Navabi v Ghasemi - [2019] WADC 1

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   NAVABI -v- GHASEMI [2019] WADC 1
CORAM:   QUAIL DCJ
HEARD:   12-16 & 22-23 NOVEMBER 2018
DELIVERED          :   17 JANUARY 2019
FILE NO/S:   CIV 193 of 2017
BETWEEN:   MOHSEN NAVABI
Plaintiff
AND
ASADULLA GHASEMI
Defendant

Catchwords:

Contract - Consideration - Misleading or deceptive conduct - Unconscionability - Damages - Plaintiff bought share in company

Legislation:

Australian Securities and Investment Commission Act 2001 (Cth)
Competition and Consumer Act 2010 (Cth)
Evidence Act 1906 (WA), s 79B, s 79C(2a)
Fair Trading Act 2010 (WA)
Property Law Act 1969 (WA)
Surveillance Devices Act 1988 (WA)
Trade Practices Act 1974 (Cth)

Result:

Judgment for the plaintiff
Damages awarded

Representation:

Counsel:

Plaintiff	:	Ms P A Martino
Defendant	:	In person

Solicitors:

Plaintiff	:	P A Martino
Defendant	:	Not applicable

Case(s) referred to in decision(s):

3Meg.com Pty Ltd v TM & SM Pike Pty Ltd [2012] WASCA 128
Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112
Australia and New Zealand Banking Group Limited v Westpac Banking Group [1988] HCA 17; (1988) 164 CLR 662
Australian Competition and Consumer Commission v Telstra Corporation Ltd [2007] FCA 1904; (2007) 244 ALR 470
Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98
Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344
Barker v The Queen (1994) 54 FCR 451
Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362
Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457; 158 ALR 66
Bunning v Cross [1978] HCA 22; (1978) 141 CLR 54
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Bwllfa & Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426
Campbell v Backoffice Investments Pty Ltd [2009] HCA 25
Clifford v Vegas Enterprises Pty Ltd [2011] FCAFC 135
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447
Commonwealth v Amman Aviation Pty Ltd [1991] HCA 54
Como Investments Pty Ltd v Yenald Nominees Pty Ltd [1997] ATPR 41‑550, 43,619
CPI Group Ltd v Stora Enso Australia Pty Ltd [2007] FCAFC 160
Deane and Westham Holdings Pty Ltd v Lloyd (1991) 3 WAR 235
Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471
Ellul v Oakes (1972) 3 SASR 377
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
Forrest v Australian Securities and Investments Commission [2012] HCA 39 [33]; (2012) 291 ALR 399
Franich v Swannell (1993) 10 WAR 459
Georgiou Building Pty Ltd v Perrinepod Pty Ltd [2012] WASC 72 (S)
Global Sportsman Pty Ltd v Mirror Newspapers Limited (1984) 2 FCR 82
Googe v Spoljaric [2017] WADC 99
Grainger v Williams [2009] WASCA 60
Hanave Pty Ltd v LFOT Pty Ltd [1999] FCA 357; (1999) 43 IPR
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109
Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351
Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313
Kizbeau Pty Ltd v WG & B Pty Ltd [1995] HCA 4 ; (1995) 184 CLR 281
Lord Buddha Pty Ltd (in liq) v Harpur [2013] VSCA 101
Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621
Luna Park (NSW) Limited v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286
Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494
McKay v Commissioner of Main Roads [No 7] [2011] WASC 223
Miller v Miller [1978] HCA 44; (1978) 141 CLR 269
Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388
MWH Australia Pty Ltd v Wynton Stone Pty Ltd [2010] VSCA 245
National Exchange Pty Ltd v Australian Securities & Investments Commission [2004] FCAFC 90; (2004) 49 ACSR 369
NEA Pty Ltd v Magenta Mining Pty Ltd[2007] WASCA 70
Owston Nominees (No 2) Pty Ltd v Clambake Pty Ltd [2011] WASCA 76
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221
Poort v Development Underwriting (Victoria) Pty Ltd (No 2) [1977] VR 454
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179
Re Surveillance Devices Act 1998 Ex parte TCN Channel 9 Pty Ltd [1999] WASC 246
Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd [1968] HCA 64; (1968) 120 CLR 516
Ricochet Pty Ltd v Equity Trustees Executors & Agency Co Ltd (1993) 41 FCR 229
Seafolly Pty Ltd v Madden [2012] FCA 1346; (2012) 297 ALR 337
Sharp v Ramage (1995) 12 WAR 325
Soia v Bennett [No 4] [2012] WASC 292
Sutton v AJ Thompson Pty Ltd (in liq) (1987) 73 ALR 233
Tabcorp Holdings Limited v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272
Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1
Townsend v Roussety & Co (WA) Pty Ltd [2007] WASCA 40; (2007) 33 WAR 321
Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632
Travel Compensation Fund v Tambree [2005] HCA 69; (2005) 224 CLR 627
Trevilyan v Donaldson [1997] SASC 6502
Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21; (2015) 47 WAR 547
Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514
Wendt v Yogesh Jogia Diamonds Pty Ltd (1993) 11 WAR 455

QUAIL DCJ:

Introduction

The plaintiff, Mr Navabi, arrived as a migrant to Australia from Iran in 2014. The defendant, Mr Ghasemi, was born in Afghanistan and came to Australia as a refugee from either Iran or Afghanistan in 2000. In April of 2016 Mr Ghasemi was the sole director and shareholder in Pashi Start Pty Ltd (the company), a company whose sole asset was the business 'Bentley Fresh' (the business), a delicatessen which specialised in Middle-eastern, Asian and African groceries and goods. Sometime during that month he sold a 48% share in the company to Mr Navabi.
Mr Navabi claims there was a complete failure of consideration in respect of the sale agreement, that he acted in reliance on the misleading or deceptive conduct of Mr Ghasemi in purchasing the share, that Mr Ghasemi acted unconscionably in respect of the sale agreement and also that Mr Ghasemi deceived him.
These reasons are organised to reflect the major issues as follows:
1.Is the audio recording of the conversation at the Chinese restaurant on 11 April 2016 admissible?
2.Findings of fact.
3.What was the legally enforceable agreement for sale of the shareholding in the company?
4.What representations did Mr Ghasemi make to Mr Navabi?
5.Were Mr Ghasemi's representations misleading or deceptive?
6.Did Mr Navabi rely on Mr Ghasemi's representations and did he fail to protect his own interests?
7.Was Mr Navabi in a position of vulnerability in his dealings with Mr Ghasemi?
8.Was there a failure of consideration for the oral agreement of 11 April 2016?
9.Was the oral agreement of 11 April 2016 breached?
10.Is the share sale agreement of 26 April 2016 enforceable?
11.Is the loan agreement of 26 April 2016 enforceable?
12.Did Mr Ghasemi intentionally deceive Mr Navabi about the value of the shareholding?
13.Damages.
In determining these issues I am satisfied of all of my findings on the balance of probabilities.
I have also had regard to the fact that Mr Ghasemi appeared in person, whilst Mr Navabi was represented. There are some well‑established general principles providing guidance on the level of flexibility and assistance which is to be provided to a litigant in person. They were helpfully summarised by Gething DCJ in Googe v Spoljaric.[1] His Honour said:
A litigant in person is entitled to some leniency in relation to compliance with the court rules: Glew v Frank Jasper Pty Ltd [2010] WASCA 87 [10] (Judgment of the Court). The court should approach the documents in which a litigant in person articulates their claim with some flexibility: Wentworth v Rogers [No 5] (1986) 6 NSWLR 534, 536 - 537 (Kirby P), 543 (Hope & Samuels JJA agreeing); Smart v Prisoner Review Board (WA) [2012] WASC 48 [10] (Pritchard J).
…
A court ought to assist a litigant in person to the extent consistent with the interests of justice. What the court ought to do will depend upon the nature of the case and the litigant's capacity to understand the issues in the case: Van Der Feltz v Legal Practice Board of Western Australia [2017] WASCA 113, [15] – [16] (Reasons of the Court); Konings v Commonwealth Bank of Australia [2016] WASCA 122 [12] (Reasons of the Court); Tobin [14]. The advice and assistance which a litigant in person ought to receive from the court should be limited to that which is necessary to diminish, so far as this is possible, the disadvantage which that litigant will ordinarily suffer when faced by a lawyer, and to prevent destruction from the traps which the adversarial procedure offers to the unwary and untutored: Van Der Feltz [15] – [16]; Konings [12]; Tobin [14].
The court must not intervene to such an extent that a position of neutrality cannot be maintained or a litigant in person is given a positive advantage over another party: Konings [12]. The court also needs to ensure that any latitude given to a litigant in person does not deprive the other party of its rights to procedural fairness and a fair hearing: Moleirinho v Talbot & Olivier Lawyers Pty Ltd [2014] WASCA 65 [51]; (Judgment of the Court); MTI v SUL [No 2] [2010] WASCA 58 [42] ‑ [43]; (Newnes JA, with whom Pullin & Buss JJA agreed); Glew [10].
[1] Googe v Spoljaric [2017] WADC 99 [13] – [15].
These principles governed the manner in which I conducted the trial and have decided the issues in dispute. It became apparent to me during the course of the trial that despite not being represented, Mr Ghasemi was an intelligent litigant and well capable of conducting his defence, putting his version of events to witnesses and calling evidence which might have assisted him.

Is the audio recording of the conversation at the Chinese restaurant on 11 April 2016 admissible?

