Taheri v Vitek

The dispute in *Taheri v Vitek* concerned an application for rescission of a settlement agreement, which had been reached to compromise earlier litigation. The applicant, Mr Taheri, alleged that the settlement was induced by fraudulent misrepresentations made by the respondent, Vitek Pty Ltd, in an affidavit filed in the original proceedings. The case came before the Court of Appeal of New South Wales, comprising Bathurst CJ, Emmett and Leeming JJA.

The primary legal issues before the Court of Appeal were whether rescission of the settlement agreement was available to Mr Taheri, given the alleged fraudulent misrepresentation, and whether the requirement of substantial *restitutio in integrum* could be satisfied. This question arose because Vitek Pty Ltd had already settled with other parties to the original litigation, and those settlements had not been set aside. A further issue concerned the scope of an agent's authority under section 163B of the *Conveyancing Act 1919* (NSW), specifically whether an agent acting under a power of attorney had the authority to enter into a contract that was beneficial to the agent but not to the principal. The Court also considered the interpretation of the phrase "on behalf of" in the context of statutory construction, examining legislative drafting styles, literal meanings, structural considerations, and the relevance of Law Reform Commission reports.

The Court of Appeal ultimately dismissed the appeals. In relation to the rescission claim, the Court held that the applicant had failed to establish that the alleged fraudulent misrepresentations caused him to enter into the settlement agreement. Furthermore, the Court found that substantial *restitutio in integrum* was not possible in the circumstances, particularly given that Vitek Pty Ltd had already settled with other parties and those settlements remained on foot. Regarding the agency issue, the Court determined that the agent did not have actual or apparent authority to enter into the contract on behalf of the principal in a manner that was to the agent's benefit and not the principal's.

Consequently, the Court of Appeal dismissed the appeals, with costs awarded to the respondent. The notice of motion dated 20 May 2014 was also dismissed, with costs.