Horesh v The Sephardi Association of Victoria
[2011] VSC 26
•11 February 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST
No. 7406 of 2009
| DAN HORESH (in his capacity as Executor of the Estate of the late ALBERT SASSOON YEHUDA) | Plaintiff |
| v | |
| THE SEPHARDI ASSOCIATION OF VICTORIA AND ORS | Defendants |
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JUDGE: | ALMOND J | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 16-19 and 23-7 August 2010 | |
DATE OF JUDGMENT: | 11 February 2011 | |
CASE MAY BE CITED AS: | Horesh v The Sephardi Association of Victoria | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 26 | |
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CONTRACTS – Whether on the proper construction of its terms a contract conferred naming rights – Surrounding circumstances and the purpose and object of a transaction – Scope of naming rights conferred
WILFUL MISREPRESENTATION – UNCONSCIONABLE CONDUCT - Whether the first, second and third defendants engaged in wilful misrepresentation and unconscionable conduct – Whether the first, second and third defendants made any wilful misrepresentations by silence – Whether equitable relief should be granted to the plaintiff
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D B Sharp | Mr D Horesh |
| For the First Defendant | Mr H A Aizen with Mr D V Aghion | Brygel Lawyers |
| For the Second and Third Defendants | Mr S M Anderson SC with Mr J P Slattery | Marsh & Maher |
HIS HONOUR:
Introduction
In about 1977, the Sephardi Association of Victoria (“SAV”) purchased property at 73 Darling Road, East Malvern and converted a house which was on the land into a synagogue to cater for the religious needs of the Sephardi congregation. The synagogue was named “The Sassoon Yehuda Synagogue”.
In about 1990, the SAV decided to sell the East Malvern property and establish a new synagogue at 79 Hotham Street, East St Kilda. This led to a dispute concerning the name of the new synagogue which resulted in litigation between Sassoon Yehuda’s son, Albert Yehuda (“Mr Yehuda”), and the SAV.
In November 1990, the parties resolved their differences and entered into a settlement agreement (“the Settlement Agreement”) which provided that the SAV would cause the new synagogue, when established, to be named in perpetuity “The Sassoon Yehuda Synagogue”.
Subsequently, a new synagogue was established at 79 Hotham Street, St Kilda. It was constructed with the assistance of a ten year loan (“the 1990 loan”) from Mr Yehuda to the SAV which was secured by a registered first mortgage over the property.[1] When it was completed in November 1994, the new synagogue was named the “Sassoon Yehuda Sephardi Centre”.[2] That name appeared on the front facade of the new synagogue building.
[1]Second Further Amended Statement of Claim [9].
[2]There is no dispute between the parties about the minor difference between the words on the sign and the words prescribed in clause 2(b) of the Settlement Agreement.
On 1 July 1993 State Trustees Ltd (“State Trustees”) was appointed administrator of Mr Yehuda’s affairs under the provisions of the Guardianship and Administration Act 1986.
In about 2002, the SAV sought to extend the premises in order to provide a resource centre with facilities for activities embracing Sephardi customs and traditions. It was proposed to add, at ground floor level, a large communal hall and a commercial scale kitchen and, at first floor level, a rabbi’s office, children’s room, boardroom/library and office.
A fundraising campaign known as the Sassoon Yehuda Sephardi Synagogue Extension Appeal was launched and a colour brochure was produced to encourage donations (“the brochure”).
Included in the brochure were plans showing the existing layout, the layout of the proposed extension, and a list of items to which naming rights would attach for donations of specified amounts. Naming rights for the “Entire extension of the Synagogue” were offered for a donation of $450,000. Naming rights for the “Hall including lighting” were offered for a donation of $125,000.
By letter dated 12 November 2006, the SAV wrote to State Trustees in its capacity as Mr Yehuda’s administrator and advised that the SAV was launching a campaign to build a separate hall in front of the synagogue. It advised that the new structure was a separate annex in the forecourt of the synagogue with the synagogue intact behind it and that the entrances would be separate as required by Jewish law so that the building could host separate activities and not interfere with the synagogue’s function. In this letter Mr Yehuda was offered “first option to the naming rights for the new annex” and “the naming rights for the new Hall”. Enclosed with the letter was a copy of the brochure. The letter concludes with a request for a prompt response “otherwise the naming rights to the new annex will be sold to another donor”. In January 2007 the State Trustees responded to the SAV and declined the offer.
Mr Yehuda passed away on 4 July 2007. Mr Dan Horesh, a solicitor and Mr Yehuda’s nephew, was appointed executor of his estate (“the Estate”) and sues in that capacity in this proceeding.
During 2008, Mr Horesh, on behalf of the Estate, agreed to provide financial assistance to the SAV for the proposed extension works by forgiving the 1990 loan and providing a further loan. These arrangements resulted in two documents coming into existence.
The first document, dated 5 May 2008, was entitled Memorandum of Understanding (“the MOU”). The MOU states that “The Estate wishes to protect and preserve Albert Yehuda’s legacy by obtaining Naming Rights to the proposed extension…” in return for the discharge of the outstanding debt of $100,000 of the SAV, which represented the then outstanding balance of the 1990 loan, and return of the Certificate of Title. In relation to naming rights, the MOU states in substance that a further agreement, a “Naming Rights Agreement … will be crafted and signed by both parties after return of the title to SAV”.
The second document, dated 17 August 2008, was entitled Loan Agreement (“the Loan Agreement). The Loan Agreement sets out the terms and conditions of an interest-free loan by the Estate to the SAV of $100,000 for a term of 10 years. In addition to setting out the terms and conditions of the loan, the SAV expressly acknowledges that the “Lender in its capacity as Executor to The Estate of Albert Yehuda wants the ground floor Hall to be named “Albert Sassoon Yehuda Hall” subject to the loan terms and conditions set forth herein”. The loan terms and conditions are then set forth and are expressed to be, among other things, “in consideration for the name to the hall”.
In accordance with the MOU, the Estate discharged the outstanding debt of $100,000 on the 1990 loan, provided a discharge of the mortgage and returned the Certificate of Title.
In accordance with the terms of the Loan Agreement, the Estate provided an interest-free loan of $100,000 to the SAV. When the extension works were completed, the ground floor hall of the extended premises was named “Albert Sassoon Yehuda Hall”.
A dispute arose in mid-2009 when Mr Horesh became aware that the words “Lyndi and Rodney Adler Sephardi Centre” were inscribed over the front entrance to the extended premises.[3]
[3]Second Further Amended Statement of Claim [13].
In substance, Mr Horesh alleges that by allowing these words to be inscribed over the front entrance to the extended premises and by not removing them after being requested to do so, the first defendant is, and remains, in breach of the Settlement Agreement, the MOU and the Loan Agreement.
Mr Horesh also alleges:
(a)That the SAV wilfully misrepresented to Mr Horesh (in his capacity as executor of the estate) that the SAV intended to maintain the name of the extended synagogue in accordance with the Settlement Agreement as “the Sassoon Yehuda Synagogue” or an acceptable alternative name (“the representation”).
(b)That the SAV had entered into an agreement with Lyndi Adler for her to donate a significant sum and had determined, contrary to the representation, to re-name the extended synagogue “the Lyndi and Rodney Adler Sephardi Centre”[4], but failed to disclose this to Mr Horesh and in the circumstances had deliberately created a false impression.[5]
[4]Second Further Amended Statement of Claim [29] and [30].
[5]Second Further Amended Statement of Claim [31] and [32].
Further, Mr Horesh alleges that wilful personal representations to like effect were made to him by the second defendant Mr Lelah, then president of the SAV, and the third defendant Mr Jaffe, then vice president of the SAV, and that these representations were made to induce him to cause the Estate to enter into the agreement with the SAV to forgive the 1990 loan and to make a further loan.
