Charlies (Broadbeach) Pty Ltd v Goldsea Pty Ltd [2007] RSLT 7

[2007] RSLT 7 RETAIL SHOP LEASE TRIBUNAL In the matter of Dispute No 2006/0078 CHARLIES (BROADBEACH) PTY LTD - Claimant - and - GOLDSEA PTY LTD - Respondent Coram: A Forbes (CHAIR) R Hourigan E Robertson DECISION Given in Brisbane on Thursday, 14 June 2007 -- 1 of 20 -- Dispute 2006/0078 - 2 - Decision 1. The Respondent lessor owns a shopping centre at Broadbeach, known as The Oasis. The Claimant tenant, Charlies (Broadbeach) Pty Ltd conducts a licensed café, “Charlies” in that centre. 2. By Notice of Dispute lodged on 14 September 2006 the Claimant seeks $275,260 as compensation for loss of profits, relying on sub-sections 43(1)(b), (c) and (d) of the Retail Shop Leases Act 1994 (“the Act”). It alleges that the Respondent’s reconstruction of The Oasis restricted the access of potential customers to Charlies Café, to the detriment of the Claimant’s trade, for more than 2 years. 3. The Claimant has carried on its business at the same premises since 1986. The current lease expires on the 28 August 2007. The permitted use is as a “24 hour Coffee Lounge Restaurant.” The claimant has exercised its option for a further term of two-years. 4. The Oasis consisted of three levels of retail shops and a large car park. It occupies the entire block bounded on the south by Charles Street, on the north by Victoria Avenue Mall, on the east by Old Burleigh Road, and on the west, by Surf Parade. In May 2003 the Respondent began construction, above The Oasis, of a 33-storey tower, comprising 133 residential units, on the eastern (or beach side) of the site. For that purpose it was necessary to demolish part of the existing building, to renew foundations, and to cover the exterior of the centre and the rising tower with scaffolding. Construction of the new building, “Air on Broadbeach”, ended in October 2005. 5. Charlies Cafe faces Victoria Avenue Mall on one side, and the atrium of the shopping centre on the other. In recent years Broadbeach has acquired a reputation as the “food Mecca” of the Gold Coast, and most of the small businesses on the Mall side of The Oasis are cafes. Charlies is about one quarter of the distance from the eastern end. There are three other cafes between Charlies and that end of the centre. All have indoor and outdoor -- 2 of 20 -- Dispute 2006/0078 - 3 - Decision dining facilities, with tables under umbrellas. From the east, the Mall is divided into an upper level on the Oasis side, and a slightly lower level on the other. 6. At Broadbeach the number of high-rise buildings with holiday apartments has increased exponentially in the past 10 years. The beach and nearby Jupiters Casino attract many holidaymakers and potential customers for restaurants in the area. Another large centre with cafes and restaurants, known as “Aria” opened in 2002, about 200 metres from The Oasis. The Claimant’s Case 7. The Claimant says that the major building project at (or above) The Oasis, continuing for some 2½ years (“the relevant period”) seriously disrupted its business, causing lost sales of $491,475 representing 12.5% of the sales the Claimant says it would have achieved but for the Respondent’s construction program. It claims a loss of profits in the amount of $275,260.1 The Claimant waives so much of its claim as exceeds the limit of the Tribunal’s monetary jurisdiction of $250,000. 8. Shares in the Claimant company are held by Joerg Riewoldt (50%), the family of Philip Graeme Downie (25%) and Robert Murphy (25%). Downie and Riewoldt are its directors. Downie is a chartered accountant who states that, in his practice, first as an accountant, and later as an insolvency specialist, he gained experience in the hospitality industry. He has been financial manager of “Charlies” at Surfers Paradise since 1982 and of the Claimant since 1989. 9. At Broadbeach “Charlies” caters for what its directors admit is the lower end of the market. It sells cafe food and alcoholic drinks and the average customer spends about $10 there, per visit. It does not take bookings, and depends entirely upon passing pedestrian traffic. About 65% of its customers enter 1 Affidavit of Philip Graeme Downie filed 28.2.07: exhibit M. -- 3 of 20 -- Dispute 2006/0078 - 4 - Decision from the Mall side, and 35% from the Centre. According to Mr Downie, it was a profitable business for the first 10 years, to the end of the 1999-2000 financial year. In that year it made a profit of $163,000, but in 2000-2001 profits plummeted to $13,500. It was discovered that the manager at that time was incompetent and probably dishonest. 