Tako (Vic) Pty Ltd v Jessica Youssef Pty Ltd
[2016] VCC 1717
•30 August 2016
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-15-04286
| TAKO (VIC) PTY LTD (ACN 147 370 410) | Plaintiff |
| v | |
| JESSICA YOUSSEF PTY LTD (ACN 162 289 009) SHOP FITTING AUSTRALIA PTY LTD WRAP IT POINT COOK PTY LTD MOUNIB YOUSSEF JESSICA YOUSSEF | First Defendant Second Defendant Third Defendant Fourth Defendant Fifth Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 9, 10, 11, 12 May & 21 July 2016 | |
DATE OF JUDGMENT: | 30 August 2016 | |
CASE MAY BE CITED AS: | Tako (Vic) Pty Ltd v Jessica Youssef Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 1717 | |
REASONS FOR JUDGMENT
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Subject: CONTRACT
Catchwords: Misleading and deceptive conduct – contract – monies had and received
Legislation Cited: S52 Estate Agents Act 1980; s260 Income Tax Assessment Act 1936; ss2, 18, 236(1) Australian Consumer Law; ss137B, 139B(2) Competition and Consumer Act 2010 (Cth); ss75B and 82 of the Trade Practices Act 1974; Bankruptcy Act 1966
Cases Cited: Jones v Dunkel (1959) 101 CLR 298; Black v Tung [1953] VLR 629; Newton v Federal Commissioner of Taxation (1958) 98 CLR 1; War Assets Pty Ltd v Federal Commissioner of Taxation (1954) 91 CLR 53; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; Elders Trustee and Executor Co Ltd v EG Reeves Pty Ltd (1987) 78 ALR 193; Haros v Linfox Aust Pty Ltd [2012] FCAFC 42; Lubidineuse v Bevanere Pty Ltd (1984) 3 FCR 1; Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd [1987] FCA 556; Henville v Walker (2001) 206 CLR 52; ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640; Gould v Vaggelas (1984) 157 CLR 215 at 220, HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640, Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 514, and Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; Yorke v Lucas (1985) 158 CLR 661
Judgment: Judgment is for the plaintiff against the third and fourth defendants – order will be within 14 days: (i) the parties to bring in short Minutes to give effect to these reasons; (ii) costs reserved
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr G R McCormick | Zeljko Stojakovic Barristers & Solicitors |
| For the Second, Third and Fifth Defendants | Mr J F Richardson | Mansour Lawyers |
HIS HONOUR:
1 Mr Faris Ashak is aged 58 and comes from Iraq. He said that he graduated from an Institute of Technology in that country and operated a shop for repairing television sets and video recorders. He said that at one stage he worked as a technical officer on a project to establish a signal monitoring system for the government of Sadam Hussein. In that role, he was posted, at one stage, to Japan. Mr Ashak declined to divulge precisely what happened, but he left Iraq, travelling initially to Jordan and then to Greece where he stayed for nearly two years. Eventually, he was accepted as a migrant to Australia under a “humanitarian program”. Amongst the reasons which led him to emigrate from the Middle East was the fact that he and his family are Christians and “there was pressure on us”. Mr Ashak’s mother tongue is Syrian, but he also is a fluent speaker of Arabic. He learnt English for his work in Japan and gave his evidence to the Court in English without the assistance of an interpreter. Mr Ashak’s three brothers and two sisters had already preceded him to Australia.
2 Mr Ashak and his family are members of the Syrian Orthodox Church. His brothers operated a wrecking yard. The family co-operated in supporting one another. Eventually, in 2004, Mr Ashak established his own car yard with a motor car trader’s licence. The car yard carries out business under the name “Dozo Car Sales”, which Mr Ashak said is Japanese for “Welcome”. My own inquiries suggest that in Japanese “Dozo” means “please”.
3 Mr Ashak said that the motor trade had been through difficult times and he considered switching his business interests from the motor trade to the building industry. He said he established Tako (Vic) Pty Ltd, the plaintiff in this proceeding, to carry on this building business. It built eight units, but he did not wish to continue in the building industry so Tako was left without any business to carry on. (Transcript (“T”) 110‒115)
4 Amongst Mr Faris Ashak’s children is a son known as Isaak, who is a qualified mechanic and operates his own car repair business. Mr Faris Ashak also has a daughter, Sara, who is studying law. (T115)
5 Mr Faris Ashak said that he had never been interested in the restaurant business, but his son and daughter “they like to have a restaurant and they keep talking in front of me restaurant, let’s do that, they always mention, that restaurant is very busy”. (T116, Lines (“L”) 5‒8). As well as studying law at Victoria University, Ms Sara Ashak manages the sales, acts as sales person and does all the advertising for Dozo. (T257, L7‒14) She said “...myself and my brother wanted another job to do at night so we spoke to my dad about investing in a restaurant or something for us to do.” (Ibid L22‒25) She said they were interested in opening a kebab shop and identified vacant premises at Burnside Shopping Centre (a north-western suburb of Melbourne). The premises used to be a butcher’s shop, but it had stood vacant for some two years. Following their inquiries, the letting agent prepared a document styled “Heads of Agreement” (T258, L2‒9; Exhibit D, Court Book (“CB”) B7-12). The Heads of Agreement for the lease contemplated that the premises would be used to conduct a “kebab and falafel takeaway/dine-in”, trading as “Burnside Kebabs ‘N’ Shisha”. The agreement proposed for a lease of five years with an option to renew for a further five years. This matter never proceeded. According to Ms Sara Ashak, there was some problem scanning “the first page”, though in the court exhibit, the signature pages appear to be on the last page. According to her evidence, the first page was signed by her brother. (T258-59)