Further or alternatively, Mr Horesh alleges that the conduct of the first, second and third defendants was unconscionable. He seeks equitable relief on behalf of the Estate.
The fourth defendant, Lyndi Adler, and the fifth defendant, Rodney Adler, were joined by the plaintiff as necessary parties to the proceeding. Neither took any part in the trial and both have indicated that they will abide by the decision of the Court.[6]
[6] Second Further Amended Statement of Claim [53].
Although it is common ground that the name “Lyndi and Rodney Adler Sephardi Centre” now appears over the front entrance to the extended premises, the first, second and third defendants each deny that the SAV was in breach of the Settlement Agreement, the MOU or the Loan Agreement.
The first, second and third defendants each deny making the alleged misrepresentations, wilfully or otherwise at any relevant time.
Issues to be determined
The issues which require determination can be stated briefly as follows:
(a)whether on their proper construction the Settlement Agreement, the MOU or the Loan Agreement confer on the plaintiff naming rights to the frontage of the extended premises;
(b)whether the SAV represented to Mr Horesh that it intended to retain and maintain the name of the extended premises as “The Sassoon Yehuda Synagogue” or an alternative acceptable to the plaintiff;
(c)whether any wilful personal representations were made by the second and third defendants that it was the SAV’s intention to retain and maintain the name of the extended premises as “The Sassoon Yehuda Synagogue” or an alternative acceptable to the plaintiff;
(d)whether the SAV without informing the Estate, had entered into an agreement with Lyndi Adler in respect of her donation and had determined to name the extended premises “The Lyndi and Rodney Adler Sephardi Centre” prior to procuring the Estate’s agreement to forgive the 1990 loan and to make a further loan thereby making a wilful misrepresentation by silence;
(e)whether in all the circumstances the conduct of any of the defendants was unconscionable and capable of founding an equitable estoppel.
Principles of construction
It is first necessary to say something about the relevant principles of construction.
In construing a term of a contract, the Court may examine the whole of the contract document to determine what a reasonable person would understand by the language used by the parties to express their agreement.
In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd, the High Court said:
This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. [7] (emphasis added)
[7](2004) 219 CLR 165, [40].
In the case of an ambiguous term, prior negotiations may be admissible to establish the objective background facts known to the parties, but they are not admissible to the extent that they reflect the subjective intentions or expectations of the parties. [8]
[8]Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352.
The underlying principle is stated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (“Codelfa”) as follows:
The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.[9]
[9]Ibid; Guthrie v News Limited [2010] VSC 196, [30]; Eastern Health v MIA Victoria Pty Ltd (2009) 22 VR 502, [61].
In ascertaining the intention of the parties a narrow or pedantic approach should not be adopted.[10] The contract will be interpreted according to its fair and ordinary meaning. The Court must take into account the commercial and social purposes for which the agreement is made.[11]
Does the Settlement Agreement on its proper construction confer on the plaintiff naming rights to the frontage of the extended premises?
[10]Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, 437 (per Barwick CJ, McTiernan, Kitto & Windeyer JJ agreeing).
[11]McCann v Switzerland Insurance Australia Ltd (2000) 176 ALR 711, 725-6 (Kirby J).
The plaintiff relies primarily on the Settlement Agreement as the repository of the right to have the extended portion of the building named in perpetuity “the Sassoon Yehuda Synagogue” or an acceptable variation to that name.
The plaintiff alleges that the word “synagogue” in the Settlement Agreement means, and was intended to mean, the building then or thereafter to be constructed at 79 Hotham Street, East St Kilda and contends that this meaning is plain and clear.
Counsel for the SAV contends that, if and to the extent that it is relevant, the intended meaning of the word “synagogue” in the Settlement Agreement could only have been a reference to the “prayer chamber” within the building and not to the building either in its original state or as extended.
Counsel for the plaintiff relied upon a dictionary definition in the Oxford English Dictionary which defines the word “synagogue” as:
“A building or place of meeting for Jewish worship and religious instruction.”[12]
[12]The Oxford English Dictionary (2nd ed) vol 17, 468.
Rabbi Heilbrunn, an ordained Rabbi and Chief Minister of the St Kilda Hebrew Congregation, was called by the SAV to give expert evidence. Rabbi Heilbrunn gave evidence that a synagogue “includes the building and … the contents. … It’s the holy part where people go to pray inside the building and its contents”.[13]
[13]Pages 8 to 14 of Rabbi Heilbrunn’s Report were objected to by the plaintiff. The report was admitted subject to objection on the basis that I would rule on the objection in my reasons, if necessary. Having regard to the definition of the word synagogue given in the Report and the evidence given orally by Rabbi Heilbrunn, it is unnecessary to make further reference to the report and unnecessary to rule on the objection.
It was suggested to Rabbi Heilbrunn that a synagogue is a building which can contain other aspects or functions such as a house of study or a school for young children. Rabbi Heilbrunn responded to the effect that it depends on whether a person is speaking about the synagogue in specific terms or in general terms. The effect of the Rabbi’s evidence was that the word “synagogue”, when used in its narrow sense, means the place where people pray inside a building but can be used in more general sense. In his report Rabbi Heilbrunn defined a synagogue both as “a place exclusively for designated public prayers” and as “a building prepared for the gathering of ten Jews for prayer at every designated prayer time”.
Rabbi Heilbrunn did not disagree with the dictionary definition which contemplates the alternatives of a building or a place of meeting. In ordinary usage a place of meeting could in my view include a prayer hall within a building but not necessarily the whole building. Likewise, Rabbi Heilbrunn’s evidence, which I accept, demonstrates that the meaning of the word “synagogue” can differ depending on whether it is used in a narrow or more general sense. It follows that neither the dictionary definition nor the expert evidence provides a simple answer to the question before the Court.
It is necessary to look at the Settlement Agreement as a whole to determine objectively what a reasonable person would understand by the language the parties have used and also to determine the surrounding circumstances and the purpose and object of the transaction.
Surrounding circumstances and purpose and object of the transaction
Counsel for Mr Horesh submitted that I should look at the surrounding circumstances to assist in the issue of construction. For this purpose, I am entitled to look to the objective framework of facts within which the agreement came into existence and to the parties’ presumed intention in this setting but not to the actual intentions of the parties.[14] As the High Court said in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd,[15] normally it is necessary to consider the surrounding circumstances known to the parties and the purpose and object of the transaction.
[14]Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352 (Mason J).
[15](2004) 219 CLR 165, [40].
I found the surrounding circumstances contended for on behalf of the plaintiff were, in the main, unhelpful. In submissions, counsel for the plaintiff asserted that at the time of execution of the Settlement Agreement the proposed new building was “commonly referred to by all concerned, including the plaintiff (meaning Mr Horesh), Mr Yehuda and Mr Jaffe, as a synagogue”. This assertion was not supported by any evidence from Mr Horesh.
In so far as there was any evidence of common usage from Mr Jaffe, the plaintiff established only that Mr Jaffe had on occasions during 1999 and 2000 referred to the Hotham Street synagogue as “the building”. There was no evidence given by Mr Jaffe that he had done so at any earlier date. There is therefore no proper basis upon which I could infer from Mr Jaffe’s evidence any habitual reference to the relevant premises in or prior to 1990 when the Settlement Agreement was made. Accordingly, I was not assisted by the submission by counsel for the plaintiff on this issue.
It was also submitted on behalf of the plaintiff that when considering surrounding circumstances I should take into account the terms of a later application by the SAV for a town planning permit to construct a 2-storey synagogue, the laying of a foundation stone at the commencement of building in 1994, the signage on the building after it had been constructed and the fact that the SAV showed on its letterhead and other documents a picture of the building as constructed with a caption “Sassoon Yehuda Sephardi Synagogue”.
All of these events or circumstances occurred subsequent to the making of the Settlement Agreement and are not admissible as an aid to the construction of that agreement.[16]
[16]Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570, 582 (Gummow, Hayne and Keifel JJ); World Best Holdings Limited v Sarker [2010] NSWCA 24, [18]-[21] (per Handley JA, Tobias and Campbell JJA agreeing).
