Trust Company of Australia Ltd v Woldingham Retail Bay Village Pty Ltd & Ors andWoldingham Retail Tuggerah Pty Ltd v Ezydvd Pty Ltd & Ors [2009] NSWDC 221

New South Wales District Court

CITATION: Trust Company of Australia Ltd v Woldingham Retail Bay Village Pty Ltd & Ors andWoldingham Retail Tuggerah Pty Ltd v Ezydvd Pty Ltd & Ors [2009] NSWDC 221

HEARING DATE(S): 14 and 21 August 2009

JUDGMENT DATE: 24 August 2009

JURISDICTION: Civil

JUDGMENT OF: Levy SC DCJ

In proceedings 1816 of 2006: 1. The second-cross defendant to the second cross-claim, Mr Jim Zavos, pay damages to the cross-claimant on the second cross-claim, Woldingham Retail Bay Village Pty Ltd, in the amount of $244,566; 2. The second cross-defendant pay the costs of the proceedings as agreed or assessed. In proceedings 942 of 2007; 3. The second defendant, Mr Jim Zavos pay the plaintiff, being: DECISION: (a) Woldingham Retail Tuggerah Pty Ltd; (b) Paul Carr; and (c) Susan Carr damages in the following amounts: (i) $287,428 to Woldingham Retail Tuggerah Pty Ltd; (ii) $63,348 to Paul Carr.; 4. The second defendant pay the costs of the proceedings as agreed or assessed.

CATCHWORDS: DAMAGES – assessment of damages for financial losses incurred in failed DVD franchising business

LEGISLATION CITED: No legislation was cited

CASES CITED: No cases were cited

In proceedings 1816 of 2006: Trust Company of Australia Ltd (Plaintiff) Woldingham Retail Tuggerah Pty Ltd (First Defendant/First Cross-Claimant) Paul Frederick Carr (Second Defendant/Second Cross-Claimant) Susan Maree Carr (Third Defendant/Third Cross-Claimant) EZYDVD Pty Ltd (First Cross-Defendant) PARTIES: Jim Zavos (Second Cross-Defendant) Sasha Radoicic (Third Cross-Defendant)

In proceedings 942 of 2007: Woldingham Retail Bay Village Pty Ltd (Plaintiff) EZYDVD Pty Ltd (First Defendant - In liquidation) Jim Zavos (Second Defendant) Sasha Radoicic (Third Defendant)

FILE NUMBER(S): 1816 of 2006; 942 of 2007

Mr G Sirtes SC for Woldingham companies and Mr & Mrs Carr COUNSEL: No appearance for Second Defendant - Zavos Mr J Cook for Third Defendant - Radoicic No appearance for the other parties

Crisp Legal for Woldingham companies and Mr & Mrs Carr SOLICITORS: No appearance for Second Defendant - Zavos Swaab Attorneys for Third Defendant - Radoicic No appearance for the other parties

JUDGMENT

Nature of case and parties

1. These proceedings relate to a DVD franchising businesses where the business of both the franchisor and the franchisees failed. Woldingham Retail Bay Village Pty Ltd and Mr and Mrs Carr seek damage against the cross-defendants Mr Sasha Radoicic and Mr Jim Zavos in respect of representations made by these persons which induced them into taking on the franchises which caused the losses claimed to be incurred.

Procedural history

2. On 4 May 2009 judgments against Mr Radoicic and Mr Zavos in respect of the principal claims were entered by the Judicial Registrar by reason of default in compliance with previous orders of the court. A hearing for the assessment of damages was fixed for 14 August 2009.

3. On 14 August 2009 the hearing could not proceed because of a misunderstanding as to where the obligation rested for advising Mr Radoicic and Mr Zavos of the date fixed for the hearing. Accordingly, the proceedings were adjourned until 21 August 2009 and at the time of the adjournment, orders were made for the notification of the parties against whom default judgment had been entered that the hearing was adjourned until 21 August 2009.

