Arise Joondalup Pty Ltd v Ausie and Azar Pty Ltd - [2018] WADC 16

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: ARISE JOONDALUP PTY LTD -v- AUSIE & AZAR PTY LTD [2018] WADC 16

CORAM: O'NEAL DCJ

HEARD: 21-25 NOVEMBER 2016 & 11-15 DECEMBER 2017

DELIVERED : 2 FEBRUARY 2018

FILE NO/S: CIV 559 of 2015

BETWEEN: ARISE JOONDALUP PTY LTD
Plaintiff
AND
AUSIE & AZAR PTY LTD
First Defendant
HUSENALY SAEY ABEDY
Second Defendant

Catchwords:

Commercial tenancy - Termination of lease for non-payment of rent - Claim for damages - Failure to provide disclosure document - Alleged misrepresentations - Misleading and deceptive conduct - Turns on own facts

Claim for debt - Deed of acknowledgement of debt - Alleged misleading and deceptive conduct - Alleged duress and unconscionable conduct - Turns on own facts

Legislation:

Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)

Result:

Counterclaim dismissed
Judgment for plaintiff

Representation:

Counsel:

Plaintiff:     Mr I R Freeman
First Defendant            :     Mr T J Lyons
Second Defendant        :     Mr T J Lyons

Solicitors:

Plaintiff:     Lavan Legal
First Defendant            :     Gibson Lyons
Second Defendant        :     Gibson Lyons

Case(s) referred to in judgment(s):

Nil

O'NEAL DCJ:

Introduction

The plaintiff is the developer and owner of the Joondalup Square Shopping Centre. The defendants are respectively a former tenant in the shopping centre and the first defendant's sole director and shareholder.

In this action the plaintiff claims for two amounts of money. The sum of $93,067 is said to be due as repayment of a loan, the terms of which are set out in a deed of acknowledgement of debt (the Deed) made in August 2014. A further $153,060 is claimed as a liquidated amount for the breach of a lease of a tenancy in Joondalup Square (the Joondalup lease) entered into between the parties in October 2013. In both cases the first defendant is sued as the principal debtor and the second defendant as a guarantor.
The defendants deny that the money claimed by the plaintiff under the Deed was in fact a loan, and say that it was a gift. The Deed it is said was only entered into by the defendants under duress, or as a result of unconscionable conduct. The defendants allege a variety of misrepresentations, and occasions of misleading and deceptive or unconscionable conduct which are said to have induced the first defendant to enter into an agreement for lease dated 22 November 2012 (the AFL) and the Joondalup lease. The defendants' counterclaim for damages of $555,026 is said to arise from the wrongful termination of the Joondalup lease.
The facts of this case offer support for the adage 'No good deed goes unpunished'.