There are two relevant surrounding circumstances which were known to the parties at the time. These concerned the physical attributes of the building in East Malvern and its usage. The East Malvern synagogue building consisted of a prayer hall with a women’s section at the back, toilet facilities, a kitchen, a library and a study room. The kitchen was very small and was used as a multi‑purpose area available to celebrate small buffet‑type meals after religious services.[17] On front of the building was the name “The Sassoon Yehuda Synagogue”. The East Malvern synagogue building was used solely for religious purposes.
[17]This was referred to in Hebrew as kiddushim.
The purpose and object of the transaction embodied in the Settlement Agreement was to reach a compromise of litigation on the basis reflected in the Settlement Agreement. Of itself, this gives me no particular insight into the present question.
The Settlement Agreement
I now turn to consider the Settlement Agreement. The word “synagogue” is used several times in the Settlement Agreement. Relevantly, for present purposes, it appears in Recitals A and B and in clauses 2 and 11.
Recitals
A.The Association owns the property situated at 73 Darling Road, East Malvern in the said State (hereinafter called ‘the Malvern Property’) upon which is situated the present Synagogue of the Association which bears the name ‘The Sassoon Yehuda Synagogue’.
B.The Association desires to relocate its Synagogue to a location deemed to be appropriate for the needs of its members (hereinafter called ‘the new Synagogue’).
…
Clauses
2.(b) The Association hereby agrees and covenants with Yehuda that it will cause the new Synagogue when established on a permanent basis to be named in perpetuity ‘The Sassoon Yehuda Synagogue’.
…
11.(a) The Association hereby agrees and covenants with Yehuda that subject to clause 11(b) hereof, it will not sell the Malvern Property unless one of the following events first occurs:-
(i)it obtains a Town Planning Permit to construct a Synagogue upon its property situated at 79 Hotham Street, East St Kilda in the said State; or
(ii)it purchases a property with the intention of constructing upon such a property, a Synagogue; or
…
There are several indications in the Settlement Agreement that reference to the word “synagogue” is a reference to the building.
The first indication is found in Recital A. In my view, a reasonable person would understand that the reference to the synagogue in this Recital is a reference to a building. There are three reasons for this. First, there is the reference to the synagogue being situated upon the East Malvern property. Secondly, there is the statement that the synagogue “bears the name ‘The Sassoon Yehuda Synagogue’.” Thirdly, there was evidence of surrounding circumstances known to the parties at the time that the name “Sassoon Yehuda Synagogue” was, in fact, located on the front of the building. Taking these factors together suggests to me that the word synagogue is used in a general sense to refer to the building, not merely to the prayer hall.
The second indication is found in clause 11. In my view a reasonable person would consider the statement “obtaining a town planning permit to construct a synagogue upon its property” in clause 11 to be a reference to obtaining a permit for the construction of a building with all necessary facilities. It is clear from Recital B that the SAV desired to relocate its synagogue. From this I infer that it was probably intended that the new synagogue would have comparable facilities to the synagogue in East Malvern, which contained not only a prayer hall with a women’s section at the back but toilet facilities, a kitchen, library and study room. It would not be efficacious to obtain a town planning permit for a prayer hall without ancillary rooms, at least, for example, a small kitchen and toilet facilities.
Finally, it is noteworthy that there is no definition of the word “synagogue” in the Settlement Agreement. It is evident that at the time the Settlement Agreement came into existence, the parties did not see fit to differentiate between the narrow meaning and the more general meaning. In my view, this is because fine distinctions were not necessary and that reference in a general sense was sufficient for the purpose.
For these reasons, I prefer the construction contended for by the plaintiff, namely, that the word “synagogue”, as it is used in the Settlement Agreement, means the building and is not confined to the prayer hall.
However, in my opinion the real question in dispute, namely whether the Estate has a right in perpetuity to have the name “Sassoon Yehuda Synagogue” displayed at the front of the extension to the building does not turn on a determination of the meaning of the word “synagogue” as it is used in the Settlement Agreement.
The Settlement Agreement provides that the SAV would “cause the new Synagogue, when established … to be named in perpetuity ‘the Sassoon Yehuda Synagogue’”. The scope of the covenanted obligation is circumscribed. It applies only to the building then in contemplation. In my opinion it is to that building that the naming obligation attaches.
Further, the Settlement Agreement did not purport to cater for the circumstance which eventuated. It was not envisaged in the Settlement Agreement that the “new synagogue” would in the future be substantially extended and that the extension to the building would be used for non‑religious purposes. Mr Lelah gave evidence to the effect that there is a clear demarcation between religious activities which can take place in the synagogue as a place of worship and the other activities which can take place in the extended part of the premises, which now includes the hall. The other activities include educational lectures, talks, cooking classes and demonstrations, fundraising activities including film, comedy and trivia evenings and backgammon tournaments. Mr Lelah gave evidence that according to the “orthodox legal way” it is not permissible to conduct such activities inside the synagogue. Mr Jaffe gave evidence to like effect as did Rabbi Heilbrunn. The evidence was not disputed by the plaintiff who accepted that he was not qualified to give such evidence.
In my view, a reasonable person would conclude in the circumstances that the naming obligation in the Settlement Agreement attaches only to the building characterised as the “new synagogue” in Recital B. This is the original building which was constructed at the Hotham Street location in about 1994.
Scope of the plaintiff’s naming rights pursuant to the Settlement Agreement
The Estate contended it had the right to have the name “Sassoon Yehuda Synagogue” (or an acceptable alternative) displayed externally on the front of the extended building. At trial it was established that the name "Sassoon Yehuda Sephardi Centre" appeared externally on the Hotham Street building prior to demolition of the front wall which occurred when the extension works were carried out. However, the Settlement Agreement does not prescribe where the name should be located at the “new synagogue when established” nor does it prescribe the size, type or format of signage. In my view it is clear that although the name was displayed externally on the original building, the SAV was not required by the terms of the Settlement Agreement to do so.
The name “Sassoon Yehuda Synagogue” now appears inside the original building over the entrance to the prayer chamber. The name is in conspicuous legible signage visible from the top of stairs which are located at the front and near the centre of the main entry point into what remains of the original building after the extension works had been carried out. The stairs lead down to the entrance to the prayer chamber. It was not suggested that any other name appears at, or near, the main entry point into the original building.
In my opinion, the current signage, affixed as it is in a prominent position on an internal wall in the original building literally and substantively complies with the naming obligation prescribed by clause 2(b) of the Settlement Agreement. Both Mr Lelah and Mr Jaffe gave evidence to the effect that they believed the SAV had at all times abided by the terms of the Settlement Agreement. The undisputed evidence is that the original building (the pre‑extended structure at Hotham Street) continues to bear the name “Sassoon Yehuda Synagogue”.
Did the SAV represent to Mr Horesh that it intended to retain and maintain the name of the extended premises as “The Sassoon Yehuda Synagogue” (or an alternative acceptable to the plaintiff)?
I now turn to consider whether the SAV represented to Mr Horesh that it intended to retain and maintain the name of the extended premises as “The Sassoon Yehuda Synagogue” or an alternative acceptable to the plaintiff.
This issue requires objective consideration of the MOU and the Loan Agreement. Bearing in mind that the plaintiff also alleges the first, second and third defendants made misrepresentations to the plaintiff in the course of their dealings, it is convenient now to set out in some detail the background facts which reveal the course of those dealings, the surrounding circumstances known to the parties and the purpose and object of the transactions which were eventually embodied in the MOU and the Loan Agreement.[18]
[18]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, [40].
Background
In November 2007, Mr Lelah of the SAV was contacted by Rabbi Cohen, the appointed Rabbi of the Sassoon Yehuda Sephardi Synagogue. Rabbi Cohen informed Mr Lelah that Mr Horesh had expressed interest in doing something with the SAV to honour Mr Yehuda’s memory.
