Nile Romance Pty Ltd and Anor v Alnabarawi and Ors (No.2)
[2010] VCC 313
•30 April 2010
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
| COMMERCIAL LIST | Case No.CI-04-05460 |
| NILE ROMANCE PTY LTD | First-named Plaintiff |
| (ACN 104 455 601) | |
| and | |
| MOHAMED ABDEL-RAZEK | Second-named Plaintiff |
| v | |
| SALAH ALNABARAWI | First-named Defendant |
| and | |
| JYILAN ALNABARAWI | Second-named Defendant |
| and | |
| HYTHAM ALNABARAWI | Third-named Defendant |
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| JUDGE: | HIS HONOUR JUDGE GINNANE |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 15 September 2009, 25 November 2009, 27 January 2010 and 15 February 2010 |
| DATE OF JUDGMENT: | 30 April 2010 |
| CASE MAY BE CITED AS: | Nile Romance Pty Ltd & Anor v Alnabarawi & Ors (No.2) |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 0313 |
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REASONS FOR JUDGMENT
Catchwords – CONTRACT for sale of business – parties to contract – repudiation of contract by vendor – total failure of consideration or breach of contract – damages.
CONVERSION of chattels – damages.
AGENCY – enduring power of attorney – liability of donor for actions of attorney.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr J G Samargis | Max Frankel & Co |
| For the Defendants | Mr M Main (solicitor) on 15 | Russell Kennedy |
| February 2010 by leave | ||
| HIS HONOUR: |
Background
1 On 15 September 2009, I heard this proceeding as an undefended cause. There was no appearance for the defendants when the matter was called and therefore no one to prosecute the defendants’ counterclaim. I reserved my judgment and during the course of its preparation I considered that there were issues about which the parties should be given the opportunity to make further submissions. I re-listed the matter for 6 October 2009, giving notice to the parties.
2 On 6 October 2009, the first defendant appeared on behalf of the defendants and stated that he had been unaware of the hearing date of 15 September 2009 and sought to have the matter reheard. After hearing the parties about whether the defendants had been aware of the hearing date, for reasons that I gave on 30 October 2009[1], I agreed to allow the matter to be reheard if the defendants paid $30,000 into Court by 18 November 2009, and stated that the plaintiffs would be able to apply to drawdown from that sum to pay their costs thrown away by the hearing of 15 September 2009 and by an adjourned trial date on 4 February 2009, when the defendants had been ordered to pay the costs of the day and costs thrown away, but had not done so.
[1] [2009] VCC 1312.
3 The Court arranged for a transcript of the hearing of 15 September 2009 to be provided to the parties.
4 Despite two extensions of time, and despite assurances given by the first defendant, the defendants did not pay the $30,000, which I later increased to the sum of $33,000, into Court. The matter was re-listed on 15 February 2010, when counsel for the plaintiffs addressed the questions which I had raised with the parties. Mr Main, solicitor, sought to appear on behalf of the defendants. I permitted him to address the issues that I had raised with the parties. I then reserved my judgment.
5 The result of the above history is that this proceeding remains an undefended proceeding and I have not heard evidence in support of the defendants’ defence or amended counterclaim.
The Parties, the Heads of Agreement and the Contract of Sale of Business
6 In 2002, the second plaintiff, Mr Mohamed Abdel-Razek, wished to become a travel agent and to own and operate a travel agency business. In about April 2003, he and the defendants and Halah Alnabarawi, who is the daughter of the first defendant, Salah Alnabarawi, entered into Heads of Agreement by which he and others were to purchase the business known as “Pharaohs Travel Centre” at 156 Sydney Road, Coburg (“the business”) from Hytham and Jyilan Alnabarawi who are, respectively, the son and the wife of the first defendant.
7 Hytham Alnabarawi is an adult. I was informed from the bar table on 15 February 2010 that he suffers from a brain injury and lives with his parents.
8 The Heads of Agreement were signed by Mr Abdel-Razek, by Salah Alnabarawi, in his own right and also signed by him on behalf of his son, Hytham Alnabarawi. They were also signed by his daughter, Halah Alnabarawi.