6 This proposal would have required a new fit-out for the former butcher’s shop premises. Ms Ashak’s brother, Isaak, was friendly with Mr Ragheb Karomi, whom he knew worked in a kebab shop. Mr Karomi told Mr Isaak Ashak that he knew someone who could assist with items to furnish the kebab shop. The contact in the kebab business known to Mr Karomi was Mr Mounib Youssef, also known as Sam Youssef or Suheel Youssef, who is the fourth defendant. When Mr Isaak Ashak was introduced to Mr Sam Youssef, the latter told him that “We have a warehouse full of shop fittings and things like that”. (T331, L17‒28) Mr Sam Youssef then took Mr Isaak Ashak to the warehouse. Mr Isaak Ashak said that the decisions would be made by his father, Mr Faris Ashak, and a meeting was held at a restaurant, controlled by the Youssef family, known as “Rendezvous”. The meeting was attended by Mr Isaak Ashak, Mr Faris Ashak and his wife. They were then joined by Ms Jessica Youssef, Mr Youssef’s daughter and the fifth defendant in this proceeding. The discussion was in Arabic, a language with which apparently Mr Isaak Ashak is not familiar. (T332) Mr Youssef was also member of the Syrian Orthodox community and Mr Faris Ashak knew him by reputation. He said:
“…I hear there is a lot of our people, they are working in these restaurants [that is, Mr Youssef’s restaurants], more than four or five, maybe more. [A priest] …, his brother-in-law and his two sons, they go frequently there. And two of his brother-in-laws, one of them was in Hoppers Crossing, he was the main chef in there and then he told to other people and they keep going to Sam. I was hearing about Sam, he is a good payer and he pays them good money and he gives them cash money and that is what I was always hearing. And he’s got a lot of restaurants, he is a very wealthy man and I never hear anything wrong about Sam, always I have idea that Sam is very good man and he’s a very successful man and he’s got lot of businesses. That’s what I have idea of.” (T119, L21‒T120, L4)
His son, Isaak, told Mr Faris Ashak:
“There is also a shop, they want to sell it or rent it as they say, managing, I never heard this before, managing the shop. And then he said that is what he managed to somebody else, he gave the shop to somebody else to run it and then he told me that. Then he said I had better go to him and talk to him there, I mean.” (T120, L13‒19)
7 The meeting at Rendezvous was on 23 June 2015. (Ibid L21). Mr Youssef told Mr Faris Ashak that he used to have 50 restaurants, but he sold them and he now had only 14. (T121, L15‒16) He then corrected that to 16 restaurants. (Ibid L17‒18) Mr Youssef told Mr Faris Ashak that it would cost $100,000 to fit out the Burnside premises. (Ibid L22‒26) The Heads of Agreement provided a lessor’s contribution of $20,000 toward fit-out, leaving $80,000 to be funded by the Ashak family. (Ibid L27‒29) Mr Youssef then suggested that the Ashak family take on Mr Youssef’s kebab shop for a payment of $2,300 per week plus Goods and Services Tax. (T122, L1‒9) According to Mr Ashak, Mr Youssef told him that he had been hospitalised and had lost $8 million, but he still had 14 businesses. As Mr Ashak saw it:
“That means he’s a very, very big businessman. I was not (sic) even thinking like I’m with someone who is a very strong man and he’s a very powerful and very wealthy man.” (T123, L9‒12)
Mr Youssef, according to Mr Ashak, then described a $10,000 donation that he made to his aunt for the construction of a church. (Ibid L17‒22) Mr Ashak noted “his cross was on his neck”. (Ibid L22‒23)
8 According to Mr Ashak, acceptance of Mr Youssef’s proposal would give Mr Ashak profit of $1,500 to $2,000 per week, though this would depend on who was employed to run the business and at what pay rate (T125, L22-30). Mr Ashak said that Mr Youssef had told him that the shop took $9,000 per week, which he described as its “intake” (T126, L5-10). Mr Youssef, according to Mr Ashak, assured him that since the Ashak family had not signed the Heads of Agreement for the Burnside shop, they were not obliged to go on with the deal (T128, L1-17). Following the meeting, Mr Youssef took Mr Ashak to see a pizza shop near the restaurant, showing him how the dough was prepared and the operation of the ovens (Ibid L25-30). Then Mr Youssef took Mr Ashak to the kebab shop that is the subject of the present proceeding (T129, L2-12). He showed Mr Ashak the equipment in the shop and when Mr Ashak complained that the barbeque was too old, he ensured him that new equipment could be provided.
9 The following day, apparently a Wednesday, Mr Youssef called on Mr Ashak at the car yard. Mr Ashak had given Mr Youssef his business card. According to Mr Ashak, Mr Youssef made a revised proposal whereby, instead of a weekly payment of $2,300, the amount was reduced to $1,961 conditionally upon payment six months’ in advance, together with a bond of $30,000 (T129, L21-T130, L12). Mr Youssef said, according to Mr Ashak, that it was his policy to require a $30,000 bond. According to Mr Ashak, Mr Youssef continued:
“This is refundable, the $30,000, if you go for trial, and it doesn’t matter how long, even if it’s two or three months you can trial.” (T130, L18-20)
to which Mr Ashak said he replied:
“It will never be two or three months, I need only two or three weeks, if it’s good and it’s taking money and it’s right and if my kids are happy with it I will continue, otherwise I will not go ahead with the deal.” (Ibid L20-24).
10 A document styled “Heads of Agreement” made 24 June 2015, was produced, apparently, by Mr Youssef. Mr Ashak said he saw this document for the first time on Thursday, 25 June (T131, L23-30). This document showed the parties as Wrap It Point Cook Pty Ltd (“Wrap It”), which is the third defendant, which is defined in the document as “Youssef” and Mr Isaak Ashak, who was defined as “manager”. In a short document of a page-and-a-half, the Heads of Agreement noted that Wrap It was the tenant of a shop known as “Wrap It Kebab and Falafel Shop” at Shop 33, 300 Point Cook Road, Point Cook, and that it had granted to Mr Isaak Ashak “the exclusive right to manage and conduct the said business”, and Mr Ashak agreed to manage and conduct the business. The arrangement was terminable upon 28 days’ notice and a bond of $30,000 “will be returned in full as well as any remaining months that have been paid in advance, $8,500 per month”. The rent, presumably for a sublease of the business, or some such arrangement, was set at $2,300, plus GST “payable on Monday of each week”, together with a $30,000 bond. The first six months of the “rent” was to be paid at a reduced rent of $8,500 per month, making a total of $51,000. The final subclause stated, “The agreement begins on the 29th June 2015 with the first payment being due on the 28th December 2015, this agreement expires on the 28th June [2016] and be extended.” The document was signed by Jessica Youssef, Mr Youssef’s daughter and the fifth defendant on behalf of Wrap It Point Cook Pty Ltd and by Mr Isaak Ashak, on his own behalf (Exhibit F, CB B13-B14).
