Wu v Burrough [2003] NSWSC 826

New South Wales Supreme Court

CITATION : Wu v Burrough [2003] NSWSC 826 HEARING DATE(S) : 5 September 2003 JUDGMENT DATE : 9 September 2003 JURISDICTION: Common Law Division JUDGMENT OF : Master Malpass DECISION : The Summons is dismissed. The plaintiff is to pay the costs of the Summons. The Exhibits may be returned.

CATCHWORDS : appeal against assessment of damages - evidence to support the assessment - no error of law. LEGISLATION CITED : N/A Ambulance Service of New South Wales v Daniel CASES CITED : BC200002229. Troulis and Anor v Vamvoukakis and Anor BC9800395. Edward Thomas Wu (Plaintiff) PARTIES : v Joanne Maree Burrough (Defendant) FILE NUMBER(S) : SC 10631 of 2003 COUNSEL : Mr S Balafoutis (Plaintiff) Mr A Paterson (Defendant) SOLICITORS : McCabe Terrill Lawyers (Plaintiff) Rowley and Ross Lawyers (Defendant)

LOWER COURT Local Court JURISDICTION : LOWER COURT 13279 of 1999 Local Court Downing Centre Sydney FILE NUMBER(S) : LOWER COURT J Andrews LCM JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

Master Malpass

Tuesday 9 September 2003

10631 of 2003 Edward Thomas Wu v Joanne Maree Burrough

JUDGMENT 1 MASTER: The plaintiff and the defendant are general practitioners. The plaintiff conducted his medical practice at Bangor. The plaintiff commenced to employ the defendant in about 1991. 2 In 1993, the parties entered into certain contractual arrangements. The business relationship that then ensued has been described as an associateship. The plaintiff sold half of his interest in the Bangor practice to the defendant for the sum of $27,500. 3 It appears that this price was reached following a market appraisal made by The Locums Group for the plaintiff. A copy of the market appraisal is Exhibit 1. It contains the following:- "Following our recent telephone conversation, we have assessed the goodwill value of your medical practice. Your practice has experienced consistent growth over the past three years. Taking into account the information you have provided, we have assessed the goodwill of your practice to be worth $55,500.00. Today's medical practice sales market is very much a buyers market and therefore not the best time to market your practice. My advice to you at this stage is not to sell a percentage of your practice and to hold on to 100% of your equity until the market shows signs of recovery. If it is your belief that you will increase your turn over again in the year end June 1994 then this factor will reinforce my opinion that now is not the time for you to sell. The above quoted figure is a market appraisal and is not a valuation. Should you wish to discuss the matter in further detail please contact me." 4 The parties commenced practising as associates at the Bangor practice from about 1 July 1993. In February 1996, their agreement was varied. It was decided to work out of two premises (Bangor and Menai), with the defendant spending most of her time working out of the Menai premises. 5 In August 1996, the plaintiff went overseas for the purposes of a three months holiday. Dr Tse came to work as a locum at the Bangor premises. The plaintiff did not return to the practice. 6 In about late January 1997, the plaintiff transmitted a facsimile to the defendant. It expressed his desire to terminate their agreement. 7 The defendant continued working from the Menai premises. In January 1997, the plaintiff purported to dispose of all of the Bangor practice in favour of Dr Tse (for no consideration). 8 Thereafter, the plaintiff gave the defendant notice to quit the Menai premises. She ceased to pay rent. He took financial records from the premises. In February 1998, she vacated the premises and thereafter conducted her medical practice from the Bangor Shopping Centre. 9 The disputes between the parties saw proceedings being taken in the Local Court. Broadly speaking, the plaintiff made a claim for rent and expenses. The defendant brought a Cross-Claim (it inter alia sought damages for the loss of her 50% interest in the Bangor practice and for the conversion of certain items. 10 The plaintiff was successful in recovering a monetary sum for rent. The defendant was successful on the Cross-Claim. Judgment was entered in the sum of $28,150. She was allowed $650 for her conversion claim and $27,500 as compensation for being deprived of her interest in the Bangor practice. 11 On 14 March 2003, the plaintiff filed a Summons in this Court. It brought an appeal against the judgment entered on the Cross-Claim. The plaintiff seeks to set aside that part of the judgment which relates to the interest in the Bangor practice. 12 The grounds of appeal set forth in the Summons raised two avenues of challenge. Ground 1 has now been abandoned. 13 The hearing took place on 5 September 2003. The ground of appeal that was litigated is in the following terms:- "The learned magistrate erred in law in finding that the defendant's damages for loss of goodwill were valued at $27,500 where there was no evidence capable of supporting that finding." 14 It is common ground that the appeal is restricted to error of law. The plaintiff bears the onus of demonstrating that there is error of law which justifies a disturbing of the decision. 15 Although the only ground of appeal was a narrow one, the parties have provided written submissions which were supplemented orally. The court was referred to a number of decided cases. 16 The written reasons of the learned Magistrate (Mr Andrews LCM) are before the court. The court has been referred to various passages in the reasons. 