9 Mr S Alnabarawi held a travel agent’s licence.
10 The Heads of Agreement provided:
“1 Razek together with Halah and Hytham are to register a company
under the name of Nile Romance Pty Ltd.2
The said company agrees to purchase the said business for the sum of $80,000. The purchase price of $80,000 shall be paid to the Vendors as per the schedule of payments endorsed herewith and as mutually agreed between the parties.
3
Razek and Salah shall be appointed as directors of the said company and Razek shall be the secretary of the company or alternatively the Secretary of the Company shall be appointed by the Directors of the Company at of (sic) prior to formation.
4 the company shall have a capital investment of $105,000.00. 5
The number of issued shares in the Company shall be 1050 shares of which 700 will be in the name of Razek and 150 shares shall be in the names of each of Salah and Hytham, a total of 350.
The Capital of the Company shall be in the form of loans to the Company and that Razek shall loan the company the sum of $70,000 and Halah and Hytham shall both advance the sum of $17,500 each to the company a total of $35,000.”
11 Nile Romance Pty Ltd (Nile Romance), which is referred to in paragraph 1 of the Heads of Agreement, is the first plaintiff.
12 The Heads of Agreement also provided that:
“The said Salah presently is the Named person registered with the Travel Agency Board and has the capacity to act as a Travel Agent according to Law.
The said Razek will immediately apply to the Travel Compensation Fund and any other necessary bodies, and do all things necessary to become registered as a Travel Agent.
The said Salah agrees that he will continue to act as a Director and not resign from the Company and to assist the Company until such time as Razek or a person nominated by Razek shall obtain the necessary licence to legally stand in Salah’s position as the present Registered Agent.
If the terms of the sale and purchase are agreed to a contract of sale of the business is to be entered between the parties and as (sic) such a contract of sale shall embody the terms of this Heads of Agreement and any other matters relevant.”
13 Nile Romance appears to have been incorporated between April and September 2003.
14 On 8 September 2003, Mr Salah Alnabarawi, for and on behalf of Hytham Alnabarawi and Jyilan Alnabarawi, signed a Contract of Sale of Business agreeing to sell the Pharaoh’s Travel Centre to Nile Romance for the sum of $80,000. This sum was payable by $30,000 deposit, of which $12,500 had been paid, and $17,500 was to be paid on the signing of the contract, and $50,000 was payable by five equal instalments of $10,000 each every three months, commencing three months from the date of settlement. The second payment of $17,500 was paid on the signing of the Contract, so that Nile Romance had by then paid $30,000. He also paid $5000 to the vendors on 23 September 2004.[2]
[2] T 23.
15 Relevant parts of the Clause 3 of the Special Conditions of the Contract provided:
“(3)
(a)
the Balance of the Purchase Price will be paid with the first instalment of $10,000.00 to the Vendors direct. The second instalment of $10,000.00 will be split as to the first $5,000.00 to the Vendors direct and the remaining $5,000.00 as follows.
(b)
Hytham Alnabarawi (Hytham) and Halah Alnabarawi (Halah) are to each agree to irrevocably to purchase 175 Shares each in Nile Romance Pty Ltd for the sum of $17,500 each, totalling $35,000. The $35,000.00 is to be paid by four instalments payable every three months, the first instalment in the sum of $5,000.00 and the next three instalments in the sum of $10,000.00 each. Such payments will coincide with the terms of payments by the purchaser as set out in Clause 3(a) hereof;
(4) Salah acknowledges that he will assist Nile Romance Pty Ltd to obtain a Travel Agent’s licence in its own name. If requested by either Mohamed or Amr or both of them shall assist them to obtain a Travel Agent Licence in their own name. When such licence has been obtained Salah will apply to cancel the Travel Agent Licence in his own name. . . . (6) Salah undertakes to work in the business for a minimum of 24 months from the date of sale. After the initial 24 months, depending on Salah’s state of health, it will be at his discretion if requested to remain whether he continues working in the business or not, whether on a full-time basis, a part-time basis or at all. . . . (10) If any person named in this Contract of Sale is made up of more than one individual or corporation, they must all perform their obligations under this Agreement jointly and each individual must also perform them.
