RESERVE CAPITAL -v- SEASCAPES SUPERMARKET WA PTY LTD [No 2] [2025] WASC 146 (2 May 2025)

7.5 represented that in 2015 Seascapes IGA expenditure on wages was $312,292 ('Wages Representation').[3] (original emphasis)

1. Broadly, the defendants admit that each of the Representations was made,[4] but dispute whether all of the defendants made all of the Representations.[5] In any event, the defendants say that none was, relevantly, misleading or deceptive.[6]
2. Reserve Capital alleges the Representations constituted misleading or deceptive conduct, in contravention of s 18 of the Competition and Consumer Act 2010 (Cth) (ACL) and s 18 of the Fair Trading Act 2010 (WA) (FTA).[7] Reserve Capital says that each of the Representations conveyed a representation as to future matters[8] and the purchaser of Seascapes IGA could expect to achieve similar outcomes as those represented.[9]

1. The paragraphs in this Section principally set out my findings of fact. Where a particular finding has turned on a resolution of contested evidence, I have explained separately (principally in Section C) my reasoning for making the finding I have.
2. At all material times, Seascapes:
   1. was incorporated;
   2. commenced to operate the Seascapes IGA as a new business from September 2013;
   3. ran the Seascapes IGA prior to its sale to Reserve Capital; and
   4. was engaged in trade and commerce under s 18 of the ACL and s 18 of the FTA.[10]
3. At all material times the second defendant, Leila Piggott, was the sole director of Seascapes.[11]
4. The third defendant, Lewis Piggott, acted as the agent for Seascapes.[12] As will be seen, it is controversial, on the pleadings, whether Mr Piggott had another role, and, in particular whether he also acted as agent for Lightwest Investments.
5. As noted above, Lightwest Investments owns, and at all material times owned, the Premises. Reserve Capital entered into a lease with it at the time of the acquisition of the Business.
6. At all material times, Lightwest Investments had two directors, Peter Fairweather and Ms Piggott.[13]
7. At trial, Seascapes and Mr Piggott were represented by the same firm and counsel. Ms Piggott and Lightwest Investments were represented by another firm and counsel.
8. From 2015, and at all material times, Reserve Capital was a company incorporated under the Corporations Act 2001 (Cth).[14]
9. The directors of Reserve Capital were, and remain, the spouses, Effendi Satyawan and Henny Dewi.[15]
10. As will be seen, throughout the relevant events Mr Satyawan was the prime actor for Reserve Capital.
11. Both Mr Satyawan and Ms Dewi had studied in Australia and obtained Bachelor of Commerce degrees.[16]
12. After their study, they left Australia and returned to Indonesia. In about 2003, they came back to Australia to settle with their then child, and then children.[17]
13. From 2010 to 2013, Mr Satyawan ran a bookshop (although it was not clear through which, if any, corporate entity) and sold that business in about 2013.[18]
14. As part of selling the Seascapes IGA, Seascapes engaged a business broker, Ascend Corporate Pty Ltd (Ascend).
15. It is common ground that Seascapes:
    1. supplied information to Ascend for its preparation of the Business Profile;[19] and
    2. authorised Ascend to distribute the Business Profile.[20]
16. Reserve Capital pleads that Ms Piggott provided authority to compile or distribute the Business Profile.[21] That is put in issue by the defendants.[22]
17. Although formally disputed, I find that the Business Profile contained information relating to the sale of the Seascapes IGA as a going concern.[23]
18. It was common ground that, by the Business Profile, Seascapes made both the Profit and the Wages Representations as they were pleaded and defined in the SOC.[24]
19. The Management Representation pleaded in the SOC was that the Seascapes IGA 'operated under management with minimal hands on [sic] input being required by any proprietor/purchaser'.[25] There was a dispute as to whether the Business Profile made the Management Representation as pleaded.[26]
20. However, it is common ground that under the heading: '5. Proprietors [sic] Involvement & Staffing'; the Business Profile stated 'Owner/Proprietor ‑ Operates under management with minimal hands on [sic] input'.[27]
21. As will be apparent, the SOC defines the Management, Profit and Wages Representations as having been made by the Business Profile. The SOC then asserts that representations to similar effect were made on subsequent occasions.[28]
22. Mr Satyawan's unchallenged evidence was that he had looked at different businesses for sale after selling the bookshop with a view to buying another business. In the course of that search, his evidence was that he had seen an advertisement of the Seascapes IGA placed by Ascend and had seen the Business Profile.[29]
23. Mr Satyawan saw the Business Profile in about the middle of December 2015.[30] I find from Mr Satyawan's evidence that the Business Profile he was sent contained the four appendices which appeared in the document he gave evidence as to having received from Ascend.[31]
24. Seascapes and Mr Piggott accepted in closing, and I find, that Reserve Capital received the Business Profile from Ascend.[32] This had previously been put in issue by the defendants' pleadings.[33]
25. Mr Satyawan's unchallenged evidence was that initially he was put off by the business being in Halls Head when he and Ms Dewi lived in Rossmoyne and had, at that time, a young child.[34]
26. To that end, Mr Satyawan had asked Ascend on 14 December 2015 whether they had anything closer to Rossmoyne.[35]
27. Mr Satyawan's evidence was that on about 1 January 2016, he entered into a loan agreement with his mother by which he borrowed $1.5 million with a minimum repayment of $20,000 per year and interest of 10% per annum accrued on the balance owing at the end of each financial year (Purported Loan Agreement).[36]
28. The defendants do not accept the genuineness of the Purported Loan Agreement and, in particular, do not accept that Mr Satyawan, or Reserve Capital, was under any obligation to pay Mr Satyawan's mother interest at 10% as purportedly documented.[37]
29. For reasons set out below, I find that Mr Satyawan and/or Reserve Capital did not come under an obligation to pay the interest as claimed.
30. At the beginning of 2016, Mr Satyawan saw a Gumtree advertisement for a supermarket business.[38]
31. That Gumtree advertisement led to a meeting on 30 January 2016 at the Seascapes IGA.[39] I have made findings as to what occurred at that meeting more fully in C.2.2 below.
32. I find that there were text messages between Mr Satyawan and Mr Piggott between 11.46 pm on 29 January to 4.36 pm on 30 January 2016.[40]
33. I find that Mr Satyawan and Ms Dewi (and their children) met Mr Piggott at the Premises on 30 January 2016.
34. For the reasons set out in C.2.2 below, I find that the following occurred at that meeting on 30 January 2016:
    1. Mr Satyawan, and maybe Ms Dewi and their children, walked through the Seascapes IGA without Mr Piggott; and
    2. Mr Piggott may have said something to the effect that the Business was in a growing area, and, or that the area was a safe one.
35. After the meeting on 30 January 2016, Mr Satyawan sent to Mr Piggott by text message (at 4.36 pm) his email address.[41]
36. On 31 January 2016 (at 3.16 pm), Mr Satyawan sent a text message to Mr Piggott which asked whether he was selling the Bertram IGA as well, to which Mr Piggott responded 'no'.[42]
37. On 31 January and 1 and 2 February 2016, by text message Mr Satyawan asked Mr Piggott for the financials for the Seascapes IGA.[43]
38. From a text message exchange on 3 February 2016:
    1. Mr Piggott indicated he was putting information together and would send it to Mr Satyawan the next day (4 February 2016);[44] and
    2. Mr Satyawan said he would see Mr Piggott at 11 am on 4 February 2016.[45]
39. There was no direct evidence that Mr Satyawan and Mr Piggott met on 4 February 2016 but, as will be seen immediately below, Mr Piggott sent a number of emails with attachments to Mr Satyawan on 4 February 2016.
40. On 4 February 2016, by email (at 4.22 pm),[46] Mr Piggott sent to Mr Satyawan the IGA franchise agreement Seascapes had with Metcash Food & Grocery Pty Ltd (Metcash).[47]
41. At 4.26 pm, Mr Piggott sent to Mr Satyawan a draft lease with Lightwest Investments as landlord, but there was no tenant nominated in that draft (Draft Lease).[48] The Schedule to that draft had completed the Items for the Term and Rent Review Date(s).[49]
42. At 4.45 pm, Mr Piggott sent to Mr Satyawan a 'Summary of Profit and Loss Statements' for the 2014 and 2015 financial years, which included 'Add Backs'.[50] That summary was included in the body of the email and replicated the summary in the Business Profile,[51] except that the 4 February 2016 email:
    1. showed the 'adjustment to rent/outgoings' for the 2015 financial year as $110,000 (rather than $104,106 in the Business Profile) which reduced the 'Total Add Backs' to $6,188 (rather than $12,082 in the Business Profile); and
    2. resulted in an 'Adjusted Profit' of $518,407 (rather than $524,301 in the Business Profile).[52]
43. At 4.52 pm, Mr Piggott sent to Mr Satyawan the four Business Activity Statements (BASs) for Seascapes for the financial year 2015.[53]
44. On 5 February 2016, by email (at 8.23 am), Mr Satyawan asked Mr Piggott some questions about the terms of the Draft Lease.[54] Included in that email was a question about the outgoings and the market review mechanism in the draft.
45. At 8.31 am, Mr Satyawan asked Mr Piggott for further financial information for Seascapes IGA, principally for the six months between July 2015 to December 2015. [55]
46. At 1.27 pm, Mr Piggott responded that the outgoings were $71,302.60 and attached a document headed 'Outgoings Budget 2015/2016'.[56]
47. At 1.51 pm, Mr Satyawan:
    1. asked Mr Piggott some questions about the franchise arrangements with IGA (which I infer is with Metcash);
    2. suggested that if there was no goodwill in the purchase price there would be no stamp duty required; and
    3. stated that the lease agreement should be between Mr Piggott's company and Mr Satyawan.[57]
48. On 8 February 2016, by email (at 4.10pm), Mr Piggott forwarded on to Mr Satyawan an email from Seascapes' accountant (Matthew Fogarty) which attached Seascapes' tax return for the 2014 financial year;[58] which Mr Fogarty stated in the email had been lodged and paid in full - he was not challenged on that statement - and I find accordingly.
49. At 4.11pm, Mr Piggott forwarded on to Mr Satyawan an email from Mr Fogarty which attached Seascapes' 2015 financial statements.[59]
50. At 4.28 pm, Mr Satyawan asked Mr Piggott (amongst other things):
    1. What would happen if we decide the purchase price will have no goodwill component?

We would just put a higher price on the plant/equipment?

The original set up cost is about [$600,000], would it be reasonable for the tax man to go over that figure?

...

1. We still waiting for the figures/ [BAS] from July - Dec 2015. Would you be able to get it for me today?[60]
2. On 10 February 2016 (at 6.30 pm), Mr Piggott sent an email to Mr Satyawan,[61] which attached:
   1. the BAS for the first quarter of the 2016 financial year;[62] and
   2. what was described as the 'Consolidated Hourly Productivity Report' for each of the quarters ending 30 September 2015,[63] 31 December 2015[64] and up to 10 February 2016[65] (in the quarter which would end 31 March 2016).[66]
3. As may be seen above, from the conclusion of the meeting at the Premises on 30 January 2016 until the email referred to immediately above, there were many text messages and emails passing between Mr Satyawan and Mr Piggott. Mr Satyawan did not give any evidence of any oral conversation between him and Mr Piggott in that time (i.e. just prior to the face-to-face meeting on 11 February 2016).
4. On 11 February 2016, there was a meeting between Mr Satyawan, Ms Dewi, Mr Piggott and Ms Piggott and their infant son at a coffee shop in Ardross.[67] I find this was the second meeting that Ms Dewi attended[68] and was the first meeting that Ms Piggott attended.[69]
5. With the exception of the fact that it occurred and who attended, most of what was discussed and agreed, if anything, at this meeting remained controversial.
6. For the reasons set out below, I find that the purchase price being agreed at $875,000 plus stock to be valued at a stocktake was the only relevant thing which occurred at this meeting on 11 February 2016.
7. It appears from a text message which Mr Satyawan sent to Mr Piggott on 11 February 2016 (at about 6.25 pm), that Mr Satyawan expected to sign an offer and acceptance for the Business the next day, 12 February 2016.[70]
8. On 12 February 2016, Mr Satyawan and Mr Piggott went to the offices of Ascend and met with Nigel Gill.[71]
9. At that meeting an agreement for sale of business was signed (February Sale Agreement).[72] As will be seen, identifying the one document which captures the true agreement for the sale is not without its difficulties.
10. Clause 2.1 of the February Sale Agreement provided for a Gross Purchase Price of $875,000 plus stock at value.[73]
11. Clause 6 of the February Sale Agreement referred to a lease with Lightwest Investments and nominated the rental as $140,000 excluding GST plus outgoings per annum with a term of '10 + 10 + 10'.[74]
12. The February Sale Agreement incorporated the Australian Institute of Business Brokers (WA Division) 2012 General Conditions for the Sale of Business 'so far as they are not varied by or inconsistent with the express terms hereof'.[75]
13. By the Special Conditions to the February Sale Agreement 'Annexure A' formed part of this contract. 'Annexure A' made plain that the February Sale Agreement was subject to, and conditional upon, a number of matters, including Reserve Capital's 'acknowledgment of their acceptance of the lease provided for the premises'.[76]
14. Mr Satyawan appeared to have no independent recollection of what was discussed at the meeting outside the terms of the February Sale Agreement and its 'Annexure A' (which referred to the offer being conditional on Reserve Capital entering into a lease on certain terms).[77]
15. Mr Satyawan gave evidence about what happened, to his observation, between Mr Piggott and Mr Gill at the conclusion of that meeting.[78] He said that Mr Piggott and Mr Gill began discussing whether commission was payable on the stock and, to his observation, their demeanour became 'tense' and Mr Piggott appeared to be angry with Mr Gill.[79] This evidence was contentious.
16. Following the meeting at Ascend, Mr Piggott and Mr Satyawan went to meet Mr Fogarty at his office (still on 12 February 2016). Mr Fogarty was, at that time, the accountant for Seascapes.[80] Mr Fogarty gave evidence that he too was the accountant for a number of entities within the second and third defendants' group, including Bertram IGA.[81]
17. I find that by the time of the trial, Mr Fogarty was no longer the accountant for any of the Piggotts' businesses.[82]
18. Mr Satyawan gave evidence that at the meeting with Mr Fogarty there was discussion as to the structuring of the deal.[83] That evidence was contentious and will be returned to below.
19. Following that meeting, Mr Satyawan sent a number of emails and text messages to Mr Piggott on 12 February 2016.
20. By an email sent to Mr Piggott (at 2.59 pm), Mr Satyawan annexed an Office of State Revenue (OSR) fact sheet for Business Acquisitions and then stated:

Please see the attachment. (it is WA govt documentation on stamp duty) We were actually right from the beginning

The duty need to be paid on the business transfer is only the following 'business asset[']:

...

There is No P/E and No stock in the list.

If we sell it as going concern, we don't even pay the GST on the P/E

That is why everybody prefer to have them on going concern basis.

But to be on the safe side, I think we should do the P/E as non going concern and pay the GST on top of it.[84]

1. Mr Satyawan sent a text message to Mr Piggott (at 3.18 pm), which stated that there was no stamp duty on plant and equipment and stock alerting him to the email Mr Satyawan had sent to him at 2.59 pm (immediately above).[85]
2. Mr Satyawan sent Mr Piggott a further email (at 3.41 pm), which said:

I have just rang [sic] OSR and make a general enquiry on stamp duty They do say stamp duty applicable on

Goodwill

P/E

but no stock

And they say any arrangement like 2 companies buying the business goodwill and P/E separately, they would combine both transaction as an aggregate value and charge stamp duty on top of it

The only way they will not charge a stamp duty is on P/E that is 'Chattel', it is not a fixture nor part of leasehold[86]

1. Later on that same day, Mr Satyawan sent Mr Piggott a second further email (at 4.41 pm). The email is of some significance and so I have set it out in full here:

The contract suggestion would be as follows:

Purchase of Goodwill : $20,000

Purchase of stock : At value

Lease of equipment : 3 years @ $285,000 p.a (Total of $855,000) with a balloon to purchase $1

I would then prepay $285,000 x 3 bank cheques on the settlement day. And you would give me an [sic] receipt and invoice for each annual equipment lease.

Benefit of doing this:

I can expense the equipment over 3 years, you can spread the revenue over 3 years as well. It is a lot quicker than depreciation for me and a slower capital gain for you

We need to prepare another small contract between [Reserve Capital] and [Seascapes] for the equipment lease. Maybe put a clause of early termination to own the equipment earlier if that necessary [sic][87]

1. At 7.02 pm, Mr Satyawan sent a text message to Mr Piggott which said:

Hi Lewis, I got a better idea: goodwill $5000 p/e $60,000 Stock at value. Then 810,000 would go as a management and consulting fee to Seascape supermarket wa Pty Ltd ($270,000 pa for 3 years) I would prepay the whole amount on the settlement day and you invoice me for the next 3 years. This way you will incur a loss in your book value. I get to pay reasonable amount stamp duty. At the end of the day it doesn't really matter if the cost comes as a depreciation or management fee. It's still a cost. Tell me what you think[.][88]

1. Mr Satyawan accepted that what was proposed in this last text message was:
   1. his idea to reduce stamp duty; and
   2. a sham as there were no consulting services.[89]
2. Mr Satyawan sent to Mr Piggott, by email on 14 February 2016 (at 9.19 pm), a link to a business article about capital gains tax.[90] The subject of the email was 'you might one to take a look at this:'.[91] I infer that 'one' was a typographical error for 'want'.
3. A few minutes later (at 9.24 pm), Mr Satyawan sent to Mr Piggott another email. That email, amongst other things, noted that stamp duty was applicable on a hire purchase and said, 'so when we actually choose to do a hire agreement, it is not supposed to be hire purchase'.[92]
4. Mr Satyawan accepted that notwithstanding the proposal in these emails, the agreement between the parties was not a lease of equipment.[93]
5. Mr Satyawan did not accept it was his idea alone.[94]
6. It was a requirement of Metcash that Reserve Capital prepare a business case or plan and Mr Satyawan prepared such a document.[95] He sent that document, by email, in draft to Mr Piggott for any comments on 17 February 2016.[96]
7. It does not appear that Mr Piggott suggested any significant amendments, and I so find.
8. An agreement for sale of business was executed by Mr Satyawan and Mr Piggott (on the face of the document on 1 March 2016) and was submitted to the OSR (Final Contract).[97] Mr Satyawan prepared this document and the duty which was assessed on it (eventually) was paid.[98]
9. A number of contracts were drafted as to the sale of the Business.
10. There was a typed agreement for sale of business (as a going concern) between Reserve Capital and Seascapes which showed the gross purchase price at $375,000 made up of:
    1. Goodwill of $10,000;
    2. Plant and equipment of $65,000; and
    3. Stock estimated at $300,000;[99]

and which was signed, it appeared, by Mr Satyawan and Ms Piggott (both signatures being witnessed by Mr Piggott).[100] It was executed by Mr Satyawan on 1 March 2016 with a settlement date of 21 March 2016.

1. Mr Satyawan created that document and accepted in cross‑examination that the $375,000 was not the real purchase price for the Business.[101]
2. I accept Mr Satyawan's unchallenged evidence that he met Mr Piggott at the McDonald's in Myaree and raised the question of amending the market rent review and reducing the rent in the Draft Lease.[102]
3. Mr Piggott signed a Disclosure Statement under the Commercial Tenancy (Retail Shops) Agreements Act 1985 on 1 March 2016 (on behalf of Lightwest Investments).[103] Mr Satyawan also signed the document on 1 March 2016 and the signed copy was returned back to Mr Piggott by Mr Satyawan by email on 2 March 2016 (at 3.58 pm).[104]
4. I accept Mr Satyawan's evidence that he signed the Disclosure Statement at the meeting at the McDonald's in Myaree.[105] That would mean that the meeting took place on about 1 March 2016.
5. Item 11 of the Disclosure Statement had the rent review at 4% annually 'including options. No market review'.[106]
6. On 2 March 2016 (4.10 pm), Mr Satyawan sent an email to Mr Piggott[107] which attached what appears to be a pro forma agreement for sale of business (as a going concern) filled out in Mr Satyawan's handwriting.[108] It was dated 24 February 2016, with a settlement date of 21 March 2016.
7. That showed the gross purchase price at $335,000, broken up as follows:
   1. Goodwill of $10,000;
   2. Plant and equipment of $25,000; and
   3. Stock estimated at $300,000.
8. On 7 March 2016 (at 11.59 am), Mr Piggott sent a further draft lease to Mr Satyawan and asked him to 'compare the schedule attached to the [previous one] I sent.[109]
9. The amended draft lease attached to Mr Piggott's email of 7 March 2016[110] had deleted the market rent review date from Item 12 in the Schedule.[111] The Rent and Term items in the Schedule in the lease sent 7 March 2016[112] were unchanged from the Draft Lease sent by Mr Piggott on 4 February 2016.[113]
10. By email on 8 March 2016 (at 8.35 am), Mr Satyawan sent to Mr Piggott a document prepared by him and described as an 'Invoice Sample for hire'.[114] Mr Satyawan accepted that, as there was no equipment hire as part of the consideration 'in reality', this was a 'fake document'.[115]
11. On 8 March 2016, (at 8.36 am), Mr Satyawan sent to Mr Piggott an email attaching a spreadsheet prepared by him (Mr Satyawan) which was described as 'breakdown of payment'.[116]
12. Reserve Capital pleads that it entered into a lease of the Premises with Lightwest Investments on about 11 March 2016;[117] which the defendants accept was entered into on 1 March 2016, with a commencement date of 21 March 2016.[118]
13. There was a series of emails between Mr Satyawan and Mr Piggott on 16 March 2016.[119] In the first of those (at 8.13am), Mr Satyawan asked who should be nominated as payee on the bank cheque for $800,000. Mr Piggott responded (at 10.17am) and said in Seascapes' name.[120]
14. In response, Mr Satyawan (at 11.00 am) said:

I'm afraid we should not deposit the cheque in Seascape supermarket p/l

Each month we would exchange cheque right

It would be better if that 800k is going to another company or other party[121]

1. Before taking over the Business on 21 March 2016 (and prior to the stocktake on 20 March 2016), Mr Satyawan's evidence was that after completing the contract and while he was getting ready to take over the Business he had a few telephone calls and a few meetings with Mr Piggott,[122] but they were mainly about opening supplier accounts to retain established discounts.[123]
2. I interpolate to say here that Mr Satyawan gave no evidence of any oral representations being made to him after the meeting at the McDonald's in Myaree on 1 March 2016 and prior to the stocktake occurring on 20 March 2016. I find that no such representation, whether to the effect of those pleaded as in the Business Profile or otherwise, were made in this period.
3. Mr Satyawan and Ms Dewi attended the stocktake at the Seascapes IGA on 20 March 2016.[124] Ms and Mr Piggott also attended. At the end of that stocktake Mr Piggott produced a tax invoice of the stocktake value at handover in the sum of $258,454.64.[125]
4. Mr Satyawan gave evidence of there being a short conversation in a break during the stocktake. Mr Satyawan's evidence was that the discussion:
   1. was mainly about the payment for the balance of the purchase price;
   2. included Ms Piggott saying that she had thought about moving to the area; and
   3. included Ms Piggott saying that the shop runs by itself with Jo Nesbitt as a reliable store manager.[126]
5. Mr Satyawan was not cross-examined on that evidence as to what was said in the break at the stocktake.
6. As will be seen below in D.2.6, Ms Piggott also gave unchallenged evidence about a conversation in this break regarding 'wholesale' customers.
7. I do not find that there was any discussion on 30 January 2016, nor at that stocktake, as to the accuracy of the Business Profile; nor any discussion of the Business Profile otherwise. I note that neither Mr Satyawan, nor Ms Dewi (who gave some short evidence about the stocktake[127]) gave evidence that there was such a discussion.
8. In cross-examination, Mr Satyawan accepted that he probably had about 10 face-to-face meetings with Mr Piggott in January, February and March of 2016[128] and accepted that he did not remember exactly what Mr Piggott said in any one of those conversations.[129]
9. On an illegible date, a bank cheque in favour of Mr Piggott in the sum of $800,000 was drawn.[130] No party made anything of the date of the cheque, and I infer it was given to Mr Piggott at about the time of the settlement of the sale.
10. On 12 April 2016, by email (at 12.37 pm), Mr Satyawan asked Mr Piggott, amongst other things, whether Mr Piggott had the 'data of the last three months weekly hours in total for [Seascapes IGA]?'.[131]
11. Mr Piggott replied to that email (at 1.01 pm),[132] attaching documents which contained the hours worked by staff at the Seascapes IGA between 28 December 2015 and 3 April 2016 (Staff Timesheets).[133]
12. At 2.06 pm, Mr Satyawan:
    1. said to Mr Piggott that he would transfer $11,000 and the rent money that night;
    2. requested an invoice from Mr Piggott; and
    3. stated the '$10,000 swap amount [should] be wired to my mum's account'. [134]
13. Mr Satyawan wrote to Mr Piggott (at 4.44 pm) and said:

I have just wired:

$19369.41 (rent and outgoings APR) - this goes to Lightwest Investment P/L account

$11000.00 (equipment hire APR) - this goes to Seascapes Supermarket WA P/L account

If you have transferred the $10,000 and have the invoice ready, please let me know

I'll have my mum to check her bank account[135]

1. Mr Satyawan wrote to Mr Piggott (at 6.46 pm) and said:

When you do the transfer of $10k please make sure it doesn't come from Leila's or seascapes supermarket wa Pty Ltd bank account. Just to avoid any connection to the original business transactions [136]

1. On 14 April 2016, Mr Satyawan sent an email[137] to the OSR and attached an agreement for sale of business (as a going concern)[138] which showed a gross purchase price of $375,000 made up of:
   1. Goodwill of $10,000;
   2. Plant and equipment of $65,000; and
   3. Stock estimated at $300,000.
2. That document showed the settlement date at 21 March 2016 (estimated) and appeared to be signed by Mr Satyawan and Ms Piggott, with Mr Piggott witnessing both signatures on 1 March 2016.[139]
3. Mr Satyawan accepted that at the time of sending this document to the OSR he knew that he had agreed to pay $875,000 (not $375,000) and that he knew that the real value of the goodwill and plant and equipment was higher than stated on the document.[140] I find accordingly.
4. He accepted in cross‑examination that he submitted the document knowing it was not a true record of the agreement he had reached and that he intended to mislead the OSR to avoid paying the correct stamp duty.[141] I find accordingly.
5. On 27 April 2016, the OSR issued a Duties Assessment Notice in the amount of $1,425 to Reserve Capital on the agreement dated 1 March 2016.[142]
6. Mr Satyawan's evidence was that he did not pay that amount to the OSR.[143]
7. On 15 May 2016 (at 5.22 pm), Mr Satyawan sent an email to Mr Piggott which, amongst other things, stated:

I made the following payment:

Lightwest $19369.41 (May rent/outgoings)

Seascapes Supermarket $43.22 (Shopping basket $165 ‑ Video Ezy 11 days March $121.78)

Seascapes Supermarket $11,000 (for the equipment hire)

$10,000 should go to:

[Mr Satyawan's mother's bank name and account details]

And also the invoices for equipment hire, only when you are ready.

Just do the whole lot for 80x $10,000 (monthly from April 2016 all the way for 80 months)[144]

1. Mr Satyawan accepted that this email contained his instructions to Mr Piggott for the payment of the $10,000.[145]
2. On 23 May 2016 (at 8.15 pm), Mr Satyawan sent to Mr Piggott an email the subject of which was 'Owner role in the business'.[146] That email concluded: 'And also I have received the money in mom's account today. Thanks'.[147]
3. From the facts found above, it appears, and I find, that Mr Satyawan took steps to seek to conceal (including from the OSR) the true consideration which Reserve Capital had agreed to and had paid.
4. It is also apparent, and I find, that Mr Piggott participated in the false round-robin of cheques or payments referred to above.[148]
5. Mr Satyawan's evidence was that in June 2016 he sent the 'true version' of the sale agreement between Seascapes and Reserve Capital to the OSR.[149]
6. On 4 June 2016 (at 5.28 pm), Mr Satyawan sent the following email to the OSR.[150] As will be seen, it is of some significance to my assessment of Mr Satyawan's credibility and so I have set it out in full.

We have just received this duty assessment notice.[151]

It is based on the wrong figure.

I think I might have send you guys the wrong contract by mistake. It has a similar name in my hard drive (contract and contract1). The contract I sent to you was the old contract. It would have a smaller value of plant and equipment of $65,000 because I couldn't get finance at that time then we ended up revising the contract before the settlement because I am able to secure finance to purchase the whole plant and equipment outright instead of hiring it from the old owner which works out to be more economical for us.

I have attached the duty assessment you have sent us and the correct contract on this email.

My apology that it takes me a while to send you this email to rectify the error as we are very busy during the transfer of business ownership.

1. Mr Satyawan attached to his email to the OSR on 4 June 2016 two documents, one of which was an agreement for sale of business (as a going concern) which had a gross purchase price of $1,159,299.44, made up of:
   1. Goodwill of $10,000;
   2. Plant and equipment of $865,000; and
   3. Stock estimated at $284,299.44 (Final Contract).[152]
2. That Final Contract had a settlement date of 21 March 2016 (estimated) and appeared to be signed by Mr Satyawan and Ms Piggott on 1 March 2016 with each of their signatures apparently being witnessed by Mr Piggott.[153]
3. Mr Satyawan's evidence was that the Final Contract recorded the correct terms of the sale of the Business.[154] Mr Satyawan accepted that Ms Piggott had not signed the Final Contract[155] and Mr Piggott had refused to sign it.[156]
4. Mr Satyawan accepted that at the time of sending the Final Contract to the OSR on 4 June 2016, he knew that Ms Piggott had not signed the document.[157] Mr Satyawan also accepted that the Final Contract was, in effect, a blended document which he had created from the previous contract which was for $375,000[158] and the first two pages of the Final Contract which he had created to show the true transaction.[159]
5. I find that the Final Contract recorded the true consideration paid by Reserve Capital to purchase the Business.
6. I find that the Final Contract was stamped and the duty of $38,977.50 was paid by, or on behalf of Reserve Capital, on about 19 September 2018.
7. Mr Satyawan's evidence was that he gave two‑pages of the Final Contract to Mr Piggott on 7 June 2016 and then sent that document to him by email on 14 June 2016 at 10.17 am.[160]
8. Mr Satyawan's evidence was that by the end of June 2016 he considered that Reserve Capital had been misled.[161]
9. In December 2016, Reserve Capital, through Mr Satyawan, engaged Greg Harrold and Sigma Business Sales to assist with the sale of the Business.[162]
10. That appointment document[163] listed an 'Asking Price' for the Business as follows:
    1. Goodwill of $700,000;
    2. Plant and equipment of $400,000; and
    3. Stock estimated at $300,000;

1. Mr Satyawan accepted in cross‑examination that he gave Mr Harrold financial information about the Business.[164]
2. On 21 December 2016, there was an email exchange between Mr Satyawan and Mr Harrold.[165] In that exchange, Mr Harrold asked some questions about staffing at the Business. As part of the response, Mr Satyawan stated:

...

Owner - come in twice a week, mainly to discuss the managers special, new range, taking documents home.

Tuesday - payrol day - take my wife about 30 minutes

Wednesday - paying suppliers statements

Thursday - allocation day take me 1 hour to finish it[166]

1. On 22 December 2016, Reserve Capital entered an agreement for sale of business (of going concern) with N U Patel Investments Pty Ltd for a total price of $1,400,000.[167]
2. As will be returned to below, Neela Patel was the principal of N U Patel Investments and she and Mr Satyawan had many interactions concerning the Business; again which will be returned to below.
3. The agreement for sale with N U Patel Investments broke the purchase price into:
   1. Goodwill of $300,000;
   2. Plant and equipment of $800,000; and
   3. Stock estimated at $300,000.[168]
4. It appears from the documents that Ms Patel (and her company) required finance to complete the purchase of the Business and Mr Satyawan accepted that he knew she would be trying to obtain bank finance, and he was giving her information to assist her to get finance.[169]
5. By a document dated 4 January 2017, it appears that Ms Patel sought information from Reserve Capital by way of a document headed 'Due Diligence of Seascapes IGA - Information Request', listing 59 questions.[170]
6. Mr Satyawan made a series of responses to Ms Patel's Due Diligence Request; namely:
   1. in answer to Question 29 by email to Mr Harrold on 6 January 2017 (at 10.34 am);[171]
   2. in answer to Question 50 by email to Mr Harrold on 6 January 2017 (at 11.13 am);[172]
   3. in answer to Question 51 by email to Mr Harrold on 6 January 2017 (at 11.13 am);[173] and
   4. in answer to Question 52 by email to Mr Harrold on 6 January 2017 (at 11.14 am).[174]
7. On 3 March 2017, Mr Satyawan sent to Ms Patel an email[175] which attached some documents.
8. In that email Mr Satyawan stated as follows:

Normal Cost = $275,108 (this is the stock value when you are buying at non-promotional level, without allocation and without auto order utilising the promotional deal)

Average Cost = $235,064 (this is the actual stock value of Seascapes IGA, as you can see we have save nearly $40,000 buying the stock when they are on lower price, done through automatic ordering)

Normal Sell = $375,840 (this is the potential sell when you are not running any promotion at all)

Register Sell = $345,432 (this is the potential sell as of today, inclusive [of] the weekly promotion)

When you have normal cost and register sell, GP would be 20.4% only (this when you don't buy any stock during promotion, or miss the deal [week], because most stores are not using auto-order, store manager would not be able to pick this up accurately)

If you don't run the promotion at all Average cost Normal Sell, GP is 37.5%

However we have to run weekly promotion, therefore Seascapes actual GP would be Average Cost & Register Sell = 31.9%, allow 2% for wastage and theft

Look at the attachment for more info.

Please note the stock will not include Direct suppliers stock, which is about $20-30K, and they are at minimum 30%GP some is even running at 50% GP

and it doesn't include the convenience drinks (40-80% GP)

Hope this will answer your financier's question.[176] (original emphasis)

1. On 11 May 2017, Reserve Capital appointed as its business broker to sell the Seascapes IGA for a price of $1.1 million.[177]
2. The $1.1 million price was made up of $900,000 (un‑itemised) plus stock estimated at $200,000.[178]
3. In the Ascend agency appointment document, at Item 4, the agent's fee was provided for but with a differential fee if 'a current buyer, Haroon Popal or Neela Patel, proceeds to settlement'.[179]
4. At the same time as Ascend was appointed on 11 May 2017, Mr Satyawan sent to Mr Gill an email which attached an interim Profit and Loss Statement for 1 January 2017 - 31 March 2017.[180] The email said, 'Please add back [$]40,000 director fee (it is included in the wages figures)'.[181]
5. On 22 May 2017, a Rob Moralee appears to have made an offer to buy the Seascapes IGA for a price of $775,000.[182] It appears from an email that Mr Satyawan sent to Mr Gill that Reserve Capital was prepared to take an offer of $900,000.[183]
6. On 26 May 2017, Mr Moralee appears to have made an offer to buy the Seascapes IGA for a price of $800,000.[184] Mr Gill reported to Mr Satyawan that the offer of $800,000 was Mr Moralee's 'final' offer.[185]
7. On 3 July 2017, Reserve Capital entered an agreement for sale of business (as going concern) with Dilesha Pty Ltd to sell the Seascapes IGA for a price of $890,000.[186] That agreement was made through Mr Harrold of Sigma Business Sales.
8. The $890,000 was broken up into:
   1. Goodwill of $1,000;
   2. Plant and equipment of $689,000; and
   3. Stock estimated at $200,000.
9. Mr Satyawan sent to Mr Harrold an email on 5 July 2017 which attached a profit and loss statement and balance sheet for the 2017 financial year (2017 Profit and Loss Statement).[187]
10. In the email, Mr Satyawan stated that one of the 'add backs', according to his accountant, was 'Wages [$372,150] (owner can replace some of the staff, we are never working in the store, plenty for owner drawings)'.[188]
11. The 2017 Profit and Loss Statement showed:
    1. total income of $3,561,227.61;[189]
    2. total cost of sales of $2,511,460;
    3. a gross profit of $1,049,767.61;
    4. total expenses of $764,188.15; and
    5. an operating profit of $285,579.46.[190]
12. From those figures, the business recorded a gross profitability of 29.47%.
13. On 13 July 2017, Mr Satyawan sent to Ms Patel an email[191] which attached the 2017 Profit and Loss Statement.
14. The financial statements prepared for Reserve Capital by its accountant for the 2017 financial year[192] showed sales income of $3,400,478[193] and showed the same cost of sales of $2,511,460 as were shown in the 2017 Profit and Loss Statement. The accountant's financial statement showed a gross profit of $889,018.[194]
15. So the financial statements for the 2017 financial year prepared by Reserve Capital's accountant showed a gross profitability of 26.14%.
16. On 14 July 2017, Mr Satyawan sent to Mr Harrold an email[195] which attached a 'Stock on Hand Report' which appeared to be printed on the same date.
17. In the email, Mr Satyawan stated:
    1. Stock on hand at ACTUAL AVERAGE COST

- The dept sales is not accurate because it is using the current cost not the average cost, therefore it does not take into account the promotional price we bought.

- It can clearly show it is on 33% GP

- This stock report mainly shows the [Metcash] stocks it does not includes direct suppliers stock and produce (approximately 30-40k) which is priced at minimum 30% anyway.

- Our RRP structure is very similar to IGA Express

- Seascapes [IGA's] actual sell price is above that RRP for IGA Express, because we want to boost some GP. There are about 2100 items selling above RRP.

- You can see in our invoices, the auto order is actually ordering up to 80-90% items on promotion (more than 30% discount) and bulk them for 40-60 days cover days.

- Auto order will not boost the dairy because it has shorter life. It would boost freezer.

1. In cross-examination, Mr Satyawan accepted[197] that the stock on hand analysis in that email was similar to the one that he had earlier provided to Ms Patel on 3 March 2017 as found in [151] above.[198]
2. On 17 July 2017, Mr Moralee made an offer to buy the Seascapes IGA for a price of $800,000 (to be paid over four years).[199] Mr Gill described the basis of the deal as being a 'vendor loan'.
3. On 12 October 2017, Reserve Capital entered into a contract for sale of business with Seascapes Associates Pty Ltd to sell the Seascapes IGA for a price of $531,500.[200] The $531,500 was made up of:
   1. Goodwill of $10,000; and
   2. Fixtures, plant and equipment of $521,500.[201]
4. On 30 November 2017, Mr Satyawan sent an email to Mr Gill[202] which attached two staff rosters of two separate weeks in October 2017.
5. The body of the email included the following:

Average per week 280 - 290 hours

Can be reduced by owner hours

The banking lady cost about [$12,000] per year

The cleaning lady is about [$26,000] per year[203]

1. Mr Satyawan and Ms Patel communicated by WhatsApp starting on about 12 December 2017.[204] It appears those WhatsApp communications finished in March 2018.
2. On 6 December 2017, Mr Satyawan sent an email to Mr Gill and a potential purchaser of the Business[205] which attached staff rosters of two separate weeks in October 2017. Those staff rosters were identical to those that he had earlier provided to Mr Gill on 30 November 2017 (as found in paragraph [172] above).
3. In the email, Mr Satyawan said that he was attaching typical weekly rosters and:

...

It is about 280 - 290 hours

Cost us about [$5,000 - $5,500] every week

...[206]

The email then listed out 12 employees by their first name with a short description of their role.

1. On 20 December 2017, Mr Satyawan sent the following messages by WhatsApp to Ms Patel:[207]

All suppliers hate metcash

Most of the independent hates them

Perfect storm!

I'm not kidding Neela

This is money making opportunity

Imagine 15% Gp improvement

You would compete with coles or making huge profit

Do you know that our metcash statement is getting smaller and smaller due to a lot of direct suppliers now and fruit/veg new supplier

Cheaper and better

When we deal direct. Our Gp is running at above 33%

And better customer service too

Fruit and veg is about 40%-45%[208]

1. From Mr Harrold's emails sent to Mr Satyawan and Ms Patel, it appears that there was a meeting between the three of them on 8 January 2018.[209]
2. At that meeting on 8 January 2018, Reserve Capital entered into a further agreement for sale of business (as a going concern) with N U Patel Investments to sell the Seascapes IGA for a price of $851,000.[210] The $851,000 was broken into:
   1. Goodwill of $1,001;
   2. Plant and equipment of $599,000; and
   3. Stock estimated at $250,999.
3. On 19 January 2018, there was an exchange of WhatsApp messages between Ms Patel and Mr Satyawan[211] as follows:

[NP:] Effendi you know very well once I get seascapes underway I'm capable of running other stores

And you can be a silent investor without doing the hard work

Knowing your money is safe with me

That is why we are doing this okay

[ES:] I'm not doing any hardwork to be honest

[NP:] Hahahaha

[NP:] We know that [smiling face emoji]

[ES:] If it wasn't you approaching me. I won't be selling it[212]

1. Between at least 8 January 2018 and 28 May 2018, Mr Satyawan and Mr Piggott were in communication via WhatsApp.[213] As part of those communications, Mr Satyawan (at 9.20 pm and at 9.21 pm) on 19 January 2018 sent messages to Mr Piggott about the sales contract between Seascapes and Reserve Capital:

We did our own contract because of the equipment rental

Then my accountant said not to do an equipment rental[214]

1. There was an exchange of WhatsApp messages between Ms Patel and Mr Satyawan on 28 March 2018 in which Ms Patel said that the owners of another business were 'taking $500k out of the business'.[215] Mr Satyawan responded, 'I don't take 500k haha'.[216]
2. On 7 March 2018, Mr Satyawan sent to Mr Gill an email which attached a Profit and Loss Statement for the Business for 1 July 2017 to 31 January 2018.[217]
3. In the email, Mr Satyawan said that suggested 'add backs' (to the attached Profit and Loss Statement) included:

...

Working owners wages $55,176

...[218]

1. On 12 April 2018, Mr Satyawan sent an email to Mr Gill[219] where in response to Mr Gill's question of 'What wages/super did you draw on 2017 year[?]', Mr Satyawan said 'I think the management wages is about $80k'.[220]
2. On 22 April 2018, Mr Moralee made an offer to buy the Seascapes IGA for a price of $375,000. Reserve Capital made a counter‑offer with a price of $900,000.[221]
3. On 17 May 2018, Mr Moralee made an offer to buy the Seascapes IGA for a price of $525,000. Reserve Capital made a counter‑offer with a price of $725,000.[222]
4. On 13 June 2018, Mr Gill sent an email to Mr Satyawan foreshadowing a cash offer of $550,000 plus stock.[223] There is no evidence that anything came of the foreshadowed offer.
5. By 13 June 2018, Haydn Baker Business Sales was acting as a business broker to sell the Seascapes IGA. Mr Satyawan forwarded Mr Gill's email to Haydn Baker and stated, 'I would rather sue Piggott at this stage then selling it to someone else'.[224]
6. On 29 June 2018, Reserve Capital requested Sigma withdraw the Business from sale.[225]
7. Mr Satyawan's evidence‑in‑chief was that he withdrew the Business from sale as he did not want 'to be conflicted with the litigation' that was about to occur.[226] It may be noted, in connection with that, that the writ in this proceeding was issued on 26 October 2018.
8. On about 29 October 2018, Lucy Goodman orally proposed to buy the Seascapes IGA for a price of $600,000.[227] That proposal was communicated to Mr Satyawan by Ascend.[228] There is no evidence that anything further came of that proposal.
9. On 19 January 2019, Ms Patel made an offer to buy the Seascapes IGA for a price of $550,000.[229] That offer was directed to Reserve Capital's solicitors with a copy sent to Mr Satyawan.[230]
10. Mr Satyawan responded by saying:

I have personally asked you to wait until court judgement before buying Seascapes IGA to avoid any complication/delay on the current litigation process.

Since it is in your own interest to settle Seascapes IGA before any court judgement we would like to see that any valid offer presented must be accompanied with: [and then seven matters were set out] ...[231]

1. It does not appear from the evidence that the offer proceeded further.

B. The principal witnesses B.1 Mr Satyawan as a witness

1. I have considered Mr Satyawan as a witness under the following headings:
   1. his interactions with the OSR;
   2. his evidence as to the structuring of the deal to purchase;
   3. statements he made while trying to sell the Business; and
   4. statements he made to Ms Patel.

1. As found in [121] and [122] above, Mr Satyawan on 14 April 2016 knowingly sent a contract[232] to the OSR which did not reflect the true deal entered into by Reserve Capital. I find Mr Satyawan did so for Reserve Capital's financial gain.
2. That is, obviously enough, discreditable conduct on his part. Of itself, it would raise the question of Mr Satyawan's honesty and reliability as a witness.
3. As found in [131] - [136] above, Mr Satyawan on 4 June 2016 sent a further email to the OSR[233] attaching a different agreement; which was the Final Contract.[234]
4. As will be seen, Mr Satyawan's email of 4 June 2016 to the OSR[235] made a number of misleading statements.
5. And, as found in [133] - [135] above, the agreement which was sent[236] had not been signed in the way it appeared, to Mr Satyawan's knowledge. In particular, Ms Piggott had not signed it and Mr Piggott had not witnessed her signature on that agreement.
6. Again, the sending of that email with that purported agreement was discreditable conduct on Mr Satyawan's part.
7. I find that the email of 4 June 2016 was sent not to financially benefit Reserve Capital, but rather was sent to mislead the OSR into thinking that it (the OSR) had been innocently misled previously. That is, to protect Mr Satyawan and Reserve Capital.
8. It may be that a frank acceptance of such discreditable conduct would leave open the possibility that a witness' evidence at the trial, where contentious, might be accepted as honest and reliable, notwithstanding the earlier conduct.
9. However, I consider it significant the way in which Mr Satyawan gave evidence at the trial about his earlier discreditable conduct. There are two aspects to this. Firstly, Mr Satyawan's insistence at trial that Mr Piggott, at least, shared in the design of the false transaction, which is set out more fully below. Secondly, Mr Satyawan's evidence explaining his email to the OSR on 4 June 2016.[237]
10. Mr Satyawan gave contradictory evidence in cross‑examination as to the round-robin of cheques/payments.
11. Mr Satyawan gave evidence that his suggestion to pay the cheque of $800,000 to another company or party (than Seascapes) was to conceal the true price paid for the Business from the OSR, and that his suggestion that the refund of the $10,000 not come from Ms Piggott or Seascapes was 'not necessarily' to avoid the OSR making a connection or to hide the real nature of the transaction from the OSR.[238]
12. Mr Satyawan said that those suggestions were made as a favour to Mr Piggott, for his (Mr Piggott's) benefit in that it meant that Mr Piggott would not need to pay capital gains tax.[239]
13. However, as to the payment of the refund of $10,000 into his mother's account, Mr Satyawan agreed that it was to conceal the refund and was for the benefit of himself (ie Reserve Capital) in stamp duty and Mr Piggott in capital gains tax.[240]
14. Mr Satyawan's evidence and the documentary evidence of the steps taken to create a false paper trail and, in particular, a round-robin of cheques/payments will be returned to below.
15. I have set out at [131] above Mr Satyawan's email to the OSR on 4 June 2016.[241]
16. Mr Satyawan accepted that his explanation in this email[242] (that he had sent the OSR the wrong contract by mistake) was not the true reason for sending a further contract and was a lie.[243]
17. Significantly, the following exchange in cross‑examination occurred:

I think I might have sent you guys the wrong contract by mistake.

