Jewelsnloo Pty Ltd v Sengos - [2016] NSWCA 309

Court of Appeal

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Jewelsnloo Pty Ltd v Sengos [2016] NSWCA 309
Hearing dates: 18 October 2016
Decision date: 16 November 2016
Before: Beazley ACJ at [1];
Macfarlan JA at [2];
Payne JA at [94]
Decision:
Appeal dismissed with costs.

Catchwords:
TRADE AND COMMERCE – contract for sale of business – whether purchaser relied on vendor’s representations concerning the business’ sales figures – bargain struck on basis that price discounted in return for purchaser’s non-reliance on representations
TRADE AND COMMERCE – contract for sale of business – whether representations by silence that earlier owner of the business did not intend to compete with it – any expectation that that intention would be disclosed not reasonable
Legislation Cited: Australian Consumer Law (Sch 2, Competition and Consumer Act 2010 (Cth))
Cases Cited: Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60
Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359; [2008] NSWCA 95
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Hungerfords v Walker (1989) 171 CLR 125
Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31
Sanrod v Dainford (1984) 54 ALR 179
Category: Principal judgment
Parties: Jewelsnloo Pty Ltd (Appellant)
Paul Sengos (First Respondent)
Stan Kotsiopoulos (Second Respondent)
Kalyopy Kotsiopoulos (Third Respondent)
Wholesale National Pty Ltd (Fourth Respondent)
Associated Products Pty Ltd (Fifth Respondent)
Representation:
Counsel:
P A Beale/E Chrysostomou (Appellant)
J F Hassett (First, Fourth and Fifth Respondents)
M Green SC/D M Jay (Second and Third Respondents)
Solicitors:
McGrath Dicembre & Co (Appellant)
Hassett Lee & Co Lawyers (First, Fourth and Fifth Respondents)
Adams & Partners (Second and Third Respondents)

File Number(s): CA 2016/72134
Decision under appeal

Court or tribunal:

Supreme Court

Jurisdiction:

Equity

Citation:

[2016] NSWSC 61

Date of Decision:

12 February 2016

Before:

Robb J

File Number(s):

SC 2012/395520

HEADNOTE

[This headnote is not to be read as part of the judgment]

On 27 January 2012 the second respondent, Mr Stan Kotsiopoulos, purchased a business from a company effectively owned by the first respondent, Mr Paul Sengos, for the price of $300,000. The business was named “Amazing Water” and undertook the sale of water coolers, filters and benchtop filters through the internet. Later in the year Mr Kotsiopoulos sold the business for the price of $200,000 to the appellant (“Jewelsnloo”), a company effectively owned by Mr Julian Facer. Exchange of contracts occurred on 18 October and settlement on 26 October 2012.

In Supreme Court proceedings for orders declaring the 18 October 2012 contract void and for damages under the Australian Consumer Law (Sch 2, Competition and Consumer Act 2010 (Cth)), Jewelsnloo alleged, first, that Mr Kotsiopoulos and his wife, the third respondent, had engaged in misleading and deceptive conduct by representing to it…

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.

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Details

Case: [2016] NSWCA 309
Decision Date: 16 November 2016

CaseChat Overview and Summary

Jewelsnloo Pty Ltd (the purchaser) appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning a contract for the sale of a business. The dispute centred on whether the purchaser had relied on representations made by the vendor, Sengos, regarding the business's sales figures, and whether there had been a misrepresentation by silence regarding the previous owner's intention to compete.

The Court of Appeal was required to determine two primary legal issues. Firstly, whether the purchaser had relied on the vendor's representations concerning the business's sales figures, particularly in light of a clause in the contract stating the purchaser did not rely on such representations and that the bargain was struck on the basis of a discounted price in return for this non-reliance. Secondly, the Court had to consider whether the vendor had made any misrepresentation by silence, specifically concerning the previous owner's intention not to compete with the business, and whether any expectation of disclosure of such an intention was reasonable.

The Court of Appeal upheld the primary judge's findings. It reasoned that the express contractual term, which stipulated that the purchaser did not rely on the vendor's representations and that the price was discounted accordingly, was effective. This clause precluded the purchaser from later claiming reliance on those representations. Regarding the alleged misrepresentation by silence, the Court found that there was no reasonable expectation that the vendor would disclose the previous owner's intention not to compete. Therefore, no misrepresentation by silence occurred.

The appeal was dismissed, and the purchaser was ordered to pay the costs of the appeal.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Medium Neutral Citation:	Jewelsnloo Pty Ltd v Sengos [2016] NSWCA 309
Hearing dates:	18 October 2016
Decision date:	16 November 2016
Before:	Beazley ACJ at [1]; Macfarlan JA at [2]; Payne JA at [94]
Decision:	Appeal dismissed with costs.
Catchwords:	TRADE AND COMMERCE – contract for sale of business – whether purchaser relied on vendor’s representations concerning the business’ sales figures – bargain struck on basis that price discounted in return for purchaser’s non-reliance on representations TRADE AND COMMERCE – contract for sale of business – whether representations by silence that earlier owner of the business did not intend to compete with it – any expectation that that intention would be disclosed not reasonable
Legislation Cited:	Australian Consumer Law (Sch 2, Competition and Consumer Act 2010 (Cth))
Cases Cited:	Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359; [2008] NSWCA 95 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Hungerfords v Walker (1989) 171 CLR 125 Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 Sanrod v Dainford (1984) 54 ALR 179
Category:	Principal judgment
Parties:	Jewelsnloo Pty Ltd (Appellant) Paul Sengos (First Respondent) Stan Kotsiopoulos (Second Respondent) Kalyopy Kotsiopoulos (Third Respondent) Wholesale National Pty Ltd (Fourth Respondent) Associated Products Pty Ltd (Fifth Respondent)
Representation:	Counsel: P A Beale/E Chrysostomou (Appellant) J F Hassett (First, Fourth and Fifth Respondents) M Green SC/D M Jay (Second and Third Respondents) Solicitors: McGrath Dicembre & Co (Appellant) Hassett Lee & Co Lawyers (First, Fourth and Fifth Respondents) Adams & Partners (Second and Third Respondents)
File Number(s):	CA 2016/72134
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Equity Citation: [2016] NSWSC 61 Date of Decision: 12 February 2016 Before: Robb J File Number(s): SC 2012/395520