Plaintiff's case

The plaintiff's case is relatively simple.
The facts which I will set out both to explain the plaintiff's case and to provide the background to these disputes are not controversial. Except where otherwise noted, the facts in this section are accepted by me.
The plaintiff is a commercial real estate developer and owner and landlord of a substantial part of the Joondalup Square shopping centre. It has been involved in a variety of commercial real estate developments, in various capacities.
In 2012 the plaintiff was developing a shopping centre in Malaga (the Malaga centre) for the owner of that property, while at the same time proposing to acquire and develop another property on its own behalf. This second property became the Joondalup Square shopping centre.
The property where Joondalup Square would be developed was being offered in a tender process by the government agency, Landcorp. That tender process had regard not only to the offered price, but the nature of the development proposed. To help support the submission that it was preparing, the plaintiff undertook investigations into market demand. It sought expressions of interest from potential tenants.
One of the businesses the plaintiff or its agents made inquiry of was the franchised food enterprise 'Croissant Express'. As the name suggests, stores trading as 'Croissant Express' sell filled croissants, sandwiches, rolls and pastries. They also sell soft drinks and coffee. Croissant Express products are sold to be taken away. A typical Croissant Express store provided modest counter space or table seating on the premises where food purchased could be consumed.
In early 2012 most if not all of the franchised Croissant Express shops traded in the City of Perth, or in shopping centres close to it. At that time however, Croissant Express was seeking to expand its franchised store network to more far flung suburban and semi‑industrial areas.
Until September 2013, the general manager of the franchisor company, Croissant Express Franchising Pty Ltd (CE Franchising) was a man named Glen Evans. Mr Evans, who gave evidence at trial, had some familiarity with the business of the plaintiff, regarded it favourably, and looked to it for premises for future franchised stores.
The second defendant was born in Azerbaijan. Although English is not his first language, he received a Bachelor's Degree in Electrical Engineering from the University of Tennessee. He came to Australia in about 2008.
In 2012 the second defendant was looking to start a business, and he was researching franchised businesses. He answered an advertisement for Croissant Express franchises, and around April 2012 he met with Mr Evans.
At that time Mr Evans was considering putting a franchised shop in the Malaga centre. That centre was being developed by the plaintiff on behalf of the owner, a company called Venetian Nominees Pty Ltd.
In about August 2012 Mr Evans introduced the second defendant to Mr Adam Lisle, the sole director of the plaintiff.
Mr Lisle is a self‑described property developer. When he met the second defendant, the second defendant was introduced to him as the person approved to operate a franchised store in the Malaga centre (the Malaga store), subject to a lease being successfully negotiated. At the time of this meeting much of the proposed tenancy arrangement had in fact largely been settled.
As was and is common practice in franchising arrangements, discussions about a lease for the Malaga store went on between CE Franchising and the plaintiff. At the commencement of those discussions the plaintiff did not know whether the tenant would be a company directly associated with CE Franchising, or a franchisee.
CE Franchising or one of its associated companies operated some 'company' stores: Croissant Express stores that were not franchised. For those stores and for at least some of its franchised stores, CE Franchising or an associated company was the tenant of the store premises, presumably subleasing to some franchisees, based on the terms of its standard franchise agreement. Despite the fact that in this instance the selected franchisee was going to become the lessee, the standard CE Franchising agreement reserved to the franchisor in such circumstances the right to approve both the store premises and the lease of those premises. The terms of the franchise agreement provided that, on its termination, the franchisor could require an assignment of the lease and the best endeavours of the franchisee to procure the consent of the landlord to that assignment. It might also be expected that the whole idea of a franchise system was to provide individual store operators with the experience of the franchisor in arranging such things as leases.
The Malaga centre contained just one tenancy that was proposed for a food retailer. Notwithstanding that, the second defendant asked for a term of the lease that would give his business the exclusive right to be the food operator at the centre. As will be seen, and contrary to some evidence given by the second defendant, the landlord refused to give that exclusivity. Instead, the landlord offered and the defendants accepted a term of the lease whereby, if another lease was granted to a tenant 'whose sole purpose is the retail sale of food and beverage' at Malaga, the first defendant's rent would be reduced by 25% from the commencement of that other lease, until the expiry of the defendants' term.
At the same time that the plaintiff was dealing with CE Franchising and the second defendant in respect of Malaga, it was involved in the process to acquire the property where Joondalup Square would be built. By mid‑November 2012 the plaintiff became the owner of that site.
Mr Evans was interested in the Joondalup Square development. It was a 'green field site' in the outer suburbs, consistent with CE Franchising's plans for expansion. Based on prior dealings, the plaintiff and its officers were in Mr Evan's view, 'reasonable landlords to deal with'. He was satisfied with the performance of the defendants in operating the Malaga store. He was prepared to grant a further franchise to them, and he had in mind the Joondalup Square development.
While the plaintiff's acquisition of the Joondalup Square site was still in the approval process, Mr Evans began discussions with the plaintiff for a franchise store site at Joondalup Square.
Paul Lampropoulos is the plaintiff's 'director of development'. He is legally qualified, and practised for a time as a lawyer. He reports to Mr Lisle. Mr Lampropoulos was and is responsible for many of the day‑to-day tasks involved in the plaintiff's property development activities, including negotiating with potential tenants.
In the lease negotiations for the Malaga centre, Mr Lampropoulos dealt with Mr Evans. When discussions began about Joondalup Square he continued to do so.
The development that was proposed for Joondalup Square included a number of retail and 'amenity' shops, and six tenancies in a food court.
The plaintiff completed the purchase of the land for Joondalup Square in around November 2012 and began the process of development approval. A second part of the development site, on the opposite side of the Joondalup Square parking lot, was on a separate title. That land was purchased by Bunnings, and developed as a Bunning's Warehouse store.
The first defendant was by mid‑2012 the operator of the franchised Croissant Express business at the Malaga store. The defendants however were looking for other business opportunities, and the second defendant hoped to receive a Croissant Express franchise for a second store in one of the six food court tenancies proposed for Joondalup Square.
Negotiations for a tenancy of about 80 sqm took place between Mr Evans for CE Franchising and the second defendant on the one hand, and Mr Lisle for the plaintiff on the other.
On 15 November 2012 the plaintiff sent Mr Evans a copy of a draft agreement for lease for an 80 sqm tenancy in the food court of Joondalup Square between the plaintiff as lessor, the first defendant as lessee, and the second defendant as guarantor of the first defendant's obligations. He also sent a Disclosure Statement as required by the provisions of the Commercial Tenancy (Retail Shops) Agreements Act1985 (WA). By a cover letter of that date, the plaintiff asked Mr Evans to
arrange for the agreement for lease and Disclosure Statement to be executed by the relevant parties where indicated and then return the agreement for lease to us together with a cheque in the amount of $5,000 … being the deposit payable under the agreement for lease.
The letter was actually prepared and sent by Mr Paul Lampropoulos, the project director for the plaintiff at that time, although it was sent over the name of Mr Lisle, the plaintiff's sole director. Mr Lampropoulos recalled that about a week later the second defendant attended the offices of the plaintiff and the AFL was executed. Mr Lampropoulos witnessed the second defendant's signature. It appears that the Disclosure Statement was never executed by the plaintiff or the defendants. No executed version was produced at trial.
Within the terms provided by the AFL, it was necessary for the landlord to complete the construction of the shopping centre to the stage that the tenant could then carry out its own fitout. By the terms of the AFL the plaintiff was required to give the first defendant a Handover Notice, advising of the Handover Date, at least 60 days prior to the practical completion of the landlord's works. The AFL estimated that date to be 15 October 2013.
At the Handover Date, subject to its compliance with requirements of the AFL, the tenant was entitled to take possession of the tenancy in order to complete its fitout. The defendant then had six weeks within which to complete the fitout.
The Commencement Date under the Joondalup lease was the day that, subject only to the rent free period, the defendant was obliged to begin paying rent and outgoings. Under the Joondalup lease the Commencement Date was six weeks after the Handover Date.
The development and construction of Joondalup Square progressed. On 15 August 2013 Mr Lampropoulos sent the defendants a Handover Notice, by email, for the first defendant's tenancy at Joondalup Square. The notice said that the landlord's practical completion date would be 26 September 2013, and that that would be the Handover Date.
On 1 October 2013 Mr Lampropoulos wrote again, this time to remind the defendants of the need to executed the Joondalup lease and provide the bank guarantee required under the AFL. Those documents, the defendants were reminded, were required before possession of the tenancy could be given.
In September 2013 torrential rain damaged some part of the landlord's works, causing a brief delay, and an extension of the 26 September date for practical completion.
On 2 October 2013 Mr Lampropoulos wrote to the second defendant again, reminding him that the Handover of the tenancy was then scheduled for 7 October. A 'walk‑through' was proposed for the afternoon of that day to ensure that the Handover was properly completed. Again Mr Lampropoulos asked for the executed lease and bank guarantee.
On 3 October 2013 Mr Lampropoulos wrote to the defendants again, confirming the details with respect to the Handover. From that email it is apparent that there had been a recent discussion between the second defendant and Mr Lisle about the exact requirements for the Handover Date under the terms of AFL, and that Mr Lisle has been corrected. Mr Lampropoulos confirms that the defendants are entitled to 60 days' notice, and acknowledges accordingly that the proper Commencement Date under the terms of the lease is to be calculated from 15 October, 60 days from the date of the notice (15 August 2013). The email advises however that the first defendant would be allowed, if it wished, to take over the tenancy earlier, on 7 October 2013. In any event the Handover Date would remain at 15 October 2013, so that the defendants gained the opportunity for earlier possession, without advancing the Commencement Date when rent and outgoings would be payable. Once again the defendants were reminded of the need for an executed lease and bank guarantee, prior to possession being granted for the tenancy.
October 7 came and went, and on 11 October Mr Lampropoulos was writing again. The email of that day refers to a prior conversation between the second defendant and Mr Lisle, and asks how the executed lease and bank guarantee were progressing. Again the defendants were reminded that while the tenancy would be available for handover on 15 October, possession of the tenancy would not be provided unless those documents had been received.
On about 30 October 2013 the second defendant finally attended the office of the plaintiff and provided the required bank guarantee and executed the lease. The defendants then gained access to their tenancy and began the tenant's works.
In the meantime, on 5 September 2013 the ownership and management of CE Franchising changed. The new management took a different approach in their dealings with the defendants, changing aspects of the design of the proposed store among other things.
Mr Lisle became aware of problems and concerns the second defendant had about the defendant's relationship with CE Franchising. At the beginning of December 2013 the second defendant went to Mr Lisle with a complaint that CE Franchising was not providing the financial contribution to the tenant fitout that had been promised, potentially delaying the opening of the first defendant's store. Mr Lisle convened a meeting at his office with the second defendant, the new manager of CE Franchising Mr Tim Tighe, and the first defendant's builder. As a result of the meeting Mr Tighe promised that the payments, totalling some $45,000, would be made over a specified timeframe.
In late December, the second defendant told Mr Lisle that despite the meeting, CE Franchising had not paid as agreed.
Mr Lisle was sympathetic. He believed that the franchisor had caused delays that had prevented the first defendant from advancing its works for the tenancy as quickly as was desirable.
Mr Lisle gave evidence that in February 2014 the second defendant again came to him and raised a number of issues that he was having with the franchisor. Mr Lisle said that the second defendant told him that the franchisor and its management were 'crooks' and that he needed to get away from them.
Mr Lisle told the second defendant that he should get some advice from a lawyer, and that he would make some inquiries on the second defendant's behalf. Mr Lisle said that he told the second defendant that he particularly needed advice from lawyers who knew something about franchising. The second defendant said that he could not afford to pay lawyers. Mr Lisle said he told the second defendant that he would provide some assistance so that the second defendant could get some advice. The second defendant, he said, was extremely grateful and promised that he would 'repay every cent'. The second defendant denied that he said that to Mr Lisle.
The case for the plaintiff is that while no terms were then agreed, the money advanced by the plaintiff for legal fees incurred by the defendants was always to be reimbursed to the plaintiff by the defendants. This fact is in dispute.
Mr Lisle instructed Mr Lampropoulos to make some inquiries of the plaintiff's legal advisers. Mr Lisle learned that the plaintiff's usual lawyers did not have any expertise in the area of franchising. Eventually a recommendation was made for the firm of Cullen Babington Macleod (CBM). The first defendant and Mr Lisle met with lawyers from CBM and the first defendant engaged that firm. CBM were told to send their invoices to the plaintiff.
The dispute with CE Franchising was not resolved quickly. CBM sought information and instructions from both the second defendant and Mr Lisle. An informal mediation took place in March 2013. Mr Lisle attended this with the second defendant and the defendants' legal representatives. Following this mediation the defendants' Joondalup Square store opened, trading as a 'Croissant Express', but there were issues still outstanding.
A more formal mediation took place in June 2013. Mr Lisle was not present for this mediation. During the mediation however he received a phone call from Ms Catriona Macleod, a lawyer with CBM, and the second defendant. The second defendant told him that a proposal had been made by CE Franchising that would allow the defendants to 'walk away' from the franchise arrangements for both Joondalup Square and the Malaga store. It required however that the defendants pay CE Franchising $50,000. Mr Lisle was surprised by that outcome, by the fact that the defendants would pay CE Franchising, but the second defendant was adamant that CE Franchising and its representatives were 'crooks' and he had to 'get away' from them. The second defendant denied that that was his attitude towards CE Franchising, and denied saying that.
The plaintiff's case is that the second defendant asked Mr Lisle for a loan in the amount of $50,000 to pay CE Franchising, and Mr Lisle for the plaintiff agreed to do so. This fact is in dispute.

