REPRESENTATIONS
54 Coastal Karts contended that Mr Wallent relied upon the profitability representations and plant and equipment representations made by Mr Bellingham in entering into the Business Contract and Vendor Finance Agreement.
55 Ms Hawkes was not involved with the negotiations and relied upon Mr Wallent conveying the information provided by Mr Bellingham.
56 There was a dispute between the parties as to what was said during various discussions.
57 Clearly, the contents of the contemporaneous documents which were circulating between the parties at that time have some bearing on what might have been discussed during the conversation as to which one participant to the conversation has a certain recollection which was rejected by the other participant to the conversation.
58 I will consider the contents of each of those contemporaneous documents when ruling on what was said.
59 The documents are also central because many of the written representations alleged by Coastal Karts are derived from those documents.
60 In fact, Coastal Karts alleged that, by providing the June 2018 Figures, identified as being the "trading figures of the business" (which Mr Wallent understood to be just Eco Noosa), and remaining silent about the fact that the figures included the three businesses, Bellandra Holdings represented that the business had generated those figures. The allegation was that, by silence, in failing to disclose that the June 2018 Figures were an amalgamation of three separate businesses' finances, being Eco Noosa, Nauticycles Noosa and Noosa SUP, the conduct was misleading or deceptive.
61 At a time prior to 18 September 2018, Mr Bellingham placed an advertisement on the internet site "Gumtree" for the sale of the business "Eco Noosa". The parties are not agreed as to whether the advertisement was first placed on Gumtree in May 2018 or September 2018, but, for present purposes, the exact date is not relevant.
62 The advertisement was not put into evidence.
63 On 18 September 2018, having seen the advertisement, Mr Wallent called Mr Bellingham to enquire about Eco Noosa. The parties did not agree on some aspects of what was said during that conversation.
64 Mr Bellingham told Mr Wallent that the purchase price was $365,000, that there were two other interested buyers and that Mr Bellingham would send through financials if Mr Wallent signed a confidentiality agreement.
65 Of relevance to the current issues, the area of non-agreement between the parties related to whether it was made clear by Mr Bellingham to Mr Wallent that the sale was to include "three businesses in one" - said to be because the owners of the businesses Nauticycles Noosa and Noosa SUP also wanted to sell their businesses and move on and they had packaged the businesses together as the combined business listed for sale. In the same vein, the parties were not in agreement as to whether it was made clear that the figures which were provided in the June 2018 Figures were for all three businesses or for just one business, Eco Noosa.
66 Just after the telephone discussion took place and before the date upon which the June 2018 Figures were sent, Mr Bellingham sent two documents on 18 September 2018 to Mr Wallent, namely the "Welcome to Eco Noosa" (the Welcome Document) and the "Eco Noosa Plant & Equipment List" (the Equipment List) that would be included in the sale, and which included a value attributed to each piece of plant and equipment, the total of which was $285,600.
67 Coastal Karts referred to the expressions used in the email from Mr Bellingham to Mr Wallent on 18 September 2018 (which included the Welcome Document and the Equipment List) in which Mr Bellingham stated:
please find the attached information for Eco Noosa … this information will give your the nuts and bolts of it … I have supplied P&L figures based based on from when we purchased it up until June 30 2018, as well as plant and equipment list and /description of the business.
In that time from Oct we closed the business for Dec for renovations and as it didn't work out with our son after January, I had to close it for February while I completed the build on The Drover,. We are currently running it 5 days a week, closing Monday and Tuesdays. This may sometimes vary depending on the weather and holiday periods.
in a nutshell though its a fantastic business the offers steady consistent income (with benefits) as well as an awesome lifestyle. While we have done all the hard work to get it to where it is now , there is still so much room for potential growth and expansion. With how we have it set up now it would be a simple walk in turn key operation business. As i discussed with you over the phone we have 2 other genuine buyers, one of which have is made us an offer..... however as I said to you it is not just about the money and getting a sale for us. We want to see the business continue to grow and we need to be confident that the potential new owners will be capable of that. As we also have our other boat The Drover on the river and will be operating that as well as moving closer to the area, it is in our best interest and reputation to see it continue to be as successful with the new owners, as well as we would like to have the opportunity as I mentioned to you, that on weekends when we don't have bookings, that we could hire a berth at the jetty to sell woodfired pizzas from.
(errors in original)
68 Coastal Karts submitted that the email:
(a) referred to "Eco Noosa" and "the business" and, by reference to "the business", utilised the pronoun "it";
(b) did not refer to "businesses", "Nauticycles Noosa" or "Noosa [SUP]" and, by reference to the business, did not utilise the pronouns "they" or "them";
(c) did not state that the figures were "indicative" or that they were "an amalgamation of three separate businesses";
(d) referred to the "business" being closed, which Mr Bellingham accepted was not Nauticycles Noosa or Noosa SUP; and
(e) referred to the "business" that "we" purchased, being the business purchased by Mr Bellingham, not Mr Howard-Clarke or Mr Van Der Vegt (the respective owners of Noosa SUP and Nauticycles Noosa).
69 Coastal Karts also pointed to the fact that the plant and equipment list referred only to "Eco Noosa" in the title and included 12 Nauticycle water spin bikes, stand up paddle boards and paddles, leashes and life jackets for stand up paddle boards.