?---It's the wrong reason.

That wasn't true, was it?---It's not [the] true reason.

So that's a lie that you're telling to the [OSR]?---It's a lie to pay more.

Is that a yes?---Yes.

And then you go on to say:

It has a similar name in my hard drive, contract and contract 1.

?---Yes.

Now, you're trying to lead Mr Bloomfield to believe that you just accidentally - - -?---It's an honest mistake, yes.

Yes. You were trying to convince him it's an honest mistake?---Yes.

But it wasn't an honest mistake, was it?---It wasn't an honest mistake.

No. So you're misleading him again just there?---I'm misleading him into the true contract of the - - -

Yes?---So it's not really a misleading, isn't it? I didn't led him into error. I led him into the correct one.[244]

1. Mr Satyawan was also cross‑examined about his explanation in the 4 June 2016 email that he had been 'very busy',[245] which had stopped him sending an email to rectify the error:

Well, it's true that you were very busy, perhaps, but that wasn't why you had taken some time to correct the position, was it?---It is true. We had been busy.

No. The reason why it has taken you some time is that between you sending the first version of the contract - - -?---Yes.

- - - to the [OSR] and this email, you had been advised that you should not proceed with the equipment hire structure because it was unlawful?‑‑‑I'm sorry, Mr Keane. I already said no one advised me. I can't keep repeating myself on that bit. I am an honest person. I feel cross if you're accusing me without any evidence.[246]

1. The significance of that cross‑examination, in my view, is that it showed Mr Satyawan was a witness who, even in 2024 with the benefit of hindsight, sought to explain and minimise what had been a plain fraud on the OSR.
2. That attitude might explain Reserve Capital's oral opening where, after referring the Court to the stamped version of the Final Contract sent to the OSR on 4 June 2016,[247] counsel said:

DILLON, MR: ... This, your Honour, is the contract in its final form stamped by the Tax Office. If you track down to the bottom, you will see it's signed by [Reserve Capital's] two directors - - -

HOWARD J: This is the final contract?

DILLON, MR: Yes, your Honour. I've got to just explain, your Honour, it's not really anything which is - your Honour is asked to deal with any issues on, but the original contract was - had different allocations of the purchase consideration to be put in different ways. This, though, is the contract we say is the contract which the court can accept as the final contract. It will be up to my friends whether they raise the history or the background as to how we get to this final contract. I understand it's not in dispute, your Honour, that this is the contract terms.

...

HOWARD J: Does anything turn on the fact that it looks like it's something like two and a half years between it being executed and it being stamped?

DILLON, MR: There is a history there, your Honour, it's just - it's - what it - as I said, the parties allocated - tried to deal with this in a way; they allocated - they determined that the - well, they sought to determine that the purchase consideration would be paid through an agreement under which there would be a - payment made for the plant and equipment over a period of time; the impact being to assist the parties in their taxation positions. [Reserve Capital's] directors eventually decided they didn't wish to participate in that and then they rearranged - they had the contract - the terms of it changed so that it was as agreed and paid the tax. I will leave it to my friends whether they want to raise that...[248]

1. As may be seen from this part of its opening, Reserve Capital sought to characterise the false contract sent to the OSR as being a shared matter with Seascapes, at the least. And, suggested that it was somehow to Reserve Capital's directors' credit that they 'eventually decided they didn't wish to participate in that'.[249]

1. There are two aspects to this:
   1. the structuring of the transaction before the first document was submitted to the OSR; and
   2. the creation of cheque/payment round-robins.
2. I have dealt with the way Mr Satyawan interacted with the OSR immediately above but there is a significance, in my view, to Mr Satyawan's evidence about the structuring of the deal before he submitted the first document to the OSR on 14 April 2016.
3. Mr Satyawan's evidence‑in‑chief was that Mr Fogarty gave advice to him and Mr Piggott on 12 February 2016 as to the structuring of the transaction. Mr Fogarty, he said, advised them of three options of transaction structures which might be adopted with a view to best minimising tax,[250] they being:
   1. the purchase of plant and equipment and goodwill;[251]
   2. the purchase of the shares in Seascapes;[252] and
   3. an equipment hire option which Mr Satyawan said that Mr Fogarty had advised would save the purchaser stamp duty and would save the vendor paying capital gains tax.[253]
4. In cross‑examination, Mr Satyawan gave evidence that after the meeting with Mr Fogarty, Mr Piggott suggested, or it was a joint idea, to lower the allocation of the consideration to goodwill and plant and equipment so as to reduce stamp duty or capital gains tax.[254]
5. After accepting that on the evening of 12 February 2016 he went home and researched Reserve Capital's stamp duty obligations, Mr Satyawan said in cross‑examination 'I want[ed] to clarify what Mr Fogarty said to me'.[255]
6. Mr Satyawan gave evidence that his subsequent email of 12 February 2016 (at 4.41 pm),[256] as found in [79] above, was him trying to construct a deal as an equipment hire arrangement based on the information he had received from Mr Fogarty.[257]
7. Mr Satyawan then said that, in a subsequent telephone call, Mr Piggott said:

... 'Actually yes, it will be good. You don't have to pay stamp duty. I don't have to pay capital gains tax. It's a win/win solution'.[258]

1. Significantly, those statements said to be made by Mr Piggott were not put to him in cross‑examination.
2. Mr Fogarty did not recall attending any meeting with Mr Piggott and Mr Satyawan and did not recall having discussions about structuring a transaction for the sale of the Business.[259]
3. Mr Fogarty said in cross‑examination that:

It would be unusual that I would be providing [Mr Piggott] - if that was correct, that I would be providing [Mr Piggott] advice in front of a purchaser of his [B]usiness.[260]

1. In cross-examination, Mr Piggott said that he did not actually remember the meeting with Mr Satyawan and Mr Fogarty.[261]
2. Mr Piggott's evidence‑in‑chief was that he vaguely recalled a meeting with Mr Satyawan and Mr Fogarty, but there was nothing in that meeting that really stood out or made him remember it in great detail.[262]
3. In cross-examination, Mr Piggott thought that the purpose of the meeting was more so for Mr Satyawan to meet Mr Fogarty as he was considering using him as his accountant.[263] He did not remember a discussion at the meeting as to what would be the best tax structure for the transaction.[264] Mr Piggott's evidence was that the equipment hire arrangement was an idea of Mr Satyawan's which he (Mr Piggott) discussed privately with Mr Fogarty as to whether it made any difference from a tax position.[265]
4. Mr Piggott disagreed that Mr Fogarty had suggested the proposed equipment hire agreement as a way of structuring the transaction.[266]
5. Mr Piggott said that there were a 'few' discussions about the structuring of the transaction and said:

... how [Mr Satyawan] wanted to structure it was completely up to him. I just needed to make sure that there was no - that I wasn't paying any extra tax or anything like that on my side. So yes, we would have just ran it past our accountant and say hey, does this work, you know, and that's really it. So I wasn't involved in structuring an offer to us or saying what our side would most likely accept. He was putting things to us, so.[267]

1. Mr Piggott's evidence was that he recalled that Mr Satyawan wanted to pay for the Business 'on a lease basis',[268] but that he did not remember how that structuring came about because there were 'too many' proposals from Mr Satyawan.[269]
2. In my judgement the emails and text messages sent on 12 February 2016 by Mr Satyawan (the same day as the meeting with Mr Fogarty) as found in [75] - [80] above do not support, and are inconsistent with, Mr Fogarty having advised Mr Piggott and Mr Satyawan together on the structure of the transaction and, in particular, the matters favouring an equipment hire arrangement.
3. That is because the first communications from Mr Satyawan to Mr Piggott on that day[270] suggest that an equipment hire arrangement was not then in Mr Satyawan's mind as he thought that stamp duty was not payable on plant and equipment.
4. That had changed by 3.41 pm on 12 February 2016,[271] and by 4.41 pm, Mr Satyawan was advancing a different structure to Mr Piggott, namely the lease of equipment.[272]
5. Still on 12 February 2016 (at 7.02 pm), Mr Satyawan had yet another idea for the structuring of the transaction: that is through a management and consulting fee.[273]
6. From those contemporaneous documents on 12 February 2016, I note:
   1. Mr Fogarty is not mentioned;
   2. the proposal being put at first is not an equipment hire arrangement;
7. within a few hours of proposing an equipment hire arrangement, Mr Satyawan proposes a 'better idea', and one which on no version of the evidence came from Mr Fogarty; and
8. there was no mention of capital gains tax or the position of Seascapes as vendor.
9. I note, as found at [57] above, that some days earlier, on 8 February 2016 (at 4.28 pm)[274] taxation issues and the structuring of the transaction were already apparently of interest and concern to Mr Satyawan, before any meeting with Mr Fogarty.
10. Indeed, it appears from the contemporaneous documents that the vendor's capital gains tax position was not raised by anyone until a couple of days later, on 14 February 2016.[275]
11. Principally, by reference to the contemporaneous documents generated by Mr Satyawan on 12 February 2016, I do not accept his evidence that Mr Fogarty had given any advice to Mr Satyawan about structuring the transaction as an equipment hire or lease.
12. Also, Mr Satyawan's evidence in that respect is, I find, against the commercial plausibility identified by Mr Fogarty in his evidence - that it would be unusual for him to give such advice to Mr Piggott in front of the purchaser (with whom, I interpolate, he had no pre‑existing relationship). By the time of trial, Mr Fogarty was not doing any work for Seascapes or for any business associated with Mr or Ms Piggott;[276] he was essentially a disinterested witness at the trial. There was no suggestion by Reserve Capital that Mr Fogarty had any continuing relationship with either of the Piggotts or their businesses.
13. In making those findings, I do not rely on Mr Piggott's evidence of what occurred at the meeting on 12 February 2016.
14. In response to Mr Satyawan's email of 14 February 2016, which included the link to an article on capital gains tax,[277] Mr Piggott's evidence was that:
    1. he did not open the link; and
    2. Mr Fogarty was providing the vendor with advice as to capital gains.[278]
15. Mr Piggott did not accept that he discussed capital gains tax and other issues coming out of the proposed structure with Mr Satyawan.[279]
16. I accept Mr Piggott's evidence that he was not discussing capital gains tax for Seascapes with Mr Satyawan at this time. Given the way that Mr Satyawan and Mr Piggott were principally communicating at this time, I think that if there were such discussions occurring on about capital gains tax it would have been reflected in more than the sole document sent by Mr Satyawan (and not responded to) on 14 February 2016.[280]
17. I consider that Mr Satyawan's evidence at trial was far from being a frank acknowledgement of his previous discreditable conduct. Rather, he sought to minimise it and share the blame with Mr Piggott. He did so, in part, by giving evidence, that I reject, as to advice he was given by Mr Fogarty.
18. A second feature of the structure of the transaction are the steps taken to create a false paper trail and, in particular, a round‑robin of cheques/payments.
19. As found at [100] above, Mr Satyawan had sent an email of 8 March 2016 (at 8.35am)[281] to Mr Piggott with an 'Invoice Sample for hire'.
20. The documentary evidence was contained in emails:
    1. on 16 March 2016,[282] as found at [103] - [104];
    2. on 12 April 2016 (at 2.06 pm),[283] as found at [116];
    3. on 12 April 2016 (at 4.44 pm),[284] as found at [117];
    4. on 12 April 2016 (at 6.46 pm),[285] as found at [118];
    5. on 15 May 2016 (at 5.22 pm),[286] as found at [125];
    6. on 23 May 2016 (at 8.15 pm),[287] as found at [127].
21. I have quoted at [104] above Mr Satyawan's responsive email of 16 March 2016 (at 11.00 am).[288] The following exchange occurred in cross‑examination on his response.

That's to conceal the true nature of the transaction, isn't it?---That's for the equipment hire. Repayment.

You're asking that the payment of [$]800,000 not be made to Seascape Supermarket, yes?---Yes.

And you're doing that because if the payment is made to Seascape Supermarket and the Office of State Revenue finds out, they will know that you've understated the value of the business?---Not really, because I'm still paying the 800, right, in either way.

Can you provide any innocent explanation for asking Mr Piggott ‑ ‑ ‑?‑‑‑This is for Mr Piggott benefit, not - not me.

Please listen carefully to the question?---Yes.

Can you provide any innocent explanation for your request that the cheque not come from Seascape Supermarket? Sorry, not go to Seascape Supermarket. Can you provide an innocent explanation for that?---What do you mean 'innocent explanation'?

Well, what I'm asking you is whether you've told him not to deposit the cheque in Seascapes Supermarket Pty Ltd because you're trying to conceal the true price paid for the business from the Office of State Revenue? Isn't that what you're doing here?---To conceal?

Yes?---No. This is for equipment hire that we agree on.

You're asking him not to put the cheque in the name of Seascapes Supermarket?---For his benefit not - - -

And there's a reason for that, isn't there?---For his own benefit.

There's a - no. I'm not asking you about price. I'm asking you why you were asking for the cheque not to go in the name of Seascapes Supermarkets?---So that he doesn't need to pay capital gain tax.

Isn't it because you are trying to avoid stamp duty - - -?---We already (indistinct).

And you are concealing the reality of this transaction from the Office of State Revenue?---So you saying by paying 800,000 to company A would be different to company B. It's still - the money is still coming out from the same source, isn't it? It's - it's different - the effect would be different to company A and B but not for me.

If it didn't matter, why would you ask for it not to be made to Seascapes Supermarket?---I'm just doing Lewis a favour here to remind him of (indistinct).[289]

1. That passage shows, I consider, Mr Satyawan giving evidence (which is against the text of his email and the contemporary commercial plausibilities) to minimise or explain away his earlier discreditable conduct.
2. In response to questions about the cheque round-robin of $10,000 per month, Mr Satyawan accepted in cross‑examination that he had created a 'fake impression of an equipment hire' 'for two months'.[290]
3. In response to questions about the email which he sent to Mr Piggott on 12 April 2016 (at 4.44 pm)[291] (which I quoted in [117] above), the following exchange in cross‑examination occurred:

... But the refund is going to your mother's bank account?---The refund is going to my mother's bank account.

And the reason for that is that you're concealing that refund, aren't you?‑‑‑Concealing the refund, yes. Otherwise, I'm not going to be able to expense the 800,000 which Lewis already saved on capital gain. How do I expense the 800,000?

You keep talking about capital gains tax, and I'm not asking you about that. But - - -?---Yes.

The reason you keep talking about capital gains tax - - -?---Because it ‑ ‑ ‑

- - - is that you're trying to - - -?--- - - - benefit both - - -

You're trying - - -?---Yes.

- - - to make this equipment hire arrangement stick to Mr Piggott, aren't you?---No. I'm trying to say this equipment hire arrangement is to benefit me in stamp duty and to benefit Mr Piggott and Ms Piggott in terms of capital gain.

But you don't know whether or not they derived any benefit?---They didn't pay their capital gain, according to their - - -

You don't know that?---To their financial statement [2016], they didn't pay. But I did pay my stamp duty.[292]

1. The following exchange then occurred concerning Mr Satyawan's email to Mr Piggott on 12 April 2016 (at 6.46 pm):[293]

... Do you agree you sent this email?---Yes.

And here, you're asking - you're asking Mr Piggott to make sure the transfer of the $10,000 doesn't come from [Mr Piggott] or Seascapes Supermarket's account?---Yes.

And you say just to avoid any connection to the original business transaction?---Yes.

And that connection that you're talking about, that's a connection that the Office of State Revenue might make, isn't it?---Not necessarily. It's because the money went into Seascapes Supermarket at the 11,000 from me. If [Mr Piggott] was to pay from Seascapes Supermarket back to me, then there is no transaction, isn't it?

What you're doing here is hiding the real nature of the transaction from the Office of State Revenue, isn't it? That's what you're doing here?‑‑‑No, it's for their capital gain tax, because I already paid the [$800,000], isn't it?[294]

1. It is significant, in my view, that none of Mr Fogarty, Mr or Ms Piggott was cross‑examined on that matter. It is also significant, in my view, that no attempt was made by Reserve Capital at the trial to explain what, if any, taxation benefit would have accrued to Seascapes from the transaction appearing to be an equipment lease.
2. In all of the circumstances, it is plain that there was, at least perceived to be by Mr Satyawan, a clear benefit to Reserve Capital by this structure. However, I am unable to assess whether there was any commercial or financial reason for Seascapes to be interested in that structure. That is, I do not have any contemporary commercial plausibility against which to assess Mr Satyawan's mere assertion of the potential benefit to Seascapes.
3. Again, in my judgement, in the course of the trial, Mr Satyawan's evidence concerning these emails and the cheque round‑robin showed Mr Satyawan - even at trial, years later - attempting to both minimise his discreditable conduct and to share the blame for it with Seascapes and Mr Piggott in particular.
4. As found, there were WhatsApp messages between Mr Satyawan and Mr Piggott between 8 January and 28 May 2018.[295]
5. Mr Satyawan was asked about statements he made on 19 January 2018 (as found in [181] above), and the following exchange occurred:

... I intended to ask you whether in January 2018 you told [Mr Piggott] that your accountant had said not to do an equipment rental?---I said that, yes.

Did you say that?---Yes.

Yes. So you - - -?---But my accountant didn't tell me that.

So are you saying - it's your evidence that you lied to Mr Piggott when you said that it was your accountant?---I'm trying to persuade him to do the right thing.

...

The question I asked you was about what you told him January 2018, Mr Satyawan?---Yes.

That's long after you've decided not to do it, isn't it?---Yes.

So you're not trying to persuade him to do that any more, are you?---I'm trying to persuade him. That's all I'm doing.

In January 2018? Is it your evidence that you were trying to persuade Mr Piggott to do the equipment rental in January 2018?---Not January 2018. It was (indistinct)

No. Well, that's the - let's be really clear about the timing here?---Okay.

I'm asking you whether in January 2018 - - -?---The issue is - - -

- - - you were telling the truth - just stay with me, Mr Satyawan?---Yes.

In January 2018, did you tell [Mr Piggott] that your accountant had said not to do an equipment rental?---Yes.

Yes?---It's because - - -

And were you telling the truth to Mr Piggott when you said that?‑‑‑I'm not telling the truth. Mr Piggott - - -

Why did you lie - - -?---Because Mr - - -

- - - to Mr Piggott about that?---Mr Piggott is still doing the equipment hire.

This is January 2018, Mr Satyawan?---Yes. He is still doing the equipment hire, as he told me.

Is it your evidence that he's still sending you - - -?---No, that's - - -

- - - invoices and you're still paying those invoices?---No. He is - - -

Hadn't you decided to abandon that scheme - - -?---Yes.

- - - a long time earlier?---Yes. Yes. But Mr Piggott still treat the sales as an equipment hire without me actually paying him.

Mr Satyawan, that's a lie, isn't it?---No, it's not. You can see Mr Piggott, Ms Piggott financial statement [2017]. It show equipment hire there (indistinct) admitted to it. Where is the money coming from? It's not a lie. You can check with Mr Fogarty.[296]

1. Again, it is significant, in my view, that none of Mr Fogarty, Mr or Ms Piggott was cross‑examined on that matter. Further, no submissions were put to the Court as to what, if anything, was shown by any financial statements for the 2017 financial year.

B.1.3 Statements made by Mr Satyawan while trying to sell the business

1. As found in [140] above, in December 2016 Mr Satyawan engaged Mr Harrold and Sigma to sell the Business for Reserve Capital.
2. After being taken to his statements to Mr Harrold on 21 December 2016 (as found in [143] above),[297] the following exchange in cross‑examination occurred:

In those communications in December 2016, just after you had engaged him, did you tell him that, as owner, you only went into the shop twice a week, mainly to discuss manager specials?---At that point of time, yes. We still have staff running the store (indistinct)

So you told him that?‑‑‑Yes.

That you only went into the shop twice a week?---When is this?

December 2016?---Yes. [2016] probably yes. It's not until mid-[2017] when we really start working there.[298]

...

All right. Can you turn the page, please, and just about seven lines down you can see just after the break there - - -?---Yes.

- - - it says:

Owner come in twice a week mainly to discuss the manager's special, new range, taking documents home.

?---Yes. Probably more than twice a week.

So you're saying that you were giving incorrect information to Mr [Harrold]?---Yes, probably between two to three times that time.

...Were you suggesting to Mr [Harrold] that you only needed to come in twice a week - - -?---Yes, probably more.

- - - at this time?---Yes, at that time. In - - -

And are you saying that that suggestion was misleading?---Probably, yes. If I work three hours a week, it's probably yes.

And you knew that he was going to use this information to talk to prospective buyers?---To - who is the buyer at that time?

It doesn't matter who the particular buyer was. I'm asking you about prospective buyers - - -?---Yes.

- - - people who might - - -?---Yes.

- - - be in contact with Mr [Harrold]?---Yes.

You were happy for him to give misleading information to prospective buyers about the number of hours that you were spending in the shop?‑‑‑It's not really misleading because even surely we say for another 40 hours in that year when this information was given to Mr [Harrold].

I'm suggesting to you that what you say there - 'come in twice a week mainly to discuss the manager's special, new range, taking documents home' - I'm suggesting to you that that was true at the time it was said?‑‑‑Yes.

So which is it, Mr Satyawan? Was that true, or were you misleading Mr [Harrold] about the extent of your involvement in the [B]usiness?‑‑‑I don't understand the misleading you're talking about here.

Well, I thought you just agreed with me that you had created for Mr [Harrold] a misleading impression about the amount of time you were spending in the shop?---Okay.

And then I asked you whether that statement was true and you said that it was. So I'm wanting you to clear up the confusion, Mr Satyawan. Which statement is true?---Is it misleading if I came twice a week that day, and then after this email was sent I came three days or four days a week?

At the time this statement was made, was it true?---Two - two times a week.

Yes?---That's probably true. Like I said, we only get really full time after mid of [2017].

But prior to making this statement, hadn't you already complained that you had been misled about the amount of time you had to work in the store?---Yes. And, in fact, we are 395 hours. It's only because we work in there and reducing the hour it has dropped to 320.

So when you said this to Mr [Harrold], you already had the view that you needed to work a lot more in the [B]usiness?---Which we did. We are reducing it to 320 from 395. Isn't that correct?

It's true, isn't it, Mr Satyawan, that at this time you were coming in twice a week, coming into the store twice a week?---It is true that the hours is reducing by 70 hours.

It's true, isn't it, Mr Satyawan, that at the time of sending this email you were coming into the store twice a week?---Twice to three times a week.

And - no, twice a week. That's true, isn't it?---In a week, yes, twice. In other week maybe three times. You can't reduce the hours to 320 without you actually working in there.[299]

1. A couple of things might immediately be noticed about the above quoted exchange.
2. Firstly, it was unclear from that evidence whether Mr Satyawan was accepting that the statement he made to Mr Harrold on 21 December 2016, about the owner coming in twice a week, was accurate when he made it or not.
3. My observation was that while in the witness box Mr Satyawan was reluctant to accept that his statement to Mr Harrold was an accurate statement because he apprehended it was inconsistent with other assertions of his that he and his wife were working fulltime in the Business as early as 2016.
4. This is reflected, in my view, by Mr Satyawan, in this passage, seeking to avoid answering the question in a straight‑forward way.
5. Secondly, Mr Satyawan's statement to Mr Harrold was inconsistent with the instructions which were subsequently given to Nadine Marke[300] as to the hours that he and Ms Dewi were working in the business and which formed part of Reserve Capital's damages claim and her calculation of the same.
6. Ms Marke was instructed to assume that Mr Satyawan and Ms Dewi worked in the business, on a full time basis, from the point of acquisition: she then calculated the wages that 'ought' to have been payable to them on that basis.[301]
7. As found in [155] above, Mr Satyawan sent an email to Mr Gill on 11 May 2017.[302]
8. Although the email stated that the $40,000 'director fee' was in the wages figures, Mr Satyawan said in cross‑examination that that sum had not been included in the 2017 financial year.[303]
9. As found in [160] above, Mr Satyawan sent financial statements for the 2017 financial year to Mr Harrold on 5 July 2017.[304]
10. In cross‑examination, on the statement he made in the email 'we are never working in the store', Mr Satyawan said that he was lying to Mr Harrold and that, in truth, he and Ms Dewi were working in the store.[305]
11. The following exchange in cross‑examination took place:

Why would you lie about this, Mr Satyawan?---Maybe just to improve the value of the [B]usiness. Maybe.

Really?---Yes.

You would be prepared to do that? Would you be prepared to lie to increase the value of the [B]usiness?---I might - looks like I misled, but I didn't have the intention.

Well, no, that's quite an important fact, Mr Satyawan. You were prepared to lie to get a higher amount for the [B]usiness? Isn't that just what you said?---No. No. Like I said, I was working in the store. This - I said this because - to - to show Mr [Harrold] that [$]372,150 does not include the wages.

HOWARD J: Sorry, Mr Satyawan, could you just repeat that?---So what I am infer here - - -

I just want you to repeat the answer?---What I said to Mr [Harrold], we were - we are never working in the store to say that these wages [$]372,150 does not include our wages.

KEANE, MR: And just to be clear, I'm saying to you, Mr Satyawan, that that is not what you were trying to say here. You agree with that? That's not - what you just told his Honour, that's not true, is it?---No, it is.

What you were trying to say is that an owner could reduce the wages costs if they worked in the store?---And - - -

That's what you're trying to say; is that correct?---And we actually - - -

You were saying - wait. Just answer the question asked?---Yes.

What you're saying here is that an owner could reduce the wages costs, yes?---Mmm.

If they worked in the store?--- (indistinct) yes.

And you're also saying you - - -?---Work - - -

- - - didn't work - - -?---Yes.

- - - in the store?---No, I work in the store. What I said is I work in the store, and these wages doesn't include my wages.

Now, because you weren't working in the store, you weren't entitled to be paid wages, were you?---No.

HOWARD J: Well, there's a double negative in that question.

KEANE, MR: I'm sorry. You weren't working in the store?---Mmm.

You weren't entitled to be paid wages?---No. If I weren't - were not working in the store, but I did work in the store.

And you weren't taking directors fees after 2016, were you?---No, only in [2016].[306]

1. While Mr Satyawan[307] said it was a lie when he said 'we are never working in the store' he then attempted an answer in cross‑examination which was textually inconsistent with the email (we were working in the store but not drawing wages versus we were not working in the store). Further, the email and his evidence as to what he meant by it as to how much work they were doing in the store is inconsistent with his evidence in other places that it was not until the middle of 2017 that he started working a lot at the store.
2. The difficulty, as with much of Mr Satyawan's evidence considered under these four different headings assessing him as a witness, is to decide which, if any, of the differing evidence he gave was true and, or, reliable. I am left quite unsure as to where the truth might lie on several of these important matters.
3. As found in [167] above, Mr Satyawan sent an email to Mr Harrold on 14 July 2017 which attached a 'Stock on Hand Report'.[308]
4. Mr Satyawan, in cross‑examination, accepted that this email was saying that the department sales reports from the Grocery Manager system were not accurate.[309]
5. Mr Satyawan, in his cross‑examination, also gave evidence that, contrary to his email, the Grocery Manager systems department sales records were accurate[310] and he had said they were not accurate because:
   1. Mr Piggott had told him so;[311] and
   2. he didn't understand the system at the time of sending this email.[312]
6. Mr Satyawan accepted that he was giving this information (in the email and the attached report) to Mr Harrold so that he could tell prospective buyers.[313]
7. The following exchange then occurred:

So as far as you know, Mr [Harrold] is going to go out and tell prospective buyers that based upon an analysis of stock on hand - ‑ ‑?‑‑‑Yes. And ‑ ‑ ‑

- - - this store could get 33 per cent gross profit?---Yes. One of the valuer actually contacted us, have a meeting. I explained to him 33 per cent is not possible.

That's not true, is it, Mr Satyawan?---Yes, that's true. That's true.

You're just saying that because this email tells everybody exactly what you were saying?---No, it's true. That's why the deal fell over.[314]

1. There was then a lengthy exchange in cross‑examination as to whether Mr Satyawan's statement in his email to Mr Harrold[315] that 'this stock report ... does not includes direct suppliers' stock and produce (approximately [$]30‑40,000]' was accurate.[316]
2. The following exchange then occurred:

Well, is that true, that this stock report does not include direct suppliers' stock; is that true?---Because the quantity of the - - -

I'm not asking why. I'm asking is it true?---It is true, yes.

Yes?---But on - - -

And that's about 30 to 40 thousand dollars worth of stock?---Yes.

And the cost of those sales - - -?---Yes.

- - - are not in the Grocery Manager system?---The cost is in the system. The quantity is not in the system.

And what you're really saying here is that your most profitable category of stock isn't taken into account in the analysis that leads you to 33 per cent gross profit?---Yes, but if you look at [$]30,000 - - -

Is that a yes?---[$]30,000 times 30 per cent - - -

I'm just asking if that's true?---It's only [$]10,000, Mr Keane, so it's immaterial.

So 33 per cent is an understatement, but only a small one; is that what you're saying?---It's very small, yes.

I see. So perhaps it might make a difference of less than two per cent?‑‑‑No, even less than that.

It might take you to, say, 34.9?---Three million (indistinct) three million. I don't know. You calculate. One per cent take 30 percent, so 0.3 per cent then.

You're not far away - - -?---Yes.

- - - from the gross profit that you say is impossible, are you?---Say that again.

You are not far away in this analysis from a gross profit that you say is impossible?---Probably very far away because the bottom one is 20 per cent like we - we saw on the other document. So it's probably between 20 and 30. You can't only see the high; you need to see the low.[317]

1. In response to questions about his statement that 'Seascapes [IGA's] actual sell price is above that RRP for IGA Express',[318] Mr Satyawan, in cross‑examination, said that the statement was 'probably wrong'[319] or was wrong.[320]
2. Mr Satyawan accepted that the nature of that information was to suggest that the store was very profitable and that was not true at the time.[321]
3. The following exchange then occurred:

- - - what you're then doing is attempting to mislead prospective buyers about the profitability of your store?---I'm - I'm not attempting to mislead. I might give the wrong information because I don't understand the sentences that I give to [Mr Harrold].

I think you understand exactly what you're saying here - - -?---No.

- - - Mr Satyawan?---No, I don't. I made a mistake.[322]

1. As found in [183] - [184] above, Mr Satyawan had sent an email to Mr Gill on 7 March 2018[323] where he suggested adding back owners' wages of $55,176.
2. In cross‑examination, Mr Satyawan accepted that no such wages had been paid.[324]
3. He then said that it was wrong to be adding them back as they had not been paid and that this was another mistake in the information he was giving to Mr Gill.[325]
4. As found in [185] above, Mr Satyawan sent Mr Gill an email on 12 April 2018[326] in which he said that the 'management wages' in the 2017 financial year was about $80,000.
5. Mr Satyawan accepted that was information being provided to Mr Gill so that he could provide it to prospective buyers.[327]
6. His evidence in cross-examination was that the statement was wrong and that he was misleading Mr Gill about a 'pretty big business cost'.[328]
7. Also, as the quotation in [286] above shows, Mr Satyawan was quite evasive in responding to the text of his own emails to try and avoid the sting of the question being put.

1. In the course of cross‑examination, Mr Satyawan said that he had been in communication with Ms Patel since the end of 2016 until 'an hour ago' on the afternoon of the second day of trial, 12 March 2024.[329]
2. That exchange led to Reserve Capital discovering text messages during the trial which had passed between Mr Satyawan and Ms Patel which, as I understand it, had not been discovered previously.
3. In cross-examination, Mr Satyawan's evidence was that when he entered into the agreement in December 2016 with N U Patel Investments[330] he did not consider that the business was worth $1.4 million or $1.2 million.[331]
4. Mr Satyawan, in cross-examination, to my judgement to avoid the sting of the propositions being put to him, gave evidence that he did not think Ms Patel was a serious purchaser and that he did not believe that she would buy the business.[332]
5. As found in [149(4)] above, Mr Satyawan sent to Mr Harrold an answer to Question 52 posed by Ms Patel's Information Request of 4 January 2017. That email said, 'I would rather discuss this separately'.[333]
6. Question 52 of Ms Patel's document read 'any cash taken out (I know this is sensitive and confidential, however this is for my information only and will be treated in the strictest confidence[)]'.[334]
7. The following exchange in cross-examination occurred:

And you did discuss it separately, didn't you?---Yes.

And you told [Ms Patel] that you were taking undeclared cash out of the business?---No. I told [Ms Patel] I didn't take any cash. And she encourages me to take cash. She said in her supermarket in New Zealand, she is taking cash every week to run the GP to 15 per cent, and New Zealand Tax Office is fine with it. So she is actually abetting me to took cash.

In fact, you told Ms Patel that you took $3000 per week in cash out of the takings each week, didn't you?---After one year, I think.

Is the answer to my question yes?---Yes.

You took - - -?---But not at that time.

When did you tell her that you took $3000 per week in cash out of the takings each week?---I think early [2018], a year after - after I disbelieve her (indistinct)

That was true, wasn't it? You were taking $3000 a week - - -?---No. No.

- - - cash out of the [B]usiness?---Never.

So is it your evidence that you admitted to Ms Patel that you were taking $3000 of undeclared cash out of the [B]business - - -?---Yes.

- - - and that wasn't true?---That wasn't true. You know why?

Why did you lie to her about that if that was a lie?---Just to pacify her.

Mr Satyawan - - -?---Yes.

- - - you told her you were taking $3000 a week - - -?---Yes.

- - - out of the [B]usiness because it was true?---No. I already given [the defendants] all my cash register report and my bank statement. They already verified, Mr Keane, that I never took any money. If they found any money has been taken out, that document will tell them. They never raised the issue from that document. Instead, they used [Ms Patel] SMS, isn't it?

I'm not asking whether you got caught, Mr Satyawan. I'm asking whether you did it?---You know, at that point of time, the process wouldn't allow me to take the cash. Do you know why? Because I never touched the money. Grace Parker is the one that handling the money. I never touch any single cent, not even 50 cents from the till. I can assure you that, and I have documentation discovered during this litigation. The [defendants] knew exactly I never took the money out of the business. That's why they used that SMS against me. And just for your information, [N U] Patel was owned by [Ms Piggott], 50 per cent of it. Are you aware of it?

Are you finished, Mr Satyawan?---Yes. It's a very important fact.[335]

1. Mr Satyawan's evidence at trial as to the explanation for these exchanges with Ms Patel was not remotely plausible and did not impress me as the answers of an honest or reliable witness.
2. In my view, Mr Satyawan's answers as quoted above point to the difficulty of placing any reliance on his uncorroborated evidence as being honest or reliable.
3. Again, it is one thing for a witness to have behaved discreditably some years before giving evidence, but it is quite another for that witness not to then give straight-forward answers concerning their previous discreditable conduct.
4. Here, it appears that Mr Satyawan:
   1. seeks to apportion some blame to Ms Patel for him saying to her that he was taking cash out of the Business;[336]
   2. says that he lied to Ms Patel about taking cash out of the Business to 'pacify her';[337] and then:
   3. without any foundation, sought to link Ms Patel's position to Ms Piggott.
5. There was a series of what appeared to be text messages between Mr Satyawan and Ms Patel which were not dated.[338]
6. Ms Patel asked Mr Satyawan whether he was still taking cash out of the Business.[339] He responded:

I have put all the cash I took back in the book because it is stealing from the government. Not a good idea. So practically I have never taken any cash out.

I have never taken any cash for a very long time now[.][340]

1. In cross-examination, Mr Satyawan denied that he had been taking cash out of the Business and then putting it back.[341] Mr Satyawan, in cross‑examination, accepted that he was lying to Ms Patel about taking the $3,000 cash out[342] and that his 'lie' to Ms Patel was him telling her that the Business was doing better than the books showed.[343]
2. Mr Satyawan said in his cross-examination that those statements made to Ms Patel were a lie.[344]
3. At the very best for Mr Satyawan, I find it difficult to know whether Mr Satyawan was telling the truth when he said to Ms Patel he was taking cash out of the Business, or whether he was misrepresenting to her how well the Business was doing. His evidence on the topic given at trial, as said, gives me no confidence as to the honesty or reliability of his evidence at the trial.
4. As found in [150] above, Mr Satyawan sent an email to Ms Patel on 3 March 2017.[345]
5. Mr Satyawan was asked about this email in cross‑examination.[346]
6. It should be remembered that at the time of sending this email in early March 2017, Reserve Capital had been running the Business for nearly 12 months.
7. Mr Satyawan said in cross-examination that the statement 'Seascapes actual GP would be Average Cost & Register Sell - 31.9%, allow 2% for wastage and theft', was 'true' but 'unlikely'.[347]
8. Mr Satyawan said that at the time of making the statement he didn't have the 'better understanding ... of the system at that time'.[348]
9. As to the email saying that 'the stock will not include Direct suppliers' cost, which is about $20-30K' as found at [151] above, Mr Satyawan said that those costs would be in the system[349] but he had said differently in that email because he 'didn't have a good understanding of the system at that time'.[350]
10. In relation to the quotation in that email that the direct supplier stock was at a minimum 30% gross profit and some were even running at 50% gross profit,[351] Mr Satyawan said that on average he thought they were 33% gross profit but only 'very minimum' items would achieve 50% gross profit.[352]
11. Mr Satyawan accepted that he was giving an indication to Ms Patel in this email of gross profit based on the stock that he had in the store at the time.[353]
12. Mr Satyawan did not accept that he was saying by that email that taking into account stock supplied directly by suppliers (other than Metcash) the gross profit achievable was going to be higher than 29.1%.[354] The following exchange then occurred:

But if you take it into account, the gross profit achievable is going to be even higher that 29.1 per cent?---No.

Isn't that what you're saying?---No. You get it wrong. 29.1 per cent you just said is you sell all of the stock today, and you will be unlikely to sell something without a ticket, Mr Keane. So among those 9000 barcode you probably sell 1000 of them, which you will be closer to 20.4 per cent in reality, or in between, 25.

You don't say any of that in this email to [Ms Patel], do you?---Because I don't have the good understanding at that point of time. I was questioning myself until mid-2018 that I'm not doing good enough to achieve 35 per cent. That is just impossible.

This is March 2017, isn't it, Mr Satyawan?---Yes. Yes.

That's - now, you first made - - -?---One year, yes.

You first made - - -?---Yes.

- - - an allegation to the Piggotts - - -?---Yes.

- - - that they had misled you about the achievable profit of this store ‑ ‑ ‑?---Yes.

- - - you had first made that allegation back in June - - -?---Isn't it even at twenty - - -

- - - of the previous year?---Isn't it at twenty - - -

Is that true? That's true, isn't it?---Yes, that's true. Even at 29 per cent, is it lower than 35, isn't it.

What you are suggesting - - -?---Yes.

- - - to [Ms Patel] here is that the likely gross profit - - -?---No.

- - - of the store is greater - - -?---No. I - I've got it there. Look at it there.

Please listen to my question, Mr Satyawan?---Yes.

What you are suggesting to Ms Patel in this email - - -?---It is unlikely to get thirty-one point - - -

Please let me get my question out, Mr Satyawan?---Yes.

What you are suggesting to Ms Patel here is that the likely gross profit of the store is going to be greater than 29.1 per cent. That's the real suggestion of this email, isn't it?---No, I was wrong.

Well, is that what you're suggesting or was your suggestion wrong?‑‑‑Look at that. Look at the register sale. The potential sale as of today. All of the stock, Mr Keane, which is very unlikely. So I think the likelihood of the gross profit will be between 20.4 per cent and 31.9 per cent, but this is a matter of expert.

HOWARD J: Well, Mr Satyawan, you're being asked about an email you wrote?---Yes.

So let's not worry about any expert evidence?---Yes.

We're just focusing on the email you wrote?---Okay.[355]

1. A number of things may be noted about that exchange compared with the email of 3 March 2017.[356]
2. Firstly, Mr Satyawan sought to explain certain statements he made by reference to his not having a good understanding of the system nearly 12 months into operating the Business and some months[357] after he says he had formed the view that he had been misled into purchasing the Business.
3. It is difficult to accept that assertion at face value and, rather, it appears to me to be an example of Mr Satyawan seeking to avoid the sting of an obvious question based on his own email.
4. In cross-examination, Mr Satyawan gave evidence that in December 2017 he told Ms Patel that:
   1. the Business was making money and was not a bad investment;[358] and
   2. if she could grow it, it would be a money machine.[359]
5. Those statements were made in the WhatsApp messages on 18 December 2017 sent by Mr Satyawan to Ms Patel at 7:04:24 pm.[360]
6. Mr Satyawan said in his evidence that the statements were incorrect and that he did not believe them to be true at the time.[361]
7. As found in [177] above, Mr Satyawan sent a series of WhatsApp messages to Ms Patel on 20 December 2017:[362] Initially in his cross‑examination, Mr Satyawan gave evidence that the non‑Metcash direct suppliers of fruit and vegetables were more expensive than Metcash, albeit not by a lot.[363]
8. When asked about his statement to Ms Patel of 'cheaper and better' fruit and vegetable via direct suppliers,[364] Mr Satyawan said that he had made a mistake in the WhatsApp message to Ms Patel.[365]
9. When asked, from that same series of WhatsApp messages,[366] as to his statement 'when we deal direct. Our Gp is running at above 33%', Mr Satyawan's evidence in cross‑examination was that he was, in the WhatsApp messages, only talking about the gross profitability for direct (non‑Metcash) stock.[367]
10. He then sought to further qualify[368] that answer when asked about his subsequent message that: 'fruit and veg is about 40% ‑ 45%'.[369] Ultimately, Mr Satyawan in cross‑examination suggested that he was not, in his WhatsApp messages, speaking about gross profitability of being between 40% to 45% for fruit and vegetables but was talking about the mark up.[370] That is, in his cross‑examination, Mr Satyawan sought to differentiate his WhatsApp message at 2:19:27 pm indicating gross profitability at above 33% from the statement made at 2:19:48 pm (about 21 seconds later) that the 40% - 45% was referring to mark up and not gross profitability.
11. That evidence, against the document, was simply not plausible. It was given, in my view, to try and avoid Mr Satyawan accepting that he was telling Ms Patel that:
    1. gross profitability was running at above 33%;[371] and
    2. gross profitability on fruit and vegetables was 40% - 45%.[372]
12. As found in [181] above, there was an exchange of WhatsApp messages between Ms Patel and Mr Satyawan on 19 January 2018.[373] When asked whether, in that exchange, Mr Satyawan was saying to Ms Patel that he was not working that hard in the Business, Mr Satyawan in cross‑examination said that was a lie.[374]
13. As found in [182] above, there was an exchange of WhatsApp messages between Ms Patel and Mr Satyawan on 28 March 2018.[375]
14. In cross‑examination, he denied that, by his statement, 'I don't take [$500,000] haha' he was saying that he had taken money out of the Business but not that much.[376]

B.1.5 Conclusions as to Mr Satyawan as a witness

1. I have concluded that Mr Satyawan was a most unreliable witness. I do not accept any of his evidence except where it has been corroborated independently, or where it is an admission against Reserve Capital's interests.
2. I do not regard Ms Dewi's evidence, as will be seen below, to be independent such that it can be taken to corroborate Mr Satyawan's evidence.
3. As will be seen, I have considered her evidence separately on its own merits in the discrete factual matters to be resolved.

1. I should say at the beginning of the assessment of Ms Dewi as a witness that I do not find that she knew about Mr Satyawan's:
   1. interactions with the OSR;
   2. attempts to disguise the true nature of the purchase transaction;
   3. misleading statements made while trying to sell the Business; or
   4. statements made to Ms Patel.
2. Ms Dewi was not cross-examined on any of these matters, and it was not suggested by the defendants that she knew about them.
3. So, for the avoidance of doubt, obviously, I have not taken any of those matters into account when approaching an assessment of Ms Dewi as a witness.
4. As noted above, Ms Dewi studied finance in Australia and received a Bachelor of Commerce. Subsequently, she worked in Jakarta as a stockbroker.[377]
5. As also noted above, in 2003 Mr Satyawan, Ms Dewi and their child came back to Australia and her evidence was that from then her principal role was as a homemaker.[378]
6. Ms Dewi's evidence was that she had no involvement with the bookshop which Mr Satyawan, as found above, ran.[379]
7. Ms Dewi's evidence was that:
   1. after the sale of the bookshop, she and Mr Satyawan wanted to purchase another, larger investment business;[380]
   2. she was not involved in doing research to find a suitable business because she was busy with their child at the time;[381]
   3. at the end of 2015, Mr Satyawan told her that the Seascapes IGA, I infer, was for sale;[382]
   4. Ms Dewi did not read the Business Profile;[383] and
   5. Ms Dewi was not involved in 'more research' after the meeting at the Premises at the end of January 2016.[384]
8. Ms Dewi gave evidence that they were looking for a business they could invest in but 'not involving us that much' and which did not 'require us to work there as much'.[385]
9. Ms Dewi's evidence was that Mr Satyawan initially had told her that the Seascapes IGA was too far away and that he then saw the advertising again with a different seller in January 2016.[386]
10. Ms Dewi accepted, and I find, that:
    1. Mr Satyawan made the decision for them as to the purchase of the Business;[387]
    2. Ms Dewi did not make her own decision to proceed;[388] and
    3. she 'just agreed' with Mr Satyawan's decision.[389]
11. Those matters point to Ms Dewi's somewhat limited role in the purchase transaction. That is, Mr Satyawan had the carriage of the purchase of the Business, including negotiations and was the decision‑maker for Reserve Capital.
12. Her evidence, (leaving aside the meetings on 30 January and 11 February of 2016), was that she had some discussions with Mr Satyawan about the purchase.
13. She gave no evidence as to the loan said to have been made by Mr Satyawan's mother, nor whether there was interest to be paid on it.
14. Understandably enough, as Mr Satyawan's partner and as someone educated and practised in business herself, there may well have been communications between Mr Satyawan and Ms Dewi in the process of purchasing the Business. And, as Ms Dewi candidly accepted, she had discussed her evidence with Mr Satyawan over the years.[390]
15. I deal with the commercial plausibilities of Ms Dewi's evidence below in my assessment of what occurred at the two contested meetings.
16. However, generally, I have come to the view that, entirely understandably, she has come to see certain meetings and discussions exactly as Mr Satyawan and Reserve Capital have asserted them to be.
17. There was nothing in the way that she gave her evidence which suggested to me an independent recollection of the events to which she said she was a party.
18. I do not suggest or find that Ms Dewi was not an honest witness. However, the strong impression I had was that her evidence was not the product of a reliably independent memory but was the product of 'acquired knowledge', or a 'common recollection' derived from Mr Satyawan over the years.

