Orica Investments v McCartney [2010] NSWSC 488

Orica Investments v McCartney [2010] NSWSC 488

Approach 2 was preferable because it used actual sales of Bronson & Jacobs and Ingredients Plus and better reflected disruption from Orica's takeover while assuming key employees were likely to remain with Bronson & Jacobs. The Court rejected the submission that Clos would almost certainly have terminated the distributorship in any event, but applied contingency discounts for the risk of termination and loss of TP Health. The gross margin data was sufficiently reliable, no incremental overhead adjustment was required, a terminal value was recoverable notwithstanding expiry of the restraint period, and Bronson & Jacobs had taken reasonable mitigation steps. Damages were therefore assessed...

Jurisdiction
Australia
Judgment Date
28 May 2010
Procedural Posture
Damages Inquiry in a Contract Proceeding Concerning Breach of Restraint Clauses and Loss of a Distributorship Agreement / Assessment of Damages Following White J's Liability Judgment and Referral for Inquiry and Certification
Outcome
Damages assessed for the Plaintiffs in the amount of $1,561,245 together with interest of $743,452.04, making a total of $2,304,697.04, and Defendants ordered to pay the Plaintiffs' costs of the damages inquiry.
Legal Topics
['breach of Restraint Clause' 'loss of Distributorship Agreement' 'loss of a Chance' 'mitigation of Loss' 'discounted Cash Flow Valuation' 'causation and Contingencies']
['contract Law' 'damages'] ['breach of Restraint Clause' 'loss of Distributorship Agreement' 'loss of a Chance' 'mitigation of Loss' 'discounted Cash Flow Valuation' 'causation and Contingencies']

Case Brief

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Procedural Posture

Damages Inquiry in a Contract Proceeding Concerning Breach of Restraint Clauses and Loss of a Distributorship Agreement / Assessment of Damages Following White J's Liability Judgment and Referral for Inquiry and Certification

Legal Issues

  1. 1 ['Whether Clos would have terminated the distributorship in any event, and the extent to which damages should be reduced for that chance' 'Whether Approach 1 or Approach 2 was the preferable valuation methodology for expected future revenues from the Clos Distributorship' 'Whether the gross margin data relied on by Mr Potter was reliable' 'Whether any allowance should be made for incremental overheads' 'Whether the discount rate and terminal value used in the damages calculation were appropriate' 'Whether Bronson & Jacobs failed to mitigate its loss by sourcing substitute products']

Ratio Decidendi

Approach 2 was preferable because it used actual sales of Bronson & Jacobs and Ingredients Plus and better reflected disruption from Orica's takeover while assuming key employees were likely to remain with Bronson & Jacobs. The Court rejected the submission that Clos would almost certainly have terminated the distributorship in any event, but applied contingency discounts for the risk of termination and loss of TP Health. The gross margin data was sufficiently reliable, no incremental overhead adjustment was required, a terminal value was recoverable notwithstanding expiry of the restraint period, and Bronson & Jacobs had taken reasonable mitigation steps. Damages were therefore assessed...

Court Disposition

Damages assessed for the Plaintiffs in the amount of $1,561,245 together with interest of $743,452.04, making a total of $2,304,697.04, and Defendants ordered to pay the Plaintiffs' costs of the damages inquiry.

Orders

  • ['Upon inquiry, the damages to which the Plaintiffs are entitled from the Defendants are assessed in the amount of $1,561,245, together with interest on that sum of $743,452.04 (making a total of $2,304,697.04).' 'The Defendants pay the cost of the Plaintiffs of the inquiry as to damages.']