There is a preliminary issue to be decided concerning the admissibility of evidence. I considered it was not necessary to determine on a voir dire at trial.
Mr Navabi says that on 11 April 2016 he, together with his son Hadi Navabi, met Mr Ghasemi at a Chinese restaurant at the Bentley Forum Shopping Centre. Mr Navabi provided a cheque in the amount of $140,000 to Mr Ghasemi at the meeting. Hadi Navabi recorded all or most of the conversation between the three men on his iPhone. He did so secretly and without the knowledge of Mr Navabi and Mr Ghasemi. I will refer to this recording as the restaurant recording and the meeting as the restaurant meeting throughout these reasons.
Mr Navabi now seeks to rely on the restaurant recording as real evidence of what was said between the people present and maintains it is admissible because it was lawfully recorded. Alternatively, he submits that if the evidence was unlawfully obtained I should nonetheless exercise my discretion to admit the recording.
Mr Ghasemi initially submitted the restaurant recording was illegally made without his permission and is inadmissible for that reason. In his evidence his position was that he did not recognise his voice and he doubted the authenticity of the recording.[2] In his closing submissions Mr Ghasemi advanced a third argument that the recording had been edited to remove the portions favourable to him. He finally submitted that he maintained all three positions.[3]
[2] ts 539.
[3] ts 541.
I will deal with Mr Ghasemi's second and third arguments first. I accept Mr Navabi and Hadi Navabi's evidence that Mr Ghasemi was the person they spoke to in the restaurant meeting and recording. That it was him is also obvious from the recording. At a point where Mr Navabi asks who the cheque should be addressed to, the other speaker spells his name as A-S-A-D-U-L-L-A G-H-A-S-E-M-I. The content of the conversation, being about the sale of part of a business to Mr Navabi could only be about the company and the only person who could and did sell part of the company was Mr Ghasemi. Although I need to be wary of voice identification I am confident, based on having listened to Mr Ghasemi's voice over the course of seven days in trial, that it is his voice in the recording. I also reject his evidence that he could not recognise his voice when portions of the recording were played to him during cross examination.[4]
[4] ts 478.
I also reject Mr Ghasemi's claim that the recording has been 'cut and pasted'. It is probable that the recording did not commence at the very beginning of the conversation but there is no evidence of any editing either in the audio or the interpretation once it commenced. The conversation flows logically and the recording ends with the parties leaving the restaurant.
I turn then to consider the issue of illegality.
Section 5(1)(b) of the Surveillance Devices Act 1998 (WA) provides that a person shall not use a listening device to record a private conversation to which that person is a party. The relevant exceptions to that are:
(1)Where a principal party to the private conversation consents to the recording and the usage is reasonably necessary for the protection of the lawful interests of the principal party;[5] and
(2)The use of the listening device is in the public interest.[6]
[5] Surveillance Devices Act 1998 (WA) s 5(3)(d).
[6] Surveillance Devices Act 1998 (WA) Part 5.
I will deal firstly with whether the conversation was a private conversation. Mr Ghasemi submits that it was whereas Mr Navabi says it was not.
Section 3 of the Surveillance Devices Act defines a private conversation to be:
Any conversation carried on in circumstances that may reasonably be taken to indicate that any of the parties to the conversation desires it to be listened to only by themselves, but does not include a conversation carried on in any circumstances in which the parties to the conversation ought reasonably expect that the conversation may be overheard.
In determining whether a conversation is private I need to consider the subjective intention of the parties and also undertake an objective assessment, looking to the circumstances as a whole including the location and environment in which the recording took place.[7]
[7] Re Surveillance Devices Act 1998 Ex parte TCN Channel 9 Pty Ltd [1999] WASC 246 [12] - [20].
I have no doubt that all of the parties to this conversation intended it to be a private conversation. It was a conversation about the sale of a business which on both Mr Navabi and Mr Ghasemi's case was something which to that point had been private between them. Mr Navabi himself says that Mr Ghasemi repeatedly told him not to tell anyone about the sale of the business as he (Mr Ghasemi) had kept it secret from his own brother.[8]
[8] ts 47.
Objectively, the conversation occurred in a public place but the parties spoke in Farsi and would not have anticipated that anybody in the immediate vicinity would have been able to understand the conversation. The conversation was also about the purchase of a small private business and payment for it. In ordinary commerce such discussions and negotiations are generally private and even confidential.
I am satisfied that both objectively and subjectively the restaurant recording was of a private conversation between Mr Navabi, Mr Ghasemi and Hadi Navabi. I turn then to consider the exceptions.
Hadi Navabi was a principal party to the conversation, participated in it and consented to the use of the recording device. He committed no offence if that recording was reasonably necessary for the protection of his lawful interests. In determining whether he had such lawful interests I adopt the five propositions identified by Allanson J in his analysis of s 5(3)(d) of the Surveillance Devices Act in Georgiou Building Pty Ltd v Perrinepod Pty Ltd [9] as follows:
1.The term 'necessary' is capable of a wide range of meanings. There is, in Australia, 'a long history of judicial and legislative use of the term "necessary", not as meaning essential or indispensable but as meaning reasonably appropriate and adapted': Mulholland v Australian Electoral Commission [2004] HCA 41; (2004) 220 CLR 181 [39]; but compare Lithgow City Council v Jackson [2011] HCA 36; (2011) 281 ALR 223 [50] – [54]. In the context of s 5, particularly qualified by the word 'reasonably', it should be construed as meaning appropriate, but not essential or unavoidable: Sepulveda v The Queen [2006] NSWCCA 379 [116] - [118]. (Section 5 is in similar but not identical terms to the provisions of the New South Wales Act. Despite the differences, the New South Wales authorities are helpful in the understanding of s 5).
2.The word 'reasonably' imports an objective test: Sepulveda [118]; Marsden v Amalgamated Television Services Pty Ltd [2000] NSWSC 465 [14]; Violi v Berrivale Orchards Ltd [2000] FCA 797; (2000) 99 FCR 580.
3.Whether the use of the device is reasonably necessary is to be judged on the circumstances that existed at the time of the use: Marsden v Amalgamated Television Services [17] - [18], [23]; Amalgamated Television Services Pty Ltd v Marsden [2000] NSWCA 167 [20] - [22]; Violi [23]; See v Hardman [2002] NSWSC 234 [17].
4.The ordinary meaning of 'protection' as shelter, defence or preservation from harm, danger, or evil is apt in the context of s 5: Sepulveda [120].
5.Lawful interests may be distinguished from 'legal interests'. Section 5(3)(c) does not require a legal interest in the sense of a legal right, duty or liability: Violi [28]. A recording made where a serious dispute has erupted and there will be a dispute as to different versions of an arrangement may give rise to a lawful interest: Chao v Chao [2008] NSWSC 584. Generally, a finding depends on the circumstances of the particular case: Sepulveda [125].
[9] Georgiou Building Pty Ltd v Perrinepod Pty Ltd [2012] WASC 72 (S) [16].
In his evidence, which I accept, Hadi Navabi said the reason he recorded the conversation without telling his father and Mr Ghasemi was 'in case of something goes wrong'.[10] I am satisfied what Hadi Navabi meant by that is, before the meeting he was aware of his father's intention to purchase a share in a company or business from Mr Ghasemi, that having been discussed by the family.[11] He had attended with his father at the bank to withdraw $50,000 cash, which was a significant sum, and knew that was to be given to Mr Ghasemi at the restaurant meeting.
[10] ts 355.
[11] ts 49, 338.
I am satisfied that Mr Navabi's purchase of the company was not only for his personal benefit but for the benefit of his family, including Hadi Navabi. The family had migrated from Iran and Mr Navabi was using all of the funds that were available to him to set the family up in Australia. Indeed, he was investing in a business instead of purchasing a family home. Further, as Mr Navabi said in the restaurant recording in the context of receipting the money paid to Mr Ghasemi, 'Asadulla (referring to Mr Ghasemi), I believe in you and trust you. But some day, we told each other that we do it for our children. I do not know how much I live, nobody knows'.[12]
[12] Exhibit P12.2 page 9.
I am satisfied that Hadi Navabi had a lawful interest that he objectively needed to protect in recording the restaurant conversation. The payment to Mr Ghasemi represented the transfer of a significant sum of his family's wealth in circumstances where, both he and his father knew, the payment was occurring in advance of settlement of shares in the company, without any written agreement and on the basis of his father's obvious trust in Mr Ghasemi. Protection of his lawful interest also included recording the payment of cash money which might otherwise be difficult to prove had occurred.

As it transpired, Hadi Navabi was properly concerned to protect his interests by making the recording as something did subsequently go 'wrong'. A serious dispute has now erupted between Mr Navabi and Mr Ghasemi about whether Mr Ghasemi was even present at the restaurant, what was said between them and whether Mr Ghasemi was paid cash.
I am satisfied that the restaurant recording falls within the exception under s 5(3)(c) of the Surveillance Devices Act. The Act was not contravened and the recording is admissible as real evidence in the trial and the best evidence of what was said by the parties in the restaurant conversation.
In light of my conclusion, I do not propose to consider the public interest exception in any detail. Mr Navabi submits that because the conversation related in part to cash payments for the exchange of an asset, thus potentially raising issues concerning liability for capital gains tax, there was a public interest in the recording being made. The integrity of the tax system and recording of large cash payments is very much in the public interest but that is not why the recording was made. Mr Navabi was quite happy to go along with Mr Ghasemi's request to be paid for the company share partly in cash. Mr Navabi in fact believed (wrongly) that cash payment would reduce his own tax liability. Mr Navabi would not have consented to the recording being made if he had known about it. Whilst the public interest exception may well apply to make the recording admissible in other proceedings, it is somewhat disingenuous of Mr Navabi to rely on it in these and I would not admit the restaurant recording under this exception.
If I am wrong in my conclusion that the restaurant recording was reasonably necessary for the protection of Hadi Navabi's lawful interests, then it was illegal. The question would then arise whether it would nonetheless be admissible.
Improperly or illegally obtained evidence is admissible but there is a discretion to exclude it in both criminal and civil trials.[13] The discretion will be exercised having regard to all the circumstances, including the public interest, the circumstances in which the evidence was obtained and the potential prejudice to any party if the evidence is admitted or rejected.
[13] Miller v Miller [1978] HCA 44; (1978) 141 CLR 269, 277; Bunning v Cross [1978] HCA 22; (1978) 141 CLR 54.
The restaurant recording is the best evidence of what occurred at the restaurant meeting and, notwithstanding that both Mr Navabi and Hadi Navabi gave evidence about their recollection of the conversation, the recording is vital because Mr Ghasemi claimed under cross‑examination that he did not specifically recall being there, he did not receive any cash, did not write out any receipts and did not make any of the verbal statements which Mr Navabi and Hadi Navabi said that he did during the conversation. Given that dispute, the best evidence of what occurred ought to be admitted. Further, neither Hadi Navabi nor Mr Navabi had any role in enforcing the Surveillance Devices Act and illegality by either of them would not generally attract the discretion to exclude the evidence.[14]
[14] Georgiou Building Pty Ltd v Perrinepod Pty Ltd [24], Barker v The Queen (1994) 54 FCR 451.
Even if the restaurant recording was obtained in contravention of Surveillance Devices Act 1998 (WA), I would exercise my discretion to admit the evidence of it as the real and best evidence of what occurred at the restaurant meeting.
The restaurant recording will become exhibit P12.4 in the trial.

The interpretation and translation of the recording

Mr Afshar is a NAATI certified professional translator and a para professional interpreter (level 2) between Farsi and English. Mr Afshar prepared the written translation of the restaurant recording which he listened to and interpreted into English.[15] He was called by Mr Navabi to give evidence about the interpreting and translation.
[15] Exhibit P12.1-12.3.
I have some reservations about Mr Afshar's methodology and independence, as at the time of his translation he had available to him a written Farsi transcription of the restaurant recording which had been provided to him by Mr Navabi. Mr Afshar did say that he checked the Farsi transcription while listening to the recording and it was accurate.[16]
[16] ts 255.
Ultimately though, the only issue regarding the accuracy of the interpreting and translation of the restaurant recording was in relation to five words that Mr Ghasemi said were interpreted incorrectly. In cross‑examination Mr Afshar accepted that those five words could be interpreted differently and accordingly I have amended the exhibit of the translation to reflect those changes.[17]
[17] Exhibit P12.1.

Findings of fact

Agreed facts

Arising from the pleadings there are a number of relevant agreed facts between the parties. They are that on 24 June 2013 Mr Ghasemi became the sole director and shareholder in the company. The company purchased the business on or about 15 August 2013 which at all relevant times operated at shop 49 and 49A of the Bentley Shopping Centre (the premises).
Mr Navabi and Mr Ghasemi agree that on 26 April 2016 they signed a share sale agreement relating to the sale of 48% of the shares of the company from Mr Ghasemi to Mr Navabi. The purpose and effect of the share sale agreement is very much in dispute. The parties both maintain that whatever the effect of the agreement it was not a deed.
Mr Navabi attended the business on a number of occasions before April of 2016, although the frequency and purpose of his visits is disputed.
On 11 April 2016 Mr Ghasemi received a cheque from Mr Navabi in the amount of $140,000 which was subsequently presented.[18]
[18] Despite his pleading, in his evidence Mr Ghasemi said he was unsure of the exact date he received the cheque (ts 405). I do not accept that evidence.
Mr Navabi subsequently received a 48% shareholding in the company.

Observations of the witnesses and background

Plaintiff witnesses

Mr Navabi

Mr Navabi is 53 years old and speaks, reads and writes in Farsi his native language and the official language of Iran. He learnt English in Iran and studied at a polytechnic university where he did a two year degree in aerospace engineering. He worked in Iran as an aircraft engineer for Iran Air for approximately 25 years and migrated to Australia with his family in 2013. On arrival in Perth Mr Navabi commenced work with Qantas Link but lost that employment because of his limited English.
Mr Navabi speaks broken English and in giving his evidence required the assistance of an interpreter to interpret unfamiliar and complex words and phrases that he did not understand. He could read in English with difficulty and greater assistance from the interpreter. He cannot write in English. Mr Navabi is also an intelligent man and during his evidence was able to do various business calculations quickly without resorting to a calculator.
At the commencement of his evidence Mr Navabi was slightly nervous but settled quickly. He was considered in the answers that he gave. He spoke quickly at times and when recalling particular events was firm in his recollection. At times he was slightly emotional and excitable. By the end of his evidence he was confident and relaxed.
Most impressively, much of his evidence was given as a free narrative and it was apparent that he was relying heavily on his memory. His recollection of critical events, for example the withdrawal of cash from the bank on 11 April, contained an impressive amount of surrounding detail and had the ring of truth to it. He was in my opinion frank. He accepted he could not recall some conversations clearly and said that the conversations were more than two years ago (regarding the purchase of the business).
It was apparent that Mr Navabi was a deeply religious man who placed tremendous store in trust. After meeting Mr Ghasemi he believed him to be a good man who contributed heavily to their shared community, was a committed Shia Muslim and someone who could be trusted.
Under cross-examination Mr Navabi answered questions without delay, maintained his versions of events and was unshaken. His evidence under cross‑examination about the reasons that he trusted Mr Ghasemi in the lead up to the sale of the business was particularly persuasive.
Generally I found Mr Navabi to be a credible and reliable witness. His evidence is consistent with objectively accurate evidence that I can rely on including his bank statements and the restaurant recording. It is also consistent with the evidence of other witnesses I found to be truthful and reliable.