70 The four page Welcome Document outlined the history of Eco Noosa, which had been known as Malu Os between August 2013 and October 2017 before being rebranded in October 2017 when it was purchased by Bellandra Holdings. In the Welcome Document, Bellandra Holdings said:
After consideration we decided that we would look at purchasing the Nauticycles and incorporating them with Eco Noosa …
In May of this year after incorporating the Nauticycles …
The last and most recent addition to the jetty is that of Noosa Stand Up Paddle boards, hire & lessons … we have now incorporated Noosa Stand Up Paddle as part of Eco Noosa's Eco friendly river adventures as well.
71 As to Nauticycles Noosa and Noosa SUP, it said the following:
Over the Christams period we met and became friends with Mark from Nauticycle Noosa who had his water bikes located down at jetty 186 . After discussions we started putting a couple of his nauticycles up on the jetty at Eco Noosa to see if better exposure would increase the hire volume with them. It worked great, we continued promoting the nauticycles from Eco Noosa until April when after talking with Mark, he informed us that due to Family circumstances he was looking at moving back to Adelaide . After consideration we decided that we would look at purchasing the Nauticycles and incorporating them with Eco Noosa as they complemented the Eco aspect of the business perfectly .
In May of this year after incorporating the Nauticycles and installing a new modular jetty system to allow for emarking and disembarking of the Nauticyles, we decided to do the second stage of the facelift by firstly replacing the old deck area ledge with a new timber deck area and handrail …
The last and most recent addition to the jetty is that of Noosa Stand Up Paddle boards, hire & lessons. While we were reluctent to introduce SUP's to our jetty as they were located directly next door to us, we approched the owner to find out his long term plans for his business. As it turned out he had recently listed it for sale as he has another business in Seychelles in East Africa specialising in surfing which he is looking to put in efforts into. So we have now incorporated Noosa Stand Up Paddle as part of Eco Noosa's Eco friendly river adventures as well.
So Eco Noosa is not just the only 100% Eco Friendly jetty now in Noosa, but also has the largest range of Sup's , Kayaks, and only hirer of Nauticycles, Electric Eco Boats and bikes along the foreshore.
…
(photographs omitted; errors in original)
72 The text of the Welcome Document has a bearing on what was meant by the words used in the email and the discussions between the parties. The document seemed to be in the nature of a "promotional" or "marketing" document. It opened with a history of Eco Noosa, including the decision to change the name to Eco Noosa from Malu Os. The document also referred to the decision to increase the offering by acquiring kayaks and good quality bikes and the decision to close the business for a month to enable a "much needed facelift".
73 This document is unambiguous in saying that "Eco Noosa is not just the only 100% Eco Friendly jetty now in Noosa, but also has the largest range of Sup's , Kayaks, and only hirer of Nauticycles, Electric Eco Boats and bikes along the foreshore" (errors in original).
74 From the Welcome Document, it was clear that Bellandra Holdings regarded the inclusion of the other businesses as a positive aspect of his business. It was a "selling point". That seemed to be a major focus of the Welcome Document. Its emphasis was on the benefits of diversification and what the expanded entity (the business as described) was able to achieve.
75 The list of plant and equipment included in the sale also pointed to the inclusion of Nauticycles Noosa and Noosa SUP with Eco Noosa. It included the following:
(a) "12 x Nauticycle Water Spin Bikes, spare drive shafts, pumps, steering ru";
(b) "22 Stand Up Paddle Boards";
(c) "24 Stand Up Paddles";
(d) "24 Stand Up Leg Leashes";
(e) "10 Life Jackets for Stand Up Paddle Boards".
76 The total of the plant and equipment list value was $285,600. Of that, $118,400 comprised $108,000 for the nauticycles; $8,000 for the stand up paddle boards; $2,000 for the stand up paddles; $200 for the stand up leg leashes; and $200 for the life jackets for stand up paddle boards.
77 With the contents of the Welcome Document, the fact that the plant and equipment of Nauticycles Noosa and Noosa SUP was included in the list of plant and equipment which were part of the sale supports the conclusion that Coastal Karts must have been aware of the nature of the business being sold - that Nauticycles Noosa and Noosa SUP were part of the business described as "Eco Noosa".
78 The contents of the documents also are consistent with Mr Bellingham having said, during the discussions, that the three businesses were included in the sale. His evidence was that this took place; and there was no logical reason for Mr Bellingham not to have mentioned what was being sold during the conversation, given that this was made obvious in the documents which were to be circulated immediately after the conversation and which was promoted as a benefit. The contents of the documents support the recollection of Mr Bellingham.
79 In those circumstances, it would be consistent for Mr Bellingham to have referred to the incorporation of the new businesses into what was being sold, "Eco Noosa". Indeed, it would have been at odds with the promotional document if the topic was not raised, as a benefit, during that first conversation. Bellandra Holdings would, logically, and likely, be aiming to emphasise those aspects.
80 Again, given the thrust of the Welcome Document, it would be consistent for Bellandra Holdings, which was promoting that theme, and plainly doing so with a view to boosting the attractiveness and value of the combined business to a prospective purchaser, to have prepared indicative figures to demonstrate what the business being sold could achieve. By their nature, those would be composite figures.
