Sharma & Anor v Seabird Education and Migration Consultants PL
[2012] QDC 306
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- Sharma & Anor v Seabird Education and Migration Consultants PL[2012] QDC 306
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Sharma & Anor v Seabird Education and Migration Consultants PL[2012] QDC 306
Sharma & Anor v Seabird Education and Migration Consultants PL[2012] QDC 306
DISTRICT COURT OF QUEENSLAND
CITATION: | Sharma & Anor v Seabird Education and Migration Consultants PL [2012] QDC 306 |
PARTIES: | NARENDRA KUMAR SHARMA SEABIRD EDUCATION AND MIGRATION CONSULTANTS PTY LTD CINU 80302 PB2008 PTC 031959 |
FILE NO: | 924 /2010 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court |
DELIVERED ON: | 27 July 2012 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 21 and 25 May 2012 |
JUDGE: | REID DCJ |
ORDER: | Judgment for the second plaintiff against the second defendant in the sum of $185,345.00, inclusive of interest and order that the second defendant pay the plaintiffs’ costs of the action fixed in the sum of $8,388.00 |
CATCHWORDS: | Assessment of damages – Breach of contract – Default judgment – Estimation of future loss |
COUNSEL: | C Wiltshire for Plaintiffs No appearance for the Defendants |
SOLICITORS: | Sharma Lawyers for Plaintiffs No appearance for the Defendants |
- [1]On the first of March 2012 the plaintiffs obtained default judgement against the second defendant. I’m required to assess the plaintiffs’ damages.
- [2]By order of Koppenol DCJ, the plaintiffs were required to serve notice of the hearing date of the assessment of damages in accordance with an order for substituted service made by McGill SC DCJ on the 2nd of November 2011. An affidavit of the first plaintiff, who is a solicitor, sworn the 21st day of May 2012 and filed by leave before me attests to such service. When the matter was to be heard, the second defendant was called but did not appear.
- [3]The material discloses that the first plaintiff is a registered migration agent with an eVisa facility granted by the Department of Immigration and Citizenship. The facility allowed him to lodge student visa applications online. He did this through the second plaintiff, the solicitors firm of which he was a principal.
- [4]The second defendant is a chartered accountant in India. In August 2008 he contacted the first plaintiff and indicated that he was engaged in providing immigration services to people in Mohali, in India, and wished to enter into a business arrangement with the plaintiffs. Subsequently the first plaintiff and the second defendant communicated with each other a number of times. On the 3rd of November 2008 the first plaintiff emailed to the second defendant a letter and attached “Disclosure Statement and Costs Agreement”. The letter was written on behalf of the second plaintiff. It was that letter and the attached documents which formed the basis of the agreement between the second defendant and the plaintiffs.
- [5]Importantly the agreement provided that fees would be payable to the second plaintiff by the second defendant for legal services the second plaintiff would provide in the sum of $40,000 for the period from 1 October 2008 to 30 September 2009. That sum was payable by monthly instalments of $3,333.33, payable on the first day of each month and commencing 1 November 2008. The services to be provided included use of the eVisa facility I have referred to. The agreement further provided that the contract could be ended by written notice at any time, but that the second defendant would remain liable for legal costs up until the time of such termination. The Agreement also provided that the second plaintiff could terminate the Agreement for a variety of reasons, including breach of agreement or “for other just cause”, and that the second plaintiff would give notice of his intention to terminate the agreement and the grounds on which the notice was based.
- [6]Thereafter the second plaintiff commenced to provide assistance in the processing of visa applications, and in particular student visa applications, on behalf of clients of the second defendant. Over a period of time, and in particular by mid 2009 it became apparent to both the plaintiffs and the second defendant and, it transpires, to the Department of Immigration and Citizenship, that a significant number of the applications lodged for clients of the second defendant were unsuccessful. Furthermore the Department also identified that an unusually large number of the second defendant’s client’s applications relied on fraudulent documentation. As a result the Department suspended the second plaintiff’s eVisa facility from about 7 September 2009. As a consequence the second plaintiff’s business as an immigration agent collapsed overnight. It had no way of continuing to process applications for visas.
- [7]The first plaintiff, on behalf of the second plaintiff, corresponded extensively with the Department, with a view to having the decision overturned. Ultimately, the eVisa facility was re-installed in February 2011 after the first plaintiff had completed training in Sydney as required by the Department of Immigration. The plaintiff’s immigration service business was by then entirely lost. Despite efforts by the plaintiffs, they have been unable to effectively resume work as immigration agents.
- [8]Material discloses that at the time the eVisa facility was suspended the second plaintiff had five regular business clients, all of whom were in India; namely, the defendant in Mohali, KCR Consultants in South India, Net Worth in Delhi, World Study Abroad in Chandigarh and Easy Overseas in Gujrat. The second plaintiff’s monthly gross income from the business was $3,333.33 from the second defendant, $1,500.00 from KCR Consultants, and $700.00 from each of the other three organisations; that is $3,600.00 in total from the other businesses and $3,333.33 from the defendant.