10. Mr Riewoldt has 20 years’ experience in the hospitality industry. Mr Downie engaged him as manager in 2001, with an option to buy a 50% shareholding in the Claimant company. At that time “Charlies” traded for 24 hours a day. In early 2002 Riewoldt reduced trading hours to 6 am to 9 pm, and profits for 2001-2002 rose to $90,000, despite a drop in turnover. Downie describes this as a "tremendous turnaround" and claims that business continued to improve month by month thereafter, producing net profits of $240,000 in 2002-2003, despite the commencement of building work in or about April 2003. 11. However, in 2003-2004, profits fell by $90,000, and in 2004-2005 by between $70,000 and $82,000. The Claimant attributes the whole of these losses to disruption of trade as a result of the Respondent’s extensive building programme. The Claimant’s business recovered slowly in 2005-2006, but has not regained the heights of 2002-2003. 12. Mr Bradley Dickfos, a chartered accountant, has prepared the Claimant’s tax returns for the past 11 years. Mr Downie prepares the financial statements, although there is no formal audit. According to Mr Riewoldt, the Claimant uses the latest recording devices, and all “till tapes” are carefully preserved. Mr Dickfos also prepares the Claimant’s turnover statements for delivery to the Respondent, in accordance with the lease. In so doing, he compares “till tapes” against bank statements and financial statements. The audit process has always proved the accuracy of the Claimant’s records, and he himself is satisfied with that result. In Schedule “M” to his affidavit Mr Dickfos calculates the Claimant’s losses between May 2003 and October 2005, compared with the previous financial year, on the basis of Claimant’s turnover in the year -- 4 of 20 -- Dispute 2006/0078 - 5 - Decision before the start of construction, and projecting a turnover in each of the 2 ½ years thereafter, with a CPI increment. According to his calculations, the Claimant’s net loss in that period, being the difference between its projected and actual turnover is $275,260.2 We note that Mr Dickfos was not cross- examined about the methodology adopted in Schedule M, or any of its assumptions. 13. Mr Riewoldt states that, as business slowed, he had ample time to observe the phases of construction. He says that for about three months the builders used jackhammers and drills to demolish old foundations. He describes the noise of those operations, and accompanying dust, as so “unbearable” as to cause the Claimant’s customers, including regulars, to leave before ordering. After a brief respite, there was more jack-hammering from time to time. One entrance to the shopping centre was closed throughout the construction period while a crane lifted building materials, and a builders’ lift inside the arcade, immediately behind “Charlies” obscured its advertisements. Riewoldt also says that there was a distracting hum from the crane and a cement pump. The eastern or beach end of the Mall was closed to the public, so that it became a dead-end near “Charlies”. He often saw potential customers veering away from the footpath outside “Charlies”, apparently deterred by the cordon. At the same time, people approaching “Charlies” from the relatively undisturbed, western end of The Oasis preferred one of the cafes closer to that end, rather than his premises, closer to the building activity. It was not until October 2005 that the builders removed all the awnings, fences and scaffolding that affected “Charlies’” business. 14. In examination-in-chief, Mr Riewoldt explained how he estimates the capacities of his staff. He refers to records of staff levels in the previous year, and maintains a basic minimum of five – two to wait on tables, one behind the counter, and two kitchen staff. As a rule of thumb, that number of staff can cope with takings of approximately $200 per hour, and any unusual 2 Affidavit Bradley Robert Dickfos, filed 18.2.07: exhibit A. -- 5 of 20 -- Dispute 2006/0078 - 6 - Decision influx of customers. Recently a crowd arrived for breakfast, boosting the normal morning takings from $400 to $2,000 and there was only one customer complaint. At other times, says Riewoldt, there is no excess capacity upon which savings could have been made in the relevant period. The business is seasonal, February to June being the quieter months. 