Supreme Court New South Wales Medium Neutral Citation: Roxo v McKay [2014] NSWSC 1317 Hearing dates: 17 September 2014 Decision date: 17 September 2014 Jurisdiction: Common Law Before: Adams J Decision: Judgment for the plaintiffs in the sum of $1,240,000 plus costs. Category: Principal judgment Parties: Ross Roxo (first plaintiff) Global Group Enterprises Pty Ltd (second plaintiff) Julia Ruth McKay (first defendant) Normandie Farm (Dairy) Pty Ltd (second defendant) Representation: Counsel: Solicitors: Self-represented (first plaintiff) File Number(s): 2012/00101127 Judgment 1The plaintiffs seek an assessment of damages following upon judgment by default on 9 August 2012 in respect of breaches of a contract concerning management of a dairy farm. The farm comprised 650 acres with two residences, a fully operational rotary dairy equipped with machinery of various kinds, fenced paddocks, bore well pumps, and irrigation equipment. It sustained a milking herd of around 400 head of cattle. From September 2009, when the plaintiffs went into possession the farm was operated by share farmers who paid a net operating income of $21,000 per month. From August 2010 to August 2011 the farm was managed by the defendants whose negligent operations resulted, in substance, in the destruction of the business. The cattle were sold by March 2012. The land and improvements were sold on 15 December 2013. Most of the equipment has been sold with some sales still to take place. 2The assessment of the plaintiffs' loss by virtue of the defendants' breach of contract is not an easy task. The damages to which the plaintiff is entitled must of course be limited to the losses consequential upon the breaches specified in the statement of claim. The breaches alleged were the making of an unauthorised payments from the bank accounts and the failure to account for income received from Norco, which was the purchaser of the farm's milk. The other breach concerned the failure to transfer the milk supply agreement which was a substantial part of the assets of the business. A substantial consequence of that failure was the failure of the farm itself as a business. 3The plaintiffs seek to quantify their loss by reference to the difference between the value of the assets of the business, except for the milk supply agreement, and the money recovered by disposal of those assets together with the operating losses calculated by reference to the net operating income received from the original share farmers of $21,000 a month, as well as with the holding costs from the time the defendant left the farm until sale of the property. 4The value of the plaintiff's interest in two tractors which were repossessed and sold by the financier was also brought into account, although this value is assessed on and as new basis. The remaining major loss is claimed to be the value of the business with a net operating income of $21,000 a month with a 50 per cent capitalisation rate. 5It seems to me, although there is no professional evidence as to an appropriate capitalisation rate that the figure proposed in this respect is a reasonable one. The evidence upon which these losses is based is exiguous partly because the defendants have not provided any accounting material which would enable a more informed calculation. 6(There is no claim made in respect of the sums not accounted for by the defendants.) 7Mr Roxo, who appears unrepresented, has submitted that the sums sought are conservative estimates and has provided some evidence of the calculations, based upon what on the face it appears to be a more reasonable approach. It seems to me his ultimate calculation is a reasonable one. There does, however, seem to me to be some double counting because of the inclusion on the one hand of the business valuation and the operating losses and the holding costs to which I have referred since the business valuation assumes a going concern, whilst the operating losses are based upon the assumption that the business no longer operates. 8Accordingly, and conscious this might be somewhat unjust, I do not think that I should allow the entire sum claimed under the business valuation head. The amount specified in Mr Roxo's affidavit as the total loss as at 17 December 2013 is $1,590,256. To that must be added interest at the sum provided by the rules. 9In respect of the amount claimed I assess damages at $1,200,000 and in lieu of interest the additional sum of $40,000. Accordingly I give judgment for $1,240,000 plus costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 September 2014