11 The effect of these discussions was that the Ashak family would pay some $81,000 to interests associated with the Youssef family. At some stage, two invoices dated 25 June (that is Thursday of the week in which these transactions began), were produced, issued by Jessica Youssef Pty Ltd. These invoices constitute Exhibit E (CB B15-16). This transaction, ultimately, did not proceed. Mr Ashak and Mr Youssef began discussing an arrangement whereby the kebab shop was sold rather than leased or subleased. Mr Youssef stipulated a price of $200,000 and Mr Ashak offered $175,000 (T135, L1-2; T136, L9-10), with the price agreed. According to Mr Ashak, he enquired about Goods and Services Tax and Mr Youssef responded “No, you’re buying but you are on trial, when you are on trial there is no GST applied.” (T137, L8-10) Mr Youssef said he needed the money to fund the purchase of a bakery which he had contracted to pay and the money was required no later than the following Monday or Tuesday, then a contract of sale would be prepared (Ibid L13-17). According to Mr Ashak, Mr Youssef said “You don’t have to worry about nothing, I will refund you the full money if you don’t like the shop.” (Ibid L19-21) These discussions took place at Mr Ashak’s car yard (Ibid L30-31). Mr Ashak said he was pressed to pay the $175,000 price in cash, but could muster only $25,000 in cash, with the balance being paid in a cheque drawn on National Australia Bank (T142). A cheque for $150,000, or a copy thereof is Exhibit A (CB B17). According to Mr Ashak, Mr Youssef said “Your money will be refundable if you are not satisfied by the shop, if you are not happy you will get your money back and I’m not going to charge you nothing at all.” (T144, L7-10) According to Mr Ashak, he was offered a two-month trial, but replied “I’m going to just need two weeks maximum, maybe less than that.” (T144, L12-13). Since Mr Ashak had made payment of the $175,000 on the Friday, he claimed to be entitled to the income from the shop on Friday the 26th, Saturday the 27th and Sunday the 28th (T145, L1-15). Mr Ashak reluctantly agreed to waive claims for those days of income (Ibid L16-19).
12 On the Sunday, Mr Ashak attended a wedding at the Syrian Orthodox Church in Albion (T145). When he told the priest he had done a deal with Mr Youssef, the priest began laughing saying:
“This man, do you know this man? … This is the biggest gambler in Victoria and you can Google this and you can see he is the biggest gambler in Victoria … Well, good luck if you do business with him … Good luck if you get your money back if the restaurant is not working good.” (T146, L7-17)
I was informed that Mr Youssef, unknown to Mr Ashak, was at all material times bankrupt (T8, L27-30). He did not appear and was not represented at trial.
This left Mr Ashak deeply concerned, “So it is culminating in my brain” (T146, L19-20). He and his wife went to the Dozo car yard and his son and daughter went to “Wrap It” at Point Cook.
13 According to Ms Sara Ashak, the cheque for $150,000 paid on the Friday, was made payable to Shop Fitting Australia Pty Ltd. She did not believe that the handwritten name of the payee was in her father’s hand (T271, L6-13). She said her father told Mr Youssef that she and her brother could not go to the Wrap It premises on Sunday because of their attendance at the wedding and suggested they attend on Saturday to learn the ropes, but Mr Youssef said, “No, no, no, no, wait for the money to be clear and then you guys can come, start fresh from Monday.” (T271, L25-26) She said that Mr Youssef assured her father that the arrangement was a trial “I will give you two months … And if you don’t like it we will cancel the deal and give you your money back.” (T272, L16-18) She said that Mr Youssef said not to worry about the EFTPOS machine “we’re not going to change anything over until everything is done and the contract is ready to go”. (Ibid L22-24)
14 The following Monday, 29 June, Ms Sara Ashak and her brother, Isaak, went to Wrap It. She arrived at about 9.30 and Isaak was already there. Mr Youssef also came into the shop and invited Ms Sara Ashak to go to his premises to obtain uniforms for herself and Isaak. Mr Youssef’s assistant, Joshua, handed her some hats and shirts from a store kept at the premises of Rendezvous. Mr Youssef said that if they required any further items or assistance they should contact his daughter Jessica and he gave Ms Ashak her phone number (T273).
15 According to Ms Ashak, in the course of the day, the same customers made multiple separate purchases. One member of a group of men said, according to her, “… don’t worry it’s Sam’s shout”. “Then we picked it up that people were getting sent to buy kebabs” (T274, L20-21). Mr Ashak Senior and his wife came to Wrap It between 5.30pm and 6.00pm to have dinner and while they were there, Mr Youssef and his wife came in as well (Ibid L4-10). The shop closed at 9.30pm. Cleaning continued to 10.00pm, and Mr Ashak returned home at about 10.30pm. The shop had taken approximately $600, $150 to $200 by way of EFTPOS and the balance. Mr Karomi counted the money. Isaak received no payment but Sara’s “partner”, who attended that day, did receive some payment (T275). She said that Mr Karomi took $200 or $220 and gave her partner $150 (T276, L5-9). She said she discussed matters with her father reporting the takings of $600. He said “… if it’s making $600 it’s not even going to cover the pay and you guys didn’t get paid either.” (Ibid L22-24). The next morning she said that, in her presence, her father rang Mr Youssef stating “I don’t want to go ahead with the deal.” (Ibid L28-29) This was around 8.30am on the Tuesday (T277, L2). Her father, nevertheless, told her and Isaak to go and work at the shop because the other employees were on leave (Ibid L5-15). Sara worked at the shop all day on Tuesday, but her brother left only after a short stay (T277, L26 - T278, L6). Later in the day, Mr Youssef’s daughter, Jessica, came to the shop. She had a Transfer of Lease which she said needed to be filled out. Sara said that it had nothing to do with her, her brother was the person to whom Jessica should speak. According to Sara, Jessica included details such as Isaak owning a restaurant in Iraq. Sara thought this was bizarre since Isaak was three when the family left Iraq (T278, L8-27). The document in question, which is more accurately described as “Assignment of Lease Application Form” on the letterhead of Sanctuary Lakes Centre Pty Ltd is Exhibit G (CB B1-6).
16 Ms Ashak left the document on the bench in the shop to await the arrival of her brother, Isaak, who was expected around 6.00pm. (T280, L10-11)
17 She continued working. She and her partner left around 9.00pm (ibid L26-27) but her brother did not return to the shop that day (ibid L23). According to Ms Ashak, Mr Karomi counted the takings for the day which were not more than $650. That included cash takings and EFTPOS takings. These takings were on a par with the takings on the previous day, the Monday (T281, L6‑19).
18 The following day, Ms Ashak sent text messages via her father’s phone asking for a receipt for the payment which had been made. These texts were directed to Mr Sam Youssef’s phone. At 5.50 she sent an email:
“Suheel are you going to return my $175,000 or not. Give me a simple answer yes or no. I DO NOT WANT ANYTHING TO DO WITH YOUR BUSINESSES!” (T282, L10-12, CB B29)
19 The next texts stated:
“Get a receipt ready for the $175,000 that I paid you. Make sure its ready by 6:30pm today.” (CB B29)
“Where’s the receipt for the $25,000 that I gave you in cash? The $25,000 cash that Josh [Mr Youssef’s assistant] counted in front of cameras outside the office, the one’s he sealed in the yellow envelope.” (CB B30)
An invoice was raised Shop Fitting Pty Ltd, dated 28 June 2015 for $175,000 for “Sale of Wrap it Kebab & Falafel Point Cook paid in full” (Exhibit H, CB B34).