The terms of the settlement with CE Franchising required payment within 30 days. The plaintiff arranged for solicitors to draw up the Deed to formalise arrangements with the defendants. The Deed consolidated the $50,000 in settlement funds and the legal fees that had then been incurred by the plaintiff on the defendants' behalf, for a total at that time of $95,692. The Deed provided a payment schedule of 40 monthly payments, with interest charged over that period of time.
The terms of the Deed provided for the second defendant to guarantee payment of the debt, and allowed the plaintiff to register a caveat over any real property owned by the defendants.
The total amount owing under the Deed was later adjusted to reflect a discount in legal fees negotiated by the second defendant with CBM.
On 18 June 2014 the defendants executed the Deed and the plaintiff advanced the $50,000. The validity of the Deed is challenged by the defendants.
The defendants paid the money to CE Franchising and were released from their obligations under the two franchise agreements, including of course the obligation to make monthly payments of franchise and marketing fees. The Croissant Express signs came down at both of the defendants' stores and they began to trade as independent shops under the style 'Roll Call'.
The defendants initially honoured the terms of the Joondalup lease, and made repayments under the Deed. By late 2014 they had fallen into arrears. A letter of demand in respect of amounts owing under the Deed was sent to the defendants on 28 January 2015. It claimed the amount of $93,067 as then owing.
The defendants stopped making payments under the Joondalup lease in November 2014. On 27 February 2015 the plaintiff gave the defendants notice of termination of the Joondalup lease. The plaintiff then re‑entered the tenancy. On 9 March 2015 those premises were re‑leased to a new tenant.
The plaintiff calculated its total loss under the lease from the defendants' default at $153,060. A certificate was issued under the terms of the Joondalup lease, claiming that amount from the defendants.
Nothing has been paid by the defendants pursuant either to the default notice under the Deed, or the certificate under the Joondalup lease.
The plaintiff's case is established almost entirely by contemporaneous documents and records. In the course of closing submissions, counsel for the defendants conceded that, subject to the proof of matters raised in defence, the plaintiff had proved its case.