Mr Hadi Navabi

Hadi Navabi is Mr Navabi's son and was 17 years old and at school in April 2016. Hadi Navabi spoke good English and gave evidence confidently.
I accept that Hadi Navabi was not an independent witness in that he is his father's son and agreed in cross-examination that he is dutiful and respectful to him and would generally do what he is told.
Hadi Navabi's recollection of the important events that he witnessed in April of 2016 appeared to me to be reliable and I also thought him credible. He was unshaken in cross-examination. His account of the restaurant meeting was consistent with the restaurant recording and Mr Navabi's evidence.
His evidence in relation to the cash transactions that he witnessed was also consistent with his father's but there were some minor differences in detail, for example, he recalled handing the envelope with $20,000 to Mr Ghasemi at the meeting whereas his father said that both envelopes were handed to Mr Ghasemi by him.[19] These small differences in detail do not affect the credibility of either witness, rather it suggests to me that they did not collude as to their evidence. The differences are such as you would expect between people who witnessed the same event and were recalling it two years later.

Ms Shirin Salimbayat

[19] ts 68, 342.

Ms Salimbayat gave evidence very briefly but what she said was crucial. She was the company bookkeeper in 2016 and was employed by Mr Ghasemi in 2015. I unreservedly accept her as a credible and reliable witness. She was not cross-examined on the basis that her evidence was untrue, she was only asked about the date of the relevant conversation with Mr Ghasemi and her answer reinforced that it was in April of 2016.

Defence witnesses

Mr Jules Lewin

Mr Lewin is an experienced commercial solicitor who practices in Wangara. He acted for Mr Ghasemi and prepared the 26 April share sale agreement (and earlier drafts) and loan agreement. He met with Mr Ghasemi and Mr Navabi on two occasions in April of 2016. He acted for Mr Ghasemi and the company at all relevant times.
Unsurprisingly, Mr Lewin did not claim to have a complete or perfect memory of the meetings. He did not give his evidence by reference to file notes or other contemporaneous records. Mr Lewin impressed me as a credible and mostly reliable witness who was certain that he had advised Mr Navabi at both April meetings that he should get independent legal advice. It was apparent to me that Mr Lewin was concerned that Mr Navabi was proceeding without obtaining independent legal advice and indeed that is why he asked Mr Navabi to sign legal advice waivers in relation to both the share sale agreement and the loan agreement at the 26 April meeting. I also accept Mr Lewin's evidence about the witnessing of the documents at the meeting.

Mr Ghasemi

Mr Ghasemi is 47 years old and has lived and worked in Western Australia for about 17 years.
Mr Ghasemi required the assistance of an interpreter for the whole of the trial. He professed to speak no English at all, notwithstanding that during the restaurant recording he answered a telephone call and spoke briefly in English. From my observations over the course of the trial he understood some English, including my questions of him, but I am unable to finally conclude how competent his English actually is. I accept that he regularly had an interpreter when instructing Mr Lewin. I do consider that Mr Navabi's English comprehension and speaking is better than Mr Ghasemi's.
Mr Ghasemi is a good example of a witness whose credibility could not be assessed by reference to his demeanour. Apart from only a few examples where he claimed lack of memory and somewhat histrionically put his hand to his head and looked to the ceiling, there was nothing in his demeanour that suggested he was not telling the truth. He was calm and confident throughout his evidence. On those occasions where he demonstrably lied, for example about the conversation in the restaurant recording, I did not detect any change in his demeanour and presentation.
I do not accept Mr Ghasemi was a truthful or reliable witness. In broad summary the reasons that I come to that conclusion include:
1.His denials under cross‑examination about what he said during the restaurant meeting were all lies, as proved by the real evidence, being the restaurant recording. The critical lies were:
•He did not recognise his voice in the recording.
•He could not recall being at the Chinese Restaurant on 11 April 2016.
•He did not say that he had buyers for the whole business for $600,000.
•He did not say he would give Mr Navabi a discount from $300,000 to $270,000 for half (of the company).
•He did not receive $50,000 cash.
•He did not write a receipt for the cheque.
•He did not write a receipt for the cash.
•He did not spell his name for the purposes of the receipt.
•He did not say anything about having a brother (from whom the transaction was kept secret).
2.In his evidence‑in‑chief, Mr Ghasemi failed to explain how the price of $140,000 which he falsely claimed was the amount paid for the half share in the company was arrived at. The statements he is alleged to have made to Mr Navabi were critical, as he well knew, but he avoided addressing them in his chronology of events.
3.Similarly, in his evidence‑in‑chief, Mr Ghasemi studiously avoided giving evidence about the critical restaurant meeting and the allegations that he had received $50,000 in cash then from Mr Navabi and a further $80,000 between 12 and 20 April.
4.I accept Ms Salimbayat's account of the conversation between her and Mr Ghasemi when in April 2016 he told her not to allow Mr Navabi to examine the books of the business or he would sue her. Mr Ghasemi's version of that conversation was a recent invention, tailored by him to best fit the evidence that he had heard from her without directly calling her a liar.[20]
5.On numerous occasions when faced with questions to which he should easily have known the answers, Mr Ghasemi sought to take refuge in a lack of recollection which was completely unconvincing. For example, he maintained that he did not know where he had received the cheque for $140,000.[21]
6.When pressed in cross‑examination on documents prepared by his accountants and solicitors he took no responsibility for inconsistencies with his case which he blamed on the professionals.[22]
7.Similarly, Mr Ghasemi blamed his accountant and did not accept that the instructions for company financial and tax records could only have come from himself and he did not accept that his signature on the documents indicated that he had authorised them.[23]
8.His answers concerning his receipt of a disability support pension during the period he was running the business were evasive.[24]
9.His explanation in cross‑examination of the liability that the company owed him at the time of the sale of the share, being for a personal asset that he had acquired, a house in Maddington, was a rare truthful slip up by Mr Ghasemi. He attempted to explain away the consequences for his case by inventing a story on the spot that he had told Mr Navabi the liability was one that he, Mr Ghasemi, would personally attend to. In his examination‑in‑chief, Mr Ghasemi had said nothing about that and had not cross‑examined Mr Navabi about it.[25]
10.His denial that he had encouraged Mr Navabi to buy his house in Maddington was improbable, depending as it did on either Mr Navabi stalking Mr Ghasemi through his real estate agent or remarkable coincidence. There is no way Mr Navabi could have known about the Maddington property unless Mr Ghasemi had told him.
11.Mr Ghasemi lied about showing Mr Navabi the company business activity statements in April 2016 when they were only signed by Mr Ghasemi on 2 May 2016.[26] When confronted by the impossibility of his claims, Mr Ghasemi again said that he knew nothing and blamed his accountant.[27]
12. Mr Ghasemi's statements to Mr Navabi about the value, turnover and profitability of the business are not supported by the company financial records. Mr Ghasemi is an astute man and I have no doubt he well knew the true financial position of the business and company at all times.
13.His claims to have owned and bought stock separately from the company which he then purported to sell to Mr Navabi were unsupported by the financial records and made no commercial sense.
[20] ts 464.
[21] ts 477, 480, 481.
[22] ts 424, 425, 429.
[23] ts 546.
[24] ts 427-428.
[25] ts 435.
[26] Exhibit P16.
[27] ts 456.
Mr Ghasemi's evidence on all of the critical issues in dispute in the trial was untruthful or unreliable. I am not prepared to accept anything that he said in his evidence unless it is independently confirmed by evidence that I do accept or I expressly say so in my reasons.

Findings in relation to disputed facts

Sometime in 2014 Mr Navabi began shopping a couple of times a week at the business. After a while Mr Ghasemi introduced himself as the owner of the shop. Mr Navabi was happy to know Mr Ghasemi because they were both Shia Muslims, spoke the same language and Mr Ghasemi told Mr Navabi that he lived in Iran for many years.[28]
[28] ts 40.
After a relationship of friendship was established, Mr Navabi discussed with Mr Ghasemi that he wanted to buy a house and Mr Ghasemi said he could sell him a house that he owned in Maddington but was not living in it at the time. Mr Ghasemi showed Mr Navabi the house and told him that it would be a good investment.[29] Mr Navabi was happy to buy the house because he trusted Mr Ghasemi by this time. Mr Ghasemi told him that the price for the house was $800,000 and Mr Navabi said that he could only afford $700,000. He told Mr Ghasemi he had $250,000 and the rest of the money would have to be loaned from the bank.
[29] ts 41.
Mr Navabi checked with the Gosnells Council and established that the house was heritage listed and he would not be able to develop the property. Mr Navabi then told Mr Ghasemi that he could not buy the house because it was heritage listed. Mr Ghasemi claimed that he had not known it was heritage listed. Mr Navabi believed that denial. I do not.
After he refused to buy the house Mr Navabi and Mr Ghasemi began to discuss the potential purchase by Mr Navabi of the business. Mr Ghasemi told Mr Navabi that if he couldn't buy a house he should buy a business and then a house. These discussions started in about late 2015. I do not accept Mr Ghasemi's evidence that Mr Navabi pressured him and kept asking him to sell the business. I accept Mr Navabi's evidence that 'gradually, little by little, we started to speak about the business and also he told me that his business is a good business'.[30]
[30] ts 44.
In two or three discussions in the first few months of 2016 Mr Ghasemi represented that the business turnover was $8,000 per day and that 70% of that represented the 'profit'. It was apparent from Mr Navabi's evidence that his use of the word 'profit' was different to the common usage of that term in Australia and I find that what he meant by profit was the difference between the purchase price of the goods and the sale price of the goods ie, mark-up. The business operated seven days per week and thus the turnover was $240,000 per month leaving $72,000 after deduction of cost of sales.[31]
[31] ts 55.