(11)
This contract constitutes the entire agreement between the parties with respect to the sale and the purchase of the business and there are no conditions, warranties or other terms affecting the sale or purchase except those included in this contract.”
16 The reference to “Amr” in Special Condition (4), was to a person, who appears to have been a business associate of one or other of the parties, but who did not ultimately take part in the business.
17 Mr. Salah Alnabarawi held an enduring Power of Attorney from his son, Hytham and from his wife Jyilan Alnabarawi, who was named as a party to the Heads of Agreement, but did not sign them. The Powers of Attorney were dated July 2003.
Events after the Contract of Sale of Business was Signed
18 I set out the following events, which I have taken from the evidence of Mr Abdul-Razek, and the documents that the plaintiffs presented to the Court. I find that each of the following events occurred or, the following facts are established by the evidence.
19 Mr Abdel-Razek commenced working in the business soon after the agreement was executed in September 2003.
20 Mr Abdel-Razek is a director and majority shareholder of Nile Romance. Mr S Alnabarawi is a director and shareholder of Nile Romance and Mr H Alnabarawi is a shareholder.
21 Nile Romance did not pay any further instalments of the purchase price additional to the $35,000 referred to above.
22 Mr S. Alnabarawi did not work in the business for a minimum of 24 months from the date of sale. He did work in the business, but travelled overseas in late 2003 and early 2004 and for a further time in April or May 2004.
23 The lease of the business premises at which Pharaoh’s Travel Centre was conducted, 156 Sydney Road, Coburg, was not renewed after warnings from the landlord about Mr S Alnabarawi’s conduct in continuing to smoke at the premises. As a result, in January 2004, the business had to be relocated to premises at 538 Sydney Road, Brunswick and re-fitting work was required.
24 At the time of the relocation of the business, Mr Abdel-Razek spoke with Mr Alnabarawi about the cost of the new fit-out, stating that he was not supposed to pay for the new premises:
“… because I already paid for my buying the premises from 156 Sydney
Road, Coburg.”[3]
[3] T91.
25 Mr Alnabarawi replied:
“Just pay now and when we sit, we basic (sic) deduct it from the
payment.”
and:
“Just pay now and when we sit, we fix it up together.”[4]
[4] T92.
26 After the move to the new premises, Mr Abdel-Razek also spoke with Mr Alnabarawi about the working expenses of the business that he was paying. He told Mr Alnabarawi that he should pay one-third of the expenses. Mr Alnabarawi said:
“When we sit, [we] fix it together.”[5]
[5] T93.
27 Mr Abdel-Razek paid the following amounts for the fit out of the new premises at 538 Sydney Road, Brunswick:[6]
[6] T 24 – T 28.
$ 2,300.00 for the carpet $ 2,000.00 for painting $ 1,600.00 for carpentry $ 2,500.00 for electricians $ 3,500.00 for decorating $ 900.00 for plumbing and fittings $ 900.00 for telephone company fitting $ 1,100.00 for computer programs. _________ $14,800.00 =========
28 Pharaoh’s Travel Centre continued to trade after its relocation to 538 Sydney Road, Brunswick.
29 In September 2004, Mr Alnabarawi locked Nile Romance and Mr Abdel- Razek out of the new premises by changing the locks.[7] Mr Abdel-Razek gave evidence that when he asked Mr Alnabarawi why he had changed the locks, he said someone had attempted to break in. Mr Abdel-Razek was unable to persuade Mr Alnabarawi to let him back into the business. Mr Alnabarawi asserted that he had stole money from the business. Mr Abdel- Razek asked for proof but was not given any. [8]
[7] T 47.
[8] T 45-46.
30 Mr C Lambert, an accountant, gave evidence that he had reviewed accounts that purported to show that Mr Abdel- Razek had stolen money. His evidence refuted that suggestion.
31 The defendants, by Amended Counterclaim, sought repayment of various sums alleged to be due by the plaintiffs, or the second plaintiff, to them. These included monies said to be loaned by the first defendant to the second plaintiff, monies alleged to have been received by the second plaintiff in the business, or for the business, and not accounted for, damages for the failure of the first plaintiff to complete the purchase of the business and pay the balance of the purchase price, failing to account for monies received in the business, arranging for a loan from a person, which Consumer Affairs Victoria directed the business to refund and obtaining and wrongfully retaining “collector’s notes” that a client had provided to the business to hold as security for future payment.