1. Mr Piggott was a difficult and unco-operative witness, in both his evidence‑in‑chief and in cross-examination.
2. More generously, Ms Piggott and Lightwest Investments submitted with some force that Mr Piggott's '... evidence was occasionally difficult to follow, and he was not always responsive to questions'.[391]
3. His evidence was from time to time unresponsive to questions he was asked, both in evidence-in-chief and in cross-examination. He gave his evidence reluctantly and preferred, it appeared, to give his evidence at a high level of generality. Mr Piggott professed to have not much of a memory of any specific conversations with Mr Satyawan.[392]
4. There were at least a couple of occasions during the course of Mr Piggott's evidence where I indicated that I was having difficulty understanding exactly what the effect of Mr Piggott's evidence was.[393]
5. While it can be imagined, and accepted, that many defendants called as witnesses would prefer not to be giving evidence, Mr Piggott generally to my observation gave his evidence in a way he considered would assist with his defence of the case.
6. I have set out above at some length the findings I have made in relation to Mr Satyawan and his dealing with the OSR.
7. The adverse findings I made against Mr Satyawan's credibility in that respect do not need to be repeated here. However, in respect of some of those matters, Mr Piggott was, effectively, on the other side of the questionable dealing.
8. Mr Piggott's evidence as to the structuring and re-structuring of the purchase transaction was wholly unconvincing.
9. Initially, Mr Piggott answered with a blanket 'no' to the question from his own counsel: 'Can you remember what you discussed with Mr Satyawan about how the deal was to be structured?'[394]
10. Then, not long after, his evidence was:

... initially he was wanting to have a - I don't know what you call it, is it a lease or - he wanted to hire the equipment or whatever it is. So yes, yes, the goodwill had a - there was some stock, sorry, some - some plant and equipment that he was wanting to buy outright, maybe some office furniture and different bits and pieces like that. Then the remainder was in the form of a hire. And - and that was fine. That - that worked from an accounting perspective, on our side. Do you want the split, well, the contract should show you the split between the hire and the [$65,000]. Was it [$65,000]? Whatever it was. And then - then it changed at a point in time. I can't remember at what point in time it changed. It would appear to me as though he wanted to change it - I can't remember the date he wanted to change it, but to just all-inclusive, just all - you know, forget not doing the hire and putting it all into (indistinct)[.] That's all basically that was - that he has put to us.[395]

1. Mr Piggott's evidence about the circumstances in which he signed a 'second contract' was similarly unpersuasive. In examination‑in‑chief, his evidence was:

...There was a second contract. I remember, well, I am quite sure because we met in lots of locations, the second - there was a second contract, basically of a similar structure but yes, it was sort of all a rush and had to be signed. And from our side, you know, we spoke to the accountant and he said, 'Look, it doesn't really make a lot of difference to our side.' So we signed it.

...

And can you remember the circumstances in which you signed the ['second contract']?‑‑‑Well, I never really got into his circumstances, but I guess from our side, you know, we were wanting to be a cooperative seller in terms of, you know, if - if it's what he wanted and it didn't change our position, well, we signed it, you know.[396]

1. Mr Piggott, in cross-examination, in dealing with there being a second contract unconvincingly to my observation, stated:

...Well, how it had come to pass was [Mr Satyawan] put it to us, or put it to me to - because he needed a change. And during that time, I spoke to the accountant. And he said it doesn't really make much difference. So, - - -

All right?---And we never really took a lot of notice as to how [Mr Satyawan] wished to change it.[397]

1. However, the evidence firmly points towards Mr Piggott having a role in, at least initially, Mr Satyawan's design to misrepresent the sale contract. That evidence includes:
   1. the email Mr Satyawan sent to Mr Piggott on 12 February 2016 (at 4.41 pm), as found in [79] above;[398]
   2. the text message Mr Satyawan sent to Mr Piggott on 12 February 2016 (at 7.02 pm), as found in [80] above;[399]
   3. the email Mr Satyawan sent to Mr Piggott on 8 March 2016 (at 8.35 am) attaching the 'Invoice Sample for hire', as found in [100] above;[400]
   4. the email Mr Satyawan sent to Mr Piggott on 12 April 2016 (at 2.06 pm), as found in [116] above;[401]
   5. the email Mr Satyawan sent to Mr Piggott on 12 April 2016 (at 4.44 pm), as found in [117] above;[402]
   6. the email Mr Satyawan sent to Mr Piggott on 12 April 2016 (at 6.46 pm), as found in [118] above;[403]
   7. the email Mr Satyawan sent to Mr Piggott on 15 May 2016 (at 5.22 pm), as found in [125] above;[404] and
   8. the email Mr Satyawan sent to Mr Piggott on 23 May 2016 (at 8.15 pm), as found in [127] above.[405]
2. Perhaps for obvious reasons, Mr Piggott's counsel did not take him to any of those emails in his evidence-in-chief, and Reserve Capital's counsel did not cross-examine on them.
3. At the very least, the above documents show that Mr Piggott was aware of Mr Satyawan's efforts to disguise the true nature of the consideration of the purchase, and that he was a party to its implementation.
4. Mr Piggott's role does not reflect well on him, and I do not accept that Mr Piggott's behaviour is properly explicable as him wishing to be a 'co-operative seller' as he described in his evidence.[406] In the evidence that Mr Piggott gave about the structuring and re-structuring of the transaction, his evidence could not be described as candid, nor could he be described as forthcoming.
5. As another example of why I consider I should approach Mr Piggott's evidence with caution was his evidence-in-chief that in one of the contracts which he signed[407] he had not paid 'a lot of notice ... of the breakdown of those numbers'.[408] I simply do not consider that to be plausible.
6. Further, Mr Piggott had difficulty in accepting some obvious propositions which were put to him. A comparatively minor example was in relation to whether there was a pre-existing lease between Seascapes and Lightwest Investments for the Premises prior to the sale. Mr Piggott quibbled about there being an agreement between Seascapes and Lightwest Investments in circumstances where it was plain that there was no lease. Mr Piggott would not accept that the companies had an arrangement or an understanding, rather than an agreement or lease.[409]
7. More significantly, Mr Piggott would not accept that there was an advantage for Seascapes, in the 2015 financial year, by certain of its business functions being performed by staff at the Bertram IGA. The following exchange occurred in cross-examination:

... On the basis that [Bertram IGA] provides the administration and assists Seascapes, that's an advantage for Seascapes in 2015. Would you accept that?---I wouldn't accept it. It's just - it's just how we did it.

There's a commercial or financial advantage to Seascapes to have another party undertaking its administration, accounts and dealing with matters such as that. Would you accept that?---It's just how we did it. It was - it was easier. It was explained at the time to [Mr Satyawan]. In fact, [Ms Dewi] was going to do their books.

Sorry, I'm not - I'm dealing with this. No need to think about it in abstract. For a party in the position of Seascapes, it is financially and commercially to its advantage that it has its administration and books and records, ordering [et cetera], dealt with by [Bertram IGA]. So it isn't at the cost of Seascapes?---I couldn't answer that.

Do you accept that?---No. I couldn't accept that.

You couldn't answer?---I couldn't answer that. It was just more convenient for the director.[410]

1. Again, that reluctance to accept an obvious proposition in cross‑examination did not reflect well on Mr Piggott as a witness.
2. An example of Mr Piggott wishing to shape his answers rather than answering the particular question arose out of the questions in cross‑examination about a disagreement or dispute between Mr Piggott and Mr Gill about which Mr Satyawan had given evidence.
3. The tail end of that exchange was as follows:

Mr Piggott, is it the case that you had a dispute with Mr Gill about the payment of his commission?---I had a - we had a discussion and we resolved it about the commission and the interpretation of how his commission is calculated, and that is it. And that was resolved.

He threatened to take you to court on it, didn't he?---It was resolved.

He did threaten to take you to court?---It was resolved.

HOWARD J: Well, Mr Piggott, the way it works is counsel asks you a question. Listen to the question and you answer the question.

DILLON, MR: He threatened to take you to court, didn't he?---He did, yes.[411]

1. Overall, I consider that I should approach Mr Piggott's evidence with a degree of caution.

1. I have recorded in other places in these reasons evidence given by Ms Piggott which, in many respects, was not challenged in cross‑examination and which I have accepted. I have not repeated that evidence or my findings here.
2. The principal area in which Ms Piggott's credibility and reliability were in issue was, as I analyse it, what happened at the café meeting at Ardross on 11 February 2016.
3. Reserve Capital also sought to impugn, to some degree, Ms Piggott's evidence to support its propositions that Mr Piggott had acted as an agent, and that Lightwest Investments[412] had made the Representations.[413]
4. Given the findings I have made against Reserve Capital's cases against Lightwest Investments, I do not consider I need to resolve these submissions by Reserve Capital.
5. There was a theme in the cross-examination of Mr and Ms Piggott that, as siblings sharing a house at the time leading up to the sale, their acts and knowledge were known to each other and mutually approved.[414]
6. Reserve Capital, in its oral closing submissions, took the position that Ms Piggott must have had a greater role in the sale of the Business and Reserve Capital's entry into the Lease than her evidence suggested.[415] And, that she must have recalled more details about various commercial matters than her evidence disclosed. For example, Reserve Capital criticised her for the number of times she responded with variations of 'I can't recall' in answer to questions put to her in cross‑examination.[416]
7. There are at least the following matters, in my view, to bear in mind when assessing Ms Piggott's evidence:
   1. as well as her role on the administrative side of the Seascapes and Bertram IGA's, at the time she had significant care responsibility for a small child and for her elderly grandmother;[417]
   2. it appears that Mr Piggott was the main, if not almost the only, point of contact with Ascend and Mr Satyawan;
   3. Mr and Ms Piggott appeared to have interests in multiple corporate entities, including trusts; and
   4. the events, at the time of the trial, had occurred eight or nine years previously.
8. Mr and Ms Piggott's business interests appeared to have diverged or changed since the events in question, which presumably explained their separate representation.
9. Overall, my distinct impression of Ms Piggott's evidence about the sale process was that her lack of direct involvement in the process at the time directly affected her evidence as to what she could recall some years later.
10. Further, it was my distinct impression from her answers to questions about various financial statements that Ms Piggott had not gone back to them prior to her giving her evidence and had not prepared to give her evidence by reference to those statements.
11. In those circumstances, and in those set out in [383] above, her lack of recall while at first might have appeared surprising was, on reflection, understandable in my judgement.
12. I do not find that those matters should impact negatively on my assessment of her credibility or reliability when it comes to the principal matter on which her evidence was disputed, being the 11 February 2016 meeting.
13. In C.3.1 below, I set out Ms Piggott's evidence as to that meeting.
14. In that consideration (of all the evidence given about that meeting) I set out what I assess were the commercial plausibilities at the time. As will be seen, I consider that they support Ms Piggott's evidence about that meeting.
15. I also set out there the fact that Ms Piggott had her then two‑year‑old son with her was an objective matter which significantly tended against accepting Mr Satyawan and Ms Dewi's evidence about the meeting, and which favoured the acceptance of Ms Piggott's evidence.
16. Taking into account Reserve Capital's submissions about Ms Piggott's evidence and assessing it overall, I do not consider that there are any matters which otherwise militate against my acceptance of her evidence concerning the 11 February 2016 meeting.

B.5 The course of the expert evidence of Mr Lewis called for Reserve Capital

1. The expert evidence called by Reserve Capital, especially from Mr Lewis, had a long and tortured history in this case. The problems led, in the trial, to long arguments about admissibility, lost days in the original trial window, and the 'necessity' for Reserve Capital to put on supplementary material on more than one occasion.
2. In the end, for reasons I will come to, during the trial I allowed Reserve Capital on more than one occasion to supplement its expert evidence from Mr Lewis. That then posed, in the trial, a somewhat difficult forensic decision for the defendants to make.
3. I have sought to capture the history in the following paragraphs. As will be seen, the course that the expert evidence of Mr Lewis took could not be described as either model or as assisting in the efficient presentation, or adjudication, of the case. None of that can be laid at the feet of Mr Lewis. And, all of the difficulties may well have been avoided with more thought and better preparation on the part of Reserve Capital's legal representatives.
4. In some of the submissions made by Reserve Capital in the course of dealing with the objections to Mr Lewis' reports, there was a tendency to blame Mr Lewis for the inadequacies.[418] That was unfortunate and not soundly based.
5. In making those observations, I would adopt what Lindgren J said in Harrington-Smith v Western Australia [No 2]:[419]

[18] Unfortunately, in the case of many of the experts' reports, little or no attempt seems to have been made to address in a systematic way the requirements for the admissibility of evidence of expert opinion. Counsel protested that, in order to ensure that the requirements of admissibility are met, lawyers would have to become involved in the writing of the reports of expert witnesses[...]

[19] Lawyers should be involved in the writing of reports by experts: not, of course, in relation to the substance of the reports (in particular, in arriving at the opinions to be expressed); but in relation to their form, in order to ensure that the legal tests of admissibility are addressed[...][420] (original emphasis)

1. On 12 May 2021, Reserve Capital filed an undated initial report of Mr Lewis (initial Report), which comprised 49 paragraphs across 22 pages.[421]
2. On 6 August 2021, Reserve Capital filed a supplementary report of Mr Lewis (Supplementary Report).[422] This report comprised 16 pages and 42 paragraphs and had at its end an index to a 'bundle' of 16 documents Mr Lewis had relied upon, numbered 'KLD-1' ‑ 'KLD‑16'. It appears that none of 'KLD‑1' ‑ 'KLD‑16' were attached to the filed supplementary report at that time.
3. On that same date, Reserve Capital served an 'Executive Summary' of Mr Lewis' initial report which was filed on 12 May 2021.[423]
4. The defendants filed and served objections on 13 October 2021 to, amongst others, those reports of Mr Lewis.[424] As will be apparent, it is relevant to note that many of the objections were that Mr Lewis had expressed a conclusion without setting out its basis, or his reasoning process, or the source of information on which he was relying.
5. Those objections were argued before Smith J on 26 November 2021. Her Honour delivered reasons which ruled on those objections on 24 February 2022: Reserve Capital v Seascapes Supermarket WA Pty Ltd [2022] WASC 56.
6. Between that argument and the delivery of reasons, Reserve Capital filed the bundle of documents relied upon by Mr Lewis in the Supplementary Report: the bundle was filed 10 December 2021 and comprised 'KLD‑1' - 'KLD-16'.[425]
7. Within that bundle of documents was 'KLD-15' which was described as the 'Brief to Keith Lewis (minus attachments)' (Brief). I will return to the Brief later, but note that it presented what might be considered contestable matters to Mr Lewis as though they were fact.
8. On 24 February 2022, Smith J also made orders that Reserve Capital was to file and serve any amended, substituted, or further expert report by 24 March 2022. By orders made on 19 July 2022, Smith J extended the time for the filing and serving of such reports.
9. On 12 May 2022, Reserve Capital filed and served a revised supplementary report as to the expert opinion of Mr Lewis (Revised Supplementary Report).[426] This report comprised 35 pages and was across 42 paragraphs. It attached a further (marked-up) index of documents, which indexed 'KLD-1' - 'KLD‑24' on which Mr Lewis had relied. 'KLD-14' was made up of four separate documents which were labelled 'KLD-14A' - 'KLD-14D'; and 'KLD‑24' was similarly made up of four separate documents. I note, here, that the Brief at 'KLD-15' was the same as the one filed 10 December 2021.
10. On 12 May 2022, Reserve Capital also filed a revised Executive Summary for Mr Lewis' expert opinion.[427]
11. On 16 May 2022, Reserve Capital filed five volumes of 'attachments' to Mr Lewis' revised supplementary report.
12. On 16 February 2023, Smith J ordered for the expert witnesses to confer and, ultimately, prepare a joint report. These orders did not apply to Mr Lewis' expert material as there was not a contrary expert briefed by the defendants. By orders made on 7 November 2023, I extended the time for compliance with those orders for expert conferral.
13. On 16 February 2023, Smith J ordered the matter be entered for an eight day trial with the parties to inform the Court of their unavailable dates in the second half of 2023 and the first half of 2024 for the listing of the trial. On 6 April 2023, Smith J extended the time for the parties to comply with those orders as to the notifying of available dates.
14. On 5 May 2023, Reserve Capital entered the matter for trial for eight days between 11 and 20 March 2024.
15. There appear to have been no further orders made by the Court until my orders of 7 November 2023 noted above.
16. By orders made on 9 February 2024, I varied earlier orders made so that by 16 February 2024 the parties were to serve the other parties with any objections to the expert evidence.[428]
17. By letter dated 17 February 2024, the solicitors for Seascapes and Mr Piggott served on Reserve Capital objections to Mr Lewis' initial report and to his revised supplementary report.[429]
18. By email dated 19 February 2024, the solicitors for Ms Piggott and Lightwest Investments, effectively, adopted the objections made by Seascapes and Mr Piggott.[430]
19. It appears that the parties conferred on the objections on 6 March 2024.
20. By email dated 7 March 2024, Ms Piggott and Lightwest Investments sent to Reserve Capital the defendants' schedule of (remaining) objections to expert evidence which included their objections to the material of Mr Lewis.[431]
21. That schedule of objections was provided to the Court after hours on 8 March 2024, being the last working day (a Friday) before the first day of trial.[432]
22. The objections going to Mr Lewis' reports comprised some 22 pages.
23. Those objections (and also to the other expert called by Reserve Capital) were argued on 14 March 2024 (day four of the trial). That was after (what became the first round of) Mr Satyawan's and Ms Dewi's evidence.
24. Some of the objections, in effect, repeated objections the defendants had made before Smith J as Reserve Capital had not sought to supplement or amend Mr Lewis' expert material or opinion evidence to deal with objections her Honour had upheld.
25. An overarching objection to many of paragraphs of Mr Lewis' expert reports was that he had not provided information about the IGA stores he had used by way of comparison to reach some of his opinions.
26. At the first hearing of objections (on 14 March 2024), although the trial was still in its infancy, it appeared to me that Reserve Capital's case could well depend heavily on Mr Lewis' evidence.[433] That is, if core parts of Mr Lewis' evidence were ruled inadmissible because he had not fully exposed his reasoning or the materials he had relied upon, it could have a very large impact on (if not be determinative of) parts of Reserve Capital's case.
27. It did not seem to me that the objections being taken by the defendants to Mr Lewis' evidence were answered by Reserve Capital's submission (correct as far as it went) that there was no expert evidence to the contrary;[434] nor that the defendants could cross-examine Mr Lewis (equally true as far as it went).
28. Rather than have me rule on Mr Lewis' expert reports at that point, Reserve Capital sought an opportunity to seek leave to put on supplementary material to meet the objections.[435]
29. Mr Lewis' evidence was left, after the rulings I did make, on the basis that Reserve Capital would put on further expert material and the defendants would have an opportunity to oppose leave being granted for the admission of that further expert material.[436]
30. Reserve Capital filed an additional expert report of Mr Lewis on 18 March 2024[437] which comprised 10 pages and attached a new annexure 'KLD-22'.
31. Following the filing and serving of the additional expert report, the defendants made objections and the objections were heard on the afternoon of 18 March 2024 (day six of trial). Somewhat frustratingly, it appeared in the course of exchanges with counsel for Reserve Capital that not all of the deficits identified in the course of the previous argument had been addressed by the additional expert report.[438]
32. During the hearing of objections on 18 March 2024, Reserve Capital indicated it wished to provide a further report of, or materials from, Mr Lewis.[439]
33. On 19 March 2024, Reserve Capital informed the Court that further material from Mr Lewis was not yet finalised.[440]
34. The further material from Mr Lewis was not finalised before the end of 20 March 2024 (day eight of the trial as it was initially listed).
35. On that day, I ordered that any further materials from Mr Lewis be filed and served by 27 March 2024.[441] I made further programming orders for any further objections and submissions for and against Reserve Capital being given leave to rely on the additional expert report and anything further filed by 27 March 2024.
36. On 27 March 2024, Reserve Capital filed the following, each of which were described as attachments to the additional expert report of Mr Lewis (which had been filed on 18 March 2024):
    1. Attachment A (of 5 pages); [442]
    2. confidential Attachment B (of 7 pages);
    3. confidential Attachment C volume 1 (of 99 pages);
    4. confidential Attachment C volume 2 (of 97 pages);
    5. confidential Attachment C volume 3 (of 28 pages);
    6. confidential Attachment C volume 4 (of 78 pages);
    7. confidential Attachment C volume 5 (of 24 pages);
    8. confidential Attachment C volume 6 (of 43 pages);
    9. confidential Attachment D (of 3 pages);
    10. confidential Attachment E volume 1 (of 54 pages);
    11. confidential Attachment E volume 2 (of 46 pages); and
    12. confidential Attachment E volume 3 (of 44 pages).
37. Again, it did not appear from this additional material (filed on 18 and 27 March 2024), that there had been any change to the Brief provided to Mr Lewis and filed 10 December 2021.
38. In response:
    1. the defendants filed further objections on 10 April 2024;
    2. Seascapes and Mr Piggott filed submissions opposing the granting of leave on 17 April 2024;
    3. Ms Piggott and Lightwest Investments filed submissions opposing the granting of leave on 17 April 2024; and
    4. Reserve Capital filed submissions in support of the granting of leave on 22 April 2024.
39. In the broad, the additional report filed 18 March 2024 and additional materials filed 27 March 2024 did not express opinions. Rather, they went to explain Mr Lewis' reasoning to some of his conclusions and to provide the material to which he had regard in reaching his conclusions in his earlier reports. It was not suggested that there was some impediment to Mr Lewis providing such further information at an earlier point in time, save that it appeared that he had not been asked to provide it in the form or detail which he ultimately did.
40. I approached the application on the basis that without the additional material, being the report of 18 March 2024 and attachments to the reports of 27 March 2024, significant parts of Mr Lewis' initial report and the revised supplementary report would be inadmissible. That would have been very considerably to Reserve Capital's detriment.[443]
41. The defendants opposed Reserve Capital having leave to supplement or to make admissible its earlier expert reports on the basis that it would not be in the interests of justice for leave to be granted. The principal submission made was that the defendants would be deprived of a proper opportunity to respond to that material.[444]
42. In the course of exchanges with the Court, the question posed to the defendants was whether, if the Court were minded to grant Reserve Capital leave, the defendants would be in a position to cross-examine Mr Lewis, or whether they would need or seek a longer adjournment to fully consider consulting with an expert, and, or, putting on their own expert evidence.
43. The defendants found themselves in a position where the trial then could not be completed within the trial window (extended as it had been through the course of the trial).[445]
44. There was a real prejudice to the defendants, both as to the trial not concluding even within its expanded trial window, and the stress and aggravation that the ongoing trial process visits upon litigants. There was further likely to be additional cost to the defendants in the costs of their representatives getting up again if the trial dates could not be used, and there was a broader prejudice to the use of the Court's resources and the bringing of the administration of justice into some disrepute as a result of Reserve Capital not preparing its expert evidence properly.
45. The defendants found themselves in that position through no fault of their own.
46. The centrality of the expert material to Reserve Capital's case was such that I formed the view that Reserve Capital ought be given that leave. That was notwithstanding the prejudice which the defendants would suffer.[446]
47. On 24 April 2024 (the ninth day of trial), I gave Reserve Capital leave to rely on Mr Lewis' additional expert report filed 18 March 2024 and the attachments filed 27 March 2024.[447]
48. I allowed the defendants time to consider their position.
49. The defendants subsequently (on 29 April 2024, the tenth day of trial) elected to proceed to the cross-examination of Mr Lewis without seeking a further adjournment of the trial dates.[448] I made orders on 29 April 2024 accordingly.

1. As I have said above, I do not hold Mr Lewis responsible for the difficulties with the course of his evidence.
2. Indeed, the fact that, ultimately, Mr Lewis was able to provide the underlying data which informed his evidence and opinions rather suggested that if his evidence had been properly prepared by Reserve Capital's legal representatives, then many of the difficulties at trial could well have been avoided.
3. There was no real challenge to Mr Lewis' credibility by the defendants, which was entirely appropriate.
4. I have dealt with the substance of Mr Lewis' evidence and its limitations (as I see them) under various headings below.
5. I do not think I need to make any separate findings as to Mr Lewis as a witness other than to note that:
   1. I found him to be careful and a knowledgeable witness; and
   2. to my observation he engaged in a candid and forthright way with the questions he was asked in cross-examination.
6. If there were occasions in cross-examination when Mr Lewis perhaps did not accept a proposition that seemed obvious or answered a different question from the one he was asked, I would attribute that to the fact that he waited a long time outside of court on the day he did give evidence, and the Court sat late to 'finally' finish his evidence. I do not take any of that as a reflection on him as a witness.

C. Findings on discrete factual matters in dispute C.1 Whether interest was payable on a loan agreement to Mr Satyawan's mother

1. This issue arises because Reserve Capital claims that it is obliged to pay interest on a loan which was taken out by it. Whether there was a loan or not was not a matter of great moment in the trial- it appeared, of itself, to make no difference to Reserve Capital's claim.
2. Like other aspects of the trial, how the interest was claimed and sought to be proved by Reserve Capital was problematic.
3. Prior to trial, in her Supplementary Expert Report filed 26 July 2022,[449] Ms Marke referred to a 'related party loan'[450] and set out in 'Appendix G' to that report a calculation of interest on that loan for the 2016 ‑ 2022 financial years.[451] Prior to trial the defendants objected to that part of Ms Marke's Supplementary Expert Report.
4. Ms Marke's Further Supplementary Report filed 20 March 2024[452] (during the trial) also included the reference to the 'related party loan' at [6.12] and 'Appendix G' in the same terms as they were in her Supplementary Expert Report. That claimed interest appeared in a table prepared by Ms Marke[453] and which was referred to in Reserve Capital's Substituted Schedule of Damages dated 23 May 2024.
5. At trial, Reserve Capital asserted that it had borrowed a maximum amount of $1.5 million from Mr Satyawan's mother and that the loan was repayable with interest.
6. Reserve Capital's case was that the loan agreement with Mr Satyawan's mother was evidenced by a one page document said to have been signed on 1 January 2016 by Mr Satyawan and Herawati Koosasi.[454]
7. That written document provided for repayment of a minimum of $20,000 per year. And, it recorded interest payable at '10% per annum accrued on the balance at the end of the financial year (every 30th June)'.[455]
8. In opening, Reserve Capital sought to tender that document. That tender was objected to on the basis that its provenance and authenticity had not been established.[456]
9. Counsel for Reserve Capital then indicated that the tender would be made through Mr Satyawan when he gave evidence.[457] Counsel for Seascapes and Mr Piggott foreshadowed an objection to Mr Satyawan giving evidence about the Purported Loan Agreement as his witness outline did not deal with any agreement to which the document could be relevant.[458]
10. Mr Satyawan was not asked about any loan agreement with his mother when he gave evidence the first time (on 11 - 13 March 2024).
11. The issue was raised again in the trial when there was argument as to the defendants' objections to Ms Marke's reports[459] on the basis that there was no underlying evidence as to the related party loan.
12. Reserve Capital then proposed to tender the loan document 'with Ms Marke's report as part of the financial records of [Reserve Capital]'.[460] In light of the objection as to its provenance and authenticity, I indicated that would not be a proper basis for its tender.[461]
13. At that time, counsel for Reserve Capital foreshadowed an application to recall Mr Satyawan (Recall Application).[462]
14. In support of the Recall Application, Reserve Capital filed:
    1. an affidavit made by its solicitor on 19 March 2024;[463] and
    2. an affidavit made by its solicitor on 20 March 2024.[464]
15. In opposition, Ms Piggott and Lightwest Investments filed an affidavit of their solicitor made on 19 March 2024.[465]
16. On 20 March 2024, I made programming orders for the Recall Application. Pursuant to those orders the Court received:
    1. submissions from Ms Piggott and Lightwest Investments dated and filed on 22 April 2024; and
    2. a memorandum of 'Scope of evidence-in-chief of Mr Satyawan if recalled' dated and filed on 23 April 2024.
17. I approached the Recall Application on the basis that Mr Satyawan's witness outlines had not dealt with the Purported Loan Agreement.
18. In Mr Satyawan's witness outline dated and filed 15 October 2020, there was a one line item in a table of 'interest payable'.
19. As expressed in the short reasons I gave during the trial; I did (and do) not consider that reference, without anything more, outlined that Mr Satyawan would give evidence about the loan from his mother, nor about the purported written loan agreement.[466]
20. Further, I approached the application on the basis that it was an oversight by Reserve Capital's counsel not to seek to lead that evidence from Mr Satyawan and not to apply for leave to do so (as it was outside of the witness outline).[467]
21. In the result, I considered that it was in the interests of justice to allow Mr Satyawan to be recalled to give that evidence and that the oversight of Reserve Capital's counsel should not be visited upon Reserve Capital.
22. On 24 April 2024, I gave reasons in the trial for giving Reserve Capital leave to put on an additional witness outline of Mr Satyawan which dealt with the further matters of evidence captured in Reserve Capital's memorandum of 23 April 2024 at [3(a) - (i)].[468]
23. Pursuant to that ruling, Reserve Capital filed a Further Supplementary Witness Outline of Mr Satyawan on 26 April 2024 and at the same time, as an aide memoire, a Schedule of Chronology of Payments.
24. Reserve Capital filed an affidavit of Mr Satyawan on 2 May 2024 which gave discovery of further documents.
25. Mr Satyawan was recalled on day 11 of the trial (6 May 2024).[469] His evidence on recall dealt with:
    1. enquiries that he had made with two banks for taking out a loan;
    2. the loan agreement with his mother;[470]
    3. 'draw-downs' of the loan amount, repayments of the loan, the payment of interest; and
    4. other matters to do with the financial statements of Reserve Capital.

1. Mr Satyawan gave evidence of enquiries which he had made with both the ANZ and CBA Banks.[471]
2. As I understood it, the relevance of that evidence was to explain why he had sought a loan for Reserve Capital from his mother, and to potentially justify the claimed interest rate.
3. For reasons I have set out, I would not accept Mr Satyawan's evidence here unless it was corroborated. I do not consider that the documents tendered at this point did so on either issue for which his evidence was led as identified in [479] above.

C.1.2 The loan agreement with Mr Satyawan's mother

1. Mr Satyawan identified his and his mother's signatures on the Purported Loan Agreement.[472]
2. His evidence was that:
   1. after making enquiries of the ANZ and CBA Banks he went back to Indonesia in about mid‑December 2015 for a Christmas holiday;[473]
   2. he had said to his mother that he wanted to buy a business and couldn't get finance;[474]
   3. he reached an agreement with her to borrow between $1 million to $1.5 million;[475] and
   4. he had offered to pay her 10% interest.[476]
3. The evidence that he gave in examination-in-chief about the preparation of the Purported Loan Agreement was as follows:
   1. he did not have a computer with him on holiday;[477]
   2. his mother left for a holiday on 1 or 2 January 2016;[478]
   3. his mother told him to wait for her secretary to come back from holiday and have the document typed;[479]
   4. Mr Satyawan told his mother's secretary what to put in the document;[480]
   5. after the document was typed up, his mother's secretary printed one copy which Mr Satyawan signed; [481]
   6. he left the signed document with his mother's secretary for her to sign - presumably later;[482]
   7. Mr Satyawan then came back to Australia;[483]
   8. in April 2021, Mr Satyawan was made aware that he needed to discover the document as part of explaining Reserve Capital's damages;[484]
   9. he asked his mother's secretary for a copy of the document;[485]
   10. she said she had already sent it to him but he could not find it in his email;[486]
   11. his mother's secretary then said she would give him another copy and sent a copy through WhatsApp;[487]
   12. he did not ask for a hardcopy of the document before some time in April 2024;[488] and
   13. he was told by his mother's new secretary that she could not find the hardcopy.[489]
4. Mr Satyawan denied in cross-examination that the Purported Loan Agreement was created and signed much later because he realised he needed to prove an obligation to pay interest.[490]

1. Mr Satyawan was shown a NAB statement in his mother's name which showed transactions between 13 February and 14 April 2016.[491]
2. Mr Satyawan's evidence was that the withdrawal or debit from the account of $800,000 on 18 March 2016 provided the funds for the cheque[492] which, as found in [113] above, was paid to Mr Piggott.[493]
3. It may be noted that there were two transfers into, or credits to, that account totalling $800,000 on that same day.[494] There was no explanation as to why $800,000 came into, and then out of, that account on the same day.
4. Mr Satyawan identified a CBA statement for the period 1 March 2016 - 31 March 2016 (Statement 79) of a joint account between him and Ms Dewi.[495] What was initially shown to Mr Satyawan (in his recalled evidence-in-chief) and sought to be adduced was a one page document.
5. In cross-examination, Mr Satyawan said that he had left the second page off this document when he provided it to his lawyers.[496] His explanation was that he did not consider the second page to be relevant.[497]
6. From Statement 79, Mr Satyawan identified debits to that account as payments made for the acquisition of, or running costs for, the Business; namely:
   1. on 9 March 2024, a debit of $20,000 being the deposit paid to purchase the Business;[498]
   2. on 21 March 2024, a debit of $14,000 which was for the float money;[499]
   3. on 21 March 2024, a debit of $258,454.60 which was for the stock on hand;[500]
   4. on 21 March 2024, a debit of $55,000 being the balance of the purchase price;[501] and
   5. on 29 March 2024, a debit of $6,873.01 being the rent and outgoings for 21 - 31 March 2024.[502]
7. Although not specifically referred to by Mr Satyawan in his evidence, I note Statement 79 also identified a debit of $100,000 on 15 March 2024 with the notation 'Metcash deposit'.
8. Mr Satyawan's evidence was that the credits shown in Statement 79 were instalments or advances on the loan from his mother which he referred to as the 'disbursement of the loan'.[503]
9. Mr Satyawan was shown in his evidence-in-chief a one page CBA statement for the period 1 ‑ 30 September 2016 (Statement 85) for his joint account with Ms Dewi.[504]
10. In cross-examination, Mr Satyawan said that he had left the second page off this document when he provided it to his lawyers.[505] His explanation was that he did not consider the second page to be relevant.[506]
11. Mr Satyawan identified a number of credits to that account recorded in the Statement 85 between 15 ‑ 16 September and 20 ‑ 27 September inclusively as 'loan disbursements' coming from his mother.[507]
12. In the same passage of evidence, however, Mr Satyawan gave evidence about a credit on 15 September 2016 which was recorded in Statement 85 and notated as 'Loan Repayment'. Mr Satyawan's evidence was not easy to follow. It appears that his mother told him that Reserve Capital did not need to pay that $20,000 to her and so the $20,000 notated as 'Loan Repayment' was from the Seascapes IGA's account (paid to Mr Satyawan and Ms Dewi), rather than to his mother.
13. Mr Satyawan's evidence then was that:
    1. no interest had been paid on the loan;[508] and
    2. some principal had been repaid.[509]
14. Mr Satyawan identified Reserve Capital's financial statements for the 2016 financial year.[510] In those 2016 financial statements, Mr Satyawan said that the entry 'Loans from other persons' under 'non‑current liabilities' of $1,286,257[511] was the loan from his mother.
15. By reference to Reserve Capital's 2023 financial statements which recorded under 'non-current liabilities' the amount of $2,052,311 as 'Loans from other persons',[512] Mr Satyawan said this was made up of his mother's loan and other loans.[513]
16. Mr Satyawan, on day 11 of trial, was not able to identify how much of the $2,052,311 represented the loan from his mother but the Court was directed to Reserve Capital's substituted schedule of damages dated 23 May 2024.[514] However, Mr Satyawan said that he would need to refer to Reserve Capital's MYOB program to do so.[515]
17. In cross-examination, Mr Satyawan was taken to a schedule of damages which Reserve Capital had filed on 23 June 2021. That schedule stated that Reserve Capital had paid interest totalling $745,986 to 30 June 2021.[516] Mr Satyawan said that was a mistake in the document which he did not pick up at the time.[517]
18. In cross-examination, Mr Satyawan was taken to the Business case or plan which Mr Satyawan prepared in February 2016.[518] Mr Satyawan was taken to the document and, in particular, the statement that 'The business take over will not involve any financial debt'.[519] Mr Satyawan sought to explain that statement by saying that he meant there would be no bank finance.[520]
19. Mr Satyawan said in cross-examination that the statement made in the Business case or plan was 'wrong',[521] and he had said that to get Metcash's approval as quickly as possible.[522]
20. Mr Satyawan did not immediately answer the question put to him as to whether he was telling Metcash a lie about the finance.[523] Eventually, Mr Satyawan admitted that it was a lie told to Metcash.[524]
21. This evidence in cross-examination (as to the 23 June 2021 schedule of damages and the business case or plan prepared for Metcash) raised for me, again, the difficulty of knowing where the truth lay in Mr Satyawan's evidence. The conclusion I have found unavoidable is that Mr Satyawan was, and remained, content to say what suited his purposes at the particular time without that necessarily being accurate or truthful.
22. Ultimately, Reserve Capital submitted an aide memoire which extracted repayments of principal, it was said, from its General Ledger.[525]

C.1.4 Consideration of whether interest was incurred or payable

1. Whether there was an interest bearing loan with Mr Satyawan's mother depends on the credibility and reliability of Mr Satyawan's evidence. That, I consider, is also the case for the authenticity of, and date of execution of, the Purported Loan Agreement.[526]
2. Mr Satyawan's evidence about its preparation and how a copy came to him in WhatsApp some five years after its 'execution' seems to me, at best, to be implausible.
3. In any event, for the reasons I have given above I do not accept Mr Satyawan's evidence unless it is independently corroborated. I do not consider that the Purported Loan Agreement is such independent corroboration of his evidence.
4. In all of the circumstances, I am not persuaded that a loan was made to Reserve Capital by Mr Satyawan's mother on the terms asserted by Reserve Capital and, in particular, I am not satisfied that Reserve Capital was, or is, under any obligation to pay interest to Mr Satyawan's mother.
5. I do not accept that the Purported Loan Agreement was genuinely executed on the date it bears. I do not accept that it was prepared in the way described by Mr Satyawan.

1. Mr Satyawan's evidence‑in‑chief was that:
   1. he saw an advertisement on Gumtree for a supermarket;
   2. he contacted the seller and spoke with Mr Piggott; and
   3. he was told that the Business was in Mandurah and that the equipment was new and the area was growing.[527]
2. As found in [39] above, there were text messages between Mr Satyawan and Mr Piggott on 29 and 30 January 2016.[528]
3. I find that Mr Satyawan's first text message was his first contact with Mr Piggott, rather than that occurring via telephone call.
4. I do not draw any adverse conclusion from not accepting Mr Satyawan's evidence that the meeting was arranged following a telephone call.
5. In the text exchange, I find:
   1. Mr Satyawan asked what the turnover was, and Mr Piggott replied approximately $83,000 per week;
   2. Mr Satyawan asked whether the price included the stock and how much the lease was;
   3. Mr Piggott responded that the stock was an additional price of about $150,000 and the lease was $140,000 per annum;
   4. Mr Piggott also said that it was 'a very nice shop with new refrigeration in a growing area';[529]
   5. Mr Satyawan and Mr Piggott arranged to meet at the Premises at 3 pm on 30 January 2016; and
   6. Mr Piggott told Mr Satyawan that the staff did not know about the sale and he would tell them that Mr Satyawan was just a visitor.
6. Mr Satyawan identified that the meeting at the Premises happened on a Saturday which was consistent with his evidence that the meeting occurred on 30 January 2016.[530]
7. His evidence, in examination-in-chief, continued that:
   1. on a weekend he went to the Business to have a look at it with his wife and children. He brought his children along for fish and chips;[531]
   2. he took the Business Profile with him, 'just to make sure it is the same one', but did not show it to Mr Piggott and left it in the car;[532]
   3. Mr Piggott, in answer to a question, said he was the owner of the Business and showed Mr Satyawan around the plant and equipment;[533]
   4. he asked about the landlord and Mr Piggott said words to the effect of 'we are the landlord';[534]
   5. he asked Mr Piggott about the profitability of the Business 'just to cross‑check with the Business Profile'[535] and Mr Piggott told him it was approximately $500,000;[536]
   6. Ms Dewi asked Mr Piggott where he lived and was told 'in Booragoon'.[537] She then asked, 'how do you run this store?' to which Mr Piggott responded that he only came to the store once every three weeks and he did not need to run the store as it was 'under full management';[538]
   7. there were some further discussions about the safety of the area and theft;[539] and
   8. Mr Piggott showed him the computer system.[540]
8. From that and the surrounding circumstances, including the discussions with Mr Piggott by text message on 29 and 30 January 2016, I find that Mr Satyawan thought that the supermarket he was to inspect was the same one as in the Business Profile prior to his meeting with Mr Piggott at the Premises. I find that it was apparent to Mr Satyawan by no later than his arrival at the Seascapes IGA that it was the supermarket in the Business Profile.
9. Mr Satyawan was formally challenged in cross‑examination about his evidence that Mr Piggott told him that he owned the building and that he only came to the Business once every three weeks.[541]

1. Ms Dewi's evidence‑in‑chief was that:
   1. she first went to the Business on Sunday, 31 January 2016;[542]
   2. she and Mr Satyawan had taken their children and they met only Mr Piggott;[543]
   3. Mr Piggott had shown them around the Business and she formed the impression that it looked good because the store was pretty much brand new;[544]
   4. Mr Satyawan asked Mr Piggott if he was the owner of the Business and was told yes;[545]
   5. Mr Satyawan asked how much the rent was and Mr Piggott said $140,000;[546]
   6. in response to a question from Mr Satyawan as to whether the landlord was good, Mr Piggott said he was the landlord;[547] and
   7. there was a discussion about an apartment building being built in front of the Seascapes IGA which Mr Piggott showed them and commented that the area was a growing area.[548]
2. Ms Dewi then gave evidence that Mr Piggott said:
   1. that the Business was under full management;[549]
   2. he hardly attended the Business and only attended once every three weeks;[550]
   3. in answer to a question from her, that he lived in Booragoon;[551]
   4. in response to whether theft was a problem, Mr Piggott said that it was 'too little for you to be worried about';[552] and
   5. in answer to a question from her, Mr Piggott indicated that he was selling the Business because he wanted to just 'become the landlord'.[553]
3. As noted, I have found that the first meeting at the Seascapes IGA occurred on 30 January 2016 and not 31 January 2016 as Ms Dewi thought. However, nothing turns on that finding or my non-acceptance of Ms Dewi's evidence in that regard.
4. In cross‑examination, Ms Dewi said that she recalled Mr Piggott saying at the first meeting at the end of January 2016 that the Business was very profitable,[554] but she did not recall Mr Piggott giving a number for the Business' profitability.[555]
5. Ms Dewi agreed that she did not recall what was said at that meeting 'word by word'[556] but she did recall some topics that were discussed.[557]

1. Mr Piggott's evidence was he remembered meeting Mr Satyawan at the Business soon after the text messages I have found at [39] above.[558] He did not recall a great deal about the meeting but told Mr Satyawan to go for a wander through the Premises himself because he did not want the staff to know that he was guiding someone around.[559]
2. Mr Piggott's evidence was that he met with Mr Satyawan between maybe 10 and 20 times and while he remembered broadly what they discussed he did not remember what happened at what meeting.[560]
3. In cross-examination, Mr Piggott said he did not recall Ms Dewi being at the meeting, but he did remember Mr Satyawan being there.[561]
4. In cross-examination, Mr Piggott's evidence was that he did not remember saying certain things based on his general lack of recollection of the meeting, but there were some matters put to him which he would not accept that it was possible he said.
5. A material example of that was that he did not remember being asked by Mr Satyawan what the profit of the Business was or that he answered approximately $500,000[562] and he would not accept that he gave that answer.[563]
6. His evidence was that he did not recall saying:

Oh, it doesn't need me. It is under full management. I don't have to come here. I only come here once every three weeks.[564]

1. Mr Piggott did not accept that he possibly said that because his evidence in cross‑examination was that he went there more often than once every three weeks.[565]
2. Mr Piggott did not recall the children attending the meeting and his evidence was that the point of Mr Satyawan visiting was so he could have a look through the Premises and they did not get into a conversation of any depth.[566]

C 2.2 The meeting on 30 January 2016: consideration

1. As found, Mr Satyawan had the Business Profile before he attended the meeting on 30 January 2016.
2. It is not plain from the evidence exactly when Mr Satyawan realised that the business he was to visit on 30 January 2016 was the same as that within the Business Profile. However, Mr Piggott, by text message in the afternoon of 30 January 2016, gave Mr Satyawan the address which corresponded with the address in the Business Profile.[567]
3. Mr Satyawan, in my assessment, likely knew before he arrived at the Seascapes IGA that it was the same business as that in the Business Profile.
4. Further, it may well be that Mr Satyawan knew as early as the middle of the day before (being 29 January 2016) when Mr Piggott told him that the Business was 'down Mandurah way'.[568] That would explain the questions which he asked by text message, as found. Those questions did not, for example, ask what the price was (which was in the Business Profile).
5. I have set out above why I would not accept Mr Satyawan's uncorroborated evidence. This includes his evidence as to what was discussed at the meeting on 30 January 2016. Further, I consider that it is unlikely that there was any discussion of the profitability of the Business as that was dealt with in the Business Profile and had been supplemented in some respects by the text message exchange prior to the meeting.
6. I have set out above my reservations as to the independent reliability of Ms Dewi's evidence.
7. I have set out above my reservations as to the reliability of Mr Piggott's evidence. The findings I make about what occurred and what was discussed at the meeting on 30 January 2016 have been reached without accepting Mr Piggott's evidence in full. Rather, I have accepted that evidence where it is supported by contemporaneous matters or accords with the plausibilities.
8. In the context of Mr Satyawan having the Business Profile and the information he had received from Mr Piggott by text message prior to the meeting, I do not think it likely that there were statements made about how much the rent was, or about the management of the Business by Mr Piggott.
9. Consistently with the text message that Mr Piggott sent to Mr Satyawan on 30 January 2016 about the staff not knowing about the sale, I think it more likely than not that Mr Satyawan, and maybe Ms Dewi and their children, walked through the Seascapes IGA without Mr Piggott.
10. It may well be that Mr Piggott did say something to the effect that the area was a growing area, or that the area was a safe one but they are not material to any of the Representations pleaded.
11. I do not find it likely that there was discussion as to the management by Mr Piggott, or more generally, of the Business at that meeting.
12. I do not find it likely that there was any discussion then as to the profitability of the Business, nor the rent to be paid.
13. Nor do I consider it likely that Mr Piggott discussed with Mr Satyawan or Ms Dewi the Business Profile, nor that he (Mr Piggott) was asked about the same. In that respect, it is somewhat significant that Mr Satyawan's own evidence was that he had left the Business Profile in his car and had, in effect, taken it only to confirm that the business was the same as that in the Business Profile.
14. I am not positively persuaded that any representation to the effect of any of the Representations was made by Mr Piggott at the meeting on 30 January 2016.

1. As found in [60] above, there was a meeting between Mr Satyawan, Ms Dewi, Mr Piggott, Ms Piggott and her young son at a coffee shop in Ardross on 11 February 2016.

