The replacement value of the stock
The policy
78Mr Hozeph said in his evidence 'I still do not understand on what basis NRMA is not paying the purchase cost of the goods in the store at the time of the fire'. The answer lies in the insurance policy. Garage was not insured for the purchase cost of the goods. The policy was a replacement policy, which in clause 1.3 obliged NRMA to:
" 1.3 Settlement
If you have a valid claim under Section 1, we will , at our option, pay for, reinstate, or repair the Property on the basis set out below.
Settlement Basis
(1) Stock in Trade
For Stock in Trade we will Indemnify you.
79'Indemnify' is defined as:
(a) Where the Property is lost or destroyed:
(i) in the case of a Building, the rebuilding; or
(ii) In the case of other Property, its replacement by similar property;
to a condition equal to but not better or more extensive than its condition at the time of loss or destruction; and
(b) where the Property is damaged, the repair and/or restoration of the Property to a condition substantially the same as but not better or more extensive than its condition at the time of damage.
Also refer to Section 9.1 for the definition applicable only to Section 9."
The cases pressed
80As Garage argued, NRMA could not dictate to it from whom it purchased replacement stock. Indeed, it is not obliged to replace the stock at all, with the moneys which it is entitled to receive under the policy. Neither, however, could Garage dictate the method by which the replacement cost of the stock in question is determined, by reference to the price it had paid Trade for the stock which was destroyed or damaged in the fire.
81In these proceedings, given the terms of the policy, the cost of the replacement of the stock by 'similar property' must be determined in light of what the evidence revealed as to the nature of the stock in question, as well as the price at which the stock could have been replaced at the time. Given the way in which the parties litigated this matter, that is not easy to determine.
82The case pressed for Garage was that:
"The indemnity required to be provided by the defendant is the cost of replacing those goods, and they've obviously got choices. If it's easily replaced by contacting an overseas wholesaler and then paying some cartage and the like, then that would be the cost. Or if it could be replaced in Australia at the same or equal price, then obviously purchase them in Australia. You would expect from an insurer of this size that that would be a relatively easy task, and your Honour hasn't heard from them, and your Honour knows Mr Jones, who apparently is able to make a quick assessment of $500,000.
Your Honour also knows the plaintiff has attempted to do it but, for failure to comply with the rules, and quite properly, your Honour has rejected that report. So it's not a matter of him not trying to do. But that still leaves your Honour with the task of having to somehow recreate them. As the cases say, it can be a difficult task. We're happy to leave it to your Honour, as it were."
83The onus in these proceedings, however, falls upon Garage. It must establish its case to the requisite standard, that is on the balance of probabilities. Whether Garage has met that onus has to be considered in circumstances where, even though Trade was not trading at all after the fire and on Mr Hozeph's evidence, was not able to trade, Garage led no evidence at all as to the price that other wholesalers with whom it might have been able to deal, would then have sold it replacement stock after the fire in 2009. Garage sought to establish this price by reference only to what it and Trade had earlier paid for the stock which was destroyed.
84Garage's case was that the only person who had given evidence, who had any expertise in retail and wholesale of the goods in question, was Mr Hozeph. The experts could not give direct evidence of what the replacement cost of the stock was and NRMA had not called any of its assessors, who might have shed some light on what was in issue. The proper question to be determined it argued, was what the wholesale cost of replacement of the stock was, an amount which had to include an appropriate margin for profit. The only evidence of margins in the industry was the Tax Department's information, contained in Mr Paul's report and what Mr Hozeph said about margins. It was thus only Mr Hozeph's evidence and how Trade conducted its business, which shed light on the question of the replacement cost of the stock.
85It is difficult to accept the approach so urged. Mr Hozeph's evidence, of itself, is not a sound basis on which the replacement cost of the stock could rest.
86This approach was supported by the submission, variously urged for Garage, that I would reject the common views which the experts had reached, after they had met to identify what they agreed and disagreed. I cannot accept that submission.
87Nowadays, a not uncommonly encountered consequence of the way in which expert evidence is received concurrently, is that experts called by different parties reach common views as to matters over which the parties are litigating. Inevitably that will assist one party, at the expense of another. That, however, is not a basis for rejecting their opinions, if they are persuasive, having in mind what the other evidence led in the case reveals. In this case, given the way in which Garage sought to establish the replacement cost of the stock and Mr Paul's explanation of why he finally came to the same opinions as Mr Russell, in relation to various relevant matters, including its replacement cost, I am satisfied that the expert's evidence is of assistance in resolving the matters over which the parties have joined issue. The fact that they jointly came to hold the same views, is not a basis for rejecting their opinions.
