VALUE OF GOODWILL

Auckland Star, Volume XLVI, Issue 68, 20 March 1915, Page 8

VALUE OF GOODWILL

FALSE REPREBEMTATION PROVED. COURT AWARDS DAMAGES. WELLINGTON, Friday. Judgment was given by hie -Honor Mr. .Justice Edwards to-day .in the case in which Frank Charles Farrow sued Louis Henry Hoare for. £2500 aa damages for alleged false representations by which the plaintiff was induced to purchase a business from the defendant. The plaintiff _ also sued separately for a further sum of £35 as damages for breach of contract. The plaintiff claimed that he .had been induced to purchase the defendant's business as an importer and indentor of boots, etc., at a price of £1750 by the defendant's representation that during a period of about 12 years he had made an average profit of £1500 a year, in.epite of the fact that he Had been robbed of .£.3i000 by, a manager whom he had left in charge during hii, absence, .on. a visit to England. This and other representations were alleged to have been untrue to the knowledge of the defendant. The defendant denied that the alleged representations were ever made,'and denied that,. if made, they were acted 'upon bjfc the plaintiff. His Honor .said he did not think .the evidence established that the total. of the defendant's profits would show an average of anything like' £1500 per annum. The representations made regarding profits and that .the' purchase moneys of the business could be paid off out of the business at the rate of £100 per month., were certainly false to the knowledge of the defendant. His books contained no record of the payment of income tax for any other than the last two years. Hie letter to to ' the. Income Tax Commissioner showed that he represented to the Commiesioner that he had made a loss In one of the-.two years for which he subsequently ' paid income.. tax 'as on an 1 income of, ' £415. "In 'my opinion," said his Honor, "therefore the plaintiff has established his first cause of action. The goodwill of the business which he has been induced to buy is, co far as.l 1 can form an opinion, quite valueless. In respect of his first cause of action the plaintiff will therefore have judgment for the sum of £ 1730. In respect of the second cause of action, hie Honor gave judgment for plaintiff for £5. Costs were awarded according to scale, 'with ail extra allowance'of £15 15/ for each of two extra days. 1 After argument it was agreed that' the amount of the: judgment shall be given credit for by the defendant in part reduction for the mortgage to secure the purchase money of the business. v -