Husseini v Girchow Enterprises Pty Ltd

The appeal, Husseini v Girchow Enterprises Pty Ltd, before the court concerned the liability of Samer Husseini, Ultimate Franchising Group Pty Ltd (UFG) and Mazen Hagemrad for misleading and deceptive conduct under s 18 of the Australian Consumer Law (ACL), and the characterisation of conduct in context, particularly with regard to the Franchising Code of Conduct disclosure document. The central dispute involved whether the misleading representations made in the disclosure document led the respondents, the Balcatta parties, to enter into franchise agreements and guarantees, and if so, whether they were entitled to damages under s 236 of the ACL. The primary judge had found Husseini, Hagemrad, and UFG liable for misleading conduct and ordered compensation to the respondents.

The court was required to decide whether the primary judge correctly identified and applied the legal principles governing misleading and deceptive conduct and causation. The appeal raised questions about the characterisation of the conduct in the context of the disclosure document, the effect of disclaimers and qualifications in the document, and whether the representations were objectively misleading or deceptive or likely to mislead or deceive the respondents. Additionally, the court had to assess whether the respondents were subjectively misled or induced to enter into the transactions and whether there was sufficient evidence to support the primary judge's findings of reliance and causation.

The court found that the primary judge did not err in applying the legal principles, but there were issues with the application in certain respects. The court respected the primary judge's conclusions but was not bound by them and undertook its own review. The court examined the evidence and found that the primary judge's conclusions about reliance were not based on the lack of credibility of the witnesses but on cross-examination evidence, contemporaneous documents, and inferences from established facts. The court concluded that the representations in the disclosure document were misleading and that the respondents were induced to enter into the franchise agreements and guarantees based on those representations.

The court allowed the appeal, varied the orders to reflect the correct compensation amounts, dismissed the claims against certain respondents, and ordered the respondents to pay the appellant's costs of the appeal. The court reserved the issue of the parties' costs in the proceeding below and directed the parties to file competing minutes of proposed orders with written submissions.