20 At 9.14pm, at the direction of her father, Ms Ashak sent a text stating inter alia:
“Look stop playing games stop passing messages through people this is not professional at all. Your (sic) playing a kids game. If you are a man you will talk face to face. I’ve had enough of this game if you do not contact me within 20 minutes I will make sure I take legal action against you. I will also contact the taxation office tomorrow morning and notify them of the cash games you are playing … .” (CB B30, T285, L7-15)
21 The following day, Thursday 2 July, Ms Ashak spoke to her former law lecturer seeking advice. According to her, he told her that in the absence of a written contract, there was nothing binding the Ashak family to take the shop. (T285,L25 - T286,L2). She said that she and her partner went to the Rendezvous restaurant demanding to speak to Mr Youssef but could only make contact with his daughter, Jessica, who told her that she was unable to make contact with her father. (T286, L2-18) Reaching an impasse, Ms Ashak threatened to involve the taxation office. (T287, L2-5) On Friday, there was an increasingly hostile and intemperate exchange of text messages. (Exhibit I, CB B20-27).
22 Ms Ashak then drew up a Letter of Demand. She said, “I made it up myself and I did a bit of research of when buying and selling a business what needs to be provided and all that, that’s why I have added that section 52 because for a vendor to sell a premises – a business, section 52 has to be provided …” (T290, L18 -23). This document is Exhibit B (CB B35). It is headed “Letter of Demand” and addressed to “Dear Sam, Jessica and Marcelle Youssef” (Marcelle is Mr Sam Youssef’s wife). It was also addressed to the “Managing Directors/owners of ‘Shop Fitting Australia Pty Ltd’ and ‘Jessica Youssef Pty Ltd’”. She included copies of receipt and text messages. The letter continued:
“I demand full refund of the payment that we have made as you did NOT provide us with section 52; STATEMENT BY A VENDOR OF A SMALL BUSINESS, a contract of sale to prove the sale of the business initialed and signed by both the vendor and the purchaser. You have also not provided us any proof of take-ins and outgoings, which show the profitability of the business.
We notified you that we would no longer be taking the business on Tuesday the 30th June 2015, as you allowed us a one-month cooling off period in which we verbally agreed that we are able to cancel the purchase and refund the full amount that was paid on Friday, 26th June 2015. We have continued to contact you in regards to the refund but avoiding our calls and any other means of contact will result in us taking further action.”
The letter stated that if a refund was not made by 10 July, “I reserve the right to commence legal proceedings … .” It also stated that “This could impact on your credit history”. The letter was signed by Mr Faris Ashak. Ms Ashak gave the Letter of Demand to her brother to “take it”. (T291, L8-9) According to Mr Isaak Ashak, when he went to deliver the Letter of Demand “I went – got out of the car to hand it over to him [presumably Mr Youssef] and I don’t know what happened after that, I was on the ground with a couple of people on top of me.” (T335, L18-21) When he returned home, according to his sister, he was covered in blood. (T300, L3)
Plaintiff’s claim
23 On 11 May 2016, I granted leave to the plaintiff to file a Further Amended Statement of Claim. For reasons which I explained in my Ruling, the amendments made to the Statement of Claim at that stage did not apply to the claim against the fourth defendant, who had not appeared at the trial and was not represented before me. In addition, the plaintiff’s claim, as against the first defendant, is stayed by reason of that company’s liquidation.
24 According to the plaintiff’s claim, Ms Youssef, the fifth defendant, was the sole director and shareholder of the first defendant company now in liquidation from 8 February 2013. Documents were filed on or about 1 September 2015, according to the plaintiff, which showed that as from 11 February 2013, Mrs Marcelle Youssef (the wife of Mr Sam Youssef and the mother of Jessica Youssef) was the sole shareholder and director of the company.
25 According to the plaintiff, Mrs Youssef was never the sole director and sole shareholder of the company and her daughter did hold those positions. Alternatively, it was said that Jessica Youssef was a de facto director “in that she was at all times material entrusted with and managed [the company] which bore her name”. The plaintiff said that it held invoices and a notice under the Food Act 1984 marked for Jessica Youssef’s attention.
26 It was said that at the time of its liquidation on 28 October 2015, Jessica Youssef Pty Ltd owed the Australian Tax Office $20,000; its accountant $1,250; and Shop Fitting Australia Pty Ltd (the second defendant) $350,000. According to a liquidator’s letter, it was also said to owe the second to fifth defendants’ solicitors, Mansour Lawyers, $4,500, and $120,000 to a company deregistered on 20 March 2015, Mosskitoman Pty Ltd.
27 According to the plaintiff, Mr Sam Youssef (referred to as Mounib Youssef), Shop Fitting Australia Pty Ltd (the second defendant) or Wrap It Point Cook Pty Ltd (the third defendant) or one or more or all of them, told Mr Faris Ashak that the business conducted at Shop 33, Sanctuary Lakes Centre, 300 Point Cook Road, Point Cook had a minimum “intake” of $9,000 per week and had a minimum profit of $1,500-$2,000 per week. It was said that Mr Isaak Ashak “then agreed to manage the business and `Heads of Agreement’ were entered into between [Wrap It Point Cook Pty Ltd] the third defendant and Isaak Ashak”.
28 Then, according to the claim, on 26 February 2015, Mr Youssef, on behalf of Jessica Youssef Pty Ltd, or alternatively as a director of Shop Fitting Australia Pty Ltd (the second defendant), or Wrap It Point Cook Pty Ltd (the third defendant):
“entered into an oral agreement for [Tako] to buy and [Jessica Youssef Pty Ltd, Shop Fitting Australia Pty Ltd or Wrap It Point Cook Pty Ltd] to sell the business for $175,000 subject to there being a two month trial by Isaak Ashak in running the business.”
29 This agreement was said to be oral. Tako relied on the representation as to earnings and/or the representation as to profitability “at the time it entered into the agreement”. But for these representations, it was said, Tako would not have entered into the agreement. At this stage, according to the claim, Mr Ashak senior and his son, Isaak Ashak, “had no knowledge that Mounib Youssef was an undischarged bankrupt”.
