My Thermomix has no value – Higgins & Thermomix [2017]

September 11, 2017

Higgins & Thermomix [2017] WADC 101

This case is primarily focused on whether Thermomix Australia engaged in misleading or deceptive conduct, but does provide insight into the judge’s application of business valuation issues for a damages claim by the plaintiff.

Mrs Higgins operated as a Thermomix group leader, overseeing a defined geographic area and a pool of sales consultants. The main claim by the plaintiff relates to boundary shifting of her geographic area. She claimed damages for the value of the business lost when Thermomix terminated her agreement.

Business valuers were appointed on both sides and undertook the typical process for determining business value. The judge made the following comments with respect to the valuations:

  • The valuers determined value of the loss of business
  • The valuer with more SME experience was preferred
  • One valuer did not adjust profits for a wage, notwithstanding that he observed that many micro-businesses sell on this basis
  • The second valuer determined value under a range of scenarios, such as Thermomix approving and disallowing a business sale.

Despite all the good work of the valuers, the judge suggested the proper basis for assessing damages was the loss of chance to sell the business, rather than the value of the loss of business. A subtle difference or just semantics?

The judge considered potential damages for “loss of business value” having regard to:

  • the probability that Mrs Higgins could sell her business
  • Thermomix will likely be anxious to appoint a replacement group leader
  • No group leader had previously tried to sell
  • The business sale could only take place to another suitably trained group leader
  • The likely buyer would be an upcoming junior group leader
  • A junior group leader would be unlikely to pay Mrs Higgins if they stood to inherit the geographic area at no cost by appointment.

“Whilst there is nothing prohibiting her from selling that business, she has not satisfied me that she would have been able to sell the business.”

The end result – the valuers hypothesised about a transaction, but in reality there was no market for the business.