After deduction of rent and outgoings (approximately $10,000) and wages ($15,000 to $20,000) from the remaining $72,000, Mr Ghasemi told Mr Navabi that the true profit of the business was between $40,000 and $50,000 per month.[32]
[32] ts 45, 55, 57.
In about March 2016 Mr Ghasemi told Mr Navabi that he could sell all of the 'business company ' for $600,000 and that many other people had offered to buy it for that amount.[33] He said that if Mr Navabi bought the whole business he would be prepared to work in it for one or two months to show him how to operate it. Mr Navabi told Mr Ghasemi that he had no business experience in managing a shop and that he did not have enough money to buy the whole shop and it would be better if he could buy half of it. Also, that because he was new in Australia and Mr Ghasemi had experience and was a 'good man', it would be better for them to have half each.[34] The two discussed that the monthly profit of $40,000 to $50,000 split between the two would give each between $20,000 and $25,000 per month income.
[33] ts 47.
[34] ts 47.
Most of these discussions occurred at the premises, the two men often sitting outside the shop at a café table. I accept Mr Navabi's evidence that Mr Ghasemi told him on a number of occasions that the negotiations should be kept secret and that Mr Navabi should not speak to others about the purchase and that Mr Ghasemi was even keeping it a secret from his own brother who worked in the shop.[35]
[35] ts 47.
Mr Navabi discussed Mr Ghasemi's offer to sell half of the business with his family.
Mr Navabi believed that Mr Ghasemi was a good man not only because of their common background and beliefs but also because Mr Ghasemi told Mr Navabi that he was part of community that was buying land to build a mosque and that he had raised money from the community to do so. Mr Navabi said and I accept:
That's why I understand he's a very good man, because many people trust him, many people, when they many people trust him and give him more than $1 million dollars …
For the mosque?‑‑‑Yes for the mosque for buying the mosque, and he told me all of them.[36]
[36] ts 50.
Mr Ghasemi showed Mr Navabi the land where the mosque was to be built. He also told him the Towhid Association, of which he was trustee, was going to build a Farsi school.[37]
[37] ts 50.
Approximately one week before 11 April, Mr Ghasemi and Mr Navabi agreed on a price for half of the company which operated the business being $270,000. Mr Ghasemi told Mr Navabi that the sale of a share should reflect a lower price in order to minimise the GST that Mr Navabi would have to pay. Mr Navabi believed Mr Ghasemi and agreed that the amount of $270,000 would be split into a payment of $140,000 to be paid by cheque and reflected in the documents and $130,000 to be paid in cash.[38]
[38] ts 60.
In fact there was no tax advantage to Mr Navabi in underestimating the sale price of the company share. A potential future disadvantage to Mr Navabi in recording a lower sale price was that it may have exposed him to a capital gain liability on sale of the company share because of an artificially low cost base.
Conversely, there was a potential tax advantage to Mr Ghasemi in underestimating the sale price of the share because it would have reduced any potential capital gain that he may have been liable for on sale of the share.
In the weeks before 11 April, Mr Navabi and Mr Ghasemi also discussed payment for stock of the business. Mr Ghasemi said that the value of the stock that he had personally purchased was $90,000 in addition to the purchase price for half of the company. Mr Navabi said that he could not afford that and told Mr Ghasemi he would pay $40,000 for half of the stock. Mr Navabi told Mr Ghasemi he had no money because he was spending everything he had to buy half of the business. Mr Ghasemi said that was no problem, they could make a loan agreement and Mr Navabi could pay the $40,000 in monthly instalments to Mr Ghasemi from his share of the profits of the business.[39]
[39] ts 118 - 119.
I reject Mr Ghasemi's claim to have owned stock of the business personally. The stock was owned by the company and neither the financial records of the company, nor common business practice support Mr Ghasemi's claims.
In late March or early April it was also agreed that Mr Ghasemi would manage the business because Mr Ghasemi had more experience and it was better to have one person in charge.[40] For that reason it was agreed that the company would be owned 51% by Mr Ghasemi and 49% by Mr Navabi.
[40] ts 72, 73.
Mr Ghasemi claimed that in the weeks prior to 11 April 2016 Mr Navabi worked in the shop and monitored the turnover and cashier. Mr Navabi denied that.[41] I accept Mr Navabi's evidence and reject Mr Ghasemi's.
[41] ts 181.
Sometime in April 2016, likely before 11 April, Mr Ghasemi pointed out Mr Navabi to Ms Salimbayat at the premises and said to her that Mr Navabi might be joining as a partner in the business with him. Mr Ghasemi told Ms Salimbayat that if Mr Navabi 'come to you and ask for the accounts, don't say anything to him. If you say anything to him, I will sue you'.[42]
[42] ts 281.
In his evidence Mr Navabi was shown the company financial records[43] and claimed never to have seen them until after they were discovered by Mr Ghasemi during the course of the litigation. I accept that evidence and conclude from it, coupled with what Ms Salimbayat said, that Mr Ghasemi deliberately kept the financial records of the company from Mr Navabi during the company share sale negotiations.
11 April 2016
[43] Exhibit P8, P13.
On the morning of 11 April Mr Navabi, as is confirmed by his bank statements,[44] withdrew $50,000 in cash that he had previously organised with the Westpac Victoria Park branch. He took his son Hadi Navabi with him because it was a large amount of money and he gave his son $20,000 in two bundles in one envelope and kept three bundles being a total of $30,000 himself. They then drove to the Chinese Restaurant in Bentley Plaza where they met Mr Ghasemi.
[44] Exhibit P3.
The restaurant recording establishes what was said in the conversation between Mr Navabi, Hadi Navabi and Mr Ghasemi. I accept the evidence of Mr Navabi and Hadi Navabi about what was happening at the time of the conversation. I reject the evidence of Mr Ghasemi.
Shortly after the commencement of the restaurant recording the following self‑explanatory exchange occurred:[45]
Ghasemi:Explain this part again! $140,000 Checks!
Navabi:          $140,000 Checks.
Ghasemi:        $50,000 in Cash.
Navabi:          I submitted the amount of $50,000 in cash now and will submit $40,000 in the coming two or three days later. But I can go to different banks rights now. I can go to ANZ bank and Citibank. By referring to these two banks, $40,000 will be supplied. Hmmm, I should got to Commonwealth Bank as well.
Ghasemi:        You should inform me when it is ready for tomorrow.
Navabi:          I will procure them for tomorrow or the day after tomorrow. I will bring another $40,000 from Iran as I am supposed to exchange it to dollar.
Ghasemi:         Yes.
[45] All quotes below from exhibit P12.
Mr Navabi went on to explain that the $40,000 coming from Iran was money sourced from his father and mother via his uncle.
Mr Navabi said that he was having difficulty raising the last amount of the money for payment of the stock price to Mr Navabi and asked for a discount and said he would compensate Mr Ghasemi in the future. He said he felt bad about starting the business being in debt to Mr Ghasemi. I find this was a reference to the earlier arrangement where Mr Navabi agreed to buy half of Mr Ghasemi's personal stock.
Mr Ghasemi said 'Actually, I did whatever I could for you. Swore to God, others offered me the amount of $600,000'. I find this was a statement by Mr Ghasemi that the company was worth $600,000 and that he had been offered that sum by other potential buyers. Mr Ghasemi knew Mr Navabi to be a very religious man and there is no doubt that in swearing to God he intended Mr Navabi to believe him. Mr Navabi responded 'I know. God will support us'. Mr Ghasemi then re-inforced that he was telling the truth.
Mr Navabi said that he trusted Mr Ghasemi and Mr Ghasemi said that his brother had not talked to him for a week. I find this to be a reference to the earlier negotiations which Mr Ghasemi said he had kept secret, including from his brother.
Mr Ghasemi then said that he was more competent to run the business and it was better for one person to do. Mr Navabi agreed. Indeed the next passage about which there was some dispute is telling. The original interpretation read:
Ghasemi:        Listen. Did I refuse anything you said from the beginning?
Navabi:           No! You agreed with whatever I said.
In cross-examination the interpreter agreed that what was said was:
Navabi:           No! I agreed with whatever you said.
Mr Ghasemi then explained again to Mr Navabi that by accepting the price for half of the business being $270,000 he had lost $60,000 on the true value. He was said to Mr Navabi that he was getting a bargain for the price. He then went on to confirm that he had originally bought the stock for $68,000 and it was now worth $90,000 and if he acceded to Mr Navabi's offer of $40,000 for half he would be losing $10,000 which was too much. Mr Navabi in the presence of Mr Ghasemi told Hadi Navabi that he was offering to pay the $40,000 by four amount of $10,000. Mr Ghasemi said that he was cooperating and he would be the loser if forced more.
Mr Navabi then wrote a cheque in the amount of $140,000 and payable to Mr Ghasemi for the purchase of the share in the company. Mr Ghasemi said that it would be better to have tomorrow's date (on the cheque ie, 12 April).
Mr Ghasemi said 'We are Shia. We are religious brothers' and 'our religion and culture is similar to each other'. Mr Navabi said that he hoped the business to be effective for the future of their children.
Mr Navabi said that he had brought his son Hadi with him to the meeting because they had to get a lot of cash money from the bank. After giving Mr Ghasemi the cheque the following exchange occurred:
Navabi:          Ok, Asadulla, may God bless us.
Ghasemi:        Thank you very much.
Navabi:          God bless your father.
Ghasemi:         May your dead rest in peace.
Navabi:          So, our work is done!
Ghasemi:Ok.
Navabi:How do I pay you the rest of the cash money, may I remit it to your account or pay it cash in hand.
Ghasemi:Cash is better. If you remit it to my account, I cannot hide it (cover it up).
I accept Mr Navabi and Mr Hadi Navabi's evidence that $50,000 in cash in two envelopes was given to Mr Ghasemi.
The two older men then discussed plans for the business and Mr Navabi spent some time explaining to Mr Ghasemi his ideas for how funding for the community mosque might work. In the course of that discussion Mr Ghasemi confirmed that he would raise Mr Navabi's ideas with the Board of Trustees. He explained how he had collected money for the building of the mosque and community centre of 1.3 to 1.4 million dollars and that the Towhid Association was registered as a charity organisation.
Mr Navabi invited Mr Ghasemi to have lunch with his family so that the two families could get to know each other. Mr Ghasemi said he would bank the cheque the following day and Mr Navabi said he would have the $40,000 cash by the following evening. Mr Ghasemi also said that he was looking for a warehouse for the shop and Mr Navabi replied 'ok do whatever you deem appropriate'. They discussed plans for the business and travelling to Melbourne to buy goods and after that, the following exchange occurred:
Navabi:          Do want to write something or not?
Ghasemi:        Do you want something? Something from me? Receipt?
Navabi:          It depends on you.
Ghasemi:        Do you want a receipt?
Navabi:          Do whatever you decide and deem appropriate.
Ghasemi:        It's up to you I will give you a receipt if you want but there is an issue. I will submit receipt to you but you have to return the receipt back to me before completing the legal assignments.
Navabi:          I suggest something else to do.
Ghasemi:        Because I would be in trouble, if the receipts are submitted or seen by anybody else.
Navabi:        I recommend you to do another things. Write a receipt for receiving cheque, and another receipt for receiving cash money, and put and keep both of them by yourself. But I have a reason. I do not know how long you or I will live. However, if you write it down, in future I will say that Asadulla wrote the receipts in his receipt book and signed it but he had not submitted it to me. Asadulla, I believe in you and trust you. But someday, we told each other that we would do it for our children. I do not know how much I live, nobody knows.
Ghasemi:        Ok, write it down. I will sign it.
Navabi:          I do not know how to write, please do it yourself and keep it. Please mention that this is a receipt.
I am satisfied that the receipts were then written as Mr Navabi and Hadi Navabi explained in their evidence. It is clear from the recording that the cheque receipt was written first and the cash receipt by Mr Ghasemi, second. The following exchange then occurred:
Navabi:          Ok, write cash (cash) and sign it. That's ok aside. There is another advantage for doing so. When I bring the remaining cash amount, you will write it here and proceed in accordance. Kept it by yourself. This is your receipt book isn't it?
Ghasemi:        Yes.
Navabi:           Ok that's done.
Ghasemi:        That's finished.
Mr Navabi put a cross on the cover of the receipt book so that it would be recognisable and then said the following:
Navabi:           Hadi said to me that why do we not submit the entire amount? I told him because of tax and many other things.
Ghasemi:         By this way, your tax will be $5000 dollars. If we want to write the whole amount, you will lose $12,000 or $13,000 dollars for nothing.
Navabi:          We are doing our work based on mutual trust.
Ghasemi:        Neither my father has violated others' rights nor yours. We trust each other in this business.
Navabi:          I swore to God.
Ghasemi:        We do these because of our kindness to each other.
Navabi:           That's exactly right.
Ghasemi:        Otherwise, why should be partner? Person who is ready to give me $600,000.
Navabi:          Asadulla consulted with many people and they told him not enter into such transactions. I consulted with Iranian friend and they told me so as well. They told me not to enter in such transaction but I do. I wanted to prove that we should not pay attention to minor issues. I think we are one nation. Qajar dynasty separated us. They bothered you and belittled our country. But we are one…We started a business. Whosoever Asad and I consulted with, told us not to enter in transaction, only our families motivated us to do so.
Ghasemi:        Actually, my family told me why you want to share your achievements. But I know what I am doing.
Navabi:          Hope success in this business. As much as you succeed, I will succeed.
Then there was further discussion about the purchase of a warehouse and future expansion of the business and then the conversation continued:
Navabi: No problem will occur. Ok, therefore, I expect to fulfil cash money today and tomorrow, what about you? Tell me I want to know what we are doing.
Ghasemi: I will consider and count this money. I will talk to the agent about warehouse.
Further on:
Ghasemi: I will inform you. I completely trust you. There is no dispute and quarrel between us. I trust you so much for example, if you say this plastic pen is a stone, I will accept it.
Navabi: I trust you as well Asadulla. Please take required actions so that I can visit mosque as well. I really wish to see it.
The meeting concluded with Mr Navabi reminding Mr Ghasemi to suggest his ideas to the Board of Trustees at the mosque.