15. According to Mr Riewoldt the business has been slow to recover. Former customers have changed their habits, and several regulars have not returned, although the menu and the quality of the food have not changed. 16. Ms Fiona Creed has been the Claimant’s assistant manager since 2000. It is her responsibility to decide each day how much casual assistance is needed. She gave evidence of losing regular customers. 17. Mr Downie says that some time after construction began he told the Respondent’s manager, one Goodfellow, that he (Downie) was monitoring “Charlies’” financial performance. In January 2004 the Claimant’s solicitor wrote to the Respondent’s lawyers stating that its business was being seriously affected by the construction work, and asking how much longer it would last. In February the Claimant received an unsatisfactory reply. In June 2004 the Claimant set out its losses in detail and claimed compensation. The Respondent denied liability, suggesting that, in fact, the Claimant’s business had been declining since 2001. In December 2004 the Claimant rejected that assertion and pointed out errors in the Respondent’s calculations. 18. By the same letter3 the Claimant sought an alteration to its lease to allow two options of five years each, and offered to improve the premises, provided that the Respondent met 50% of the cost by way of rent relief for 12 months. (The current lease provided for two two-year options.) The Respondent did not reply until August 2005, when it declined both propositions, but offered a new seven year lease at an increased rent of $178,000 per annum. In the event 3 Affidavit Phillip Graeme Downie, filed 28 May 2007, Exhibit “A”. -- 6 of 20 -- Dispute 2006/0078 - 7 - Decision the Claimant entered a two year lease with one two year option at a lower rent. The extended term expires on 28 August 2009. The Respondent’s Case 19. The Respondent denies, or does not admit that its construction work caused any significant loss to the Claimant. It adheres to its previous view, that the Claimant’s business was in decline before that work began, because of greater competition and a failure to upgrade its image. 20. Mark Odgers-Jewell was manager of the construction project. He states that jack-hammering was confined to an initial six-week period, and was suspended during lunch hours. He says that the Claimant made no complaint to him at any time, and that “Charlies” was well away from main construction area. He asserts that its sales were 9.2% lower in the six months prior to May 2003 than in the same period in 2002. He says that the trading figures of Marios, adjacent to “Charlies”, were maintained despite the fact that it was nearer the main construction area. 21. Trevor Darnell became the Respondent’s centre manager in March 2004, almost one year after construction began. He says that in late 2004 the Respondent began to refurbish the retail precinct of The Oasis. He then advised all tenants to upgrade their premises to match the improvements. The Claimant did not do so. In February 2007, according to Darnell, other restaurants in the centre increased their turnover by an average of 4.76%, while the Claimant’s declined by 1.18%. Expert Evidence 22. The Claimant relies on calculations by its director Downie, its accountant Dickfos and a report by Susan Carter of Worrells, Forensic Accountants. For the Respondent, expert evidence was given by John Thynne of Vincents -- 7 of 20 -- Dispute 2006/0078 - 8 - Decision Chartered Accountants, and Jon Norling an accountant and retail analyst in the firm known as Urban Economics. 23. As ordered at a directions hearing, the experts met in search of common ground. As noted above, there was no challenge to the Claimant’s financial statements, or to the mathematical integrity of Mr Dickfos’ calculations. Ms Carter and Mr Thynne were able to agree on a range of compensation for lost profit based on turnover loss from 1% and 12.5%, and differed only as to potential savings on labour and superannuation during the period of disruption. They jointly prepared Exhibit 9. (a) The Downie-Dickfos calculations4 24. Mr Dickfos takes May 2002 to April 2003 as the standard year. He calculates a loss of gross turnover between May 2003 and October 2005, adding the appropriate CPI increments, as $491,475. He calculates savings of $115,046 on materials for reduced sales, apportioning 22.3% of that sum to food, and the balance to liquor. He estimates labour and superannuation savings at $91,169 (37.1% of turnover) and sundry other savings at $10,000. On this reckoning the nett loss of profit is $275,260. 