30 Tako, it was said, paid $175,000 by way of cheque and cash of $25,000 and Jessica Youssef Pty Ltd issued a receipt to Isaak Ashak. It was said that that receipt was prepared by Jessica Youssef on or about 1 July at the request of Sara Ashak to replace an earlier receipt that recorded the sale price of $150,000. The earlier receipt had been left at the Point Cook premises “on or about 30 June 2015”.
31 Next, the email exchanges of 3 July 2015 were alleged.
32 According to the plaintiff, the business was a small business within the meaning of the Estate Agents Act 1980 and no statement, as required by s52 of that Act, was given to Tako or to Faris Ashak by any of the first to fifth defendants.
33 When Isaak Ashak attended to commence the trial of the business, no keys to the shop were given to him by any of the defendants and the EFTPOS machine operating belonged to one of the first, second or third defendants.
34 It was said that there had been no transfer of assignment of the lease of the shop from Jessica Youssef Pty Ltd to Tako, and no such assignment could have been made without the consent of the lessor, Sanctuary Lakes Centre Pty Ltd, “which had not been sought or obtained by any of the defendants”. It was said, therefore, that there was an implied term of the agreement that:
“absent consent of Sanctuary Lakes to the transfer or assignment of the lease of the shop, the agreement would be at an end and the $175,000 would be repaid to the plaintiff”.
35 It was to be implied, it was said, “to give business efficacy to the contract”.
36 According to the plaintiff, at the material time, namely 29 June 2015, the gross takings of the business were $600 [presumably per day], “meaning that the business operated at a loss”. Faris Ashak advised that in light of the loss, the purchase would not proceed and a refund of $175,000 was sought. A demand for a refund was sent by SMS text at 4.08pm on behalf of Faris Ashak to Mounib Youssef. On 3 July a Letter of Demand was sent to persons named, referring to a cancellation of the verbal agreement and referring to non-compliance with s52 of the Estate Agents Act, demanding repayment of $175,000 by 10 July.
37 The SMS text and/or the Letter of Demand was said to be given pursuant to s52(3) of the Estate Agents Act to the defendants which were vendors of the business so as to avoid the agreement. Therefore, each of the first, second, third and fifth defendants “are indebted to the plaintiff for $175,000” or else they have “had and received the $175,000 to the use of the plaintiff”.
38 Then it was said that the earnings and profitability representations were made in trade and commerce and were misleading and deceptive contrary to s18 of the Australian Consumer Law in that the business did not have minimum takings of $9,000 per week but was operating at a loss. It was said that by virtue of s139B(2) of the Competition and Consumer Act 2010 (Cth), insofar as Sam Youssef made representations as to earnings and profitability as agent for the corporate defendants, “those defendants [were] taken to have been engaged in that conduct”.
39 It was said that his daughter was a person involved in the contravention of s18 and was accordingly liable for the loss of the plaintiff pursuant to s236(1) of the Australian Consumer Law. She was involved, it was said, in a capacity as sole director and shareholder of the first, second and third defendants.
40 It was said that since there was no statement pursuant to s52 of the Estate Agents Act, each of the first, second and third defendants “was required to keep the $175,000 separate and account to the plaintiff for that sum if requested to do so” or to keep the $175,000 separate “and account to Tako for it [until such time as the two month trial was complete]”. Or else, hold it separate and account to it to Tako until Sanctuary Lakes Centre Pty Ltd gave consent to the transfer or assignment of the lease.
41 Therefore, it was said a constructive trust arose in favour of Tako in respect of the $175,000 and each of the corporate defendants held the $175,000 on trust for the plaintiff. Those corporate defendants neglected or refused to account to Tako for the $175,000. Alternatively, it was said that those corporate defendants were “Ms Youssef’s alter ego and she [was] liable for the aforesaid breach of fiduciary duty” by the corporate defendants. The claim noted that whilst demand had been made by Faris Ashak for repayment of the $175,000, it had not been repaid. It was said that the $175,000 was funded by way of an overdraft facility from National Australia Bank on the account of Dozo Car Sales Pty Ltd with a rate of 8.9 per cent up to 21 November 2015 and thereafter 5.37 per cent.
42 By reason of all those matters, it was said, the plaintiff had suffered loss and damage, namely, $175,000 or the loss of use of $175,000 plus interest on the overdraft facility.
43 There followed an elaborate prayer for relief. Tako claimed against the first, second, third and fifth defendants $175,000 for an alleged breach of s52 of the Estate Agents Act or, alternatively, damages for misleading and deceptive conduct and interest at the overdraft rate charged by its bank to Dozo Car Sales Pty Ltd. Alternatively, interest at the penalty interest rate, costs and further relief. Then, against the first, second and third defendants, there was a claim for $175,000 for monies had and received, interest at the overdraft rate or, alternatively, the penalty interest rate, costs, or further and other relief. Then, against the first second and third defendants, a claim for damages arising out of the alleged constructive trust or, alternatively, equitable compensation, interest at the overdraft rate or the penalty interest rate, costs or further and other relief. Then, against all defendants, damages for misleading and deceptive conduct – limited in the case of Mr Youssef to damages with respect to what was described as `the earnings representation’, interest and costs. Finally, against Ms Youssef, the fifth defendant, for constructive trust and alleged breach of fiduciary duties there was a claim for damages, equitable compensation, interest and costs.
Defence
44 In its defence to the Further Amended Statement of Claim, Wrap It Point Cook Pty Ltd denied the allegation that Jessica Youssef Pty Ltd, Shop Fitting Australia Pty Ltd or Wrap It Point Cook Pty Ltd traded as Wrap It Kebab & Falafel Shop at any time prior to the sale of the business. It said it never operated a business that sold kebabs and falafels. It denied that Sam Youssef ever acted as its agent and it also denied that it ever entered into a Heads of Agreement with Tako or any representative of Tako.
45 Wrap It Point Cook Pty Ltd admitted that it and Jessica Youssef Pty Ltd entered into an oral agreement with Tako for the sale of the business for $175,000 on or about 26 June 2015. It denied that that agreement was subject to a two month trial. It said that if the sale agreement was expressed to be subject to a two month trial, such a term was “void for uncertainty”. Even if it were not, the term could be exercised only in the event that Tako had established that the business was not profitable. If the term as to the two month trial was valid and effective, it would be subject to a requirement that it be exercised in good faith and not capriciously. This implied term derived from the need to give business efficacy to the agreement.