88Garage pressed its case on the basis of a number of alternatives. Firstly, that an order in the sum of $597,672 would be made, that being the price the experts agreed its financial accounts showed it had paid Trade for the stock which was affected by the fire. That was argued to be a figure which not only reflected what had actually been paid for the stock, but also what it could have been sold for by retail, at a sum identified by the experts to have been some $1.6 million.
89Secondly, in the alternative, Garage relied on the sum of $500,000 assessed to have been the value of the stock in December 2008 on behalf of the NRMA by its assessor, Mr Jones, before the fire, when the insurance cover was increased.
90Thirdly, in the further alternative, Garage claimed a figure which reflected the price for which Trade had acquired the goods, marked up by 550%. That figure reflected the average of the mark-up it had charged its various customers, including Garage, over the time it had traded, between 2006 and 2009, plus a further amount to reflect its business expenses and profits over that period. That approach rested on an argument that o verseas or local wholesalers do not sell to anybody at any time, for the cost of acquisition of stock to them. They sell to the market at the cost of acquisition, plus their expenses in running the business, plus profit. This approach would result in a replacement figure of $424,367.
91On Garage's approach, the lowest figure which could be ordered was some $267,000.59. That was the result of applying a mark-up of 310% to the figure of $86,148, which the experts agreed was the price at which Trade had acquired the stock, plus costs such as cartage and freight.
92NRMA conceded that a sum representing the amount which Trade had paid the Turkish manufacturers it had dealt with for the stock, plus costs agreed by the experts, could be ordered. Its case was that replacement cost could not be established on the basis of the amount Garage had agreed to pay Trade. They had not dealt with each other at arms length. Their dealings could not establish what the replacement cost of the goods in the market place was. Nor could the replacement cost of the stock be determined by reference to Trade's other expenses of operating its business, its claimed profits, or by the assessment which Mr Jones had made. These matters were all not relevant to a determination of the price at which Garage could have replaced the stock after the fire.
93On NRMA's approach there would also be no mark-up applied in arriving at a replacement cost, because the evidence established that Mr Hozeph could acquire the goods for Garage direct from the manufacturers he had dealt with for over 30 years. Garage had no need to deal with them through Trade, or any other wholesaler. The replacement cost of the stock, it was conceded, had to include an amount to reflect the travel costs which Mr Hozeph would incur in travelling to Turkey to acquire the stock.
94Garage's position was that this would not be accepted, because it ignored Trade as a trading entity and also ignored the reality of the market place; and what wholesalers do in that market and the function which they perform. The cost had to be assessed by reference to the wholesale price at which the stock could be acquired. Mr Hozeph was not obliged to buy direct for Garage. That was not its business.
Conclusion
95The case was fought on the basis of what the two companies' historical records showed, NRMA conceding that the stock could have been replaced at the price Trade had acquired it, plus the costs agreed by the experts. Did Garage establish that the replacement of the stock would have cost it any more?
96Garage was solely owned and operated by Mr Hozeph, its only director and its controlling mind. It was Garage which was insured with NRMA, not Trade. After Garage's premises were destroyed in 2009, NRMA's consideration of its claim was delayed by the police investigation. It conducted its own investigation, to establish what stock Garage owned and what had been destroyed in the fire. While there was no disagreement about what emerged from the Abacus investigation, in which Mr Hozeph assisted with reference to Trade's records, what resulted was a dispute over the cost of the replacement stock, amongst other things.
97It was in August 2009 that Abacus was instructed to undertake a stock take of the property on the ground floor of the premises. It was briefed with a schedule of the damaged contents, which listed both quantities and prices. In its exercise, Abacus had regard both to the prices of the stock, disclosed on tags on the clothes which had not been destroyed, as well as Trade's invoices, which were provided by Mr Hozeph. On his evidence at NRMA's request, Mr Hozeph then checked that work and himself added a column of figures, in addition to those Abacus had arrived at, having sought to match stock identified against Trade's invoices.
98At the time of the fire, Trade itself had no other stock whatsoever, to provide Garage, or to sell to other retailers and on Mr Hozeph's account, no other means by which to obtain other stock. Nor was there any stock which had already been ordered and was yet to be delivered. The result was that both Garage and Trade ceased to trade.