32 Because the case has proceeded undefended, the Amended Counterclaim was not prosecuted and I therefore do not consider it.
33 Mr Abdel-Raze did not obtain his travel agent’s licence, whilst working at Pharaoh’s Travel Centre.
34 On 5 October 2004, the first defendant, under the name of Pharaohs Travel Centre, wrote to the Business Licensing Authority in respect of Nile Romance’s application for a travel agent’s licence as follows:
“I, Salah Alnabarawi of 538 Sydney Road, Brunswick, Vic 3057, I refer to the processing of the Nile Romance Pty Ltd Travel Licence; I would be grateful if you would suspend the processing of that Licence until further notice.
I further request that El Pharaoh Travel current Licence remains intact until the matter of the Nile Romance Pty Ltd (sic) resolved among the shareholders.”
Causes of Action
35 The plaintiffs pleaded many causes of action, principally in contract.
36 The causes of action include allegations that a variation of the Heads of Agreement and the Contract of Sale of Business occurred in or about February/March 2004 and in or about May/June 2004 whereby:
(a)
the payments made by Mr Abdel-Razek on behalf of himself and Nile Romance would be accepted and received in lieu of the payments set out in those agreements;
(b)
the first and second plaintiffs would accept late payment by the first and second defendants for their shares in Nile Romance;
(c)
the first and second plaintiffs would accept late payment by the first and second defendants for their one-third share of expenses of the business during the period of payments in lieu; and
(d)
any adjustments concerning payments would be resolved when the parties sat down to reconcile the payments made or due.
37 The plaintiffs allege that pursuant to and in reliance on those variations, they paid the following sums to the defendants:
(a) relocation and fit-out costs $15,000 (b) running expense of business $19,000 (c) costs for travel agent’s licence $11,000
(d) legal costs $5,000 _______
Total $50,000 =======
38 The plaintiffs argued that the Heads of Agreement and the Contract should be read together, so that the obligations imposed by the Heads of Agreement continued to bind and benefit the parties to that document even after the Contract was signed. On this argument, Mr Abdel-Razek had rights to sue for recovery of consideration which had totally failed, or for damages for repudiation of the Contract for Sale of Business, even though he was not a party to it. I do not accept that argument. The last paragraph of the Heads of Agreement that I have quoted above, indicates that from the time the Contract of sale of business was entered into, it governed the legal relationship for the sale of Pharaoh’s Travel Centre. This is consistent with legal principle governing the effect of preliminary documents that are later replaced with a more formal contract.[9]
[9] Masters v Cameron (1954) 91 CLR 353.
39 Therefore, neither Mr Abdel-Razek, nor Mr S Alnabarawi, was a party to the Contract for the Sale of Business.
40 Under the contract, Mr S Alnabarawi did undertake the obligation to work in the business for twenty four months and acknowledged that he would assist Nile Romance to obtain a travel agent’s licence. Because he was not a party to the Contract and did not sign it as a party, I do not consider that he can be sued for breach of contract. For the reasons I have given, I consider that any contractual obligations that may have been created by the Heads of Agreement, to which Mr S Alnabarawi was a party, were replaced by the terms of, and the legal effect of, the Contract of sale of business.
41 The plaintiffs also argued that it was a condition precedent to the operation of both the Heads of Agreement and the Contract that Mr Abdel- Razek, or a person nominated by him obtain a travel agent’s licence to run the business. The terms of the Heads of Agreement and Contract do not support that argument. Rather they suggest that the contract would operate on terms which included Mr Abdel-Razek receiving training and assistance from Mr S Alnabarawi.
Issues to be Determined
42 The principal issues to be determined on the plaintiffs’ case are:
(a)
when the business was relocated to 538 Sydney Road, Brunswick, did the Contract of Sale of Business continue to apply to it?
(b)
was the Contract of Sale of Business varied in 2004 whereby fit out costs for new premises of the business, paid for by Mr Abdel-Razek, were to be deducted from the balance of the purchase price payable by Nile Romance?