Events of 12 to 26 April 2016

It was agreed that after the balance of the cash was paid Mr Ghasemi and Mr Navabi would see Mr Ghasemi's lawyer to sign the company transfer documentation. Mr Ghasemi told Mr Navabi that if the lawyer asked if the money was paid that he should just say 'yes' and nothing else.[46]
[46] ts 71, 72.
Mr Lewin at all times represented Mr Ghasemi and also the company. Mr Navabi was never his client.[47] His instructions came from Mr Ghasemi.
[47] ts 381.
On 12 April Mr Navabi withdrew $3,000 from his ANZ account and $7,000 from his Commonwealth Bank account and paid the total of $10,000 to Mr Ghasemi in his car which was parked at the Bentley Plaza in front of the premises.[48] Again Mr Ghasemi wrote out a receipt in the orange receipt book but the receipt remained in the book.
[48] Exhibits P4 and P5, ts 110, 112, 113.
On 13 April Mr Navabi withdrew $16,000 from his ANZ account in cash and $4,000 from his Westpac account and in all likelihood on the same day gave the money totalling $20,000 to Mr Ghasemi in his car at the Bentley Plaza car park.[49]
[49] Exhibit P3 and P4, ts 114.
The $140,000 cheque was deposited by Mr Ghasemi to his account and it cleared on 14 April.[50]
[50] Exhibit P4, ts 482.
On 14 April Mr Navabi drew $10,000 in cash from his Commonwealth Bank account and in all likelihood on the same day paid the money in the same way to Mr Ghasemi and a receipt was written and kept in the book.[51]
[51] Exhibit P5, ts 115.
On 15 April Mr Navabi withdrew $10,000 in cash from his Westpac account and gave it to Mr Ghasemi in the same way.[52]
[52] ts 116 - 117, Exhibit P3.
Also on 15 April Mr Patrick Owen the asset manager of Bentley Plaza emailed Mr Ghasemi acknowledging Mr Ghasemi's letter[53] 'advising the partial sale of your business' and stating that the landlord would consider Mr Ghasemi's request on completion of a new tenant application form and provision of copies of driver's licence, bank statements and any other relevant information.[54]
[53] Not produced in evidence.
[54] Exhibit P20.
Although Mr Owen was not called as a witness I find the emails from him which Mr Ghasemi forwarded to Mr Navabi on 22 April are admissible as business records of the company, relating as they do to the lease of the premises and used in the ordinary course of the business.[55]
[55] Evidence Act 1906 (WA) s 79B, s 79C(2a); Soia v Bennett [No 4] [2012] WASC 292.
On 18 or 19 April Mr Ghasemi attended on Mr Lewin to instruct him regarding the sale of a share in the company to Mr Navabi. A draft agreement was prepared by Mr Lewin.
Mr Lewin did not send either the draft share sale agreement of 19 April or the later 26 April draft to Mr Navabi.[56] Mr Lewin did send them to Mr Ghasemi.
[56] ts 383.
On 19 April Mr Ghasemi emailed Mr Navabi a draft of the share sale agreement.[57] Mr Navabi could not open the attachment.[58] On 20 April Mr Ghasemi emailed him a document titled 'sale of shares latest.docx'.[59]
[57] Exhibit P9.1.
[58] ts 231.
[59] Exhibit P21.
On 20 April Mr Navabi withdrew $30,000 from his Westpac account[60] and this time went with Hadi Navabi and met Mr Ghasemi at the business. They all sat in Mr Ghasemi's car; Mr Ghasemi in the driver's seat, Mr Navabi in the passenger seat and Mr Hadi Navabi in the back. The $30,000 in cash was given to Mr Ghasemi and he wrote a receipt in the orange book, keeping the receipt.
[60] Exhibit P3, ts 117.
Also on 20 April Mr Navabi and Mr Ghasemi attended on Mr Lewin regarding the share transfer and Mr Lewin told Mr Navabi to get independent legal advice. The draft agreement he had prepared could not be signed because it referred to the transfer of four shares to Mr Navabi with Mr Ghasemi retaining six shares. Mr Lewin was of the belief that the reason that agreement could not proceed was because he received advice that ASIC would require the share capital to be increased to 100 shares first.[61]
[61] ts 368.

Mr Navabi's evidence was that he would not sign the draft agreement because he had bought 49% of the company not 40%. I accept that Mr Navabi was not prepared to go ahead with a six to four share split but I also accept that Mr Lewin formed the view that the share capital needed to be increased to 100 shares. In any event the parties left the meeting and Mr Lewin prepared a fresh share sale agreement.
On the morning of 21 April Mr Ghasemi and Mr Navabi went to see Mr Owen about the lease on the premises. Mr Owen then emailed Mr Ghasemi confirming the meeting and that the Landlord had approved the change of ownership subject to a guarantee being taken from Mr Navabi. He also asked when the change of ownership was to take effect and I find that was a reference to when the share transfer was to occur.[62]
[62] Exhibit P20.
On 26 April at 10.30 am, a few hours before Mr Ghasemi and Mr Navabi returned to see Mr Lewin at 2.00 pm, Mr Ghasemi emailed Mr Navabi two documents, one entitled 'Sale of Shares latest 1.docx' and the other 'Ghasemi Narobi Loan Agreement V3.docx'. [63] Both were prepared by Mr Lewin.
[63] Exhibit P9.1 and P9.2.
Mr Ghasemi was the person who had instructed Mr Lewin that the sale price to put in the share sale agreement was $140,000.[64] Mr Lewin was aware at the time of signing that the purchase price had been paid but did not learn until months later that the amount allegedly paid was $270,000, not $140,000.[65]
[64] ts 382.
[65] ts 385.
At the meeting in Mr Lewin's office on 26 April, Mr Navabi signed waivers whereby he acknowledged he had been advised to get independent legal advice and declined to do so.[66]
[66] Exhibit P10.
I accept that Mr Navabi did not read the share sale agreement or the loan agreement at Mr Lewin's office and that he had not had them for long before the meeting. I accept also he did not understand a number of the words in the share sale agreement, for example, 'completion'. I do consider though, that he did check the agreements after receiving them that morning and agreed and understood the shareholding transfer was for 48% rather than 49% and the payment recorded for the shareholding was $140,000.
The share sale agreement and loan agreement were signed and then witnessed, as Mr Lewin described, by Mr Ammamula Ghasemi (Mr Ghasemi's son who was present as an interpreter for Mr Ghasemi) and Mr Lewin himself.
Mr Navabi's evidence that the agreement was witnessed by another member of Mr Lewin's staff is incorrect on this point. Mr Lewin confirmed that he did have a law student undertaking work experience with him who was present in the office at the time of the discussions and in my view Mr Navabi has mistaken that person as the witness of the signatures.
I will deal with the express terms and effect of the share sale agreement and the loan agreement when dealing with the issues below.
Mr Navabi did not get any share certificates of the company on 26 April. He also did not get access to the company's bank accounts[67] nor the company documents and records.[68]
[67] ts 96.
[68] ts 97.
Mr Navabi did not receive $40,000 from Mr Ghasemi after he signed the loan agreement.
Some days after signing the agreements, Mr Ghasemi and Mr Navabi opened a new company bank account for the operation of the business.[69]
[69] ts 96.
On 27 April 2016, Mr Navabi commenced working in the business, going to the markets with Mr Ghasemi and managing the shop.
On 4 May 2016, Mr Navabi signed on as a new guarantor of the lease for the premises between Nicvira Nominees Pty Ltd and Pashi Start Pty Ltd.[70]
[70] Exhibit P7.
In mid to late May 2016, Mr Navabi realised that the turnover was not $8,000 per day as Mr Ghasemi had said. His estimate was that it was only $3,000 to $4,000, and on Saturdays, $4,000 or $5,000. He raised his concerns with Mr Ghasemi who said it would get better.[71]
[71] ts 178.
Apparently in payment for Mr Ghasemi's stock, Mr Navabi paid $5,500 to him on 26 May 2016 and then $4,000 on 8 June 2016, $4,000 on 12 July 2016 and $4,000 on 8 August 2016.[72] Each of the amounts of $4,000 were taken from the sale proceeds of stock of the company, being Mr Navabi's half share paid to him by Mr Ghasemi.[73] I am satisfied the first payment of $5,500 came from Mr Navabi's personal funds.
[72] Exhibit P6 page 9.
[73] ts 122.
I accept that Mr Navabi did not receive any other payments from the company.
ASIC recorded a change to the company share structure and share issue on 23 May 2016. Mr Ghasemi is recorded as holding 52 shares and Mr Navabi 48 shares.[74]
[74] Exhibit P2.
Mr Navabi completed ASIC forms at the request of Mr Ghasemi or his son and on 24 June 2016 he became a director of the company.[75]
[75] ts 86, Exhibit P2.
In approximately June 2016 Mr Navabi and Mr Ghasemi travelled to Iran. They visited three cities and Mr Navabi also introduced Mr Ghasemi to a friend of his and toured his friend's chemical factory. Mr Ghasemi claimed that Mr Navabi represented that he was an owner of the factory and experienced in business. Also that his friend was the person who ultimately would buy the other half of the business from Mr Ghasemi. I reject that evidence and accept what Mr Navabi says, that the trip to Iran was mostly for pleasure and to visit people. Mr Navabi funded most of the expenses for the trip. I am not satisfied that Mr Navabi made any representations to Mr Ghasemi that he was experienced in business, owned businesses in Iran or elsewhere or that he had business experience in Malaysia. Mr Navabi made the good point that if he was an experienced businessman he would never have paid $270,000 for this business.[76]
[76] ts 167.
Approximately three months after Mr Navabi was working in the business, relations between he and Mr Ghasemi broke down and Mr Navabi became very angry and did not attend at the business for about two weeks.
During those two weeks, Mr Navabi and Mr Ghasemi met on a few occasions at a restaurant nearby the premises called Oporto. At one meeting, Mr Navabi asked Mr Ghasemi for his money back because the turnover was not the $8,000 that he was told and because Mr Ghasemi was now telling him that the shop was bankrupt.[77] Mr Ghasemi said he had no money and refused Mr Navabi's request, and told him that it was his responsibility.
[77] ts 199.
Another meeting was scheduled for 30 August 2016[78] when Mr Ghasemi sent Mr Navabi an SMS in English notifying of a directors' meeting for the company with an agenda being:
1.Business dispute
2.Business resolution
3.Statement of current debt
4.Finalising.
[78] Exhibit P11.
At one of their meetings Mr Ghasemi told Mr Navabi that he (Mr Navabi) was in a very bad situation, that there was outstanding rent which he had responsibility for and that he would send him a letter and that it was better for Mr Navabi to sign the letter.[79]
[79] ts 125 – 126.
I am also satisfied that around that time Mr Ghasemi withdrew all of the company funds from the joint account and transferred them to an account to which Mr Navabi did not have access.[80]
[80] ts 200, 411.
Sometime shortly after 1 September 2016 Mr Navabi received a letter dated 1 September 2016 which Mr Lewin was instructed by Mr Ghasemi to send.[81] The letter is headed 'Pashi Start Pty Ltd/Asadulla Ghasemi- my client'. I find that at that time Mr Lewin was acting on instructions from Mr Ghasemi personally. It could not be said that he was acting on behalf of the company as Mr Navabi was a director and owner of the company as Mr Lewin knew.
[81] Exhibit D3.
The letter confirms that at a meeting between Mr Navabi and Mr Ghasemi on 29 August 2016 they had been unable to resolve the issues between them. The letter suggests that Mr Navabi was not meeting his director's obligations and that according to Mr Ghasemi, he had abandoned the business, not attending the shop and not showing any interest in the business or its debts. The letter goes on:
My client requests you resign as a director of the company and transfer your shares (by signing the attached document) in return for which my client will endeavour to release you as a guarantor from the lease and assume any liabilities for which directors guarantees have been given. In addition my client will retain the monies paid by you for your shares and forgive the amount due by you for the stock part of which is still owing.[82]
[82] Exhibit D3.
The letter concluded that Mr Navabi should return the document within seven days, failing which Mr Ghasemi would take the action he was entitled to at law and claim damages. The letter also recommended that Mr Navabi obtain independent legal advice before signing the document.
After receiving the letter, Mr Navabi attended on Mr Lewin without notice who told him to go and find a lawyer.
Mr Navabi finally took Mr Lewin's advice, then instructing Ms Martino.[83] It is not clear what date that was and there was no other evidence of termination or the fate of the business, except that at some point it ceased operation and another business now operates at the premises.[84] I am satisfied that Mr Navabi has not received any money from a sale of the company or its assets.
[83] ts 128.
[84] Exhibit P15 page 5, ts 150.
Mr Ghasemi tendered a document purporting to be an expression of interest in purchasing the business dated 3 October 2016.[85] The expression of interest was not discovered during pre-trial, not referred to by Mr Ghasemi in his examination‑in‑chief and it was not put to Mr Navabi in his evidence.
[85] Exhibit D4.
The document is apparently signed by a Mr Movad Ali. Mr Ali was not called by Mr Ghasemi to give evidence and in circumstances where I do not accept Mr Ghasemi's evidence generally, I am not prepared to accept that the expression of interest which he produced late in the trial was a genuine expression of interest in purchasing the business. I also do not accept that it reflects the market value of the business in October of 2016. It definitely does not reflect the market value of the company in April 2016.
Further, the apparent date of the expression of interest was after the breakdown in relations between Mr Ghasemi and Mr Navabi and I reject Mr Ghasemi's evidence that he told Mr Navabi about it.[86]
[86] ts 520 - 521.
The writ was filed on 24 January 2017.