1. Mr Satyawan's evidence‑in‑chief was that:
   1. he thought this meeting at a café in Ardross was arranged over the telephone between him and Mr Piggott;[569]
   2. he and Ms Dewi 'specifically' wanted to see Ms Piggott;[570]
   3. the meeting was between him, Ms Dewi, Mr and Ms Piggott and Ms Piggott's young son who was about 2 years old;[571] and
   4. the meeting took two hours as he 'checked his "Google map timeline" when he did his witness outline'.[572] I interpolate to say that document was not in evidence.
2. Mr Satyawan said that:
   1. mainly he and Ms Dewi verified with Ms Piggott the profitability of the Business;[573]
   2. he asked Ms Piggott if the profit is $500,000 and the gross profit is 35%;[574]
   3. Ms Piggott verified those figures and said that to get to 35% 'you have to do an investment buying';[575]
   4. he asked why Ms Piggott was selling the Business;[576] and
   5. Ms Piggott said she just wanted to be a landlord and she already had a supermarket in another shopping centre in Bertram.[577]
3. Mr Satyawan said that after verifying all of the information 'we come to a price negotiation'.[578]
4. Mr Satyawan's evidence about that was:
   1. he asked if the price could be reduced to $850,000;[579]
   2. Ms Piggott responded that the Business was profitable and several other people were interested in it and it was under offer;[580]
   3. Ms Piggott said the lowest she could go to would be $875,000;[581]
   4. he asked Ms Piggott to reduce the rent;[582]
   5. Ms Piggott said in response the Business is still profitable and 'you're still making [$500,000] even though you are paying [$210,000] rent and outgoings';[583] and
   6. Mr Satyawan and Ms Dewi did not want to seem greedy so they agreed with the rent of $140,000.[584]
5. After Ms Piggott had offered $875,000, Mr Satyawan's evidence was that he and Ms Dewi 'sort of give a look to each other and just nod, yes' and 'we got a deal, pretty much'.[585]
6. Having clearly moved on from the topic of the meeting on 11 February 2016 to Mr Satyawan's evidence of what occurred the next day, counsel for Reserve Capital then stated:

Yes. I've just forgotten to ask you something about the meeting on 11 February. What - did you have any documents with you at that meeting?‑‑‑Yes, I did. I bring the [B]usiness [P]rofile with me.

Thank you?---Like I said, the - the purpose of the meeting is to clarify information with [Ms Piggott].

Sorry. Did you - to what extent did you refer to the [B]usiness [P]rofile?[586]

1. Counsel for Ms Piggott and Lightwest Investments rose to object (which is not recorded on the transcript) and in the absence of Mr Satyawan the objection to the leading question was debated.[587] I indicated to Reserve Capital's counsel that it did not assist his witness, nor my assessment of his credibility, for the evidence to be led by such leading questions.
2. When Mr Satyawan returned to the witness box, the line of questioning was not resumed.
3. I do not need to make a finding as to whether Mr Satyawan had the Business Profile with him at the meeting on 11 February 2016. If I did, then I would not accept his uncorroborated evidence for the reasons set out above. And, my assessment would not be assisted or changed by reason of his counsel leading him in the way set out above.
4. In cross‑examination, Mr Satyawan:
   1. did not accept that he had made a decision to make an offer to buy the Business on the night before the meeting on 11 February 2016;[588]
   2. said he wanted to verify the information with Ms Piggott before he made any offer, with the most important piece of information being about the lease;[589] and
   3. said he had discussed with Ms Dewi the maximum offer they would make if Ms Piggott verified everything.[590]
5. In response to a question as to whether the meeting took about half an hour because Ms Piggott had her 2‑year‑old son with her and so she did not have much time to speak with Mr Satyawan and Ms Dewi on that day,[591] Mr Satyawan maintained that the meeting took two hours.
6. Mr Satyawan did not accept that all that occurred at that meeting was a negotiation on the price of the Business.[592]
7. In cross-examination, Mr Satyawan suggested that only the last 15 minutes of the two‑hour meeting was small talk or a social conversation.[593]
8. Mr Satyawan maintained that he did have an actual recollection of the 'process of verification' and that it did occur.[594]

1. Ms Dewi's evidence-in-chief was that there was a meeting at a coffee shop in Ardross at which she, Mr Satyawan, Mr and Ms Piggott and Ms Piggott's son (who she thought was two or three years old) attended.[595]
2. She thought the meeting went 'a good two hours'.[596]
3. Of the meeting, her evidence-in-chief was that:
   1. Ms Piggott introduced herself as the director of the owner of the building and the landlord;[597]
   2. there was then 'chit chat';[598]
   3. Mr Satyawan asked if the rent of $140,000 could be reduced;[599]
   4. Ms Piggott responded 'no' because the gross profit was good - it was 35% and the Business could earn $500,000 per year;[600]
   5. Mr Satyawan asked who the manager of the Business was;[601]
   6. Ms Piggott responded to that question '[Ms] Nesbitt';[602]
   7. in response to a question, Ms Piggott said that Ms Nesbitt was one of the best employees and all of the other employees were also good;[603]
   8. Mr Satyawan asked about the gross profit which was 'pretty high', at 35%;[604]
   9. Ms Piggott advised to do a lot of deals and buy in bulk from a direct supplier, and that the gross profitability could be 35% if they did a lot of investment buying;[605]
   10. Mr Satyawan and she asked why Ms Piggott was selling the Business;[606] and
   11. Ms Piggott said in response that she wanted to become just the landlord and collect the rent.[607]
4. Ms Dewi gave evidence that there was a negotiation of the price and 'then we got it at [$75,000]'.[608]
5. The last matter Ms Dewi gave evidence about from that meeting was that she and Mr Satyawan asked whether they should be worried about Aldi to which the Piggotts said that Aldi shouldn't be any trouble because it was more of a competitor 'with Coles and [Woolworths] but not IGA'.[609]
6. Ms Dewi did not give any evidence as to Mr Satyawan having the Business Profile with him or referring to it during that meeting.
7. In cross-examination, against the suggestion that the meeting went for about half an hour, Ms Dewi maintained that it was a two‑hour meeting.[610] She agreed that she did not have a word‑by‑word recollection but remembered the topics discussed.[611]
8. In cross-examination, Ms Dewi's evidence was that Mr Piggott did refer to 35% as being the Business' profitability.[612]
9. Ms Dewi agreed that the meeting largely consisted of Mr Satyawan discussing the Business with Ms Piggott.[613]
10. She recalled that Ms Piggott spoke to Mr Satyawan about doing the investment buying[614] and that when Ms Piggott answered a question Mr Piggott supported the answer 'so it became [a] conversation with everyone'.[615]

1. Mr Piggott's evidence-in-chief was that he recalled meeting 'at a café' with Ms Piggott, Mr Satyawan and Ms Dewi and thought that was the only time he met anyone other than Mr Satyawan.[616]
2. He did not remember much about the meeting, save that his evidence was there was not much discussion but Mr Satyawan 'wanted the opportunity to see if he could negotiate the price down'[617] and that he thought the meeting might have lasted about half an hour.[618]
3. In cross-examination, Mr Piggott remembered the meeting at the café but not its date.[619]
4. Mr Piggott accepted that the meeting had been arranged because Mr Satyawan wanted to speak with Ms Piggott, but he primarily remembered the purpose of the meeting as Mr Satyawan wanting to have a discussion about the price of the Business.[620]
5. Mr Piggott said that he did not recall Mr Satyawan asking Ms Piggott whether the profit was $500,000 and the gross profit 35%.[621] Mr Piggott disputed that was said as it 'wouldn't make sense' and did not 'sound accurate' because the point of the meeting was to discuss the price.[622]
6. Mr Piggott recalled a discussion about why they (the Piggotts) were selling but did not recall the words which were put to him in cross‑examination being said.[623]
7. Mr Piggott accepted that there was a negotiation and the price was set at $875,000.[624]
8. He accepted that, although he did not recall it, Ms Piggott might have said:

The plant and equipment is new and the business profitable and several parties are interested in it. So the - so the best I can do will be [$875,000], and bear in mind, the business [is] under offer at the time.[625]

1. Mr Piggott could not remember if he made any similar, or supporting, comment at that time but said that all of the points (in the above quotation) were true.[626]

1. Ms Piggott's evidence-in-chief was that the first time she met Mr Satyawan and Ms Dewi was at the café in Ardross some time in February 2016.[627] She recalled that she, Mr Piggott, her son, Mr Satyawan and Ms Dewi attended the morning meeting where they sat inside.[628]
2. That meeting had been organised between Mr Satyawan and Mr Piggott and Mr Piggott asked her to attend.[629]
3. She assumed the purpose of the meeting was for them to meet each other but she did not know.[630]
4. She said her son was about two years old at the time and during the meeting he was '... in a lot of places. On my lap, moving around a little bit, as 2-year‑olds do'.[631]
5. She said that she had a reasonable memory of the meeting and it was quite brief, no more than half an hour.[632]
6. Of the discussion at the meeting she said:
   1. it was mainly things of a personal nature, and she remembered specifically talking about travelling to Indonesia and Japan;[633]
   2. Mr Satyawan asked for a discount on the purchase price which she remembered as $25,000;[634]
   3. she declined and said that they wanted a fixed price;[635] and
   4. Mr Satyawan accepted that and there was no further discussion regarding the price.[636]
7. She did not recall anything else happening at the meeting and the next time she met Mr Satyawan was at the stocktake.[637]
8. In cross-examination, Ms Piggott:
   1. denied that Mr Piggott told her that Mr Satyawan wanted to speak to her directly about the terms of the potential purchase;[638]
   2. said the only question that was put to her in the meeting was whether she would discount the sale price by $25,000 and she said no;[639]
   3. maintained that she was not asked questions about the profit of $500,000 a year and the gross profit at 35%;[640]
   4. said she recalled the meeting, that it was pretty brief and it was one of the only interactions that she had with Mr Satyawan;[641]
   5. did not recall saying, in answer to a question, that she just wanted to be a landlord and already had a supermarket in another shopping centre, and said it was not something that she would say;[642]
   6. did not accept that she said words about the Business being profitable;[643]
   7. said that the plant and equipment was new as a matter of fact, but she did not recall saying words to that effect at the meeting;[644]
   8. did not think she would have said something about other parties being interested in the Business because she was not dealing with the sale process;[645] and
   9. thought that the price had already been agreed, although she could not say why she thought that, and Mr Satyawan was then asking for a further discount.[646]

C.3.2 The meeting on 11 February 2016: consideration

1. I am satisfied that the price of the Business was negotiated at the meeting and that the price agreed was $875,000 plus stock to be valued.
2. For the reasons given above about his credibility and reliability, I would not accept Mr Satyawan's evidence that there was a discussion as to the profit of the Business, nor its profitability.
3. I do not accept Ms Dewi's evidence on this matter. That is because:
   1. on her own evidence, Mr Satyawan had the carriage of the purchase of the Business, including the negotiations;
   2. Mr Satyawan was the decision-maker between them for Reserve Capital;
   3. she had never read the Business Profile;
   4. I have found that, inevitably, her evidence on crucial matters over the years has been influenced by Mr Satyawan's 'recollections';
   5. her evidence as to the length of the meeting is unlikely when compared with the objective facts; and
   6. her evidence of what was said about the Business is unlikely compared with the commercial plausibilities.
4. I do not accept Ms Dewi's evidence that the meeting took about two hours, because the objective facts are:
   1. Ms Piggott had her about 2-year-old son with her and it seems unlikely that it would have been possible to have a two‑hour business meeting in the way described; and
   2. Ms Piggott had not met either Mr Satyawan or Ms Dewi previously and in a commercial transaction, even allowing for 'chit-chat' with the matters Ms Dewi says were discussed, it is difficult to accept the meeting would have gone for two hours.
5. As to the commercial plausibilities, I note that in the lead up to the 11 February 2016 meeting, Mr Satyawan had been sent a number of documents by Mr Piggott. On 4, 5, 8 and 10 February 2016, Mr Satyawan had received:
   1. further summary Profit and Loss Statements for the 2014 and 2015 financial years as found in [49] above;[647]
   2. the four BASs for the 2015 financial year as found in [50] above;[648]
   3. Seascapes IGA's tax return for the 2014 financial year (from the Business' accountant), as found in [55] above;[649]
   4. the Seascapes IGA's 2015 financial statements as supplied by its accountant, as found in [56] above;[650]
   5. the BAS for the first quarter of the 2016 financial year, as found in [58(1)] above;[651] and
   6. the Consolidated Hourly Productivity Reports for the quarters ending 30 September 2015, 31 December 2015 and 31 March 2016, as found in [58(2)] above.[652]
6. Also, by 11 February 2016, Mr Satyawan had, as found in [48] above, been sent the Draft Lease[653] and he had asked questions about the outgoings and the market review mechanism in that draft, as found in [51] above.[654]
7. Mr Satyawan's evidence was that he had considered that financial information supplied prior to 11 February 2016 and had formed a view that the documents sent to him on 10 February 2016 as found in [58] above[655] showed him that the sales were sustainable.[656]
8. In all of those circumstances, I do not think it likely that the purpose of the meeting on 11 February 2016 was to verify the financial figures which had been supplied, including those which had come from the vendor's accountant, and which included a submitted tax return on which Mr Satyawan had been told tax had been paid.
9. Further, given the volume of different financial information which had been supplied between 4 and 10 February 2016, I do not consider it likely that verifying questions were then asked or that they would have focused on only the net profit of '[$500,000]' and the gross profitability of 35% - especially so when one remembers that '35%' does not appear as a figure in the Business Profile but is able to be discerned from the figures in the Business Profile.
10. Further, I consider it unlikely that the rent of $140,000 per annum was discussed at this meeting.
11. That is because, looking at the exchanges between Mr Satyawan and Mr Piggott, it seems unlikely that if there was an attempt to bargain down the rent unsuccessfully on 11 February 2016, Mr Satyawan would have returned to that topic later at about the time that the meeting between him and Mr Piggott occurred at the McDonald's in Myaree as found in [92] and [94] above. That is, I consider it more likely that was the occasion (at the McDonald's in Myaree) when there was an attempt to negotiate down the lease by Mr Satyawan.
12. Without being led, Mr Satyawan did not give evidence of having the Business Profile with him and, in his evidence of what was discussed at the meeting of 11 February 2016, he did not mention any discussion which 'verified' the Business Profile as such. Nor did Ms Dewi give evidence to that effect.
13. I do not find that the Business Profile, as such, was discussed at the meeting.
14. I do not find that any representation similar to the Representations was made by either Mr or Ms Piggott at the meeting on 11 February 2016.

1. The reasons from here are organised as follows:

D.1.1. The first plea on the Management Representation;

D.1.3. Conclusions as to meaning and the first plea on the Management Representation;

D.1.4. Evidence as to management of the Seascapes IGA at the time of the Business Profile?

D.2.1. The first plea on the Profit Representation;

D.2.2. The pleaded case as to why the 'historical' Profit Representation was misleading or deceptive ;

D.2.4. SOC [13.1.2] Removal of cigarettes from 2015 financial statements.

D.3.2. Consideration of the first plea on Wages Representation;

D.3.3. Wages Representation in the Business Profile as to future matters;

D.3.4. The other Wages Representation cases pleaded against Seascapes.

D.1.1 The first plea on the Management Representation

1. As to the Management Representation, Reserve Capital's first plea is that Seascapes represented that:[657]

... the Seascapes IGA operated under management with minimal hands on input being required by any proprietor/purchaser[.][658]

1. It is important to bear in mind that the Management Representation as pleaded was defined to have been made in the Business Profile.[659]
2. Reserve Capital pleaded that the Management Representation conveyed a representation as to future matters being:

... the purchaser of the Seascapes IGA could expect to achieve in the future similar outcomes or results to those represented.[660]

1. As will be seen, there are also other, subsequent, pleas that representations to the effect of the Management Representation (as made by the Business Profile) were made in other ways and on other occasions.[661]
2. It was common ground that the Business Profile stated:
   1. PROPRIETORS [sic] INVOLVEMENT & STAFFING:

Owner/Proprietor-Operates under management with minimal hands on input.

Joanne - Floor Manager

Tahlia - Supervisor

Nadia - Supervisor

Sheila - Supervisor

15 x Casual staff on roster[662]

1. As may be seen, under the heading 'Proprietors Involvement & Staffing', the Business Profile did not contain the pleaded words 'being required by any proprietor/purchaser'.[663]
2. Reserve Capital pleaded that the Management Representation was, relevantly, misleading or deceptive:

... in that the Seascapes IGA requires more than minimal hands on input by the proprietor to operate successfully or at all.[664]

1. The use of 'requires' in the plea[665] quoted immediately above, leads to a question of whether Seascapes' case was that the Seascapes IGA:
   1. before its sale to Reserve Capital, required more than 'minimal hands‑on input' such that the Management Representation was misleading and deceptive at the time of being made in the Business Profile; or
   2. following its purchase by Seascapes, required more than minimal hands‑on input; or
   3. both of the above.
2. The plea at SOC [12], in my view on its most natural reading, sought to negative the Management Representation as a representation of future matters.
3. The defendants deny that the Management Representation, as pleaded, was made[666] and submitted that the words in the Business Profile did not convey the pleaded Management Representation.[667]
4. I note that, if the Management Representation is to be found to have been made as pleaded, the meaning conveyed by the pleaded additional words would have to be found by implication from the whole of the Business Profile or other conduct.
5. I will deal first with the allegation that Seascapes made the Management Representation by the Business Profile, and then deal with the pleas that the other defendants also made the Management Representation in the Business Profile, or subsequently made equivalent representations. I will also return to the future representation as pleaded.
6. With the exception of one paragraph in its written closing submissions,[668] Reserve Capital conducted its case against Seascapes making the Management Representation in the Business Profile from the words actually used.
7. Reserve Capital submitted in its written opening that the Seascapes IGA required, and requires, as a matter of fact, constant management by the owners to operate.[669] That submission was repeated in Reserve Capital's written closing.[670] A natural reading of that submission is that the Management Representation as pleaded was misleading and deceptive both at the time of the Business Profile and following the sale of the Business to Reserve Capital.
8. In Reserve Capital's oral opening submissions, counsel disclaimed that the Management Representation was directed to the position as at the time of sale saying:

... But this is a document for the purposes of selling it on to someone else. It's not saying presently this is what they do...[671]

1. But then, in answer to a question as to whether Reserve Capital was alleging that the Management Representation was not an accurate statement at the time of the Business Profile, counsel said:

... it was misleading or deceptive, was likely to mislead or deceive, in that the [Seascapes IGA] requires more [than] minimal hands-on [management]. It's not [temporally] fixed to them, it actually, it requires, at any time it requires more than that.[672]

1. That lack of clarity in the pleading and from Reserve Capital's counsel as to Reserve Capital's case was obviously unhelpful.
2. Ms Piggott and Lightwest Investments, in their written opening, submitted that the additional words pleaded 'being required by any proprietor/purchaser' changed the meaning from a present‑tense description of the involvement of the current proprietors at the time of the Business Profile to a broader future statement.[673] As will be seen, I accept this submission.
3. The defendants' submission was that the pleaded representation could not be established[674] and no case had been put by Reserve Capital which falsified the statement of 'present fact' made in the Business Profile. They submitted:

[Reserve Capital] does not allege that, in the 2015 financial year, [Mr or Ms] Piggott provided more than minimal hands-on input.[675]

1. Ms Piggott and Lightwest Investments submitted that the words in the Business Profile against the background of all the surrounding circumstances did not convey the Management Representation as pleaded.[676]
2. As will be seen below, I have found that:
   1. the Management Representation as pleaded was not made;
   2. the actual words used in the Business Profile were a representation of the position at the time of the Business Profile; and
   3. the Business Profile, in this respect, did not make a representation as to future events.
3. Further, in my view, the Management Representation as pleaded was a representation as to future matters. That is, the additional words pleaded (which did not appear in the Business Profile) made, in my view, the representation one as to future matters. The use of 'any proprietor/purchaser' distinguishes the representation from being about the (then) current proprietor.
4. I have reached these conclusions after determining the meaning of the words used in the full context of the target audience and the entirety of the Business Profile.
5. However, because of the lack of clarity in the way the case was pleaded and presented, I have gone on to consider whether the words actually used in the Business Profile were misleading and deceptive at the time of the Business Profile.
6. Further, although I do not need to resolve this question, if the words actually used in the Business Profile were not misleading and deceptive at the time of the sale, then it may readily be concluded, in the ordinary course, that there was a reasonable basis for the making of any future representation to that effect.
7. I have considered the question in [628] above in the event that I am wrong and the Management Representation as pleaded was made and was directed to the time of the Business Profile; i.e. while Seascapes owned the Business.
8. As will be seen, the result of that consideration disposes of the contention that the Management Representation as pleaded was misleading at the time of the Business Profile as to the then current state of affairs.
9. Before turning to the meaning or meanings of the words used, I note that Reserve Capital submitted for the first time in its written closing submissions that Seascapes' making of the Management Representation was to be implied from:
   1. the absence of wages for the owner in the financial statements; and
   2. the absence from the add back schedule of wages for management time expended by the owner/proprietor.[677]
10. I do not consider that the allegation of the Management Representation being made impliedly in the Business Profile in these ways was part of Reserve Capital's pleaded case; nor part of the case it, or the parties, ran in the trial. Further, I would not allow it to be introduced by three lines in one paragraph in Reserve Capital's written closing.
11. In any event, I do not accept the submission on its merits. I do not think that the implication is available from the two suggested 'absences'. I do not see any necessary or particular connection between the wages an 'owner' receives from a business and the time that they spend 'hands-on' at or in the business. One is not saying anything about the other.
12. Further, the owner of the Business was Seascapes. One would not expect the corporate owner to be paid a wage in any circumstances. That Mr and Ms Piggott (assuming they are the relevant, natural persons behind the 'owner') are, or are not, paid a wage by the Business does not say anything necessarily about the amount of time they spent 'hands‑on' in or at the Business.
13. I do not accept the submission made as to the implication to be drawn from the 'absences'.

D.1.2 The meaning or meanings of the words used

1. The relevant words actually used in the Business Profile are quite imprecise.
2. In Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (Tobacco Institute),[678] the Full Federal Court considered imprecise written words, and said that the first task was to identify what the meaning or meanings of the words is.[679]
3. Where a statement made is capable of more than one meaning, the applicant may succeed if their contended for meaning was reasonably open and was misleading and deceptive: Tobacco Institute;[680] CPA Australia Ltd v Dunn;[681] Caffey v Leatt-Hayter [No 3];[682] Telstra Corporation v Singtel Optus;[683] ACCC v Coles Supermarkets.[684]
4. In Tobacco Institute, Hill J classically stated:

Where, as in the present case, the advertisement is capable of more than one meaning, the question of whether the conduct of placing the advertisement in a newspaper is misleading or deceptive conduct must be tested against each meaning which is reasonably open. This is perhaps but another way of saying that the advertisement will be misleading or likely to mislead or deceive if any reasonable interpretation of it would lead a member of the class, who can be expected to read it, into error.[685] (citations omitted)

1. As Allsop CJ stated in ACCC v Coles Supermarkets:

... Language, especially advertising, seeking to raise intuitive senses and associations, can have its ambiguities and subtleties. The task of evaluating the objective character and meaning of the language in the minds of reasonable members of the public is not necessarily one that will be assisted in any cost-effective manner by calling members of the public. The question is one for the court.[686] (citation omitted)

1. As made plain in cases such as ACCC v Coles Supermarkets and Tobacco Institute (including from the passages quoted immediately above), the question of the meaning or meanings of the words used is to be assessed by reference to the person, persons or class of persons to whom the representations are directed.

1. It is trite that the context in which any representation is made is significant. As, of course, are the words used and, if in writing, the entirety of the document in which they appear.
2. In my view, the context relevant to determining the target class of the Representations in the Business Profile is informed by the following:
   1. the Business Profile, on its face, was prepared and circulated as a first information document in a sale process;
   2. what was being sold was a supermarket business;
   3. the Business, although said to be operating 'under the national IGA banner'[687] was a stand‑alone supermarket;
   4. the supermarket was a newer one having commenced trading in September 2013;[688]
   5. the supermarket was located in a suburban area;
   6. the area of the Premises from which the supermarket was conducted was 860 square metres;[689]
   7. the opening hours of the Business were said to be 7 am to 9 pm seven days a week;[690] and
   8. the asking price of the Business was $950,000 plus stock at value.[691]
3. That provides, in my view, the relevant context to consider both the target recipients and the meaning or meanings of the actual words used in the Business Profile which I quoted in [609] above.

1. Taking that context into account, I consider that the class of persons to whom the Business Profile was addressed had the following features:
   1. they were interested in buying a suburban, stand‑alone supermarket of about that square meterage with long opening hours on each day of the week;
   2. the purchase price, while significant, was not such as to mean that, after the possibility of finance is included, only a very small group of potential purchasers would read the Business Profile (for example, and obviously enough, a purchase price of $10 million would suggest a much smaller group of potential purchasers);
   3. correspondingly, the purchase price suggests that a broad range of potential purchasers may be interested in the Business, including those who had run a supermarket business previously and those who had not;
   4. as the Business Profile (in its body) ran for six pages and offered (upon request) four appendices, one would expect that the potential purchasers would read the Business Profile reasonably closely. That might be contrasted with the cases which consider how much attention a wider target audience might give to, for example, a one page newspaper advertisement; and, further to this point;
   5. it contained a summary of financial information (such as Gross Revenue and EBITDA[692]) and a summary of profit and loss statements for two previous financial years.[693]
2. I find that the Business Profile was prepared to be read by such potential purchasers and was supplied to Mr Satyawan as such a person.
3. The Business Profile also stated that the following additional items were available on request:
   1. Profit and Loss 2014 to 2015;
   2. Department History Report - 1 July 2014 to 30 June 2015;
   3. Department History Report - September 2015 quarter; and
   4. Plant & Equipment List.[694]
4. From the face of the Business Profile, I draw the inference that those four items were not attached to the Business Profile. However, it appears that the Business Profile sent to Mr Satyawan annexed those four items as they were included in the exhibit tendered in his evidence.[695]
5. For present purposes, I think it is appropriate to consider the class or group of persons receiving the Business Profile on the assumption that they, like Mr Satyawan, also received the four additional items.
6. The Business Profile was not made available to the public at large. I find that it was intended to be, and was, distributed to a class of persons who might be described as potential purchasers for the Business with the features I identified in [646] above. And, I find, that is the context in which Reserve Capital came to receive the Business Profile and 'receive' the conduct via the statements made in it.
7. At that time there is no evidence to suggest, and I do not find, that any of the defendants knew of Reserve Capital or Mr Satyawan. Hence, I consider it appropriate to consider the target audience of the Business Profile (and the four appendices), in the way described above, rather than incorporating any particular features or characteristics of Reserve Capital or Mr Satyawan.

1. I now turn to the question of what meaning or meanings would be drawn or understood by reasonable or average members of the group or class to which the Business Profile was directed.
2. Reserve Capital's counsel in answering his rhetorical question of 'what does it mean?' said in opening:

... when you look at the entire context of offering a business ... operates under management with minimal hands-on input means you will only have to have minimal involvement with this investment.[696]

1. The question of what the Management Representation in the Business Profile meant was returned to in Reserve Capital's closing. Counsel's submission was that the Court was to determine:

... [W]hat would it mean to the average person who was in the position of [Reserve Capital] being provided with this document.[697]

1. So much is accepted.
2. Counsel then submitted that the phrase meant:
   1. 'you don't need to worry about it';[698]
   2. '[you] don't have to worry about doing the managing';[699]
   3. the 'business is managing itself';[700]
   4. '[you] might be called on from time to time as the owner';[701] and
   5. '[you] don't have to do the management ... there's already somebody there'.[702]
3. Those closing submissions may reflect Mr Satyawan's evidence as given but seem to me plainly to travel beyond the pleaded Management Representation.
4. As a preliminary observation, it may be seen that Reserve Capital contended, in its closing submissions as set out in [657] above, for a meaning as to an owner's overall or total involvement with, and time requirements of, the Business. The tenor of Reserve Capital's submission was that the entirety of the purchaser's time commitment or involvement would be 'minimal'. While not wanting to isolate any one word from the broader sense, that, in my view, tends to downplay or minimise the effect of the 'input' being described as 'hands‑on'. In my view, the natural meaning of the words used was that it was that particular type of 'input' which was 'minimal'.
5. It may be observed that the meanings contended for by Reserve Capital in closing were principally directed to negativing the alleged Representation as to future matters. Those submissions in closing,[703] then, rather supported counsel for Reserve Capital's opening disclaimer that the Management Representation went to the position at the time of the Business Profile.[704]
6. However, in my view, the natural meaning of the words actually used in the Business Profile, in context, is that it was making a statement or a representation as to what the then current position was as to the 'proprietor's involvement and staffing'. I have reached that conclusion principally by reference to:
   1. the heading at Item 5;
   2. the use of the words 'owner/proprietor';
   3. the use of the word 'operates' in the present tense; and
   4. the identification of the particular staff roles (including the use of names for most).
7. That is, I consider and find that the words used in Item 5, in context, were describing what the (then) current owner of the Business was doing.[705]
8. I note that the Business Profile made statements that were both current and historical (see, for example, Items 1, 3, 6, 7, and 9) and as to future matters (see, for example, the second part of Item 2, Item 4, and the second part of Item 12).
9. There is nothing in the rest of the Business Profile, in my view, to suggest that, notwithstanding the textual indicators I have identified from Item 5, the balance of the Business Profile requires a different reading. That is, there is a mix of current, historical and future matters dealt with.
10. My finding is inconsistent with Reserve Capital's contended for meaning to the extent that it is pleaded that the Management Representation was as to future matters.
11. I consider and find that the class of recipients of the Business Profile (with the four appendices) would have understood it in this way.
12. While accepting that the Business Profile was a selling document, that does not, of itself, turn every statement made in it into a statement as to future matters.
13. In considering the meaning of the Business Profile in this respect, I have not considered the evidence of Mr Satyawan. As I understand the authorities, his subjective understanding is irrelevant to the question of whether there was a contravention at the time that Reserve Capital (and Mr Satyawan) received the Business Profile as a member of the class of potential purchasers of the Business.
14. For example, as Beech J (as he then was) noted, in Caffey:

... The meaning actually attributed to the statement by the recipient is relevant to reliance, but not to the objective characterisation task [as to whether the representation is misleading or deceptive].[706]

1. Before coming to the most imprecise word within the actual words used (i.e. 'minimal'), I make the following observations about the actual words used in the Business Profile. That is:
   1. the words clearly suggest some 'hands‑on input' is required from the owner;
   2. it is the operation of the supermarket which is 'under management';
   3. there are three levels of staff disclosed: a floor manager, three supervisors, and 15 casual staff on roster;
   4. the listing of the floor manager and supervisors suggests the owner will not be required to duplicate what they are doing;
   5. 'hands‑on' strongly suggests work at the supermarket in some day to day role; and
   6. that last observation is reinforced by the presence of the named positions being at the supermarket.
2. See, for example, the definition of 'hands-on' provided in the Macquarie Dictionary (6th ed):
   1. practical as opposed to theoretical: hands-on experience in teaching.
   2. requiring or encouraging manual contact or operation: a museum with hands-on exhibits.
3. It may be immediately observed that 'minimal' does not mean nothing or none.
4. That same Dictionary defines 'minimal' as:
   1. relating to or being a minimum.
   2. least possible.
   3. smallest; very small.
   4. negligible; with minimal work.
5. In the context of a stand‑alone suburban supermarket which is operating 14 hours a day, seven days a week, I think the meaning of 'operates under management with minimal hands-on input', in context, is that the owner was not at the supermarket very much time-wise at all to operate it or to manage its operations and staff: as there were already managers and staff running the business of the supermarket at the Business day to day. (It may be accepted that my replacing of 'minimal' by 'very much' in the previous sentence may not add much to the elucidation to the words used).
6. I think the words in context are directed to:
   1. the day to day operations where any owner's input would be required: i.e. at the supermarket via the words 'hands-on';[707] and
   2. it being the place of the supermarket which is managed by staff: via the words 'operates', 'under management' and then the naming and identification of the three levels of management and staff.
7. The words used, in my view, are not apt to describe the entirety of what is required from the owner.[708] I think the references to 'operates', 'management' and 'hands‑on input' suggests that it is the type of management of operations day to day or at the supermarket that was 'minimal'.
8. However, I consider that the reasonable member of the class receiving the Business Profile (and the four appendices) would understand that overall, or in totality, there may well be a greater time or resource commitment required from the owner.
9. I think the words used in the Business Profile, on their face, leave open the possibility that there may be further activities or time commitments 'required' of an owner, but that such tasks or time would not be much required at the supermarket, nor would there be much doing of tasks which were then being performed at the supermarket by the floor manager and three supervisors (or the casual staff on roster).
10. Another matter of significance, in my view, is that notwithstanding what is being described, on its face, as the owner or proprietor's involvement or input, what is being represented is how much the natural persons who are the owners or who are 'behind' the entity or corporate form are required to spend of their own time hands-on.
11. I say that because a distinction is being drawn in the words between those who are 'staff' (i.e. the floor manager, supervisors and casual staff) and the 'owner/proprietor'.
12. So, if for example a company owned the Business (as was the case here) then it would be doing all of the operations and management via its employees and the words used could, literally, not be accurate. So, here, Seascapes, as a corporate entity, could not be described as having minimal hands‑on input because its employees were operating and managing the store.
13. If one were to include (within the 'owner/proprietor') its employees, then the words used in the Business Profile, on their face, would not be capable of a sensible meaning.
14. I consider that the reasonable member of the class receiving the Business Profile would understand that what is being described is the input required from the individuals who ultimately 'owned' the Business, whether individually or through an entity or other corporate form.
15. I think 'minimal' or 'very much' (which I have used to seek to elucidate the former) also take colour from the trading or operating hours of the Seascapes IGA. By way of example only, an hour or two may be considered a 'minimal' time commitment over a normal working week (or a week of extended shopping hours) but would not be in a five‑hour window.

D.1.3 Conclusions as to meaning and the first plea on the Management Representation

1. To summarise my findings from the above discussion:
   1. the words actually used in the Business Profile made a representation as to the position at the time of the Business Profile; i.e. the position of Seascapes as the owner/proprietor;
   2. the additional pleaded words being required by any proprietor/purchaser were not part of the representation made by the actual words used, nor made by any other part of the Business Profile;
   3. the sort of 'hands-on input' which was the subject of the Representation was management of the supermarket's operation at the supermarket and the performing of actual tasks at the supermarket; and
   4. the natural persons behind Seascapes did not need to be at the supermarket very much time-wise at all to operate it or to manage its operations and staff.
2. The above findings are sufficient to dispose of Reserve Capital's case both:
   1. that the Management Representation as pleaded was made; and
   2. that it made a representation as to future matters.
3. Nonetheless, because of the lack of clarity in Reserve Capital's case as I identified above, I will now go on to consider if I am wrong and the Management Representation as pleaded was directed to the time of the Business Profile.

D.1.4 Evidence as to management of the Seascapes IGA at the time of the Business Profile

1. I now turn to consider the evidence given at trial as to how the Seascapes IGA was relevantly run before its sale; and, in particular, the 'input' from Mr and Ms Piggott.

1. Mr Piggott gave evidence that he did not hold a formal position with Seascapes but was 'like, a manager ... to the company'.[709]
2. His evidence was that up until the sale, there was a manager in the store (Ms Nesbitt) who would report to him and Ms Piggott who looked after all of the day to day operations of the Business.[710] Mr Piggott said in his evidence that he did not know why Ms Nesbitt was described in the Business Profile as the 'Floor Manager', as she was the store manager.[711]
3. His evidence was that he 'wasn't involved too heavily in the day to day'[712] of the business but was there predominantly if Ms Nesbitt needed to ask him a question.[713]
4. His evidence was that he spoke with Ms Nesbitt on average two to three times a week but there could be several days where they did not speak at all and then there could be three days consecutively where they spoke quite a bit if needed.[714] Mr Piggott was not challenged on that evidence.
5. In further evidence to that point, Mr Piggott said that to begin with, Ms Nesbitt would have run everything past either him or Ms Piggott but, as trust was built and they understood Ms Nesbitt's capabilities, fewer things needed to be run past them.[715]
6. By way of illustration, Mr Piggott said there would sometimes be a particular issue 'like a fridge broke down or something like that' when he would get more involved and he might 'go as far as ringing a contractor' or perhaps he would help Ms Nesbitt resolve the issue with the knowledge that he had.[716]
7. He said that he was not very involved with the rostering of staff.[717]
8. Mr Piggott gave evidence-in-chief of how stock was ordered and supplied to the Seascapes IGA. In the course of that evidence, it was clear that he had a role, and perhaps the primary role, in dealing with suppliers who went to the Bertram IGA and ordering their items which were not ordered through Metcash or automated ordering systems for both the Bertram IGA and Seascapes IGA. Mr Piggott said because he was already doing the deal buying or investment buying for Bertram IGA there was no additional work in doing that for the Seascapes IGA.[718]
9. Mr Piggott explained that he was involved in 'deal stock' ordering for the Bertram IGA and the Seascapes IGA, and that the Bertram IGA would 'supply' some of those items to the Seascapes IGA.[719] 'Deal stock' were items that, in effect, Mr Piggott was able to negotiate a better price with a supplier for.[720]
10. However, he did not deal with sales representatives who attended at the Seascapes IGA as that was done by Ms Nesbitt or the manager at the time.[721]
11. So his evidence was that he was involved in the ordering of stock, other than stock that Ms Nesbitt would order or that would be ordered automatically for the store.[722]
12. In the course of Mr Piggott's evidence, Reserve Capital appeared to accept that through the use of the Grocery Manager system, the Seascapes IGA purchased 87% of its stock from Metcash.[723] However, as I have noted elsewhere, how the ordering of stock - particularly at the Seascapes IGA - was conducted was not very clear in the evidence before the Court. For example, Mr Piggott was unable to assist with estimating the proportion of stock purchased for the Seascapes IGA from the various sources, including Metcash.[724]
13. Mr Piggott's evidence also was that there were bulk sales made by Seascapes IGA to certain customers, including Kelly Hoang.[725] Mr Piggott's evidence was that he knew Ms Hoang and would meet her at the store by arrangement.[726] His evidence was that Ms Hoang would select items and they would then discuss and negotiate a price.[727] I deal with the evidence about Ms Hoang in more detail below. Its relevance here is only as to the time that Mr Piggott spent at the store.
14. Mr Piggott said that he visited the Seascapes IGA store weekly or maybe twice a week.[728] His evidence was that when he attended, he was there mostly to make sure things were on track, answer any questions, and meet the staff.[729] Mr Piggott was not challenged on that evidence.
15. Mr Piggott was not asked in his evidence‑in‑chief or cross‑examination how much time he spent dealing with the business of Seascapes IGA in a normal week or month, or at all.
16. His evidence was that he had no role in the preparation of Seascapes IGA's financial statements.[730] His evidence-in-chief was that Ms Piggott generally looked after the administrative side of things,[731] and he had no role in dealing with the accounts for Seascapes IGA or making any payments with respect to its business, including payroll.[732]
17. Mr Piggott said that a staff member at the Bertram IGA was doing the payroll for Seascapes IGA, but that it was not a large task as it was relatively automated.[733] That person also completed the BASs for Seascapes.[734]
18. Mr Piggott accepted in cross-examination that there was a regular passing of documentation or information between the Seascapes IGA and the Bertram IGA as he accepted that 'effectively the administration for Seascapes was being run from Bertram'.[735] Obviously, the acceptance by Mr Piggott of such a high level statement in cross‑examination must be considered with all of the other evidence he gave.

1. Ms Piggott's evidence was that Ms Nesbitt:
   1. was the manager of the Seascapes IGA;[736]
   2. 'did everything' at the store;[737]
   3. did the staff rosters and, towards the end, interviewed and hired staff and the staff at the store reported to her; [738] and
   4. ordered stock for the Business and was responsible for opening and closing the store.[739]
2. Ms Piggott's evidence was that a different administration person at the store was responsible for reconciling the banking and taking the banking to the bank.[740]
3. Ms Piggott said that she and Mr Piggott were always contactable by telephone,[741] but that she did not have a great deal to do with the day to day operations of the store and did not attend very often at all.[742] Ms Piggott was not cross-examined on this evidence.
4. Her estimate was that she attended at the store somewhere between twice a year to once a quarter.[743] She would spend about an hour at the Business when she did attend, and predominantly spoke to staff.[744] Ms Piggott was not cross‑examined on this evidence.
5. Ms Piggott said that she approved the weekly payroll run,[745] and accounts payable.[746] In cross-examination, she gave evidence that she spent time at the Bertram IGA overseeing certain tasks, for example payroll and accounts payable for both the Bertram IGA and Seascapes IGA.[747]
6. She said payroll and bookkeeping was done by bookkeepers out of Bertram,[748] who she estimated probably spent about 10 hours a week working on the Seascapes IGA business;[749] in cross-examination, she said it was possibly not even that many.[750]
7. She estimated that she would have spent only a few hours a week working on the Seascapes IGA.[751] Ms Piggott was not cross‑examined on this evidence.
8. Her evidence was that Seascapes maintained its books on the MYOB platform which was maintained by the bookkeepers at the Bertram IGA[752] but Ms Piggott had no role in using that platform at all.[753] Ms Piggott gave evidence that Linda Coulter, who was a bookkeeper at the Bertram IGA, prepared the BASs for Seascapes.[754]
9. Ms Piggott accepted in cross-examination that in 2016, the Seascapes IGA relied substantially on the staff at the Bertram IGA to do bookkeeping, payroll and accounts payable.[755]
10. Ms Piggott was cross-examined on the relevant words used in the Business Profile. Ms Piggott rejected the suggestion that she and Mr Piggott needed to spend a reasonable amount of time managing the Seascapes IGA.[756] Her evidence was that she did not spend a reasonable amount of time managing the store.[757] She further disagreed with the suggestion that she had spent a reasonable amount of her time each week running the two stores, including contributing towards the Seascapes IGA.[758]
11. Despite being questioned at this level of generality, as noted, Ms Piggott was not cross-examined on her evidence as to: how often she attended the store; the time that she spent at the store; or her estimates as to the time that she or others spent working on the business of the store.
12. Ms Piggott further rejected the suggestion that the Seascapes IGA required hands‑on management from the owner or the proprietor and said that she and Mr Piggott had fairly little hands‑on involvement.[759]

1. Ms Nesbitt was employed at the Seascapes IGA in 2013 and initially worked at the check-out. After about six months, when the store manager left, she became the store manager and she finished her employment in about July of 2016 (that is after the purchase of the Business by Reserve Capital).[760]
2. Her evidence was that she, as store manager, opened the store and whoever was the supervisor would close it at night.[761]
3. Her evidence was that she was responsible for generally supervising the staff in the store and interviewing and hiring new staff.[762] Having made the decision to hire someone, she said she got permission from either Mr or Ms Piggott before employing them.[763] She was responsible for arranging the rosters.[764]
4. She explained that if there was something that did not work then she would call Mr or Ms Piggott who would deal with the problem or have whoever was fixing the problem come down to the store.[765] If it was something quite serious then Mr Piggott would come down to the store himself.[766]
5. She said that she dealt with the suppliers' representatives who came to the store and ensured that the store maintained the right stock.[767] She gave as an example of such representatives, the representatives of meat suppliers that came into the store.[768] She described her authority to order as being for 'daily, weekly orders' and that anything new or different would be referred on.[769] She said she did not have much to do with the Metcash ordering.[770]
6. Her evidence was that during her time as manager, she saw Mr Piggott in the store once a week or once a fortnight and he spent an hour or sometimes more depending on what was needed of him.[771] She was not challenged on that evidence.
7. Her evidence was that she saw Ms Piggott maybe once every six months or so.[772] She was not challenged on that evidence.
8. Her evidence was that she spoke to Ms Piggott on the telephone whenever they needed to reach her.[773]
9. Her evidence was to the effect that there was no average number of times she would contact Mr or Ms Piggott being that in some weeks she might have called them 20 times, and in the following week only once.[774] She then offered that maybe in an average week it would be five times.[775]
10. Ms Nesbitt was not challenged on any of the above evidence.
11. I note that there was no suggestion on the part of Reserve Capital that Ms Nesbitt was other than an entirely credible and reliable witness and I find that she was. I accept her evidence in full.

D.1.5 Findings as to whether the words used were misleading or deceptive at the time of the Business Profile

1. In closing, Reserve Capital:
   1. accepted that the part of the statement which said 'operates under management' was accurate;[776]
   2. submitted that the words of the Business Profile meant:

'... that you don't need to worry about it. The business operates under management. It is managed.[777]

... the proprietor doesn't need to worry about it. It operates;'[778]

don't have to worry about doing the managing;[779]

the business is managing itself;[780]

you might be called on from time to time as the owner;[781]

you don't have to do the management - there's already somebody there;[782]

...

1. submitted that the statement meant that the incoming purchaser would understand that they did not 'have to worry about doing the managing'.[783]
2. Seascapes and Mr Piggott in their written closing submitted that:
   1. Ms Nesbitt managed the store;[784]
   2. the staff at the store reported to Ms Nesbitt and she arranged the rostering and was principally responsible for interviewing and hiring new staff;[785]
   3. Ms Nesbitt dealt with suppliers and representatives who came to the store;[786]
   4. Mr Piggott's evidence was (and, being uncontradicted and corroborated by Ms Nesbitt, should be accepted) to the effect that he visited Seascapes IGA either weekly or twice a week for an hour on average and spoke to Ms Nesbitt on average two to three times a week about various matters;[787]
   5. Ms Piggott's evidence was (and, being uncontradicted and corroborated by Ms Nesbitt, should be accepted) that she visited the Seascapes IGA once or twice a year for about an hour and was contactable by phone; and that she approved the weekly payroll run and dealt with queries that arose for a few hours a week;[788]
   6. the Seascapes IGA business did operate under management;[789]
   7. in the context of the supermarket business 'hands‑on input' must refer to actual work in the store;[790] and
   8. the Management Representation at the time of the Business Profile was not misleading or deceptive.[791]
3. As I have identified in [679] - [685] above, I consider that it is the time and involvement of Mr and Ms Piggott which is relevant to the determination of whether the Management Representation was misleading or deceptive at the time of the Business Profile.
4. That is because they were the natural persons ultimately behind the ownership of the Business.
5. I find relevantly that at the time of the Business Profile:

1, Mr Piggott was involved in ordering certain items for both the Bertram and Seascapes IGAs which, I infer from all of the evidence, did not take him that much time;

1. Mr Piggott (and Ms Piggott) were available to Ms Nesbitt by telephone. Ms Nesbitt contacted them with varying frequency which could be between once and 20 times in a week;
2. Mr Piggott did attend the Business from time to time to assist with a particular problem at the store but there was no evidence to suggest that occurred regularly or was particularly time consuming;
3. Ms Piggott supervised the payroll and accounts payable for Seascapes IGA, but not at the store;
4. she spent only a few hours a week working on the Seascapes IGA Business;
5. Ms Piggott was not involved in the day-to-day maintenance of the books of the Seascapes IGA or the preparation of its BASs or financial statements; and
6. bookkeeping and the preparation of BASs and the financial statements of Seascapes IGA was done by staff at the Bertram IGA.
7. I consider that, at the time of the Business Profile, Mr and Ms Piggott's input at the Seascapes IGA was accurately described by the words used: 'with minimal hands-on input'. That is, if the Management Representation was directed to the position at the time of the Business Profile, then I do not find it was misleading and deceptive or likely to mislead or deceive.
8. In all of the circumstances, particularly by reference to the factors I identified above (i.e. it being directed to the 'owner/proprietor'; it being 'hands‑on' at the supermarket; and it being directed at 'operations'), I do not find the words used in the Business Profile to be misleading and deceptive or likely to mislead or deceive a reasonable member of the group which might receive the Business Profile as to the position at the time of the Business Profile.

