Upintheair Pty Ltd v Business Custodians Ltd

Upintheair Pty Ltd (the purchaser) brought proceedings against Business Custodians Ltd (the vendor) concerning the sale of a printing business. The purchaser alleged that the vendor had misrepresented the income of the business by disguising machinery sales as printing sales in the Profit and Loss Statement provided prior to completion. The purchaser also contended that fictitious invoices were created by the vendor to mask this misrepresentation. The dispute came before the Court of Appeal of New South Wales.

The court was required to determine several legal issues. These included whether further invoices, beyond those admitted by the vendor, were fictitious, and whether the purchaser had relied on the vendor's representations as to income when purchasing the business. Additionally, the court had to consider the interpretation of the contract regarding a vendor loan, specifically whether a term could be implied that interest would continue to accrue at the pre-90 day rate in the event of default, given the contract did not expressly provide for interest payable on default. Finally, the court had to determine whether, on a proper construction of the pleadings, it was necessary for the purchaser to prove that the fictitious invoices themselves, rather than merely their amounts, were included in the Profit and Loss Statement.

The court found that the vendor had misrepresented the business's income by including machinery sales disguised as printing sales in the Profit and Loss Statement. The court also determined that the purchaser had relied on these representations in deciding to purchase the business. Regarding the implied term for interest on default, the court held that the contract did not support the implication of such a term, as the parties had not intended for interest to continue to accrue at the pre-90 day rate in the event of default. The court further clarified that the purchaser was not required to prove that the fictitious invoices themselves were included in the Profit and Loss Statement, but rather that the amounts represented by those invoices were included.

The appeal was dismissed with costs.