The financial records of the company

Before dealing with the valuation of the company and business I will deal with those relevant findings which I can make based upon the financial records of the company that were produced as exhibits in the trial. They include the financial statements for Pashi Start Pty Ltd for the year ended 30 June 2014,[87] updated financial statements for Pashi Start Pty Ltd for the year ended 30 June 2014 and amended tax return,[88] financial statements for Pashi Start Pty Ltd for the year ended 30 June 2015 and tax return,[89] profit and loss statement for Pashi Start Pty Ltd for the year ended 30 June 2016,[90] and three business activity statements for the periods 1 July 2015 to 30 September 2015, 1 October 2015 to 31 December 2015, and 1 January 2016 to 31 March 2016.[91] I am satisfied those documents were discovered by Mr Ghasemi prior to trial, notwithstanding his claims at stages during the trial not to have been aware of them.[92]
[87] Exhibit P13.2.
[88] Exhibit P13.1.
[89] Exhibit P8.
[90] Exhibit P14.
[91] Exhibit P16.
[92] ts 102.
The updated profit and loss statement for the year ended 30 June 2014 shows the gross profit from trading to be $297,709.97. The closing stock for that year was $65,000 and after expenses, the profit before income tax was $18,596.99. The balance sheet reflects plant and equipment valued at $81,137, goodwill of $135,000, being the amount that the goodwill was valued at when the company purchased the business in 2013.[93] The company also had liabilities being four loans from Mr Ghasemi totalling $280,797.43. Mr Ghasemi's evidence, which I do accept, was that the loans related to his private purchase of an investment property in Maddington. The company did not gain any asset or interest in the investment property but assumed part of the liability.[94]
[93] Exhibit D2.
[94] ts 435.
The updated 2014 financial statements are reflected in the company's amended 2014 tax return. The company's taxable income was $27,654 and tax paid was $8,296.20. I am satisfied that Mr Ghasemi provided instructions to the company accountants for the preparation of the financial statements, the updated financial statements and the amended tax return for the company.
The 2015 financial statements for the company show an improved gross profit from trading of $324,871.01. The closing stock valuation dropped to $40,000. Notwithstanding the improved gross profit, after expenses, the profit from the ordinary activities of the company was only $1,755.65. The balance sheet shows that after depreciation the assets of the business, being the plant and equipment, decreased to $63,807.68, the goodwill was still valued at $135,000, and the company's liabilities, being the debts owed to Mr Ghasemi, decreased to $228,037.02. The company's tax return for 2015 shows a loss of $3,686 with no taxable income. Again, Mr Ghasemi's name is on the various documents and I am satisfied that he instructed the company's accountants to prepare the financial statements and tax return of the company which he authorised.
The only financial record for 2016 is an unaudited profit and loss statement for 12 months ended 30 June 2016. Despite requests, Mr Navabi did not discover full financial records and nor did he discover the company tax return for that year.[95] The profit and loss statement shows that the gross profit for the year ending 30 June 2016 was $317,241.40, that the value of closing stock was $65,000, and that after expenses the company's net profit was $7,375.35.
[95] ts 493.
The business activity statement for the quarter 1 October 2015 to 31 December 2015 was due to be lodged on 29 February 2016 but was only prepared on 13 April 2016 and the exhibit discovered by Mr Ghasemi does not have a lodgement date. Mr Ghasemi claimed to have shown this document to Mr Navabi in early April of 2016. I do not accept that evidence, it is clearly untruthful because the unlodged draft is signed and dated by Mr Ghasemi on 2 May 2016.[96]
[96] Exhibit P16.2, ts 546.
The business activity statement for 1 January 2016 to 31 March 2016 was due to be lodged on 28 April 2016 and was lodged on 2 May 2016. It is also signed by Mr Ghasemi on that day which suggests that both business activity statements were done at the same time. For the period 1 January to 31 March 2016, the trading period just before the sale of the company, the total sales are shown as $500,545 and non‑capital purchases at $420,963, a difference of $79,582. This suggests to me that at 31 March 2016 the company had $80,000 worth of stock purchased in the previous three months on hand plus whatever stock remained from earlier periods. No pay as you go instalment income was recorded and the GST payable on total sales was $1,350. GST on purchases amounted to $4,916.[97]

The market value of the business and company in April 2016

[97] Exhibit P16.3.

Mr Blair Macdonald is an expert business valuer and prepared a business valuation for Pashi Start Pty Ltd as at 11 April 2016.[98] Mr Macdonald gave evidence about his valuation and was cross‑examined by Mr Ghasemi. His qualifications and expertise were not questioned.
[98] Exhibit P15.
In preparing his valuation Mr Macdonald had access to the financial statements I have detailed above and he also visited the premises (after the business had changed ownership and name). A historic photograph of the business is included in his report.
I accept Mr Macdonald as an expert and I am prepared to rely on his evidence. Mr Macdonald explained his methodology and calculated valuation of the business and company by reference to both Going Concern Asset Value (GCAV) and Enterprise Value (EV). He explained, and I accept, that in Western Australia most small businesses sold as going concerns transact as asset sales rather than share sales and so GCAV is the methodology that would usually be used. In this case what occurred was a share sale transaction and therefore EV, I am satisfied, is the most appropriate methodology for establishing the market value of the company at 11 April 2016. The GCAV is relevant though for the purposes of establishing the value of the assets of the business.
I also accept that because of the variation in the three years of trading results available to him, it was appropriate for Mr Macdonald in assessing the company's profitability to use a weighted average approach, giving an adjusted weighted earnings before interest, tax, depreciation and abnormals for the company of $14,009 per annum.
The GCAV of the business, based on the June 2015 financial records, which were the most recent available, was $103,808. That comprised the inventories and stock, together with property, plant and equipment.
Mr Macdonald then calculated a Return on Investment (ROI) GCAV so that he could value the goodwill of the business. I accept that it was appropriate to use this method given the difficulties Mr Macdonald outlines in his report with using an Industry Market, Discounted Cash Value or Book Value methods. The ROI method is also the most commonly used valuation approach for small to medium business in the Western Australian market, mainly because there are comparable transactions available as market evidence.
In using the ROI method Mr Macdonald assumed a willing buyer and willing seller, the business would be readily saleable in the open market and the current income stream of the business would continue into the foreseeable future. In that sense the valuation assumes an arms‑length transaction and no emotions, sentiment or personal considerations on the part of either party.[99]
[99] Exhibit P15, page 4.
Mr Macdonald selected a ROI percentage of 42.5% which he explained was appropriate for the business. In cross‑examination, Mr Macdonald accepted that if the business were regarded as a specialist grocer, servicing a particular niche market, the ROI percentage would reduce. He said though that on the flip side there would then be a smaller market for buyers prepared to buy such a specialist business.[100] In my opinion Mr Macdonald's ROI percentage, whilst justifiable, nonetheless does not fully reflect the specialist nature of this business and that there are willing buyers for such businesses. I think a more appropriate ROI percentage is one of 30% which Mr Macdonald said would be used for a well‑established and systemised business such as an IGA store.
[100] ts 331.
Using an ROI of 42.5%, Mr Macdonald calculated a ROI GCAV for the business of $32,965. Changing the ROI percentage to 30% gives a ROI GCAV of $46,700.[101]
[101] Using the calculation method on page 18 of Exhibit P15.
Mr Macdonald then calculated the effective goodwill of the business by deducting from the ROI GCAV the GCAV. At his ROI GCAV of $33,000 that left a value of goodwill of minus $70,808. Using my ROI GCAV, the value of the goodwill is minus $57,108. Thus whether Mr Macdonald's ROI percentage is used, or the lower percentage of 30%, the effective goodwill in the business (and company) was still nil.
Turning then to the calculation of EV which, as I say, is the appropriate measure of the market value of the company given the sale was by way of transfer of a shareholding, I accept that EV is calculated by adding the GCAV to other assets and deducting liabilities. Thus the calculation to 11 April 2016 is as Mr Macdonald did at page 19 of exhibit 15, taking the GCAV, adding cash and GST clearing, equalling $115,579, and then deducting the liabilities of the company. The most substantive liabilities were the loans that the company owed Mr Ghasemi of $246,324.
I accept Mr Macdonald's conclusion that at 11 April 2016 the market value of the company calculated by reference to EV was minus $130,745 or, a value per ordinary share, assuming 100 shares, of minus $1,307. If those shares were to be split 48% to one buyer and 52% remaining with the original shareholder, that equates to a value to the buyer of a 48% shareholding of minus $62,736.