99On the evidence, had Garage then had the financial means to replace the stock, it was free to acquire replacement stock from anyone it wanted to deal with. At that time, Trade was itself not in a position to trade. That was no doubt because even though its records showed that it had made a substantial profit, it had no funds. Garage had no contractual obligation to Trade, to acquire replacement stock from that company. Having in mind Mr Hozeph's evidence as to his experience and contacts, Garage was unquestionably in a position where it could itself have purchased replacement stock from the manufacturers which he had dealt with in Turkey, for many years. On the evidence there was no reason why those manufacturers could not have sold Garage ready made goods of the kind which Garage had previously bought from Trade. But for the relationship between Mr Hozeph and Trade, it is impossible to think that Garage would then have contemplated dealing with Trade, given what it would have charged for replacement stock. Mr Hozeph was in a position to acquire replacement stock for Garage much more cheaply, by dealing direct with his Turkish contacts, than paying the inflated prices at which Trade had previously sold Garage the destroyed stock.
100Indeed it was Garage's case that it would have had to purchase replacement stock from someone other than Trade. There was, however, no evidence which established what stock other wholesalers would have offered it, or the price they would have sold at. On Mr Hozeph's evidence, with his contacts, even with Trade's mark-ups, he was able to achieve a better price, than other wholesalers could offer Garage. That was not made out on the evidence, but it is in that context, however, that consideration has to be given to NRMA's case, that Garage did not need to deal with another wholesaler to replace the stock, it was in a position itself to purchase replacement stock direct from Mr Hozeph's Turkish contacts.
101On the evidence, Garage itself buying direct from Turkish manufacturers would not have been difficult. All the ready made goods which Mr Hozeph had been acquiring for Trade after Garage was established, were already being delivered direct to its premises in Oxford St. Indeed, some of the invoices named Garage, not Trade, to be the purchaser. All that would have altered, had Garage purchased direct, would have been that it was Garage through which Mr Hozeph would buy the stock from the manufacturer, rather than Trade.
102Clearly, thereby Trade would have lost the opportunity to make a profit on the purchase of the replacement stock. That is not a reason for concluding that Garage could not have acquired replacement stock itself direct from Turkish manufacturers without Trades' involvement. Trade's position is not a relevant matter under the policy. It was not the insured. At the time of the fire, what Trade was acquiring from the manufacturers with whom Mr Hozeph was dealing, was ready made garments. As was submitted for Garage itself, that was reflected by the extraordinary change from 2008 to 2009 in terms of Trade's cost of sales, which dropped about $100,000, while the amount of its sales to Garage was about the same, but its mark-ups increased from around 300% to 814%.
103As I have explained, while it may be accepted that before Garage was established, Mr Hozeph was involved in the design and manufacture of the goods which Trade had imported into Australia, that was not the case in 2009 at the time of the fire. It follows that it may simply not be concluded that there would have been any difficulty in replacing that stock, by dealing direct with the same manufacturers or that the replacement cost of the stock may properly be assessed by reference to what Garage had paid Trade in the past for such stock. The massive increase in the mark-up Trade charged Garage, by comparison to what it had earlier charged its other customers, did not reflect either the cost of the stock, or the price at which it could have been replaced by Garage.
104The basis upon which Trade sold to Garage was clearly not as the result of any arms length transaction, but rather the result of decisions made by Mr Hozeph, as to which of his two companies would reflect particular profit and losses. He was certainly entitled to run his businesses, as he wished. In the circumstances, however, it is apparent that the replacement cost of the stock cannot be established on the basis of what Trade and Garage so agreed with each other.
105Nor did the evidence of the price at which Trade supplied its other retailer customers, for whose business it was competing with other wholesalers, establish the price that Garage could have acquired the stock from such other wholesalers.
106Garage also relied on the Crawford investigation report. There, however, it was observed:
"3.8 As outlined in the report from Abacus, the contents have been photographed and a schedule provided, indicating the property has a replacement cost of $153,416. We are satisfied all of the property shown on the contents schedule has either been burnt beyond recognition or contaminated to the extent it is beyond economical restoration. Therefore, we accept the contents schedule provided, subject to verification of the replacement cost claimed.
...
3.10 We have advised the Insured the contents which remain on site are deemed beyond economical restoration, and therefore do not have any salvage value. Rather than collect the contents and incur ongoing storage costs, we are satisfied the damaged contents can be discarded during the removal of debris co-ordinated by the building owners."