As a result, in early December 2007, Mr Lelah and Mr Jaffe had a meeting with Mr Horesh at a café in Carlisle Street, Balaclava. As there was a dispute about this evidence, I set out the respective versions of what occurred at this meeting.
Mr Horesh gave evidence that at this meeting Mr Lelah and Mr Jaffe each gave him a copy of the brochure. Mr Horesh said they discussed the funding of the extension but did not recall of the content of the discussion.
Mr Lelah gave evidence that he and Mr Jaffe showed Mr Horesh the brochure and in particular the dedications list which was a list of items which were offered with naming rights. During the meeting Mr Lelah and Mr Jaffe made Mr Horesh a direct offer of full naming rights to the entire extension for a donation of $450,000 in return for which the Estate would get the signage rights to the front of the extension. Mr Horesh said in effect he was not interested in making a donation of that magnitude, that it was “too much, they would kill me”. Mr Lelah presumed he meant that the beneficiaries of the Estate would not approve. The discussion then turned to a consideration of the third item on the list which related to naming rights to the hall which were available for a donation of $125,000. There was a lengthy discussion concerning the purpose of the hall, the events which would be held there, signage, collateral benefits of the advertising whenever events were held there and whether it would be possible to have two or three photographs of Mr Yehuda hanging inside the hall. No decisions were made at this meeting although Mr Horesh said he would look into it.
Mr Jaffe gave evidence that at this meeting he and Mr Lelah flipped through the pages of the brochure, explained the plans and had a brief discussion about them. They then stopped at the page with the dedications list and took Mr Horesh to the first item for $450,000 for naming rights to the entire extension. Mr Horesh said something to the effect “you’ll never get anything like that from anybody”. Mr Jaffe said Mr Lelah then took Mr Horesh to the third item on the list which was naming rights to the “hall including lighting” at $125,000. Mr Horesh said this would be more palatable to the beneficiaries. As to the content of the discussion, Mr Jaffe said Mr Horesh asked a lot of questions about the financial state of the SAV, about the necessity for the building and each particular room and the tax deductibility of any donation.
Initially under cross examination Mr Horesh said he did not recall being taken through the brochure but then said he clearly remembered that Mr Lelah and Mr Jaffe did not take him through the various items listed in the brochure that could be purchased by donors and named. He gave evidence that “[w]e did not go through the specifics. All that they were concerned – they wanted the title” for the synagogue property returned.
I reject this evidence. In my view, Mr Horesh had forgotten going through the brochure with Mr Lelah and Mr Jaffe during the cafe meeting. Both Mr Lelah and Mr Jaffe had brought a brochure to the meeting and in my assessment it is highly probable that the discussion about potential donation took place with direct reference to the dedications list which dealt with the subject of donations. I find that Mr Lelah and Mr Jaffe did take Mr Horesh to the dedications list and that they did "go through the specifics". I also find that during the discussion Mr Lelah and Mr Jaffe clearly differentiated between naming rights to the "entire extension" and naming rights to the hall and that Mr Horesh disavowed any interest in the naming rights to the "entire extension". Thereafter the conversation focussed on the issue of naming rights to the hall in the proposed extension.
On or about 9 December 2007, Mr Lelah, Mr Jaffe and Mr Maurice Levy met Mr Horesh at the synagogue where a donation was discussed. Mr Horesh said he was prepared to donate $100,000, that he wanted financial statements, evidence of tax deductibility and for the SAV to prepare an agreement because he was too busy at the time to prepare it. Mr Lelah gave evidence that it was proposed that the donation would be made by the Estate forgiving the outstanding 1990 Loan and that Mr Horesh (on behalf of the Estate) said he would be prepared to “donate … the title deeds back in … for the rights of the hall” and that the SAV should draft an outline of agreement. Mr Jaffe gave evidence to similar effect.
It is not entirely clear whether any draft agreement came into existence during the period December 2007 to 11 March 2008. Certainly during this period no oral or written agreement was reached with Mr Horesh. However during discussions between Mr Jaffe and Mr Horesh, Mr Jaffe foreshadowed that the price for the building works had gone up and that the SAV would need an extra $100,000 donation from the Estate in order for the building works to proceed.
On 11 March 2008, the SAV Committee decided by unanimous vote not to proceed with the building project in the absence of any agreement and having regard to the fact that the building permit was due to expire.
In late March 2008, Mr Horesh telephoned Mr Lelah and asked whether Mr Lelah had considered his proposal. Mr Lelah gave evidence that he told Mr Horesh that as there was no agreement or commitment from Mr Horesh, the SAV could not commit to the builder and could not commit to the bank and had decided not to go ahead. Mr Horesh responded in effect that he was committed to giving. Mr Lelah advised that nothing had happened for three months and that building costs were escalating. During the conversation Mr Horesh said he was prepared to give the title deeds back, but Mr Lelah said even that was not sufficient and extra funding was required. Mr Lelah then asked Mr Horesh whether he could donate another $200,000 or lend the SAV $200,000 and said that these suggestions were emphatically rejected. Mr Lelah then suggested a loan of $100,000. Mr Horesh said he would have to speak to the beneficiaries and get back to Mr Lelah.[19]
[19]It may be the case that there were two separate conversations but nothing turns on this.
In about late March 2008, a further meeting took place at the synagogue with John Mazza who was to be project manager of any new project and was aware of the details of the proposed construction. Mr Lelah and Mr Jaffa also attended the meeting. Mr Lelah gave evidence that during the meeting Mr Horesh said that in return for naming rights to the hall, he would return the title deeds and that he was yet to hear from the beneficiaries regarding the $100,000 loan.
In late March or early April 2008, Mr Horesh advised Mr Lelah during a telephone discussion that he had had discussions with the beneficiaries of the Estate and that he had decided that he would advance the SAV $100,000 as a loan. He intimated some beneficiaries were not in favour of giving the money. The question of the drafting of an agreement was again discussed. Mr Lelah said he would get an outline done with some help and give it to the synagogue’s legal person to look at. Mr Lelah subsequently prepared a draft, and thought perhaps a copy was given to Mr Horesh at that time by Mr Jaffe.
During the period from the end of March to 10 June 2008 several draft agreements came into existence. The first of these was described as a “New Extension Naming Rights Agreement” which provided for the name of the extension to be the “Albert Yehuda Hall” in consideration for discharge of the mortgage, the existing debt of $100,000, a gift of $25,000, a $100,000 interest-free loan and a further $50,000 interest‑free loan. Clause 2(b) of this draft agreement provided for signage rights to the front of the extension when the building works were completed. A draft form of document was provided to Mr Horesh at the end of March or in early April 2008. It is evident from the draft that the proposed consideration involved a gift of $25,000 and two interest‑free loans. This differed from the consideration which had previously been discussed. By way of explanation, Mr Jaffe gave evidence to the effect that this draft was prepared for the purpose of negotiations with Mr Horesh and that it was put to Mr Horesh as an option of “more consideration for further rights”. It is evident that at least at this time the SAV was prepared to grant naming rights to the Estate for the extension when completed not merely the hall.
The draft New Extension Naming Rights Agreement was rejected by Mr Horesh in early April 2008 in a discussion with Mr Lelah. Mr Lelah gave evidence that Mr Horesh rang to say said he did not like the draft agreement, the arrangement or its content without being clear about what he wanted.