81 There was no reason not to inform Coastal Karts of what was being proposed and of the nature of the figures provided.
82 Consistent with what was said in the Welcome Document regarding incorporation of the businesses into Eco Noosa, and that the list included the plant and equipment from Nauticycles Noosa and Noosa SUP, if Mr Wallent was not aware that he was being provided with the figures for the businesses being sold, it would reasonably be expected that he would seek figures which included the contribution from these businesses which were offered as part of the transaction. The fact that no such enquiry was made (in any level of detail) supports a conclusion that Coastal Karts was aware of the fact that the June 2018 Figures included the figures for Nauticycles Noosa and Noosa SUP. It is consistent with Mr Wallent not needing to ask because he was aware the figures were included.
83 Mr Bellingham said in evidence that he was expecting that he would be contacted by accountants who would seek additional information and undertake due diligence. Mr Paul Green (an expert witness called by Coastal Karts) pointed to the fact that generally a purchaser would undertake such due diligence. In those circumstances, with the expectation that Mr Bellingham said he had (which was not challenged by Coastal Karts and was consistent with the view of Mr Green), there would have been no point in not disclosing that the figures provided were an amalgamation of the figures from the three businesses, which was an estimate of what could be achieved in the business which was being sold. To hide the fact that the figures were amalgamated figures would have been counterproductive as the fact that the figures were an amalgamation would have become obvious when the expected due diligence occurred.
84 On 19 September 2018, at 9:57 am, Mr Wallent sent an email in reply to Mr Bellingham's email as follows:
Thanks for sending through all that without the confidentiality agreement, it was an interesting read last night.
You're information is pretty safe with me over here in the West.
Unfortunately the P&L didn't come through on the second email that you sent. Any chance you can resend it please?
One more question, how do you enjoy living on the Sunshine Coast?
(errors in original)
85 On 19 September 2018, at 10.55 am, Mr Bellingham sent the first of two emails. The first referred to living on the Sunshine Coast and spoke in glowing terms about the opportunities in Noosa. Mr Bellingham also referred to other interested buyers:
You sounded genuine when we spoke and I figured as much with you living in WA. Like living on the Sunshine Coast … it's terrible
With the new international airport opening in 18 months . The place is going to boom. We have already seen a huge increase since direct flight out of NZ this year with tourism . If you are looking to move to the coast you are better to do it sooner than later …. Noosa has just had the best house sales in Qld !! Beating Gold Coast !!
It is really starting to go off,hence why why won't be able to run both businesses.
We have been made an offer from the other couple , an hour ago in regards to the business. However before we make a decision would like to see where you're at after viewing financials , as well as have a father and son from NSW looking at coming to have a look. As I said , we don't just want to sell but want to sell to the best suited , so the business keeps growing .
Will send financials shortly.
(errors in original)
86 The second email, at 1.28 pm, which attached a document referred to as the "June 2018 Figures", was as follows:
Please find the following information. Keep in mind we only purchased the business Oct 1 and then closed for all of Dec and most of January. So in reality these figures are applicable to 7 months trading. We are only operating 5 days due to my other work commitments.
(error in original)
87 The June 2018 Figures was a single page document containing income, expense and combined profit figures and was headed:
Bellandra Family Trust
Eco Noosa
Income Statement for the year ended 30th June 2018
(bold omitted; underlining in original)
88 Mr Bellingham said he had received financial information from Nauticycles Noosa and Noosa SUP which he combined with the existing financial statements to create the June 2018 Figures document. Mr Bellingham said that he considered it necessary to combine the three businesses as Nauticycles Noosa and Noosa SUP were, at that point, still being operated separately. Mr Bellingham removed expenses from Nauticycles Noosa and Noosa SUP which he considered would not be incurred after the purchase as these expenses would already be incorporated in the Eco Noosa figures. The trading figures of Noosa SUP were from July 2017 to June 2018 and were reduced by Mr Bellingham from $74,614 to $65,378.66 to better reflect the income generated between October 2017 and June 2018. The adjustment to the sales was calculated by adding up the individual sales that occurred during that period. The Nauticycles Noosa sales figure was calculated by adding together the three quarters from October 2017 until June 2018 for a total of $15,250.99. The adjusted operating expenses for Nauticycles Noosa and Noosa SUP were $4,788.01 and $3,957 respectively. The operating expenses for Eco Noosa was $48,616.08. The Eco Noosa sales figure was $79,339.98. For the period of October 2017 to June 2018 the calculated profits were:
(a) Eco Noosa had a profit of $21,723.90.
(b) Nauticycles had a profit of $10,462.98.
(c) Noosa SUPs had a profit of $61,421.66.
(d) The combined profit was $93,608.54.
89 These calculations were contained in a handwritten document said to have been prepared by Mr Bellingham at the time of the discussions. The figures matched those in the June 2018 Figures.
90 The document which was prepared by Mr Bellingham at the time seems to have been the product of a methodical process to assess what the combined result would be. The document must have been prepared contemporaneously as the figures fed into the June 2018 Figures. He viewed the separate figures for Eco Noosa, Nauticycles Noosa and Noosa SUP and made the calculations deriving a total profit of $150,969.63 and a net profit of $93,608.50, which were used in the June 2018 Figures.
