Helou v Chahhoud - [2021] NSWSC 878

Supreme Court

New South Wales

Medium Neutral Citation: Helou v Chahhoud [2021] NSWSC 878
Hearing dates: 19, 20, 21 July 2021
Date of orders: 21 July 2021
Decision date: 21 July 2021
Jurisdiction: Equity - Real Property List
Before: Parker J
Decision:
See [86]-[87]

Catchwords:
CONTRACTS – deed of loan negotiated and signed by husband to complete purchase of property in the name of his wife – husband purports to sign deed on his wife’s behalf – no direct dealings between wife and lender – whether husband had authority to commit his wife
EQUITY – subrogation – unauthorised and unenforceable borrowings – equity in Bannatyne v MacIver – claim not available on the pleadings
CIVIL PROCEDURE – interlocutory application – withdrawal of solicitor – conflict of interest – discretionary factors

Legislation Cited:
National Consumer Credit Protection Act 2009 (Cth), Sch 1 – National Credit Code
Uniform Civil Procedure Rules 2005 (NSW), rr 7.1, 7.29

Cases Cited:
Bannatyne v MacIver [1906] 1 KB 103
Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142
Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72
Erceg v Volonakis (2020) 103 NSWLR 200
Jones v Dunkel (1959) 101 CLR 298

Texts Cited:
Heydon, J D, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths)

Category: Principal judgment
Parties: Fawaz Helou (Plaintiff/First Cross Defendant)
Helou Developments Australia Pty Limited (Second Plaintiff/Second Cross Defendant)
Chadia Chahhoud (First Defendant/First Cross Claimant)
Elias Joseph Taleb (Second Defendant/Second Cross Claimant)
Steadiform Pty Limited (Third Defendant/Third Cross Claimant)
Steadiform Holdings Pty Limited (Fourth Defendant/Fourth Cross Claimant)
Class 1 Form Pty Limited (Fifth Defendant/Fifth Cross Claimant
Elias Pty Limited (Sixth Defendant/Sixth Cross Claimant)
Representation:
Counsel:
M Southwick (Plaintiffs/Cross Defendants)
P Tiliakos (Defendants/Cross Claimants)
Solicitors:
Macquarie Law (Plaintiffs/Cross Defendants)
Harrington Legal (Defendants/Cross Claimants)

File Number(s): 2020/89187
Publication restriction: Nil

Judgment – EX TEMPORE

Revised from transcript; issued 23 July 2021

In these proceedings the plaintiffs sue the defendants for repayment of the outstanding balance ($450,000) of a $500,000 loan. The borrowing in question was made for the purpose of acquiring a rural property at Peak View in the Cooma district of south eastern New South Wales.
The plaintiffs contend that under the terms of the loan agreement they are entitled to register a mortgage on the property to secure the defendants’ repayment obligations. To this end they seek specific performance orders. It is for that reason that the proceedings have been brought in this Division of the Court.
The first plaintiff, Mr Fawaz Helou, is a businessman of Lebanese extraction. He uses the nickname “Fuzz”. The second plaintiff, Helou Developments Australia Pty Limited (“Helou Developments”), is a company controlled by him.
The loan arose out of dealings between Mr Helou and the second defendant, Mr Elias Joseph Taleb, who is also a businessman of Lebanese extraction. The first defendant, Ms Chadia Chahhoud, is the wife of Mr Taleb. She is the sole shareholder and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Helou v Chahhoud

Details

AGLC: Helou v Chahhoud [2021] NSWSC 878
Case: [2021] NSWSC 878
Decision Date: 21 July 2021

CaseChat Overview and Summary

In the case of Helou v Chahhoud, the dispute before the court involved a deed of loan executed by the husband, Mr Helou, to facilitate the purchase of a property in the name of his wife, Mrs Helou. The lender, Mr Chahhoud, sought to enforce the deed against both spouses, claiming that Mr Helou had signed the deed on his wife’s behalf. The court had to determine whether Mr Helou had the authority to commit his wife to the loan agreement. Additionally, the case explored the equitable principle of subrogation, specifically whether it applied to unauthorised and unenforceable borrowings. The court had to consider whether the doctrine in Bannatyne v MacIver supported Mr Chahhoud’s claim. Lastly, the case addressed procedural matters, including an interlocutory application concerning the withdrawal of a solicitor due to a conflict of interest.

The primary legal issues before the court were whether Mr Helou had the authority to sign the deed on behalf of his wife and whether the equitable principle of subrogation applied in the circumstances. The court had to assess the validity of the husband’s signature and the authority behind it, considering the lack of direct dealings between Mrs Helou and the lender. Additionally, the court examined whether the equitable principle of subrogation could be invoked in cases of unauthorised borrowings, and whether Mr Chahhoud’s claim was tenable based on the pleadings. The court also considered the procedural issue of the solicitor’s withdrawal and the conflict of interest, determining the appropriate course of action in light of the case’s unique circumstances.

The court concluded that Mr Helou did not have the authority to commit his wife to the loan agreement. The evidence did not establish that Mr Helou had the necessary authority to sign the deed on Mrs Helou’s behalf, particularly given the absence of direct dealings between her and the lender. Furthermore, the court ruled that the equitable principle of subrogation did not apply to unauthorised and unenforceable borrowings, aligning with the precedent in Bannatyne v MacIver. Consequently, Mr Chahhoud’s claim was not available on the pleadings. Regarding the interlocutory application, the court considered the conflict of interest and the implications of the solicitor’s withdrawal, exercising its discretion to determine the best course of action.

In summary, the court found in favour of Mrs Helou, holding that Mr Helou lacked the authority to sign the deed on her behalf and that the equitable principle of subrogation did not apply to the unauthorised borrowing. Consequently, the lender’s claim was dismissed. The court also addressed the procedural matter of the solicitor’s withdrawal, making a discretionary decision to ensure the integrity and fairness of the proceedings.

Orders