(c)
did Mr Abdel-Razek’s payment of business expenses incurred in running the business entitle him to deduct those expenses from the purchase price otherwise payable to the vendors?
(d)
did the first defendant’s actions in locking Nile Romance and Mr Abdel- Razek out of the business end the Contract:
(i) as a result of Mr Abdel-Razek accepting the repudiation of the Contract?
(ii) as a result of a total failure of consideration?
(e) if yes to either part of (d), what compensation or damages should be awarded to the plaintiffs? (f) did the defendants convert Mr Abdel-Razek’s computer equipment and mobile phone? (g) if yes to (f), what damages is Mr Abdel-Razek entitled to recover as a result of the conversions? (h) are the second and third defendants liable for the actions of the first defendant? (i) what cause of action lies against the first defendant, bearing in mind that he did not own the business and was not a party to the Contract of sale?
(j) should judgement be given against Mr Hytham Alnabarawi?
Relocation of the Business
43 As I stated above, the business was relocated to 538 Sydney Road Brunswick. The contract was for the sale of the Pharaoh’s Travel Centre. The fact that the business was relocated did not mean that relevant terms of the Contract ceased to apply. Rather, in my opinion, the Contract continued to apply to the business at the relocated premises. A number of contractual obligations still had to be performed. The defendants’ Amended Counterclaim is framed on that basis. Alternatively, the parties must be taken to have varied the Contract to substitute the new business premises as the location of the business that was being sold.
Did the Defendants Repudiate the Sale of Business Contract?
44 The actions of Mr S Alnabarawi in locking Nile Romance and Mr Abdel-Razek out of the premises did evince an intention no longer to be bound by the Contract.
45 The structure of the Contract for Sale of Business provided that Nile Romance would purchase the business, that Mr Abdel-Razek would work in it with Mr S Alnabarawi’s assistance for twenty four months and that Nile Romance or, Mr Abdel-Razek, would obtain a travel agent’s licence with Mr S Alnabarawi’s assistance. Mr Alnabarawi’s actions in locking Mr Abdul-Razek out of the business premises repudiated the Contract and breached those obligations by destroying the structure of the Contract.
46 The plaintiffs’ counsel contended that the defendants’ actions resulted in a total failure of consideration of the Agreements and that therefore the plaintiffs were entitled to a re-payment of all the monies that they had paid to the defendants. I do not accept that there has been a total failure of consideration. The relevant test applied to the facts of this case, is not whether the plaintiffs have received a specific benefit intended by the agreements, but whether the defendants have performed any part of the contract or duties for which the purchase price was payable: see the
consideration of this issue by Lord Goff in Stoczńia Gdanska SA v Latvian
Shipping Co,[10] and compare Intertransport International Private Ltd v Donaldson[11] and Roxborough v Rothmans of Pall Mall Australia Ltd.[12][10] [1998] 1 All ER 883, 896.
[11] [2005] VSCA 303.
[12] (2001) 208 CLR 516.
47 There has been a breach of contract of a fundamental nature. The second and third defendants did perform part of the contractual duties for which the purchase price was payable, namely allowing Nile Romance, through Mr Abdel-Razek, to have control of, or at least work in, the business for twelve months, commencing in September 2003. There has not been a total failure of consideration.
48 As a result of the repudiation of the Contract, Nile Romance was entitled to rescind it and sue for damages. At the latest, by the commencement of this proceeding in 2004, Nile Romance indicated its acceptance of the repudiation of contract.
49 Damages can be recovered that flow from the breach of, and repudiation of, contract. Nile Romance is entitled to full compensation for the loss which it sustained in consequence of the defendants’ repudiation of Contract subject to the rules as to remoteness of damages.[13]
[13] Hungerfords v Walker (1989) 171 CLR 125,143.
What Damages are the Plaintiffs Entitled to Recover?
50 The plaintiffs claimed damages totalling approximately $85,000, including amounts of $35,000 paid towards the purchase price and towards the fit out of the premises to which the business relocated totalling $14,800 which are set out above. The following amounts were also claimed as damages:
Running expenses of the business $19,000 Costs for travel agent’s licence $11,000 Legal costs $5,000
51 Nile Romance did not pay the balance of the purchase price, which was $45,000. By the time Nile Romance was locked out of the premises, sums totalling $30,000 would have been payable by it under the written terms of the contract. The second and third defendants served a Notice of Default in October 2004, apparently claiming the balance of purchase monies due.