D.1.6 Was the Management Representation made as to a future matter

1. As noted above, Reserve Capital pleaded that the Management Representation conveyed a representation as to future matters being:

... the purchaser of the Seascapes IGA could expect to achieve in the future similar outcomes or results to those represented.[792]

1. The additional words pleaded 'being required by any proprietor/purchaser' in SOC [7.3], supported the allegation made in SOC [8.5] to the effect that the Management Representation conveyed a representation as to future matters. The defendants separately denied that plea.[793]
2. Reserve Capital further pleaded that 'insofar as [it conveyed] an additional representation being in relation to future matters', it was 'taken to be misleading' by virtue of s 4(1) of the ACL or s 4 of the FTA.[794]
3. As noted above, in my view, the Management Representation as pleaded, if made, was a representation as to future matters. That is, the additional words pleaded (which did not appear in the Business Profile) made, in my view, the representation one as to future matters.
4. Further, as noted above, I do not find that the Management Representation as pleaded was made. And, I have found that the actual words used did not convey a representation as to a future matter.

D.1.7 Representations to the same effect as the Management Representation made outside of the Business Profile

1. In addition to its pleas that Seascapes made the Management Representation in the Business Profile (whether as to the contemporary position or as to a future matter), Reserve Capital pleads that through Mr Piggott as its agent, Seascapes made representations to the same effect as the Management Representation on four occasions.[795]
2. As will be seen in D.1.8 below, each of those cases against Mr Piggott fails. Accordingly, the cases against Seascapes, which are dependent on Reserve Capital succeeding against Mr Piggott, cannot succeed. In all of the circumstances, I do not need to determine whether Mr Piggott was, relevantly and effectively, the agent of Seascapes.
3. Further, Reserve Capital pleads that Seascapes, through Ms Piggott as its director and agent, made a representation to the same effect as the Management Representation on three occasions.[796]
4. As will be seen in D.1.9 below, those cases against Ms Piggott fail. Correspondingly, the case against Seascapes, based on Reserve Capital succeeding against Ms Piggott, cannot succeed. In all of the circumstances, I do not need to determine whether Ms Piggott was, relevantly and effectively, the agent of Seascapes.

D.1.8 The Management Representation cases pleaded against Mr Piggott

1. Reserve Capital pleads that Mr Piggott made representations to the same effect as the Management Representation (made, as pleaded, in the Business Profile) at the times or in the manner of the following:[797]
   1. in late January or early February 2016, in an oral conversation, by saying to Mr Satyawan and Ms Dewi that the Business Profile was accurate;[798]
   2. between late January and March 2016, in an oral conversation, by repeating the Management Representation to Mr Satyawan and/or Ms Dewi;[799]
   3. on 4 February 2016, by providing Mr Satyawan with an 'Add Back Schedule'[800] which made the Management Representation;[801] and
   4. on 8 February 2016, by providing Mr Satyawan with Seascapes' 2015 financial statements.[802]
2. As to the first: I am not positively persuaded that in late January or early February 2016, Mr Piggott confirmed to Mr Satyawan and/or Ms Dewi that the Business Profile was accurate. In closing, I was not referred by Reserve Capital, in writing or orally, to any evidence of Mr Satyawan or Ms Dewi that Mr Piggott represented to them in an oral conversation at that time that the Business Profile was accurate.
3. On my review of their evidence, it does not appear that either gave evidence which would support this plea.
4. Further, Mr Piggott was not cross-examined as to whether he had orally confirmed to Mr Satyawan and/or, Ms Dewi that the Business Profile was accurate.
5. As to the second: There were three specific occasions from the evidence where Mr Piggott was present with both Mr Satyawan and Ms Dewi; namely (on Reserve Capital's evidence) at the meeting at the Seascapes IGA on 30 January 2016; on 11 February 2016 at the Ardross coffee shop; and at the stocktake on 20 March 2016.
6. As set out in my findings above, in addition to the above three meetings, Mr Satyawan also gave evidence about a fourth meeting with Mr Piggott at the McDonald's in Myaree.
7. As to what was discussed at each of those four meetings, I have not found that the Management Representation, or a representation to that effect, was repeated by Mr Piggott.
8. It may be that there were conversations outside of those meetings. From the evidence led, however, I am not persuaded that the Management Representation as made in the Business Profile was repeated by Mr Piggott to Mr Satyawan and, or, Ms Dewi as put in Particular (3) to SOC [9.3].
9. As to the third: I do not consider that the 4 February 2016 email[803] which included (slightly adjusted) 'Add Backs' made a representation to the same effect as the Management Representation.
10. Reserve Capital's written opening submissions did not seek to explain how the email of 4 February 2016[804] made a representation to the effect of the Management Representation; nor did its oral submissions.
11. In a footnote in Reserve Capital's written closing, it appears that Reserve Capital's submission is that:

... just because additional documents from [Mr Piggott] did not add anything to the [Business] Profile does not mean they did not make similar representations, if only by confirmation, as the earlier material.[805]

1. In its written closing, Reserve Capital submitted:

The Management Representation, at least as to the future (as pleaded in SOC 15), in that the financial statements do not show any director or other fee to [Ms Piggott] nor any salary or wage to [Mr Piggott], and nor was any addback for this non-paid management shown in the [Business] Profile, which reasonably interpreted implies that the wages in the [2015] financial statements encompass any work that in the past was undertaken by the management.[806]

1. Mr Piggott's email of 4 February 2016[807] substantially mirrored Item 9 in the Business Profile which was headed 'Summary of Profit and Loss Statements'.[808]
2. The pleaded Management Representation did not rely on Item 9 in the Business Profile. To the extent that Mr Piggott's email of 4 February 2016 confirmed or altered (in a minor respect) Item 9 in the Business Profile, it may be readily accepted that the latter email repeated the figures and representations from Item 9 in the Business Profile.
3. However, on its face, the email of 4 February 2016 does not, in my judgement, touch on the matters in Item 5 of the Business Profile.
4. As I set out above, from the perspective of what must have been represented, I do not see any necessary or particular connection between firstly, the wages an 'owner'[809] receives from a business, and secondly, the time that they spend 'hands-on' at or in that business.
5. Further, as set out above, the owner of the Business was Seascapes. One would not expect the corporate owner to be paid a wage in any circumstances. That Mr and Ms Piggott, assuming they are the relevant, natural persons behind the 'owner', are, or are not, paid a wage by the Business does not say anything necessarily about the amount of time they spent 'hands-on' in or at that Business.
6. As to the fourth: I do not consider that Seascapes' 2015 financial statements[810] made a representation to the same effect as the Management Representation.
7. As I understand Reserve Capital's submissions, it is submitted the 2015 financial statements sent by Mr Piggott to Mr Satyawan[811] made a representation to the effect of the Management Representation on the same basis as Mr Piggott's email of 4 February 2016 did so.
8. By parity of reasoning, I do not consider that Seascapes' 2015 financial statements did repeat, or make a further representation to the effect of, the Management Representation.
9. Based on those findings, I do not find that Mr Piggott made the Management Representation or representations to that effect as pleaded.

D.1.9 The Management Representation cases pleaded against Ms Piggott

1. Reserve Capital pleads that Ms Piggott made the Management Representation in the Business Profile and, or, was responsible for the Management Representation in the Business Profile:[812]
2. As I have held that the claim concerning the Management Representation (as pleaded) in the Business Profile fails, so must this claim against Ms Piggott.
3. Reserve Capital further pleaded that Ms Piggott made representations to the same effect as the Management Representation on three occasions, they being:
   1. by acting within the scope of her actual or apparent authority in her position as the sole director of Seascapes, by providing the information for compiling the 2015 financial statements of Seascapes, which made the Management Representation;[813]
   2. by acting as director of Seascapes in authorising Ascend to distribute the Business Profile; [814] and
   3. at the meeting at the Ardross coffee shop on 11 February 2016, by adopting or acquiescing to Mr Piggott making a representation to the effect of the Management Representation, and at the same meeting adopting or acquiescing Mr Piggott's supply of the 4 February 2016 email with 'Add Backs'.[815]
4. As to the first: if Particular (1) to SOC [9.4.1] is asserting that the inclusion of the 2015 financial statements (in summary) in the Business Profile made the Management Representation, then for the reasons I have already given above, I would dismiss this claim against Ms Piggott.
5. However, it may be that Particular (1) to SOC [9.4.1]is asserting that Seascapes' 2015 financial statements, separately, made a representation to the effect of the Management Representation. Again, for the reasons I have given above, I would dismiss this claim.
6. As to the second: Particular (2) to SOC [9.4.1] adds nothing to the plea made against Ms Piggott in SOC [8.4.2] which I dismissed above. I also would dismiss Particular (2) to SOC [9.4.1].
7. As to the third: for Reserve Capital to succeed in this plea, it must be first established that Mr Piggott made a representation to the effect of the Management Representation:
   1. at the meeting on 11 February 2016; and
   2. by the supply of the 4 February 2016 email with 'Add Backs'.[816]
8. If Mr Piggott is found not to have made the representation to that effect on either occasion, then Ms Piggott could not 'adopt or acquiesce' in its making.
9. For the reasons set out above, I have found that Mr Piggott did not make a representation to the effect of the Management Representation in either of those ways relied on in Particular (3) to SOC [9.4.1]. It necessarily follows, then, that Ms Piggott could not have adopted, or acquiesced in, Mr Piggott's making of a representation to the effect of the Management Representation.

D.1.10 The Management Representation cases pleaded against Lightwest Investments

1. Reserve Capital pleads a number of cases against Lightwest Investments in relation to the Management Representation and representations to a similar effect.
2. It appears that Reserve Capital asserts it had pleaded a case that Lightwest Investments itself made the Management Representation in the Business Profile.[817]
3. Reserve Capital pleaded that Lightwest Investments breached various statutory provisions by its entry into the Lease with Reserve Capital.[818] There then follows a salad of cross-referencing in SOC [19.1] against Lightwest Investments purportedly setting out the premises on which that plea is made.
4. Notwithstanding that, there is not, to my reading, a plea (whether in the salad or not) that Lightwest Investments made the Management Representation in the Business Profile. That is not the pleaded case at, for example, SOC [8.1.3] and [19.1.2]. Indeed, the plea at SOC [8.1.3] when read with [7.2] naturally is a much more limited plea as to what Lightwest Investments represented in the Business Profile.
5. However, notwithstanding the wording of its pleading, if Reserve Capital did make a plea that Lightwest Investments made the Management Representation in the Business Profile then, as a matter of substance, I would not find that plea against Lightwest Investments.
6. As I understand the propositions put by Reserve Capital, at their highest, Lightwest Investments relevantly made representations in the Business Profile because:
   1. the Business run by Seascapes had to be run at the Premises;
   2. a purchaser of the Business needed to enter into a lease of the Premises with the owner, Lightwest Investments;
   3. the lease of the Premises was referred to in the Business Profile;
   4. the purchase of the Business was linked to the purchaser taking a lease and, so, the Business Profile, in effect, was a package;
   5. the package was being offered by Seascapes and Lightwest Investments at the same time in the Business Profile;[819]
   6. representations were made in the Business Profile that the Business could, effectively, afford the rent being offered on the lease;[820] and
   7. as a result of all of the above, Lightwest Investments should be taken as having made the Representations complained of by Reserve Capital in the Business Profile.
7. Those propositions were sought to be buttressed, as I understood it, by the following commercial matters:
   1. all of the interests of the defendants (especially Seascapes and Lightwest Investments) were the same in, presumably, getting the sale of the Business and a lease 'done'; and
   2. the relationship between all of the defendants was common or close or aligned.[821]
8. The first three and possibly the fourth propositions in [781] above may be accepted. The fifth and sixth propositions might be thought to be contestable, and the seventh proposition is a conclusion.
9. The matters which I have said Reserve Capital sought to buttress other propositions might be accepted without being probative as to whether Lightwest Investments made any relevant representation in the Business Profile.
10. As said, the third proposition, (that the lease was referred to in the Business Profile), may be accepted.
11. The Business Profile:
    1. under Item 2 'the Offer' included a second sentence:

Additionally, the lease for the business premises is available to takeover to facilitate the purchase;[822]

1. at Item 4, terms were proposed for the lease;[823] and
2. in Item 9,[824] which was the Summary of Profit and Loss Statements, there was an 'add back' to include what the rent had been for the 2014 and 2015 financial years, (but which was less than the terms of the lease proposed at Item 4).
3. For the purposes of the present consideration, I accept that Items 2, 4 and the relevant 'add back' in Item 9 might, at the highest, be taken to be a representation by Lightwest Investments. To be clear, I am not sure that is correct, but I have assumed it is for present purposes.
4. Even on that assumption, I do not think that reading the Business Profile as a whole leads to the finding that Lightwest Investments made any representation other than those possible three I have identified.
5. Of course, on the face of the Business Profile, there is no relationship disclosed between Seascapes and Lightwest Investments. And, in the Items identified with the historical or proposed lease arrangements, there is nothing said at all that supports or repeats the Management Representation.
6. I do not think any person reading the Business Profile, in context and from a member of the class I have sought to identify above, would have reached the conclusion that the (present or future) lessor was making any representation as to how the lessee supermarket operator was managing its business.
7. Even if it be accepted that a normal reading of the Business Profile was that the Business was generating enough profit to pay the rent, that does not have effect, in my judgement, of Lightwest Investments making the Management Representation. In any event, I do not accept the implicit proposition that statements as to the performance of the Business made a representation to the effect of the Management Representation, as pleaded.
8. Reserve Capital then pleads that Lightwest Investments knew that the representations to the effect of the Management Representation were made to Reserve Capital and that it was relying on those representations in entering into the Lease.[825]
9. That plea might support some of the other ways the case is pleaded against Lightwest Investments but does not, in my view, support the plea that Lightwest Investments made the Management Representation, or any other representation, in the Business Profile.
10. Even if Reserve Capital did plead that Lightwest Investments made the Management Representation in the Business Profile then, for the above reasons, I do not find that Reserve Capital succeeds in that plea.
11. A second way that Reserve Capital puts its claim against Lightwest Investments is that Lightwest Investments was involved in the contraventions by Seascapes and Mr and, or, Ms Piggott.[826]
12. This plea, obviously enough, depends on Reserve Capital succeeding in its 'primary' claims against one of Seascapes, Mr and, or, Ms Piggott. For the reasons I have set out above, I do not find that Reserve Capital has succeeded in its claims against any of those defendants and, so, necessarily its plea of knowing involvement or liability against Lightwest Investments fails.
13. Further, I do not need to consider and decide the limitation defence raised by Lightwest Investments against the accessorial liability claim.[827]
14. A third way that Reserve Capital pleads that Lightwest Investments made representations to the effect of the Management Representation is through:
    1. Mr Piggott as its agent;[828] and
    2. Ms Piggott as its director.[829]
15. Those pleas depend on Reserve Capital relevantly succeeding in its claims against Mr Piggott[830] and, or, separately, Ms Piggott.[831]
16. As Reserve Capital has failed to establish its claims, relevantly, against Mr Piggott and Ms Piggott, it cannot succeed in these ways against Lightwest Investments.
17. That means that I do not need to determine whether Lightwest Investments is liable via Mr Piggott, relevantly, acting as its agent, nor whether Lightwest Investments is liable via Ms Piggott, relevantly, acting as its director.

1. In considering the evidence of Reserve Capital, it must be borne in mind that Ms Dewi's unchallenged evidence was that she did not read the Business Profile at any time.
2. Mr Satyawan's evidence is relevant to:
   1. the making of representations to the effect of the Management Representation outside of the Business Profile; and
   2. Reserve Capital's reliance on the Management Representation.
3. Leaving aside reliance for the moment, Mr Satyawan's evidence may have gone to Reserve Capital's pleas as to representations to the same effect as the Management Representation being made on subsequent occasions, namely:
   1. orally by Mr Piggott in late January or early February 2016;[832]
   2. orally by Mr Piggott between late January and March 2016;[833]
   3. on 4 February 2016, by Mr Piggott providing the 'Add Back Schedule';[834]
   4. on 8 February 2016, by Mr Piggott providing Seascapes' 2015 financial statements;[835] and
   5. at the Ardross coffee meeting on 11 February 2016.[836]
4. I have dealt elsewhere with Mr Satyawan's evidence as to whether a representation to the effect of the Management Representation was made other than by the Business Profile; I do not repeat that discussion here.
5. As found in [30] above, the Business Profile was sent to Mr Satyawan by Ascend in about the middle of December 2015 (with the four appendices).
6. Mr Satyawan's evidence-in-chief was that he reviewed the Business Profile briefly at the time.[837]
7. Mr Satyawan gave evidence that from his review he had understood that the Business Profile was saying that:
   1. the Business was 'under full management';[838]
   2. 'it's a passive income';[839] and
   3. that the Business ran 'by itself'.[840]
8. Even assuming, for present purposes, that I accept Mr Satyawan's evidence as to how he read the Business Profile at the time, his reading is not in accordance with the meaning that I have found above that a reasonable or average member of the class to which the Business Profile was directed would have understood the actual words used meant.
9. That is, Mr Satyawan's evidence is, to the effect, that Reserve Capital relied on a representation which was not made in the Business Profile.

D.1.12 Disposition of the Management Representation

1. For the above reasons, I dismiss Reserve Capital's cases against all of the defendants based on the Management Representation.

D.2.1 The first plea on the Profit Representation

1. the Business Profile represented that in the 2015 financial year Seascapes IGA had returned:

(a) a gross profit of $1,288,840; and
>
> (b) a gross profit margin of 34.9%;[841]

(these were defined as the Profit Representation); and

1. Seascapes made the Profit Representation.[842]
2. It is important to bear in mind that the Profit Representation, as defined in the pleading, was made in the Business Profile. I have treated the Profit Representation, as defined, as the 'first plea' against Seascapes.
3. As will be seen, there are other, subsequent, pleas that representations to the effect of the Profit Representation (as made by the Business Profile) were made in other ways and on other occasions.
4. As will be seen, the Profit Representation is pleaded as a representation, effectively, of the 'historical' position of Seascapes in the 2015 financial year and as a representation going to future matters.
5. I will start with the 'historical' Profit Representation made by Seascapes in the Business Profile.

D.2.2 The pleaded case as to why the 'historical' Profit Representation was misleading or deceptive

1. Reserve Capital alleged that the Profit Representation was misleading or deceptive or likely to mislead or deceive in seven ways; which fall into four groups.
2. The first group is that the sales and/or the cost of sales recorded in Seascapes' financial statements for the 2015 financial year were inaccurate by reason of the following two matters:

13.1.1 The 2015 financial statements for Seascapes IGA had been inflated by the inclusion of sales recorded as valued at $472,252 for which there were no corresponding product or goods recorded as having in fact been sold by Seascapes IGA and/or by reason that the financial statements failed to account for the cost of any such sales.

13.1.2 The 2015 financial statements for Seascapes IGA had been inflated by the removal from the costs of sales of an amount of $279,380.42 for purchases of cigarettes. [843]

1. The second group is that the Seascapes IGA financial statements for the 2015 financial year were misleading by the inclusion of the costs of sales in the amount of $694,380.71 in the circumstances of three further pleas which appear at SOC [13.2.1.1] ‑ [13.2.1.3].
2. The third group is that the financial statements for the 2015 financial year were misleading by including dealings with a single customer, Ms Hoang, to a value of $281,737.65 (out of sales recorded in the sum of $472,252, pleaded in SOC [13.1.1]) such not being in the usual course of trade as a retail supermarket.[844]
3. The fourth group is that the gross profit margin of Seascapes IGA for the 2015 financial year was not 34.9%.[845]

1. The plea at SOC [13.1.1] is problematic and caused difficulties at the trial.
2. It is helpful to bear in mind that in the following discussion the figure pleaded is a figure for bulk keyed sales entered manually, rather than sales which are scanned in, at the check-out. Further, unless otherwise indicated the keyed sales were made of items sold 'in bulk': for example, to a single customer such as Ms Hoang.
3. SOC [13.1.1] has to be read with SOC [13.2.2], which pleaded:

The sales pleaded in [13.1.1] include dealings with a single customer, [Mr] and/or [Ms] Hoang, to a total value of $281,737.65 such not being in the usual course of trade as a retail supermarket.

1. The essential problem was whether the plea in [13.1.1] alleged that the sales recorded to the value of $472,252 (being a subset of all sales recorded) had not actually occurred. Reserve Capital's counsel either did not know what its position was, or did not wish to commit to a clear position, for much of the trial.
2. One of the resulting difficulties was that if the allegation was that those sales had not, in fact, occurred, then recording those sales in the 2015 financial statements appeared to be an allegation of a fraud (but without the requirements for such a pleading having been complied with).
3. In the next paragraphs, I describe how this matter was agitated through the trial to explain the history of the position Reserve Capital finally adopted, and which I have determined in these reasons.
4. The difficulties were first articulated at trial as Seascapes and Mr Piggott began their oral opening.[846] It is to be noted that the defendants opened after Reserve Capital had closed its case: these were not sequential openings before Reserve Capital's evidence was called.
5. The matter was identified by counsel for Seascapes and Mr Piggott to head off any Jones v Dunkel[847] submission which may be made against them by reason of their not calling Ms Hoang to give evidence.[848]
6. Seascapes and Mr Piggott submitted that Ms Hoang, although served with a subpoena to appear as a witness, was not going to be called by those defendants, in part, because there was: 'no longer an issue in the case about whether the bulk purchases from the Seascapes [IGA] by Ms Hoang were genuine. It's accepted they were genuine ...'[849]
7. Further, the defendants submitted that there had once been a pleaded case putting in issue the genuineness of bulk sales to Ms Hoang, but that had been subsequently amended out of the case.[850]
8. Counsel for Seascapes and Mr Piggott summarised his understanding of the case pleaded at SOC [13.1.1] and [13.2.2] (as at the trial) being that: the bulk sales to Ms Hoang had occurred but were not in the usual course of trade as a retail supermarket and that the 2015 financial statements had not properly recorded matters relating to those goods.[851] The submission was that the only way those pleas could be read was that there was an acceptance that the bulk sales were genuine as there was a 'positive averment' that the sales occurred.[852]
9. The submission continued that the plea that no goods (in that amount) were in fact sold had been amended 'out' by the inclusion, principally, by the words 'recorded as having ...' in [13.1.1] in the amended substituted statement of claim filed 13 May 2020 (May 2020 SOC).[853]
10. Counsel for Ms Piggott and Lightwest Investments had a similar understanding as to the effect of the amendment to the pleading in SOC [13.1.1].[854]
11. At that time, I left it to the parties to confer and decide whether it was necessary for Seascapes and Mr Piggott to go into evidence as to Ms Hoang's position.[855]
12. To understand the defendants' submissions in this respect, it is useful at this point to trace the relevant plea through the history of the SOC. There have been the following iterations of the statement of claim filed in the action:
    1. the original statement of claim indorsed on the writ filed on 26 October 2018 (October 2018 SOC);
    2. the amended statement of claim filed on 5 December 2018 (5 December 2018 SOC);
    3. the re-amended statement of claim filed on 19 December 2018 (19 December 2018 SOC);
    4. the further re-amended statement of claim filed on 28 March 2019 (March 2019 SOC);
    5. the amended further re-amended statement of claim filed on 30 March 2020 (March 2020 SOC);
    6. the May 2020 SOC;
    7. the re-amended substituted statement of claim filed on 17 August 2021 (August 2021 SOC); and
    8. the SOC (which was the statement of claim at the trial).
13. It does not appear that a substituted statement of claim was filed between the March 2020 SOC and the May 2020 SOC. Consistently with that, the Papers for the Judge filed on 19 February 2024, did not refer to any other statement of claim apart from the iterations set out in [836] above.
14. The October 2018 SOC pleaded:

The Profit Representation was misleading or deceptive or was likely to mislead or deceive in that the sales recorded in the financial statements for Seascapes IGA for the year June 2015 were inaccurate.

PARTICULARS

The 2015 financial statements for Seascapes IGA had been inflated by the inclusion of sales recorded as valued at $476,305 for which there were no corresponding product or goods in fact sold by Seascapes IGA.[856]

1. That plea remained unamended in the following iterations: 5 December 2018 SOC, 19 December 2018 SOC, and March 2019 SOC.
2. On 8 July 2019, the defendants sought particulars of the March 2019 SOC. Reserve Capital provided responses by its document filed on 12 August 2019. Relevantly, the Request and Answer in response were, inter alia, as follows:

1. As to paragraph 13, in respect of the products or goods that it is alleged were not actually sold by Seascapes IGA in the financial year ending on 30 June 2015, specify:

5.1. each item that it is alleged was recorded as sold but not sold, the date of each allegedly fabricated transaction, and the value of each allegedly fabricated sale (said to total $476,305);

5.2. the document(s) (if any) recording the number and value of the stock held by Seascapes IGA of each item alleged to have been sold on the day of the alleged sale; and

5.3. any other documents referred to.

5.1. See attachment marked 'Annexure A'.

5.2. The 'Item Movement (Ranking Report)' (which is capable of being extracted from document number 70 in [Reserve Capital's] list of discovered documents) for each of the dates as are specified in the attached 'Annexure A'.

5.3. Paragraph 13 of the [March 2019 SOC] does not refer to any documents apart from [Seascapes'] 2015 financial statements.[857] (emphasis added)

1. As it may be seen from the above quoted Request and Answer, as at 12 August 2019 on the March 2019 SOC, the parties were proceeding on the basis that Reserve Capital was alleging that sales in the pleaded amount had not actually taken place.
2. The plea was slightly amended by the March 2020 SOC as follows:

[13] The Profit Representation was misleading or deceptive or was likely to mislead or deceive in that the sales and/or the cost of sales recorded in the financial statements for Seascapes IGA for the year June 2015 were inaccurate.

PARTICULARS

The 2015 financial statements for Seascapes IGA had been inflated by the inclusion of sales recorded as valued at $463,309$476,305 for which there were no corresponding product or goods in fact sold by Seascapes IGA. In any event the financial statements failed to account for the cost of any such sales.[858]

1. The relevant paragraph [13] was further amended by the May 2020 SOC, which also pleaded for the first time [13.2]. The plea as made then was:
   1. The Profit Representation was misleading or deceptive or was likely to mislead or deceive in that:

13.1 the sales and/or the cost of sales recorded in the financial statements for Seascapes IGA for the year June 2015 were inaccurate by reason of the following.

13.1.1. The 2015 financial statements for Seascapes IGA had been inflated by the inclusion of sales recorded as valued at $463,309 for which there were no corresponding product or goods recorded as having in fact been sold by Seascapes IGA. In any event and/or by reason that the financial statements failed to account for the cost of any such sales.

13.1.2. The 2015 financial statements for Seascapes IGA had been inflated by the removal from the costs of sales of an amount of $279,380.42 for purchases of cigarettes.

13.2 Further, the financial statements for Seascapes IGA for the year June 2015 was misleading by reason of the following.

13.2.1 The costs of sales recorded in the financial statements for Seascapes IGA for the year June 2015 included costs of sales valued at $694,380.71:

13.2.1.1 for which there was no corresponding product or goods recorded as having in fact been purchased for sale by Seascapes IGA;

13.2.1.2 further and alternatively, without recording or noting any such costs of sales were incurred by way of related party loans and as such other than at commercial arms-length.

13.2.2 The sales pleaded in [13.1.1] include dealings with a single customer, [Mr] Hoang, to a total value of $281,737.65 such not being in the usual course of trade as a retail supermarket.[859] (original emphasis)

1. As noted above, it was the insertion of the words 'recorded as having' in the amendment to [13.1.1] in the May 2020 SOC which led to the defendants' contention that the genuineness of bulk sales had been amended out of the case.
2. I note in passing that, relevantly to the next section in these reasons, the May 2020 SOC also introduced, for the first time, the plea in SOC [13.1.2].
3. In the August 2021 SOC, there was a minor amendment to [13.2.2] by the insertion of 'and/or [Ms Hoang]' between the words '[Mr] Hoang' so that it read, relevantly, '[Mr] and/or [Ms] Hoang'.
4. The SOC at trial, relevantly, remained in that form.
5. Before Seascapes and Mr Piggott called their first witness, counsel for Reserve Capital sought to reserve its position as to whether it was alleging that the transactions pleaded in SOC [13.1.1] were genuine in the sense of having occurred.[860]
6. After the defendants' submissions set out in [831] - [834] above, there was a discussion between the Court and counsel for Reserve Capital as to what the plea in SOC [13.1.1] was alleging.[861]
7. At the end of that exchange, counsel for Reserve Capital said that Reserve Capital was not making the allegation that there was no product behind any sale because he did not have the relevant evidence to do so.[862] Counsel for Reserve Capital said that it was not positively pleading a case of fraud.[863]
8. However, counsel for Reserve Capital wanted to review Reserve Capital's expert evidence and then return to the question after doing so.[864]
9. On the next day of trial, after a weekend, the issue was returned to. At this point, Mr Piggott had commenced to give, but had not completed, his evidence-in-chief. Counsel for Reserve Capital had reviewed Reserve Capital's expert evidence. From that evidence, counsel for Reserve Capital made submissions and then the following exchange occurred:[865]

HOWARD J: But there is quite a difference, isn't there, between an allegation that sales didn't happen on the one hand and that sales aren't reflected on the other? And Mr Lewis and [SOC 13.1.1] suggest it's more in the recording, don't they?

DILLON, MR: Yes. So (indistinct) I'm not going to repeat what I said last week.

HOWARD J: Well, except that as I understand it, so that I'm not misunderstanding [Reserve Capital's] case, [Reserve Capital] is not putting a positive case that the sales did not occur. Its case is that the sales weren't recorded.

DILLON, MR: Well, we take - I wish to try and take both sides of that.

HOWARD J: Well, I think that's the problem with the pleading of fraud, Mr Dillon, or a pleading of dishonesty, is you can't have it both ways. You need to tell the court and the defendants what it is that you plead.

DILLON, MR: Your Honour, then I have insufficient - presently I have insufficient evidence on that point.

HOWARD J: Yes. So I'm going to proceed, then, on the basis that the allegation is that the sales occurred and that they're not recorded in the way that Mr Lewis describes at paragraph 32.3.[866] Is that correct?

DILLON, MR: That's my evidence, yes. That's the case. Yes.

HOWARD J: And that's the way the court should proceed?

DILLON, MR: Yes, your Honour.

1. Mr Piggott then recommenced his evidence-in-chief.
2. Under the section dealing with SOC [13.2.2] below, I have set out the evidence at trial of the bulk sales, including to Ms Hoang.
3. Following the conclusion of the defendants' evidence and on the eve of the parties' oral closings, counsel for Reserve Capital, for the first time, said that he may be making an application 'to be released from [his] position in respect of the pleading in 13.1 and 13.1.1 and 13.1.2 [of the SOC]'.[867]
4. At that point, it appeared that Reserve Capital had not sought to confer with the defendants and there was no application before the Court.[868]
5. Ultimately no such application was made.
6. In its written closing submissions, Reserve Capital sought to articulate two limbs of its case in SOC [13.1.1] being:
   1. the first limb: that for keyed sales there was no corresponding product or goods identified as having been sold by Seascapes IGA which Reserve Capital said might be called the 'No identified product or goods recorded as sold Case', and that could be explained because such sales never took place; and
   2. the second limb: being the 'The Cost of Keyed Sales Case'.[869]
7. In its written closing submissions, Reserve Capital submitted:

No record was made or kept of what products or goods were supposedly sold as bulk [k]eyed Sales, proving the allegation in the first limb of [13.1.1] of the [SOC].[870] (footnotes omitted)

1. The submission was then made that the 'cost' of keyed sales was not included in the 'Cost of Sales' recorded in the 2015 financial statements.[871]
2. In the end, as will be seen, I understand that Reserve Capital only asserted the 'second limb' as quoted at paragraph [858(2)] above.
3. By its written closing submissions, Reserve Capital then submitted:[872]

One possible explanation for this shortfall is that as set out above in relation to paragraph 33 of [Mr Lewis' initial report dated 12 May 2021],[873] the costs of products the subject of bulk [k]eyed Sales may for some reason have not been recorded in [Seascapes'] [2015] financial statements, a subset of which is the possibility that the reason for not recording those costs is because these products never existed, in that there were no such sales, with these alleged purchases resulting in cash injections of pure profit. Ms Nesbitt's evidence supports this conclusion.[874]

Although that subset possibility was found to be within its pleading,[875] [Reserve Capital] could not (absent credible material to do so) forensically pursue this by cross-examination,[876] but nevertheless the evidence that eventuated establishes it is not just a possibility but did in fact occur, in that no products were the subject of bulk [k]eyed [s]ales.[877] (footnotes omitted)

1. Reserve Capital further submitted in its written closing that it was a 'fact' that keyed sales did not occur.[878] As will become apparent, I do not consider that ultimately reflected Reserve Capital's case.
2. However, as I understood the oral submissions (including from the following exchange) made in Reserve Capital's closing, Reserve Capital's case was not that the 'impugned' sales did not occur:

HOWARD J: Your case is that the sales did happen.

DILLON, MR: Yes, yes, your Honour.

HOWARD J: So your case is that Mr Piggott's evidence that there were such keyed sales is correct.

DILLON, MR: Yes. I seek - - -

HOWARD J: So I don't think you can then seek to negative that by Ms Nesbitt's evidence.

DILLON, MR: I understand. I try and use it this way. I try and - and I'm repeating myself, but I'm using it this way. I say, first, it goes to credit, potentially.[879]

1. Ultimately, as may be seen from that exchange, Reserve Capital said that Ms Nesbitt's evidence showed the keyed sales did not occur, and that could be used to challenge the credibility of Mr Piggott. That is notwithstanding that Reserve Capital accepted (in its case) that such sales occurred and, as seen, accepted Mr Piggott's evidence to that effect.
2. By its oral closing submissions, I understood Reserve Capital's case to be:
   1. the keyed sales did occur;[880]
   2. there were keyed sales of $472,252 in the 2015 financial year;
   3. of the $472,252 of keyed sales, $281,737.65 were made to Ms Hoang;
   4. the items sold as keyed sales did not have their cost of acquisition included in the cost of sales in the 2015 financial statements and so the statements were not accurate;[881]
   5. the profit shown in the 2015 financial statements was inflated by the cost of acquisition not being included; and
   6. Ms Nesbitt's evidence could be used to impugn Mr Piggott's evidence about the keyed sales (notwithstanding that Reserve Capital accepted that Mr Piggott's evidence that there were such keyed sales was correct).[882]
3. That is, it was only the second limb which was ultimately advanced by Reserve Capital and which falls to be decided.
4. I note that what I understand to be Reserve Capital's ultimate case on this is consistent with the instructions which Reserve Capital gave to Ms Marke and her verification that, at the least, the sales to Ms Hoang had been recorded as going through Reserve Capital's cash bank account.[883]
5. The above analysis of the pleadings and the exchanges at trial, explain my understanding of the case ultimately put by Reserve Capital. That is, (notwithstanding the different submissions made by Reserve Capital at different times and, notwithstanding the possible different meanings which could be given to the text of the relevant plea in SOC [13.1.1]), ultimately Reserve Capital's case as put in SOC [13.1.1] is that:
   1. the 2015 financial statements were misleading;
   2. because they did not record or account for the acquisition cost of some goods sold (being keyed sales, which sales totalled $472,252);
   3. that is, the (overall) cost of goods to Seascapes was understated by an unpleaded amount for the sale of goods which totalled $472,252.

D.2.3.1 Reserve Capital's case on its second limb

1. In its written closing, Reserve Capital submitted that its case that the costs of the acquisition of the keyed sales were not included in the financial statements was made good by Mr Lewis' reasoning:
   1. It is submitted that the reasoning reflected in paragraph 33 of Mr Lewis' [initial] report at [Ex] 501 supports the submission that:

108.1. the Cost of Sales in the financial statements amounted to $2,423,194, including the End of Year Adjustments of $410,000. This value is $83,973 less than the Cost of Sales recorded by the POS, if the bulk [k]eyed [s]ales are excluded;

108.2. The difference between the Cost of Sales in the Financial Statements and the total Cost of Sales recorded in the POS would be $444,348 if the bulk [k]eyed [s]ales were included; and

108.3 From the above it can be inferred that the cost of the bulk [k]eyed [s]ales were not included in the Cost of Sales recorded in the financial statements.[884] (original emphasis)

1. This submission somewhat mis-states the position. I upheld the objection to paragraph [33] of Mr Lewis' initial report[885] on the basis that it was argumentative. However, I allowed Reserve Capital to use [33] of Mr Lewis' supplementary report as an aide memoire for its argument that the acquisition costs of the goods sold as keyed sales were not included in the 2015 financial statements.[886]
2. In figures extracted by Mr Lewis for the 2015 financial year, the cost of sales recorded in the Grocery Manager system was $2,867,542, whereas the cost of sales recorded in Seascapes' MYOB program was $2,423,194.
3. That is, in the 2015 financial year, Seascapes' MYOB program had recorded cost of sales in the sum of $444,348 less than that recorded in the Grocery Manager.
4. Reserve Capital's essential submission and case on this point is that Seascapes' MYOB costs of goods could not be as reported and that reported figure was significantly less than the actual cost to Seascapes. At its core, that proposition rests on the comparison between the cost of goods acquired as recorded in the Grocery Manager system, and as recorded in the MYOB records of Seascapes.
5. Mr Lewis accepted that the essential submission was dependent on the costs recorded in Grocery Manager being more likely to be accurate than those recorded in MYOB.[887] Mr Lewis further accepted that the conclusion depended upon the accuracy of the acquisition cost information in Grocery Manager and the accuracy of the selection of 'grocery' as the department against which the sales were recorded.[888]
6. In his supplementary report,[889] Mr Lewis identified the difference between cost of sales in MYOB and cost of sales in Grocery Manager and then said:

33.2.6.1 This means that the Cost of Sales recorded in MYOB are very much lower than the notional Cost of Sales recorded in Grocery Manager, which leads to the actual [gross profitability] being higher than the Scanning Gross Profitability. ... However it is more typical that the Cost of Sales in the accounting system will be higher than in the [Grocery Manager] system due to all of the types of variations I identified in para 13 of my original report,[890] such as shrinkage, theft or delivery shortages and damages. For the Cost of Sales in MYOB to be so much less than the Cost of Sales in Grocery Manager, stock would have had to have been purchased at a significant discount. The table ['KLD-18'] shows that the largest contributor to the negative variance was the Grocery department (incl. Cigarettes) shows a negative variance of $490,763 ['KLD-18' column D, row 18]; for such a large amount of discount to be generated it would have required a 25% discount on every item of grocery purchased including all stock from Metcash, which is not possible as I have previously stated in para 23.4 of this document. Alternatively, such discount may have been generated by the fact that there is no Cost of Sales in MYOB for Cigarettes ['KLD-18', column C, row 16] and there is no supporting evidence for the value of transfers of stock from Bertram IGA and by how much these transfers may have been discounted.[891]

33.2.7 The above comparisons in para [33.2.6.1] and [33.2.6.2] illustrate that there is significant uncertainty as to how the Cost of Sales recorded in MYOB came to be very much lower than the Cost of Sales determined from Grocery Manager. Such uncertainty could possibly be explained by factors previously identified in my report, which were not identified in the Business Profile or accompanying financial statements being:

33.2.7.1 There was no cost for Cigarettes purchased by the Business during the 2014/15 financial year;

33.2.7.2 Transfers of stock from Bertram IGA were potentially being made at a significant discount to the real cost of such stock;

33.2.7.3 There being no cost attributable to the Bulk Keyed Sales recorded in MYOB, which supports my conclusion that these Bulk Keyed Sales did not represent legitimate transactions for the sale of goods from Seascapes IGA.[892]

1. I pause to note that, as I have identified above, the last factor identified by Mr Lewis (in [33.2.7.3] of his revised supplementary report) was not the case finally run by Reserve Capital.[893]

D.2.3.2 Defendants' position on cost of goods sold for 2015 financial year

1. The defendants denied the 2015 financial statements were inflated by recording the sales as valued at $472,252. The defendants contend that the Business Profile accurately stated that Seascapes IGA had sales of $3,690,877 for the financial year ending 30 June 2015.[894]
2. The defendants also submitted that the cost of sales for the same period was $2,592.037.[895]
3. The defendants submitted that the data from the Grocery Manager point of sale software of Seascapes IGA[896] was relevantly inaccurate because:
   1. Seascapes did not use the Grocery Manager software to record the cost of goods sold and did not systematically update the information on the software;[897]
   2. the transactions comprising of the sales Reserve Capital identified as valuing $472,252 were sales manually entered into the Grocery Manager and these transactions were not linked to specific inventory within the system.[898]

D.2.3.3 Consideration of cost of goods sold for 2015 financial year

1. A, if not the, principal attack on the 2015 financial statements was that they under‑recorded the cost to Seascapes of goods which were ultimately sold and which, in the language adopted by Reserve Capital, was an injection of 'pure profit'.
2. It may be observed that there are at least three issues or matters embedded in Reserve Capital's core propositions on this aspect. The three are not necessarily completely distinct from one another.
3. The first is that the cost of goods recorded by Grocery Manager is accurate or reasonably so. And, by extension, that is true for the 2015 financial year at Seascapes IGA.
4. The second is that Seascapes relevantly used Grocery Manager, and it was set up in such a way that its recording of the cost of goods was accurate, or reasonably so, for the Seascapes IGA.
5. The third is that the cost of goods sold as recorded in Grocery Manager is materially a more accurate record of the actual cost to Seascapes than the MYOB program.
6. On the figures presented to the Court, the issue here is the real cost of goods acquired by Seascapes in relation to goods sold as keyed sales. So, more general references in this section to the cost of goods must be understood as being limited to this subset.

1. Mr Lewis described the Grocery Manager point of sale software in the following way:

Its primary function is to record the sale of products to consumers by identifying each product being sold based on the bar-code that is contained on each item's label. It also provides a mechanism to identify the appropriate amount of GST that is being collected on each sale, provides the store operator with an indicative gross profit achieved from each sale and can be used as part of a perpetual inventory management system.[899]

1. Mr Lewis described what Grocery Manager would do as each product was passed over the scanner at the check‑out.
2. Firstly, it would identify the selling price.[900] Secondly, at the time the product went over the scanner:

... the system will look up the current purchase cost for the item in the POS database and will attach that cost to the sale record. That current purchase cost could be its normal cost or a promotional cost if the supplier has provided a discount as part of the promotion of that product. Once that cost has been attached to the sale record, it is never altered regardless of what changes may be made to the purchase cost in the future. Paragraph 9 below outlines how this current purchase cost is maintained in the system later.[901]

1. This evidence assumed that a product had scanned properly over the scanner at the check‑out. Mr Lewis dealt with what happens when a product did not scan properly and stated:

When a product does not scan properly, it can be entered as a manual sale against the appropriate department once the correct selling price has been determined, usually by the check-out supervisor. These are known as 'keyed sales' and are reported in the Department Sales Report in a separate column. Their value is included in the Scanning GP by applying a default gross profit percentage to the actual selling price. This default gross margin is set individually for each department and is shown on the Department Sales Report.[902]

1. Mr Lewis stated then that the 'current purchase cost' (which Mr Lewis identified as quoted in [890] above) could be in the Grocery Manager system against each product in one of three identified ways, being via:
   1. the Metcash weekly host file;[903]
   2. manual entry;[904] and
   3. updates from purchase invoices loaded into the system.[905]
2. Significantly, Mr Lewis stated:

[10] It is important to note that in each of the above methods, the current purchase cost is being updated as a singular entry i.e., the system is applying the latest purchase cost to the record and not using any form of average cost based on the quantity of items purchased.

[11] The accuracy of the Scanning GP being reported in the Department Sales Report is therefore somewhat dependent upon the accuracy of the current purchase cost. However, the purchase costs being maintained by the weekly Metcash Host file will be accurate and as a large majority of product lines are maintained in this way, the resulting Scanning GP calculations will be accurate to a large extent. If a store utilises the automatic updates outlined in point 9.3 above, then the purchase costs will also be accurate.

[12] To the extent that a store does not properly maintain purchase costs for lines from direct suppliers, it is more likely that purchase costs will increase over time through inflation and therefore the resulting Scanning GP calculations will be overstated rather than understated.[906]

1. Mr Lewis, in his evidence speaking to his reports, said:
   1. the current purchase price was the price that was in the system at the time of the sale;[907]
   2. the average cost (rather than the current purchase cost) may give a more accurate gross profit because it uses actual costs derived from invoices;[908]
   3. a store could choose to use the average cost in Grocery Manager rather than the current purchase cost;[909]
   4. neither the current purchase cost nor the average cost would necessarily reflect the specific cost to the store of the item being sold by being scanned over the check-out;[910]
   5. whether with the current purchase cost or the average cost, the cost of the particular item being sold at the particular time could be different from either of those measures;[911]
   6. where goods are supplied other than from Metcash, the accuracy of the purchase cost recorded in Grocery Manager is dependent on how accurately the store has recorded the acquisition cost into the Grocery Manager system;[912]
   7. the acquisition cost as recorded in the Grocery Manager system was notional or theoretical for that particular item;[913] and
   8. Grocery Manager does not incorporate into the cost of goods rebates provided by suppliers.[914]
2. To put some of that evidence into context, Mr Lewis:
   1. did not consider the difference between the average cost recorded by the Grocery Manager system and what a store actually paid for a particular product to be materially different;[915]
   2. did not consider that a store could obtain other than minimal rebates from suppliers outside of Metcash;[916]
   3. said that keyed sales are usually 'very small' in an IGA store;[917]
   4. did not see any benefit in doing bulk sales as a reason to have high keyed sales;[918] and
   5. because keyed sales gave rise, in his view, to so many problems there would be no reason why a store would want to have large keyed sales.[919]
3. Mr Lewis gave evidence that:
   1. Grocery Manager would allocate items sold to a particular 'department' within the store;[920]
   2. the barcode on an item which was successfully scanned at the check-out would allocate that sale to the correct department;[921]
   3. for a keyed sale, where the item had not scanned properly, it would be entered as a manual sale against the appropriate department which was done by the check-out operator;[922]
   4. a keyed sale did not identify in Grocery Manager the particular item, but rather recorded it against the department to which the check-out operator had allocated it;[923] and
   5. the cost of an item in a keyed sale would, effectively, from a Grocery Manager recording perspective, be derived by the application of a default gross profitability figure which was set for the particular department.[924]
4. As I understood the evidence, when an item did not scan, Grocery Manager did not allocate to it either the current purchase cost or the average purchase cost; rather its cost was effectively derived from the default profit figure for the department to which the check‑out operator allocated it.

