| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : SUNBLAZE HOLDINGS PTY LTD -v- RUDMAN [2005] WADC 23 CORAM : COMMISSIONER GREAVES HEARD : 10 MARCH & 12-14 OCTOBER 2004 DELIVERED : 17 FEBRUARY 2005 FILE NO/S : CIV 2971 of 2000 BETWEEN : SUNBLAZE HOLDINGS PTY LTD Plaintiff
AND
MAUREEN SYLVIA RUDMAN
Defendant
Catchwords: Share mortgage - Power of sale - Whether mortgagor in default at time of Notice - Sale of share by mortgagee - Whether mortgagee converted share - Value of share at time of conversion - Turns on its own facts
Legislation: Nil
Result: Plaintiff's claim dismissed
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Representation:
Counsel:
Plaintiff : Mr C P Shanahan
Defendant : Mr A P Hershowitz
Solicitors:
Plaintiff : Butcher Paull & Calder
Defendant : Paiker & Overmeire
Case(s) referred to in judgment(s):
Cuff v Broadlands Finance Ltd [1987] 2 NZLR 343
Harrisons Group Holdings Ltd v Westpac Banking Corporation (1989) 51 SASR 36
Pacific Acceptance Corporation Ltd v Mirror Motors Pty Ltd (1960) 61 SR (NSW) 548
Case(s) also cited:
Nil
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1 COMMISSIONER GREAVES: In 1993, Mr Richard Spain began work at a firm known in these proceedings as Travelabout. Travelabout was a business owned by Noraben Pty Ltd ("Noraben"). Mr Spain went to work for Travelabout to give him the opportunity to decide whether the plaintiff, the trustee of his family trust, should purchase an interest in Noraben and the Travelabout business. In the event, the plaintiff purchased a one third share from a Mr George Sisarich for $140,000.
2 At the same time that Mr Spain was working for Noraben, his wife operated another business owned by the plaintiff known as Discover West Holidays. Mr Spain gave evidence that the plaintiff sold the business of Discover West Holidays in January 1996. He said he approached Ray Harrison of Gillard Finance Brokers Pty Ltd in early 1996 to see if he could arrange a loan of $65,000 to enable the plaintiff to pay creditors of the business of Discover West Holidays. Mr Spain said Mr Harrison as a representative of Gillard Finance Brokers Pty Ltd had been associated with Travelabout from at least the time he became involved with that business and Mr Harrison had assisted Travelabout with all its financial arrangements. 3 Mr Spain said Mr Harrison arranged for the defendant to lend the plaintiff the sum of $65,000 in February 1996. 4 By par 3 of the amended statement of claim, the plaintiff alleges that the loan agreement between the parties was partly written, partly oral and partly to be implied from the following documents: "(1) A deed of loan between the Plaintiff and the Defendant dated 28 February 1996 stamped the 7 March 1996 ('Primary Instrument');
(2) A share mortgage between the Plaintiff and the Defendant dated and stamped 28 February 1996 ('Share Mortgage'); (3) A mortgage of land between the Plaintiff and the Defendant in respect of all of the land in Lot 742 on Plan 15075 Certificate of Title 1698 Folio 108, known as 39 Barranjoey Way, Sorrento, in the State of Western Australia ('the Land'), dated and stamped 28 February 1996 ('Land Mortgage'); (4) Certificates issued pursuant to section 234(10) of the Corporations Law by the director and secretary of the
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5 By par 4 of the amended statement of claim, the plaintiff alleges that the loan agreement between the parties contained certain implied terms, including a term that the defendant would exercise any power of sale under the share mortgage and/or land mortgage bona fide and in good faith. In par 3 of the amended defence, the defendant pleads that on 28 February 1996 the plaintiff and the defendant completed documentation for the loan and for security for the loan. The defendant supplies the following particulars of that documentation as follows: "(a) Deed of Loan between the plaintiff as 'the debtor' and the defendant as 'the mortgagee' ('the Deed of Loan');
(b) Share Mortgage Agreement between the plaintiff as 'the mortgagor' and the defendant as 'the mortgagee' ('the Share Mortgage');