The defendants' case

The defendants' case is more complicated than that of the plaintiff, both as pleaded, and as it emerged in the testimony of the second defendant.
First, the defendants' allege that they were induced to enter both the AFL and the Joondalup lease by representations made on four separate occasions that, as pleaded, were called the 'Coffee Shop representations'. The effect of the conduct or representation on each occasion is said to be that 'no other coffee shops other than that run from the Premises by the first defendant would be leasing premises from the plaintiff in Joondalup Square'.
The representations were said to have been made at meetings between Mr Lisle and the second defendant in August or September 2012, early October 2012, 22 November 2012 and 30 October 2013. On each occasion the representation was said to have been made verbally by Adam Lisle to the second defendant. No one else is said to have ever been present.
As pleaded, the words of Mr Lisle said to constitute the representations were as follows:
1.August or September 2012
In response to an inquiry from the second defendant, Mr Lisle said the plaintiff had already arranged for some businesses, being a Subway restaurant, a burger place, a Japanese eatery and a Mexican eatery to lease premises in the food court at Joondalup Square. A tenant had not yet been confirmed for the one remaining tenancy in the food court at Joondalup Square and next to the premises available to the defendants, but that it would be tenanted by Sumo Salad or Oporto or an Indian eatery. Mr Lisle said he had been in contact with those three businesses about a proposed lease.
2.Early October 2012
The second defendant asked Mr Lisle whether the Joondalup Croissant Express would be the only shop selling coffee in Joondalup Square. Mr Lisle advised the second defendant that there were no other coffee shops coming to Joondalup Square and repeated that the other shops in the food court would be Subway, a burger place, a Japanese place and a Mexican place. The vacant tenancy had not yet been decided but the plaintiff was in negotiations with Oporto, an Indian restaurant and Sumo Salad and would choose one of those businesses to lease the vacant tenancy.
3.22 November 2012
The second defendant asked Mr Lisle to advise him what other businesses would be renting premises in Joondalup Square. Mr Lisle told the second defendant, words to the effect that there was going to be a Subway restaurant, a burger place, a Japanese eatery and a Mexican eatery in Joondalup Square and the tenant had not yet been confirmed for the vacant tenancy but that would be tenanted by Sumo Salad or Oporto or an Indian eatery.
4.30 October 2013
When the second defendant attended the plaintiff's offices to sign the lease and bank guarantee, he had a conversation with Mr Lisle. The second defendant again asked what businesses were going to be renting premises in Joondalup Square and whether a tenant had been confirmed for the vacant tenancy (in the food court). Mr Lisle responded to the second defendant's question by repeating the things he had said on the previous occasion.
The next allegation made by the defendants in defending the claims brought by the plaintiff is to allege that the first defendant never received the form of Disclosure Statement required for the tenancy, as provided for under the Commercial Tenancies (Retail Shops) Agreements Act 1985 (WA) (Commercial Tenancies Act), or that alternatively the Disclosure Statement was deficient. The only documentary evidence on this subject is a Disclosure Statement that was sent to CE Franchising, to the attention of Glen Evans. The defendants deny being given the document, but say that in any event even that document did not contain all of the information that was required under the legislation.
There is merit in some of the complaints about the deficiencies of the Disclosure Statement. What it discloses is that little appears to have been known about the final makeup of the tenancies at Joondalup Square. That may well reflect the fact that the land had just been acquired, that development approval was ongoing, and that no tenants had been secured.
It is common ground however that while a Disclosure Statement was sent to Mr Evans with the AFL, there is no Disclosure Statement that is signed by either the plaintiff or the first defendant. Nor however, despite the fact that the form of lease executed by the defendants included the 'Tenant Guide' required by the Commercial Tenancies Act (with extensive references to the tenant's right to a Disclosure Statement), did the first defendant either ask for that document or seek to terminate the lease within the time prescribed by the Commercial Tenancies Act. Whether the plaintiff's failure to provide a Disclosure Statement or an adequate Disclosure Statement will lead to any relief here depends however on the conclusions reached with respect to the defendants' allegations of misleading and deceptive conduct by the plaintiff.
The plaintiff's claimed right to terminate the Joondalup lease for non‑payment of rent and outgoings is defended on the basis that, for several reasons, no money was owed under the lease at the time that it was terminated. The pleadings come at this issue in a variety of ways.
First it was pleaded that the plaintiff was late in completing its work in respect of the tenancy and the landlord's work was deficient in several particulars. The plaintiff's work as landlord is pleaded to have been so delayed that its works under the lease did not reach practical completion until late November or even December 2013. On this pleaded claim, the Commencement Date on the lease should not have arisen until six weeks after this time, or around 12 January 2014.
The defendants also say that in October 2013, at a time when the plaintiff was pressing the defendants to execute the lease and provide a bank guarantee, the plaintiff represented to the defendants that the first defendant would receive a further two months' rent free in addition to the four months' rent free provided for in the AFL.
That representation is said to have been made by Adam Lisle in a telephone call to the second defendant in or around early October 2013. Mr Lisle is said to have made the same representation again in mid‑October 2013. Once again, this was said to be in a telephone call. This 'two extra months' rent free representation was allegedly made a third time by Mr Lisle, on 30 October 2013.
The third such representation was said to have been made following a discussion where the second defendant once again complained of the delay in the completion of the landlord's works. Mr Lisle is said to have advised that the Commencement Date for the Joondalup lease would not be finally determined until the landlord's works had been practically completed and a further two months' rent free would be provided to the defendants. Relying on those representations, as well as the 'coffee shop representations', the defendants executed the lease and bank guarantee.
Another representation about a delay in the Commencement Date is said to involve the opening of the Bunnings Warehouse at Joondalup Square. While the existence of the Bunnings Warehouse was obviously advantageous to the plaintiff and the tenants of Joondalup Square, the Bunnings development, construction, and operation was completely independent of the plaintiff.
The defendants say that in late January 2014, at a meeting at the plaintiff's offices between Mr Lisle, the second defendant and his son, 'the plaintiff and the defendants agreed to vary the Commencement Date to 22 March 2014'. That was the date when the Bunnings Warehouse apparently started trading.
This agreement is pleaded as a conclusion, without even stipulating any consideration on the part of the defendants. Questions of the certainty of terms are avoided by pleading the actual date of the eventual opening, although the evidence is that that was not known in late January, beyond perhaps an expectation that it was likely to be in March.
The defendants' case with respect to the claim for money owing for legal fees and the settlement funds under the Deed is slightly more straightforward, although pregnant with inconsistency and an air of commercial unreality. The pleaded case is that in consideration for the defendants 'pursuing' a dispute with CE Franchising, the plaintiff agreed to be responsible for all legal fees. Alternatively, the same facts are said to amount to a representation that the plaintiff would pay all such fees incurred.
With respect to the settlement funds of $50,000 captured by the Deed, the defendants' claim is that in consideration of the defendants not pursuing the dispute with CE Franchising, and settling the dispute on the terms offered, the plaintiff agreed to pay CE Franchising $50,000. Alternatively, the same facts are said to amount to a representation by the plaintiff, which the defendants relied on in settling the dispute with CE Franchising.
