(d) Favourable movements in foreign exchange.
Vince Variation
125 Mr Vince adopts the same methodology as Mr Rowell, but moves each of the two quarters forward one month so that they end on 31 March 2007 and 30 June 2007. For June 2007, he uses a sales figure of $537,133.00 comprising actual sales of $379,396.00 plus the $157,133.00 revenue loss that Mr Vince and Mr Rowell have agreed occurred.
126 Applying a 17.70% gross margin, Mr Vince calculated the loss as $629,532.00 plus interest of $89,169.00 totalling $718,701.00. If Mr Rowell's 15.29% gross margin were deployed, the loss would have been $425,147.00 plus $60,219.00 interest totalling $485,366.00 (see paragraph 63 of the Joint Report).
127 Nevertheless, the plaintiff maintains that Mr Vince's primary approach is its preferred loss of gross profits figure for the financial year ending 30 June 2008.
128 In the Joint Report, at paragraph 22, Mr Rowell accepts that the Vince Variation is "not unreasonable" and is an "alternative method" to estimate Lime's loss although he maintains that his own method (the Defendant's Scenarios) provide a better basis for calculation.
129 In my view that Mr Vince's primary approach remains the most appropriate. Although the Variation ameliorates to a certain extent, Mr Rowell's heavy reliance on two months prior to disconnection where Lime did not achieve its budget forecast, Mr Rowell's methodology remains flawed in that the Variation still uses a short time frame involving month to month accounting figures that may not accurately reflect the plaintiff's financial status.
Award of damages for lost profits
130 As mentioned earlier, there are two components one of which the experts have already agreed upon.
131 The first component, which both experts agreed upon, is for the loss of profits during the month of June 2007 (the month immediately following the disconnection). This amount has been calculated as $218,726.00 including interest and will be awarded in full to the plaintiff.
132 The second concerns the appropriate figure regarding the loss of profits during year to 30 June 2008 to reflect Mr Vince's primary approach, which has prevailed. In my view, subject to the requirement to reduce for exigencies, this second loss of profits figure should be $847,794.00 as earlier set out in the Vince Primary Approach (P1).
133 This exigency discount, judging by the deficiency of evidence presented by the plaintiff to justify its claim will be 50%. This takes the figure of damages for loss of profits during the year ended 30 June 2008 to $423,897.00 (as 50% of $847,794.00).
134 Therefore, the total amount awarded to the plaintiff for loss of profits arising from the disconnection is the sum of $218,726.00 and $423,897.00, that is $642,623.00.
Extra credits issue
135 In dealing with the customer complaints, Mr Neghabian and his staff encountered a large number of customers who demanded extra credit for the inconvenience they had suffered from the disconnection. If a client expressed dissatisfaction, Lime often offered to give the extra credit as compensation.
136 The plaintiff has assessed the total amount of credits given to customers from 15 June 2007 to 28 February 2008 to be $615,598.43. The provision of that credit increased Lime's cost of sales by $338,250.00 because it had to pay telecommunications carriers an additional amount to carry the extra traffic. This figure is derived as the aggregate of the credits displayed in Exhibit 7 of Mr Neghabian's affidavit of 18 May 2009.
137 The defendant submitted that the plaintiff's failure to adduce material evidence regarding the distribution of the extra credits means that the appropriate approach is to concentrate on the actual financial results of Lime prior to disconnection free of Mr Neghabian's assertions. The defendant submitted in final address that it was "commercially irrational" to hand out such a large amount of credits (transcript 221.25).
138 Indeed, as the plaintiff has pointed out, Lime has never put forward the extra credit amount as an additional head of claim. In addition, neither expert has included the issue in their respective reports. Nevertheless, the principled approach is to deal with this issue as it arises.
139 I accept that the plaintiff was in a state of extremis upon the defendant disconnecting the services provided to the plaintiff.
140 Mr Neghabian's evidence is accepted when he makes clear that the lodestar, which governed his approach, was to do everything humanly possible to save his business: