Kate has decided that she would like to purchase a café. While holidaying with her family for two weeks in a unit on the beach at the coastal town of Port Macquarie, Kate notices that the 'two beans' café located in Port Macquarie's main street is for sale. That evening, while at a social function with some friends, Kate is introduced to Malcolm. Approximately ten minutes into their conversation, Malcolm reveals that he is an accountant. Kate immediately mentions that she is in need of a good accountant to check over the financial position of the two beans café that she was interested in purchasing. Malcolm then said:
"I buy my coffee there every morning on the way to work. Their beverages and the quality of their food are excellent. The place is always busy so they must be making loads of money. I do not think you will have any problems purchasing that business."
Kate continued to talk to Malcolm for a while longer and the pair shared a couple of more drinks before Kate left to return to her unit for the evening. One week later, Kate engaged the services of a solicitor and purchased the two beans café. Six months have now passed and the café is not making a profit. In fact, Kate has discovered that the business has been running at a loss for the past 12 months.
Kate has come to see you. She wants to know whether she can sue Malcolm for negligent misstatement. Advise Kate.