This is consistent with a file note made by Mr Horesh of 4 April 2008 which records that Mr Horesh advised Mr Lelah by telephone that he was not prepared to provide a loan of more than $100,000 and asked Mr Lelah to obtain another precedent of an agreement. The matter was further discussed at Mr Horesh’s office in mid-April 2008 at a meeting attended by Mr Lelah and Mr Jaffe for the SAV, and Mr Horesh. Mr Lelah gave evidence that during this meeting Mr Horesh, among other things, again said he did not like the proposed agreement and that he wanted to talk about some conditions. In particular he said he wanted tax deductibility on the return (forgiveness) of the $100,000 loan with deduction available for the 2007 tax year so that receipt of the gift by the Estate would need to be backdated to that year. It is common ground that the draft New Extension Naming Rights Agreement was never signed.
Subsequently, at a meeting on 21 April 2008, the Trustees of the SAV met and decided it would accept Mr Horesh’s word that the beneficiaries had agreed that they wanted to give the SAV the gift in 2007 and based on this understanding would issue a backdated receipt. The Trustees also decided they would require a document stating that the backdating was based on this understanding. Mr Horesh expressed willingness to sign a memorandum of understanding and release the title.
Memorandum of Understanding
This arrangement gave rise to the MOU which was executed on 5 May 2008. The background to the arrangement set out above explains why the understanding recorded in the MOU is expressed to be “entered into as of 29 June 2007”, which predates Mr Yehuda’s death by five days.
The document is somewhat contrived. In the opening paragraphs it states that: “Dan Horesh will in due course be acting as the Executor of the Estate of Albert Yehuda” even though at the time the document came into existence and at the time it was executed, Mr Horesh was in fact the executor of the Estate. Mr Horesh signed the MOU in his capacity as executor of the Albert Yehuda Estate.
The MOU is expressed in prospective language. It sets out events which will occur, namely that the Estate would discharge the SAV’s outstanding debt of $100,000 and provide a discharge (of mortgage) and Certificate of Title of the property at 79 Hotham Street, East St Kilda to the SAV.
Relevantly, in relation to the issue of naming rights the MOU states:
The Estate wishes to protect and preserve Albert Yehuda’s legacy to SAV by obtaining Naming Rights to the proposed extension, in return for the protection:
·…
·…
·…
·The memorandum also recognises the Protection is part of an overall “Naming Rights Agreement“ that will be crafted and signed by both parties after return of the title to SAV.”
·… ”
Two things are evident from this document. First, the Estate expresses a wish to obtain naming rights to the proposed extension without specifying what those rights might be. Secondly, the parties contemplate that a “Naming Rights Agreement” will be crafted and signed after return of the title to SAV”. I agree with the submission of the SAV that the MOU foreshadows but does not confer naming rights.
Following execution of the MOU on 5 May 2008, the SAV provided a receipt (backdated to 20 June 2007) acknowledging a donation of $100,000 from Mr Yehuda. Mr Jaffe gave evidence that at about this time Mr Horesh requested that the SAV minute the fact that the extension was going ahead and that the hall be named the Albert Yehuda Memorial Hall. In Mr Horesh’s account of this conversation, Mr Horesh said “I think I asked him for the extension to be named after Albert Sassoon Yehuda and I never mentioned the word “memorial”.
On 20 May 2008 the SAV passed a motion in the following terms:
That the Sephardi Association goes ahead with the building of the extension and that the Hall be named the ALBERT YEHUDA MEMORIAL HALL.
A copy of the minutes incorporating the wording of the motion was subsequently delivered to Mr Horesh.
Mr Horesh’s letter dated 26 May 2008
By letter dated 26 May 2008, Mr Horesh wrote to Mr Lelah of the SAV purporting to clarify the basis on which agreement had been reached with the Estate to provide funds to assist in the construction of the hall. In this letter Mr Horesh states:
The hall is to be named after Albert with his photo and video of his life to be displayed at a prominent location at the Hall.
There is no reference in this letter to the Estate having agreed to naming rights to the frontage of the extended building. Furthermore, Mr Jaffe gave evidence to the effect that Mr Horesh said he wanted the name “Albert Sassoon Yehuda Hall” placed above the main entrance to the hall and that the name is currently in that position. Mr Horesh agreed that the name was currently above the doorway to the hall but denied having been involved in the decision to put it there. I do not accept Mr Horesh’s evidence on this issue. In my view, Mr Jaffe’s evidence was much clearer and is more reliable on this point. Mr Horesh took a close interest in the construction works. He acknowledged direct involvement in choosing the placement of the photographs of Mr Yehuda inside the hall and in my view it is probable that he also had direct involvement in choosing the location of the signage.
On 10 June 2008, a draft “New Hall Naming Agreement” was provided by the SAV to Mr Horesh for his consideration. It provides for naming rights to the hall on the ground floor of the new building in exchange for discharge of the debt of $100,000 and an interest-free loan of $100,000 for ten years. The draft agreement refers to the request of the Estate that the hall be known as the “Albert Sassoon Yehuda Hall” and that all signage expenses be borne by the SAV. There is no reference in this draft to signage on the frontage of the extended building.
A signed copy of the draft “New Hall Naming Agreement” was provided to Mr Horesh under cover of a letter dated 10 June 2008. Mr Lelah gave evidence that Mr Horesh telephoned him one night and said in effect that it was too complex, that he wanted a simple two page agreement to cover the loan and naming rights. Mr Horesh denied this. He said he never made any comments on the draft agreements except to say he was not happy with them with no specific suggestion to change anything. It follows there was no complaint that the draft refers to the hall and not to the extension.
Mr Lelah gave evidence that following this discussion and with the help of the SAV’s honorary solicitor Mr Szmerling, a simple loan agreement was prepared.
On or about 16 July 2008, it was delivered by Mr Jaffe to Mr Horesh for his consideration.
Mr Horesh requested an amendment to the execution clause seeking the addition of the words “signed, sealed and delivered” so that the document could be executed as a deed. The terms of the draft loan agreement were also discussed at a meeting at the synagogue on 17 August 2008 attended by Mr Lelah, Mr Jaffe and Mr Horesh among others and during which Mr Horesh agreed to sign the draft Loan Agreement subject to minor amendments.
The revised version of the Loan Agreement, incorporating the amendments specified by Mr Horesh, was sent to Mr Horesh after the meeting later on 17 August 2008. On 21 August 2008, Mr Jaffe attended Mr Horesh’s office to collect the Loan Agreement. Mr Horesh signed the document in Mr Jaffe’s presence and it was subsequently signed by Mr Lelah and Mr Jaffe on behalf of the SAV. A copy of the signed Loan Agreement was sent to Mr Horesh by letter dated 24 August 2008.
The Loan Agreement
The Loan Agreement provides for a $100,000 interest‑free loan to the SAV. It also provides for naming rights, relevantly as follows:
The Borrower has represented to the Lender in its capacity as Executor to The Estate of Albert Yehuda that the purpose of the loan is for a new 2 story (sic) Building proposed for the present site which will have a new frontage, and contain a HALL on the ground floor, kitchen, classrooms, etc.
The Borrower acknowledges that the Lender in its capacity as Executor to The Estate of Albert Yehuda wants the ground floor HALL to be named “Albert Sassoon Yehuda Hall” subject to the Loan terms and conditions set forth herein.
NOW, THEREFORE, in consideration for the name to the hall, mutual promises, duties and obligations acknowledged and agreed to by both parties are set forth herein as follows:
5. Entire agreement
This Agreement constitutes the entire agreement between the parties and shall become a binding and enforceable Agreement among the parties hereto and their respective successors upon the signed date of this Loan Agreement below. No prior verbal or written agreement shall survive the execution of this Agreement.
…
7. Exclusions
The Lender in its capacity as Executor to The Estate of Albert Yehuda acknowledges and agrees that except for the ground floor hall, it has no rights whatsoever over the other areas of the building and frontages and or its naming rights nor signage in these areas.
It is evident from the above paragraphs that the parties provide in explicit terms for naming rights only to the hall on the ground floor of the proposed new building.
There is express reference to the fact that the building will have a new frontage. In clause 7, Mr Horesh “acknowledges and agrees” on behalf of the Estate that, except for the ground floor hall, it has no rights over “other areas of the building and frontages and/or its naming rights nor signage in these areas”. I accept the submissions made on behalf of the plaintiff to the effect that this acknowledgement and agreement in so far as it refers to other areas of the building, frontages, naming and signage rights in the context, is confined to the area of the extension.[20]
[20]In final submissions, counsel for the plaintiff submitted that the acknowledgement and agreement of Mr Horesh in his capacity as executor of the Estate in clause 7 of the Loan Agreement that the estate “has no rights whatsoever over the other areas of the building and frontages …” could not affect Mr Yehuda’s rights under the Settlement Agreement because the parties to the Loan Agreement (the SAV and Mr Horesh as executor of the Estate of Mr Yehuda) were different to the parties to the Settlement Agreement (the SAV and Mr Yehuda). In my view, this argument has no merit. In any event in the Loan Agreement, the Estate unequivocally renounced naming rights over the extension and the frontage to the extension, except for the ground floor hall, and is precluded by its own conduct from now claiming it has such rights.
In clause 5, the parties have provided that the Loan Agreement constitutes the entire agreement between the parties. There is no reason to ignore or read down this clause which has effect to exclude matters extraneous to the written agreement.[21]
[21]Hart v MacDonald (1910) 10 CLR 417, 430 (Isaacs J).
In my view, a reasonable person would conclude that the terms of the Loan Agreement are clear and unambiguous and directly contradict Mr Horesh’s claim that the Estate has naming rights to the frontage of the extension to the Hotham Street building.
Misrepresentation and unconscionable conduct
I turn now to consider whether Mr Horesh was induced to enter into the MOU and the Loan Agreement by wilful misrepresentations by the SAV and, in particular, by the individuals Mr Lelah and Mr Jaffe:
(a)that the SAV intended to retain and maintain the name of the extended synagogue in accordance with the Settlement Agreement as the “Sassoon Yehuda Synagogue”;
(b)that the SAV had entered into an agreement with Lyndi Adler for her to donate a significant sum and determined contrary to the representation to rename the extended Synagogue the “Lyndi and Rodney Adler Sephardi Centre” and failed to disclose its changed intention to the plaintiff and whether in all the circumstances the actions of the first, second and third defendants were unconscionable; and
(c)whether in all the circumstances the actions of the second and third defendants were unconscionable.
The relevant law
In Magill v Magill the High Court set out the elements of the tort of deceit as follows:[22]
The modern tort of deceit will be established where a plaintiff can show five elements: first, that the defendant made a false representation; secondly, that the defendant made the representation with the knowledge that it was false, or that the defendant was reckless or careless as to whether the representation was false or not; thirdly, that the defendant made the representation with the intention that it be relied upon by the plaintiff; fourthly, that the plaintiff acted in reliance on the false representation; and fifthly, that the plaintiff suffered damage which was caused by reliance on the false representation.
[22](2006) 226 CLR 551, [114] (Gummow, Kirby and Crennan JJ).
In an action of deceit the plaintiff must establish actual fraud[23] and because fraud is such a serious allegation the need to satisfy each element has always been strictly enforced.[24]
[23]Ibid [112] (Gummow, Kirby and Crennan JJ quoting Smith v Chadwick (1884) 9 App Cas 187, 190 (Lord Selborne)).
[24]Ibid [114].
Clear or cogent proof is necessary reflecting a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.[25]
[25]Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449, 450 (Mason CJ, Brennan, Deane and Gaudron JJ).
Further, the courts require accurate specification by the plaintiff of the representations said to be false.[26] As Hayne J stated in Magill:
This emphasis is no matter of mere form or pleading practice. It is founded in basic considerations of fairness. A party alleged to have deliberately mislead another must know precisely how the misleading is said to have occurred.
[26]Magill v Magill (2006) 226 CLR 551, [151].
A defendant is therefore entitled to hold the plaintiff to the representations pleaded in the statement of claim.[27]
[27]Krakowski v Eurolynx Properties Pty Ltd (1995) 130 ALR 1, 8 (Brennan, Deane, Gaudron and McHugh JJ).
While the actions of the defendant, not just his or her words, may convey a representation capable of sustaining a claim for deceit, mere silence, however morally wrong, will not give rise to the tort of deceit unless there is a legal or equitable duty to speak and disclose the true facts.[28]
[28]Magill v Magill (2006) 226 CLR 551, [37]-[38] (Gleeson CJ). See also [9], [43] and [129].
The traditional common law approach is that between parties dealing at arm’s length, a failure by one party to disclose to the other party that the transaction is not as the other would believe in the circumstances does not give rise to a representation capable of founding an action in deceit.[29] As Gleeson CJ stated in Lam v Ausintel Investments Australia Pty Ltd:
where parties are dealing at arms’ length in a commercial situation in which they have conflicting interests it will often be the case that one party will be aware of information which, if known to the other, would or might cause that other party to take a different negotiating stance. This does not in itself impose any obligation on the first party to bring the information to the attention of the other party, and failure to do so would not, without more, ordinarily be regarded as dishonesty or even sharp practice. It would normally only be if there were an obligation of full disclosure that a different result would follow. That could occur, for example, by reason of some feature of the relationship between the parties, or because previous communications between them gave rise to a duty to add to or correct earlier information. [30]
[29]Beach Petroleum v Johnson (1993) 115 ALR 411, 582-3 (von Doussa J).
[30](1989) 97 FLR 458, 475.
Gleeson CJ then proceeded to summarise the circumstances in which an obligation to disclose may arise by quoting the following passage of Bowen CJ in Rhone‑Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd:
Dealing with the question of misrepresentation constituted by silence, there are cases which show, for example, that an omission to mention a qualification, in the absence of which some absolute statement made is rendered misleading, is conduct which should be regarded as misleading. So too is the omission to mention a subsequent change which has occurred after some statement which is correct at the time has been made where the result of the change is to render the statement incorrect so that thereafter it becomes misleading. This also may be regarded as constituting misleading conduct. However, the general position between contracting parties has been expressed in the following way: ‘The general rule, both of law and equity, in respect to concealment, is that mere silence with regard to a material fact, which there is no legal obligation to divulge, will not avoid a contract, although it operates as an injury to the party from whom it is concealed.’ (Smith v Hughes (1871) LR 6 QB 597 at604; and see Ward v Hobbs (1878) 4 App Cas 13; W Scott, Fell and Co Ltd v Lloyd (1906) 4 CLR 572; cf Chadwick v Manning [1896] AC 231 at 238). Under the general law it is important to consider whether there is a legal obligation to divulge. There are particular relationships which have been held to raise an obligation of disclosure. Contracts uberrimae fidei come to mind as examples of this type of relationship. Indeed, there are many particular relationships which raise duties of disclosure. These include trustee and beneficiary, solicitor and client, principal and agent and guardian and ward. Where an obligation to disclose arises an omission to inform the person to whom the obligation is owed may, perhaps on the basis that that person is entitled to assume some fact or circumstance which does not exist, constitute or be an ingredient in misleading conduct. [31]
[31](1986) 12 FCR 477, 489-90.
Absent the existence of a particular relationship giving rise to an obligation of disclosure (such as trustee and beneficiary, solicitor and client, principal and agent and guardian and ward), the learned authors Balkin & Davis in Law of Torts,[32] summarise the circumstances in which non‑disclosure will found liability for deceit, namely, if:
[32]Rosalie Balkin and Jim Davis, Law of Torts (4th ed, 2009) [23.18].
(a)what is left unsaid gives a deceptive meaning to that which is uttered;[33]
(b)the statement was true when made but becomes false to the maker’s knowledge before it is relied upon by the plaintiff;
(c)the statement was believed to be true when it was made but the maker discovers its falsity prior to the plaintiff’s reliance thereon.[34]
Assessment of witnesses
109 Before addressing the misrepresentation and unconscionable conduct claims I make the following assessment of the lay witnesses.
[33]Ibid citing Curwen v Yan Yean Land Co Ltd (1891) 17 VLR 745; Bristow v Moffatt-Virtue (Qld) Pty Ltd [1962] Qd R 377; Awaroa Holdings Ltd v Commercial Securities and Finance Ltd [1976] 1 NZLR 19; Krakowski v Eurolynx Properties Pty Ltd & Anor (1995) 130 ALR 1 and Simms v Conlon [2007] 3 All ER 802 (CA).
[34]Ibid citing Robertson and Moffat v Belson [1905] VLR 555; Lochart v Osman [1981] VR 57, 69-70 (King J).
Mr Horesh
Mr Horesh’s evidence suffered because of poor recollection of events. He was heavily dependent on contemporaneous file notes to which he often referred in order to refresh his memory. He had a very limited independent recollection of events or conversations even after endeavouring to refresh his memory. Under cross‑examination he was frequently agitated, unresponsive and obdurate. Mr Horesh was clearly upset about the fact that the name Lyndi and Rodney Adler was displayed on the front of the Hotham Street extension. This may account for his agitation and I make due allowance for this when assessing his credibility as a whole. Overall I found him to be well-intentioned but, by reason of his poor memory, an unreliable witness.
Mr Lelah
Mr Lelah had a good independent recollection of events and conversations. Mostly he was measured and considered. At times he became emotional and on occasions seemed uncomfortable, particularly on the subject of the backdating of the SAV receipt. Occasionally he was glib. Generally, however, I found him to be a persuasive witness. Furthermore, Mr Lelah’s evidence was substantially corroborated by contemporaneous documents.
Mr Jaffe
Mr Jaffe also had a good independent recollection of events and conversations. He remained calm under cross‑examination dealing responsively to each question. I found him to be a very persuasive witness, willing to concede matters where necessary.
There was no sign of any collusion between Mr Lelah and Mr Jaffe. Though parties to the proceedings, they absented themselves from the courtroom when the other was giving evidence. Overall I found them to be believable and reliable both in respect of evidence given on behalf of the SAV and in respect of evidence given on their own account.
Were there any wilful misrepresentations made by the first, second and third defendants?
It is necessary to make some preliminary observations.
First, the particulars of the allegations of wilful misrepresentation in the plaintiff’s statement of claim are noteworthy for their imprecision.[35]
[35]Second Further Amended Statement of Claim.
Secondly, Mr Horesh conceded he has no memory of the precise words used by the SAV’s representatives “on the numerous occasions that the subject was discussed between them but such (w)as the basis generally of their conversations.”[36] Putting aside issues of form, this imprecision bordered on unfairness to the first, second and third defendants because they faced serious allegations of having made wilful misrepresentations which were particularised only in the most general terms.
[36]Second Further Amended Statement of Claim, Schedule A (b).
Mr Horesh gave evidence of numerous conversations and communications that he had had with representatives of the SAV at meetings and by telephone during the period 6 May 2006 to 23 December 2006 and during the period 12 November 2007 to 17 August 2008.[37] It was Mr Horesh’s usual practice to record important matters discussed during meetings in his diary notes. Mr Horesh also made diary notes of telephone conversations. Mr Horesh conceded that he did not have a file note to the effect that the SAV represented that the name Sassoon Yehuda would always appear on the exterior of the building at Hotham Street, including any extension to it. This is apparent from an examination of the contemporaneous diary notes.
[37]Second Further Amended Statement of Claim, Schedule A.
Thirdly, to the extent that the alleged misrepresentations were in writing, Mr Horesh relies on the term in the Settlement Agreement that the synagogue would be named “in perpetuity Sassoon Yehuda Synagogue”.[38] The meaning and effect of the Settlement Agreement has been discussed above. I have already concluded that the Settlement Agreement conferred naming rights only with respect to the original building and did not require the name to be displayed externally.
[38]Second Further Amended Statement of Claim, [16](a) and [25].
Fourthly, Mr Horesh referred to a letter he had received from the SAV, dated 18 June 2006 (which was in similar, but not identical, terms to the letter dated 12 November 2006 sent by the SAV to Mr Peter Sier of State Trustees) offering to Mr Yehuda “first option to the naming rights for the new annex” and “the naming rights for the new Hall”.
Mr Horesh said that the words “hall”, “annex” and “extension” are used interchangeably in the 18 June letter so that the acquisition of naming rights to one of these things would involve the acquisition of naming rights to the others. If the letter is read in isolation from the brochure there is arguably room for some confusion, though not to the extent suggested by Mr Horesh. However the letter was accompanied by the brochure and specifically refers to the naming rights for the hall being sold for $125,000 “(a)s noted in the brochure.” In the brochure there is a clear a distinction made between naming rights for the “Entire extension of the Synagogue” (Item 1 for $450,000) and naming rights for the “Hall including lighting”, (Item 3 for $125,000).
Mr Horesh admitted he received and read the brochure with the 18 June letter and agreed that the naming rights for the extension and for the hall were separate items in the brochure. Mr Horesh said he understood the letter to mean he was “offered the extension for $100,000 and to give them the title” but admitted the letter “doesn’t say that”.
Without being specific as to dates Mr Horesh characterised what was offered to him in respect of naming rights as follows:
WITNESS: Well, basically what is offered is the whole extension for the release of the title... in all our discussion was the extension for the title back.
COUNSEL: You refer to the words, "No other name appearing on the front of the building"?
WITNESS: That's what Mr Lelah said to me and it's in his letter too, well he's claiming that Albert ask - Albert didn't want another name to be on the extension and therefore no other name if Albert buys the naming right to the extension, well there would be only the Yehuda name.
This statement of what Mr Lelah had allegedly said was given by Mr Horesh in his evidence‑in‑chief. It was the high water mark of the oral component of the misrepresentation case. Needless to say it was disputed by Mr Lelah. More specifically, it was not consistent with evidence later given by Mr Horesh under cross‑examination. In particular, Mr Horesh admitted that all discussions after the meeting at the café in December 2007 were:
in relation to the naming of the hall, the Albert Sassoon Yehuda Hall. That – it is correct in the sense I was thinking it – there was – I (indistinct) the hall with extension. Whether it’s true I was correct to do that is irrelevant. I – anyway, I was happy to accept only the hall from it and I was happy for them to sell the other parts of the extension.
I have already found that Mr Lelah and Mr Jaffe had clearly differentiated between naming rights to the “entire extension” and naming rights to the hall at the meeting at the café. Thereafter, in my view, Mr Horesh must have been aware of the difference.
A fifth obstacle for the plaintiff’s wilful misrepresentation case is Mr Horesh’s letter to the SAV dated 26 May 2008. In this letter, Mr Horesh outlined in his own words what had been agreed and setting out the basis upon which the Estate would be making the donation. He said he thought that the MOU was not sufficiently detailed and that he wrote the letter to make it clear.
In doing so, Mr Horesh set out the basis of the agreement in his own words relevantly as follows:
“Hall is to be named after Albert with his photo and video of his life to be displayed at a prominent location at the hall.”
Significantly, Mr Horesh does not say that the extension is to be named after Mr Yehuda. Mr Horesh’s explanation was to the effect that he used the word “hall” when he really meant “extension” and that he had been influenced in doing so by the interchangeable use of the words in the 18 June 2006 letter from the SAV. Not only did the explanation sound unconvincing when it was given, but it fails to take account of the detailed discussions which took place at the meeting at the café in December 2007. I do not accept the explanation.
Sixthly, Mr Horesh received a copy of the minutes of the committee meeting of the SAV held in May 2008 recording the motion which had been passed “that the Sephardi Association goes ahead with the building of the extension and that the Hall be named the ALBERT YEHUDA MEMORIAL HALL” (emphasis added). There was no adverse reaction from Mr Horesh. When it was put to him that he did not complain, Mr Horesh said it did not reflect what he said, but he didn’t think it was worth pursuing. I also found this explanation unconvincing. In my assessment Mr Horesh had a very assertive demeanour. Had the motion not reflected what he had requested, in my view he would have immediately pursued the matter.
Finally, in the Loan Agreement dated 17 August 2008 Mr Horesh acknowledges that “the purpose of the loan is for a new two-storey Building proposed for the present site which will have a new frontage, and contain a hall on the ground floor … “. The SAV acknowledges that Mr Horesh in his capacity as executor of the Estate “wants the ground floor hall to be named ‘Albert Sassoon Yehuda Hall’.” Notwithstanding the Loan Agreement was executed as a deed it is expressed to be “in consideration for the name to the hall”. The Loan Agreement specifically provides that the Estate “has no rights whatsoever over the other areas of the building and frontages and or its naming rights nor signage in these areas”.
It was submitted on behalf of the plaintiff that the reference in the Loan Agreement to the new two-storey building was wilfully misleading because the proposal was for the construction of an extension to the synagogue not for a new building. In my view the submission has no substance. Mr Horesh knew exactly what was intended having previously discussed the matter at length over the preceding months. He also had the opportunity to peruse the floor plans in the brochure which set out precisely what was proposed. On no view could Mr Horesh seriously contend on the evidence that he was misled by this descriptive reference.
Further, it was contended on behalf of the plaintiff that the name of the appeal “The Sassoon Yehuda Synagogue Extension Appeal” and the photograph of the synagogue in the brochure showing the name on its frontage constituted representations that the SAV intended to retain and maintain the name of the extension to the synagogue as the Sassoon Yehuda Synagogue. In my view this contention is also without merit. The description of the appeal accurately reflected the subject-matter of the fundraising and does not constitute a representation with respect to the future naming of the extension. Likewise, in my view the photograph on the rear of the brochure of the synagogue as it then existed does not constitute a representation with respect to the future naming of the extension.
In my opinion the Loan Agreement makes it unambiguously clear that the Estate acquired naming rights only to the hall in the extended portion of the premises and that it had no naming or other rights over any other areas of the building including the frontage.
For all of the above reasons, the plaintiff’s wilful misrepresentation claim cannot succeed. For completeness I mention one further reason. Even if the plaintiff had established that the first, second and third defendants had made false representations, the plaintiff failed to establish that they made the representations knowing they were false or reckless as to whether they were false or not. Both Mr Lelah and Mr Jaffe gave evidence to the effect that they never intended to mislead Mr Horesh. I accept their evidence on this issue unreservedly. They impressed me as astute and moderate individuals who endeavoured to conduct themselves and the affairs of the SAV prudently and with propriety.
Were there any wilful misrepresentations by silence by the first, second and third defendants?
In substance the plaintiff alleged that the SAV and Mr Jaffe and Mr Lelah intentionally failed to inform Mr Horesh that the SAV intended to re-name the extended building the “Lyndi and Rodney Adler Sephardi Centre” in circumstances where they knew or ought to have known that Mr Horesh relied on the representation that the SAV intended to retain and maintain the name of the extended building as the “Sassoon Yehuda Synagogue”.
The general law approach is that between parties dealing at arm’s length a failure by one party to disclose to the other that the transaction is not as the other would believe in the circumstances does not give rise to a representation capable of founding an action in deceit. In an arm’s length transaction in a commercial situation it is recognised that the parties will have conflicting interests.[39] However, an exception exists where the misapprehension is caused by the false utterances of the other party where that party does not take steps to correct the misapprehension before it is relied upon by the other party.[40]
[39]Beach Petroleum v Johnson (1993) 115 ALR 411, 583 (von Doussa J).
[40]Awaroa Holdings Limited v Commercial Securities and Finance Limited [1976] 1 NZLR 19; Jones v Dumbrell [1981] VR 199, 204.
In order for a claim for deceit based on representation by silence to succeed, Mr Horesh must establish that Mr Lelah and Mr Jaffe made the representation alleged against them and that they knew Mr Horesh had relied upon it. As indicated above, mere silence however morally wrong, will not support an action for deceit unless there is a legal or equitable duty to speak and disclose the true facts.[41]
[41]Magill v Magill (2006) 226 CLR 551,[37]-[38] (Gleeson CJ).
The plaintiff failed to make out this allegation.
First, based on reasons given above, the plaintiff failed to establish the premise, namely, that the SAV and Mr Lelah and Mr Jaffe made the representation that the SAV intended to retain and maintain the name of the extended building as the “Sassoon Yehuda Synagogue”.
Secondly, at trial the plaintiff sought to prove that the SAV’s intention must have changed prior to August 2008 when Mr Horesh signed the Loan Agreement at which point the SAV became obliged to name the hall at the extended premises the “Albert Sassoon Yehuda Hall” and the Estate became obliged to pay the $100,000 loan to the SAV subject to the requirement that the building works reached “75% Stage” completion.
The plaintiff did not lead any evidence at trial to contradict the evidence of Mr Lelah and Mr Jaffe to the effect that the possibility of Lyndi and Rodney Adler contributing funds for the extension of the building first arose in January 2009.
In cross‑examination a letter addressed to Mr Rodney Adler dated 28 May 2008 was put to Mr Lelah for an explanation.
Mr Lelah said that the document was an early draft of a letter which was never finished and never sent and that it was created on his computer on 24 February 2009 from a pro forma letter which was dated 28 May 2008. Mr Lelah’s evidence was corroborated by a “screen grab” from his computer which showed the properties of the relevant electronic file and suggested that the document dated 28 May 2008 was created on 24 February 2009 at 12.58pm. I accept Mr Lelah’s evidence on the provenance and timing of creation of the draft letter. Further, the plaintiff did not challenge the details of the “screen grab”.
There was therefore no evidence before me capable of giving rise to an inference that the dealing with the Adler family which led to an agreement to make a donation pre‑dated the Loan Agreement. In the circumstances, Mr Horesh could not have relied to his detriment upon any failure of Mr Lelah and Mr Jaffe disclose the existence of that agreement.
Equitable estoppel
For the reasons previously given, the plaintiff’s claimed equitable estoppel based on unconscionable conduct by the first, second and third defendants has no merit.
Conclusion
In summary I have found that on the proper construction of the Settlement Agreement, the obligation on the SAV “to cause the new synagogue when established … to be named in perpetuity “The Sassoon Yehuda Synagogue”” attaches only to the new synagogue building originally constructed at 79 Hotham St, East St Kilda in 1994 and not to the extension subsequently constructed in about 2008.
Further I have found that the Settlement Agreement does not prescribe where the name should be located on the “new synagogue when established”. In particular, it does not require the name to be displayed externally. The current signage affixed as it is in a prominent position internally complies with the naming obligation in the Settlement Agreement.
Further I have found that the MOU foreshadows but does not confer any naming rights and that the naming rights subsequently agreed upon in the Loan Agreement apply only to the hall on the ground floor of the extension and expressly exclude any naming or signage rights to the frontage of the extension.
At trial, the SAV maintained, in my view correctly, that it had, at all relevant times, complied with the known wishes of Mr Yehuda. First, it had endeavoured to comply with its legal obligation to maintain in perpetuity the name of the synagogue as the “Sassoon Yehuda Synagogue”. Secondly, it had endeavoured to fulfil its perceived moral obligation by offering Mr Yehuda the first right of refusal to the naming rights to the extension, an offer which the State Trustees, while it was the administrator of Mr Yehuda’s affairs, and Mr Horesh, after Mr Yehuda’s death, saw fit to decline.
Further in my view the Estate received precisely what it had bargained for; the naming rights to the hall. It was not induced to forgive the 1990 loan and to enter into the MOU or the Loan Agreement by any misrepresentations. In the circumstances and for the reasons given above the plaintiff’s claim will be dismissed.
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