91 All of these factors support a conclusion that Mr Bellingham is to be believed as to his evidence that he informed Mr Wallent of the incorporation of the two businesses into Eco Noosa and that the figures were amalgamated figures and related to the total business being sold.
92 Coastal Karts pointed to the fact that Mr Bellingham said that he sent the June 2018 Figures because he did not want to miss a sale. The submission continued that he considered it a waste of time to provide full financial documents at the outset. That approach is not misleading provided that it was explained to Mr Wallent that the figures were amalgamated figures. If the incorporation of Nauticycles Noosa and Noosa SUP into the Eco Noosa business made financial sense, and was done with a view to enhancing the value of the three components, Bellandra Holdings might understandably in those circumstances wish to put forward the figures that could be achieved with the combined business actually being sold (including the removal of any duplicated expenses such as rent, insurance, electricity, IT and the like). Bellandra Holdings might take the view that doing so would highlight what was possible, and so not "miss a sale". The figure achievable would not be the same as the figures individually from the three separate entities. Such a statement does not adversely reflect on Mr Bellingham.
93 It would, of course, be a matter for the purchaser to undertake the due diligence described by Mr Green.
94 Coastal Karts noted that the Welcome Document referred to "incorporating" Nauticycles and Noosa SUP into the business whilst, at the time of the preparation of the June 2018 Figures, Eco Noosa, Nauticycles Noosa and Noosa SUP were all trading under separate Australian Business Numbers (ABNs).
95 This fact would not have been relevant to Mr Wallent's evidence. It is not suggested that he was aware of the ABN structure for Eco Noosa, Nauticycles Noosa or Noosa SUP.
96 Rather, it seems to be directed to the credibility of Mr Bellingham.
97 There is no reason why, even with separate ABNs, Nauticycles Noosa and Noosa SUP could not have been incorporated into the business which was being offered for sale. The fact that there was a discussion of "incorporating" Nauticycles Noosa and Noosa SUP in circumstances where there were separate ABNs does not reflect on the credit of Mr Bellingham in an adverse way.
98 Coastal Karts pointed to the fact Mr Bellingham proposed that Mr Wallent purchase the water spin bikes (nauticycles) but then, in oral evidence, Mr Bellingham said that he did not pay for the nauticycles until after the sale of the business. Again, this is a matter which was raised by Coastal Karts in relation to the credit of Mr Bellingham. There is no legal difficulty in effectively on-selling a business where the price on the original sale might come from the final sale. This does not reflect adversely on Mr Bellingham's credit.
99 It was submitted that Mr Bellingham had previously deposed to the fact that Nauticycles Noosa and Noosa SUP owned their respective assets. This fact does not seem to be relevant to the transaction contemplated between Coastal Karts and Bellandra Holdings. There is no legal reason why those assets could not be offered for sale, by arrangements with the owner, to a prospective buyer. Again, this does not reflect on Mr Bellingham's credit.
100 It was submitted that, overall, the separate financial accounting and ownership of assets by each of Nauticycles Noosa and Noosa SUP was inconsistent with those businesses being "incorporated" into the Eco Noosa business. The fact that there may have been separate financial accounting and ownership of assets by each of Nauticycles Noosa and Noosa SUP was not inconsistent with Bellandra Holdings acquiring the assets (regardless of when payment was to be made) and incorporating those assets into an entity to be sold. The separate financial accounting and ownership of assets is not inconsistent with each of Nauticycles Noosa and Noosa SUP being incorporated, for sale, into the Eco Noosa business.
101 The assertions made by Mr Bellingham in relation to what was said as to the incorporation of the businesses, and what was said as to the June 2018 Figures, are consistent with the contemporaneous documents.
102 I conclude that Mr Bellingham did inform Mr Wallent that the sale was of a business in which Nauticycles Noosa and Noosa SUP was incorporated and that Mr Wallent was aware that the June 2018 Figures were an estimate made by Mr Bellingham of what the combined business would achieve.
103 The fact that Mr Wallent made no further enquiries is also consistent with what Mr Bellingham said was discussed. By the time Mr Wallent received the June 2018 Figures, he had received both the Welcome Document as well as the summary of the plant and equipment. Leaving aside my finding as to what Mr Bellingham informed Mr Wallent of during the conversations, after receipt of the documents, it must have been clear that the business being sold included Nauticycles Noosa and Noosa SUP. This was obvious from the text of the Welcome Document as well as the equipment which was included in the list which was provided.
104 Coastal Karts pointed to the discussions concerning a confidentiality agreement as an inconsistency with Mr Bellingham's evidence that should be taken into account in relation to Mr Bellingham's credit. Coastal Karts pointed to the fact that neither Nauticycles Noosa nor Noosa SUP required that financial information not be released. It was submitted that Mr Bellingham's own evidence was that he would send full financial information only after he received the signed confidentiality agreement from Mr Wallent in circumstances where Mr Bellingham accepted that he had not sent Mr Wallent any confidentiality agreement to sign.