25. Mr Downie states that net profits in four financial years from 1999-2000 were as follows: 1999-2000 $163,000 2000-2001 $13,500 2001-2002 $90,662 2002-2003 $240,377 4 Affidavit Bradley Robert Dickfos, filed 28.2.07, Exhibit A; Exhibit M to affidavit of Philip Downie filed 28.2.07. -- 8 of 20 -- Dispute 2006/0078 - 9 - Decision 26. He attributes the anomalous result in 2000-2001 to management problems referred to above. (b) The Carter Report 27. Ms Carter disputes the suggestion that the Claimant’s turnover steadily declined, regardless of the building operations. In her opinion, when the aberration of 2000-2001, and the reduction in trading hours are properly considered, the Claimant’s sales trends are predictable, not volatile. She says that Mr Thynne has failed to take into account the increased profit in 2002 –2003, despite reduced turnover. 28. Ms Carter accepts Dickfos’ calculation of gross loss of turnover and countervailing savings in expenses. However she would count savings on labour and superannuation only if a turnover loss between 10% and 12.5% is assumed. She based this opinion on a close inspection of Mr Riewoldt’s tightly controlled practice of estimating from day to day how many employees were needed for satisfactory service. The question of how much credit should be given for savings on labour is the point of departure between Ms Carter and Mr Thynne. Carter considers that Thynne is unduly theoretical. She places the Claimant’s loss of profits at 10% or 12% of the assumed gross turnover loss in the range of $228,840 - $309,691 and credits a saving of labour costs only at those levels, of $54,000. (c) Mr Thynne’s Opinion 29. Thynne accepts the Dickfos-Downie method of quantifying loss while disputing certain components. In his view – • That method assumes that the sales in 12 months prior to the relevant period are predictive of ongoing sales; -- 9 of 20 -- Dispute 2006/0078 - 10 - Decision • Average monthly sales in the year immediately before the relevant period show a reduction of 5% from the previous year; however, he concedes that this may be related to management problems; • The two six month periods immediately prior to the relevant period reveal lower turnover compared to the same periods in the previous year: a 1.2% reduction in the first half year, and a 9.3% reduction in the second; • The sales history is volatile; therefore it is not appropriate to index the notional sales; • The Claimant’s approach fails to consider the possibility of external factors affecting sales; • The Claimant’s allowance for cost-savings on labour and superannuation is not acceptable. He prefers to deduct savings of 24.8% on any assumed turnover loss above 3%. However, he concedes Ms Carter’s proposition that this calculation cannot be strictly accurate, because of a high percentage of salaried as against casual staff.; • The loss of net profit is in the range of 1% - 3% of the assumed turnover loss, or $25713 - $65.589. (d) Mr Norling’s View 30. Mr Norling accepts in principle that the building work may have affected the flow of customers to the Claimant’s premises. He refers to (admittedly incomplete) records of pedestrian traffic counts provided by the Respondent. In his opinion these show a seasonal trading pattern in the Oasis, with February to June the quietest months. 31. He lists some external factors that, in his view, are likely to have affected the Claimant’s business, namely: • Tourism: Norling agrees with Darnell that tourists account for about 40% of retail trade in The Oasis. Consequently business activity there fluctuates more than in a centre with a larger resident population. While -- 10 of 20 -- Dispute 2006/0078 - 11 - Decision international tourists were fewer in 2002-2003 domestic tourism increased. • Competition: Impact of the building work was greater on food outlets nearer to the eastern end of the Centre, but even there it was uneven. For example, Marios Restaurant, close to the north-eastern corner, actually enjoyed a 1% increase in sales in the relevant period; Madisons, further away from the building activity, recorded an increase of 8%, and the Broadbeach Tavern, at the western end of the Centre, an increase of 16%. Dining places in Broadbeach have rapidly increased in number and variety in the last decade; there are now 63 in the commercial precinct. Customer tastes change and restaurants are notoriously subject to the whims of fashion. • Presentation: “Charlies” lost its competitive edge by not making refurbishments. In Norling’s opinion its standard of presentation is now inferior to its main competitors’. 