The thorny fact of the execution of the Deed is met by a claim that the defendants only executed the Deed because of duress and unconscionable conduct by the plaintiff. In essence, the claim is that the Deed was sprung upon the unsuspecting second defendant when the settlement funds were due, at a time when the defendants were unable to obtain legal advice, and by threats to terminate the Joondalup Square lease if the Deed was not executed.
The defendants counterclaim for damages for wrongful termination of the first defendant's lease. The damages claimed in that regard include, among other things, $246,505 for the cost of the fitout of the first defendant's premises. This amount included fitout work for which the plaintiff had paid $150,000.
There are or were pleaded claims for $18,500 for 'spoiled stock at premises' and 'contents of safe at premises … including $500 till money, $500 float money and $3,988 of daily takings'. There was a claim for 'personal funds of the second defendant expended on the business as a result of loss of turnover July 2014 to date', in the amount of $68,019. With the exception of the 'contents of safe', no evidence was offered in respect of any of these particular claims. All of these claims were abandoned in closing submissions, but I will refer later to the evidence that was offered in respect of the 'contents of safe'.
In breach of the Coffee Shop representations, it is said, the plaintiff had discussions about tenancies at Joondalup Square with other businesses that sold coffee, both before and after the execution of the AFL. On 1 July 2014 another business, a café or restaurant called 'The Coffee Club', opened in the food court next to the first defendant's tenancy. Obviously, perhaps, it sold coffee. The Coffee Club tenancy was almost double the size of the first defendant's tenancy. The evidence is that while The Coffee Club offered many items similar to that offered by the first defendant's Roll Call business, The Coffee Club offered table service and a much more extensive menu of food and beverages.
The defendants claim compensation for the breaches of the various alleged representations and for alleged unconscionable conduct, in the amounts for which the defendants were liable under the terms of the Deed and the Joondalup lease, or as claimed by them for the alleged wrongful termination of the lease, or both.
The testimony of witnesses called by the plaintiff contradicted the defendants' case in almost every material particular. Apart from testimony from the first defendant's son in some limited respects, the defendants' case depended entirely on an acceptance of the first defendant's oral testimony. That was because of the many documents that became evidence at trial, no document positively supported the defendant's claims in any material way. A few documents were neutral or arguably ambiguous as to some claims made by the defendants, but most of the documents tendered positively contradicted their case. For these reasons the defendants' case turns on an acceptance of the second defendant's testimony.
I recognise that English is not the first language of the second defendant. That would obviously affect his ability to both understand and respond to questions asked of him. At the same time, he is obviously a man of intelligence who has spent many years in English speaking countries, including his years in the United States to obtain his electrical engineering degree.
I refer to these things because one of the difficult aspects of the trial was that it was difficult to get responsive answers from the second defendant when he gave his evidence. When asked a question, whether in examination‑in‑chief or cross‑examination, there was a high probability that in responding to the question (if indeed there was a responsive answer), the second defendant would volunteer other facts, often put into the mouths of third parties. These gratuitous remarks would inevitably either transparently try to advance some aspect of the defendants' case or denigrate Mr Lisle, or both. This continued throughout the second defendant's evidence, despite the fact that I repeatedly stopped him and repeatedly directed him to stop behaving in that way. It was largely futile.
The second defendant's conduct in the witness box revealed an extreme degree of fixation, if not actual obsession, in seeking to argue his case rather than give evidence. He demonstrated the ability to recall, seemingly word for word, conversations from 2012, 2013 and 2014, including conversations with third parties, when there was a point that either supported his case or seemed to prejudice the case of the plaintiff. His memory failed him frequently when confronted with material that appeared to prejudice his case or where its purpose was not apparent. When confronted with contemporaneous documents that appeared to flatly contradict his evidence, his inevitable response was that 'Adam' (Lisle) either told him to disregard it, or told him that it did not matter, or effectively told him to say or write whatever appears in a document over the second defendant's signature.
In the course of his evidence the second defendant tried to persuade me to a number of propositions. I use the word 'persuade' deliberately. I will summarise the effect of these propositions:
•From his very first meeting with Adam Lisle and on each subsequent occasion, up to and including a meeting where the second defendant executed the Joondalup lease, the second defendant told Mr Lisle about his concerns as to the kinds of food outlets that would be at Joondalup Square and Mr Lisle told him, on each occasion in almost exactly the same terms, that the plaintiff had a commitment from Subway, a burger place, Japanese restaurant and a Mexican restaurant, and the last tenancy, apart from Croissant Express, would be either 'Oporto' (a hamburger vendor), an Indian outlet or 'Sumo Salad'. The second defendant repeatedly sought assurance, not merely that there would be no other 'coffee shop', but that 'all the other businesses would be only food. I will be the only coffee', and Adam Lisle gave him that assurance.
•The plaintiff, as landlord, was late in building its works at Joondalup Square and in delivering the tenancy to the defendants. When the plaintiff did finally hand over the tenancy to the defendants, the landlord's works were deficient, causing the defendants further delay and expense.
•Adam Lisle acknowledged to him that the plaintiff had caused delay in the handover of the tenancy, and the deficiency of its works, and agreed to compensate the defendants by providing two months' rent free in addition to the four months provided in the Joondalup lease.
•In January 2014 Adam Lisle told the second defendant that the Commencement Date (and by implication the payment of rent under the Joondalup lease) would not begin until the Bunnings Warehouse store began trading.
•In the course of preparing his Joondalup Square store for opening, the defendants experienced some minor disagreements with CE Franchising, but Adam Lisle interjected himself into this dispute, causing it to be blown out of all proportion. Mr Lisle encouraged the second defendant to make false claims against CE Franchising, claims that it was CE Franchising that had delayed the opening of the defendants' store. Even after the first mediation when the second defendant had reconciled with CE Franchising and their relationship was on a very good footing, Adam Lisle once again fanned the dispute between them, preventing any reasonable compromise, and ultimately destroying the defendants' relationship with CE Franchising.
•While bringing the defendants into dispute with CE Franchising, Adam Lisle, for the plaintiff, offered to give the second defendant the money for lawyers to bring action against CE Franchising and to make claims against CE Franchising that were either largely or wholly without foundation, without expectation of repayment of the money advanced.
•After stirring up this dispute Adam Lisle then offered to give the second defendant $50,000 to pay CE Franchising if the second defendant would agree to settle his claim with CE Franchising and give up his franchise agreements for his stores at Joondalup and Malaga, again without expectation of repayment.
•Contrary to his promises to gift the defendants the money for legal fees and the payment of CE Franchising, Adam Lisle unconscionably demanded that the defendants execute a deed acknowledging their indebtedness for that money, provided a timetable for repayment, as well as terms and security. The second defendant had no knowledge that he was going to be asked to sign such a document until he went to Mr Lisle's office to get the settlement money for CE Franchising. Mr Lisle threatened to terminate the first defendant's lease unless the document was executed.
•Despite the fact that the defendants were not in arrears of rent because of the additional rent free periods that had been represented or promised, the plaintiff terminated the first defendant's lease, claiming that rent was unpaid, and then locked the defendants out of the tenancy.
•When, months later, the second defendant went to recover the contents of the store safe which had been in the custody of the plaintiff's agents in the tenancy, the safe had been 'forced' open and more than $4,000 in cash from the last four days of trading was missing, obviously stolen.