105 It was accepted by both parties that Mr Bellingham did not provide Mr Wallent with a confidentiality agreement to sign. It was also accepted by both parties that Mr Bellingham did not provide the full financial information, with the June 2018 Figures being described as "indicative figures". As the transaction progressed, Mr Wallent did not ever request any full financial records nor did he pursue the request for this information. It was clear that Mr Bellingham was confused about the release of the information, even thinking that his provision of the "indicative figures" of the June 2018 Figures did not reveal confidential information of the other two businesses. It was also the case that Mr Wallent did not press the supply of that information. At a later point, Mr Wallent asked about entire year figures and again did not press supply of this information as he indicated that his "reason for asking for the updated figures became less important as part of funding". In terms of whether this factor would cause me to have sufficient doubt so as to disregard Mr Bellingham's evidence, the fact that the contemporaneous documents all support what was said by Mr Bellingham is of much greater significance and so would not impact upon the findings I have made.
106 Between 21 September 2018 and 29 September 2018, Mr Wallent and Mr Bellingham exchanged a number of telephone calls. It was not disputed that during this time they discussed:
Mr Bellingham's desire to sell and focus on his other business "The Drover";
that Mr Bellingham expressed interest in leasing a berth on the Eco Noosa jetty;
the condition of the Duffy boats and that they should be capable of running for at least six hours;
that Mr Wallent had previously looked into Duffy boats;
sunset cruises and their popularity;
that Mr Bellingham thought that Noosa was a wonderful place to live and offered an amazing lifestyle;
Mr Wallent's workplace injury;
Mr Wallent's desire to find a business that offered a "health and family-oriented lifestyle" while also supporting his family; and
Mr Wallent's experience in the marine industry and Ms Hawkes' experience in the hospitality industry.
107 On 30 September 2018, the following text messages were sent:
[At 11:56 AM, Mr Bellingham sent the following text message to Mr Wallent]
Hi Michael,
… Had a talk last night with my wife and also discussions with the other interested buyers. The offer the other couple have put to us is this :
Purchase price$330k
Not including the sups. $100k vendor finance . Therefore making it $230k up front and vendor finance of $100k.
However they cannot commit to a time as yet .
If this would make a difference to your position we are happy to offer you the same deal. As I said to you time is the main factor for us due to to other commitments with The Drover . Would also be happy to negotiate leasing of the Berth area for The Drover as well.
Let me know your thoughts.
Cheers Shane
(errors in original)
[At 6:49 PM, Mr Wallent sent a reply]
Hi Shane,
Thanks for extending your existing offer to us. This would certainly make financing the deal easier for us and puts us in the position where we are likely to be able to obtain the funds.
Just a quick question, why are the sups not included?
Would you be willing to accept a contract subject to finance and viewing?
We are hoping to get over in the next week or so.
Regards
Michael
[At 8:12 PM Mr Bellingham responded]
We have aggreed to purchase the sup business from the business next to us on the sale of the business ( for $35k) however the other buyer did not want to be doing sup lessons or school groups of up to 20 per group . As that is the bulk of his hires. They felt for $35K they would rather put that money into the business and could buy a few sups later if needed.
But as he had been operating for 12+ months and had solid financials we just felt it helped with the overall package of the business .
And I agree with them so am happy not to include it .
Also I can discuss it more if or when you come over , but an opportunity has come up over the past few days giving us the chance to expand The Drover. If we choose to go with it we would be looking to lease the half of the jetty where we Berth the Drover now on a permanent basis . This will also have a huge impact on the jetty for attracting more clientele and customers , as well as be a constant rent for the new owners of the business .
As I said the jetty has so much potentional and is only going to grow with the increasing tourists coming to Noosa . So I want to not only see it grow but still want to be involved on the river with The Drover …
Noosa is just growing week by week, so when the new airport opens tourism is going to go off !
Cheers Shane
(photographs omitted; errors in original)
108 The exchange of text messages on 30 September 2018 raised the topic of the amended offer. The purchase price was reduced to $330,000 with $100,000 vendor finance and "not including sups". Mr Wallent asked, in a text at 6.49 pm, "Just a quick question, why are the sups not included?".
109 By this stage, I have concluded that Mr Wallent must have known of the incorporation of the two businesses, Nauticycles Noosa and Noosa SUP.
110 As to that question regarding the "sups not [being] included", Mr Bellingham responded indicating that Bellandra Holdings had agreed to purchase the Noosa SUP business for $35,000 and indicated the reasons why the other buyer did not want to acquire that business. Mr Bellingham continued: "But as he had been operating for 12+ months and had solid financials we just felt it helped with the overall package of the business".
111 Clearly, Coastal Karts knew of the incorporation of Noosa SUP and, further, was told that Noosa SUP had "solid financials", "had been operating for 12+ months" and that its inclusion helped "the overall package of the business".
112 On 2 October 2018, at 10.37 pm, Mr Wallent sent an email to Mr Bellingham indicating:
After plenty of discussions, we are excited about the prospect of potentially moving to the Sunshine Coast and operating a business on Noosa River. Arahina and I have previously owned businesses, have plenty of tourism and hospitality experience which we hope to bring to the business and after working on luxury yachts for years, the idea of owning my own little luxury boat, is awesome.
We agree the SUPs are not really required at this moment, especially considering we have some other ideas we would like to investigate that may require some additional capital. On that note, we would be happy to work with your offer of $330k for the business, with $100k vendor finance, after a few details have been agreed on. Could you please let me know what terms for the finance you would like to offer?
A few other questions;
• Are there any permits, or licenses that need to be transferred over?