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6 The defendant does not identify the ancillary documentation in par 3(d) of the amended defence. On the pleadings, however, there is no issue between the parties that the deed of loan (exhibit 1), the share mortgage (exhibit 2) and the mortgage of land (exhibit 3) were part of the loan agreement between the parties. While there remains an issue on the pleadings whether the three remaining documents particularised by the plaintiff formed part of the agreement between the parties, that issue was not ventilated with any vigour at the trial and I accept the submission of counsel for the plaintiff that the ancillary documentation referred to in par 3(d) of the amended defence comprised the Corporations Law Certificates (exhibit 5), the authority to obtain duplicate title and facsimile of agreement dated 14 February 1995 (in error for 1996) (exhibit 4), being the remaining three documents particularised by the plaintiff in par 3 of the amended statement of claim. 7 By par 4 of the amended defence, the defendant admits the allegation in par 4.3 of the amended statement of claim that the defendant would exercise any power of sale under the share mortgage and/or the land mortgage bona fide and in good faith. 8 In par 6 of the amended statement of claim the plaintiff alleges that on or about 28 October 1998 the plaintiff learnt that its share in Noraben had been acquired by the defendant and sold to Mr Harrison for $42,352.63 of which $32,500 was principal outstanding under the deed of loan without his knowledge. In par 7.3 of the amended statement of claim, the plaintiff alleges that in breach of the implied term the defendant would exercise any power of sale under the share mortgage and/or loan mortgage bona fide and in good faith the defendant purported to exercise the power of sale under the share mortgage when the plaintiff was not in default. The plaintiff particularises the alleged breach at par 7.3 of the amended statement of claim as follows: "(1) Serving a Notice of Demand under the Land Mortgage on the Plaintiff dated 27 May 1998 ('LM Notice of Demand') alleging:
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(a) The Plaintiff had 'defaulted in the due and punctual performance of the Plaintiff's obligations under the Primary Instrument'; (b) the LM Notice of Demand did not particularise the alleged default; (c) as a result of such alleged default the Plaintiff was liable to repay the monies owing under the Primary Instrument; and (d) if such monies were not repaid within three (3) days of service of the LM Notice of Demand on the Plaintiff the Defendant would be entitled to exercise any powers, rights and remedies under the Land Mortgage and Primary Instrument; (2) Serving a Notice of Demand under the Primary Instrument on the Plaintiff dated 27 May 1998 ('PI Notice of Demand') alleging: (a) the Plaintiff had 'defaulted in the due and punctual performance of the Plaintiff's obligations under the Primary Instrument'; (b) the PI Notice of Demand did not particularise the alleged default; (c) as a result of such alleged default the Plaintiff was liable to repay the monies owing under the Primary Instrument; (d) if such monies were not repaid within three (3) days of service of the service of the PI Notice of Demand the Defendant would be entitled to exercise her power of sale under the Share Mortgage; (3) Sold the Share in purported exercise of the power of sale under the Share mortgage by the Share Sale when the Plaintiff was not in default in the due and punctual performance of the Plaintiff's obligations under the Primary Instrument."
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9 Further and in the alternative, the plaintiff alleges in par 7.4 of the amended statement of claim that the defendant failed to exercise its power of sale under the share mortgage bona fide and in good faith and pleads the following particulars:
"(1) The Plaintiff repeats paragraph 7.3;
(2) The Share Sale was conducted on the basis that the sale price for the Share would be calculated by sole reference to the monies the Defendant alleged to be outstanding under the Primary Instrument and with no reference to the value of the Share; (3) Sold the Share by the Share Sale to a purchaser who was intimately aware of the true value of the Share because of his prior association with the Plaintiff; (4) Sold the Share by the Share Sale without seeking to establish the market value of the Share; (5) Sold the Share without advertising or disseminating the fact that the Share was available for purchase; and (6) Sold the Share at an undervalue, the true value of the Share being approximately $150,000."