46 It was said that Tako had breached the good faith term by Tako purporting to terminate the sale arrangement after one day, “without establishing whether or not the business was profitable”. Therefore, Tako was not entitled to terminate the agreement. It denied that Tako would not have entered into the agreement but for the profitability representation. It denied the allegations as to the payment of $175,000 insofar as those allegations entailed involvement by Wrap It Point Cook Pty Ltd.
47 Wrap It Point Cook Pty Ltd did not admit that the relevant business was a small business within the meaning of the Estate Agents Act. It did admit that no statement was provided under s52 of that Act and said there was no obligation to provide it. Wrap It Point Cook Pty Ltd admitted that it did not provide any keys to Tako, but was not required to do so. It repeated its denial that it ever entered into an agreement with Tako. It did not admit the allegation that without the consent of Sanctuary Lakes Centre Pty Ltd, no transfer or assignment of the lease of the shop could be effected or that it was an implied term of any agreement for the sale of the business that it would be at an end if the consent of Sanctuary Lakes Centre Pty Ltd was not obtained. It did not admit that the total gross takings of the business on 29 June was $600, meaning that it was operating at a loss. It admitted that Mr Ashak telephoned Mr Youssef and told him the sale would not proceed and requested a refund of $175,000 and that on the same day Mr Ashak sent an SMS text to Mr Youssef to similar effect. It did not admit receipt of the alleged Letter of Demand dated 3 July. It denied that the SMS text or Letter of Demand avoided the agreement under s52(3) of the Estate Agents Act or that any of the defendants were indebted to Tako for $175,000. It also denied the allegation that it had received $175,000 to the use of the plaintiff.
48 Wrap It Point Cook Pty Ltd denied that the earnings and profitability representations were made in commerce and were misleading or deceptive. It said that it had operated the “abandoned store” and earns approximately $9,000 per week and does not trade at a loss. It denied that it had engaged in conduct by making the earnings representation and the profitability representation by virtue of s139B(2) of the Competition and Consumer Act. It denied that Ms Jessica Youssef was involved in any contravention of the Australian Consumer Law. It denied the allegations that it and other defendants were obliged in the circumstances to keep $175,000 separately and account to Tako for it, or that it was engaged in any breach of fiduciary duty arising from a constructive trust. It denied an allegation that Ms Youssef was the “alter ego” of the first, second and third defendants.
49 Wrap It Point Cook Pty Ltd did not admit the serving of the Letter of Demand. It admitted it had not paid $175,000 to the plaintiff but said it was not obliged to do so. It said nothing about the allegations of funding $175,000 from an overdraft account conducted by Dozo Car Sales Pty Ltd and denied that it caused loss and damage to the plaintiff, generally.
50 The second defendant, Shop Fitting Australia Pty Ltd, filed a Defence to the Further Amended Statement of Claim in similar terms allowing for its slightly different situation.
51 The fifth defendant, Ms Youssef, filed a Defence generally to similar effect, admitting that Jessica Youssef Pty Ltd, the first defendant, and Wrap It Point Cook Pty Ltd, the third defendant, entered into an oral agreement with Tako for the sale of the business for $175,000. She denied that it was subject to a two month trial and made similar allegations as to this clause as being void for uncertainty and, if not void, subject to an obligation by way of implied term that it not be exercised other than in good faith. She said further, that the purported termination of the contract was made without establishing whether or not the business was profitable.
52 She said that whilst she managed some of the businesses “run by the first defendant”, she was “never in control of the company and its books and records”. She said that on 29 June 2015 she provided keys to the premises to Tako and/or its representatives.
53 As to s52 of the Estate Agents Act, she said that since the plaintiff had taken possession of the business it was not able to rely on s52.
54 The fourth defendant, by a Defence to an earlier version of the Statement of Claim, admitted that he represented “an average intake of $9,000”. The Defence said that Mr Youssef “never acted on behalf of or entered into an agreement on behalf of the third defendant and never agreed or discussed a trial period in any manner”. Mr Youssef said the earnings representation was one of the reasons that Tako entered into the agreement “but not the sole reason”.
55 He denied that he was ever under an obligation to provide a statement under s52 of the Estate Agents Act. He admitted that he did not provide any keys to Tako and he was not required to do so. He said that he told Mr Faris Ashak, on behalf of Tako, that Tako owned the business and was not entitled to a refund of the sale price. He said there were no misleading or deceptive statements made “in that the figures described to [Tako] and its representatives were accurate”. He denied liability generally.
Conclusions
Evidence
56 One striking aspect of the trial in this proceeding is that the defendants represented, the second, third and fifth, called no evidence and tendered no documents. This appeared to be, at least in part, a forensic choice which entitled the defendants’ counsel, Mr Richardson, to call upon his opponent, Mr McCormick, to give the first address with no more than a minimal right of reply. Following the plaintiff’s opening, I invited Mr Richardson to state his clients’ position for the purpose of defining the issues at trial. As he was entitled to do, he declined. In cross-examining a number of the plaintiff’s witnesses, he referred to evidence, which he said Ms Jessica Youssef, the fifth defendant, would give, and cross-examined by reference to certain documents which he said he would put into evidence “through his witness”. In the event, Ms Youssef did not give evidence and the documents were not tendered. It follows that the plaintiff’s evidence was entirely uncontradicted and, for the most part, unchallenged. The cross-examination was, for the most part, probing, rather than confronting the witnesses with alternative scenarios and saying “I put it to you that this is what really happened …”
57 Unsurprisingly in these circumstances, Mr McCormick, for the plaintiff, placed heavy reliance upon adverse inferences, which he said should be drawn against the defendants based on their failure to give evidence, call witnesses and tender documents. The case most frequently cited and relied upon in support of submissions of this type is the decision of the High Court in Jones v Dunkel (1959) 101 CLR 298. The effect of that and other authorities was summarised by Newton and Norris JJ in the context of personal injury litigation as follows. Having referred to a number of authorities, their Honours said:
“It is sufficient to say that in our opinion for the purposes of the present case the law may be stated to be that where a party without explanation fails to call as a witness a person whom he might reasonably be expected to call, if that person's evidence would be favourable to him, then, although the jury may not treat as evidence what they may as a matter of speculation think that that person would have said if he had been called as a witness, nevertheless it is open to the jury to infer that that person's evidence would not have helped that party's case; if the jury draw that inference, then they may properly take it into account against the party in question for two purposes, namely: (a) in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party, and which relates to a matter with respect to which the person not called as a witness could have spoken; and (b) in deciding whether to draw inferences of fact, which are open to them upon evidence which has been given, again in relation to matters with respect to which the person not called as a witness could have spoken.” — O’Donnell v Reichard [1975] VR 916, 929.