• Can you provide the contact details for the Landlord so that we can have a chat about the lease?
• Do you have a date that you want to be out of the business?
…
We are planning to come over to look at the business in the coming weeks, but would like to secure our finance before we come so that we can move to contract should everything be okay after the viewing. I'd actually like to be there before the school holidays finish and give you hand for a day if that's ok? I have meetings tomorrow and Thursday regarding finance, I can't see any problems, it's just a matter of time as it involves an insurance settlement. Before we book flights, we would also appreciate some sort of assurance that we're in the running and the business won't be sold before we get there. It's pretty difficult for us over here, we're keen as but we're on the opposite side of the country!
113 There was a further discussion between Mr Bellingham and Mr Wallent on 5 October 2018. Mr Bellingham recalled that:
(a) he "discussed the Noosa SUP business further and the income that related to the June 2018 Figures" that he had sent to him;
(b) he "also explained what would not be included as part of the [Equipment List he] had also previously sent" to Mr Wallent;
(c) he said to Mr Wallent then "that it would reduce the amount of income from the $150,000 by approximately $65,000";
(d) he stated that "the Noosa SUP business was included as part of the financials as it made it a much better package not only financially but also to obtain finance and the Noosa SUP business had a solid 12 month's figures";
(e) in response, Mr Wallent stated that "removing the Noosa SUP business was not an issue for them and that they would rather put that capital into ideas they had of their own to build the business up";
(f) Mr Wallent said "he would be purchasing his own stand-up paddle boards for the business anyway";
(g) Mr Wallent said that he "had a pedal kart business concept of which he wanted to bring over to Noosa as he felt it would work well there, but had not worked in Western Australia because of the position it was located in";
(h) Mr Wallent said that "he had new ideas for the business and that he would reconfigure the business and the direction to further enhance the Eco-friendly concept of it";
(i) he also remembered explaining to Mr Wallent that "the reason [he] had made the offer to him was due to the vast amount of experience he had told me that he had in boats, as well as he was familiar with the Duffy Boats";
(j) he told Mr Wallent that the "sale of the business was not just about the sale, but it was about someone buying it who could continue to grow the business"; and
(k) he told Mr Wallent "his experience made him someone [he] would like to have purchase the business".
114 As to that conversation, Mr Wallent recalled:
(a) Mr Bellingham stressed the urgency of the sale and the need to progress quickly, given there was another interested party and his need to concentrate on his other business, The Drover;
(b) Mr Bellingham referred to the removal of the stand-up paddle boards and related stand up paddle equipment from the original plant and equipment list he had provided to him;
(c) they discussed Mr Wallent's experience and qualifications in boats and the marine industry;
(d) they discussed the progress of financing. Mr Wallent explained to Mr Bellingham that he had approached a finance broker and was working with the broker to achieve finance;
(e) they further discussed the option of vendor finance; and
(f) Mr Wallent mentioned that he could use the $30,000 reduction in sale price to invest in other ideas for Eco Noosa like, for example pedal go-karts, purchasing his own stand up paddle boards or as working capital.
115 In a subsequent affidavit, Mr Wallent said:
(a) Mr Bellingham never said anything to me about the impact of removing the paddleboards from the plant and equipment in the proposed sale and the reduction to that would have on the income identified in the June 2018 Figures.
(b) I never told Mr Bellingham that I would 'reconfigure business'; I said during this conversation, words to the effect, that my intention was to build on what was already there.
116 As can be seen, Mr Wallent and Mr Bellingham broadly agreed as to the discussion concerning the removal of the stand up paddle boards and related stand up paddle equipment from the original plant and equipment list provided to Mr Wallent. However, Mr Wallent said that Mr Bellingham did not say anything regarding the impact on turnover of removing the paddle boards in the proposed sale.
117 I have found that Mr Bellingham told Mr Wallent of the fact that the June 2018 Figures included the incorporated businesses. Consistent with that fact, there would be no reason for Mr Bellingham not to have informed Mr Wallent of the impact on profit. This would not have risked the sale as it would have been open at that time to Mr Wallent to include Noosa SUP if he wished and the information would be useful as a guide to possible revenue if Mr Wallent decided to acquire his own stand up paddle boards for the business.
118 It seems implausible that Mr Wallent himself would not have considered the issue of revenue reduction. He was being told the price would be reduced due to Noosa SUP being removed. At that point, Mr Wallent had been told by email and during a telephone conversation that Noosa SUP had solid financials, been operating for 12+ months and helped the overall package of the business. It seems implausible that, knowing this information and being told that Noosa SUP would be removed, Mr Wallent did not, himself, ask questions about the financial impact of Noosa SUP being removed. The logical conclusion is that he did not ask as he was told of the financial impact by Mr Bellingham. Whilst I have found that Mr Wallent was told of the inclusion of the three business in the sale at an earlier date, regardless, by this time, it must have been obvious that the three businesses were included.
119 Consistently with what had occurred, and logically associated with a discussion concerning the fact that equipment would be excluded, I conclude that, during the conversation on 5 October 2018, Mr Bellingham also told Mr Wallent that the exclusion of Noosa SUP would reduce the potential income by a figure of $65,000.
120 As I observed earlier, regardless of what was discussed in the first conversation, certainly by this stage it was clear that the Nauticycles Noosa and Noosa SUP businesses had been included in what was being offered for sale.
