DAN v MIKE GAFFIKIN MARINE PTY LTD and ANOR [1997] NSWCA 85

DAN v MIKE GAFFIKIN MARINE PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

POWELL, COLE and BEAZLEY JJA 31 October 1997, 17 December 1997

[1997] NSWCA 85

VALUE of shares — misleading and deceptive conduct — calculation of damages

Powell JA The facts which gave rise to this appeal have been set out in the Judgment prepared by Cole JA, which Judgment I have read in draft.

Although I was, at first, disposed to think that the appeal should be dismissed, upon further reflection I have concluded that, while Young J's finding that Mr Dan had been guilty of conduct which was misleading and deceptive should not be disturbed, the order which his Honour made against Mr Dan to give effect to that finding cannot be sustained.

In order to understand why this should be so, it is necessary to identify, with precision, what was the loss which the Respondent suffered by reason of Mr Dan's conduct, for it is only in respect of that loss that the Respondent is entitled to be compensated.

Although Young J's order appears to have been founded upon the basis that, as the result of Mr Dan's conduct, the Respondent lost its shares - or, at the least, the value of its shares - in Princes Street Marina Pty Ltd ("Princes Street"), that, with respect, was not so.

At that time, the Respondent was in default in respect of its debt to Barclays Australia Finance Pty Ltd ("Barclays") which had appointed Mr Brien as its agent to negotiate the sale of the Respondents' shares in Princes Street over which it (Barclays) had security so that it was virtually inevitable that the shares would be sold and that, even if Barclays were, on any sale, to obtain the best price then reasonably attainable, the price received would be less - perhaps significantly so - than the true value of the shares.

This being so, it follows, in my view, that the loss which the Respondent sustained - and for which he was entitled to be compensated - as the result of Mr Dan's conduct, which conduct led Barclays to sell the Respondents' shares in Princes Street for far less than Young J held was the best price then reasonably obtainable was the amount - $120,000.00 - by which the actual sale price fell short of the best price then reasonably obtainable for the shares.