1. Mr Piggott, in his evidence-in-chief:
   1. was asked how Seascapes IGA recorded the cost of stock that was acquired, and said that there 'would have been some record' which documented the net cost of the item;[925]
   2. said he thought there 'would have been' a spreadsheet or there would have been a note in Grocery Manager of the cost of an item;[926]
   3. said that Grocery Manager was not used by Seascapes to document the actual cost of the items sold;[927]
   4. said there would have been an individual item cost recorded by a schedule or something like that which showed the cost of the items sent from Bertram to Seascapes IGA so that Seascapes knew what it was going to be charged for those items;[928]
   5. said that Grocery Manager reasonably accurately recorded the cost of stock acquired from Metcash. However, that was not the case for all items acquired through Metcash;[929] and
   6. said that the MYOB program was used by Seascapes to enter the actual costs of acquiring stock that Seascapes received other than from Metcash.[930]
2. Mr Piggott was not directly challenged in cross‑examination on the above evidence.
3. Ms Piggott's evidence was that:
   1. 'bookkeepers' at the Bertram IGA were responsible for maintaining the Seascapes MYOB platform or database;[931]
   2. information from the Grocery Manager system as to sales was printed into weekly reports. There were daily sales sheets that would be tallied up with the banking and that would be entered into MYOB as daily sales by the bookkeepers;[932]
   3. the cost of goods sold got into the MYOB database by bookkeepers entering the invoices from the suppliers, including Metcash;[933]
   4. between July 2014 until the sale of the Business in 2016, the Bertram IGA transferred to, or supplied stock to, the Seascapes IGA and that was overseen by Mr Piggott;[934] and
   5. her understanding was that the stock that was transferred between the Bertram IGA and the Seascapes IGA was written into an exercise book or books kept at the Bertram IGA which was then priced and tallied by administrative staff at the Bertram IGA.[935]
4. In cross-examination, Ms Piggott said that there was a folder 'between' Seascapes IGA and Bertram IGA which contained orders and invoices and the like and that folder was then processed, or entered into the MYOB system, by the bookkeepers at the Bertram IGA.[936]
5. Ms Nesbitt's evidence was that when goods arrived from the Bertram IGA the fruit and vegetables were not entered into the Grocery Manager system, but the quantities received of other products were entered into that system so that the Metcash automatic ordering system was not disrupted.[937]
6. Ms Nesbitt did not give any other relevant evidence going to the Seascapes IGA's use of Grocery Manager.

Grocery Manager is materially more accurate than the MYOB program

1. Mr Lewis accepted that his proposition that Grocery Manager was more likely to be accurate for costs than MYOB depended on:
   1. the accuracy of the acquisition cost information recorded in Grocery Manager; and
   2. the accuracy of the selection of the department for the keyed sales.[938]
2. Mr Lewis stated that without scanning an item or items, there was no way of (later) identifying what the particular products were if made by a keyed sale.[939]
3. In my judgement, Mr Lewis proceeded on the basis that the Seascapes IGA's use of Grocery Manager was sufficiently similar to his experience of other IGAs' use of Grocery Manager such that it remained for the Seascapes IGA a more reliable record of costs than Seascapes' MYOB program.
4. Reviewing Mr Lewis' evidence carefully and the defendants' evidence as to how the records of Seascapes were kept, I am not positively persuaded that the Grocery Manager records on which Mr Lewis depended to express his opinions were more reliable for the 2015 financial year than the MYOB program used by Seascapes.
5. The defendants' evidence as set out above was clearly to the effect that Seascapes did not use Grocery Manager as its principal way of recording the cost of the goods it acquired.
6. Rather, it used the MYOB program and, on the evidence, which was not directly challenged, recorded costs of goods acquired from invoices, especially those goods acquired by Seascapes from non‑Metcash suppliers and from the Bertram IGA.
7. Of course, much of that evidence, but not all of it, came from Mr Piggott and I have expressed above my caution in accepting his evidence.
8. However, I consider it most significant that the MYOB financial statements formed the basis on which Seascapes made its BASs and annual taxation returns and on which it paid tax. No defendant witness was cross-examined to the effect that false returns had been made to the ATO. And, perhaps as significantly, the keeping of the impugned MYOB records occurred prior to the Business being put up for sale. I have considered in more detail in D.2.6.2 below the accuracy of Seascapes' financial statements. I do not repeat that discussion here but consider it is relevant to the present matters.
9. Reserve Capital's case necessarily involved an implicit proposition that Seascapes had, in effect, been looking to inflate its profits as per its second limb in SOC [13.1.1] and pay more tax than it would have been required to, in anticipation of some future sale.[940]
10. That proposition does not seem to me commercially plausible and so Mr Piggott's evidence as to how the MYOB program captured the cost of acquiring goods is, in my judgement, commercially plausible with regard to Seascapes' returns to the ATO and the other defendants' evidence on the point and can be accepted.
11. That is, I do not find that Reserve Capital has made good a key assumption of Mr Lewis' reasoning: that the Grocery Manager system for the 2015 financial year was more accurate in recording costs than was Seascapes' MYOB program.
12. Once that key assumption is not made good, Mr Lewis' reasoning on the point cannot be accepted.
13. There are some further matters which, additionally, make it difficult to accept Mr Lewis' reasoning on this point.
14. The Brief to Mr Lewis[941] is unusual in that it is in a heavily narrative form without clearly distinguishing or stating what the assumptions are which the expert was asked to make.
15. For example, although Mr Lewis is put forward as an expert in how the Grocery Manager system worked, there are many paragraphs describing the operations and functions of Grocery Manager in the Brief, without it being plain whether Mr Lewis is being told these things by way of an assumption or they are, perhaps, being provided as the solicitor's understanding of the system for Mr Lewis' comment.
16. The following, relevantly, appears in the Brief:

[13] A total amount of $463,309 from sales in excess of $1000 per day, and included in all the keyed sales set out in (PD 90), are recorded as Keyed Sales in the Department Sales Reports of Attachments A1 to A12 ('2015 Keyed Sales'). 'Keyed Sales' are manually entered and for which no information was generated in Grocery Manager as to which if any product item is the subject of such a manually entered sale. This compares to 'PLU Sales', which do generate that information when a sale is made, by way of scanning the product item at the check out register (ie terminal).

[14] ... The keyed sales of $463,309 used eftpos in some cases, whilst in all other cases the sale purported to have been by cash. Grocery Manager data records many such Keyed Sales being immediately followed by this same amount of cash being picked up from the register for deposit in the safe.

...

[16] PD 91 is the Item Movement Report for 2014/15 which we are instructed shows that the Business did not have sufficient quantity of stock by which the Business could have effected keyed sales totaling [sic] $463,309. The cost of PLU Sales (albeit based on the then current replacement not necessarily the actual cost, and without taking into account any written off stock) exceeds the cost of sales reported in the 2015 financial statements (after allowing for the same discount/freight). The Item Movement Report, which only includes the cost of PLU items sold, calculated on their then replacement cost, records a total cost of $2,491,378. The 2015 financial statements reported $2,418,194 worth of purchases (including a purchase adjustment made at the end of the financial year 2015 in the amount $415,000) which still falls short by $73,184. This also indicates that there was no costs of any of the keyed sales being recorded in the financial statement, the effect being the profit in that statement is inflated by the $73,184 of unrecorded costs for the PLU sales, but additionally inflated by the $463,309 of keyed sales. In the event that the recorded costs of sales do include the costs of keyed sales, then this would cause the unrecorded costs of the PLU sales to be inflated by the same amount of those costs of keyed sales, over and above the $73,184 of unrecorded costs of PLU sales ...[942]

1. Before posing any questions for opinion to Mr Lewis, the Brief stated:
   1. The figures derived from those records and analysis are as follows and show that the ability of Business to make money and to pay rent/outgoings has been overestimated:

30.1. 1,815,074 is from Item Movement Report FY2014 (PD 111 which reports the gross total cost which is inclusive of GST the amount of which is derived from GST only sales in the Annual Item Movement Report 2014 GST in PD 109)

30.2. 349,547 is 3 months of annual wages FY2017 (466,063)

30.3. 176,632 is 3 months of annual rent/outgoings (235,509)

30.4. 3,227,568 is the total sales (3,690,877) less keyed sales (463,309)

30.5. 2,491,378 is from Item Movement Reports FY2015 (PD 112 by adding monthly figures to derive the gross cost and then calculate and deduct GST)

30.6. 466,063 is annual wages FY2017 adjusted with 2 owners' wages

30.7. 235,509 is the rent/outgoings FY2017 (original emphasis)

1. It appears from the cross-examination of Mr Lewis that he was initially contacted by Mr Satyawan directly,[943] they had discussions before he was then formally instructed by Reserve Capital's then solicitors. I am unable to say whether the Brief contained the rather unusual narrative that it did because it reflected an understanding which had already been reached between Mr Satyawan, his solicitors and Mr Lewis, or whether it reflected the solicitors' and Mr Satyawan's understanding which was then put to Mr Lewis.
2. It is not a proper or desirable way for an expert to be briefed and although Mr Lewis' independence, as such, was not significantly challenged, his opinions were challenged on the basis that he was reasoning to a conclusion or opinion he already held - that is, that his reasoning was, effectively, working backwards.
3. While not determinative, the manner in which Mr Lewis was briefed in this respect does not add to my confidence or the persuasiveness of his views on, for present purposes, the greater reliability of the Grocery Manager system for the 2015 financial year.
4. Also, Mr Lewis came to the view that the keyed sales were fictitious or not legitimate transactions.[944] However, it was not plain to me why the disparity between the cost of goods acquired for keyed sales as recorded in Grocery Manager and as recorded in MYOB was not explained by the evidence given by the defendants' witnesses.

1. I find that Reserve Capital has not established its plea made at SOC [13.1.1] as it finally presented that case.

D.2.4 SOC [13.1.2] Removal of cigarettes from 2015 financial statements

1. As noted, the plea in SOC [13.1.2] was introduced by the May 2020 SOC. That plea was not amended and was the plea at trial.
2. By a request dated 27 May 2020, the defendants requested further and better particulars of SOC [13.1.2]. That request was answered by Reserve Capital by its document filed 15 July 2020.[945]
3. The responses to the request for particulars attached five documents, which comprised more than 2,100 pages. Reserve Capital did not, at trial, identify which, if any, of the attachments to its answers of 15 July 2020 had been tendered and were relied upon.
4. Seascapes and Mr Piggott submitted that the documents which were referred to by Reserve Capital in its Answers 1.1.2, 1.2(c), (d) and (e) (with respect to (e) for the period prior to 1 July 2014), 1.3 and 1.3.1 - 1.3.4 were not put into evidence by Reserve Capital, or otherwise.[946]
5. By 'Annexure A' to the July 2020 Response, Reserve Capital alleged the removal of the costs of $279,380.42 for the purchase of cigarettes from the 2015 financial statements was the subject of entries found in Seascapes IGA's General Ledger (i.e. at lines 15986 to 16071).[947]
6. Reserve Capital did not expand on SOC [13.1.2] in its written or oral openings.[948]
7. As I understand it, the defendants' position is that the entries found in lines 15986 to 16071 of the General Ledger were subject to an end of year adjustment; by which the expenses recorded in account '5‑1270' and described as 'Cigarettes (Incl GST)' were 'removed' from the General Ledger but then consolidated with other 'Grocery (Incl GST)' expenses recorded in account '5‑1210', at line 14906.[949]
8. That position is supported by the evidence of Mr Fogarty. His relevant (to this) evidence was as follows.
9. Mr Fogarty identified the 2015 General Ledger as all of the transactions from a MYOB file downloaded into Excel format from 1 July 2014 to 30 June 2015.[950] I note that 'Annexure A' to Reserve Capital's July 2020 Response appears to be a two page extract from that spreadsheet.
10. Mr Fogarty further gave evidence that he or his practice had made an extract out of the MYOB file which showed the inputs or adjustments which his practice had made to the MYOB file in that financial year (MYOB extract).[951] That MYOB extract had been marked for identification by Mr Fogarty's witness outline and was a document which it appears Mr Lewis was briefed with.[952]
11. Mr Fogarty said that all of the adjustments that were apparent from the MYOB extract would be identifiable in the General Ledger by reference to the code 'FP'.[953]
12. Mr Fogarty identified the handwriting on the right‑hand side of the MYOB extract as his and said that he had written 'Reallocation within COGS a/cs' meaning 'Reallocation within cost of goods sold accounts'.[954]
13. In the MYOB extract, Mr Fogarty gave evidence that the line which was second under the heading of 'FP Adjustments' against the code for account '5‑1270' which had to its right 'Cigarettes (Incl GST)' in the sum of $279,380.42 was reallocated within the cost of goods sold and ended up in account '5‑1605' in the sum of $415,000.[955]
14. In relation to the entry for cigarettes, Mr Fogarty said in cross‑examination that he did not have a recollection of the instructions he received.[956]
15. Mr Fogarty's evidence was that the 'reallocation' did not have any effect on the overall costs of goods sold - the figure of $415,000 increased the total of the goods sold for that particular year.[957] And, by increasing the cost of goods sold by that amount, the gross profit would have been reduced by an equivalent amount.[958]
16. Although Mr Fogarty was cross-examined (in the sense that he was asked questions by Reserve Capital's counsel) about the $279,380.42 against the entry for cigarettes in the MYOB extract, there was no challenge to Mr Fogarty's evidence that the $279,380.42 for cigarettes was captured within the cost of goods to Seascapes and reduced its gross profit in the 2015 financial year.
17. Reserve Capital's written closing submissions did not grapple with the clear effect of Mr Fogarty's evidence. The submission made was:

... in relation to cigarettes [where] the MYOB recorded no debit (or cost) a figure for credit (or sales) was merely advised by the client and then recorded in the accounts. The effect being to increase credit or profit by the $379,380.42 allocated to cigarettes.[959] (footnotes omitted)

1. If one accepts Mr Fogarty's evidence on this point, and I do, then the cost of cigarettes acquired was included in the costs to Seascapes in the 2015 financial year.
2. Mr Lewis dealt with the cost of cigarettes in the 2015 financial year in his supplementary report.[960] With respect, Mr Lewis' evidence on this point is not easy to follow. He appears to assert that 'all cigarettes sold during the 2014/15 financial year were acquired at a zero cost'.[961] However, he then may be asserting that the same sum was added to increase the cost of sales in the grocery department.[962]
3. As said, it appears that Mr Lewis was given a copy of the MYOB extract. However, it appears, doing the best I can, that Mr Lewis was only referring to the General Ledger, and did not appear to take into account the inclusion of the cost of cigarettes acquired into the overall cost of goods acquired.
4. To be fair, Mr Lewis was not cross-examined as to the effect of the MYOB extract concerning cigarettes nor that the sum of $279,380.42 was included in the overall cost of goods sold by Seascapes in the 2015 financial year.
5. Mr Lewis' supplementary report referred to an attachment titled 'Analysis of pre-sale information'.[963] Mr Lewis' evidence was that the figures in that analysis had been taken from Grocery Manager and the MYOB financials[964] - he did not mention there the MYOB extract.
6. It is apparent that Mr Lewis has understood the position to be that Seascapes made sales of $596,250 off cigarettes and he has represented that in his analysis.[965] Further, he has not recorded cost of sales for those cigarettes in his analysis,[966] which has led to his evidence in cross‑examination that 'cigarettes is showing a hundred per cent gross profit'.[967]
7. With respect, in the absence of Mr Lewis addressing the clear effect of the end of year adjustments made by the MYOB extract, his evidence appears not to take into account the full picture. I do not consider it is, strictly, a question of preferring Mr Fogarty's evidence over Mr Lewis' evidence. However, if I needed to do so, I prefer Mr Fogarty's evidence on the point - especially in circumstances where it was a more full reckoning and was not challenged in cross-examination.
8. I find that Reserve Capital has not made out its case that the cost of cigarettes to Seascapes (of $279,380.42) was removed from the 2015 financial statements. I find that the pleaded figure was included, as per the evidence of Mr Fogarty, in the overall cost of goods sold and so there was no 'removal' of the costs of cigarettes. Consequently, the 2015 financial statements of Seascapes were not 'inflated' as pleaded.
9. Reserve Capital's claim as pleaded in SOC [13.1.2] fails.

D.2.5 SOC [13.2.1] Costs of sales valued at $694,380.71

1. The pleas made in SOC [13.2.1] are not easy to follow. My understanding of the pleas was not assisted by the fact that Reserve Capital did not seek to explain them in its written opening or oral opening; and barely touched on them in its written[968] or oral closing submissions.[969]
2. The difficulty with the text of SOC [13.2.1] is that it asserts that the 2015 financial statements 'included costs of sales valued at $694,380.71'. Taken at face value, that appears to be a plea that the cost of goods to Seascapes in the 2015 financial year contained at least $694,380.71.

1. The plea made in SOC [13.2.1.1] is that there was no corresponding product or goods recorded as having in fact been purchased by Seascapes. Reading SOC [13.2.1.1] with the premise or plea in SOC [13.2.1], the plea appears to be that the costs to Seascapes in the 2015 financial year were inflated by the sum of $694,380.71. That is, costs were recorded as spent, but in respect of which no product was in fact purchased. The effect of that would be, inevitably, to reduce the gross profitability of Seascapes for the 2015 financial year - but this does not seem to have been Reserve Capital's case at all.
2. The defendants deny the 2015 financial statements overstated the cost of sales by $694,380.71. They say if that was the case then the gross profit of Seascapes IGA would have been greater than the Profit Representation.[970] With respect, the defendants' proposition seems self‑evidently correct.
3. By Request 2 of the request for particulars made 27 May 2020, the defendants sought further and better particulars of the plea at SOC [13.2.1.1].
4. By Answer 2 to that Request filed 15 July 2020:

2.1 The grocery manager data of the Seascapes IGA business for the year ended 30 June 2015, which has yet to be discovered by the defendants but which is included within document number 70 in [Reserve Capital's] list of discovered documents, does not record any corresponding product or goods being purchased for sale in an amount totalling $694,380.71, and nor have the defendants discovered any other record of the same.

2.2 See response 2.1 above and Annexure D which particularises the entries in the [G]eneral [L]edger of the [B]usiness by which costs of sales valued at $694,380.71 were recorded.[971]

1. 'Annexure D' to the July 2020 Response appears to be an extract from the General Ledger;[972] the entirety of which was tendered as Ex 257. Looking at 'Annexure D', it appears that the pleaded amount of $694,380.71 is made up of five figures being Fogarty Partner adjustments made by:
   1. line 14906 against the code for account '5-1210' titled 'Grocery (Incl GST)' in the sum of $379,380.42;
   2. line 16696 against the code for account '5-1310' titled 'Grocery (Excl GST)' in the amount of $265,000;
   3. line 17439 against the code for account '5-1320' titled 'Meat (Excl GST)' in the sum of $8,000;
   4. line 17857 against the code for account 'Fruit & Veg (Excl GST)' in the amount of $12,000; and
   5. line 19007 against the code for account 'Dairy/Freezer (Excl GST)' in the sum of $30,000.
2. I note that the lines and amounts in 'Annexure D' do appear in the full General Ledger.
3. The five items totalling the $694,380.71 also appear in the MYOB extract which I discussed in the section immediately above.
4. If my understanding of the plea in SOC [13.2.1.1] is correct, then Seascapes would have shown in its 2015 financial statements a worse position in the sense of showing less profit than was the case in the 2015 financial statements.
5. It is hard to see how, in the circumstances of Reserve Capital's overall case, the 2015 financial statements looking worse than the actuality, could give rise to an actionable claim on the part of Reserve Capital.
6. In the circumstances, I do not need to consider SOC [13.2.1.1] further as it is not capable of giving rise to any actionable claim on the part of Reserve Capital.

1. This plea appears to be that some part, or all, of the $694,380.71 was included as costs of goods sold in the 2015 financial statements but without recording or noting that some of that cost was incurred by way of related party loans and were costs other than at commercial arm's‑length.
2. The defendants sought further particulars of this plea by their request for particulars dated 27 May 2020.
3. Reserve Capital objected to providing further particulars by its July 2020 Response. Its first objection in Answer 3.1 was that: ' ... contrary to the request the [SOC] does not allege that the loans were included in the financial statements for the year ended 30 June 2015 as cost of sales'.[973]
4. That objection is difficult to reconcile with the text of SOC [13.2.1.2].
5. It seemed to be accepted by Reserve Capital's counsel in its oral closing submissions that the 'related party loans' pleaded in SOC [13.2.1.2] were monies owed by Seascapes to the entity owning Bertram IGA for goods 'bought' by Seascapes from Bertram IGA.[974]
6. What remains unclear to me is what is asserted by Reserve Capital by the plea at SOC [13.2.1.2] to be materially misleading in the 2015 financial statements.
7. At [877] above, I quoted from the 'submission' made by Mr Lewis in his supplementary report at [33.2.7] and, in particular, at [33.2.7.2].[975]
8. I have not set those paragraphs out here again. The 'submission' made by Mr Lewis speculates that the stock transferred from Bertram IGA was potentially made at a significant discount to the real cost of such stock.
9. With respect, there is no evidence that supports that speculation. Reserve Capital did not appear to grapple with the fact that although it was allowed to use Mr Lewis' reports, in places, as an aide memoire or as a submission, any facts underlying the submission still had to be proved in the ordinary way.
10. Indeed, the speculation was not put to, for example, Mr Piggott in cross‑examination. And, it may be thought to be against the commercial plausibilities, in the absence of the identification of a clear motivation on someone's part, for the Bertram IGA to be losing money in that way.
11. Further, Mr Lewis' speculation, even if accepted as fact (which I do not think can be done) would not of itself, make out the plea in SOC [13.2.1.2].
12. It remains unclear to me how, without more, the plea at SOC [13.2.1] and [13.2.1.2] would render the 2015 financial statements misleading. With respect, there was no plea to the effect that mere related party loans or non arm's-length transactions would render the Profit Representation misleading.
13. I accept Mr Fogarty's evidence that the $410,000 shown in the MYOB extract as a 'loan‑related party' was included in the cost of goods sold in the 2015 financial year.
14. Further, a comparison of 'Annexure D' to Reserve Capital's July 2020 Response with the MYOB extract shows that the $410,000 in account '5‑1605', which is recorded as cost of goods sold, marries up to the five line items in 'Annexure D'.
15. That is, again, the stock bought from the Bertram IGA was included in the costs to Seascapes in the 2015 financial year.
16. In those circumstances, I do not find that the 2015 financial statements were misleading and deceptive in the way pleaded in SOC [13.2.1.2].

1. This plea, as I understand it, proceeds on the basis that Seascapes did purchase product to sell and it paid $694,380.71 for that product. However, the plea is that the stock was worth more than Seascapes paid for it and, so, the effect was Seascapes got a discount of about $83,973 on the goods purchased for that amount; and that the discount should have been recorded.
2. The figure of $83,973 in the Particulars to SOC [13.2.1.3] appears to derive from the 'submission' made by Mr Lewis at [33.2.6.2] of his supplementary report.[976]
3. As I understand it, the submission is that:
   1. the cost of sales in Grocery Manager attributable to keyed sales should be removed';[977]
   2. those costs of sales from Grocery Manager excluding the cost of keyed sales can be then compared with cost of sales from the General Ledger;[978] and
   3. which leads to a variance in cost of sales 'MYOB versus Grocery Manager' (without cost of keyed sales) of $83,973.[979]
4. The submission depends, as I understand it, on an acceptance of the premise that the costs shown in Grocery Manager are more reliable and should be used rather than the cost of sales shown in the General Ledger.
5. As set out above, I do not accept that premise and, more particularly, I do not accept that Reserve Capital has discharged its burden to show that costs in the 2015 financial statements taken from the MYOB rendered the 2015 financial statements misleading.
6. The plea at SOC [13.2.1] and [13.2.1.3] is, as I have stated, premised on Seascapes having actually spent $694,380.71 in the 2015 financial year.
7. Whether or not there was a discount within that figure does not make the inclusion of the pleaded sum in the 2015 financial statements misleading and deceptive in and of itself. That is, it does not touch upon, in my judgement, Seascapes' 'historical' position in the 2015 financial year.
8. For the above reasons, I do not find that the 2015 financial statements were misleading and deceptive in the way pleaded in SOC [13.2.1.3].

1. This plea has already been touched upon in the consideration above as to SOC [13.1.1]. It is important to note that the Profit Representation as pleaded, at least in its historical aspect (going to the 2015 financial year), was 'limited' to the gross profit figure in dollars and as a percentage.
2. By SOC [13.2.2], Reserve Capital pleaded that $281,737.65 of the $472,252 of keyed sales (pleaded in SOC [13.1.1]) were to a single customer, Ms Hoang; and that this was not the usual course of trade for a retail supermarket.[980]
3. The plea nominated the single customer as '[Mr] and/or [Ms] Hoang.[981] However, the trial was conducted on the basis that the single customer was Ms Hoang. That is consistent with the particulars provided by Reserve Capital by its July 2020 Response where it was stated '[t]here were no sales allegedly made to [Mr] Hoang'. In the circumstances of the way the trial was run, I do not need to deal with the internal inconsistencies in Reserve Capital's particulars [4.1] and [4.2] given in its July 2020 Response. Nor do I need to reconcile the inconsistencies in the particulars ([4.1] - [4.3]) with the plain words of SOC [13.2.2].
4. The defendants each denied the plea at SOC [13.2.2] but accepted that during the 2015 financial year the Business sold goods in bulk quantities to Ms Hoang.[982] It did not appear to me that the defendants contested the dollar amount of sales to Ms Hoang. And, as noted above, Ms Marke had verified the receipt of such funds at Reserve Capital's bank account.
5. Leaving aside the Profit Representation plea as to future matters, the natural reading of the defined Profit Representation as pleaded does not, on its face, include any representation as to the Seascapes IGA's 'usual course of trade'; rather, on its face, it is a statement of what happened in the 2015 financial year.
6. The allegation made in SOC [13.2.2] sits in a different category from the other allegations made as to the Profit Representation. That is because the plea does not assert a mis-statement in the figures in the 2015 financial statements as such.
7. To succeed in this part of its case, Reserve Capital must succeed in two subsidiary matters.
8. The first is that it must be accepted that either it pleaded that Seascapes represented, as part of the Profit Representation, that (at the least) the sales figures and revenue in the 2015 financial statements were achieved in the usual course of trade as a retail supermarket; or that the trial was conducted in such a way that Reserve Capital should have this case determined.
9. Secondly, Reserve Capital must then succeed in establishing that bulk keyed sales to a single customer (to a total value of $281,737.65) were not in the usual course of trade of a retail supermarket.

1. Reserve Capital submitted that SOC [13.2.2], when read with the defined Profit Representation, effectively pleaded that:
   1. the Profit Representation represented that the profit had been achieved in the 2015 financial year in the usual course of trade of a supermarket business;
   2. the sales made to Ms Hoang in the 2015 financial year were not in the usual course of trade of a supermarket business; and
   3. there was no disclosure of the sales to Ms Hoang being outside of the usual course of trade to Reserve Capital.
2. That is, the plea at SOC [13.2.2] (which is negativing the Profit Representation) must be understood as effectively expanding or adding to the Profit Representation - notwithstanding the way in which the Profit Representation was defined in SOC [7.4].
3. In its written opening submissions, Reserve Capital posed the issue for determination (arising from SOC [13.2.2]) as:

65.3 Whether, if more than half these keyed sales were paid from a single credit card in exchange for bulk wholesales to a single customer, were these transactions other than in the usual course of trade?[983]

1. Ms Piggott and Lightwest Investments did not accept that on the pleaded case the mere inclusion of the sales in the financial statements could be misleading.[984]
2. In its oral opening, Reserve Capital submitted as to the sales to Ms Hoang:

... So they're not a standard grocery store operator - customer. You will also hear from the experts in relation to this to say that this level of keyed sales is completely outside the usual course of business for this type of business, to the extent that the keyed sales are usually fairly low and then these ones are an extreme amount. And that's to give weight, your Honour, to the proposition that these are not, or these are - there is some issue in relation to these sales.[985]

1. It may be seen from the passages I quoted above from Reserve Capital's written and oral openings that there was something of a conflation of the issue of bulk sales with the issue of keyed sales.
2. I think care needs to be taken when approaching this as SOC [13.2.2] is directed to a single customer and, one may infer, directed to bulk sales to that single customer; rather than the plea being directed to the mode of those sales, i.e. keyed versus scanned sales.
3. Seascapes and Mr Piggott closed on the basis that:

1. whether or not any or all of the sales to Ms Hoang were in the usual course of trade was irrelevant and did not render the Profit Representation misleading and deceptive;[986] 2. that is because the Profit Representation related only to the gross profitability of Seascapes in the 2015 financial year;[987] 3. the Profit Representation said nothing about the extent to which Seascapes' gross profitability in the 2015 financial year was a consequence of activities in the usual course of trade as a retail supermarket;[988] and 4. if the gross profit of $1,288,840 and gross profit margin of 34.9% was achieved in the 2015 financial year - regardless of how it was so achieved - the Profit Representation was true and correct.[989] 5. Ms Piggott and Lightwest Investments in their written closing sought to characterise what Reserve Capital said about its plea in SOC [13.2.2] as a 'case of silence or non‑disclosure'.[990] Ms Piggott and Lightwest Investments submitted that had such a case been pleaded:

(a) [Reserve Capital] would have been obliged to specify what exactly ought to have been disclosed, and when;
>
> (b) the defendants would have had the opportunity to: > > > (i) prepare a defence based on due diligence or disclosure of relevant facts;
> >
> > (ii) cross-examine Mr Satyawan on the extent of his due diligence; and
> >
> > (iii) investigate and adduce evidence in relation to whether and to what extent, the [Business] continued to make large sales to a single customer in the 8 months between June 2015 and March 2016.[991] (footnotes omitted)

4. The difficulties with Reserve Capital's closing submissions about the 'alleged bulk sales' to Ms Hoang have been considered already under SOC [13.1.1] above.
5. Ultimately, as I have found above, Reserve Capital's case was that the bulk sales to Ms Hoang did occur.[992]
6. To that ultimate case, Reserve Capital submitted in its written closing:

Furthermore, Ms Hoang's transactions were other than in the usual course of trade of a retail supermarket business, and ... it is no answer to say this did not impact [Seascapes'] profitability, given that the Profit Representation relates to the profitability of the Business, not the corporation and the Business was confined to retail (Seascapes [IGA] being a small IGA with a turnover of only $60,000 or $70,000 a week).[993] (footnotes omitted)

1. In its oral closing, Reserve Capital submitted:
   1. that the attachment 'KLD-12' to Mr Lewis' supplementary report was the list of Ms Hoang's transactions;[994]
   2. the dealings with Ms Hoang did not represent the ordinary course of business;[995] and
   3. the sales to Ms Hoang were not what a retail supermarket does.[996]
2. In circumstances where Reserve Capital's ultimate case was that the sales to Ms Hoang and the other bulk keyed sales did occur, then the Profit Representation, at least in its historical sense, cannot be relevantly negatived by the plea at SOC [13.2.2], unless the Profit Representation as pleaded included the further plea as to the profit being achieved in the usual course of a supermarket business.
3. As seen from the opening submissions set out above, the defendants did not accept that the Profit Representation made the additional representation.
4. The 'negativing' plea in SOC [13.2.2], on its face, did not correspond to, nor negative, the pleaded Profit Representation.
5. I do not consider that the Profit Representation as defined and pleaded in SOC [7.4] contained within it a plea that there was a further representation as to the profit (in 2015) being achieved in the usual course of a retail supermarket.
6. In my judgement, the defendants were entitled, at least as to the historical position, to take the Profit Representation as it was pleaded in SOC [7.4], rather than meeting a case of, as they put it, silence or non-disclosure.
7. If that is correct, then the defendants were entitled to lead their evidence, and run their defences accordingly.
8. I now turn to the evidence at trial to analyse how the trial was run on this issue.
9. In doing so, I have in mind and apply the principles stated in, for example, Banque Commerciale SA In Liquidation v Akhil Holdings Ltd[997] that:
   1. the function of pleadings is to state with sufficient clarity the case that must be met;
   2. pleadings serve to ensure that a party has the opportunity of meeting the case against them and to incidentally define the issues for decision;
   3. the circumstances in which a case may be decided on a different basis from the pleadings are limited to those in which the parties have deliberately chosen some different basis; and
   4. ordinarily whether the parties have chosen some different basis is determined by inference from the way in which the trial was conducted.[998] (citations omitted)

1. Mr Satyawan gave the following evidence in cross‑examination:
   1. he was aware in early 2017 that a business like the Seascapes IGA might have business or wholesale or bulk customers;[999]
   2. the Seascapes IGA might have business or wholesale customers;[1000]
   3. he was aware that there might be someone who owned a café who would come to the IGA Seascapes and buy their café's needs there up to $1,000;[1001] and
   4. Mr Satyawan was not told at the time he bought the Seascapes IGA that in the past it had had large wholesale customers.[1002]
2. Immediately after giving the last answer, Mr Satyawan volunteered:

... If I was told there is [$]470,000 key sales in the system, I wouldn't buy the business.[1003]

1. These questions in cross-examination (as set out above) were directed to the time at which he sent his email to his then selling agent on 6 January 2017.[1004] That email stated:
   1. there were no customers on account 'at the moment';
   2. this was something that a new owner could explore; and
   3. Reserve Capital had had some enquiries from the nearby retirement villages/schools.[1005]
2. Mr Satyawan said that when a customer wanted to buy more than $200 worth of stock he would have referred them straight to the supplier because they could not deliver the product to them.[1006]
3. Mr Satyawan had not given any evidence-in-chief as to any discussions he had about bulk customers prior to the purchase of the Business. He also had not given any evidence-in-chief as to what he understood from the figures presented by Seascapes as to the make up of the customers at the store.
4. Those matters and the position the defendants had taken in opening (i.e. that the Profit Representation did not contain a representation as to what was the usual course of business) would explain the forensic decision made by the cross-examiner to focus on the time of early 2017, when Mr Satyawan's email was sent,[1007] rather than asking questions about the time of the purchase of the Business.

1. Mr Lewis stated, in his report, that of the pleaded sales to Ms Hoang:[1008]

... Such bulk sale transactions are extremely unusual and cannot be considered to be retail sales that you would expect to be made in a normal supermarket. As such, the source of these sales including the specific customer(s) involved should have been disclosed in the Business Profile document. This would have allowed the purchaser of the business the opportunity to negotiate with the relevant customer(s) to continue the supply after the sale of the business and to also assess the risk of having such a large proportion of sales with a single customer.[1009] (emphasis added)

1. I have put to one side Mr Lewis' opinion about what should have been disclosed in the Business Profile.
2. Mr Lewis went on to state that the purchases made by Ms Hoang:

... would therefore seem impractical for this to be an efficient mechanism for either the seller or buyer ...[1010]

1. Mr Lewis then gave reasons for that view.
2. Notwithstanding those statements in Mr Lewis' report, it appeared from his oral evidence that the Grocery Manager system would allow for a discount to be calculated on bulk sales.[1011]
3. Further, it appeared that the difficulty that Mr Lewis had was not with bulk sales as such, but rather with them being processed by way of keyed sales rather than scanned sales.[1012]
4. The following exchange occurred in cross-examination:

- - - to implement - - -?---But as I discussed earlier, I just don't see any benefit in doing bulk sales in the way that has been suggested. It makes no sense to me at all.

Because there would be a bespoke discount for a particular customer who is buying in bulk?---You can access the - - -

That would be a reason for utilising keyed sales, wouldn't it, Mr Lewis?‑‑‑No, because you can set up an account within Grocery Manager, process the sale into an account and then process a discount through there. There's - so that way, then, at least you would have recorded all of the articles going out of the door. That maintains your inventory to an appropriate - or to the correct level. That would - enables your auto-ordering to work correctly. The value of sales goes into an account for whatever name and then the owner can decide, 'Well, instead of paying me that much, pay me this much and process the balance as a discount.' That would be far simpler.[1013]

1. Mr Piggott's evidence-in-chief was that Seascapes IGA did make bulk sales to various bulk customers and that Ms Hoang was one of them.[1014]
2. Mr Piggott's evidence was that there probably were some bulk customers other than Ms Hoang but he could not remember who they were.[1015] He said that such bulk customers were hard to manage and were problematic.[1016]
3. Mr Piggott said that he had known Ms Hoang 'for a while' but could not say how her buying in bulk from Seascapes IGA had 'originated exactly'.[1017]
4. Mr Piggott also gave evidence of his role in making the sales to Ms Hoang. I have set out that evidence below under the Management Representation.
5. He gave evidence that his role would be to negotiate the price with Ms Hoang and he would help assemble the order.[1018] He said that he would meet Ms Hoang at the Seascapes IGA to make the deal and arrange the bulk purchase.[1019]
6. Mr Piggott's evidence-in-chief was that the sales would be paid for by a credit card and would be entered into Grocery Manager as a manually keyed sale.[1020]
7. Mr Piggott was asked some questions in cross‑examination about the bulk sales to Ms Hoang.[1021] He was not asked questions as to whether the bulk sales to Ms Hoang, or to any other buyer, were in the usual course of trade as a retail supermarket in circumstances where he had experience with at least two IGA supermarkets.[1022] Having said that, he did, in passing, give evidence that:

... various delis and bits and pieces always go to IGA stores. There's less and less presence of cash and carries these days.[1023]

1. Mr Piggott did not accept that processing Ms Hoang's sales as keyed sales (rather than scanned sales) made the Seascapes ordering system 'nearly dysfunctional'.[1024]
2. In a perfunctory manner at the end of the cross-examination, Mr Piggott was asked, and responded, as follows:

I put it to you that the Seascapes business of including bulk sales to [Ms Hoang], or to any others, including all sales of, say, $1000 or more, were not disclosed - that part of the business was not disclosed to Mr Satyawan or Ms Dewi - was not identified to them as not being in the ordinary course of business?---I disagree with that.

1. Mr Piggott was not otherwise asked, and did not give evidence as to what, if anything, had told Mr Satyawan about bulk sales. [1025]

1. In evidence-in-chief, Ms Piggott gave evidence that in a break at the stocktake she recalled Mr Satyawan asking Mr Piggott why the Seascapes IGA had not continued doing wholesale customers. Her evidence was that she and Mr Piggott explained it was just too much hard work.[1026]
2. Her evidence was that prior to the selling of the Seascapes IGA, they had not had a wholesale customer or customers for some time as they 'sort of' came and went.[1027]
3. Still in her evidence-in-chief, Ms Piggott gave evidence that she had met and knew one of the wholesale customers, Ms Hoang. Her evidence was that she had met Ms Hoang a few years prior when Ms Hoang was a tenant for a short time at the Bertram premises,[1028] but she did not have any discussions or contact with Ms Hoang at or about the Seascapes IGA.[1029]
4. In cross-examination, Ms Piggott:
   1. accepted that Ms Hoang used to buy substantial product from the Seascapes IGA to a reasonable dollar figure;[1030]
   2. said she did not have anything to do with the processing of Ms Hoang's purchases;[1031]
   3. twice disagreed with the suggestion that it was not in the ordinary course of an IGA business to have a customer who was spending over $200,000 a year;[1032]
   4. in disagreeing that it was unusual to have someone spending more than $200,000 a year, said 'customers come in all shapes and sizes';[1033] and
   5. repeated her evidence that such customers 'come and go'.[1034]
5. To the extent that she was able to answer the question, Ms Piggott said that there had also been substantial customers at the Bertram IGA.[1035]
6. Towards the end of Ms Piggott's cross‑examination the following exchange occurred:

I put it to you that Seascapes business included bulk sales to a single customer, Ms Hoang, which should have been - which were not in the ordinary course of business and therefore should have been disclosed to Seascapes. Would you accept that?---They were a number of years ago. And I was present when we discussed wholesale customers. Because [Mr Satyawan] wanted to know why we didn't continue.

All right. When was that conversation?---That conversation was at the time of the stocktake.[1036]

1. That matter was not further explored, nor was Ms Piggott challenged on this evidence, in cross‑examination.

1. In the cross-examination of Reserve Capital's witness, Ms Nesbitt, the following exchange occurred:

... Just going to the bulk sales now. So how often did you see somebody rolling two or three trolleys around and making one large purchase?‑‑‑Well, not many.

Not many. So two or three times a year, five times a year, 10 times a year, once a month?‑‑‑I couldn't tell you.

Did you ever see anybody rolling three trolleys around?‑‑‑Not three trolleys. Two trolleys, yes.

Okay. How often was that person - that party?‑‑‑Not often.

Not often. All right. I'm going to ask you if you remember a customer called [Ms] Hoang?‑‑‑No.

She was a customer who evidently attended the store and would spend $10,000 on buying goods. If somebody was spending $10,000 on buying goods, even though you weren't on the counter, I put it to you, you would know what was going on - that was happening, wouldn't you?‑‑‑Yes.

It has been put to us that $10,000 would be something like 70 trolleys, so it would be a very significant purchase, wouldn't it?‑‑‑Yes.

$10,000?‑‑‑It would be a ‑ ‑ ‑

So let me just understand. You never saw anybody buying $10,000 worth of goods at ‑ ‑ ‑ ?‑‑‑No.

‑ ‑ ‑ Seascapes. Just remind me again: how long did you work there for?‑‑‑Probably [a] total of three years.[1037]

1. As I have considered under the discussion of SOC [13.1.1] above, while not challenging Ms Nesbitt's credibility or reliability, Reserve Capital's case was that, notwithstanding her evidence, such bulk sales had occurred.

D.2.6.2 Consideration of Reserve Capital's case on SOC [13.2.2]

1. The point of the above analysis is that it does not appear to me that the case was run at trial by the parties on the basis that the Profit Representation contained that additional representation that Reserve Capital asserts was made.
2. If I am correct that Reserve Capital did not effectively plead that the Profit Representation included the representation that it was made 'in the usual course of trade as a retail supermarket', then I do not consider that the course of the trial effectively expanded the issues to be determined. In the language of the authorities I cited above, I do not consider that, here, 'the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination'.[1038]
3. Further, the evidence, such as it was, from the defendants (given by Ms Piggott as set out above; and perhaps Mr Piggott's bare denial to the perfunctory question) was unchallenged to the effect that there was discussion and disclosure of wholesale customers.
4. I am not saying that evidence would, at the end of the day, necessarily have been accepted. Rather, that evidence suggests that if the Profit Representation had been pleaded as including a representation as to the Seascapes IGA's usual course of trade, then the defendants may well have had called evidence which specifically addressed that question.
5. In any event, I would not have found that the evidence led by Reserve Capital would be sufficient for me to be satisfied that the dealings pleaded in SOC [13.2.2] were not in the usual course of trade as a retail supermarket.
6. I accept that Mr Lewis' evidence went some way to establishing that proposition.
7. However, the basis on which Mr Lewis made the statement, as quoted in paragraph [1023] above,[1039] was not explained. For example, as I understood it, Mr Lewis did not explain that conclusion from the financial statements which he had for a number of the other IGA businesses which he relied on for some of his other conclusions.
8. To be fair to Mr Lewis, he may not have explained his view because he had reached a conclusion that such bulk keyed sales had not occurred, and he thought such large bulk keyed sales were not a sensible way to run a supermarket.
9. Further, Mr Piggott was not cross-examined on the point. And, Ms Piggott disagreed with the proposition that such sales were not in the usual course of business.
10. Taking those matters into account, I would not have been satisfied that Reserve Capital has established its plea in SOC [13.2.2]. A further difficulty for Reserve Capital is that there was no evidence led that it understood that the unpleaded representation was made, or that it had taken it into account in any way prior to the purchase.

D.2.7 SOC [13.3] Gross profit percentage at 34.9%

1. The figure of 34.9% was not stated expressly in the Business Profile. Rather, it stated that for the 2015 financial year 'Gross Profit' was $1,288,840 and 'Gross Revenue' was $3,690,877;[1040] 34.9% was, obviously, calculable from these figures.
2. There are two broad ways in which Reserve Capital may have succeeded on this plea.
3. The first was to succeed in proving that some entry or entries in the financial statements was or were inaccurate which had the consequence of mis-stating the gross profit; i.e. proving one of the allegations made in the pleas at SOC [13.1] - [13.2.2].[1041]
4. As set out above, I have found Reserve Capital has not succeeded in any of those pleas. If it had been so successful, that might have explained how, or led to the conclusion that, the plea at SOC [13.3] was made out.
5. Seascapes and Mr Piggott submitted in their written closing:

Without establishing any of the matters pleaded in SOC [13.1] or [13.2], there is no basis for [Reserve Capital] to establish that the Profit Representation was misleading or deceptive for the reason pleaded in SOC [13.3].[1042]

1. However, it was accepted by the defendants in their oral closing that it was possible for Reserve Capital to succeed on the plea in SOC [13.3] without succeeding in any other of its relevant pleas.[1043]
2. To succeed in this second way, Reserve Capital had to prove its plea in SOC [13.3] to the requisite standard, but without providing an explanation as to how Seascapes had produced its relevantly misleading financial statements. It is a plea of a misleading result rather than showing the errors in its production.
3. Reserve Capital might have succeeded in its plea in SOC [13.3] if, broadly, the evidence of Mr Lewis was taken to establish to the requisite standard that:
   1. no IGA store in the 2015 financial year in Western Australia could have returned a gross profit percentage of 34.9% if it had the mix of fresh and grocery sales that the Seascapes IGA did; and
   2. consequently, the likelihood is that Seascapes IGA did not make that return in that year.
4. That evidence would have to be accepted as, of itself, falsifying the 2015 financial statements and, by extension, the tax returns made to the ATO from those financial statements.
5. It may be seen from this just how significant Mr Lewis' evidence was to, at least, this aspect of Reserve Capital's case. I have noted that the importance of his evidence was a very significant reason in my decision to allow Reserve Capital to continue to supplement his reports during the course of the trial.
6. Mr Lewis' essential reasoning on this aspect was in his initial report as follows (and I especially note [18.3] quoted below):

[17] The level of actual gross profit being achieved within the WA Independent Supermarket sector will vary depending upon several factors. These will include factors identified earlier in this report such as how well a retailer controls shrinkage, theft and manages the receival process and also their ability to generate Investment Buy profit, none of which is reflected in the Scanning GP.

[18] There are however factors that have a larger impact on actual gross profit, each of which will already be reflected in the Scanning GP, these are:

18.1. Pricing Policy - a store can generally apply its own mark-up to products they sell, except where there is an over-riding retail price dictated by a supplier or by virtue of being part of the IGA network, especially in relation to long-term promotions such as Price Match. The level of mark-up that each individual retailer is able to apply will vary across the store and is usually guided by the local demographics and nearby competition. Retailers will usually agree a mark-up by product category with Metcash, that is then automatically included in the selling price that is sent down to the store via the weekly Host. The impact of this pricing policy is therefore reflected in the Scanning GP.

18.2. Proportion of Promotional Sales - products on promotion will usually attract lower margins as not all of the discounts given to consumers is funded by the supplier or Metcash. Therefore, the proportion of sales that are made from lines on promotion will have a direct impact on the margin a store will make i.e., the higher the proportion of promotional sales, the lower the achievable margin.

18.3. Product Mix - the biggest driver of gross profit is the mix of sales across the store. In general, the fresh departments attract the highest margins and therefore if they represent a larger proportion of overall sales, the store will record a higher overall gross profit. On the reverse, the grocery sections, especially cigarettes, generally attract lower margins and therefore if the fresh component is low, the overall gross profit will be driven by these lower margin sections and will consequently be lower.

...