121 What was also clear from the emails which were exchanged on 30 September and 5 October 2018 was that Noosa SUP was excluded. It was not disputed between the parties that there was a discussion about the equipment which would be excluded as a result of Noosa SUP no longer being included in the transaction.
122 In early October 2018, Mr Wallent was in communication with a number of relatives and Mr Brook Picken from Finlease (Australia) Pty Ltd, a business finance broker, regarding obtaining finance.
123 On 5 October 2018, Mr Wallent sent an email to Mr Picken. Mr Wallent recalled that Mr Picken informed him that it would be difficult to obtain a business loan if the business had only been in operation for nine months (as per the June 2018 Figures). Mr Wallent prepared a number of documents for Mr Picken - "Business Plan 2018/19 dated 1/10/2018 (version 1)", "Cash flow for Eco Noosa Nov 2018-19" and "Eco Noosa Cashflow Assumptions".
124 The "Cash Flow for Eco Noosa" document was a spreadsheet prepared by Mr Wallent with columns for each month from November 2018 to October 2019. Under the heading "Cash incoming (EX GST)" were the sub-headings "Hire of Equipment", "Berth Hire" and "Kiosk income". The figures of $21,571, $2,000 and $3,500 respectively were shown in each month's column with a "Total incoming" figure of $324,852.00. There were then a number of entries under the heading "Cash outgoing (EX GST)" with a "Total outgoing" figure of $127,118.66. The yearly "cash balance" was $197,733.
125 The "Eco Noosa Cashflow Assumptions" document stated that Mr Wallent calculated the monthly "Hire of Equipment" amount by rounding up the gross income figure to $151,000 before dividing it by seven (as Eco Noosa had "been operating in its current form for 7 months up to EOFY 2018"). The document also stated that any "[Berth hire] to client vessels has been included, although not currently included in the P&L". Kiosk income, a recent inclusion post EOFY 2018, was not included in the June 2018 Figures. These figures had been added to the "Cash Flow for Eco Noosa" document.
126 On 6 October 2018, at 9.45 am, Mr Wallent sent an email to Mr Bellingham, as follows:
We're excited to hear that you're keen to have us purchase the business, but also understand about the other couple. Hopefully we can secure finance in time.
To make that obtainable Shane I'm going to need a bit more information as discussed last night. I figured it's easier to put it in an email for you to work through. I've got a great guy helping me, but he was only able to start the process on Friday so we're a bit behind the ball. He'll get through it quickly he said, but he needs the following information before he can make it happen.
• Can you please provide at your first available convenience
• Your last name!! :)
• Boat survey certificate
• Previous financials to prove the business has been operating for more than 24 months.
• Any valuations of the boats and equipment that you may have, recent or not.
• Details of the lease and landlord.
As I explained yesterday, we'll likely get approval without the lease and contract, but will need them to finalise the finance.
Also for my own interest.
• Are there any permits, or licenses need to be transferred over?
• Do you have a date that you want to be out of the business?
• When were the boats last out of the water?
Thanks Shane, I really appreciate your assistance and patience, hopefully we'll have something for you soon. Also, I'll let you know about Joel's visit on Wednesday once I've spoken with him.
Kind Regards
Michael Wallent
…
127 On 7 October 2018 at 10.45 am, the parties exchanged text messages which were:
[Mr Bellingham to Mr Wallent]
Hi Michael,
Received your email, will get onto that information you require today sometime.
There are no licenses or permits required or that need transferring, and all equipment is owned outright. As for the time .… I needed to be out now ! Lol. If your mate is coming this week I will more than likely not be there as I have put all my work back till October. As it is now October I have to have these kitchens installed as well as have the drover slipped for survey inspection and antifoul this month. So I will be concentrating mainly on the weekends on the jetty. I have just had one of the Duffy's out last week and has been cut ,polished ,waxed , antifouled and fully detailed. And the other one will be coming out this week so when new owners take over they will be like new. All other equipment is only 12 months old and still like new .
As I said , I take a lot of pride in the presentation and condition of our equipment and we have a really good reputation for it .
I am happy to arrange lease and contract once you know finance has been pre approved and inspected , but have been caught out and stuck with solicitors bills before once engaging them. Only to have buyers not be able to obtain or not have the finances to purchase .
Cheers Shane
[Mr Wallent to Mr Bellingham]
Hi Shane,
I totally understand about the contract and lease and I wouldn't be asking for everything else if it wasn't necessary at this end. But that shouldn't be a problem for pre-approval. Yeah I can see on your social media the condition of your equipment and it's one of the reasons we feel the business is a good buy. And I respect that, as presentation and attention to detail are values hold strong myself.
Good news everything is in order as if it goes ahead we'll be able to step straight in and get you out as soon as possible.
Not sure it's worth Joel driving from Ipswich if you're not going to be there, but I'll discuss that with him today.
Cheers mate, have a great day.
Michael
[Mr Bellingham to Mr Wallent]
I have full pics and documentation when out of the water . I give them a full pressure wash and rub down to a totally clean hull then they get a primer coat and I give 3 coats of Jotun Antifoul.