32. Mr Norling’s analysis of the Claimant’s financial statements is as follows: • “Charlies” suffered a steady decline in turnover in 2001-2002 and 2002- 2003, i.e. before the relevant period. Turnover fell from an average $116,000 in the four months January–April 2003 to $109,000 in the last four months of the relevant period; • The decline from 2002 is likely to be due to a decline in international tourism and the opening of the Aria development; • Mr Downie’s calculation is unreliable in that (a) it includes an unwarranted estimate of CPI growth; (b) it does not acknowledge that turnover has failed to recover since the relevant period; and (c) the claimed loss of 12.5% of turnover is constructed on an inflated base. • Mr Downie’s schedule (Exhibit M) should not be used to calculate loss; -- 11 of 20 -- Dispute 2006/0078 - 12 - Decision • Any loss is, at the highest, in the range of $34,747 - $106,390. The Claimant’s Response 33. Mr Downie had no contact with the project manager because he preferred to monitor his company’s sales for a reasonable time before complaining to that person. He firmly rejects Mr Norling’s suggestion of declining turnover prior to the relevant period, and responds as follows: • In March 2002 opening hours were reduced from 144 to 83 hours per week, saving the wages of two overnight staff at penalty rates. Notwithstanding lower turnover there was a marked rise in profits; • The 2002-2003 year was the Claimant’s most profitable for several years, showing an average monthly turnover of $124,234 compared with $114,665 during the relevant period. 34. As to competition, Messrs Downie and Riewoldt both deny that the Aria development has affected their business in any way. Aria opened a year before construction began, and in that year there were record profits. Downie does accept, as a general proposition, that “Charlies” faces increased competition, but denies that it has reduced the Claimant’s profits. On the contrary, so he says, growth in the restaurant precinct was “good for Charlies”, when a substantial increase in visitors to Broadbeach is considered. Several food outlets in The Oasis cater to a different market - as “destination” businesses they take bookings, trade at night, and offer “white table-cloth service” – offerings quite different from “Charlies” catering style. Marios is one example and the Tavern is another. Such establishments are not really in competition with the Claimant. The same applies to restaurants in the Aria complex. -- 12 of 20 -- Dispute 2006/0078 - 13 - Decision 35. Downie denies that “Charlies” was out of date during the relevant period. It has been refurbished twice since 1989, more recently in 1999. Its furniture is of the same quality as that in similar establishments, and its décor is of reasonably high standard. Umbrellas shading outdoor tables are regularly recovered. He concedes that it now needs renewal, but in the absence of a significantly longer lease and security of tenure, refurbishment in the order of $300,000 - $400,000 cannot be justified. 36. According to Downie’s evidence in chief, Norling’s figures are based on overall visitor numbers to the Gold Coast, whereas they should be based on numbers of visitors to Broadbeach in particular. He tendered schedules of such numbers, prepared for the local council.5 In round figures, Exhibit 3 shows an increase in international visitors from 11,000 in March 2003 to 58,000 in December 2005. The record of visitor nights shows a similar trend. Domestic overnight visitors at Broadbeach increased from 831,000 in March 2003 to 1,064,000 in December 2005 - an increase of 28% - while day- trippers increased by 109%. According to Mr Downie these statistics are pertinent to the Claimant’s business, which depends largely on passing trade. The Law 37. The Claimant, relying on sub-sections 43(1)(b) and (c) of the Act, must prove a substantial disruption of its business for which the Respondent is responsible. 5 Exhibit 3. -- 13 of 20 -- Dispute 2006/0078 - 14 - Decision FINDINGS Disruption of Business 38. The building of a 33-storey tower over The Oasis is indisputably a major undertaking, as its 2½ years’ duration testifies. No doubt such a development affected pedestrian and vehicular traffic for much of that time. The present question is whether its impact on the Claimant was “substantial” or “significant” within the meaning of section 43(1). 