[20] The majority of IGA stores that I have been involved with would report actual gross profits in the range from 20% to 25%. Those at the lower end would have a proportion of fresh department(v) sales at no more than 20% of total store sales and a higher proportion of cigarette sales in excess of 20%, some as high as 25%. To achieve higher actual gross profits, a store would need to have fresh department sales of at least 30% of the store sales and be achieving actual gross profits across those departments in excess of 30%.

[21] I have experience with several IGA supermarkets in WA achieving actual gross profits of up to 32%. However, this is only possible because sales from their fresh departments represent over 50% of total store sales, including large service delicatessens serving hot food and other meal options, and the average actual gross profit across those departments is over 35%. These stores are usually located in more affluent areas where customers are less price conscious and more [focused] on quality, customer service and variety of product range.[1044] (emphasis added)

1. Mr Lewis stated his overall opinion as follows:

[34] Based on the available information, I am of the opinion that the reported actual gross profit for the 2014/15 financial year of 34.9% is well in excess of the actual gross profit that it is likely was made during that year. I summarise my reasoning below:

34.1. The Scanning GP does not support the actual gross profit - the Scanning GP of 22.28% will be somewhat accurate, especially as it relates to the Grocery sections of the store, due to the large quantity of stock that would have been purchased through Metcash, where purchase costs are maintained via the weekly Host. Furthermore, if the purchase costs for products from direct suppliers have not been properly maintained, it is more likely that they will be lower than is actually being paid due to inflation, and therefore the Scanning GP would be overstated rather than understated.

34.2. Shrinkage and theft will reduce the available actual gross profit - there is no record of what level of shrinkage or theft the store was incurring but there would undoubtedly have been some and I would estimate that this would, as a minimum, represent between 1% and 1.5% of total store sales.

34.3. Lack of capacity to generate significant Investment Buy profit - given the physical size of the store and with average weekly turnover of only $70,000 (inclusive of keyed sales), I think that the store would be unable to generate any significant value of Investment Buy profit and certainly not enough to be able to generate $491,975 of extra gross profit in the Grocery sections, representing an additional 19.37% in actual gross profit. At best, it is likely that any Investment Buy Profit would be between 1% and 1.5% of total store sales.

34.4. Lack of substantial buying power - the combination of orders from the two supermarkets (Bertram IGA and Seascapes IGA) is insufficient to be able to negotiate any significant discounts with suppliers beyond those available to other IGA retailers and larger groups.

34.5. Product mix - the store's fresh department(V) sales only represented 11.6% of total store sales at an average actual gross profit of 21.61%. This is well short of the amount required to achieve the reported overall actual gross profit, which would require a fresh mix of sales in excess of 50% of the total store sales with an average actual gross profit of over 35% across these departments.

34.6. Keyed sales - the value of keyed sales of $472,252(i) is extremely unusual for any normal supermarket. In particular, $462,020 of this value was generated by individual transactions greater than $1,000 for which I do not believe that the cost of these sales was included in the financial statements.

[35] In my opinion, it is more likely that the Grocery Manager records of the Business provide a more accurate indication of the actual gross profit of the business and that the actual gross profit being achieved was much closer to the Scanning GP reported by the POS system of 22.28%. Any Investment Buy profit the store was able to make would most likely be absorbed by shrinkage and theft.

[36] As noted in paragraph 22 above, the actual gross profit calculations specifically exclude the costs of Freight and the receipt of Discounts Received (Metcash Rebates), as these items will not be included in the Scanning GP. The value of these amounts represented (0.59%) and 1.17% respectively in the year to June 2015.

[37] Based on the above factors I would anticipate that the actual gross profit being achieved was not the reported 34.9%. I estimate that at best the actual gross profit would have been in the region of:

Note that in the above calculations, no allowance has been made for theft or any inaccurate maintenance of purchase cost prices or damaged or short deliveries from suppliers, each of which would have a negative impact on actual gross profit.

Based on the total sales reported in the financial statements of $3,690,877, the above calculations estimate the actual gross profit to be between $825,280 and $862,189 for the year, or between $426,651 and $463,560 less than the reported $1,288,840.

[38] The above estimated actual gross profit of between 22.36% and 23.36% is within the range I would expect a supermarket of the size and location of Seascapes IGA to achieve, especially given the low proportion of sales (11.6%) attributable to the fresh departments.[1045] (original emphasis)

1. Relevantly to the above, Mr Lewis used the following terminology:
   1. 'fresh departments' or 'fresh' to mean or ordinarily include: meat, fruit and vegetable and service delicatessen; and
   2. 'Total Grocery' or 'grocery' to mean or include: grocery food, grocery non-food, cigarettes, variety, bakery, confectionary, plants, magazines and pet food.[1046]
2. Reserve Capital also sought to place reliance, even if only by way of corroboration of Mr Lewis' conclusions, on the expert reports of Ms Marke (called by Reserve Capital) and Mr Hockley (called by the defendants).
3. In the Joint Report of Ms Marke and Mr Hockley on the Valuation of Seascapes IGA as at 21 March 2016,[1047] they stated:

Both experts agree that Seascapes IGA is not a 'premium' IGA given the sales mix and product offering.

Both experts further agree that a gross profit margin in the range of 25% would be reasonable for a supermarket such as Seascapes IGA based on their experience. [1048]

1. It needs to be noted that Ms Marke and Mr Hockley were considering this for the purposes of their determining a value of the Business on a future maintainable earnings basis. They were not specifically considering this for the purposes of opining what gross profit Seascapes had actually achieved in the 2015 financial year.
2. Mr Hockley stated that:

I have considered an adjustment to the gross profit margin from the reported gross margin in FY2015 to be reasonable based on my understanding of the industry.

Based on my understanding of the industry and the information contained in Section 3.0 above, I have assumed that a gross profit margin in the order of 25.0% to be a reasonable gross profit margin.

1. In his evidence‑in‑chief, Mr Hockley said:[1049]

The most significant adjustment to that is the gross profit adjustment ...

... What it does is it results in a reduction of the EBITDA and, therefore, a reduction in the overall assessed profitability of the business based on a - on a future earnings basis, taking into consideration what a -what a transaction might look like, note - noting that the gross profit margin in my view seemed substantially higher than what other stores would do and, therefore, a purchaser would not - would necessarily take that into consideration when looking at the valuation and look to, potentially, adjust their likely earnings based on what the market historically might have been able to sustain based on other IGA stores.

1. In cross-examination, Mr Hockley gave the following evidence on the point:[1050]

... So you assumed a gross profit of 25 per cent because your understanding of the industry and your research indicated that would be a reasonable gross profit margin to be applied so that you could give a reasonable analysis to this court. Is that correct?---Yes. My assessment was that the margin that had been achieved in the 2015 financial year, which I think was 33.8 per cent, was substantially higher than any other IGA store I had previously identified and, therefore, I considered an adjustment on a conservative basis that should be made to reflect what might be the likely normalised EBITDA of the business going forward.

1. Seascapes and Mr Piggott submitted that Ms Marke's and Mr Hockley's reports did not express any view as to the actual gross profitability of Seascapes IGA during the 2015 financial year and, at their highest, contained 'some' opinions regarding the typical range of gross profits achievable by IGA supermarkets.[1051] I accept that submission. With respect, on this critical matter, I do not consider that their evidence adds very much at all.
2. Seascapes and Mr Piggott submitted that Mr Lewis's evidence was essentially advocacy for a particular conclusion, and he had shoehorned 'information available to him to support that conclusion'.[1052]
3. The primary attack made on this part of Mr Lewis' evidence was:

[29] Mr Lewis clearly had an entrenched view, apparently formed prior to providing his reports in these proceedings, that the gross profitability of an independent supermarket is predominantly determined by the extent of fresh produce in its sales mix; and supermarkets with a lower proportion of fresh produce in their sales mix were subject to inherent limitations on their potential gross profitability.

[30] Mr Lewis held out his schedules comparing the Seascapes IGA business to other supermarkets as being comparisons which demonstrated this point.[1053] However, the reality is that the selection of stores to compare to Seascapes IGA was not driven by the seeking out of the most comparable stores from Mr Lewis's dataset, but by selection of those which Mr Lewis thought best illustrated the point that he sought to make; or by simply making use of the only stores for which he had available data (addressed at paragraph 114 below).

...

[114] Mr Lewis's process of selecting the stores to use as comparisons in his KLD 14A to KLD 14D tables - initially held out as comparing particular metrics of the performance of Seascapes IGA business with apparently comparable supermarket businesses - turned out to unreliable; with the selection criteria either being suitability to demonstrate a preconceived view or simply being a product of necessity given a paucity of other stores for which Mr Lewis had information about the relevant metric ...[1054]

1. As I understand the submission, it involved the following:
   1. there was no proper process of reasoning;
   2. it was a statement of a (pre-determined) conclusion; and
   3. that may go to whether, in addition, Mr Lewis was independent or whether he was more like an advocate for his view.
2. In my view, Mr Lewis was principally drawing on his experience when he gave his evidence, particularly at [18.3] of his first report, which I quoted above.[1055]
3. So much I think is plain, or is confirmed, by the following exchange in cross‑examination:

Accept this as a proposition, Mr Lewis: the analysis - the comparative analysis you conduct is inherently constrained by a small dataset; do you agree with that?---No, because I think that the premise on which I have reached my conclusions, that predominantly, that the fresh - the mix between fresh and grocery sales - or the proportion of fresh is - has been the same in all of the periods that I have looked at and all of the periods that I could have looked - could - sorry, all of the history that I know about, you know, 20 years ago, when I worked for Foodland. It's always been the fresh departments that drive the profit - the - sorry, the gross profit. So conditions will change, things will go up and down, fruit and veg prices change, etcetera, etcetera. So yes, things change, but wholly, the proportion of fresh sales and the GPs that you can generate from those departments will largely dictate the overall margin that you're able to achieve. That's my conclusion.

So that was the view you started this process with, wasn't it, Mr Lewis?‑‑‑I beg your pardon?

You had that view when you started writing the first of your reports, didn't you, Mr Lewis?---From the history that I had had, yes.[1056] (emphasis added)

1. In no way do I consider that Mr Lewis reached that view or held that view to advance Reserve Capital's position in a particular way.
2. Further, I think that the opinion which Mr Lewis expresses is one that is drawn from his considerable experience over a long number of years. I think it is much more in the nature of evidence derived from his personal experiences and observations over a long period of time. In this way, I consider it to be like the evidence identified by McLure P in Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd.[1057]
3. In that case, her Honour had set out the objections taken to a witness' evidence who had given evidence of market practice for business interruption insurance. After setting out the objections made, her Honour noted the objector's reliance on well‑known authority[1058] and said:

Makita is authority for the well‑known proposition that the prime duty of experts in giving opinion evidence is to furnish the trier of fact with criteria enabling evaluation of the validity of the expert's conclusion. However, I am not persuaded that the evidence relating to common types of exclusion clauses in the business interruption insurance market is opinion evidence. It is factual evidence of market practice. That is, it involves factual evidence of personal experience and observations over a very lengthy period in a highly specialised market. It is comparable with evidence given by police officers in criminal trials relating to factual matters associated with dealings in prohibited drugs.[1059] (citations omitted)

1. I would admit Mr Lewis' evidence on this aspect on that basis.
2. I do not accept the criticism or submission that Mr Lewis then sought to reverse engineer the material about other IGA businesses that he put before the Court to support his evidence. Rather, I think Mr Lewis sought to illustrate the evidence of his experience by the data he had available to him.
3. I do not accept the criticism or submission that Mr Lewis somehow selected stores to 'demonstrate [his] pre‑conceived view'.[1060]
4. However, there is more force to the criticism that the data he sought to use by way of demonstration or illustration from other IGA stores was (perhaps necessarily) limited.
5. In my view, it is not that the small data set put before the Court necessarily undermines Mr Lewis' evidence as to his personal experience and observations. Rather, it goes to the weight and confidence that I can have in his evidence on the point.
6. Further, the defendants' position (from the evidence they led) is that the product mix recorded in Seascapes' financial documents should not be taken as being necessarily accurate because of the large volume of keyed sales which appear to have been entered as 'grocery' items rather than 'fresh' items.
7. Further, the defendants, in effect, submitted that the Court should not accept, in all cases (and certainly not in the case of the Seascapes IGA), the reported mix between fresh and grocery items as a determining factor by itself as to gross profitability percentage.
8. It is plain that Mr Lewis, in his experience, had not come across an IGA store with the gross profitability such as that represented for the Seascapes IGA and certainly had not come across one which had the product mix that he took as fact for the Seascapes IGA.
9. I certainly understand the force of Mr Lewis' evidence.
10. However, I am not persuaded that Reserve Capital has established from his evidence that it is likely (as opposed to possible) that Seascapes IGA could not have returned a gross profitability as pleaded in SOC [13.3.3].
11. While unusual, I consider that the bulk keyed sales being of the size they were (as accepted by Reserve Capital ultimately in its case) may well have had the effect of skewing, to some unknowable degree, the apparent or reported product mix by effectively increasing the grocery input over the fresh input. That would reduce the accuracy of the reported product mix that Mr Lewis was considering.
12. I have found it difficult to accept Mr Lewis' evidence as discharging Reserve Capital's burden in circumstances where, as found above, I have not been persuaded that there was anything demonstrably wrong with any component or input in the 2015 financial statements. And, the accuracy and reliability of the 2015 financial statements are supported, in my view, by the fact that they formed the basis of returns made by Seascapes to the ATO prior to the Business being put up for sale.
13. As may be noted from the above, there is a particular contest between the parties as to the accuracy and reliability of the 2015 financial statements in the determination of the Profit Representation pleaded at SOC [13.3].
14. The defendants point to those financial statements and submit:
    1. they were derived from ledgers maintained by the MYOB program or platform;[1061]
    2. the ledgers comprised books kept by Seascapes pursuant to s 286 of the Corporations Act;[1062] and
    3. by s 1305(1) of the Corporations Act, they were prima facie evidence of the matters stated or recorded in them.[1063]
15. It may be noted that the Seascapes tax return for the 2015 financial year[1064] was in accordance with the 2015 financial statements. That is, the challenge which Reserve Capital seeks to make to the 2015 financial statements is to the effect that Seascapes inflated its taxable income in its return to the ATO and, necessarily, paid more tax than it would have been obliged to.
16. There was evidence of the 'regular' preparation of those statements. Mr Fogarty identified the financial statements for the 2015 financial year for Seascapes.[1065]
17. Mr Fogarty described the process that he and his accounting practice went through to prepare those financial statements as follows:
    1. he would have received a 'fully reconciled MYOB file' for the financial year;[1066]
    2. that MYOB file would have been loaded into his system;[1067]
    3. once loaded, there would be a high level review and cross‑checking of the file;[1068]
    4. there would then have been a discussion with Ms Piggott and also possibly Mr Piggott about whether any adjustments would be required;[1069] and
    5. if there was to be an adjustment then a journal entry in the MYOB file would be prepared and denoted with 'FP'.
18. The notation for an adjustment would allow an identification of what his firm had done in the MYOB file.[1070]
19. Section 1305(1) of the Corporations Act 2001 (Cth) provides:

(1) A book kept by a body corporate under a requirement of this Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book.

(2) A document purporting to be a book kept by a body corporate is, unless contrary is proved, taken to be a book kept as mentioned in subsection (1).

1. There was no issue in this case that Seascapes' 2015 financial statements were books kept within the meaning of s 1305 of the Corporations Act.
2. Le Miere J considered the operation of the section in Warwick Entertainment Centre Pty Ltd v Silkchime Pty Ltd [No. 2] [2012] WASC 275 [18] - [23]. While the books are not of themselves determinative, I consider that the statutory prima facie position has not been overcome by the evidence led by Reserve Capital.
3. Further, it seems to me of significance that when Mr Satyawan was trying to sell the Business, he reported gross profitability percentages of:
   1. about 30% or higher as found in [150], [151] above;
   2. about 29.5% as found in [163] above;
   3. about 33% as found in [168] above; and
   4. above 33% as found in [177] above.
4. I have already expressed my difficulty in knowing where the truth lies with Mr Satyawan's evidence. Was Mr Satyawan making true statements to potential purchasers at that time, or was he lying to them about it then and telling this Court the truth (when he explained those statements by saying they were lies).
5. However, those contemporaneous statements that Mr Satyawan made, if they were accurate, would show gross profitability of the Business 'under' Reserve Capital being not dramatically different from that represented in the Business Profile (and significantly above that said by Mr Lewis to be likely).

D.2.8 Was the Profit Representation made as to a future matter

1. Reserve Capital pleads that the Profit Representation additionally conveyed a representation as to future matters being that the purchaser of the Seascapes IGA could expect to achieve in the future similar outcomes or results.[1071] While it is not entirely clear, given the chapeau to SOC [8], I have taken Reserve Capital's plea, relevantly here, to be limited to the Profit Representation (as defined to have been made in the Business Profile).
2. The defendants deny that the Profit Representation in the Business Profile was a representation as to future matters.[1072]
3. Reserve Capital pleads that the Profit Representation in the Business Profile (and the subsequent representations to the same effect) are, by virtue of s 4(1) of the ACL or the FTA, taken to be misleading.[1073] That plea is not completely clear because the plea includes the word 'insofar' which suggests that it may depend on some positive plea elsewhere that the Profit Representation was in relation to future matters. That plea is denied by the defendants.[1074]
4. Reserve Capital further pleads that the Profit Representation as to future matters (that a purchaser of the Seascapes IGA could in the future expect to achieve similar outcomes or results to those represented in the 2015 financial statements) was misleading and deceptive because Seascapes had omitted to disclose that the Business' trading results for the first quarter of the year ended 30 June 2016 were less than the first quarter results reflected in the 2015 financial statements.[1075]

1. As noted above, I have taken Reserve Capital's plea (because of the chapeau to SOC [8]) in SOC [8.5] to be only directed to the Profit Representation (as defined to have been made in the Business Profile).
2. Reserve Capital in its written opening submissions did not address how it said that the Profit Representation was as to future matters. Rather, it focused on whether the representation (assumedly) about future matters was made without a reasonable basis.[1076]
3. Nor was the plea at SOC [8.5] as to the Profit Representation opened on orally by Reserve Capital.
4. In Reserve Capital's written closing, without elaboration it was put, relevantly, that the Profit Representation '... carried with it an implicit representation that [Reserve Capital] could expect those levels of business ... performance to endure (SOC 8.5)'.[1077]
5. That quoted submission had within it footnote 15 which relevantly stated:

For example, inclusion in the Business Profile of add-backs to adjust FY 15 figures to better reflect likely future performance when rent and outgoings would be incurred, and given this shown in context of an offer to enter into a lease for next decade. [sic]

1. Further, Reserve Capital submitted under a heading: 'Do representations of past performance carry implied representations about future performance'.[1078]

[47] In Cargill Australia Ltd v Viterra Malt Pty Ltd (No. 28) [2022] VSC 13 (Appealed, but Appeal dismissed), at [493] the Defendant's Corporate Finance Director accepted during cross examination that providing historical financials during due diligence carries an implied representation that the business, subject to market forces, and all other things being equal, is capable of repeating the reported results. The court accepted that this concession was correctly made (but did not make a general finding to this effect in its conclusion). Specifically, the court found, "In acknowledging his understanding that any purchaser would be focused on what it thought was reasonably achievable in the future, he stated that sophisticated purchasers always looked to historical financial performance as a benchmark for future performance. He quite correctly, further accepted, that for this reason it was 'so important' to get the historical information right.'[1079]

1. As explored with counsel for Reserve Capital in closing, I do not read Cargill as possibly supporting a factual or legal proposition to the effect that historical financial information carries, in and of itself, an implied representation as to a business' future performance.
2. There was a further rather bald submission by Reserve Capital that the defendants had 'expressly or implicitly represented that the profit margin ... could be replicated in future years ...'.[1080] That submission was not further expanded upon.
3. Leaving aside Cargill, Reserve Capital in its oral closing submitted that the 'add-backs' in Item 9 of the Business Profile[1081] constituted a future representation of the Business' profitability.[1082]

... by virtue of the add backs, [it's] indicating to you what you're going to have to spend or accept is going to be a depreciation on the cost and - because it's rent, it's not something which is going to be discretionary and, therefore, it represents what you need to look to for the future.[1083]

1. Further, Reserve Capital submitted that there was something implicit or inherent, also, in the simple presentation of the 2014 and 2015 financial statements:

... it becomes a future representation because it's indicating to the objective reviewer of this document that these are the profits you could earn next year, including with the add back. You need to take that into account.

...

... the submission is - and, your Honour, if you're against me, you're against me, but the submission is that by providing the financials for those years and later on providing the gross profit margin of [34.9%], it's representing not only that you would achieve the - that this has been the figures for this year, but then you would, as a purchaser, have the capacity to achieve the next year.[1084]

1. With respect, I do not think that Reserve Capital's submissions about there being an 'implicit' representation here is supported by the authorities and I do not accept it.
2. The defendants contended, by reference to authority, that statements of historical financial performance were not, of themselves, representations as to future matters.
3. Where a plaintiff or applicant claims that a representation is as to a future matter then, objectively, the representation must be capable of being so characterised.[1085]
4. As the Full Federal Court in Australian Competition and Consumer Commission v Woolworths Group Ltd[1086] stated:

A representation will only be with respect to a future matter if it is in the nature of a promise, forecast, prediction or other like statement about something that will only transpire in the future - that is, a representation which is not capable of being proven to be true or false when made.[1087] (citations omitted, emphasis added)

It may be possible for a representor to make a double‑barrelled representation or more than one representation in more or less the same breath. For example, a vendor of a business might state to a prospective purchaser of that business that the business had earned $1 million profit in each of the last five years and that, in his opinion, based upon that experience, the business would be likely to earn at least $1 million profit on average for the next five years. In that example, the first statement is a representation of an existing fact ...[1088]

1. In Christie Agency Pty Ltd v Wiseman Advertising Pty Ltd,[1089] in a paragraph that is of assistance here, McDougall J stated:

There was a representation made, that the business of Wiseman Advertising had made a 'management net profit' of $257,224 after ... the financial statements were adjusted by deleting, or adding back, the identified addback items totalling $263,478. ... Clearly, Wiseman Advertising made representations to the Christie Agency in terms of the addbacks schedule ... However, those representations are not as to future matters. Firstly, and perhaps by implication, they assert that the financial statements of Wiseman Advertising for the years in question ... are correct. Secondly, they represent expressly that if the arithmetical adjustments ... are made then, for each year, a net loss is transformed into a net profit in the way set out.[1090]

1. I do not consider, in line with the authorities I have set out above, that objectively, the statements relied upon by Reserve Capital in its plea at SOC [8.5] are as to future matters. There is nothing which contains, in my view, a 'promise, forecast [or] prediction'.
2. I find that the case pleaded at SOC [8.5] for the Profit Representation fails.
3. Reserve Capital, in its written closing, submitted that the defendants bore the onus of establishing that the representations as to future matters were made on a reasonable basis.[1091]
4. Having found that Reserve Capital has not made good its plea at SOC [8.5], I do not need to determine whether any or all of the defendants had a reasonable basis or bases to make that representation as to a future matter.
5. Although I do not need to decide it, I consider, on a preliminary basis, that if the Profit Representation was not misleading or deceptive as to the 2015 financial year then that may have provided a reasonable basis or bases to make a representation as to future financial performance.
6. Correspondingly, I would dismiss Reserve Capital's claim as pleaded in SOC [15].

1. Reserve Capital provided the following particulars to its plea at SOC [15A]:

1st quarter sales in FYE 2016 were $92,813 less than 1st quarter sales in FYE 2015[.]

1st quarter purchases [in] FYE 2016 were $95,418 more than 1st quarter purchases [in] FYE 2015[.]

1st quarter wages in FYE 2016 were $14,880 more than 1st quarter wages in FYE 2015.

1. By comparison with SOC [15], the plea at [15A] appears to be limited to the Profit Representation made in the Business Profile. The defendants did not expressly plead to SOC [15A].[1092]
2. The fatal difficulty for Reserve Capital in this plea (at SOC [15A]) is that it appears that those matters were disclosed in documents sent to Reserve Capital prior to the entry into any contract (i.e. on 4 and 10 February 2016).
3. As found in [58] above, on 10 February 2016 Reserve Capital had received Seascapes':
   1. BASs for the first quarter of the 2016 financial year;[1093] and
   2. 'Consolidated Hourly Productivity Report' for the quarters ending 30 September 2015, 31 December 2015 and up to 10 February 2016 (in the quarter that would end 31 March 2016).[1094]
4. Also, as found in [50] above, on 4 February 2016, Mr Piggott had also sent through the four BASs for the 2015 financial year.[1095]
5. With respect, Reserve Capital in its closing submissions did not grapple with this difficulty.
6. Rather, in support of its plea at SOC [15A] it submitted, by reference to figures produced in Ms Marke's report, that:

... Costs got worse in the second quarter as compared to the FY 16 first quarter figures they supplied, and ... wages got worse in the third quarter compared to the first quarter.[1096]

1. That submission is, with respect, clearly directed to a different plea than that made at SOC [15A] as particularised and as set out above.
2. It was eventually accepted by counsel for Reserve Capital in its oral closing that the figures given in the particulars to SOC [15A] reflected the BAS for the first quarter of the 2016 financial year.[1097]
3. Reserve Capital's submissions in its oral closing on SOC [15A], in light of the fact that it appeared that there had been disclosure of the results about which it was complained that there was no disclosure, were, with respect, difficult to follow.[1098]
4. In all of the circumstances, I find that Reserve Capital cannot succeed on its plea in SOC [15A] as the figures (and underlying documents) were disclosed to Mr Satyawan before the entry into any contract.
5. I would dismiss Reserve Capital's plea made at SOC [15A].

D.2.9 The other Profit Representation cases pleaded against Seascapes

1. Reserve Capital pleads that, through Mr Piggott as its agent, Seascapes made representations to the same effect as the Profit Representation on four occasions.[1099] Those pleas are also made directly against Mr Piggott and are considered below.
2. As will be seen, I have not found any of those pleas against Mr Piggott to be established and, therefore, necessarily the pleas against Seascapes through Mr Piggott as its agent must fail.
3. Reserve Capital pleads that Seascapes, through Ms Piggott as its director and agent, made representations to the same effect as the Profit Representation on three occasions.[1100] Those pleas are also made directly against Ms Piggott and are considered below.
4. As will be seen, I have not found those pleas directly against Ms Piggott to be established. Therefore, and necessarily, I would not uphold the pleas against Seascapes through Ms Piggott as its director and agent.

D.2.10 The Profit Representation cases pleaded against Mr Piggott

1. Reserve Capital pleads that Mr Piggott made representations to the same effect as the Profit Representation (made in the Business Profile):[1101]
   1. in late January or early February 2016, by orally confirming to Mr Satyawan and Ms Dewi that the Business Profile was accurate;
   2. between late January and March 2016, by orally repeating to Mr Satyawan and/or Ms Dewi the Profit Representation;
   3. on 4 February 2016, by providing to Mr Satyawan an Add Back Schedule;[1102] and
   4. on 8 February 2016, by providing to Mr Satyawan Seascapes' 2015 financial statements.[1103]
2. Mr Piggott did not admit making a representation to the same effect as the Profit Representation.[1104]
3. Mr Piggott submitted that no evidence was adduced of him making either of the oral statements particularised.[1105]
4. By parity of the reasoning I set out in D.1.8 above, I do not consider any of the above four matters was established by Reserve Capital. I do not find that Mr Piggott made the Profit Representation or representations to that effect as pleaded.

D.2.11 The Profit Representation cases pleaded against Ms Piggott

1. Reserve Capital pleads that Ms Piggott made the Profit Representation in the Business Profile as it is pleaded and that she made and, or, was responsible for the inclusion of the Profit Representation in the Business Profile.[1106]
2. As I have held that the claim concerning the Profit Representation (as pleaded) in the Business Profile fails, so must the claims against Ms Piggott based on the Business Profile itself.
3. It is further pleaded against Ms Piggott that she made representations to the same effect as the Profit Representation on three occasions. They being:
   1. by acting within the scope of her actual or apparent authority in her position as the sole director of Seascapes by providing the information for compiling the financial statements of Seascapes for the year ended 30 June 2016, which made the Profit Representation;[1107]
   2. by acting as director of Seascapes in authorising Ascend to distribute the Business Profile; [1108] and
   3. at the coffee meeting at the Ardross coffee shop on 11 February 2016, by adopting or acquiescing to Mr Piggott making a representation to the effect of the Profit Representation, and at the same meeting adopting or acquiescing Mr Piggott's supply of the 4 February 2016 email with 'Add Backs'.[1109]
4. By parity of the reasoning I set out in D.1.9 above, I do not consider that Reserve Capital succeeds in any of the above three cases against Ms Piggott that she made a representation to the effect of the Profit Representation.

D.2.12 The Profit Representation cases pleaded against Lightwest Investments

1. Reserve Capital pleads a number of cases against Lightwest Investments in relation to the Profit Representation and the making of representations to a similar effect.
2. The first appears to be that Lightwest Investments, itself, made the Profit Representation in the Business Profile.
3. I traced, relevantly, the pleas in the SOC under D.1.10 above and do not repeat that discussion here.
4. However, notwithstanding the wording of its pleading, if that plea is effectively made and maintained by Reserve Capital, then, as a matter of substance for the following reasons, I would not accept that Lightwest Investments made the Profit Representation in the Business Profile.
5. I have not repeated here Reserve Capital's propositions, as I understood them at their highest, which I set out in the discussion at D.1.10 above, and do not repeat here the 'buttressing' commercial matters raised by Reserve Capital.
6. By parity of reasoning with what is set out in D.1.10 above, I do not accept that Lightwest Investments made any representation about Seascapes' financial performance at all, including via the Business Profile.
7. I would dismiss, therefore, this first way that Reserve Capital made its case as to the Profit Representation against Lightwest Investments.
8. A second way that Reserve Capital puts the claim, perhaps, against Lightwest Investments, is pleaded in SOC [19.1.2] to the effect that Lightwest Investments was involved in the contraventions by Seascapes, Mr Piggott and, or, Ms Piggott.
9. The pleas made about the Profit Representation against Lightwest Investments depend on Reserve Capital succeeding in its claims against Seascapes, Mr Piggott and, separately, Ms Piggott making, or making representations to the effect of, the Profit Representation.
10. For reasons set out above, I do not find that Reserve Capital has succeeded in any of its claims against any of those three and, so, necessarily its plea of knowing involvement or liability against Lightwest Investments fails and does not need further consideration.
11. Reserve Capital then pleads that Lightwest Investments knew that the representations to the effect of the Profit Representation were made to Reserve Capital and was relying on those representations in entering into the Lease.[1110]
12. For reasons already given as to the failure of Reserve Capital to make out the Profit Representation or any of the representations to the effect of the Profit Representation, this last plea does not need to be further considered.
13. The pleas made about the Profit Representation against Lightwest Investments depend on Reserve Capital succeeding in its claims against Mr Piggott[1111] and, separately, Ms Piggott[1112] making representations to the effect of the Management Representation.
14. Reserve Capital then pleads that Lightwest Investments knew that the representations to the effect of the Profit Representation were made to Reserve Capital and that was relying on those representations in entering into the Lease.[1113]

D.3.1 The first plea on the Wages Representation

1. It is common ground that:
   1. the Business Profile represented that in the 2015 financial year Seascapes spent $312,292 on wages[1114] (which was defined as the Wages Representation); and
   2. Seascapes made the Wages Representation.[1115]
2. I have treated the Wages Representation, as defined, as the 'first plea' against Seascapes.
3. As will be seen, there are also other, subsequent pleas that representations to the effect of the Wages Representation were made in other ways and on other occasions.
4. Reserve Capital also pleaded that the Wages Representation conveyed a representation as to future matters being:

... the purchaser of the Seascapes IGA could expect to achieve in the future similar outcomes or results to those represented.[1116]

1. I leave aside for the moment the plea as to future matters.
2. The Business Profile, without the appendices, did not contain the pleaded figure. However, the second appendix (the 'Profit and Loss Statement') did contain it. I have taken the plea and admissions to refer to the Business Profile with, at the least, that appendix.[1117]
3. I note that the plea is that Seascapes IGA had expended that figure on wages, whereas the Profit and Loss Statement appendix was for the corporate entity, Seascapes. No party sought to make anything of that distinction, if it be one.
4. Further, it is to be noted that the Profit and Loss Statement provided a separate figure for superannuation contributions from the figure given for wages. Again, it does not appear that much turns on this, although it is important to bear that in mind when Ms Marke's and Mr Lewis' relevant evidence is considered below.
5. Reserve Capital pleaded that the Wages Representation was misleading or deceptive:

... in that the wages costs for the business was not $312,292 as represented but a significantly higher figure.[1118]

1. The Particulars to the plea in SOC [14], quoted in the previous paragraph, are important. They state:

(1) The 2015 accounts represented the wages costs incurred by the [Business] in that year was $312,292.

(2) The payroll records of the [Business] from 28 December 2015 to 20 March 2016 show a level of wage costs which if extrapolated over the whole year would mean total yearly wages of $389,231, being $76,939 more than the wage costs that the 2015 accounts represent were incurred in FYE 2015.

(3) The difference between the wages costs as represented by [Reserve Capital] and [Mr Piggott] and the true wages costs on an annualised basis is $76,939.[1119]

1. That is, as I read the plea with its particulars, Reserve Capital seeks to negative what was said to have been actually or historically expended on wages for the 2015 financial year by reference to the payroll records from a later period of time; i.e. 28 December 2015 to 20 March 2016.
2. The defendants deny the plea made in SOC [14].[1120]
3. By the end of its closing, Reserve Capital submitted that the Wages Representation was misleading and deceptive in two distinct ways.
4. The first was as per the paragraphs above setting out SOC [14] as particularised.
5. The second was that the Wages Representation was misleading and deceptive in that it did not disclose the 'cost' of the staff at Bertram IGA doing work 'for' Seascapes IGA.[1121]
6. The question arises as to whether the second way is within Reserve Capital's pleaded case. And, if not, whether Reserve Capital should have that unpleaded case determined in light of the way the trial was run. I do not repeat here the principles I adopted above at [1016] in D.2.6.1. I have applied them equally here.
7. To consider those matters, it is necessary to trace through the relevant parts of the trial.

1. In Reserve Capital's written opening going to the Wages Representation:
   1. the figure from Particular (2) to SOC [14] was used to submit that there was extra undisclosed staff time in the 2015 financial year;[1122] and
   2. it relied on Mr Lewis' expert opinion to submit that the Business required either more than 'minimal input' from the owner/proprietor or the Business actually had wages higher than $312,292 for the 2015 financial year, and that the extra cost would have been most likely in the region of $76,939 as a minimum.[1123]
2. In its written opening, Reserve Capital, (under the heading of 'Management Representation') referred to Seascapes as running the Business in tandem with the Bertram IGA and that staff at the Bertram IGA undertook administrative roles for the benefit of Seascapes IGA which, it submitted, was not disclosed to Reserve Capital.[1124]
3. That submission was put as going to show that the Business required 'full hands on management'.[1125] That submission, on its face:
   1. was not directed to the Wages Representation; and
   2. was made without referring to any pleading.

1. As was made plain in Reserve Capital's opening oral submissions,[1126] the figures referred to in Particular (2) to SOC [14] were derived in part from the payroll information in documents containing the hours worked at the Seascapes IGA by staff between 28 December 2015 and 3 April 2016 (Staff Timesheets)[1127] which was supplied by Mr Piggott to Mr Satyawan by email on 12 April 2016 at 1.01 pm;[1128] (sent in response to Mr Satyawan's email to Mr Piggott on 12 April 2016 at 12.37 pm[1129]).
2. In Reserve Capital's oral opening submissions, reference was made to the evidence that Mr Satyawan would give about his identifying that a lot of the administration and financial reporting of the Seascapes IGA was undertaken by staff at the Bertram IGA and that he was not told of those matters.[1130]
3. Reserve Capital in its oral opening also foreshadowed the expert evidence (of Ms Marke) that the Wages Representation was 'outside' of industry benchmarks as to 'how much people usually spend on wages compared to their turnover'.[1131] It was put that her benchmark evidence was relevant:

... purely to give weight to - it's purely to comfort your Honour that, contrary to what's in the tax returns and other documents, this is clearly - this is a misrepresentation.[1132]

1. As may be noted, Reserve Capital did not open on the case of non‑disclosure by the defendants of the cost of staff at the Bertram IGA. That is of significance given the state of the pleadings at trial.

1. Mr Satyawan gave evidence-in-chief of having sent the request to Mr Piggott on 12 April 2016,[1133] and receiving the response from Mr Piggott which attached the Staff Timesheets.[1134]
2. Mr Satyawan in his evidence-in-chief gave evidence that in the first week of Reserve Capital's ownership and operation of the Business he became aware that certain tasks were done for the Business at the Bertram IGA.[1135] Although the transcript of this evidence is not completely clear, at the time I understood Mr Satyawan's evidence to be that, before settlement, he was not aware that payroll, the accounts through MYOB and investment buying were done at the Bertram IGA and not at the Seascapes IGA.[1136] Mr Satyawan's evidence was that after a week of ownership, he went to the Bertram IGA for training.[1137]
3. Mr Satyawan was not cross-examined on that evidence.

1. In response to being asked whether, in her opinion, the Wages Representation was true, Ms Marke, quite correctly, said she was unable to provide an opinion as 'to the actual operational side of the Business'.[1138]
2. Ms Marke compared the total wages and superannuation expenses of the Business in the 2015 financial year (calculated at 9% of sales) with:
   1. one industry benchmark which showed wages accounting for 9.5% of sales; and
   2. another more relevant benchmark, in her view, which showed wages accounting for between 11 - 13% of sales.[1139]
3. Ms Marke was not questioned, in her evidence‑in‑chief or in cross‑examination, on this further.

1. As opened by Reserve Capital in writing, Mr Lewis gave evidence about the Management and Wage Representations together as he regarded them as 'inter‑linked'. That is:

...they both relate to the ability of the store to operate effectively within the scope outlined in the Business Profile document.[1140]

The measurement of wages in the supermarket industry is generally reported as a percentage to the store's sales (excluding GST). When advising clients on what level of wage percentage they should be attempting to achieve, I advise that 10% is an appropriate level for an efficiently run store ... Those stores that operate with a store manager and where the owner of the business does not draw a salary, will usually incur wages in the region of 10% to 15% of sales...[1141]

The reported wages for the Business in the 2014/15 financial year were $312,292, representing 8.46% of the reported sales for that year. For this level of wages to be achieved, from my experience, I would expect that there would have had to have been reasonably substantial input from the owner/proprietor of the business...[1142]

1. Mr Lewis was not questioned, in his evidence‑in‑chief or in cross‑examination, further about this evidence.
2. It is apparent, from the above comparison of Ms Marke's and Mr Lewis' evidence, that Ms Marke used the wages plus superannuation to calculate the percentage of the reported sales in the 2015 financial year. Mr Lewis did not do so. If he had done so, it appears he would have agreed with Ms Marke and the percentage of sales that the actual wages represented would have been about 9% of recorded sales.
3. It may be noted, in passing, that:
   1. Ms Marke and Mr Lewis adopted different preferred benchmarks. I say that without any criticism. But it does point to, understandably, a lack of precision in the use of a tool like a benchmark; and
   2. while the figures used in the Business Profile represented a lower percentage than either of the preferred benchmarks, the differences could not be described as dramatic.

1. Mr Piggott gave evidence-in-chief that:
   1. (prior to the sale of the Business) he recalled telling Mr Satyawan that they had another store at Bertram and that some of the stock for Seascapes IGA was supplied from there;[1143]
   2. Mr Satyawan had come to the Bertram IGA and met a couple of the staff and did some training with some staff;[1144]
   3. he could not recall exactly when that training occurred but 'it was before settlement';[1145]
   4. some of the functions for the Seascapes IGA were done at the Bertram IGA (e.g. payroll, allocations buying);[1146]
   5. Mr Satyawan was well aware of the functions that were done at the Bertram IGA in relation to Seascapes IGA;[1147]
   6. Mr Satyawan was not that interested in payroll administrative functions because he had his own programs;[1148]
   7. he discussed bookkeeping and administrative functions for the Seascapes IGA with Mr Satyawan and that was part of the reason that he (Mr Satyawan) had come to the Bertram IGA to see how it was done;[1149] and
   8. he had discussed with Mr Satyawan the different roles for different staff and what staff at the Bertram IGA did.[1150]
2. In cross-examination, Mr Piggott accepted that there was a regular passing of documentation or information between the Seascapes IGA and the Bertram IGA because effectively the administration for Seascapes IGA was being run from the Bertram IGA.[1151]
3. In cross-examination, Mr Piggott said that he had given some of the information in the Business Profile to Ascend.[1152] In relation to the statement: 'operates with efficient well trained staff using modern systems',[1153] Mr Piggott did not accept it was incorrect without it referring to the staff operating out of the Bertram IGA.[1154]
4. Mr Piggott was cross-examined on the statements made at Item 5 of the Business Profile,[1155] as quoted in [609] above, and:
   1. accepted that there was no reference to the Bertram staff in there; and
   2. did not accept that 'minimal hands-on input [was] incorrect' given the involvement of Bertram staff.[1156]
5. In relation to Item 9 in the Business Profile which was the Profit and Loss Statements for the 2014 and 2015 financial years,[1157] Mr Piggott:
   1. did not accept that the net profit figure was misleading because it did not include the staff at the Bertram IGA;[1158]
   2. said he did not believe the staff at the Bertram IGA were not charged to the cost of Seascapes IGA;[1159] and
   3. did not accept that the expenses for the 2015 financial year for Seascapes should have included the cost of Bertram IGA staff.[1160]
6. It was put to Mr Piggott that there was an advantage to Seascapes in Bertram providing certain administration for it in the 2015 financial year and that was not referred in the Business Profile.[1161] In response Mr Piggott said:

It's just how we did it. It was - it was easier. It was explained at the time to [Mr Satyawan]. In fact, [Ms Dewi] was going to do their books.[1162]

1. Mr Piggott was cross-examined about the staff or payroll information he supplied to Mr Satyawan by the Staff Timesheets.[1163] He accepted that it did not refer to staff at Bertram IGA.[1164]
2. In relation to 'add backs' both in the Business Profile[1165] and as sent by Mr Piggot by email on 4 February 2016 (at 4.45 pm):[1166] Mr Piggott in cross‑examination did not accept that the 'add backs' should have included staff from the Bertram IGA.[1167] He also said that he could not answer the question of whether that was a 'legitimate add [back] for accounting purposes'.[1168]
3. In further response to that proposition, Mr Piggott said:

... It was explained to [Mr Satyawan] that certain functions were done by the other store.[1169]

1. When asked in cross-examination if he understood how an add back document worked, Mr Piggott said: 'Not fully, no'.[1170]
2. In re-examination, Mr Piggott accepted that the training at the Bertram IGA occurred after settlement, but was arranged, he was sure, prior to settlement.[1171]
3. I note, at this point, that Mr Piggott was not cross-examined about the evidence he gave in his evidence-in-chief, or in the course of cross‑examination, about what he told Mr Satyawan, (and, so, what Mr Satyawan knew), about functions being performed at Bertram for the Seascapes IGA.

1. Ms Piggott in her evidence-in-chief gave evidence as to her role and her time commitment at the Seascapes IGA, and in that context gave evidence about what staff at the Bertram IGA did and spent time‑wise on the administration of Seascapes IGA.[1172] Some of that evidence was set out in D.1.4 at [707] above and following, in consideration of Ms Piggott's evidence going to the Management Representation.
2. In cross-examination, Ms Piggott was asked what amount of time Ms Coulter (at the Bertram IGA) spent on administrative functions for the Seascapes IGA.[1173]
3. In cross-examination, counsel for Reserve Capital put to Ms Piggott that the figure for wages in the Business Profile was understated by reference to an extrapolation from the Staff Timesheets.[1174]
4. Ms Piggott did not accept the premise that the 'sample' between 28 December 2015 and 20 March 2016 was an accurate way of calculating a year's payroll/wages by extrapolation.[1175]
5. Ms Piggott's evidence was that wages week to week or month to month would generally be 'within a ballpark'[1176] but there would be exceptions.
6. Ms Piggott was cross-examined on Item 9 of the Business Profile[1177] and accepted that the 'Expenses' did not include the cost of the bookkeeping staff (at Bertram).[1178]
7. Ms Piggott said in cross-examination that the Seascapes IGA relied on staff at Bertram for bookkeeping and, more specifically, the doing of the payroll and accounts payable.[1179]
8. Ms Piggott's evidence was that 'it was advised' to Reserve Capital that the bookkeeper was not from Seascapes but she accepted that she had not communicated that personally to Mr Satyawan or Ms Dewi.[1180]
9. Ms Piggott, in cross-examination, also accepted that the wages figure in the Business Profile (in the Profit and Loss Statement for the year ended 30 June 2015)[1181] did not include wages for bookkeeping staff at Bertram.[1182]
10. She did not accept that rendered the Profit and Loss Statement inaccurate because, on her evidence, Reserve Capital was advised.[1183]
11. In answer to the proposition of whether the bookkeeping and accounts staff at Bertram should have been included in the costs and expenses of Seascapes, Ms Piggott responded that Reserve Capital was advised that the payroll and account functions were being performed elsewhere.[1184]

1. In Reserve Capital's written closing it was submitted that:
   1. again, by reference to the figures in the Staff Timesheets (for the 2016 financial year), that there was an extra $76,939 expended in wages per annum in the 2015 financial year;[1185] and
   2. no 'add back' for wages paid by Bertram and/or wages for management accompanied the financial statements for Seascapes.[1186]
2. Further to that second submission identified immediately above, Reserve Capital's written closing submitted that the Wages Representation was:

... incorrect in the absence of an addback [sic] for the wages [Seascapes] did not have to pay for the Bertram staff who undertook work for the Seascapes store ...[1187]

1. Reserve Capital's submission that the Wages Representation was misleading and deceptive because it did not include the costs of staff at the Bertram IGA was returned to in its oral closing submissions.[1188]
2. In that oral closing, counsel for Reserve Capital seemed not to put weight on the allegation that Seascapes had not spent the sum in the Wages Representation; that is, the first way that Reserve Capital had put that the Wages Representation was misleading.[1189]
3. Rather, the emphasis was on the wages for staff at the Bertram IGA not having been included or disclosed in the financial statements of Seascapes[1190] and should have been included as an 'add back'.[1191]
4. The defendants, in their written closings, submitted that Reserve Capital had not pleaded a case concerning the non-disclosure of the 'cost' of staff at the Bertram IGA.[1192]
5. Reserve Capital did not further address this in its written responsive submissions.
6. There was no clear answer from Reserve Capital's counsel in closing as to whether the submission being made as to the Wages Representation being misleading and deceptive by not including staff at Bertram was within Reserve Capital's pleaded case.[1193]

D.3.2 Consideration of the first plea on Wages Representation

1. The evidence led principally to establish that Seascapes did not spend $312,292 on wages in the 2015 financial year is, as seen, the Staff Timesheets which related to the period 28 December 2015 to 20 March 2016.
2. With respect, Reserve Capital at no stage sought to articulate how figures from a period at least six months after the end of the 2015 financial year demonstrated that the figure stated as having been expended in the 2015 financial year was not correct.
3. The unstated, but perhaps obvious, premises to this submission are:
   1. the amount 'spent' by Seascapes in the period 28 December 2015 to 26 March 2016 was accurate;
   2. an extrapolation from that part of the 2016 financial year would be accurate as to what would have been spent in the whole of the 2016 financial year;
   3. the same hours were worked and costs incurred by Seascapes in the 2015 financial year (as would result from the 2016 financial year extrapolation); and
   4. the records kept by Seascapes for the period 28 December 2015 to 26 March 2016, therefore, showed that the 'true' cost in the 2015 financial year was not as represented.[1194]
4. There was no direct evidence led by Reserve Capital which challenged or put into doubt that Seascapes had expended that sum in the 2015 financial year (if one excluded the 'evidence' of the period starting six months after the financial year).
5. The expert evidence of both Mr Lewis and Ms Marke, as identified above, was not direct evidence that the Wages Representation was misleading for the 2015 financial year.
6. However, Ms Marke, as I have noted, correctly said she was unable to provide an opinion on the actual operations of the Business in relation to the Wages Representation in that year. Rather, her evidence was that the wages and superannuation were lower (but not dramatically so) than the benchmark she thought most applicable.
7. It did not appear that Reserve Capital, in its opening as quoted in [1197] above, sought to establish that the Wages Representation was misleading simply on the basis of Ms Marke's benchmark evidence but led it, as said rather, as some form of comfort to the Court or by way of corroboration.
8. Mr Lewis' evidence was, put crudely, that the Management and Wages Representation could not both be true at the same time. That is, his evidence was not directed to a simple proposition that the Wages Representation was not accurate in and of itself.
9. I do not find, and could not find, that the Wages Representation was misleading from the evidence led from Ms Marke or Mr Lewis.
10. Nor do I find that the Staff Timesheets (for the period 28 December 2015 to 20 March 2016) proves that the Wages Representation was misleading. I do not consider that the Staff Timesheets document could, of itself, prove the relevant plea as it could not, of itself, establish the second to fourth premises I set out in [1244] above.
11. Reserve Capital did not, apart from pointing to the Staff Timesheets, seek to identify any relevant flaws or errors in the 2015 financial statements.
12. By way of contrast, and as has been seen above in some of the cases on the Profit Representation, a challenge was made to the accuracy of the 2015 financial statements of Seascapes on particular, identified bases.
13. I do not find that Reserve Capital has proved that the Wages Representation as pleaded and particularised was misleading. A further difficulty for Reserve Capital is that there was no evidence led that it had read this representation, or that it had taken it into account in any way prior to the purchase.