52 However, on the evidence of Mr Abdel-Razek, which I have set out above, I find that the Contract of Sale of Business was varied, so that the fit out expenses paid by Nile Romance and Mr Abdel-Razek for the new premises, are to be regarded as payment of part of the purchase price.
53 Again on the evidence of Mr Abdel-Razek, that I have set out above, I find that Nile Romance, through Mr Abdel-Razek, and the second and third defendants, through Mr S Alnabarawi, agreed to postpone the dates upon which further instalments of the purchase price were payable, until they had discussed an appropriate reconciliation of the payments, that Mr Abdel-Razek had made towards the cost of the fit out at the new premises and the running costs of the business. I therefore do not consider that in September 2004, Nile Romance was in breach of its obligations under the Contract to pay instalments of the purchase price.
Fit out Expenses
54 As stated the sum of $14,800 was spent in fitting out the new premises. I have listed those expenditures previously. I find that that expenditure was incurred for, or on behalf of Nile Romance, so that it could operate Pharaoh’s Travel Centre at the new location in Sydney Road Brunswick.
55 Nile Romance has sustained, and is entitled to recover, damages resulting from the repudiation of the contract in the sum of $14,800 spent on the fit-out.
Travel Agent’s Licence Expenses
56 The third item of damages that is claimed by the plaintiffs are the costs incurred in connection with Nile Romance, or Mr Abdel-Razek, attempting to obtain a travel agent’s licence. The application appears to have been made by Nile Romance. The expenses included:
(a) $4,800 paid to the Travel Compensation Fund; (b)
$950 paid to the plaintiffs’ solicitor in connection with the travel agent’s licence.
57 These sums were spent by Nile Romance and not recovered. They are losses sustained as a result of the repudiation of the contract and Nile Romance is entitled to recover them.
58 There were further claims made for the sum of $5000 paid into the Arab Bank “to use it at any time to finish the licence for travelling”, [14] which amount was said to have been taken by Mr S Alnabarawi, and $250 paid to Mr Amr for sundries. I am not satisfied on the evidence as to the details of those amounts, why they were made, or the terms on which Mr S Alnabarawi may have been able to withdraw amounts from the Arab Bank account and I am not prepared to award them as damages.
[14] T 43.
59 I therefore consider that Nile Romance is entitled to recover damages in the sum of $5750 in respect of the application for the travel agent’s licence and the associated legal expenses.
Expenses of Running the Business
60 Mr Abdul-Razek gave evidence that he contributed running expenses of approximately $19,000 to the business to keep it afloat, including amounts paid to maintain the businesses’ liquidity, wages, and amounts in the nature of wages drawn by him and Mr S. Alnabarawi, when he worked in the business, and other expenses. I do not consider that the evidence establishes that the Contract was varied to enable these expense payments to be treated as part of the purchase price.
61 Further, I do not consider that these amounts can be recovered as damages as part of losses that Nile Romance sustained in consequence of the defendants’ repudiation of the Contract. Nile Romance did operate the business through Mr Abdel-Razek for twelve months and incurred expenses in running the business. I have not accepted the plaintiffs’ claim as one for total failure of consideration. I do not consider that these business expenses can be recovered as damages following the rescission of the Contract.
Legal Costs and Miscellaneous Expenses
62 Nile Romance also claimed $4,700 legal costs, associated with the Contract of Sale and other pre-contract investigations. It also claimed the sum of $1,050, which was for incorporation expenses. I heard evidence from the plaintiffs’ solicitor about these expenses.
63 I do not consider that these sums are losses sustained as a consequence of the repudiation of the Contract. The Contract was on foot for a time. Some of the legal expenses appear to have been incurred prior to the Contract being executed. Some of them may have been incurred in connection with the Heads of Agreement, which I have found was replaced by the Contract. The evidence does not permit me to allocate these costs to particular stages of the transaction. Nile Romance is still in existence as a result of its incorporation and is the first plaintiff in this action.