107That cannot establish the replacement costs of the stock as Garage claimed. Nor does NRMA's acceptance at the time that the amount of the insurance cover was increased in 2009, that there was $500,000 goods then in the store, establish the replacement cost of the stock destroyed in the fire.
108The evidence in that regard was that initially the insurance cover was for a maximum of $350,000. There were several unsuccessful attempts to increase the cover. In Crawford's August 2009 report to NRMA, it was observed that in January 2009, NRMA's assessor Mr Jones, visited the store and was convinced by Mr Hozeph that a fair estimate of the stock in the store was about $500,000. Mr Hozeph told Mr Jones that he was also about to receive two other shipments and it was then agreed that the insurance cover could be increased to $700,000, with a seasonal increase of 30%. On the basis of this information, Crawford recommended that Mr Hozeph's financial records be investigated and a possibility of fraudulent documents was raised. No evidence was called in these proceedings from Mr Jones.
109Even if it be accepted that Mr Jones' evidence would not have assisted NRMA's case, his evidence cannot provide a foundation for the conclusion that the replacement cost of the stock was $500,000. When the evidence as to the two companies' trading is considered, it must be accepted that this figure was not established as representing the replacement cost of the stock. To make an order on that basis would deliver Garage a windfall to which it is not entitled under the policy.
110For Garage, it was urged that if these approaches to the assessment of the cost of replacing the stock were not accepted, the calculation of the replacement cost of the stock would be approached by reference to the price Trade had acquired its stock, with a mark-up of some 550%. This reflected an average of the mark-ups it had charged to all of its customers, plus an amount to reflect Trade's other business expenses and its profits. That approach was necessary, it was urged, to pay proper regard to the various expenses Trade had incurred in operating its business (in addition to the expenses incurred in acquiring the goods) and the profit which Trade and other wholesalers like it, were entitled to make on the goods they imported.
111These figures were derived in part from Mr Paul's report, figures which he did not adhere to, after he and Mr Russell had conferred. During the concurrent evidence, Mr Paul explained that his initial calculations had proceeded on the basis of various assumptions he had been instructed to make, as to the businesses' operations. Having received a better understanding of the two businesses' operations and the investigations Mr Russell had undertaken, he and Mr Russell had reached common views which were reflected in the joint report. They did not support the approach which Garage pressed in its submissions.
112This approach was put to the experts at the hearing. They both disagreed with it. Their evidence was:
"DOOLEY: Start with you, Mr Russell. In your calculation you have not taken into account the expenses incurred by Trade Stone in the financial years - these are below the line expectations (sic), if I can put them like that, occurred in the financial years ending June 2007, June 2008 and June 2009, is that correct?
RUSSELL: That's correct.
DOOLEY: Do you agree with that Mr Paul?
PAUL: Yes.
DOOLEY: Also not taken into account is any allowance for profit other than what would be shown in the profit and loss accounts for the respective years I have referred to?
RUSSELL: I don't know what you mean by that.
DOOLEY: Well, an allowance for the business to make a profit on conducting its operations?
RUSSELL: I don't know how that fits with the exercise I have conducted.
DOOLEY: I appreciate that.
HER HONOUR: Let me interrupt. I understand that you don't understand how that fits in with the exercise you have conducted. Does that mean the answer to the question is 'no', it hasn't been taken into account?
RUSSELL: Sorry, I don't understand the question.
HER HONOUR: I think the question is, in identifying the cost of purchase by Trade Stone of the stock in issue, whether you took into account any profit?
RUSSELL: No, I didn't.
HER HONOUR: And Mr Paul, I take it you didn't either?
PAUL: No.
HER HONOUR: Really, your next question is, whether that should occur?
DOOLEY: Yes.
RUSSELL: No.
PAUL: No. My approach to the valuation of the cost of stock was prefaced upon the relevant tax ruling and the accounting standard that I referred to in my report. They set out what cost should be included in determining the value of the stock.
DOOLEY: Do you agree with that, Mr Russell, with what Mr Paul said?
RUSSELL: That profit is not included in the standards as a cost of stock?
DOOLEY: Yes.
RUSSELL: Yes."
113When further questioned about taking profit in consideration in determining the cost of the stock, their evidence was:
"DOOLEY: Mr Russell, if an overseas wholesaler sold for the costs you are describing, 70 to 80 odd thousand dollars, they would have to, out of that, pay for all their expenses of conducting the business. That is, that below the line expenses, wouldn't that be right?
RUSSELL: I imagine so, yes
DOOLEY: How would they do that?
RUSSELL: Well, they did.