10 The plaintiff alleges that as a result of the breaches alleged, the plaintiff lost the benefit of the true value of the share. The plaintiff claims damages, equitable compensation and an account of the defendant's profits from the share sale. 11 The defendant admits that on or about 20 October 1998 Mr Harrison purchased the share in Noraben for the sum of $42,352.63 but otherwise denies the breaches alleged by the plaintiff. 12 Clause 3 of the Share Mortgage (exhibit 2) provides that the plaintiff mortgagor shall pay the monies thereby secured at such times and in such manner and including interest at such rate as are prescribed by the Deed of Loan (exhibit 1) and the Share Mortgage (exhibit 2). Clause 2 of the Deed of Loan (exhibit 1) provides:
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2.2 So long as the Principal Sum or any part thereof shall remain unpaid, TO PAY to the Mortgagee interest on the same:- PROVIDED THAT the Mortgagor shall not be at liberty to repay to the Mortgagee the Principal Sum or any part thereof earlier than as hereinbefore provided, unless:- (a) the said repayment is of the whole of the Moneys Hereby Secured; and (b) such repayment is only made after one (1) month's prior written notice has been given by the Mortgagor to the Mortgagee of the Mortgagor's intention so to repay the whole of the Moneys Hereby Secured; and (c) such repayment includes:- (i) if made before the first anniversary of the Interest Computation Date, an amount equal to two (2) Periodic Instalments; or
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(ii) if made after the first anniversary of the Interest Computation Date, an amount equal to one (1) Periodic Instalment." 13 The term "Instalment Payment Days" in cl 2.2(b) of the Deed of Loan (exhibit 1) is not defined but the term "the Interest Payment Days" is defined in the schedule to the Deed of Loan as "Consecutive monthly payments commencing on the date being one (1) month from the date of execution of this Deed." The deed reveals that it was executed on 28 March 1996. The case for the plaintiff is, therefore, that payments of interest were due to the defendant under the loan on the 28th of each calendar month. 14 It was common cause between the parties that the plaintiff repaid half the principal of this loan in the sum of $32,500 to the defendant on 17 April 1997. The solicitor for the defendant wrote to the plaintiff by exhibit 16 on 31 May 1997 in part in the following terms: "… please note that interest owing on the balance owing to my client ($32,500) is the monthly sum of $338.54, payable by cheque made out to 'M Rudman' on the 18th of each month, until the capital is repaid in full." 15 The evidence of Mr Spain was that between 17 April 1997 and prior to 27 May 1998 the plaintiff continued to make interest payments of $677.08 to the defendant, being bi-monthly payments of $338.54. These payments are recorded in Noraben's ledger of Mr Spain's loan account which records six payments of $677.08 on 4 July 1997, 19 August 1997, 15 October 1997, 24 February 1998, 6 March 1998 and 29 April 1998. As I have observed, the loan agreement provided that the next instalment of interest was due on 28 May 1998. The defendant issued a notice of demand under the share mortgage, exhibit 2, dated 27 May 1998 (exhibit 8). The case for the plaintiff is accordingly that on 27 May 1998 the plaintiff was not in arrears under the loan agreement. Counsel for the plaintiff further submitted there was no evidence that any monies were owing under the loan agreement at 27 May 1998. Counsel for the plaintiff referred to the evidence of Mr Spain in cross-examination and submitted that at no time did Mr Spain concede that the plaintiff was in arrears on 27 May 1998. That evidence is to be found at T60. In my opinion, that evidence falls far short of any concession on the part of Mr Spain that the plaintiff was in arrears under the loan agreement on 27 May 1998. I accept the submission of counsel for the plaintiff that the fact that there may have been default prior to the payment on 29 April 1998 is irrelevant
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because any such default was remedied by the time of the issue of the notice of default and no such prior conduct is relied upon in the notice of default upon which any exercise of the power of sale is based. 16 The case for the defendant is that interest was payable under the loan agreement to the defendant on 18 May 1998 and that therefore the plaintiff was in default under the loan agreement on 27 May 1998. There is no evidence that the plaintiff agreed to the variation of the day for payment of interest on the 28th of each calendar month to the 18th of each calendar month, as stated by the solicitor for the defendant in exhibit 16, nor did that date reflect the pattern of payments made by the plaintiff to the defendant. The solicitor was not called as a witness by the defendant and thus was never available for cross-examination by the plaintiff. In these circumstances I draw the inference that the evidence of the solicitor could not have assisted the defendant. 