4. On 21 August 2009 Mr Radoicic appeared with counsel and solicitors and sought an adjournment which was opposed. After some discussion the following orders were made: (a) The third cross-defendant to the second and third cross-claims and defendant to the statement of claim (Mr Radoicic) is granted leave to file in court the notice of motions in 942 of 2007 and 1816 of 2006. (b) The notice of motion seeking an adjournment is made returnable instanter and an order is made in terms of paragraph 3 of that notice adjourning the assessment of damages until the determination of the notices of motion seeking to set aside the judgment against Mr Radoicic. (c) The notices of motion seeking to set aside judgments against Mr Radoicic are made returnable on 18 September 2009 for allocation of a hearing date. (d) Mr Radoicic is to serve affidavits in support of his motions by no later than 4 September 2009. (e) The plaintiffs and cross-claimants, as respondents to those motions, are to serve any affidavits in reply by no later than 11 September 2009. (f) Mr Radoicic is to serve any further affidavits in reply by no later than 16 September 2009. (g) Mr Radoicic was ordered to pay the costs wasted by reason of the adjournment and leave was given for such costs to be assessed forthwith. 5. The remaining claims not covered by the above orders then proceeded ex-parte against Mr Zavos for the assessment of damages. 6. The question of whether or not Mr Radoicic obtains leave for the judgment that has been entered against him to be set aside is to be determined on another occasion after the matters that are required to be done in accordance with the above timetable have fulfilled.

Evidence and submissions

7. To prove their damages, the claimants read paragraphs 54 to 58 of the affidavit of Paul Frederick Carr sworn on 19 September 2008 and tendered a voluminous folder of tabbed and paginated material which was marked Exhibit "A" in the proceedings. The claimed losses relate to DVD franchises at Tuggerah and Bay Village.

Assessment of damages 8. Having considered the evidence relied upon by the claimants and having considered the submissions made by Mr Sirtes SC, I am satisfied that the losses claimed by claimants have been incurred as a consequence of them being induced to take on the failed franchise which is the subject of a judgment tin their favour. Accordingly, I assess and the losses of the claimants as follows:

Type of Loss Amount assessed Exhibit "A" reference Tuggerah (a) Franchise fee $20,000 Tab 1 pp 456-460 (b) Security Deposit paid to Westfield $21,532 Tab 2 p 304 (c) Fit out costs associated with the Tuggerah store $143,488 Tab 3 pp 366 to 383; 398 to 419 (d) Legal fees (EZYDVD solicitor) $2,000 Tab 4 pp 456; 458 to 460 (e) Trading losses (2004/2005; 2005/2006; 2006/2007) $37,546 Tab 5 pp 366 to 383; 398 to 419 Bay Village (f) Franchise fee $20,000 Tab 6 pp 456 to 460 (g) Fit out costs associated with the Bay Village store $146,100 Tab 7 pp 342 to 365; 384 to 397; 420 to 432 (h) Legal fees (EZYDVD solicitor) $2,000 Tab 8 pp 456; 458 to 460 (i) Trading losses (2004/2005; 2005/2006; 2006/2007) $84,328 Tab 9 pp 342 to 365; 384 to 397; 420 to 432 (j) Settlement payment (Stocklands) $20,000 Tab 10 pp 461 to 463 Paul & Susan Carr and/or Tuggerah and Bay Village (k) Costs of sale of investment properties $15,188 Tab 11 pp 433 to 443; 448 (l) Costs of sale of personal home $27,774 Tab 12 pp 444 to 447; 455 (m) Costs of purchase of new personal home $20,386 Tab 13 pp 449 to 455 (n) Loss of investment in View Developments $15,000 Tab 14 pp 464 to 465

9. The effect of these assessments is that in proceedings 1816 of 2006 Woldingham Retail Bay Village Pty Ltd is entitled to the sum of $244,566 and in proceedings 942 of 2007 Woldingham Retail Tuggerah Pty Ltd is entitled to the sum of $287,428 and Paul Carr is entitled to the sum of $63,348.

Disposition

10. I have determined that the claimants are entitled to verdicts and to judgments in accordance with the claimed amounts that I have assessed.

Orders

11. In proceedings 1816 of 2006 I order that: (a) The second-cross defendant to the second cross-claim, Mr Jim Zavos, pay damages to the cross-claimant on the second cross-claim, Woldington Retail Bay Village Pty Ltd, in the amount of $244,566; (b) The second cross-defendant pay the costs of the proceedings as agreed or assessed.

12. In proceedings 942 of 2007 I order that the second defendant, Mr Jim Zavos pay the plaintiff, being: (a) Woldingham Retail Tuggerah Pty Ltd; (b) Paul Carr; and (c) Susan Carr damages in the following amounts: (i) $287,428 to Woldingham Retail Tuggerah Pty Ltd; (ii) $63,348 to Paul Carr.; (d) The second defendant pay the costs of the proceedings as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.