DOOLEY: You say they did--
RUSSELL: All I have done is generate the purchase costs to Trade Stone of that stock, so whoever sold it to them you would imagine recovered their cost in achieving it's own cost.
DOOLEY: Also have a mark up?
RUSSELL: Would have to be in the sale price. Are you suggesting to me the person or the entity who sold the stock to Trade Stone sold it at a loss?"
114It seems to me that this third approach to establishing the replacement cost of the stock, urged for Garage, may also not be accepted. There was no evidence from which it could be concluded that stock similar to that sold by Trade, was being sold by other wholesalers at mark-up levels of 550%. That would also be quite inconsistent with the Taxation Department figures and was much higher than the mark-ups at which Trade sold it to its other customers. On the evidence, as I will explain, it seems likely that prices with mark-ups of less than the 300% at which Trade sold to other of its customers, was available to them in the market from other wholesalers.
115What was insured under the policy was replacement cost of the stock. That cost did not involve business expenses which were wasted, as the result of the fire. While there must be sympathy for Mr Hozeph's view that he was entitled to operate his businesses as he wished and that NRMA was not entitled to oblige him to purchase replacement stock from Turkish manufactures direct for Garage, without Trade's intervention, the question which arises to be determined in these proceedings is what was established on the evidence that the replacement cost of the stock was. Replacement of the stock clearly did not require that it be purchased from Trade.
116It is in these circumstances that I am also not able to accept the further approach urged for Garage, namely that the cost of the stock must be assessed by reference to a 310% mark-up, which was described as the 'lowest' figure available on the evidence.
117That the replacement cost of the stock which Garage lost in the fire, would have been the prices which Trade was able to command from its other retail customers, that is with a 300% mark up, does not follow from the evidence.
118There was no evidence of the prices which Trade's competitors were charging for similar stock in 2009. Trade's financial records show, however, that in the time before it commenced selling to Garage, it did not achieve sufficient turnover, at the price it sold to its other retailer customers, with a 300% mark-up, to turn a profit. On the Taxation Department information referred to in Mr Paul's report, this was a very high mark-up. That may well explain Trade's poor performance. At those mark-ups Trade was not sufficiently competitive to make a profit. If its competitors were offering similar stock, even if acquired at a higher purchase price, but sold with the lower mark-ups in the industry range of 196% to 158%, that would explain Trade's indifferent results, when it was selling to other retailers before it began selling to Garage.
119This helps explain, no doubt, why Mr Hozeph changed Trade's business model, in order to acquire the cheaper ready made goods which it later sold to Garage. Even then, in its second year of trading, apart from its sales to Garage, Trade did not significantly increase its sales to its other retail customers or make a profit on that business. The inference is that there were other wholesalers offering Trade's other retail customers similar stock, at lower prices.
120In 2009, Mr Hozeph regarded the ready made stock that Trade was able to import from Turkey to have a particular value. He had established Garage and its retail business, in order to establish the 'Trade Stone' brand. He believed that as a result of his contacts, he was uniquely placed to bring those goods into Australia, at a price cheaper than other wholesalers could import such goods. Indeed, he considered that the information he had acquired over the years as to the Turkish manufacturers with whom he dealt from 2006 through Trade, to have been 'priceless'. On the evidence that was not information which belonged to Trade, but it was certainly information revealed in its records. That was the basis upon which Mr Hozeph was able to command a considerable price, when he sold Trade's shares in 2010. With that information, the purchaser was put in a position to import goods from the Turkish manufacturers with whom Mr Hozeph had long dealt. He was not thereby precluded from dealing with those manufacturers on behalf of Garage, as he was clearly also free to do in 2009.
121In all of those circumstances, it seems to me entirely unlikely that in 2009 after the fire, Mr Hozeph would have sought to purchase replacement stock from the Turkish manufacturers with whom he had long dealt, through another wholesaler, even if Trade had not been in a position itself to trade, as was his evidence. Mr Hozeph was not bound to acquire the replacement stock through Trade or any other wholesaler, nor was Garage. They were both entitled to purchase direct. Nor would it seem likely that Mr Hozeph would have wished to replace the stock with stock which Garage could have obtained from other manufacturers, given that his aim was to establish the 'Trade Stone' brand with the stock he had been importing through Trade. Nor is he likely to have introduced his Turkish contacts to other wholesalers, given his view of the value of this information. The reality was that if Mr Hozeph had had the necessary funds, he would have used the information at his disposal, to deal with his Turkish contacts direct, in order to obtain replacement stock for Garage.