17 Counsel for the defendant conceded that the first issue for determination by the court in this case is whether the plaintiff was in default under the loan agreement at the time of the issue of the notice of default on 27 May 1998. I find the plaintiff was not in default under the loan agreement at the time of the issue of the notice of default by the defendant on 27 May 1998. It should perhaps also be observed that the notice of demand exhibit 8 does not identify any default by the plaintiff and no evidence was led in respect of such alleged default other than an alleged failure to pay interest due under the loan agreement at the date of the notice of demand on 27 May 1998. 18 Counsel for the plaintiff contended that because there was no default by the plaintiff at the date of the notice of demand the power of sale never arose and the sale of the plaintiff's share was illegal, and constituted a conversion by the defendant. It is not in issue that the defendant took the transfer of the share pursuant to the execution of the signed transfer deposited by the plaintiff prior to the purported exercise of the power of sale under the share mortgage. Counsel for the plaintiff submitted that the taking of the share for the purpose of sale was a conversion, a conversion that was antecedent to the improper exercise of the power of sale and was unlawful in itself. He referred generally to Cuff v Broadlands Finance Ltd [1987] 2 NZLR 343. 19 Counsel for the plaintiff further submitted that when a negotiable instrument or other document representing a chose in action is converted the value which the document represents and not merely its value as a piece of paper is the proper measure of damage. He referred to Harrisons
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Group Holdings Ltd v Westpac Banking Corporation (1989) 51 SASR 36 at 40. He submitted that it is the value of the goods converted that represents the damages to which the plaintiff is entitled, and the time at which the value of the goods is to be determined is ordinarily the date of the conversion: Pacific Acceptance Corporation Ltd v Mirror Motors Pty Ltd (1960) 61 SR (NSW) 548. 20 In view of the conclusion I have reached that the plaintiff was not in default at the date of the defendant's purported exercise of the power of sale and that therefore the defendant converted the plaintiff's share in Noraben, it becomes unnecessary for the court to determine the alternative plea in par 7.4 of the amended statement of claim that the defendant failed to exercise its power of sale under the share mortgage bona fide and in good faith. Both counsel were agreed that the crucial issue for determination in the present case is the value of the plaintiff's share in Noraben on 10 October 1998. 21 The onus is on the plaintiff to establish on the balance of probabilities that the share was sold at an undervalue as at 10 October 1998. Counsel for the plaintiff contended that the three primary areas of dispute regarding the valuation of the plaintiff's share in Noraben can be shortly disposed of. They are (1) Kalbarri Backpackers, (2) motor vehicles and (3) goodwill. There is a further issue on the evidence relevant to the valuation of the plaintiff's share in Noraben. The case for the defendant is that in 1998 the business of Travelabout had a negative cash flow and was in a precarious financial position that would affect particularly the valuation of any goodwill in the business. 22 Mr James Thompson for the plaintiff and Mr Daniel Oblowitz for the defendant were agreed on the evidence that the asset of Noraben known as Kalbarri Backpackers should for present purposes as at 10 October 1998 be valued at $430,000. The valuation of Mr Thompson dated 13 June 2002 is to be found at p 9 et seq and p 44 et seq of exhibit 32. The evidence of Mr Oblowitz is to be found at p 34 et seq of exhibit 32. 23 It will be seen that Mr Thompson adopted the market value of the motor vehicles as estimated by the directors in 1998 as $1,490,000. No independent valuation of the vehicles was carried out in October 1998. The plaintiff called the author of exhibit 26, Mr Con Mast. In cross-examination Mr Mast stated (T150) that he did not value the motor vehicles.
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24 Counsel for the defendant pointed to a number of inconsistencies on the face of exhibit 26 and exhibit 37. He submitted the court should not conclude that the figures stated in exhibit 26 and the total of $1,490,000 is a reliable valuation of the market value of the vehicles in October 1998. I accept that submission. I find that the plaintiff has failed to establish on the evidence the fact of the market value of the vehicles relied on by Mr Thompson in his valuation.