Mr Richardson, for the defendant, rightly observed that too much could not be made of this doctrine in the present case because there was, in fact, little factual dispute; for instance, the absent fourth defendant, Mr Sam Youssef, in his defence, admitted telling the Ashaks that the kebab shop had an “intake”, viz weekly takings of $9,000. Mr Richardson also stressed that Jones v Dunkel and the other cases do not entitle a judge or jury to speculate on what evidence an absent witness might have given or use the absence of a witness to fill a gap in the opposing party’s case. Mr Richardson, therefore, did not deny the operation of the doctrine here. Rather, he said it created no major basis for the advancement of the plaintiff’s case in the circumstances.
58 Here, the failure to call evidence was not merely restricted to the failure to call particular witnesses, but extended to a failure on the part of the fifth defendant, who was and is the principal of the other represented defendants, to give evidence herself. In Black v Tung [1953] VLR 629, as a member of the Full Court of the Supreme Court of Victoria and again in the context of personal injury litigation, Martin J said:
“The failure of a defendant to give evidence when there is reason to believe that he may be able to throw some light on the matter under investigation affords no positive evidence to add to the plaintiff's case, but the inferences which can be drawn from facts proved by the plaintiff ‘become a great deal more potent because he, who might dispose of them altogether if untrue, says nothing’. (Graves v. Roth (1904), 29 V.L.R. 841, at p. 846)” — [1953] VLR 629, 630‒1.
59 In his final address, Mr Richardson said it would be wrong to conclude that the fourth defendant, Mr Sam Youssef, was in effect at the disposal of the other defendants as a witness so that adverse inferences of the type described could be drawn against those other defendants based upon their failure to call him. There was no evidence of considerations which might have rendered the fourth defendant somehow unavailable to the other defendants as a witness. It is frequent enough in litigation of all types for parties to adduce evidence which explains the absence of a witness whom that party might have been expected to call. Here, there was no such evidence and the plaintiff’s evidence established a clear basis for the view that the remaining defendants might have been expected to call Mr Sam Youssef as their witness. He took the lead at the meetings held between the Ashak family and the Youssef family at the Café Rendezvous in the week leading up to the one-day trial, or alleged trial, on behalf of the plaintiff. He adopted the role of “boss” and his daughter, Ms Youssef, fulfilled the role of assistant, sometimes attending the discussions and other times bringing things and providing assistance, and the following week delivering an application for assignment of lease to Ms Sara Ashak at the kebab shop. All of these considerations suggest that Ms Youssef and her father were part of the same family unit, working together in their business dealings. No evidence or explanation has been given to rebut these considerations or to show any subsequent estrangement.
60 The adverse inferences called for by Mr McCormick should be drawn with respect to the defendant’s failure to call either the fifth or the fourth defendant as witnesses.
Section 52 of the Estate Agents Act 1980
61 The first basis relied on by the plaintiff for relief in the proceeding was s52 of the Estate Agents Act 1980. I set the section out in full:
“Statement to be given on sale of small business
(1)A person seeking to sell a small business or an estate agent who—
(a) obtains the signature of a purchaser or of a person acting on behalf of a purchaser to any contract agreement or document in respect of a sale of a small business which is legally binding upon or intended legally to bind the purchaser; or
(b) accepts a deposit in relation to a sale of a small business—
shall before obtaining the signature or accepting the deposit give to the purchaser or to any person signing the contract agreement or document on behalf of the purchaser or to any person paying the deposit on behalf of the purchaser, in addition to the statement required to be given by section 51, a statement in writing in the prescribed form and containing the prescribed particulars and shall obtain from the person to whom the statement is given an acknowledgement in writing of the receipt of that statement.
(2)The statement shall be signed by the vendor of the business.
(3)If in purported pursuance of this section a statement is given which is not in the prescribed form or does not contain the prescribed particulars or which states any of those particulars inaccurately or if no statement at all is given pursuant to this section the purchaser may by notice in writing given to the vendor or to the estate agent—
(a) within three months after he first signs any contract agreement or document in respect of the sale; and
(b) before he takes possession of the business—
avoid the contract agreement or document, and in any civil proceedings arising out of or connected with the contract agreement or document the onus of proving that the statement was duly given shall lie upon the party so alleging.
(4)Upon the avoidance of a contract agreement or document under this section the vendor shall be liable for the repayment to the purchaser of any money paid by the purchaser under the contract agreement or document and the estate agent shall be liable for the repayment to the purchaser of such part of the money as was paid to him by the purchaser and the money shall be recoverable by the purchaser accordingly as a civil debt recoverable summarily in the Magistrates' Court or in any court of competent jurisdiction.
(5)Where an estate agent has under subsection (4) been required to pay and has paid any money to the purchaser that money, to the extent of any amount received by the vendor in respect of the transaction, shall be recoverable by the estate agent from the vendor as a civil debt recoverable summarily in the Magistrates' Court or in any court of competent jurisdiction unless the vendor proves to the satisfaction of the court that the failure to give a statement to the purchaser as required by this section or the failure to include in the statement the prescribed particulars or the inaccurate giving of those particulars was without his knowledge connivance or consent.
(6)Every contract or agreement made or entered into with intent, or the effect of which would be, to avoid or evade the operation of any provision of this section shall to the extent of the evasion or avoidance be absolutely void and of no legal effect.
(7)A vendor or an estate agent who, upon being so required under subsection (1), fails to give in respect of a sale of a business a statement in writing in the prescribed form and containing the prescribed particulars shall be guilty of an offence and liable to a penalty of not more than 10 penalty units.
(8)This section does not apply to or in relation to the sale of any business in connection with which a licence or permit is in force under the Liquor Control Reform Act 1998 and which the purchaser could not lawfully carry on without a licence under that Act.”
62 It is uncontested that no statement under this section was provided. Mr McCormick submitted that, by virtue of subsection (3), the plaintiff was empowered to “avoid the contract” and, under subsection (4), the plaintiff was entitled to recover the $175,000 which it had paid “as a civil debt”. Mr McCormick took me to the legislative history of this provision. It was inserted initially as s34A into the Estate Agents Act 1958 by the Estate Agents (Amendment) Act 1963. The section was modified by the Estate Agents Act 1964, which limited the buyer’s right of avoidance so that it came to an end upon the buyer’s taking possession of the business, as subsection (3) of s52 now provides. He stressed the legislative policy underlying the provision of creating transparency in small business sales and protecting buyers of small businesses.