The second defendant gave evidence about his early dealings with the plaintiff in about mid‑2012. He said that he mostly met with Adam Lisle although sometime Paul Lampropoulos would come 'and take some orders from Adam or sit down and explain things'.
With respect to the Malaga lease negotiations, the second defendant said, '… we went back and forth so many times, and we make sure that nobody is coming there in that centre. We are the only food outlet, and coffee. They said "yes, no problem" and they gave us exclusivity'.
That was not in fact true. The truth was that the landlord for the Malaga Centre refused to agree to a term that the first defendant would be the only food outlet in that shopping centre.
The 'permitted use' for the premises leased at the Malaga Centre was 'preparation and sale of Croissant Express menu items (set out in an attached list) and sale of ancillary and other products sold from time to time in the Croissant Express franchise network'.
The lease from the Malaga Centre contained this term, 'the landlord reserves the right to grant any other leases or licences for business of the same type of the Permitted Use'.
The true position with respect to the Malaga Centre only became part of the second defendant's testimony when his own counsel took him to the relevant lease provision. What the landlord in fact agreed to do was contained in cl 1.4 of the third schedule to the lease identified by the second defendant:
The Landlord agrees that if it grants a lease to any other tenancy at the Centre during the Initial Term of this Lease … to a tenant whose sole purpose is the retail sale of food and beverage, then the minimum rent shall be reduced by a proportion of twenty five percent (25%) from the date such Lease is granted until the expiry of the Term or earlier determination of this Lease.
The second defendant described an early meeting in respect of the Joondalup Square tenancy where he, Mr Evans and Adam Lisle were present. The second defendant thought that this meeting was in July or August 2012. He said that Mr Lisle showed them a plan with a food court on it, there was no name on it, and he said 'Bunnings is coming next door'. No particular tenancy was identified for Croissant Express but Mr Lisle asked them about the size of the tenancy that they wanted and Mr Evans said 'we want about 80 square metres'. The second defendant continued, 'and the first question that we had right there, the first meeting when he put in the plan in front of us, we asked who else is coming in the food court? The second defendant said he asked that question, because (in words that would resonate for monopolists everywhere), ' … look, as a business man it's very important to see who's your competitor. They can kill your business. If you're the only one that – who specialising in certain food - - - you can be successful'.
Mr Evans was called on behalf of the defendants. He did not give evidence of a conversation with Mr Lisle in those terms.
This meeting took place of course at a time when the plaintiff was still engaged in a competitive process to try to acquire the land at Joondalup Square for development. The second defendant says that, at a time when the plaintiff was not even the owner of the land, Adam Lisle responded to their inquiry by telling him the plaintiff had lease commitments, saying 'so far we have commitment from Subway. There's burger place coming, and Japanese restaurant and Mexican restaurant has committed, and it will be you, and the last one we, we are debating between Oporto … an Indian outlet, or Sumo Salad'.
Mr Evans remained involved in the lease discussions for quite some time. As the second defendant recognised 'I cannot make decision by myself. Franchisor has to be happy with the location, make sure that I will be successful there …'. The second defendant recalled however that in the course of these discussions Mr Evans asked for a term of 'exclusivity'. The second defendant said that Mr Lisle's answer to this was that, ' …. it's against the law now and we cannot do that'.
As best as can be understood, an early proposal by the plaintiff that refused to grant 'exclusivity' but offered $50,000 as a contribution to tenant improvements, was rejected by CE Franchising and the defendants.
The defendants' counsel revisited the subject of the first meeting with Mr Lisle. The second defendant was asked 'I just want to clarify. I think you said you had your first meeting with Mr Lisle in mid‑2012?' That relatively straightforward question brought forth this example of the burnishing of the second defendant's earlier evidence:
And he assured that no other coffee outlet is coming beside us. All the other businesses will be only food. I will be the only coffee. What he assure.
The second defendant then described a second meeting with him, Mr Evans, and Mr Lisle present. At this meeting Mr Evans told Mr Lisle that the proposal was going to be rejected because of perceived risks about the economy in 2013. Mr Lisle, the second defendant said, '… was really upset, and he said "let me think about it. I will get back to you guys" '. The second defendant says that a further meeting was arranged where Mr Evans told the second defendant to go on his own and 'just go and see what Adam has to say'.
The second defendant went to the meeting. He said that in the course of this, Mr Lisle offered to improve the $50,000 contribution to tenant fitout. The second defendant says that
at that meeting again I mentioned one more time, Adam, what, you are sure last time that no other coffee place is coming to the centre? He said, as I said, last time there is Subway sandwich, burger place, Japanese outlet, Mexican place, it will be you and the last one is undecided it can be Sumo Salad, Indian and it can be Oporto. He repeated exact the same thing.
This meeting, the second defendant thought, was probably in September or October 2012.
The second defendant said he reported back to Mr Evans. He was asked in examination‑in‑chief 'but ultimately you went ahead with the agreement for lease?' He answered 'Yes. After I got the assurance that I will be the only coffee outlet there … because our business comes croissant and coffee'.
At this stage of his narrative the second defendant said he then began to deal with Paul Lampropoulos in respect of the form of the AFL. In his evidence‑in‑chief he described the attention to detail that he gave to this process:
Lampropoulos send me, my god, about seven or eight lease and they were different from each other. Some of them were wrong and we read final was – there was five clause that was different then what it was supposed to be. Finally he corrected and I signed that agreement for lease.
The problems that the second defendant was referring to were apparently differences between the original version of the lease that he had been shown, and a version that was attached or provided with the AFL.
On 15 November 2012 the plaintiff sent Glen Evans the AFL between the defendants and the plaintiff for the tenancy at Joondalup Square and the Disclosure Statement, as required by the Commercial Tenancies Act, for that tenancy. Schedule 5 to the AFL is the proposed form of lease. Schedule 4 to the form of lease provides for a rent free period of four months, calculated from the Commencement Date (cl 4) and a landlord contribution to the first defendant's fitout of $150,000 (plus GST) paid in several instalments (cl 5).
In the covering letter Mr Evans was asked to arrange for the AFL and Disclosure Statement to be executed 'by the relevant parties where indicated' and returned to the plaintiff with the deposit payable.
The second defendant denied ever seeing the covering letter or Disclosure Statement until '… 2014 when I went to Small Business Administration to get assistance for mediation … Lavan Legal produced this'. Mr Evans was called as a witness for the defendants. Mr Evans was not asked about his dealings with these particular documents or his usual practice with such documents.
The AFL itself however was in fact executed by the defendants on 22 November 2012.
I will refer to some specific provisions of the AFL and the Joondalup lease, at least to the extent that they seem to have some bearing on matters in issue here, and in particular the evidence of the second defendant.
It will be recalled that the AFL provided that at least 60 days prior to practical completion of the landlord's works, the landlord was required to serve a Handover Notice on the tenant confirming the date that the tenant was to get possession of the premises. The 'Commencement Date' provided for in the AFL was to be 'six weeks after the Handover Date (estimated to be 15 October 2013)'.
The Joondalup lease provided that, subject to the tenant having complied with its own obligations under the lease, there would be a rent free period of four months from the Commencement Date. The manner in which the agreed $150,000 plus GST would be contributed by the landlord towards the costs of the tenant's floor coverings and fitout of the premises was set out.
The 'Permitted Use' for the premises was 'preparation and sale of Croissant Express menu items and sale of ancillary and other products sold from time to time in the Croissant Express franchise network as approved by the relevant local authority'. Like the first defendant's lease in respect of the Malaga store and the AFL for Joondalup Square, the Joondalup lease contained an 'entire agreement' clause in these terms:
This lease contains everything that the parties have agreed on in relation to the matters it deals with. No party can rely on an earlier document, or anything said or done by another party (or a director, officer, agent or employee of that party) before this lease was executed.
Like the lease in respect of the Malaga store, the Joondalup lease contained this term (cl 4.4):
The Landlord reserves the right to grant any other leases or licenses for business of the same type as the Permitted Use.
The second defendant said that when he executed the AFL he went to the offices of the plaintiff and met with Adam Lisle. He and Mr Lisle signed the agreement and Mr Lisle 'called Paul Lampropoulos to come and be witness for his signature'.
The second defendant said that in this meeting, leading up to him signing the agreement, he said:
… before I sign, you know I – you know, it – it was big concern to be honest with you because he didn't give us exclusivity. I just wanted to get assurance. Again I say, 'Adam, look, you already have told me. I am just repeating?, because I repeated. I said 'so Subway is coming, hamburger place' I – he says exactly that's what I – so far that's what I have the commitment. The last one I don't know. It can be Sumo Salad, Oporto and it can be Indian outlet.
The second defendant was asked 'when in relation to that conversation did you sign the agreement for lease?' He answered 'after the conversation finished I got the assurance that no other coffee outlet is coming, I signed it'. This conversation, he said, occurred when it was just him and Adam Lisle in the room.
The second defendant spent some time telling me of his difficulties in the handover process, indeed, according to him, the failure of the plaintiff to arrange for a handover of the tenancy or to make sure that he was given a key in a timely way.
Apart from the vague complaints of the second defendant there is no evidence that the landlord's works under the AFL were delayed or deficient. No document produced by the defendants shows any such thing. The contemporaneous documents produced by the plaintiff show the plaintiff pressing the defendants by early October 2013 to make arrangements to receive the Handover of their tenancy.
The defendants did not call any witness involved with the fitout of their store to give evidence about the timing or circumstances of that work. The plaintiff called Mr Geoffrey Loxton, a project superintendent.
Mr Loxton was the construction manager and superintendent of the construction contract for Joondalup Square. He was involved in the original estimate of 26 September 2013 for the landlord's works. When torrential rain caused some delays, he was again involved in choosing 7 October as the revised date for practical completion. His evidence was that the defendants' tenancy was ready for Handover on 7 October. He acknowledged that some modifications in plumbing and electrical elements in the defendants' tenancy were required. That resulted he said, because after those things had been constructed in accordance with the plans originally provided by the tenant and CE Franchising, revised plans were given to the plaintiff's construction contractor. In any event, his evidence was that to the best of his recollection, any changes prompted by the new plans from CE Franchising were carried out by early October.
This issue, the change of the proposed store layout, coincides with the change in the management of CE Franchising.
When the ownership and management of Croissant Express changed in September 2013, a Mr Tim Tighe replaced Glen Evans at CE Franchising. Early the following year Mr Tighe would himself be replaced by a Mr Neil Soares.
I have referred to a theme in the second defendant's evidence with respect to the source of the problems that he was experiencing in completing the fitout of his store. His relationship with the franchisor he told me was in fact relatively good, and that CE Franchising did not delay the opening of his store and cost him his rent free period. It was, he claimed, the delays and deficiencies in the plaintiff's work that prevented the first defendant from carrying out their work in a timely way. When the second defendant confronted Mr Lisle with these facts in telephone conversations overheard by the second defendant's son Mr Lisle, he said, effectively conceded that the defendant should have a further two months' rent free.
There are a number of difficulties with accepting this line of argument. They include of course the fact that the contemporaneous records show the plaintiff pressing the defendants to prepare for Handover, which was met for the most part with silence from the defendants. There is the testimony of Mr Loxton, and the absence of testimony from anyone who carried out the defendants' fitout work. Finally, there are documents that show that from a very early stage, indeed from early November, the defendants were in conflict with their franchisor.
The office of the franchising mediation adviser sent an email to the second defendant on 1 November 2013. It said:
Dear Alex
Thank you for contacting our office recently. Please find attached a short form which we would be grateful if you would complete and return to us. This feedback is provided on an anonymous basis and helps us to develop the service we offer.
Kind regards
Alicia Chilton
Mediation Officer
Plainly, by that date the second defendant was already seeking advice about his franchising relationship.
There is another document (the Chronology) however which sets out in considerable detail the difficulties encountered by the defendants with CE Franchising between 17 June 2013 and 5 May 2014. I will refer to the Chronology again when I come to consider the second defendant's credibility. I will say however that I am satisfied that this document is a memorandum that was prepared by the second defendant. I conclude it was prepared by him for the purpose of instructing CBM. In his evidence the second defendant eventually accepted that the Chronology was prepared for the dispute with CE Franchising. It was prepared not in February 2013 he said, but 'after we made the peace', that is - after the informal mediation in March 2013.
After initially claiming not to recognise the memorandum, then claiming to 'not remember preparing this document myself', then to 'not remember writing with my handwriting these documents' (when the document was in fact typed), then to not 'remember exactly' if he created it, the second defendant then said that it was typed by Catriona Macleod, from his dictation.
Even that is improbable. If it were so, as will be seen, Ms Macleod took down the second defendant's dictation not merely word for word and perfectly capturing his ordinary syntax, but somehow incorporating his unusual manner of randomly capitalising words, and his strange manner of punctuation.
Although Ms Macleod gave evidence, she was never asked a question about the memorandum.
In 27 paragraphs, over more than five pages, the memorandum describes in detail the series of problems caused by the franchisor that resulted in the delay of the fitout of the first defendant's Joondalup Square store. In relating the history of broken promises by the franchisor it says this:
…
7.On Oct 23^rd I contacted Office of the Franchising Advisors and they referred me three Franchise Solicitors Based in Perth , And I choosed Mrs Karene Primrose from Jackson McDonald To Get legal Advise [sic].
8.I met with Tim Tighe again and I Mentioned that per my lawyer advise he cannot demand this money ,because we have binding contract with previous owner which is in our franchise agreement and also my lawyer advised me that before I pay you this money you should produce a document indicating that your entitlement to receive this money because this deal was done before you bought this business, also I told him that my lawyer reviewed our franchise agreement and code of conduct and she said I can choose my own fit out builder as long as he is licensed .
9.At that point as soon as Tim Heard that I contacted Office of Franchising Advisors and I have consulted with lawyer and she has educated me about cod of conduct and so on, Tim Tighe changed his tone and he said ok , you can pay that $45,000 franchise fee of Malaga as your agreement says, and if we go with our fit out builder we will pay the difference , and my son was with me in that meeting and he is witness.
…
11.On Nov 25^th I found out from Brian (His Builder) that he has Already authorized Brian to go ahead and brake the lock (Even though That I had the key for premise , Arise Development Gave me That on hand over date October 15^th, and Lease is in my name) , and put new lock and start the work and he has committed to pay the deposit and all the cost that Alex will pay the difference (his Portion).
…
15.Finally on Dec 2^nd Brian contacted Mr Adam Lisle (Land Lord) to mediate and come up with resolution, everybody attended including Mr Tim Tighe, and Tim in that meeting again agree to pay $45,000 in two payment $20,000 on 4^th December and $25,000 in two weeks.
16.After few Meeting With Brian And Mick Nash (palmer) Finally God Bless Mr Adam Lisle he put contract together that going forward contract would be between me (Alex) and Builder After Builder collects his $45,000 from Tim Tighe.
The memorandum goes on at some length reciting a lengthy history of treachery on the part of the franchisor and its successive chief executive officers. It insinuates at conflicts of interest by officers of the franchisor and complains of the new CEO Neil Soares' demands for repayment of the $45,000 advanced by CE Franchising for the first defendant's fitout. It ends with this:
27.Conclusion:
New CEO Neil Soeres So Far After one unofficial and two official long Meeting He is Refusing to Acknowledge circumstances, He is not taking the issues seriously, so far from two meeting with him and his response from those letters indicates his Ignorance of the situation and he is only interested in his own interest and totally ignores the damages caused and tremendous amount of stress I have gone through and it continues, They are not Willing to solve the problem in Good Fait, it is important to note that, even if Neil comes and says open the store tomorrow, it won't be possible, because the ingredients of opening the store is not in place any more.
1)I lost Staff that I started to put Add back in first week of Dec 2013 and interviewed them for three weeks from 28 interview I hired two and all month of Jan I Trained them, so it will take me another month and half to employ and train staff.
2)Land lord give incentive of free rental at the beginning of starting business, with the logic of being in new center, new business, that for three months business without rent can stand up on his toes and goes forward, these people (CX CEO's) caused lots of delays and destroyed my free rent period.
3)Promotions the previous CEO has agreed to get done is not done yet.
4)$25,000 That I was supposed to get as short term loan, which would start six month from opening, by termination of Tim, I didn't get that, as a result I draw from my Back up money that I always keep for emergency cases of business and I payed for some of the Equipment's. So even if they agreed to pay the damage we need to factored in and Add month and half Worth of Damage from the date of settlement.