39. According to the Claimant’s witnesses the most disturbing events were the jack-hammering and drilling of foundations, and resultant dust, in the early stages of the project. We are satisfied that initially these nuisances occurred regularly for about three months and intermittently afterwards. The evidence of Mr Riewoldt and Ms Creed on these matters was not seriously challenged. We find that most of the Claimant’s income is from serving “all day breakfasts” from 6 am, and from lunchtime trade, and that it depends largely on passing foot traffic. We accept that significant numbers of potential customers, entering the upper Mall from the western end, discouraged by builders’ barriers, took their custom elsewhere, while those approaching from the east were diverted into the lower Mall, by-passing “Charlies”. 40. The Respondent admits that its building operations caused some damage to the Claimant’s interests6 . Curiously, Mr Norling states on page 15 of his report: “The analysis of monthly turnover does not support the contention that Charlies Café suffered a loss resulting from the construction period” but on the very next page he goes on: “I would expect that the business of Charlies café would be adversely affected in some way by the construction activities.” 41. It is uncertain whether the disturbance, in so far as it affected the Claimant, was intensive throughout all the relevant period, but we are satisfied that a crane, a builders’ lift, a concrete pump lifting concrete for the slabs of each 6 Submissions of Counsel for the Respondent, paragraph 3. -- 14 of 20 -- Dispute 2006/0078 - 15 - Decision floor, scaffolding, barriers and general disarray had significant ill-effects upon the Claimant’s business until October 2005. Therefore we are satisfied that the Claimant has proved substantial and prolonged disruption to its trade that entitles it to compensation. 42. Two issues remain: (a) The cause or causes of the Claimant’s losses, and (b) the appropriate calculation of same. (a) Factors contributing to the Claimant’s Loss? 43. The Claimant attributes its losses to the building operations. The Respondent claims that other factors caused or contributed to those losses, including a downturn in tourism, increased competition and the Claimant’s failure to renovate its premises. 44. Contrary to the Respondent’s submissions, we find that there has been an increase in domestic visitors and day trippers to the Broadbeach area. In our view, the statistics relating to the local area, which are in evidence, are more persuasive than those of the Gold Coast area generally.7 We accept the evidence of Downie and Riewoldt that their business does not depend on international visitors. 45. We accept Downie’s admission that some refurbishment of “Charlies” is required, although recent photographs present the premises as clean and pleasant without obvious shabbiness. We are satisfied that four years ago, when the building work began, and during the relevant period, the Claimant’s café was probably as well-presented as others in the Centre. Only one food outlet (McGinty’s8 ) was refurbished in the relevant period. McGinty’s does not appear to be in the immediate vicinity of “Charlies”. We reject Mr Norling’s assertion that, in the relevant period, presentation was a significant factor in the Claimant’s lower sales. The Claimant does not seek compensation for 7 Exhibit 3. 8 Exhibit 5. -- 15 of 20 -- Dispute 2006/0078 - 16 - Decision losses after October 2005. “Charlies” was last refurbished in 1999, and its décor was just four years old at the commencement of the relevant period, during which only one food outlet was refurbished. In the light of up-to-date photographs of the Claimant’s premises we regard presentation as a relatively minor cause of the Claimant’s losses in the relevant period. 46. However, considering the evidence of expanding restaurant facilities in Broadbeach, we accept that Charlies now faces stiff competition, which has increased during the last five years. Mr Norling lists no fewer than 14 major and competitive developments in the Gold Coast area since 1989, of which 4 of them have opened since 1999. The tourist market is notoriously fickle in its pursuit of fashion and novelty. Competition does not necessarily take the form of a similar business; anything that attracts a customer to use disposable income in outlets other than the Oasis amount to competition. 