Bertram IGA staff and the Wages Representation

1. I accept the defendants' submission that Reserve Capital's second position or case put in its closing submissions (see [1234] above) was not within any pleaded case of Reserve Capital. In my view, that follows from the above review of the pleadings.
2. Simply put, I do not consider that the plea in SOC [14], especially when its Particulars are considered, raise the Bertram IGA staff wages issue.
3. The question arises then as to whether the course of the trial was such that within the principles discussed above, I should determine whether the Wages Representation was misleading in the absence of some add back or some other disclosure in the financial statements communicated by Seascapes.
4. I do not consider that the way the trial was conducted means I should determine the non‑pleaded case (essentially put in closing) by Reserve Capital about the non‑disclosure of the 'cost' of the Bertram IGA staff.
5. That is because:
   1. the evidence given by Mr Satyawan and Mr Piggott, in particular about what Mr Satyawan was told about the staff and their functions at Bertram (for Seascapes IGA), was evidence given incidentally as part of the broader narrative of their evidence;
   2. Mr Satyawan's evidence was in no way detailed or 'fleshed-out' but was given at a level of generality and conclusion (without objection);
   3. Mr Piggott was not cross-examined on his evidence as to what he told Mr Satyawan about the staff at Bertram IGA;
   4. Ms Piggott was not cross-examined on what she apparently heard being said to Mr Satyawan about the staff at Bertram;
   5. no evidence was given by Mr Satyawan about the significance to him, if any, of the 'add backs' in the 2015 financial statements in the Business Profile, and then later sent to him by Mr Piggott; and
   6. there was no evidence led by Reserve Capital (or the defendants for that matter) as to what an 'add back' document was, technically or in a lay sense; and so there was no evidence as to how such a document was to be read or understood; nor how it was read or understood.
6. To determine that Reserve Capital was misled in the way put in Reserve Capital's unpleaded case would, necessarily, require a consideration of not just the Business Profile and the 'add back' document sent by Mr Piggott, but, in fairness to the defendants, would require an opportunity to lead, and an analysis of, all relevant communications that Reserve Capital received concerning the functions and roles that staff at Bertram IGA were performing for Seascapes IGA.
7. That, in turn, would require an assessment of the Piggotts' evidence, at the least, as to what was told to Mr Satyawan about the functions and roles being performed for the Seascapes IGA at Bertram.
8. My assessment is that evidence from Mr Piggott was given incidentally in the course of his evidence and certainly was not the subject of any careful analysis in the cross‑examination of Mr Piggott, nor for that matter in Reserve Capital's closing submissions.
9. In short, I do not consider that the course of the trial was such that, although unpleaded, this aspect was run by the parties as a live issue at the trial (certainly that was the case prior to Reserve Capital's written closing).
10. I do not consider I should decide that unpleaded case. If I were to do so, however, on the evidence before the Court I could not find for Reserve Capital.
11. That is because (in line with my findings set out above about Mr Satyawan's credibility) I would not accept Mr Satyawan's evidence of what he knew about the staff at the Bertram IGA and their functions for the Seascapes IGA without some corroboration.
12. As noted, I have some reservations about accepting, uncritically, Mr Piggott's evidence. On the question of what he told Mr Satyawan about the staff at the Bertram IGA and the functions they performed for Seascapes however, his evidence was not challenged in cross‑examination. Indeed, much of that evidence, as demonstrated above, came in the course of cross-examination and was then left unchallenged.
13. Further, within the objective evidence of the contemporaneous documents, it is plain that:
    1. there was some disclosure of Ms Coulter having a role in preparing financial statements and BASs or tax returns;
    2. Ms Coulter was not on the list of staff at Seascapes IGA; and
    3. some training was arranged with Mr Satyawan to be done at the Bertram IGA prior to settlement (even if it did not occur until after settlement).
14. While none of those things is determinative, they tend to support Mr Piggott's evidence, rather than Mr Satyawan's evidence, on the point.
15. As said, what that demonstrates to my mind is that if I were to decide the unpleaded case, then, on the evidence before the Court, I would find that Reserve Capital had not discharged its onus to establish that the Wages Representation was misleading and deceptive. A further difficulty for Reserve Capital is that there was no evidence led that it understood that the unpleaded representation was made, or that it had taken it into account in any way prior to the purchase.

D.3.3 Wages Representation in the Business Profile as to future matters

1. Reserve Capital also pleaded that the Wages Representation conveyed a representation as to future matters being:

... the purchaser of the Seascapes IGA could expect to achieve in the future similar outcomes or results to those represented.[1195]

1. I take it that Reserve Capital alleged here that Seascapes made the Wages Representation as to future matters by the Business Profile.
2. Reserve Capital pleaded that the Wages Representation was, by virtue of s 4(1) of the ACL and, or, s 4 of the FTA, taken to be misleading.
3. A further plea (in SOC [15B]) also sought to negative the pleaded representation as to future matters. It is pleaded that Seascapes omitted to disclose that the wages for the first quarter of the 2016 financial year were more than the first quarter of the 2015 financial year.[1196] It is plain from the terms of this plea that it goes only to the representation pleaded as to future matters.
4. To the plea identified immediately above, Reserve Capital repeats the second Particular from SOC [14] and as quoted in [1184] above.
5. The Wages Representation as to future matters was addressed further elsewhere in Reserve Capital's written opening but that identified only the substance of the allegation derived from the Staff Timesheets.[1197]
6. By parity with the reasons I set out in D.2.8.1 above, I do not consider that the Wages Representation as pleaded was a representation as to future matters.
7. Further, it appeared that the most significant matter put by Reserve Capital to negative any future matters contained in the Wages Representation was the alleged failure to disclose the 'cost' of staff at Bertram.
8. For the reasons I have set out above, I do not consider that such a case was pleaded, nor within the case effectively run by the parties at trial.
9. Further, for the reasons set out above, I would not find, if I had considered that unpleaded case as to the future matters in the Wages Representation, that Reserve Capital had discharged its burden.

D.3.4 The other Wages Representation cases pleaded against Seascapes

1. Reserve Capital pleaded that, through Mr Piggott as its agent, Seascapes made representations to the same effect as the Wages Representation on four occasions.[1198] Those pleas are also made directly against Mr Piggott and are considered below.
2. As will be seen, I have not found any of those pleas against Mr Piggott to be established and, therefore, necessarily the pleas against Seascapes through Mr Piggott as its agent must fail.
3. Reserve Capital pleaded that Seascapes, through Ms Piggott as its director and agent, made representations to the same effect as the Wages Representation on three occasions.[1199] Those pleas are also made directly against Ms Piggott and are considered below.
4. For the reasons that follow, I have not found those pleas directly against Ms Piggott to be established. Therefore, and necessarily, I would not uphold the pleas against Seascapes through Ms Piggott as its director and agent.

D.3.5 The Wages Representation cases pleaded against Mr Piggott

1. Reserve Capital pleaded that Mr Piggott made representations to the same effect as the Wages Representation (made in the Business Profile). They being:[1200]
   1. in late January or early February 2016, by orally confirming to Mr Satyawan and Ms Dewi that the Business Profile was accurate;
   2. between late January and March 2016, by orally repeating to Mr Satyawan and/or Ms Dewi the Wages Representation;
   3. on 4 February 2016, by providing to Mr Satyawan the 'Add Back Schedule';[1201] and
   4. on 8 February 2016, by providing to Mr Satyawan Seascapes' 2015 financial statements.[1202]
2. Mr Piggott did not admit making a representation to the same effect as the Wages Representation.[1203]
3. Mr Piggott submitted that no evidence was adduced of him making either of the oral statements particularised.[1204]
4. By parity of the reasoning I set out in D.1.8 above, I do not consider any of the above four matters was established by Reserve Capital. I do not find that Mr Piggott made the Wages Representation or representations to that effect as pleaded.

D.3.6 The Wages Representation cases pleaded against Ms Piggott

1. Reserve Capital pleaded that Ms Piggott made the Wages Representation in the Business Profile as it is pleaded that she made and, or, was responsible for the Wages Representation of the Business Profile.[1205]
2. As I have held that the claim concerning the Wages Representation (as pleaded) in the Business Profile fails, so must the claims against Ms Piggott based on the Business Profile itself.
3. It is further pleaded against Ms Piggott that she made representations to the same effect as the Wages Representation on three occasions. They being:
   1. by acting within the scope of her actual or apparent authority in her position as the sole director of Seascapes by providing the information for compiling the financial statements of Seascapes for the year ended 30 June 2016, which made the Management Representation;[1206]
   2. by acting as director of Seascapes in authorising Ascend to distribute the Business Profile; [1207] and
   3. at the meeting at the Ardross coffee shop on 11 February 2016, by adopting or acquiescing to Mr Piggott making a representation to the effect of the Management Representation, and at the same meeting adopting or acquiescing Mr Piggott's supply of the 4 February 2016 email with the 'Add Back Schedule'.[1208]
4. By parity of the reasoning I set out in D.1.9 above, I do not consider that Reserve Capital succeeds in any of the above three cases against Ms Piggott that she made a representation to the effect of the Wages Representation.

D.3.7 The Wages Representation cases pleaded against Lightwest Investments

1. Reserve Capital pleaded a number of cases against Lightwest Investments in relation to the Wages Representation and the making of representations to a similar effect.
2. The first appears to be that Lightwest Investments, itself, made the Wages Representation in the Business Profile.
3. I traced, relevantly, the pleas in the SOC under D.1.10 above and do not repeat that discussion here.
4. However, notwithstanding the wording of the pleading, if that plea (that Lightwest Investments, itself, made the Wages Representation in the Business Profile) is effectively made and maintained by Reserve Capital, then, as a matter of substance, I would not accept that Lightwest Investments made the Wages Representation in the Business Profile.
5. I set out in the discussion at D.1.10 above Reserve Capital's propositions, as I understood them at their highest. I have not repeated them here; nor have I repeated the 'buttressing' commercial matters raised by Reserve Capital.
6. By parity of reasoning with what is set out in D.1.10 above, I do not accept that Lightwest Investments made any representation about Seascapes' financial performance at all, including via the Business Profile.
7. I would dismiss, therefore, this first way that the Wages Representation case is made against Lightwest Investments.
8. A second way that Reserve Capital puts the claim, perhaps, against Lightwest Investments, is to the effect that Lightwest Investments was involved in the contraventions by Seascapes, Mr Piggott and, or, Ms Piggott.[1209]
9. The pleas made about the Wages Representation against Lightwest Investments depend on Reserve Capital succeeding in its claims against Seascapes, Mr Piggott and, or, separately, Ms Piggott making the, or making representations to the effect of the, Wages Representation.
10. For reasons set out above, I do not find that Reserve Capital has succeeded in any of its claims against any of those three and, so, necessarily its plea of knowing involvement or liability against Lightwest Investments fails and does not need further consideration.
11. Reserve Capital then pleads that Lightwest Investments knew that the representations to the effect of the Wages Representation were made to Reserve Capital and that it was relying on those representations in entering into the Lease.[1210]
12. For reasons already given above as to the failure of Reserve Capital to make out the Wages Representation or any of the representations to the effect of the Wages Representation, this last plea does not need to be further considered.

1. By SOC [22], Reserve Capital pleaded:
   1. the Contract[1211] was subject to an implied term that the stock being purchased was saleable through Seascapes IGA;
   2. in breach of that term, $19,654.13 of stock purchased was unsaleable as the stock was out of date or missing; and
   3. consequently, Reserve Capital suffered loss and damage as the said stock could not be sold for full value but only for a reduced value or not sold because it was missing.
2. By the Particulars to SOC [22], Reserve Capital stated that the $19,654.13 comprised:
   1. stock past its best before date (donated or sold below cost);
   2. stock past its expiry date (disposed of in the rubbish); and
   3. missing stock from the stocktake list.
3. The plea was not expanded upon, or substantively addressed, in Reserve Capital's written or oral opening.
4. The defendants deny that there was such an implied term and plead that such an implied term would be inconsistent with the express terms of the Contract which included cl 22.4 of the Australian Institute of Business Brokers 2012 General Conditions for the Sale of Business and incorporated cl 9 of those General Conditions.[1212]
5. Reserve Capital did not address the plea of there being an implied term in its written or oral closing.
6. That Reserve Capital did not address the claim in its oral closing is of significance when it is noted that Seascapes and Mr Piggott, in their written closing, submitted that:

[215] [Reserve Capital] has adduced no evidence of any stock being unsaleable for any reason.

[216] All that the evidence (and the pleaded case) discloses is that there was a stocktake, an amount paid for stock was agreed at the conclusion of the stocktake, an invoice for that amount was issued and [Reserve Capital] paid that amount.

[217] Absent any evidence of there being unsaleable stock, the claim pleaded SOC [at] [22] must fail; without the need to consider whether or not the term contended for by Reserve Capital can be implied.[1213]

1. Seascapes and Mr Piggott's submission, with respect, also reflects my understanding of the evidence, or lack thereof, led by Reserve Capital going to this plea.
2. In those circumstances, I dismiss this claim by Reserve Capital on the basis that it is unsupported by any evidence adduced. I accept, with respect, Seascapes and Mr Piggott's submission that it is not necessary to go on and consider whether the implied term pleaded can be implied on the facts of this case and, in particular, by reference to the nominated clauses of the General Conditions.

1. I have found that Reserve Capital does not succeed on any of its claims.
2. Nonetheless, I have considered what findings I can sensibly make if I am wrong in my judgement on any or all of the Representations.
3. By its Prayers for Relief, Reserve Capital claimed:
   1. As against [Seascapes]:

1.1. the damages pleaded in [20.4.1] above;

1.2. an order or declaration that the Contract is void;

1.3. the damages pleaded in [20.4.3] above;

1.4. the damages pleaded in [22.3] above.

1. As against [Ms Piggott], the damages pleaded in [20.4.1] and/or [20.4.3] above;
2. As against [Mr Piggott], the damages pleaded in [20.4.1] and/or [20.4.3] above.
3. As against [Lightwest Investments]:

4.1.1. [20.4.3] above;

4.1.2. further and alternatively, the damages pleaded in [20.4.1] above;

4.2. an order or declaration that the Lease is void.[1214]

E.1 An order that the Contract is void and the Lease is void; damages under SOC [20.4.3]

1. As against Seascapes, Reserve Capital sought an order or declaration that the Contract was void.[1215]
2. Further, Reserve Capital sought against Lightwest Investments an order or declaration that the Lease was void.[1216]
3. I have held above that Reserve Capital does not succeed on any of its claims against either Seascapes or Lightwest Investments.
4. Apart from identifying an issue for determination as 'should the Contract and/or the Lease be declared void?' in its written opening submissions,[1217] Reserve Capital did not address this relief in its opening or written closing submissions.
5. In their oral closing submissions, Seascapes and Mr Piggott submitted that in light of the fact that (at the time of the closing) it had been eight and a half years since the purchase of the Business and Reserve Capital had run it in that time there was not much scope to make orders voiding the purchase or the Lease ab initio.[1218] It was submitted that damages would be a complete remedy.[1219]
6. Reserve Capital, in its oral closing as to whether the orders it sought in respect of the Contract and the Lease should be made ab initio or from the date of the court order said:

So it would be hard for us to say ab initio. It would have to be an order, I think, from the date that you made your final decision.[1220]

1. It is fair to say that no party regarded an order that the Contract or Lease be declared void as being realistic (as judged by the lack of attention that relief received).
2. If I had found for Reserve Capital, I would not have made an order voiding the Contract or the Lease either ab initio or from the date of final orders.
3. In respect of the Contract, I consider that damages would have been a full remedy. Further, the effluxion of time from the date of purchase would be another very significant factor militating against the grant of such an order or declaration.
4. In relation to the Lease, the same matters would be against such an order. Further, the Lease, unless extended by Reserve Capital, expires in March 2026. That is, by the time of final orders, the Lease would have comparatively little time to run.
5. If I am wrong about one or more of the Representations and should have found, for example, Seascapes to be liable, but was correct to dismiss the case against Lightwest Investments, my preliminary view is that Reserve Capital would be entitled to recover damages for losses (if proved) which took into account the payments to be made or made under the Lease.
6. I express this on a preliminary basis as no argument was addressed to these issues.
7. However, if I should have found Seascapes to be liable and also should have found Lightwest Investments to be liable, I would not have separately awarded damages as claimed by SOC [20.4.3] as I consider that all such damages would be picked up in the damages award that Reserve Capital would have been entitled to against Seascapes. I have not considered the damages claimed under SOC [20.4.3] further.

1. As seen above, Reserve Capital claims damages against each of the defendants by SOC [20.4.1].
2. That plea is:

20.4.1. [Reserve Capital] has suffered loss and damage as a result of entering into the Contract;

PARTICULARS

(1) But for the contraventions [Reserve Capital] would not have entered into the Contact.

(2) By reason of entering into the Contract, [Reserve Capital's] loss and damage is:

(a) the difference between the true value of the Seascapes IGA as at the date of the purchase and the price paid by the Plaintiff under the Contract;

(b) all consequential costs and expenses incurred as a result of the Plaintiff entering into the Contract;

(c) all losses incurred in operating the Seascapes IGA since settling on the Contract to the date of Judgment;

(d) the loss of the opportunity to have invested in an alternative investment and earned a return on the funds invested and engaged in the operation of the Seascapes IGA.

(3) A schedule of [Reserve Capital's] loss and damage as particularised in (2) will be provided separately.[1221]

1. Reserve Capital claims, as a consequence of entering into the Contract, it suffered loss and damage:
   1. loss being the difference between the true value of the Seascapes IGA as at the date of the purchase and the price paid by Reserve Capital under the Contract;[1222]
   2. trading losses, being all losses incurred in operating the Seascapes IGA since settling on the Contract to the date of Judgment[1223] (although I note that Ms Marke's further revised assessment[1224] had losses at $1,512,236);
   3. all consequential costs and expenses incurred as a result of Reserve Capital entering into the Contract;[1225]
   4. unpaid wages to Mr Satyawan and Ms Dewi;[1226]
   5. interest paid or payable on the Purported Loan Agreement to Mr Satyawan's mother;[1227] and
   6. opportunity loss, being the loss of the opportunity to have invested in an alternate investment for eight years, until 29 February 2024 and earned a return on the funds invested and engaged in the operation of the Seascapes IGA.[1228]
2. As at 8 March 2024, Reserve Capital claimed it had suffered total loss and damage in the sum of $4,319,048.60.[1229] That claim and Schedule filed 8 March 2024 needs to be read, as I understand it with MFI-2 (as substituted).
3. Further, in Section 4 of her Supplementary Report,[1230] Ms Marke gave an opinion as to what was the 'present' value of the Business.[1231]
4. That, however, appears to be beyond the loss and damage claimed by Reserve Capital in its Prayers. And, as I understand it, it assumed that Reserve Capital was suffering on-going trading losses; an assumption which I consider was not established on the evidence (after I would have disallowed Ms Marke's proposed adjustments to Reserve Capital's profit and loss position).
5. I have not considered that evidence further.

1. Reserve Capital led evidence from Ms Marke as to the value of the Business at the date of purchase. The defendants led evidence from Mr Hockley on the same issue.
2. There was a Joint Valuation Report addressed to the valuation of the Business at 21 March 2016.[1232]
3. Relevantly, the experts:
   1. agreed that there were two applicable valuation methodologies; namely: capitalisation of future maintainable earnings (CFME) and net tangible assets (NTA);
   2. agreed that it would be appropriate to use the higher of the CFME and the NTA values;
   3. agreed that their respective NTA values were higher than both of their values derived from CFME;
   4. agreed that the inventory should be taken as being valued at $258,454;
   5. disagreed as to what the NTA value was;
   6. agreed that the single biggest 'item of difference' in their NTA valuation was the value to be attributed to plant and equipment; and
   7. agreed that the preferred approach on valuing plant and equipment would be to have an independent valuer value it at the time of sale.
4. If I am wrong in dismissing a Reserve Capital case, then there may be utility in resolving the differences on the NTA valuations between Ms Marke and Mr Hockley.
5. I have done so on the basis that both Ms Marke and Mr Hockley had reached a higher value for the Business on their respective NTA valuations and agreed that the higher of the NTA (compared with the CFME) method should be adopted.
6. If Ms Marke adopted the financial information of Seascapes pre‑acquisition,[1233] then using the CFME method she valued the Business at between $235,200 to $277,200.[1234]
7. It is to be noted that it appears from Section 10 of Ms Marke's first report[1235] that Ms Marke was requested to use the Seascapes financial records in this regard, but also to make nine contentious assumptions which she set out there.[1236] That is, Ms Marke did not take the Seascapes financial records at face value but rather was influenced by the assumptions.[1237]
8. Unfortunately, it appears that Ms Marke was not briefed to provide an opinion using Seascapes' financial information, pre‑acquisition, without those assumptions. That would have been, I consider, a problem with the reliability of Ms Marke's opinion in this respect; but a flaw which ought not be laid at Ms Marke's feet.
9. Using Reserve Capital's financial information, post‑acquisition, Ms Marke assessed the value of the Business as between $176,400 to $207,900.[1238]
10. It appears that if I was wrong in dismissing a Reserve Capital case which did not go to the accuracy of Seascapes 2015 financial statements, it would not have the effect that Ms Marke's CFME value would be greater than her NTA value.
11. On the basis that both of her value ranges using the CFME method was below the assessment she made on a NTA basis, Ms Marke would have used her NTA valuation for her opinion of the value of the Business as at the date of sale.
12. Because on both Ms Marke's and Mr Hockley's valuations, the NTA method produced a higher value, I have not sought to resolve the differences in the way each of them approached the calculation of their CFME valuation.
13. As said, the principal difference between the NTA valuation performed by Ms Marke and that performed by Mr Hockley is the value attributed by each of them to the plant and equipment.
14. As found in [132] above, the parties agreed that of the consideration to be paid, $865,000 was allocated or attributed to plant and equipment.[1239]
15. Ms Marke did not accept that the fair market value of the plant and equipment was $865,000 because she understood the original purchase cost of the plant was $667,782.[1240]
16. Ms Marke used a value for plant and equipment of $331,725.[1241] In the absence of an independent valuer valuing the plant and equipment she considered that the 'second most reliable' value would be derived from the written down value of the plant and equipment which she calculated as being $331,725 as at the date of acquisition.[1242]
17. Ms Marke explained why $10,000 which had been attributed by the parties to goodwill was not to be taken into account in her assessment of the value of the Business at acquisition date.[1243] I would accept that reasoning.
18. It is apparent that Ms Marke assumed that the plant and equipment which was being sold was the same plant and equipment that had been purchased for $667,782. That assumption was not proved nor, relevantly, put to Mr Piggott or Ms Piggott.
19. Mr Hockley, in making his NTA assessment, assumed that the market value of the plant and equipment was the value attributed by the parties as part of the consideration.[1244]
20. In the Joint Valuation Report, Mr Hockley:

... [acknowledged] the assertion of Ms Marke in that the allocation of the purchase price to specific assets in a transaction is often driven by the future tax treatment associated with those assets, he notes that the value ascribed by the Directors of [Reserve Capital] to the plant & equipment of $865,000 was in circumstances whereby the Directors were under no influence to ascribe any value other than which they believed to be the market value of those assets.[1245]

1. While I would accept that it would have been preferable for the valuers (and the Court) to have had an independent valuation of the plant and equipment as at the time of sale, I consider that the next best assessment is the value that the parties, at arm's length, agreed to be attributed to the plant and equipment.
2. That is particularly so where, as set out above, there was quite a history between the parties as to what was recorded as the consideration of the components of the Business.
3. I would not accept the submissions made by Seascapes and Mr Piggott that Reserve Capital should wholly fail in this part of its claim because it did not adduce an independent valuation of the plant and equipment.
4. Further, as Mr Hockley notes, that value for plant and equipment was carried to Reserve Capital's 2016 financial statements as the value recorded 'at cost'.
5. Consequently, I would accept the assessment of the NTA valuation being $1,123,454: being $865,000 + $258,454.
6. A caveat needs to be attached to this assessment. As Seascapes and Mr Piggott submitted, my acceptance of the 'arm's length' valuation of the parties may be questionable depending which Representation I am wrong about.
7. I consider there is force in Seascapes' and Mr Piggott's submission that:

... if a finding of misleading or deceptive conduct is made ... the assumption that the value attributed to assets by two parties dealing with each other at arm's length ... may not be a sound basis for attribution of value to the plant and equipment and any goodwill at 21 March 2016.[1246]

1. Given that there may be many permutations as to how I might be wrong about which Representation, and no submissions were addressed to this, I do not consider I can take the matter further here.

1. Ms Marke and Mr Hockley prepared a Joint Loss Report.[1247]
2. As is apparent from the Joint Loss Report, Mr Hockley was not briefed to respond to all aspects of Ms Marke's Supplementary Report[1248] which dealt with her assessment of the value of the losses.[1249]
3. In her assessment of the value of the losses, Ms Marke started with the reported trading profits or losses of Reserve Capital over the period and then adjusted those for non‑cash items.[1250]
4. The Joint Loss Report identified the following differences between the experts:
   1. director fees: the experts disagreed on the treatment of the directors' fees totalling $40,000 in the 2016 financial year; [1251]
   2. the experts disagreed over the treatment of motor vehicle costs which had been recorded in the profit and loss statements;[1252] and
   3. stock on hand.[1253]
5. As I understood Ms Marke's evidence, which was relied on by Reserve Capital in respect of stock on hand, it proceeded on an assumption that the Business was loss making and there would be a loss on the stock on hand when Reserve Capital ceased to operate the Business.
6. As I understand it, that assumption would not be made good if I am correct in not allowing the adjustments to Reserve Capital's financial statements. That is, the premise that Reserve Capital was making a loss and would cease to trade, is not supported if those adjustments are not made. I have not considered the claim for stock on hand further and have not sought to resolve the differences between Ms Marke and Mr Hockley on this matter.
7. Overall, as will be seen, I would not have made an adjustment for any of: the 'unpaid wages'; interest on the loan from Mr Satyawan's mother; or motor vehicle allowances. It appears, without those adjustments, that Reserve Capital has run the Business at a profit since its acquisition.
8. Reserve Capital would not then have been able to prove a loss and would not be compensated for the profit it has made.

1. In Ms Marke's Further Revised Schedule of losses which was MFI‑2 dated 8 March 2024, Ms Marke included the following items:
   1. stamp duty on the initial purchase of $37,482: Ms Marke and Mr Hockley agreed that the stamp duty of $37,482 should be included in the loss assessment;[1254]
   2. unpaid wages: this is considered at E.2.4 below;
   3. unpaid interest on loan: this is considered at E.2.6 below; and
   4. trade and other creditors - this was considered as 'stock on hand' above and would have been dismissed.
2. The tallying of those items led to 'total consequential expenses' from the 2016 financial year up to eight months into the 2024 financial year of $1,963,698.[1255]
3. From that total, Ms Marke deducted the net profit after tax for that same date range which was a 'total' profit of $451,462. That left a 'total loss suffered' of $1,512,236.

1. Ms Marke was asked what loss had been suffered by Reserve Capital by way of consequential costs and expenses incurred (if any) as a result of Reserve Capital purchasing the Business.[1256] Reserve Capital's solicitors had said to Ms Marke that the following 'may be relevant':

[13.3] Whether the accrued unpaid wages of the director of [Reserve Capital] for performing retail employee duties for the Business should be included in any losses, or otherwise treated as an unpaid consequential cost, to be taken into account as a cost and/or loss and to what extent.[1257]

1. Ms Marke was instructed to assume that Mr Satyawan and Ms Dewi 'were required to both work 40 hours per week managing the store however did not receive any remuneration'.[1258]
2. Ms Marke was told to assume those hours were worked by both of them from the date of the taking over of the Seascapes IGA. Without reciting Mr Satyawan and Ms Dewi's evidence, even if I accepted it in full on this issue,[1259] their evidence did not support that assumption. Unsurprisingly, Ms Marke accepted that if there was a change to the number of hours worked it would change her opinion as to consequential losses.[1260]
3. Rather, Mr Satyawan and Ms Dewi's evidence was that they spent more and more time in the Business following acquisition but were not spending very significant numbers of hours in the Business until some time well into 2017.
4. In valuing the Business, using Reserve Capital's financial information post‑sale, Ms Marke, in her first report, adjusted the earnings to take into consideration:

... an assessed commercial remuneration based on the General Retail Industry Award Rates from July 2016 for a Level 7 and Level 8 employee based on a fulltime position plus superannuation to total $100,938.[1261]

1. As I understand it, that adjustment fed into Ms Marke's calculation of the Business' valuation on a CFME method. If I have understood that correctly, then I do not need to consider it further for the reasons I have set out in E.2.1 above.
2. Ms Marke also, as I understood it, used the 'unpaid wages' in her Supplementary Report when she was considering the losses which had been suffered post‑acquisition by Reserve Capital.
3. In her Supplementary Report,[1262] Ms Marke stated:

3.14 As outlined in paragraphs 23 to 26 of the Brief dated 30 June 2022, [Reserve Capital's] Directors realised that the wages were higher than the Wages Representations and the sales were too low to generate sufficient revenue to cover the wages and also their obligations under the Lease. Therefore [Reserve Capital's] Directors ([Ms Dewi] and [Mr Satyawan]) took over a number of roles previously completed by other members of staff at the [Business] and also stopped paying themselves a wage for undertaking those roles.

3.15 As the Profit and Loss Statements of Reserve Capital are prepared on a cash basis, the unpaid wages to [Mr Satyawan] and [Ms Dewi] for work actually undertaken are not reflected in my above assessment of the actual operating loss of $271,756 from settlement until 31 March 2022. As outlined in paragraph 23 of the Brief dated 30 June 2022, accrued unpaid wages for [Mr Satyawan] and [Ms Dewi] have been assessed based on the amounts payable to a Retail level 7 employee and Retail level 8 employee in the General Retail Industry Award. The table at paragraph 23 of the Brief provides the weekly wages for each of the different levels as per the Award which I have confirmed and therefore relied on this information in my calculations. I am instructed that both Directors worked more than 38 hours each per week in the Business.

3.16 Based on this assessment, the unpaid wages and superannuation total $625,025 to 31 March 2022.

1. In the Joint Loss Report,[1263] at Item 10 Ms Marke considered:

... that additional wages costs would have been incurred by the Business had the Directors not stepped in and carried out their roles without paying themselves a wage as a loss mitigation strategy. Ms Marke therefore considers that the unpaid wages for work undertaken by the Directors for no compensation should be reflected in the loss assessment as a consequential loss.

1. In closing, Reserve Capital put this claim to 'unpaid wages' on the basis that what the court was trying to assess was what they (Mr Satyawan and Ms Dewi) had lost which would include their time spent working in the Business.[1264]
2. In its oral closing, Reserve Capital:
   1. submitted that no unpaid wages were included in the financial records of Reserve Capital;[1265] and
   2. accepted that there was no evidence that there was an agreement between Reserve Capital and Mr Satyawan and, or, Ms Dewi that they were to be paid wages, nor was there a company resolution to that effect.[1266]
3. That acceptance was in response to the question as to what Reserve Capital said was its legal liability to pay wages to Mr Satyawan and Ms Dewi.
4. A principal difficulty, as I see it, is that the inclusion of a claim for unpaid wages assumes, at the least it seems, that Reserve Capital had an obligation to pay such wages and had suffered a loss by taking on that liability.
5. Of course, neither Mr Satyawan nor Ms Dewi were plaintiffs in the action.
6. Ms Marke's evidence was that she would have allowed remuneration to the directors or wages to them either by wages or directors' fees up to the limit of the benchmark award she had adopted.[1267]
7. I would not have taken the 'unpaid wages' into account in calculating the losses which Reserve Capital said it had suffered post‑acquisition. That is, taking Mr Satyawan's and Ms Dewi's evidence at its highest, it did not make out the assumption given to Ms Marke. Further, there is the conceptual difficulty I have identified of there being no evidence that Reserve Capital had any obligation to pay wages.

1. Ms Marke and Mr Hockley did not agree on including motor vehicle costs in the calculation of the profit or loss incurred by Reserve Capital in running the Business.
2. I would not have allowed that to be taken into account in the calculation of the profit or loss. That is because, for reasons I largely set out to do with the claim to unpaid wages under E.2.4 above:
   1. Reserve Capital did not own a motor vehicle;
   2. Reserve Capital did not establish any contractual or other liability to provide Mr Satyawan and, or, Ms Dewi with a vehicle; and
   3. any 'loss' in respect of the use of a motor vehicle was 'personal' to Mr Satyawan or Ms Dewi, who were not plaintiffs in the action.

1. As noted in C.1 above, Ms Marke's calculations initially included a component for this interest in her Supplementary Report.[1268] Mr Hockley was 'unable to confirm the accuracy' of Ms Marke's calculations because he did not consider he had enough information.[1269]
2. Annexure G to Ms Marke's Supplementary Report[1270] set out certain sums 'payable' by way of that interest. By her revised damages schedule taken as MFI‑2, there was a further, different calculation of unpaid interest. That was $959,245 to the end of February 2024.[1271]
3. As confirmed in its oral closing, Reserve Capital did not contend, ultimately, that it had paid any interest.[1272]
4. I have recited in C.2 above Mr Satyawan's evidence about what was 'outstanding' and being owed by Reserve Capital to his mother by way of principal.
5. Reserve Capital handed up an 'aide memoire' which became MFI‑511 and which it said came from Reserve Capital's General Ledger and showed repayments of principal. I did not find it an easy document to follow.
6. Mr Satyawan did not give evidence which supported the entries in MFI‑511. I would have difficulty, therefore, accepting it as accurate.
7. If I am wrong and Reserve Capital had incurred a liability to pay Mr Satyawan's mother 10% interest on the Purported Loan Agreement, I do not consider that the evidence would allow me to make a robust assessment of what interest was currently payable by Reserve Capital because it is, so far, not clear what the balance of principal was owing which will affect the calculation of the interest.
8. In any event, as I understand it, Ms Marke's last calculation of interest to be paid was not based on Reserve Capital's last position on what principal was outstanding at particular points in time (for the rolling calculation of interest). So, a further calculation would need to be put before the Court.

1. Ms Marke dealt with opportunity loss in Section 6 of her Supplementary Report.[1273]
2. In that section, Ms Marke noted she was responding to the following in the Brief to her dated 30 June 2022.

5.3 What is the loss or value of the opportunity for [Reserve Capital] to have invested in an alternative investment and earn a return on the funds invested and engaged in the purchase and operation of the Business.

1. As regards your opinion requested at 5.3 above, the [SOC] a claim for:
   • the loss of the opportunity to have invested in an alternative investment and earned a return on the funds invested and engaged in the operation of the Business.
2. In respect of this head of claim, please assume [Reserve Capital's] directors' evidence will be to the following effect.

18.1 [Reserve Capital] was looking for a passive investment/asset near where its directors lived in Rossmoyne which provided income or revenue and was attracted to supermarkets for their reported rates of return for an investment up to $1.5 million,

18.2 If possible, the investment/asset would not require significant management time by [Reserve Capital's] directors who could then engage in other employment or family related duties.

18.3 Although the purchase was to be financed, the finance was by a family or "friendly" party.

18.4 However, the finance for the purchase of the Business was ultimately on terms that the interest payable to the financier was 10% per annum - the interest rate being susceptible to negotiation depending on the anticipated revenue to be earned from the investment/asset.[1274]

1. For present purposes I leave aside the assumption from the Brief to Ms Marke in [18.4] quoted immediately above, which, as set out elsewhere in these reasons, I have not found to be made good by the evidence.
2. Ms Marke then considered a 'return from passive investment'.[1275] In her Further Supplementary Report[1276] Ms Marke further dealt with this topic.[1277]
3. Ms Marke picked an Australian shares index fund as the 'passive investment'.[1278] While the adoption of such an index fund may have responded to the questions posed to Ms Marke by the Brief to her, I do not consider that the underlying assumption (that Reserve Capital would have purchased an interest in such an index fund) with the purchase price of the Business is made good by the evidence led by Reserve Capital at trial.
4. Consequently, I do not consider, on the evidence led by Reserve Capital, that it would be a sound basis to award such damages to Reserve Capital on the basis of the index fund.
5. As an alternative, Ms Marke considered the 'return on alternative supermarket investment' on the basis that:

[6.11] I am instructed that [Reserve Capital] was attracted to supermarkets with an investment value up to $1.5 million. Based on my review of RSM's IGA Benchmark database, I have identified five IGAs that had a comparable business value of up to $1.4m from 2016 to date.[1279]

1. Again, Ms Marke's consideration was in line with the instructions given to her by the Brief.[1280]
2. However, again, I do not consider that the instructions given to Ms Marke were borne out by the evidence led by Reserve Capital at trial. Mr Satyawan did not give evidence to the effect that if Reserve Capital had not purchased the Seascapes IGA, it would have purchased another IGA (or other brand of supermarket). I would not have drawn the inference that Reserve Capital (or Mr Satyawan for that matter) was particularly attracted to supermarkets from the evidence led.
3. Further, the other IGA's from which Ms Marke made her calculation of a possible, alternative return were not, as I read her material initially, identified.[1281] In the course of her evidence‑in‑chief, Ms Marke identified the five IGA's as being at: Carine, Marmion, The Park Hive, Austin Lakes and Leederville.[1282] Ms Marke said that she had identified them because they had a value of around $1.4 million which was close to the $1.5 million that she was instructed would have been used for the alternate investment.[1283]
4. That has two potential significances in my view.
5. The first is that it is not plain to me from the evidence whether any or all of the nominated IGA's would have been 'acceptable' to Reserve Capital given Mr Satyawan's evidence about where the subject of the investment had to be.
6. The second, and more significant, is as to whether any of the five alternative IGA's were for sale in the relevant period and at what point in that relevant period (which would have an impact, I infer, as to the length of period in which such a posited return may have been generated). There was no evidence given about this.
7. In those circumstances, I would not have found that if Reserve Capital had not bought the Seascapes IGA that it would have expended $1.4 million or thereabouts on an alternative IGA - whether or not one of the five nominated and used by Ms Marke. Further, in those circumstances, I would have been unable to find that Reserve Capital had made good its loss of opportunity case calculated on this basis.
8. In all of those circumstances, I would not have been satisfied that Reserve Capital had established that it would have purchased an alternative IGA such that it should be awarded a return based on alternative investment opportunity. Nor would I have been satisfied as to the period of time for which such an award should have been made.
9. The matter was discussed with Reserve Capital's counsel in closing.[1284] Nothing emerged from that discussion which suggests a different conclusion to me.
10. Because of the findings I would have made on the claims for the loss of an opportunity, I do not need to go on and consider (on a further hypothesis) the submissions made by the defendants to the effect that the losses from the loss of opportunity would cease upon the point in time at which Reserve Capital, knowing of the true position, could have sold the Business.[1285]

1. For the above reasons, I find that Reserve Capital has failed on all of its cases. I would dismiss its claims against all of the defendants.
2. I will hear the parties as to final orders, including as to costs, as needs be.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Further re-amended substituted statement of claim dated 29 November 2023 (SOC) [5.2].

[2] Ex 2 at PDF page 5 - 10. I have referred to each exhibit tendered from the trial bundle as an Ex, bearing its trial bundle number. Unless otherwise indicated, references to page numbers are to the PDF number within the particular exhibit.

[3] SOC [7.3] - [7.5]. I adopt the defined terms used in the SOC and will refer to the Representations as 'Wages Representation', 'Management Representation' and 'Profit Representation', collectively 'Representations', throughout my reasons.

[4] As will be seen, there is a significant dispute as to whether the Management Representation as pleaded was made in the Business Profile.

[5] Re-amended defence of the first and third defendants dated 13 February 2024 (Defence of first and third defendants) [9.2] and [9.4]; Re-amended defence of the second and fourth defendants dated 9 February 2024 (Defence of second and fourth defendants) [9.2] and [9.4].

[6] Defence of first and third defendants [12], [13.1] - [13.4], [13.6], [13.8] and [14]; Defence of second and fourth defendants [12], [13.1] - [13.4], [13.6], [13.8] and [14].

[8] Competition and Consumer Act 2010 (Cth) (ACL), s 4(1) and Fair Trading Act 2010 (WA) (FTA), s 4.

[10] SOC [2.1] and [2.3]; Defence of first and third defendants [2], Defence of second and fourth defendants [2].

[11] SOC [2.2]; Defence of first and third defendants [2]; Defence of second and fourth defendants [2].

[12] SOC [4.2]; Defence of first and third defendants [4.1]; Defence of second and fourth defendants [4.1].

[13] SOC [5.4]; Defence of first and third defendants [5.2]; Defence of second and fourth defendants [5].

[14] SOC [1.1]; Defence of first and third defendants [2]; Defence of second and fourth defendants [2].

[15] SOC [1.2]; Defence of first and third defendants [2]; Defence of second and fourth defendants [2].

[19] Business Profile: Ex 2 at pages 5 - 10.

[20] SOC [8.2.1]; Defence of first and third defendants [8.1]; Defence of second and fourth defendants [8.1].

[22] Defence of first and third defendants [8.3]; Defence of second and fourth defendants [8.2].

[24] SOC [7.4], [7.5] and [8.4.1]; Defence of first and third defendants [7.4] and [8.2]; Defence of second and fourth defendants [7.4] and [8.1A].

[25] Those words do not appear in the Business Profile.

[26] SOC [7.3]; Defence of first and third defendants [7.3]; Defence of second and fourth defendants [7.3].

[27] Business Profile: Ex 2 at PDF page 7.

[30] Business Profile: Ex 2 at PDF page 4.

[31] The appendices appeared as attachments to the Business Profile (Ex 2) at PDF pages 11 - 15.

[32] Written closing submissions of first and third defendants dated 28 June 2024 (Closing submissions of first and third defendants) [42].

[33] SOC [6.3] and [8.3]; Defence of second and fourth defendants [6.2] and [8.3]; Defence of first and third defendants [6.2] and [8.4].

[36] ts 905. The Purported Loan Agreement in written form was initially marked for identification and then tendered as Ex 470, subject to the defendants' objections as to its authenticity.

[37] Closing submissions of first and third defendant [199] - [203]: Closing submissions of second and fourth defendant (Closing submissions of second and fourth defendant) [221].

[48] The email sent from Mr Piggott to Mr Satyawan at 4.26 pm on 4 February 2016 was Ex 6 and the Draft Lease was Ex 8.

[51] Business Profile; Ex 2 at PDF page 8.

[52] Business Profile: Ex 2 at PDF page 8.

[56] The email sent from Mr Piggott to Mr Satyawan at 1.27 pm on 5 February 2016 was included in the email chain at Ex 6 and the attachment headed 'Outgoings Budget 2015/2016' was Ex 7.

[58] The email sent from Mr Piggott to Mr Satyawan at 4.10 pm on 8 February 2016 was Ex 19 and the attached tax return for the 2014 financial year was Ex 20.

[59] Mr Fogarty's forwarded email sent from Mr Piggott to Mr Satyawan at 4.11pm on 8 February 2016 was Ex 21 and the 2015 financial statements was Ex 22.

[60] Ex 18. I have kept the quoted exchanges in their original form and have edited them to correct typographical, grammatical and stylistic errors only where contextually necessary throughout.

[66] Ex 24 at PDF page 3 and following; ts 327.

[67] ts 328, ts 547, ts 1213 and ts 1291.

[71] ts 333, ts 380, ts 385 and ts 1214.

[72] February Sale Agreement: Ex 33; ts 380 and ts 385.

[73] February Sale Agreement: Ex 33 at PDF page 1.

[74] February Sale Agreement: Ex 33 at PDF page 2.

[75] February Sale Agreement: Ex 33 at PDF page 4.

[76] February Sale Agreement: Ex 33 at PDF pages 4 - 5.

[77] February Sale Agreement: Ex 33 at PDF page 5; ts 335 - 336.

[85] Ex 84 at PDF pages 10 - 11; ts 387.

[87] Ex 34; ts 338 and cross‑examination of Mr Satyawan commencing at ts 388 and following.

[95] Business Plan: Ex 36; ts 389 - 420.

[97] The Final Contract was Ex 114 and a copy of the Final Contract stamped by the OSR was Ex 41; ts 341.

[103] Ex 45 and Ex 46: The Disclosure Statement was split between two documents in the trial bundle, so that pages 1 ‑ 10 were in Ex 45 and pages 11 ‑ 20 were in Ex 46.

[106] Disclosure Statement: Ex 45 at PDF page 8: the italicised words were in handwriting.

[113] Ex 6 and Ex 8; as found at [48] above.

[118] Defence of first and third defendants [10.2]; Defence of second and fourth defendants [10.2].