Café Brioche formerly trading at Takapuna on Auckland’s North Shore was ordered to pay $272,500 damages for misrepresenting turnover when selling to Yuen Fei Wei.
Café Brioche opened for business in February 2014, selling out to Mr Wei twenty months later. The High Court was told Mr Wei later found business records hidden under the till recording weekly turnover well below figures he was told prior to the sale. Damages followed; Café Brioche’s turnover misrepresentations induced Mr Wei to buy the business.
Brioche’s owners advertised the business for sale in August 2015 at $220,000 plus stock. Asking price steadily reduced over following weeks. With Brioche later asking $120,000, Mr Wei offered $110,000. A deal was struck at $115,100, with a three week due diligence period. Brioche provided sales data stating weekly turnover for the previous three months was some $9000 with a brief reduction down to $6500 when business was disrupted by construction of a neighbouring car park. The High Court was told Café Brioche turnover for the period never averaged either $9000 or the lower figure of $6500. Car park construction in fact had little effect on weekly sales.
Café Brioche said included in its turnover figures was food supplied to corporate events with payment direct to Brioche’s parent company. Justice Gault said there was no evidence Brioche in fact provided the catering. Its parent company controlled many other food outlets.
Mr Wei went unconditional on his Café Brioche purchase after receiving turnover data during the due diligence period. He was entitled to damages for the difference between profitability as represented by Café Brioche and actual profitability.
The court was told Mr Wei sold the café for $92,000 one year after his purchase.
Do Yay Ltd (formerly known as Café Brioche Ltd) v. Wei – High Court (20.04.20)
20.070