122In those circumstances, it must be concluded that the value of the stock must be approached on the basis urged for NRMA. With such funds, Garage would plainly have been in a position to replace the stock. Any further amount would result in Garage receiving a windfall.
123Various of the matters dealt with by the experts in their concurrent evidence, must be considered in determining the precise figure to be ordered in Garage's favour.
124While Trade's financial records suggested that the price Trade charged for the goods was a mark-up of 960% on its acquisition cost, what costs had been included in reaching that figure was not revealed by the accounts. The experts agreed that the better view was a mark-up of 814%, which took into account various costs of acquisition of the goods, such as freight and customs costs, which Mr Russell had been able to identify. That had the result of a cost of acquisition of a maximum of $86,148, which the experts agreed.
125The experts also agreed that Mr Hozeph's work in travelling to Turkey to acquire the goods, had also involved travel expenses, which also had to be taken into account in determining the cost of the stock Trade had acquired. Whether any such costs were included in the mark-up figure arrived at is uncertain. The experts were unable to conclude positively that they were. The records showed that some $103,095 had been spent in travel in the 2008 and 2009 financial years, when a total of $118,812 had been spent by Trade on purchasing the stock. Not all of that travel related to the stock which Garage had on hand at the time of the fire. What part of those travel and accommodation expenses related to the travel involved in the acquisition of the stock which had to be replaced, could not be ascertained by the experts. Mr Hozeph gave evidence of having undertaken other travel, not related to acquisition of stock, but he gave no evidence from which a figure reflecting travel associated with the destroyed stock could be identified by the experts.
126In the circumstances it was accepted that an amount reflecting he cost of travel must be added. That the costs would be as low as $10,000, as was urged for NRMA, involving only a single simple trip to Turkey, is somewhat difficult to accept. It seems to me that to acquire sufficient stock to restock the entire shop, given the range of goods, would reasonably involve somewhat more expense than was suggested.
127What the expert's calculations also did not take into account was the cost of Mr Hozeph's labour, if Garage was itself to acquire the goods from Turkish manufacturers. There was a controversy between the parties as to whether what he received from the two companies reflected a payment to him for his labour, or a share of profits. Given his evidence, in my assessment it must be concluded that what was paid to Mr Hozeph reflected a labour cost incurred by each company. He worked considerably longer hours in the two businesses than the payments he received for that work could have fairly recompensed him. I cannot see in the circumstances, that these payments in truth involved any concept of 'profit'.
128In the case of Garage, if his work was not done by Mr Hozeph, it would have had to have been done by someone else. Given the little spent on wages for other staff, if Mr Hozeph had not done that work, Garage would unquestionably have had to pay other staff to perform that work. In the case of Trade, on the evidence there was no-one else who could have done Mr Hozeph's work. It follows, in my view, that in assessing the cost of acquisition of replacement stock, some account must be taken of Mr Hozeph's labour, in obtaining the replacement stock for Garage, if it was to be acquired by Garage itself, rather than being purchased from Trade or another wholesaler.
129NRMA's case was that the cost of the goods fell within the range between $53.588 and $73,418, the higher number including an unspecified amount for undisclosed costs, which it would be assumed included travel expenses. The experts finally came to a higher figure, as I have explained.
130The end result of all of this, doing the best I can on the evidence, is a figure of $121,148. That is calculated on the following basis:
- Trade's cost of acquisition of the goods, calculated with a mark-up of 814%, the figure which the experts agreed should be used, which resulted in an amount of $86,148. This includes the price paid by Trade to the manufacturers for the goods, freight costs, duty, plus the other relevant expenses which the experts were able to identify, such as customs agent charges.
- An additional amount for travel costs which I have estimated to be $15,000.
- An additional amount for the cost of Mr Hozeph's labour which I have estimated to be $20,000, in order to properly reflect the nature and value of work involved.
131The figure includes no amount for mark-up. That is a cost which Garage would not incur if Mr Hozeph acquired the goods direct from Turkish manufacturers on its behalf. It leaves Garage in a position, however, on the evidence, to sell that stock at retail with mark-ups of over 2000%, absent the interposition of Trade. Even if it were to sell the stock wholesale, on the evidence that would permit mark-ups of up to 300%, when industry averages are in the 196% to 158% range. In all of those circumstances, to assess the replacement cost of the stock on any higher basis would result in an unjustified windfall, so far as Garage is concerned.