- [9]A report of Chand and Co, the plaintiffs’ accountants, of the 24th of May 2012 was attached to an affidavit of the first plaintiff and filed herein by leave before me. In my view it may have been open to objection that the report did not meet the requirements for admissibility of an expert report; see Thiess Pty Ltd & Anor v Arup Pty Ltd & Ors [2012] QSC 131, especially paragraphs 34 and 35 per Applegarth J.
- [10]Be that as it may, I admitted the report. The report estimates that the expenses associated with processing of the applications would be about 20.5% of gross fees. This was calculated on the basis that variable expenses, not including staff resources, would be about 8% of gross fees and that staffing resources would be about half of the usual 25% of gross fees. The estimation of only half of the usual fee for staff expenses was on the basis that the processing of applicants was in fact part of an existing solicitor’s business so that the second plaintiff had staffing resources already in place.
- [11]In my view the estimate of such expense is reasonable. It accords with relatively common experience and the allowance of only half of the usual allowance for staffing resources is reasonable because of the reasons relied on by the accountants. It was likely in my view that much of the work could have been performed by existing staff without incurring further outlays.
- [12]I have significant difficulties however with the accountants estimation of the likely income that would have been earned, but for the defendant’s breach.
- [13]It seems reasonably clear on the basis of the material before me that the gross income from agents other than the defendant would have been about $3,600 per month from 7 September 2009 to date.
- [14]The contract with the second defendant however was only for 12 months, and was due to expire on the 30th of September 2009. In my view there is no evidence to support an expectation that the second plaintiff would have renewed the contract with the second defendant. It’s clear from correspondence between them that the plaintiffs were concerned at the regular failure of applications made on behalf of clients of the second defendant. In my view the plaintiffs have not demonstrated that it was likely that this contract would have been continued. In the circumstances I do not think that the second defendant should be held liable for income that would only have been earned if this contract had been renewed. Furthermore, it does not seem to me that there was anything to indicate that in the event that that contract had not been renewed, the plaintiffs were then in the position where they could have negotiated with another immigration agent in Mohali. Whether it could have done so is entirely a matter of speculation. I’ve been provided with no evidence to support the view that this was likely to occur. In the circumstance, it’s my view that the damages for which the second defendant is liable should be limited to the amount of income that would have been generated by the second plaintiff as a result of the contract up to the 30th of September, and for loss of business associated with the other clients of the second plaintiff.
- [15]The material discloses that the second defendant did not pay two monthly payments, that is those due on the 1st of September and the 1st of October 2009, being an amount of $6,666.66.
- [16]For the period from 7.9.2009 to 27.7.2012 (34.66 months) loss of gross income from other clients, at $3,600 per month, would amount to $124,776. The total gross loss of income to date is therefore $131,442.66. After allowing for expenses (20.5% thereof) I find the net past loss from existing clients amounts to the sum of $104,496.91, which I round to $105,000.00.
- [17]Estimation of the plaintiffs’ future losses is difficult. The first plaintiff swears in his affidavit that he has not been able to attract any business despite his efforts to do so. He says he has contacted by email and by phone all former business clients in India about the fact that his eVisa facility has been reinstated. He says they have either not replied or have advised that they have engaged some other immigration agent in Australia to act on their behalf. Copies of a number of such emails are attached to his affidavit. He says that as might be expected news of the suspension of his eVisa facility was a matter which spread quickly within the industry. I accept that the suspension of his eVisa facility would have very significantly disrupted his business. Moreover, it was under suspension from September 2009 until reinstated only in February 2011, a significant period. It has now been a further period of almost 18 months since the facility was reinstated. In my view, while there will be an ongoing loss the amount of such loss is very much one of conjecture. Evidence as to exactly what steps have been taken, other than correspondence to former clients, is entirely lacking. Nor is there any evidence as to the possibility of attracting business from other agents, or from agents in other areas of India, or indeed from elsewhere in the world. In my view it is incumbent upon the plaintiffs to establish their case. In my view the failure to have properly addressed these issues in a detailed report must mean that the damages that can be awarded can be little more than a ball park estimate and because of the failure to have properly and more accurately established the loss, it is my view that the damages should be assessed in a modest sum. I would allow future loss in the sum of $50,000. In arriving at this figure I note that the annual net loss from the businesses with whom the plaintiffs had established contacts was a little under $35,000 per annum so the amount I’ve allowed represents a further one and a half year’s net loss of income from these businesses.
- [18]I would also allow interest on the past loss of $105,000 at 10% per annum from 7 September 2009 to date (2.89 years), which I calculate in the sum of $30,345.00.
- [19]In all I assess the second plaintiff’s damages, inclusive of interest, in the sum of $185,345.00 and give judgment for the second plaintiff against the second defendant in that sum. Pursuant to the agreement with the second defendant no money was payable to the first plaintiff. I assume all such agreements reflected a similar arrangement. As a result the first plaintiff is not entitled to any damages.
- [20]I would order that the second defendant pay the plaintiffs’ costs of and incidental to these proceedings, and fix them in the sum of $8,388.00. I was assisted in this regard by a schedule of costs provided by the plaintiffs, which set out costs in the sum of $11,388. I trimmed those by $3,000, the amount claimed for the appearance of counsel and solicitor on the second day of hearing, because in my view those expenses were attributable to the fact the matter had not been properly prepared on the initial hearing.