Mensie Services Pty Ltd v Newserv Pty Ltd [2023] NSWSC 65

Mensie Services Pty Ltd v Newserv Pty Ltd [2023] NSWSC 65

The representations as to subcontractor expense and profitability were materially inaccurate and breached contractual warranties and s 18 ACL, causing loss to the defendants/cross-claimants. The appropriate remedy is to reduce the purchase price under the Sale Agreement from $3 million to $2.1 million and the advance owing under the Loan Agreement from $1.5 million to $600,000. The plaintiff is entitled to judgment for $600,000 plus interest at 8% per annum from the completion date less interest already paid.

Parties
Plaintiff/first Cross Defendant: Mensie Services Pty Ltd; Second Cross Defendant: Mr Mensie Menashie; Third Cross Defendant: Ms Julyana Dankha; Fourth Cross Defendant: Menashie Services Pty Limited; First Defendant/first Cross Claimant: Newserv Pty Ltd; Second Defendant/second Cross Claimant: Mr Simon Bartter
Jurisdiction
Australia
Judgment Date
10 February 2023
Procedural Posture
Principal Judgment / Judgment After Trial
Outcome
Cross-claimant is entitled to an order varying the purchase price; plaintiff entitled to judgment for reduced amount plus interest.
Legal Topics
Breach of Contract, Breach of Warranty, Misleading or Deceptive Conduct, Damages, Variation of Contract Under ACL
Contract Law Consumer Law Equity Breach of Contract Breach of Warranty Misleading or Deceptive Conduct Damages Variation of Contract Under ACL

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Parties

Mensie Services Pty Ltd

Plaintiff/first Cross Defendant

Mr Mensie Menashie

Second Cross Defendant

Ms Julyana Dankha

Third Cross Defendant

Menashie Services Pty Limited

Fourth Cross Defendant

Newserv Pty Ltd

First Defendant/first Cross Claimant

Mr Simon Bartter

Second Defendant/second Cross Claimant

Procedural Posture

Principal Judgment / Judgment After Trial

Legal Issues

  1. 1 Whether there was breach of contractual warranties concerning the accuracy of financial information in the sale of business
  2. 2 Whether there was misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (ACL)
  3. 3 Whether damages or variation of contract are appropriate remedies

Ratio Decidendi

The representations as to subcontractor expense and profitability were materially inaccurate and breached contractual warranties and s 18 ACL, causing loss to the defendants/cross-claimants. The appropriate remedy is to reduce the purchase price under the Sale Agreement from $3 million to $2.1 million and the advance owing under the Loan Agreement from $1.5 million to $600,000. The plaintiff is entitled to judgment for $600,000 plus interest at 8% per annum from the completion date less interest already paid.

Court Disposition

Cross-claimant is entitled to an order varying the purchase price; plaintiff entitled to judgment for reduced amount plus interest.

Orders

  • The Sale Agreement is varied pursuant to ss 237 and 242 of the ACL to reduce the Purchase Price from $3,000,000 to $2,100,000.
  • The Advance owing under the Loan Agreement is reduced from $1,500,000 to $600,000.