17 The plaintiff contends that there was insufficient evidence before the court to properly base the assessment of damages made in the sum of $27,500. In support of that submission, the court was referred to passages to be found in the judgment delivered in Ambulance Service of New South Wales v Daniel BC200002229. In that case, Hodgson CJ in Eq (as he then was) observed as follows:- " [55] Mr Hislop submitted that it was very difficult to establish that there was no evidence: it did not matter that the evidence was scanty or implausible, or even that the decision was perverse: if there was any evidence at all on the point, there was no error of law. [56] In my opinion, Mr Hislop's submissions to some extent reflect a misunderstanding of what was decided in Azzopardi. In the main judgment in that case, that of Glass, JA, a clear distinction was drawn between the situation where the finding of fact in question is made in favour of a person bearing the onus of proof, and the situation where the finding of fact is made against the person bearing the onus of proof. In the former situation, the question is not whether there is any evidence at all on the point, but rather whether the evidence on the point is sufficient, in the sense that it is evidence which if fully accepted could properly base the finding of fact……………." 18 The court was also referred to passages appearing in the judgments delivered in Troulis and Anor v Vamvoukakis and Anor BC9800395. In his judgment in that case, Gleeson CJ observed:- "In such circumstances, there are limits to the lengths to which a court may properly go in "doing the best it can" to assess damages (cf Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 ). We are not here concerned with damages of a kind which are inherently difficult to quantify, or which involve estimating a risk, or measuring a chance, or predicting future uncertain events. The assessment of damages turned upon the valuation of the goodwill of a business. That was a matter in respect of which there may well have been room for differences of opinion. However, it was not shown that the goodwill was valueless, and it was necessary for the respondents (who themselves conducted the business for almost two years) to provide some evidence upon which a rational assessment of value could be made." 19 In my view, there was evidence before the learned Magistrate which could properly found the assessment made by him. He was in a position to make a rational assessment. It was not a case where he merely plucked a figure out of the air. 20 The defendant bore the onus of proving the loss alleged in her Cross-Claim. It is true she did not lead evidence of a valuation as at the time of breach of agreement. The evidence suggests that there may well have been reasons why this was not done. For present purposes, I put those considerations aside. 21 The defendant did lead evidence as to the value of the half interest as at 12 November 1993 (Exhibit 1). This was the market appraisal made at the instance of the plaintiff. It assessed the goodwill of the plaintiff's practice at that time to be worth $55,500. The contents of Exhibit 1 suggest that November 1993 was a bad time to market the practice (it very much being then a buyer's market). The market appraisal advised the plaintiff to not sell a percentage of his practice until the market showed signs of recovery. 22 The plaintiff does not dispute that $55,500 was the worth of the practice as at 12 November 1993. It was a valuation that was not remote in time. The one half share was in fact purchased by the defendant by payment of the sum of $27,500. 23 This material was supplemented by evidence of dramatically increased earnings by the defendant during inter alia the following years during which she operated from the Bangor premises (Exhibit 2). 24 In response to all of this material, the plaintiff did not lead evidence of valuation as at 1997 or any other time or indeed any other evidence which demonstrated that the value of the practice had fallen since 12 November 1993. In submissions, reliance was placed on the gift of the practice to Dr Tse. 25 However, it was not said that the half share was valueless. The gift had to be seen in the context of the other material which was before the court (including the evidence adduced on behalf of the plaintiff that Dr Tse made a living out of the practice and that it was of value to him). 26 It may be that the learned Magistrate did not have before him the best evidence as to valuation. Despite that, it seems to me that he had more than sufficient material to properly found the assessment that was made. In my view, he made an assessment which was reasonably open on the material before him. 27 In submissions, counsel for the plaintiff has directed attention to a number of matters which are said to be relevant to the valuation of the half interest. It was open to the plaintiff to place material before the court to demonstrate that any of such matters had the effect of decreasing the 1993 valuation. This course was not taken. Indeed, it is far from clear that the making of an allowance for any of these factors would have led to a reduction in the assessment that was made. On one view, it may be that the plaintiff was fortunate in not having the assessment made in a larger sum. 28 In my view, the plaintiff has failed to demonstrate error of law. I consider that, no basis has been put forward which would justify a disturbing of the assessment. Accordingly, the appeal fails. 29 The Summons is dismissed. The plaintiff is to pay the costs of the Summons. The Exhibits may be returned. **********