JJES Pty Ltd v Sayan - [2014] NSWSC 541

Supreme Court

New South Wales

Medium Neutral Citation: JJES Pty Ltd v Sayan [2014] NSWSC 541
Hearing dates: 11 - 13 June 2013
Decision date: 08 May 2014
Jurisdiction: Common Law
Before: Campbell J
Decision:
(1)Judgment for the defendant;
(2)The plaintiff to pay the defendant's costs of and incidental to the proceedings on the ordinary basis forthwith after they have been agreed or assessed.

Catchwords: TORTS - negligence - professional negligence - solicitor - transactional work - whether failure to advise on obvious financial implications - purchase of franchise
Legislation Cited: Civil Liability Act 2002 (NSW)
Cases Cited: Fink v Fink (1946) 74 CLR 127
Grant v Sun Shipping Co Ltd [1948] AC 549
Provident Capital Ltd v Papa [2013] NSWCA 36
State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536
Category: Principal judgment
Parties: JJES Pty Ltd (plaintiff)
Hakki Sayan (defendant)
Representation: Counsel: J Jobson (plaintiff)
D Priestley (defendant)
Solicitors: Pserras Lawyers (plaintiff)
DLA Piper (defendant)

File Number(s): 2011/125034

Judgment

The plaintiff company, which I will refer to as JJES was incorporated by Mrs Emily Navaei to conduct a small business. Mr Sayan is a solicitor in sole practice at Auburn.

Mrs Navaei retained Mr Sayan to act on behalf of JJES on the purchase of a 7-Eleven franchise at Burwood Heights.

Legal arrangements for purchase of the business

The purchase of the business was effected by two separate agreements. The first was an agreement for the sale of business made on 19th March 2007 between the outgoing franchisee of the Burwood Heights store and JJES. The purchase price was expressed as "for a total goodwill of $206,000" and a deposit of $20,600 was required. The deposit had been paid on 9th March 2007, ten days before the agreement was signed. And, I interpolate, before Mrs Navaei first consulted Mr Sayan.

The sale was expressed to be subject to the following material conditions (Clause 3):

(a) The approval by 7-Eleven of the purchaser as a satisfactory and suitable candidate to conduct the business as a franchisee;

(b) Payment by the purchaser to 7-Eleven an initial franchise establishment fee of $84,920;

(d) Payment to 7-Eleven by the purchaser of $5,500 (including GST) by way of an application fee (the plaintiff said this was categorised as a training fee).

The second agreement is styled "Store Agreement" between JJES Pty Ltd and 7-Eleven stores Pty Ltd, by which the latter granted a franchise to the former. It was executed on 30th March 2007. A number of the terms of this agreement are of particular relevance and need to be set out in full. In these terms JJES is referred to as the franchisee. The material terms are as follows:

Article 2: Licence

(a) 7-Eleven hereby confers upon the FRANCHISEE leave and licence to enter upon, be in and use the Licensed Premises and (subject to the reservation in sub-article 2 (j)) to use Licence Equipment in conjunction therewith, solely for the purpose of operating…

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: [2014] NSWSC 541
Decision Date: 08 May 2014

CaseChat Overview and Summary

In the matter of JJES Pty Ltd v Sayan, the court heard a claim of professional negligence against a solicitor who had provided transactional services in relation to the purchase of a franchise. The plaintiff alleged that the solicitor had failed to advise on the obvious financial implications of the transaction, leading to significant losses. The Federal Court of Australia was tasked with determining whether the solicitor's conduct fell below the standard of care expected of a reasonably competent professional in the field. The central issue was whether the solicitor had a duty to provide financial advice, and if so, whether the failure to do so constituted negligence.

The court examined the relationship between the plaintiff and the solicitor, the nature of the transactional work performed, and the expectations of both parties. It was determined that the solicitor's role was limited to providing legal advice on the transaction, without any obligation to offer financial counsel. The court held that the solicitor's failure to advise on the financial implications did not constitute negligence, as it was not within the scope of the services provided. The court concluded that the solicitor had fulfilled their professional obligations by ensuring that the transaction was legally sound, and that the absence of financial advice did not breach any duty of care owed to the plaintiff.

As a result of the court's reasoning, the plaintiff's claim for professional negligence was dismissed. The court found that the solicitor had acted within the bounds of professional competence and had not breached any duty of care owed to the plaintiff. The defendant was therefore not liable for the losses incurred by the plaintiff as a result of the transaction. The court ordered the plaintiff to pay the defendant's costs of the proceeding.

Orders