Loss of profits
Lotus Amity provides loss of profits reports in disputes. Lotus Amity prepares valuation reports for Court, for internal consulting purposes or to critique another expert’s report.
Loss of profit claims are often made in breaches of contract and tort and business interruption claims. The loss of profit often being the amount required to put the party in the same situation, with respect to damages, as is if the contract has been performed or the wrong or interruption had not been sustained.
The key issues Lotus Amity considers in loss of profit calculations include:
- establishing the date of the breach or interruption and the loss of profit period
- analysing revenue before and during the loss period and assessing lost and expected future lost revenue
- analysing costs before and during the loss period and assessing any avoided costs associated with the lost revenue
- assessing the impact of economic and industry conditions before and during the loss period
- comparing financial performance before and during the loss period to comparable businesses during those periods
- modelling cash flows and discount rates and calculating the present value of the loss
- estimating Court interest or lost interest
Experience
Examples of loss of profit engagements include the following:
- Breach of an employment and sale of business agreement, passing off and injurious falsehood. The respondent sold a facilities management business to the applicant. Allegedly, the respondent subsequently set up in competition in breach of the non-compete clause of both the business sale and employment agreement and made representations that were misleading. Lotus Amity prepared an expert report which analysed the potential lost clients, suppliers, employees and referrers and the expected lost gross profit and avoided overheads on historic and future work. The expert report was prepared for the Supreme Court of Queensland GBAR (Australia) Pty Ltd v Brown [2020] QSC 14.
- Breach of a management rights contract. The applicant held the rights to carry out the management role for the body corporate. The body corporate allegedly terminated the contract without cause. Lotus Amity prepared an expert report which quantified the loss of profit suffered by the applicant as a result of the breach. The expert report addresses issues such as the risk profile of the cash flows, the damage period, the profitability of the contract and the costs associated with the contract. The report was prepared for the Queensland Civil Administrative Tribunal. The expert report addresses issues such as the risk profile of the cash flows, the damage period, the profitability of the contract and the costs associated with the contract. The Sands Gold Coast Pty Ltd v The Body Corporate for the Sands QCAT 2019.
- Breach of a business lease agreement. The respondent breached a restaurant and coffee shop business lease, by denying the applicant access to the property. Lotus Amity prepared a report that critiqued the two previous expert valuation reports and further analysed the data on which the other two expert reports were based and reassessed lost earnings after a forensic analysis of the books and records. The report was prepared for the Supreme Court of Queensland.