Can the First Defendant be sued for Breach of the Contract of Sale of
Business?64 I do not consider that Mr S Alnabarawi can be sued for breach of the Contract of Sale of business because he is not a party to it.
Were the Second and Third Defendants liable for actions of the First Defendant?
65 Mr S Alnabarawi signed the Contract of Sale as vendor on behalf of his son, Hytham, and his wife, Jyilan. He held enduring Powers of Attorney from them. The rules of agency apply to the use of Powers of Attorney. The attorney is able to do all acts and things that the donor can do.[15]
[15] Ghosn v Principle Focus Pty Ltd & Ors (No.2) [2008] VSC 574, at [36]; and see s.115 of the
66 Mr S Alnabarawi could therefore conduct the business and sell it. His actions, which I have found to have repudiated the contract, meant that the ownership of the business returned to Hytham and Jyilan Alnabarawi. I consider that in acting as he did, he acted in the course of his engagement as attorney and agent for them.16
67 Hytham and Jyilan Alnabarawi are liable for the first defendant’s action in repudiating the contract. They owned the business. They had given authority by means of the Powers of Attorney to Mr S Alnabarawi to do anything that they could do. I do not consider that Mr S. Alnabarawi’s actions in locking Nile Romance out of the business was outside the scope of his authority as an agent and attorney.
Should Judgment be Entered Against Mr Hytham Alnabarawi?
68 On 15 February 2010, Mr M Main informed me that Mr H Alnabarawi was the disabled son of Salah Alnabarawi and Jyilan Alnabarawi and suffered from a brain injury. He lives with his parents. I was informed that he and his mother, the second defendant, are in Egypt.
69 In the circumstances I have set out, I do not consider that, at this stage, I should allow judgment to be entered against the son, Mr H Alnabarawi. It may be that he should have defended this proceeding through a litigation guardian.17 If so, a judgment entered against him may be irregular. I take into account that he is said to live with his parents, who are parties to the proceeding. He gave his father an enduring Power of Attorney in July 2003. I also take into account that the solicitors, who had conduct of this proceeding on his behalf for much of the time that it has been on foot, have not taken steps to have a litigation guardian appointed. This would have been required
Instruments Act 1958 and Fridman’s ‘The Law of Agency (6th edition) chapters 11 and 13.
See the cases discussed by McHugh J in his dissenting judgment in Scott v Davis (2000) 204 CLR 333, 347- 359.
See the mandatory terms of Rule 15.02 of the County Court Civil Procedure Rules 2008 and Civil Procedure - Victoria, p.2975.
if he was “under disability” within the meaning of that term in Order 15 of the County Court Civil Procedure Rules 2008. However, in light of the information I received from the bar table on 15 February 2010, I would not enter judgment against Mr H Alnabarawi until I had received some submissions concerning the steps taken to represent his interests in this proceeding. I will permit Nile Romance to pursue judgment against Mr H Alnabarawi if it so wishes, but I will need to hear submissions about how his interests in the proceeding have been protected.
Claims in Conversion
70 Mr Abdel-Razek, the second plaintiff, also claimed that he was the owner of or entitled to possession of the following chattels, which had been converted by the defendants, alternatively by Mr S Alnabarawi:
[18] PCB 290 and T48.
[19] T 50.
(a) two computers with accessories and printers. Mr Abdel-Razek paid monthly instalments of $200 for twenty three months totalling $4,600 for them[18] He continued to make payments for months after he and Nile Romance were locked out of the business premises. (b) a mobile phone purchased in about July 2004. Mr Abdel-Razek made payments totalling $1,086 for the mobile phone, including payments of $900 after he lost possession of it.[19] 71 I am satisfied from his evidence that Mr Abdel-Razek left the computer and accessories and mobile phone on the business premises, that he has made a demand to Mr S Alnabarawi for the return of them, but has been refused access to the premises to obtain them.[20] On the evidence I find that he was entitled to immediate possession of the mobile phone, although his wife may have owned it. He therefore has title to sue for conversion of the mobile telephone.
[20] T 49.