At the same time, from other contemporaneous emails of the second defendant that were tendered at trial, it was plain that the second defendant enthusiastically embraced the conflict with CE Franchising. The records of CBM that were tendered show however that the second defendant commonly dealt with Mr Ed Babington of that firm, and usually alone. I conclude that Mr Babington's evidence of those private consultations would not have assisted the defendants.
While I do not accept Mr Lisle's evidence in this limited respect, nothing turns on it. That is not only because the defendants bear a positive burden of proof on the critical issues in this case but because an explanation that is as plausible as any other is that Mr Lisle genuinely hoped to help a tenant that he saw as disadvantaged in a dispute with the franchisor. It is entirely possible that he is now embarrassed about the extent to which he committed himself on behalf of the defendants given the way the second defendant subsequently conducted himself. As I say however, nothing turns on it.
As counsel for the defendants accepted, unless I am positively persuaded by the evidence of the second defendant on the critical issues of the defence and counterclaim, there is no material issue on which the defendants can succeed.
As must be plain by now from some of my earlier observations about assertions made by the second defendant, I do not accept his evidence. I will go so far as to say that, having seen and heard the evidence of the second defendant, having seen the contemporaneous records about the matters in issue, I would not accept the evidence of the second defendant on any matter of importance unless it was corroborated by probative evidence that I did accept. The evidence of his son does not fall into that category.
Many of the concerns that arise with respect to the second defendant's evidence have already been referred to in the course of these reasons. I will however set out a number of the more significant matters that particularly troubled me with respect to his credibility. I have referred to the claim for damages arising from the termination of the lease, and that claim particularised as being the contents of the safe '… stolen after unlawful termination (including $500 till money, $500 float money and $3,988 of daily takings)'.
In closing submissions counsel for the defendants properly abandoned some of the claims that were advanced for particularised damages. Those included the claim for spoiled stock, a claim for personal funds spent by the second defendant, and the money alleged to have been stolen from the safe. With respect to the first two items, either no evidence was offered during the trial or what evidence there was, was hopelessly vague. In the context of this trial they were nothing more than ambit claims. With respect to the allegation that cash had been stolen from the safe, the position was rather different.
When the tenancy was terminated and the locks changed, the defendants were given a letter asking them to come and clear out the contents of the safe. They were asked to do so within days of the termination. Instead the second defendant waited several months. His evidence with respect to the cash was that when he finally attended '…the safe was all broken. Nothing was in the safe'. He said that he asked the landlord's agent what had happened to the contents of the safe and did not get a satisfactory response 'so I had to call police and report'.
He was asked whether he recalled what was in the safe and in response he said:
In safe we have about $4,000. This is, like about – normally we deposit the money every Friday, probably four days of trade. … And there was float money … float is $100. Cash register is another $100. And there was all my deposit book, cheque book, and some reports.
The second defendant was not cross-examined with respect to the discrepancy between the amounts particularised as the stolen till money and float money ($500 each), and his evidence about those amounts ($100 each). Nor was he cross-examined about how the particularised claim for the lost $3988, with its air of precision, was calculated. Because he was not cross‑examined in that regard I draw no conclusion adverse to the second defendant on that point. My concern about his evidence arises, as is the case with most of what the second defendant said, with the contrast between his oral testimony and what was revealed by contemporaneous records.
In cross-examination the second defendant repeated his evidence that the practice at Joondalup was to deposit the cash takings every four days. He denied that that business 'banked pretty much every banking day'. He then modified his earlier answer to say that they used to bank cash takings every three or four days.
The banking records for both the Joondalup and Malaga stores operated by the first defendant became exhibits at the trial. The first defendant's evidence was, at least initially in cross-examination, that there were separate accounts for the deposits of the two stores.
Having given evidence-in-chief that the cash takings for the Joondalup Square store were about $1,000 a day, he was then asked:
But your business had cash sales of $1,000 a day? - - - It depends. Weekends were more. Weekdays were less.
On average about $1,000 a day? - - - I don't remember. I have to look at the documents.
Following this retreat from his earlier resolute assertion of 'about a $1,000 a day', the second defendant was taken to the first defendant's banking records.
The plaintiff retook possession of the premises at Joondalup Square on 24 January 2015. The banking records for that business show that cash deposits were made, sometimes more than one per day, on 5, 7, 8, 9, 12, 13, 14, 15, 16, 19, 21 and 22 January. In other words, except for weekends, it appears to have been an almost daily practice (for week days) to take cash to the bank. On 21 January there were two deposits made, suggesting separate deposits for takings from the 20^th and 21^st.
Contrary to the second defendant's evidence about the usual process with respect to banking cash takings, deposits were made for two of the three days prior to the retaking of possession. Contrary to the second defendant's evidence, the business was not earning, even on average, $1,000 a day in cash sales. To the contrary, a big day for cash sales in January 2015 was $550. Many days were less than $400 and some were less than $200. On 21 January two deposits of cash were made, $414.90 and $548.30. On 22 January, a deposit of $484.70 was made. On 23 January it was $345.25.
I gave the plaintiff an opportunity to try and explain how he could have come to settle on a figure of 'about a $1,000 a day' for four days of un-deposited cash. More to the point, I asked him what he had based the accusation of the missing $4,000 on. In response he tried to tell me that his manager called and told him 'there should be close to $4,000' in the safe that was locked in the retaken premises, that the second defendant himself never bothered to check any record for the correctness of the claim that $4,000 was missing, and that in any event 'that banking record is not accurate'. Apart from the evidence of the second defendant, there is no evidence that the safe was found broken open. The willingness of the plaintiff to claim that $4,000 or more was missing from the safe, despite his access to his own banking records, leads me to conclude that his evidence was untruthful. Given the records available to him, either he knew it was untrue, or at the very least he did not care whether the claim was true or not.
I have referred to the plaintiff's assertion that the delay in opening his Joondalup Square store was caused by the plaintiff and not by CE Franchising.
The claim that the plaintiff delayed the handover of the first defendant's Joondalup Square store is not supported by any credible evidence. It is contradicted by contemporaneous records showing that the plaintiff was ready and able to give possession to the first defendant. It is also contradicted by the testimony of Mr Lisle, Mr Lampropoulos and Mr Loxton. I accept their evidence.
The second defendant's claim, that it was the plaintiff and not CE Franchising that delayed him, is contradicted by contemporaneous records including the Notice of Dispute, the memorandum prepared by the second defendant for the purpose of obtaining legal advice, and various other emails that became exhibits, sent by the second defendant to Mr Lisle, that I have not bothered to refer to. When these events were current, the second defendant repeatedly asserted that CE Franchising had delayed his possession and opening of the Joondalup Square store, in terms that are now echoed in the claims that he wishes to make against the plaintiff.
I have referred to the some of the second defendant's evidence when confronted by the Chronology, and his painful retreat from not recognising the document at all, to a position that was only nine tenths falsehood. His initial response when confronted with the Chronology however was to demand of the cross-examiner, 'So who has given this document and for what reason?' Later, when he was being asked about the contents of the Chronology he asked, 'Excuse me, may I ask this question? Who gave you this document?'
Neither that reaction nor his feigned failure to recognise the Chronology could inspire confidence in his other testimony.
Of course the reported conversations the second defendant says that he had with Mr Lisle about the various 'rent free' representations, allegedly overheard by the second defendant's son, were all premised on Mr Lisle's acceptance that the plaintiff had delayed the first defendant in taking possession of the Joondalup Square tenancy. That premise is entirely without foundation. It is preposterous that Mr Lisle would have made any such concession.
I do not accept the evidence of Iemon Abedy with respect to the conversations he claims to have overheard. They are conversations that could not in reality have taken place. I find his evidence is unreliable.
The charitable explanation for the evidence given by Iemon Abedy in support of his father's cause is that Mr Abedy continues to live in his father's home and was involved in his father's businesses. Having seen the second defendant give evidence, I have no doubt that he would seek to persuade anyone prepared to listen, and even those who were not, of the truth and righteousness of his cause. Iemon Abedy acknowledged that, from time to time over the years, he has discussed these matters with his father. I conclude that he has at least unconsciously come to accept the version of events put forward by his father.
So far as the second defendant's claims that he was always led to believe that he would never have to repay the money advanced for legal fees and for the settlement funds with CE Franchising, I have already referred to the contemporaneous documents that show that his claims in this respect are false.
In any conflict between the evidence of Mr Lisle and Mr Lampropoulos and that of the second defendant and his son, I prefer the plaintiff's evidence. I find the defendants have not proved any misleading or deceptive conduct, or duress, or unconscionable conduct, by the plaintiff.
The case advanced on the defendant's behalf is without merit.
Accordingly, the counterclaim fails. I find for the plaintiff.