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Shine Lawyers delivers successful judgement against ‘deceitful’ seller
A Queensland District Court decision to penalise a seller of a smash repair business for being “misleading and deceptive” in his business with the purchaser is a “timely warning” about honesty during major transactions, Shine Lawyers said.
Naomi Neilson
The court ruled that the seller had “deliberately misled” the purchaser about a critical loss of a Suncorp insurer contract, which comprised at least 80 per cent of turnover for the business and would mean it could not withstand the existing rental and fixed expenses. The seller did this to compel the purchaser to finalise the transaction.
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Shine Lawyers commercial disputes practice leader Joseph Crane, who represented the purchaser, said he was pleased to deliver a just outcome. The firm alleged that Suncorp had notified the seller that it would shortly stop purchasing services from the business but that the seller made no steps to inform the purchaser.
“We also alleged that the seller of the business not only failed to disclose this important fact to our client prior to his purchase, but knowingly misrepresented to our client that none of the business’ customers were going to leave in the foreseeable future. As a result, our client purchased the business and suffered significant financial loss when the business lost its biggest customer,” Mr Crane said.
The seller denied engaging in misleading and deceptive conduct and submitted to the court that he did not understand the “meaning and effect of the guarantee”, despite successfully conducting businesses in Australia for around 20 years. The court found that the seller is liable to compensate the purchaser for his losses.
“Today is a good day for our client, who the court found lost a significant amount of money as a result of the defendant’s deceit,” Mr Crane said.
“People take risks when buying businesses. However, sellers of businesses are not permitted to engage in misleading and deceptive conduct with impunity. This judgement serves as a timely warning to all sellers of the importance of being honest and candid in your representations to potential purchasers.”
