BBQ Smokers Australia Pty Ltd Mainfreight International Pty Ltd [2019] NSWSC 1733

APPEAL FROM LOCAL COURT — Local Court Act 2007 (NSW) — Assessment by Magistrate of economic loss — Whether Magistrate erred in determining award for loss of profits — Whether Magistrate gave sufficient reasons — Where the plaintiff’s shipment of BBQ smokers was delayed and damaged

 

  1. This matter was heard before the Honourable Justice Harrison and is an appeal from the decision of her Honour Magistrate Kennedy (“the Magistrate”) on 24 May 2019 in separate Local Court proceedings commenced by Mainfreight International Pty Ltd (“Mainfreight International”) against BBQ Smokers Australia Pty Ltd (“BBQ Smokers”). BBQ Smokers appealed the Magistrate’s decision in the Local Court Proceedings on the basis that the Magistrate had failed to give sufficient reasons for her decision with respect to BBQ Smokers claim for economic loss.
  2. The dispute related to a contract for the transport of a shipment of BBQ smokers from Perry, Oklahoma USA to Sydney Australia. BBQ Smokers in the process of starting up their business, with the intention of importing BBQ smokers to Australia and selling them from a shop premises in Australia. Mainfreight International is a freight forwarding company. It contracted with BBQ Smokers to arrange the freight of the BBQ smokers.
  3. The freight was delayed and the goods were damaged prior to their arrival. Mainfreight International commenced proceedings in the Local Court seeking the cost of freight, while BBQ Smokers sought damages for loss occasioned to its business and repair of damaged goods.
  4. Section 39 of the Local Court Act 2007(NSW) provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court, but only on a question of law. It has been well established that if a court fails to give sufficient reasons for its decision it constitutes an error of law: see Wang v Yamamoto [2015] NSWSC 942 (“Yamamoto”); and Jung v Son [1998] NSWCA 120 (“Jung”). This appeal is limited to whether the Magistrate on 24 May 2019 provided adequate reasons in relation to economic loss, particularly for loss of profit in the amount of $20,032 (rather than the claimed $37,473).
  5. BBQ Smokers relied on an expert report by accountant Mr Manzo, where he assessed the delay and loss of profits being injected into the business resulting in lost sales of $40,000 in December 2015, and a further loss of $60,000 in April, May and June 2016 (totalling $100,000).
  6. The Magistrate was not persuaded by this evidence on the basis that the company was in its infancy, and although that it had shown positive growth, it would be incorrect to attribute the same value as when it had first commenced. She further stated that for the losses claimed in April, May and June 2016, there was still stock on hand which was later sold by the defendant.
  7. As for December 2015, her Honour did not accept the expert’s opinion that the sum of $40,000 or a sum ought to have exceeded $34,700.00 could be attributed to the delay in receiving the stock.
  8. In light of the business not operating for the whole of December 2015 and only commencing business operations before Christmas 2015, she reasoned that 30% should be deducted. In consideration of the material before her, the Magistrate assessed the defendant’s loss of profit resulting from the delay in December 2015 to be $20,160.
  9. The Honourable Justice Harrison held that the Magistrate provided sufficient reasons as to why and how she assessed the loss of profits and why there were no lost profits in April, May and June 2016. His Honour was of the view that the Magistrate did what she could with the material before her by explaining the flaws of Mr Manzo’s methodology and providing a new method for calculating the loss and why.
  10. This appeal reminds us that it is important for any judicial officer to make it clear what he or she is deciding, and why. The analysis by the Honourable Justice Harrison is important when considering appealing decisions under Section 39 of the Local Court Act 2007(NSW) and that determining the adequacy of a Magistrate’s reasoning will depend on the circumstances of each case and what evidence was before the Magistrate at the time of his or her decision.