See if Joel can come up next Sat or Sun. Can give him the full guided tour also if he came up on the sat arv , I have a sunset cruise going out on the Drover … he's more than welcome to come along , he'll get to see the river as well then
Did you say you have a master 5 ??
[Mr Wallent to Mr Bellingham]
Master 4, MED 2 and a stack of other safety and operational certs.
I've been working superyachts and marine tourism for most of my adult life.
I'm trying to get out of it as it usually means extended periods away and that doesn't sit well with a family. This business potentially gives us the opportunity to move forward.
While still holding an interest in the water and boats.
[Mr Bellingham to Mr Wallent]
Well we will definately have to have some serious discussions when you're over, with what I am planning for the Drover it could work out very beneficial for both of us . If all goes as planned, when are you likely to be flying over to have a look ?
[Mr Wallent to Mr Bellingham]
The day after I get finance
Pre-approval
I'm hoping by the end of the week
What's your last name please Shane?
[Mr Bellingham to Mr Wallent]
Sir
Bellingham
[Mr Wallent to Mr Bellingham]
Excellent thanks
[Mr Bellingham to Mr Wallent]
Doing a FB stalk ? Lol
[Mr Wallent to Mr Bellingham]
Hahaha no mate, I've done that already … well your business social media anyway.
No, just filling out documents
Also, is the business called Eco Noosa River Adventures, or just Eco Noosa?
[Mr Bellingham to Mr Wallent]
Eco Noosa is the Registered trading name .
Have just sent through 2 lots of previous P&L we had from the previous owners
[Mr Wallent to Mr Bellingham]
Great thanks
[Mr Bellingham to Mr Wallent]
[A Certificate of Operation for the "Lady Isabella" as well as one for the "Lady Mary" was sent - not reproduced here]
Cert of operations for the Duffy's .
Max Ruster is the Landlord . However his agent John is the one who will be handling the lease. I will forward you his details.
[Mr Wallent to Mr Bellingham]
Thanks again. Also do you have any valuations on your equipment?
Old or new
[Mr Bellingham to Mr Wallent]
No as the bikes, kayaks, pedal boats, and water bikes were all new . We didn't need a valuation on any of the equipment The Duffy's are approx. $62k new here in Australia plus an additional $5-$7k to have them put into survey with a cert of operations.
Prices new are :
Waterbikes $10-$11kea
Bikes $450ea
Kayaks 500-1000 ea depending on size
Pedal boats $1800 ea
Floating pontoon dock is around $25k and fingers $2000k ea
…
[Mr Wallent to Mr Bellingham]
Ok thanks. They may want to do an evaluation on the Duffy's, how old are they?
2013?
[Mr Bellingham to Mr Wallent]
2010
[Mr Wallent to Mr Bellingham]
Cheers
…
[Mr Bellingham to Mr Wallent]
If there's anything else just let me know 👍
[Mr Wallent to Mr Bellingham]
Awesome thanks Shane. It may just be getting some valuations from our end then. Any chance you have receipts that may help?
For the new equipment
[Mr Bellingham to Mr Wallent]
I would have them but they should be able to valuate without them. I'm sure you can appreciate that would open my business up with my suppliers/ sources etc … which obviously I want to protect as I'm sure you would if it were yours . Example is the water bikes : [he then named the website, described them and quoted an approximately price, plus shipping , gst and import taxes].
But they should be able to work all that out anyway.
[Mr Wallent to Mr Bellingham]
Ok great thanks.
Are the Duffy's the 18 Snug Harbour model?
Don't worry, found it. 16 Back Bay
[Mr Bellingham to Mr Wallent]
Yep 👍
They are around $40k US plus shipping and import taxes . Work out around $62-65k AUS then they have to be certified for commercial use which is around another $5-7k to have done.
[Mr Wallent to Mr Bellingham]
Yep great thanks. I'm just passing this on to my broker to make it easier. I've found them online too 👍
(errors in original)
128 Of significance from these text messages is that:
(a) Mr Bellingham referred to two Duffy boats which had been taken "out" and were being cut, polished, waxed, antifouled and fully detailed.
(b) Mr Bellingham sent copies of the Certificates of Operation for the "Lady Mary" and "Lady Isabella".
(c) Mr Bellingham said that he sent two sets of "P&L" from the previous owners.
129 The Certificates of Operation were a one page document for each of the Duffy boats the "Lady Mary" and the "Lady Isabella". Each Certificate of Operation listed the "Date of Issue" as "02 March 2017" and stated "[u]nless suspended or cancelled, this certificate shall remain current from 02 March 2017 to 11 February 2022". The Certificates of Operation listed the Service Category as "4E" and contained a number of "Limits and conditions of operations and maximum persons permitted to be carried" as follows:
S.Cat 4E - SHELTERED WATERS HIRE AND DRIVE VESSEL FOR USE IN SMOOTH WATERS ONLY.
TO CARRY A MAXIMUM OF 8 PERSONS.
TO OPERATE IN DAYLIGHT HOURS ONLY.
All S.Cat - THE VESSEL MUST BE OPERATED IN FULL COMPLIANCE WITH THE NATIONAL STANDARD FOR COMMERCIAL VESSELS PART F-SPECIAL VESSELS.
All S.Cat - THIS CERTIFICATE HAS BEEN ISSUED FOR A NEW VESSEL AS DEFINED IN MARINE ORDER 504