Ali v Hartley Poynton Ltd

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No.2039 of 1999

RAHMAT ALI	Plaintiff
V
HARTLEY POYNTON LIMITED	Defendant

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JUDGE:	Smith  J
WHERE HELD:	Melbourne
DATE OF HEARING:	1-28 February, 1-23 March, 20-27 April, 1-31 May, 1-28 June, 2-31 July, 1-31 August, 3-26 September, 15 and 16 October,2001.
DATE OF JUDGMENT:	16 April 2002
CASE MAY BE CITED AS:	Rahmat Ali v Hartley Poynton Limited
MEDIUM NEUTRAL CITATION:	[2002] VSC 113

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Stockbroker – Discretionary authority – Negligent misrepresentation – False and misleading conduct – Negligent trading – Negligent supervision – Illegal transaction – Contributory negligence – Waiver – Damages – Lost opportunity – Exemplary damages.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr. J. Selimi	Starnet Legal Pty Ltd.
For the Defendant	Mr. F. G. Beaumont QC and Mr. M. Wyles	Phillips Fox

TABLE OF CONTENTS

INTRODUCTION.............................................................................................................................. 6

SUMMARY OF ISSUES................................................................................................................... 6

Plaintiff’s Case............................................................................................................................... 6

The Retainer............................................................................................................................. 6

The Trading Aspect of the Retainer........................................................................................... 7

The Telstra Aspect..................................................................................................................... 8

Other issues – Fiduciary Duty.................................................................................................. 9

Other issues – Exemplary Damages.......................................................................................... 9

The Defendant's Case................................................................................................................... 9

The Retainer............................................................................................................................... 9

The Trading Aspect.................................................................................................................. 10

The Telstra Aspect................................................................................................................... 10

Other Defence Issues................................................................................................................ 11

Counterclaim............................................................................................................................ 12

STRUCTURE OF REASONS FOR JUDGMENT....................................................................... 13

Introduction................................................................................................................................. 13

The Critical Issues....................................................................................................................... 13

(1)Credibility............................................................................................................................ 13

(2)Identity of the Client........................................................................................................... 13

(3)Representations and Terms of the Retainer........................................................................ 14

(4)Liability – Trading Aspect.................................................................................................. 14

(5)Liability the Telstra Aspect................................................................................................. 14

(6)Defences............................................................................................................................... 14

(7)Damages.............................................................................................................................. 14

(8)Counterclaim....................................................................................................................... 15

(9)Exemplary Damages........................................................................................................... 15

(10)Events Subsequent to the Agreement – Annexure A....................................................... 15

CREDIBILITY OF KEY WITNESSES.......................................................................................... 15

Introduction................................................................................................................................. 15

Credit of Liyakat Ali and Martin.............................................................................................. 16

Their Positions......................................................................................................................... 16

A Comparison.......................................................................................................................... 17

Credibility of Liyakat Ali – Overview..................................................................................... 18

Credibility of Liyakat Ali – The Diary..................................................................................... 19

Liyakat Ali – conclusion.......................................................................................................... 21

Credibility of Martin – presentation in court.......................................................................... 21

Credibility of Martin – undisputed conduct........................................................................... 22

(a)Innovax................................................................................................................................ 22

(b)Loan to Martin’s father....................................................................................................... 24

(c)The Petroz Parking.............................................................................................................. 24

(d)Cross trades – for his father................................................................................................ 25

(e)Privileged Information........................................................................................................ 25

Credibility of Martin –disputed conduct................................................................................. 25

(a)Withholding information from client.................................................................................. 25

(b)Explanation of admissions.................................................................................................. 26

Credibility of Martin – conclusion.......................................................................................... 28

Credibility of Martin & Liyakat Ali - conclusion.................................................................... 28

Credibility of Rahmat Ali........................................................................................................... 28

Defence criticisms.................................................................................................................... 28

Analysis................................................................................................................................... 29

Credibility of Barba..................................................................................................................... 30

Barba’s role............................................................................................................................... 30

Defence Criticism - Analysis................................................................................................... 31

Barba’s File Notes.................................................................................................................... 33

Barba and Martin.................................................................................................................... 35

Barba - Overview..................................................................................................................... 36

Overview – Qualification........................................................................................................ 37

THE ISSUE OF THE IDENTITY OF THE CLIENT................................................................... 38

Pleading History......................................................................................................................... 38

The Evidence................................................................................................................................ 38

Direct Evidence........................................................................................................................ 38

Indirect Evidence..................................................................................................................... 40

Identity of Client - Conclusion.................................................................................................. 43

REPRESENTATIONS  AND TERMS OF THE AGREEMENT............................................. 43

Pleadings of Parties and Positions Taken................................................................................ 43

Common ground...................................................................................................................... 43

Terms and representations relevant to trading aspect............................................................. 44

Terms and representations relevant to Telstra aspect............................................................. 47

Trading Aspect - the Evidence.................................................................................................. 49

Approach to analysis................................................................................................................ 49

Trading Aspect - Meeting of 27 August 1997......................................................................... 50

Trading Aspect - Meeting of 15 September 1997.................................................................... 51

Trading Aspect;  Evidence of meetings – comment................................................................ 56

Trading Aspect - Demonstration Period................................................................................. 60