Reliance is, in a case like this, an element of the causation question: whether Mr Navabi has suffered loss by Mr Ghasemi's misleading or deceptive conduct.[132] In Campbell v Back Office, Gummow, Hayne, Heydon and Kiefel JJ emphasised that because s 52 of the Trade Practices Act is not confined to representations, reference to reliance on a misrepresentation should not be permitted to obscure the need to identify contravening conduct and a causal connection between it and the loss and damage suffered.[133]
[132] Wardley Australia (525).
[133] Campbell v Backoffice [102].
In Gould v Vaggelas, a case dealing with the tort of deceit, Justice Wilson stated the applicable principles regarding reliance which, translated into the context of s 18, are as follows:[134]
(a)Even if a representation breaches s 18, if the recipient of the representation does not rely on it, he has no case;
(b)If a representation is made in breach of s 18 which is calculated to induce the recipient to enter into a contract and that person in fact enters the contract, there arises a fair inference that he was induced to enter into the contract by the representation;
(c)The inference may be rebutted, for example by showing that the recipient, before he entered the contract, either had knowledge of the true facts and knew them to be true, or alternatively made it plain that whether or not he knew the true facts or not, he did not rely on the representation;
(d)The representation need not be the sole inducement. It is sufficient so long as it plays a part, even if only a minor part, in contributing to the decision to enter into a contract.
[134] Gould v Vaggelas (1985) 157 CLR 215, 236.
These principles have been held to be applicable to a claim under s 52 (s 18) in the Full Federal Court[135] and also in cases in the Full Court of the Supreme Court of Western Australia.[136]
[135] See, for example, Sutton v AJThompson Pty Ltd (in liq) (1987) 73 ALR 233; Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112; Ricochet Pty Ltd v Equity Trustees Executors & Agency Co Ltd (1993) 41 FCR 229, 233 ‑ 234.
[136] Franich v Swannell (1993) 10 WAR 459, 476; Wendt v Yogesh Jogia Diamonds Pty Ltd (1993) 11 WAR 455, 463 ‑ 464; Sharp v Ramage (1995) 12 WAR 325, 329 ‑ 330.
The contravening conduct need not be a sole cause of Mr Navabi's loss and damage. It is enough to demonstrate that contravention was a cause of the loss or damage.[137]
[137] I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 [31], [33], [57], [61],[69]; Townsend v Roussety & Co (WA) Pty Ltd [2007] WASCA 40; (2007) 33 WAR 321 [98], [101].
Although Gould v Vaggelas and Full Court decisions in this state have said that it is sufficient if the representation plays only a minor part in contributing to the decision to enter a contract, a more recent decision in the Court of Appeal has said that the representation must have had a substantial, rather than negligible effect, in inducing the plaintiff to do the act which occasions the loss.[138] That is the approach I will take.
[138] Townsend v Roussety [98]; 3Meg.com [63].
Reliance and causation are determined subjectively, by reference to the effect of the contravening conduct on the plaintiff.[139] However, questions of reliance and causation invite attention to the objective material in assessing the probability that the contravening conduct or misrepresentation influenced the plaintiff's relevant conduct at the time. The assertions of the plaintiff, given in hindsight in the context of litigation, are to be treated with caution.[140]
[139] NEA Pty Ltd v Magenta MiningPty Ltd[2007] WASCA 70 [128] ‑ [129]; Grainger v Williams [2009] WASCA 60 [26].
[140] Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471, 483; Lord Buddha Pty Ltd (in liq) v Harpur [2013] VSCA 101 [135]; Campbell v Backoffice [146]; Clifford v Vegas Enterprises Pty Ltd [2011] FCAFC 135 [151].
Reliance and causation may be inferred.[141]
[141] 3Meg.com [63]; Townsend v Roussety [102]; Lord Buddha v Harpur [159].
In 3Meg.com, Murphy JA cited with approval the following observations from Como Investments Pty Ltd v Yenald Nominees Pty Ltd:[142]
Where a representation is relevant to the decision in question, and its nature persuasive to induce the making of that decision, it accords with legal notions of causation to hold that it has a causative effect. And where a respondent, who may be taken to know his business, has thought it was in his interests to misrepresent the situation in a particular respect, the court may infer that the misrepresentation was persuasive. These inferences arise from the making of the representation followed by the respondent doing the thing it was calculated to induce him to do. (emphasis omitted)
[142] 3Meg.com [63], citing Como Investments Pty Ltd v Yenald Nominees Pty Ltd [1997] ATPR 41‑550, 43,619.
Like any question in the context of a claim under s 18 of the Australian Consumer Law, the question of reliance must be determined in the light of the whole of the relevant surrounding facts and circumstances. The effect of any relevant statements or actions, silence or inaction in the context of a cause for conduct must be deduced from the whole course of conduct.[143]
[143] MWH Australia Pty Ltd v Wynton Stone Pty Ltd [2010] VSCA 245[32]; Campbell v Backoffice [102]; Lord Buddha v Harpur [159].
The drawing of inferences of reliance is not in itself precluded simply because there was direct evidence as to reliance, or by reason that such direct evidence was given and rejected.[144]
[144] Lord Buddha v Harpur [159], referring to Hanave Pty Ltd v LFOT Pty Ltd [1999] FCA 357; (1999) 43 IPR 545.
The fact that a person could have discovered the truth had he or she made proper enquiries, and was careless, does not preclude a finding of reliance.[145]

Reliance

[145] Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546, 558, 559; Sutton v AJ Thompson (240 ‑ 241); CPI Group Ltd v Stora Enso Australia Pty Ltd [2007] FCAFC 160 [68].

In buying a share of the company Mr Navabi undertook none of the due diligence a prudent business purchaser would have. He did not obtain an independent company and business valuation, nor did he seek independent financial and legal advice. He did not examine the financial records of the company, nor make inquiries about its assets and liabilities. He did not do a stocktake nor work the business.
I am satisfied Mr Navabi made a visual inspection of the business operations on a number of occasions when he attended at the premises prior to 11 April 2016. That partly informed his decision to buy a share in the business.
I am satisfied that the primary matters upon which Mr Navabi relied in his decision to buy a 48% shareholding in the company from Mr Ghasemi were the ownership, price, value, turnover and profit representations made by Mr Ghasemi. The misleading or deceptive value, turnover and profit representations played the major part in Mr Navabi's decision and substantially induced Mr Navabi to buy the shareholding. He relied upon those representations because he trusted Mr Ghasemi.
I am also satisfied that Mr Navabi relied on the confidentiality representation as Mr Ghasemi intended he would so that Mr Navabi would not find out the value and profit representations were false before he paid for the shareholding.
Had Mr Navabi known the true facts he would not have bought the shareholding. That he could, with reasonable diligence, have established the true facts and was careless does not change my opinion that he relied upon the representations.

Causation

A question arises of whether Mr Navabi was so negligent in failing to protect his own interests that his negligence severed the causal link. In Argy v Blunts and Land Cove Real Estate Pty Ltd[146], a solicitor claimed that he was misled when purchasing a property. Information from the real estate agent indicated the property was capable of development but this turned out not to be the case. The court found that the solicitor's lack of due diligence was not enough to sever the causal link between the representation and the entry into the contract.
[146] Argy v Blunts and Land Cove Real Estate Pty Ltd [89], [91].
Mr Navabi was no solicitor. He was objectively negligent and that is because he valued trust more highly than due diligence. His trust was betrayed by Mr Ghasemi, and in respect of at least the value, profit and confidentiality representations, intentionally and cynically so.
I am satisfied there was no relevant intervening conduct and no break in the causal link between Mr Navabi's reliance on the misleading or deceptive representations. I am satisfied that the misleading or deceptive representations were not only a cause, but the major cause of Mr Navabi's loss or damage.
Before dealing with relief and damages I will deal with the balance of the issues, most relatively briefly, given my findings that the alternative cause of action in misleading or deceptive conduct is proved.

Was Mr Navabi in a position of vulnerability in his dealings with Mr Ghasemi?

Mr Navabi maintains that he was in a position of vulnerability in his dealings with Mr Ghasemi. He pleads that he trusted Mr Ghasemi and that he was a new migrant to Perth and unfamiliar with business practices in Western Australia. Mr Navabi says that whatever the agreement was for purchase of the shareholding in the company, it should be set aside because of Mr Ghasemi's unconscionable conduct. Mr Ghasemi denies that he acted unconscionably.
Unconscionable conduct looks to the intended enforcement or retention of a benefit of a dealing with a person under a special disability.[147] Where one party by reason of some condition or circumstance is placed at a special disadvantage to another party, the transaction is liable to be set aside if the other party takes an unfair or unconscientious advantage of the opportunity created. The relevant disadvantage focuses on 'the ability of the weaker, or victimised, party, to make an informed judgment as to his or her interests'.[148] It is not enough that there is some difference in the bargaining power of the parties, the disabling condition must be such as to seriously affect the ability of the innocent party to make a judgment as to their own best interests.[149]
[147] Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447.
[148] Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457; 158 ALR 66; [39].
[149] Commercial Bank of Australia v Amadio (462).
Mr Navabi says that he was at a special disadvantage and relies on two decisions of the High Court in Bridgewater v Leahy[150] and Louth v Diprose.[151] In Bridgewater, an elderly man, Mr York, fully trusted and had enormous affection for his nephew who he then gave property to, thus depriving the beneficiaries of his estate, his three daughters, of it. Mr York was in good health and of sound mind and concerned with preserving his legacy. His nephew approached him with a proposal that played on his uncle's desire to keep his rural interests intact after his death. The High Court held by majority that the nephew took advantage of his position to obtain a benefit through a grossly improvident transaction on the part of his uncle.[152]
[150] Bridgewater v Leahy.
[151] Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621.
[152] Bridgewater v Leahy [123].
The relationship between Mr Navabi and Mr Ghasemi was quite different. There was no familial trust and the relationship was not one of father/son as that in Bridgewater was characterised. Mr Navabi trusted Mr Ghasemi as a business partner and believed they shared the same values. If there had been no deceit by Mr Ghasemi, the relationship of trust would have been a solid foundation for building a business as equal partners. The reason for the breakdown of the business and agreement was not any imbalance in their relationship but Mr Ghasemi's breach of trust.
In Louth, the High Court held that the position of disadvantage which renders one party subject to exploitation by another may stem from a strong emotional dependence or attachment. In that case the court confirmed the South Australian Full Court's view that 'it is an oversimplification to say that because the respondent acted as he did with his eyes open, and with a full understanding of what he was doing, he was not in a position of disadvantage, and therefore not the victim of unconscionable conduct'.[153] Mr Diprose was a solicitor who began a relationship with Ms Louth after their respective marriages failed. Mr Diprose, who was infatuated with Ms Louth, bought her a property which he then sought to recover after the relationship ended. The High Court held that Ms Louth's unconscientious use of her power over Mr Diprose, resulting from his infatuation, rendered it unconscionable for her to retain the benefit of such a large gift out of Mr Diprose's limited resources. Her conduct was dishonest.
[153] Diprose v Louth(No 2) (1990) 54 SASR 450, 453.
Mr Navabi is a mature man with a good education, including post‑secondary studies in aeronautical engineering. He had a long career in aircraft maintenance and worked in both Iran and Malaysia. He was not a new migrant to Australia at the time of entering into the arrangement with Mr Ghasemi; he had been here for two years. He spoke English, better than Mr Ghasemi did, and had advice available to him from both his family and friends. Some of those counselled him against the business purchase.
Mr Navabi was not infatuated with Mr Ghasemi who did not hold any position of power over him. He trusted Mr Ghasemi because of their shared religious and cultural background. For Mr Navabi, that trust was sealed when he shook hands with Mr Ghasemi.[154] As he said in cross‑examination, when asked why he had not followed the advice of others not to go ahead with the purchase, 'because that … because I trust you. I trust you more than everybody. Because you show me you are a very good man. That's why I do it.'[155]
[154] Exhibit P12.3 page 13.
[155] ts 205.
Trust is the foundation of many business relationships and does not constitute a disabling condition or circumstance which seriously affects the ability of a party to make a judgment in his or her own best interests. There must be some underlying adverse circumstance or special disadvantage. That might be poverty or a need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary.[156] Although those categories are not closed, Mr Navabi does not fall into any of them.
[156] Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, 405.
Breach of trust, even by deceit, does not elevate the party who was deceived into a position of special disability. Breach of trust is not by itself unconscionability.
Although Mr Ghasemi lied to Mr Navabi and breached his trust I am not satisfied that Mr Navabi was at any special disadvantage and I am not satisfied that Mr Ghasemi acted unconscionably towards Mr Navabi. Accordingly it is unnecessary for me to consider what relief might be available to Mr Navabi if unconscionability were proved.

Was there a failure of consideration for the oral agreement of 11 April 2016?

Mr Navabi maintains that because the 48% shareholding he purchased had no value at all, there has been a total failure of consideration in respect of the oral agreement of 11 April. In the alternative, he says Mr Ghasemi breached a term of the agreement in that the share was not valued at $270,000. Mr Ghasemi denies there was any breach and denies a total failure of consideration.
Payment made for a consideration that has wholly failed is prima facie recoverable in restitution.[157] Payment can only be recovered if there has been a total, or at least substantial, failure of consideration. Proportionate recovery is not allowed.[158]
[157] Australia and New Zealand Banking Group Limited v Westpac Banking Group [1988] HCA 17; (1988) 164 CLR 662, 673.
[158] Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344, 375.
Although I am satisfied on my findings of fact that the business had no market value at 11 April 2016, I am not satisfied that it had no value at all. Although heavily encumbered, the company did own plant and equipment and stock with a total value of $103,808 at 11 April 2016.
After the agreement was concluded Mr Navabi worked together with Mr Ghasemi in the business and derived income from the company totalling $12,000. As I have found, this came from his share of the sale of stock of the company. Accordingly, I am not satisfied there was a total failure of consideration.

Was the oral agreement of 11 April 2016 breached?