72 Mr Abdel-Razek is entitled to the value of the computer and accessories and mobile phone and any additional damage which is not too remote. The value of the goods is their market price, or if there is no market price, the cost of replacement.
73 The plaintiffs did not call evidence about the market price, or replacement value of the computers and accessories or mobile telephone. It may be that the computer repayments, being over twenty-four months, included a component of interest or finance charges, as may the payments for the mobile phone. In addition such goods depreciate in value. I therefore consider that I should not award the full amount paid by Mr Abdel- Razek for the computers and accessories and mobile phone. In the absence of more precise evidence, I can only attempt an estimate of the damages that have been suffered. I consider that two thirds of the amounts paid by the second plaintiff for the computers and accessories and mobile telephone should be awarded. This amounts to:
(a) computers and accessories $4,600 at two-thirds - $3,066.00
(b) mobile telephone $900 at two-thirds - $600.00
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Total $3,666.00
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74 I am satisfied that the first defendant has been asked to return the chattels and has refused. He is liable in damages for their conversion. I do not consider that his wife and son are liable for his actions in this regard. His conduct amounted to a tort and I do not consider that it was performed within the scope of his authority as an agent or attorney.[21]
[21] Colonial Mutual Life Assurance Society Limited v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41; Scott v Davis (2000) 204 CLR 333 and Fridman’s ‘The Law of Agency’ (6th edition) at p.276.
Other Causes of Action
75 The Amended Statement of Claim was thirty five pages long. There were a number of additional causes of action to those I have already dealt with. Many of them were not pursued.
76 A claim in misrepresentation was pursued. It related to a representation that Mr S Alnabarawi would help Mr Abdel-Razek obtain a travel agent’s licence by providing the necessary training to him and by assisting him with any application for a licence. That representation was said to found an action in negligence, in breach of the misleading and deceptive conduct provisions of the Trade Practices Act 1974 and the Fair Trading Act 1999, to found an estoppel preventing a departure from the expectation and understanding relied on by Nile Romance and to constitute a breach of director’s duties.
77 In my opinion, the Contract embodied the legal agreement about the role that Mr S Alnabarawi would assume and any previous representations were replaced by the Contract. The Contract does contain an entire agreement clause.
78 In addition, I do not consider a case is made out for breach of any representation, or misleading or deceptive conduct, or the other causes of action mentioned, because it has not been established on the evidence that Mr S Alnabarawi, at the time any such representation or conduct was engaged in, did not intend to assist Mr Abdel-Razek to obtain a travel agent’s licence.
79 I do not consider that the plaintiffs’ have established that Mr S Alnabarawi breached his duties as a director of Nile Romance by failing to assist the plaintiffs to obtain a travel agent’s licence. This cause of action was barely developed and I will say little about it, save that I consider that Mr S Anabasis’ obligation to assist Nile Romance to obtain a travel agent’s licence, arose as a result of promises that he made, which were included in the terms of the Contract. I consider that his promises should be analysed from the perspective of the defendants’ liability for repudiation of contract.
80 In any event, I do not consider that Mr S Alnabarawi’s conduct in withdrawing support for Nile Romance’s travel agency licence application, is the cause of the loss that Nile Romance has suffered, but rather the principal cause of that damage is his action in locking Nile Romance out of the business.
81 Mr Abdel-Razek also sued Mr S Alnabarawi in defamation, but that cause of action was not made out on the evidence and as I understood it, was not pursued.
Summary
82 I award Nile Romance damages in the sum of $55,550, comprising $35,000 being the part payment of the purchase price; $14,800 being costs of the fit- out of the new premises and $5,750 in respect of the travel agent’s licence application.
83 I propose to give judgment in favour of Nile Romance against the second defendant, Jyilan Alnabarawi, for the said sum of $55,550.
84 I will reserve leave to Nile Romance to apply for judgment for the said sum of $55,550 against the third defendant, Mr Hytham Alnabarawi, but any such application will have to address the issues that I have raised.
85 I propose to give judgment to the second plaintiff, Mr Abdel-Razek, against the first defendant, Mr S Alnabarawi, for damages for conversion of chattels in the sum of $3,666.
86 I will dismiss the defendants’ counterclaim.
87 I will hear submissions about the form of orders that should be made.
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