25 At pp 6 and 7 of his valuation, Mr Thompson concluded that the level of goodwill in Noraben in October 1998 would have been between zero (ie, based on the return of investment method) and $763,000 (based on actual sales evidence). Mr Thompson relied on the following sales evidence at p 6 of his report: 26 Mr Thompson then reached the following conclusions at p 7 of his report: "As a valuation principle, direct sales evidence should take precedence over a price calculated using a valuation method. This sales evidence obviously has to be relevant (i.e. same type of business), within a short period of the transaction and independent (i.e. at arms length). The sales of shares in April 1997 meet all of these criteria. Thus in my opinion, this sales evidence has more credence than the value obtained using the ROI method in this instance. As a downturn in the company sales had occurred due to the Asian currency crisis in mid 1998, the level of goodwill would have been lower than in April 1997. In my opinion, a discount of 60% should be applied to the goodwill level of the business in October 1998, compared to April 1997, due to this downturn and the time that has elapsed from the last sale in April 1997. This equates to a goodwill of $305,000 (i.e. 40% of $763,000)." 27 Mr Thompson, therefore, assessed goodwill in the sum of $365,000 based on previous sales. It will be observed that at p 6 of his report, in the second to last paragraph Mr Thompson has crossed out his previous statement that Mr Collins may have overpaid in April 1998. In
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cross-examination, at T275, Mr Thompson agreed that it was a possibility that Mr Collins overpaid in April 1997. He said he did not know all the facts associated with that sale. I find the evidence of Mr Thompson itself reveals the uncertain basis of the previous sales evidence he relied on to make his calculation of goodwill. 28 While Mr Thompson assessed goodwill at $365,000 based on previous sales, Mr Oblowitz ascribed no additional value to goodwill. Counsel for the plaintiff and defendant each acknowledged in the end that the main difference between the opinion of Mr Thompson and Mr Oblowitz in the valuation of goodwill is that Mr Thompson formed the opinion that the business was supporting itself on a cash flow basis while Mr Oblowitz formed the contrary opinion. Mr Thompson acknowledged in cross-examination that a business that has a negative cash flow is not paying its way and such a conclusion leads to a more negative view of the business (T230). 29 It is apparent from the evidence of Mr Thompson that he has adopted the figure of $436,196 as earnings before depreciation from the trial accounts to 31 May 1998. He expresses the opinion that depreciation, interest and management fees are not to be deducted from this sum in the determination of the financial position of the company in 1998. 30 Mr Thompson was referred to the evidence of Ms Julie Cox in exhibit 41 on behalf of the defendant where it is apparent she has adopted the same figure of $436,196 in respect of earnings before depreciation, interest and management fees. She then deducted lease charges relating to the vehicle fleet in the sum of $388,416 to the year ending 30 June 1997 and in the sum of $356,048 to the year ending 31 May 1998. At par 13 of exhibit 41, Ms Cox states: "13. From the information available, it appears that the business had negative cashflow from operations after taking into account the lease charges related to the vehicle fleet, as demonstrated in the following table. It appears that most of the vehicle leases were on three and four year lease terms due to expire during 2000.
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Based on trial balance
30 June 97 | Based on
accounts
30 June 97 | Based on trial balance
31 May 98 | | Operating loss before asset sales Add: amortisation of leased vehicles Add: depreciation Add: lease financing charges Less: lease charges ($32,368 per month) | (622,312) 369,795 48,681 106,960 (388,416) | (434,352) 369,795 48,681 106,960 (388,416) | (283,929) 312,000 26,400 144,000 (356,048) | | Operating cashflow | (485,292) | (297,332) | (157,577)" | 31 Mr Thompson's response to this evidence is in par (3) in exhibit 42 as follows: "(3) Point 11 Page (3) – This table shows that in the eleven months to 31 May 1998, the earnings before amortisation, depreciation, interest and management fees were $436,196. The interest expenses were $232,712 and management fees $149,013. Thus the positive cashflow was $54,471. EBIDTA= 436,196 Less: Interest 232,712
: Management Fees 149,013 32 Mr Thompson explains his evidence in par 3 of exhibit 42 at T230. It is apparent from that evidence that Mr Thompson has not deducted the lease charges in his calculation. At T317, Ms Cox addressed the deduction of lease charges in the determination of cash flow when she said: "The lease charges represent the actual monthly cash payment that's made to the leasing companies for the vehicle fleet that's under lease, and therefore in arriving at the operating cash flow,
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because that is a cash outgoing of the business, that needs to be taken into account." 33 Ms Cox said at T318 that such is the generally accepted accounting and valuation practice. It is apparent from exhibit 32 at p 34 that Mr Oblowitz deducted the same lease costs as Ms Cox for the relevant years in determining the negative cash flow from operations, and ultimately the good will of the business. 34 It should be observed that neither Mr Thompson nor Ms Cox expressed an opinion whether the business had or had not a positive cash flow in October 1998. At T234, Mr Thompson acknowledged that his opinion was that the figures showed that the business had a positive cash flow. Ms Cox's opinion was also formed well after the event, and she acknowledged (T338) she would have required further information to prepare a formal valuation. 