If a representation is reasonably likely to induce and in fact induces, 'it is prima facie a term of the contract, and the onus is on the representor to displace this inference'.[159]
[159] Ellul v Oakes (1972) 3 SASR 377.
Following from my findings above, I am satisfied that the value and profit representations induced Mr Navabi and they are terms of the 11 April contract for the sale of the shareholding.
I am not satisfied the turnover representation induced the contract and I am not satisfied it was a term of the contract.
Whether a term is an essential term depends on:
… whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor. [160]
[160] Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632, 641 - 642.
In my opinion the value representation was an essential term of the contract, it was a promise of such importance that Mr Navabi would not have entered the contract unless he was assured of substantial performance of that promise. That was apparent to Mr Ghasemi and indeed Mr Ghasemi misled Mr Navabi about the value of the company and concealed its liabilities from Mr Navabi.
The profit representation was partially about a future matter and an expectation that Mr Navabi had. He understood though that the profit might be variable, between $40,000 and $50,000 per month. More importantly, viewed objectively, the sale of a small business such as this would only rarely include as an essential term, giving rise to a right to termination, a promise of reliable future profit. In my opinion the profit representation was not an essential term of the contract. It was a term that induced Mr Navabi both because of the promise about past and current profitability but also the expectation of similar future profit. In my opinion the profit representation amounted to a warranty.
For the reasons I have already outlined above, when dealing with Mr Ghasemi's misleading or deceptive conduct, I am satisfied that Mr Ghasemi breached an essential term of the 11 April contract, being the value representation, because the market value of the company was nil.
I am similarly satisfied that the profit representation warranty was breached in that the previous profitability of the company did not match the profit representation and the profit in the months after the sale also did not meet that promise.
Although I am satisfied of breach, termination of the agreement is less clear. Generally, communication of an election to terminate an agreement is essential.[161] There must be an unequivocal indication that the contract is at an end.[162] Any words or conduct are sufficient if they 'make the election manifest to the relevant parties'.[163]
[161] Poort v Development Underwriting (Victoria) Pty Ltd (No 2) [1977] VR 454, 459.
[162] Trevilyan v Donaldson [1997] SASC 6502.
[163] Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 [155].

I am unable to finally conclude whether, and if so, when and how, the contract was terminated as there is insufficient evidence. It is possible that there was a termination by conduct after Mr Navabi walked away from the business after receiving Mr Lewin's letter of 1 September and obtaining his own legal advice.
Ultimately though it is not necessary for me to finally determine this matter as a right to damages for loss caused by breach of contract arises whether or not the contract has been terminated.[164]
[164] Luna Park (NSW) Limited v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286, 300.

Is the share sale agreement of 26 April 2016 enforceable?

Mr Navabi and Mr Ghasemi both plead that the share sale agreement signed on 26 April 2016 was an agreement and not a deed. In order to be a deed the agreement needs to comply with s 9 of the Property Law Act 1969 (WA). The agreement complies with the formal requirements of a deed in that it is signed and witnessed. The question then arises whether it has the same effect as a deed in light of s 9(4) of the Property Law Act 1969.
In order to determine whether a document was executed as a deed, it is necessary to determine the intent of the parties in executing the document, in particular whether they intended to execute it as a deed. The intent of the parties can be discerned from extrinsic evidence concerning the words or acts of the parties, or from an examination of the words contained in the document itself.[165]
[165] Deane and Westham Holdings Pty Ltd v Lloyd (1991) 3 WAR 235, 252.
There is no evidence of any extrinsic words or acts by the parties that they intended to execute the document as a deed. Mr Lewin, an experienced commercial solicitor, prepared the document as an agreement, not a deed, on the basis of his instructions from Mr Ghasemi. By contrast he prepared the documentation concerning Mr Ghasemi's purchase of the business in 2013 as a deed.
My findings of fact above are that the binding agreement for the sale of the shareholding in the company was concluded on 11 April and all that remained to be done as at 26 April was to transfer the shares. No further written agreement or deed was required to achieve that end.
There is also nothing in the wording of the document that suggests it was executed as a deed, rather it is described as an agreement and executed as an agreement. The use of the word 'agreement' in a number of clauses suggests that it is an agreement rather than a deed. [166]
[166] Exhibit P1 clauses 3, 4, 9, 10, 11, 12, 13, 14, 15 and 16.
I am satisfied on balance that the share sale agreement operated as an agreement and not a deed. Consequently, in order to be an enforceable agreement it required consideration.
When he signed the share sale agreement on 26 April, Mr Navabi had already fulfilled his part of the 11 April agreement. There was nothing more for him to do. He signed the 26 April agreement in order to obtain the shares which he had already paid for and was legally entitled to receive. There was no consideration for the 26 April share sale agreement. I am satisfied therefore that the share sale agreement of 26 April fails for want of consideration. Insofar as it is expressed as being an agreement for the sale of 48% of the shares in the company for $140,000 it is also a fiction. It is not necessary for me to consider the balance of the terms in the agreement as I am satisfied it is of no effect and not enforceable.

Is the loan agreement signed on 26 April 2016 enforceable?

Mr Navabi and Mr Ghasemi both plead that the loan agreement signed on 26 April 2016 was an agreement and not a deed. It too is signed and witnessed and I must decide whether it operates as a deed.
The document is expressed throughout as an agreement, the parties intended it to operate as such and there is no reason it has to operate as a deed. I am satisfied it is an agreement and required consideration to be enforceable.
The loan agreement describes Mr Ghasemi as the creditor and Mr 'Narobi' as the debtor.[167] It has a repayment clause and deals with demand and the event of default. It provides for an amount of loan from Mr Ghasemi to Mr Navabi of $40,000 “for the payment of the stock of the business Pashi Start Pty Ltd” and provides for loan repayments.[168]
[167] Exhibit P6 cover page. Elsewhere in the document Mr Navabi is described as the debtor.
[168] Exhibit P6 schedule.
Based on my findings of fact there was no advance of money and no loan from Mr Ghasemi to Mr Navabi in the amount of $40,000. Mr Ghasemi's claim to have sold stock that he had purchased outside of the company to Mr Navabi was false. Mr Ghasemi had no stock to sell Mr Navabi and sold him none. When Mr Navabi bought a share in the company for $270,000 he bought a share in all of the assets of the company, including the stock, and there was nothing more for him to pay.
Accordingly, the loan agreement is a fiction and fails for want of consideration.

Did Mr Ghasemi intentionally deceive Mr Navabi about the value of the shareholding?

In his statement of claim Mr Navabi pleaded reliance on the tort of deceit, arising out of the false representations that were made to him by Mr Ghasemi. Mr Ghasemi denied any liability in tort.
In closing submissions the plaintiff agreed with a proposition that if I were satisfied about misleading or deceptive conduct there was no need for me to consider the tort of deceit if the measure of damages would be no different.[169] In his written closing submissions Mr Navabi abandoned the claim for tort of deceit and accordingly I will not consider it further.
[169] ts 588.

Damages

Damages for misleading or deceptive conduct

In his particulars of damage dated 9 October 2018, Mr Navabi claims damages in the sum of $270,000, being the amount he paid for the 48% share in the company. Mr Ghasemi denies any entitlement to damages.
Section 243 of the Australian Consumer Law provides for a wide variety of orders that the court can make following contravention of the Act by misleading or deceptive conduct. Section 237 empowers the court to make an order that compensates an injured person 'in whole or in part for the loss or damage'. Section 236 allows for recovery of damages.
In order to recover damages a plaintiff must demonstrate that loss or damage suffered was suffered 'because of the conduct' in contravention of the relevant Act.[170] I refer to the causation principles set out above. Remedies under the Australian Consumer Law should not begin with an attempt to draw an analogy from contract, tort or any other particular form of claim under the general law.[171]
[170] Competition and Consumer Act s 236, 237(1).
[171] Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494, 503 - 504; Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388 [44].
Where the misleading or deceptive conduct is found to have been a material cause of the acquisition of an asset by the plaintiff, a conventional measure of damage, perhaps the general rule, will be the difference between the price paid and its true value at the time of acquisition.[172] Mr Navabi's claim is of this character.
[172] HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640 [35] - [36]; Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179 [101]; Morellini v Adams [2011] WASCA 84 [41]; North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60; (2010) 269 ALR 262 [136].
It is important, and fundamental, to recognise that this measure of damages does not depend on the difference between price in market value, but the difference between price and the real or true value.[173]
[173] HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [36].
An assessment of market value invites attention to information available to a hypothetical purchaser at the time value is to be assessed.[174] The position is different when an assessment is to be made of the real or true value of an asset.
[174] McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 [148], [160] ‑ [161].
The decision maker in an evaluation case should 'avail himself of all information at hand at the time of making [the decision]', and not 'shut his eyes and grope in the dark'.[175]
[175] Bwllfa& Merthyr Dare Steam Collieries(1891) Ltd v Pontypridd Waterworks Co [1903] AC 426; Kizbeau Pty Ltd v WG & B Pty Ltd [1995] HCA 4 ; (1995) 184 CLR 281; HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd.
I have already summarised my findings in relation to the evidence of valuation. My task is to ascertain the true value of the company as at 11 April 2016.
I accept that in Mr Navabi's case there were emotional and personal considerations which motivated him in wanting to partner with Mr Ghasemi, being their friendship, common culture and religion. Although he had those motivations, there is no evidence, and I cannot conclude, that Mr Navabi was prepared to pay more than market value for the business by reason of such personal considerations. This is not a case where he was prepared to pay a premium to go into business with Mr Ghasemi, rather he proceeded on the basis of what Mr Ghasemi told him about the value and profitability of the business.
Even allowing for Mr Navabi's personal interest in partnering with Mr Ghasemi, he did not know in purchasing a 48% shareholding in the company that he was assuming substantial liability and that the market value of his share was minus $62,736.
I am satisfied that the true value of the 48% shareholding was less than nil. Accordingly, I am satisfied that the appropriate starting point for calculation of damages for misleading or deceptive conduct is the amount Mr Navabi paid and claims of $270,000. He did though subsequently receive $12,000 from the sale of company stock which must be deducted from the purchase price.
Mr Navabi is entitled to damages to be paid by Mr Ghasemi in the amount of $258,000.

Damages for breach of contract

Alternatively, for breach of contract Mr Navabi claims $270,000 and Mr Ghasemi denies any entitlement.
The onus of proving damages lies on Mr Navabi as the innocent party.[176] He must first prove that the loss claimed was caused by the breach.[177] He must then prove the measure of damages claimed. The general principle governing the measure of damages is that the innocent party is to be placed in the same position, so far as money can do it, as if the contract had been performed.[178] The corollary of this is that an innocent party is not entitled, by the award of damages upon breach, to be placed in a superior position to that which it would have been in had the contract been performed.[179] The compensation is to represent 'fair and adequate compensation for the loss suffered by reason of the breach of contract'.[180] The measure of damages is to be objectively determined.[181] The assessment of these damages will ordinarily involve 'a comparison between the position in which the innocent party would have been if the breach of contract had not occurred and what, relevantly, represents the position in which the innocent party is in after the occurrence of the breach'.[182] Damages are usually assessed at the date of breach although this is not always the case; 'it must give way in particular cases to solutions best adapted to giving an injured plaintiff that amount in damages will most fairly compensate him for the wrong he has suffered'.[183]
[176] Commonwealth v Amman Aviation Pty Ltd [1991] HCA 54.
[177] Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd [1968] HCA 64; (1968) 120 CLR 516.
[178] Tabcorp Holdings Limited v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 [13].
[179] Commonwealth v Amman Aviation Pty Ltd (82).
[180] Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 [282].
[181] Commonwealth v Amman Aviation Pty Ltd (80).
[182] Australian Goldfields NL v North Australian Diamonds NL [276]; Commonwealth v Amman Aviation (116).
[183] Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351.
Having regard to those principles, in my opinion Mr Navabi's entitlement to damages for breach of contract is in the same amount as for misleading or deceptive conduct. He cannot have both.

Restitution for failure of consideration regarding the loan agreement

In his particulars of damage dated 9 October 2018 Mr Navabi claims damages in the sum of $17,500, being the amount he paid to Mr Ghasemi under the loan agreement.
Because there was a total failure of consideration it would be an unjust enrichment for Mr Ghasemi to retain the money Mr Navabi paid him.[184] Mr Navabi is entitled to restitution, being a refund of the money he paid to Mr Ghasemi, namely $17,500.

Orders

[184] Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221.

In accordance with this judgment and subject to hearing from the parties, the orders I propose are that:
1.      Judgment be entered for the plaintiff for:
a.  $258,000 plus interest from 20 April 2016; and
b.     $17,500 plus interest from 8 August 2016.
2.      The defendant pay the plaintiff's costs of the action to be taxed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
AW
Associate to Judge Quail
17 JANUARY 2019