financial Year.
The plaintiff is claiming for loss of profits caused by the defendant. It has established a causal link between the publication of the defamatory statements and loss through the report of its accountant Mr Cassarino. He is not an independent expert, which is of concern, but this application for damages has not been opposed and his report is the only evidence before me.
In State of New South Wales v Moss,[1] Heydon JA said:
In short, where earning capacity has unquestionably been reduced but its extent is difficult to assess, even though no precise evidence of relevant earning rates is tendered, it is not open to the court to abandon the task and the want of evidence does not necessarily result in non-recovery of damages. Statements to the contrary such as those made in Allen v Loadsman [1975] 2 NSWLR 787 at 792 are not correct: Baird v Roberts [1977] 2 NSWLR 389 at 397-8 per Mahoney JA; J K Keally v Jones [1979] 1 NSWLR 723 at 732-735 per Moffitt P; Yammine v Kalwy [1979] 2 NSWLR 151 at 154-5 and 156-7 per Reynolds JA and Mahoney JA; Thiess Properties Pty Ltd v Page (1980) 31 ALR 430; see also Radakovic v R G Cram & Sons Pty Ltd [1975] 2 NSWLR 751 at 761 where Samuels JA criticised the “meagre facts” provided but did not say it was not open to the jury to find a substantial sum for diminished earning capacity by the “application of their own knowledge and experience”. The task of the trier of fact is to form a discretionary judgment by reference to not wholly determinate criteria within fairly wide parameters. Though the trier of fact in arriving at the discretionary judgment must achieve satisfaction that a fair award is being made, since what is involved is not the finding of historical facts on a balance of probabilities, but the assessment of the value of a chance, it is appropriate to take into account a range of possible outcomes even though the likelihood of any particular outcome being achieved may be no more than a real possibility. The trial judge in substance explained these aspects of the jury’s task satisfactorily.[2]
[1](2000) 54 NSWLR 536.
[2]Ibid [87].
The damages that the plaintiff claims are difficult to assess as the only evidence I have is the report of the company accountant. I have no idea whether it is based on audited accounts. There is no evidence before me to rebut the plaintiff’s claim. In my view the 50 per cent deduction calculated by Mr Cassarino appears to be high; a 40 per cent deduction is more appropriate taking into account the factors raised by Mr Cassarino and the fact that Mr Cassarino is not an independent expert. I therefore assess damages at $735,837 (40 per cent of $1,839,592).
The plaintiff submits that there should also be interest on that amount from the date of the writ to the date of judgment at the rate of 3 per cent. In my view that is appropriate.
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