35 The plaintiff also relied on the evidence of Mr Ashley Cross who was the chartered accountant for Noraben from 1990 to 2002. He identified the profit and loss statement for the year ended 30 June 1998 in exhibit 32. In cross-examination, Mr Cross gave the following evidence at T111 et seq: "Were you responsible primarily for preparing the audit, the financial statements?---Yes. Would you agree that in 1997 and 1998 Noraben was trading at a loss and was highly geared?---Yes. So those are for the two years preceding the sale of the share in October 1998. There was a trading at a loss and highly geared. To what extent was it highly geared? SHANAHAN, MR: Your Honour, can I just rise at this stage? I object to the manner in which my friend has put the question in terms of two financial years. As I understand him to be asking the question, one could have understood him to have been referring to a single financial year, 97-98. I think if we are going to have those sort of questions it would be helpful if my friend could identify 96-97 and 97-98, given that that's the way in which the financial accounts have been prepared. HERSHOWITZ, MR: Just to clarify that. Thank you, that is a fair comment by my friend. In 1997, that is from 96 July to
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June ending 97, and for the following year to June 1998, you would agree Noraben traded at a loss? ---Yes. And you would agree that it was highly geared?---Yes. To what extent was it highly geared? Are you able to tell his Honour?---Most of the vehicles that were the assets of the company were subject to leases or hire-purchase agreements, so most of the assets were subject to finance. Would I be correct then, is it fair to say, that Noraben was not generating sufficient earnings to cover its financing costs?---The only – yes, I think that is correct to say, yes. And for that same period, is it fair to say that the business had a negative cash flow from operations, taking into account the lease charges relating to the vehicle fleet?---Yes, taking into account all the expenditure, yes. And in the 11 months to May 1998, is it correct that the company received and required cash injections from one of its major shareholder, Mr Colins, just to enable it to meet its debts?---I'm not sure on the actual date but I do know Mr Colins did inject funds into the business, yes. In that year leading up to June 1998?---I would probably just have to have a look back at the particulars of that year to see that it went in in that year, but I do know he did inject funds into the company. And were those funds required by Noraben in order to enable it to meet its day-to-day credit?---It would have been. And then is it fair to say, Mr Cross, that the business operations in those two years we have spoken about were primarily funded by debt and Noraben had a substantial deficiency of net assets?---Yes. And, moreover, it was undercapitalised?---Yes. Given all of that that you have just agreed with, is it fair to say that by the end of June 1998 it was in somewhat of a precarious financial position?---Yes, it needed to – it had made a loss and it needed to correct that.
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36 Mr Cross was further cross-examined about the contents of exhibit 31 in which he stated on 13 November 1998 he did not consider Noraben to be trading whilst insolvent as the company had the ability to meet its debts from trading income and other sources. He gave evidence before me that his opinion then expressed did not mean Noraben had no cash flow problems and was not relying on capital injections. It was simply his opinion that the company was not insolvent. He said Mr Collins was still able to inject further funds into the company if need be, and but for those funds, if all the creditors had asked it to pay at that time, it could not have met those debts and would have been insolvent (T117). 37 While the factual foundation for the opinions of both Mr Thompson and Ms Cox have not been established independently of their evidence, I am of the opinion that the uncontradicted evidence of Mr Cross is consistent with the conclusions of Ms Cox in regard to the trading position of Noraben in October 1998. I accept the submission of counsel for the defendant that it is significant that two chartered accountants, one being the chartered accountant for Noraben, and Ms Cox who is an independent chartered accountant, are in total agreement that Noraben was trading at a loss, was highly geared, was not generating sufficient earnings to cover its financing costs, had negative cash flow operations, required cash injections to assist in meeting its working capital needs, and that its business operations were primarily funded by debt. I conclude that the evidence of Mr Cross and Ms Cox is to be preferred over the evidence of Mr Thompson. I also accept the submission of counsel for the defendant that Mr Spain confirmed the evidence of Mr Cross and Ms Cox regarding cash flow problems, the inability of the company to meet its debts as and when they fell due, the solvency concerns of the business, and the continuation by the business to rely on injection of capital from outside sources. 38 I have found that the plaintiff has failed to establish the value of the motor vehicles relied on by Mr Thompson and his valuation of the goodwill. I accept the submission of counsel for the defendant that the net worth of Noraben in October 1998 was nil. I also accept his submission that the sale of the share to Harrison, although at a price higher than the
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nil value was a commercially agreed upon value for the purpose of the share mortgage, and did not reflect the true value of the share at the date of the conversion. 39 In my opinion, the plaintiff has not discharged its onus to prove on a balance of probabilities that the share in Noraben was sold at an undervalue, and accordingly the plaintiff's claim must fail.
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