47. In our opinion Mr Downie unduly minimises these factors, particularly in view of “Charlies’” failure to regain its previous peak of turnover after the relevant period. And so we find that increased competition accounts for a significant percentage of the Claimant’s losses in the relevant period, and must be taken into account in assessing compensation. (b) Quantum: calculation of Loss 48. None of the experts challenged the Dickfos-Downie9 presentation of raw figures of the Claimant’s trading during the construction period. Downie was not cross- examined on that schedule, nor on his analysis of monthly sales and decline in net profits during the relevant period10 . We are satisfied that Downie, with long and successful experience in café management, handled “Charlies’” finances with regular precision. Significantly, both Thynne and Carter relied on his schedule, with appropriate adjustments, to express their 9 Affidavit Philip Graeme Downie filed 28.2.07, exhibit M. 10 Affidavit Philip Graeme Downie filed 28.2.07: exhibit L. -- 16 of 20 -- Dispute 2006/0078 - 17 - Decision different opinions. 49. The Claimant’s case is that its turnover in the relevant period was only 87.5% of what could have been achieved. In other words, in the relevant period, the Claimant should have made sales of $3,931,358 rather than $3,439,940, and accordingly lost 12.5% of turnover, or, in round figures, $491,475. 50. The Dickfos-Downie calculation assumes that, without the impact of the Oasis redevelopment, the Claimant’s trading pattern in 2002–2003 would have continued in the relevant years, unaffected by any external factor other than CPI increments. 51. Mr Norling questions that assumption and, in our view, rightly so. The downward trend in sales11 between May 2002 and May 2003 is not adequately explained by Mr Downie’s reference to the satisfactory net profits in that period. Absent evidence of an internal factor, such as defective management, the factor influencing turnover just before the relevant period must have been external to the business. In our view, it was competition for the tourist dollar. 52. Counsel for the Respondent submits that there is no basis for compensation greater than 1% to 3% of assumed loss of turnover in the relevant period. He argues that Downie’s evidence on this point must be rejected, because he is a biased expert, with a financial interest in the outcome of these proceedings. However, the fact that an expert is aligned to the party who calls him does not render his evidence inadmissible.12 It is simply a consideration that goes to credit. 11 Identified by both Messrs Norling and Thynne 12 Feingold Partners Pty Ltd v Fagenblat [2003] VSCA 33; Australian Securities & Investments Commission v Rich (2005) 190 FLR 242; [2005] NSWSC 149; Flavel v South Australia [2007] SASC 50. -- 17 of 20 -- Dispute 2006/0078 - 18 - Decision 53. We have already found that the Claimant’s business suffered substantial financial loss in the relevant period. We are satisfied that the Respondent is responsible for the loss of 5% of the Claimant’s assumed gross turnover in that period. Adjustments for costs of sales, labour and superannuation savings: 54. Costs of Sale: The expert witnesses agree that sales savings (food and liquor) and sundry expenses amount to 26% of gross turnover loss. 55. Labour costs: We accept the Claimant’s evidence that the experienced staff of “Charlies”, at a regular minimum of five, had adequate excess capacity to service customers in what might be called “the post football rush”, and that the manager made appropriate adjustments when necessary. We also accept that the Claimant required the same minimum number of staff (5) when business was relatively quiet. On this point we prefer the assumptions of Ms Carter (Exhibit 9) to those of Mr Thynne. We find that there would be no labour cost savings at the abovementioned 5% level of loss. 56. Our calculations are set out in the schedule below. Conclusion 57. We find that the Respondent is liable to compensate the Claimant for its actions within section 43(1)(b) and (c) of the Act in the amount of $133, 977. -- 18 of 20 -- Dispute 2006/0078 - 19 - Decision ORDER That the Respondent pay to the Claimant as and by way of compensation the sum of one hundred and thirty three thousand nine hundred and seventy seven dollars ($133,977) within thirty days of this order. A FORBES Chairman -- 19 of 20 -- Dispute 2006/0078 - 20 - Decision SCHEDULE Notional gross turnover loss $3,439,940 5% gross loss $181,049 Less costs of sales @ 26% $47,073 (labour and superannuation excluded) Loss of net profit $133,977 -- 20 of 20 --