63 The initial objection to the plaintiff’s reliance on the section is that neither of the criteria laid down in subsection (1) is satisfied in the present fact situation. None of the defendants obtained any signature of the plaintiff or anyone acting on its behalf of a contract agreement or document for the sale of the business, nor did any of the defendants accept a deposit. Rather, the entire price was paid in full. Mr McCormick made a number of responses to this point. First, he said that the operative provisions relied upon were subsections (3) and (4) and these became operative “if no statement at all is given pursuant to this section”. It is conceded that no statement was given. Therefore, submits Mr McCormick, the plaintiff is entitled to avoid the contract and recover the monies paid under subsections (3) and (4).
64 Mr Richardson, for the defendants, submitted that subsection (3)—
“…assumes the signature of a contract agreement or document (as one would anticipate given sub-section (1) … Moreover, in addition to the temporal limitation vis a vis the signature, sub-section (3) also presents one further unsurmountable obstacle for the plaintiff.”
Since no contract or agreement was signed, there is no three-month period within which the alleged entitlement under subsection (3) is exercisable. More fundamentally, the construction of subsection (3) urged by Mr McCormick would seem to render subsection (1), far from being the description of the indispensable requirements for the section’s operation, to be no more than surplusage. A construction which consigns a substantial provision such as subsection (1) to the role of surplusage is not one to be preferred. In my view, subsection (1) lays out the circumstances in which the section operates. All the following subsections are governed by it. None of them (subject to what I will say as to subsection (6)) operates unless the requirements laid down by subsection (1) are met. One suspects, if this section were being prepared by parliamentary counsel now using contemporary drafting style, it would begin “This section applies if…”. I reject Mr McCormick’s submission that subsections (3) and (4) can operate independently without the requirements of subsection (1) being met in a particular case.
65 Mr McCormick, as a fall-back submission, relied upon subsection (6), contending that if the primary construction of the balance of the section excluded the present facts from its operation, subsection (6) operates to render of no legal effect contracts or agreements made to avoid or evade the operation of the provisions of the section. Mr McCormick submitted that subsection (6) was self-evidently modelled on the notorious s260 of the Income Tax Assessment Act 1936. I accept that submission. Guidance could be derived, he said, from the advice of the Judicial Committee of the Privy Council in the famous case of Newton v Federal Commissioner of Taxation (1958) 98 CLR 1, where Lord Denning, speaking for the Board, said of the concept of avoidance that a person “is said to avoid something which is about to happen to him [when] he takes steps to get out of the way of it” — (1958) 98 CLR 1, 7. The avoiding operation of s260, according to their Lordships, operated upon a contract or agreement for a tax avoidance, “irrespective of the motives of the persons who made it” — (1958) 98 CLR 1, 8. When the section operated, the transaction was “annihilated” — (1958) 98 CLR 1, 10. Accordingly, he said, the oral agreement “does avoid the effect of s52(1)” of the Estate Agents Act. In accordance with the approach adopted by their Lordships in Newton’s case, such an arrangement or agreement would be avoided unless it were an ordinary business or family dealing. Mr McCormick recited the history and pointed out the unusual circumstances surrounding the initial negotiation, the transmogrification of the arrangement from an initial management agreement to an outright sale, and the pressing for early payment with as much cash as possible and so forth.
66 Mr Richardson submitted that a set of dealings, which fell outside the primary parameters of a provision such as s52 in the first place, could not be said to be a contract or arrangement to avoid or evade their operation.
67 Section 260 of the Income Tax Assessment Act on its face appeared to be a complete answer to the threat to the nation’s finances constituted by tax avoidance. It appeared to solve the problem with the sharp simplicity of Occam’s Razor. Upon further analysis, however, it proved problematic and flawed. In War Assets Pty Ltd v Federal Commissioner of Taxation (1954) 91 CLR 53, a Victorian incorporated and domiciled company controlled by a number of Melbourne businessmen acquired an option to purchase a large number of war surplus assets located in Papua. The businessmen behind the taxpayer company determined the transaction would be beneficial only if it could be completed tax free. On receipt of expert advice, they incorporated a company in Papua, and those controlling War Assets and another businessman, Mr Baker, incorporated Milne Bay Merchants Ltd in Papua, which took an assignment of the contract for the purchase of the materials from War Assets and completed the purchase and derived the profit itself. The court accepted that the profit was derived by Milne Bay Merchants and not by War Assets. The Commissioner of Taxation, however, contended that, by virtue of s260 of the Income Tax Assessment Act, the arrangement with Milne Bay Merchants Pty Ltd could be “annihilated” and the profit could be taxed in the hands of War Assets. In the High Court, Dixon CJ, Williams and Kitto JJ, rejected this argument:
“Mr Holmes [senior counsel for the commissioner] submitted that the agreement or arrangement that was come to was that the appellant and Baker as to two-thirds and one-third respectively would purchase the war materials in the name of the appellant and would resell these goods at a profit and that it was also agreed or arranged that, for the purpose of avoiding income tax, the profit should be made by a Papuan company selling the goods and retaining the profits. He submitted that if you avoid, or to use the word in the judgments ‘annihilate’, the latter agreement or arrangement as having any of the purposes or effects referred to in the section you find the profits from the sale of the goods are held by Cody, in accordance with the former agreement or arrangement, on trust for the appellant and Baker in two-third and one-third shares. But the difficulty in the path of Mr Holmes is that there never was any such antecedent agreement or arrangement. If you avoid the latter agreement or arrangement you are left with nothing.
Certainly you are not left with the profits in the hands of the appellant. Various plans were discussed but no other agreement or arrangement was ever reached by anyone except that the Milne Bay company should sell the goods and make the profit. The present case is simply one of a choice being presented to the appellant and Baker as prospective taxpayers between two courses one of which would, and the other would not, expose them to liability. As was said in Clarke’s Case the deliberate choice of the second course cannot readily be made a ground of the application of s260. We are of the opinion that the second contention of the commissioner also fails” — (1954) 91 CLR 53, 97‒8.
68 This passage points out two of what were found to be the fundamental drawbacks in s260. All legislation, including tax legislation, has a particular field of operation. Does an avoidance provision, such as s260 or s52(6), mean that there is no boundary to the field of operation? As their Honours said, if taxpayers or others make a choice either to bring themselves within the field of operation of a tax or other statute or not, as the case may be, an avoidance provision cannot be regarded as simply extending the field of operation to whatever extent is necessary to bring the relevant transaction to charge or subject to regulation. Then, assuming that a transaction is “annihilated”, what is being regulated or brought to charge?
69 Mr Richardson observed that s52(6) was, in any event, not pleaded. I do not believe that the subsection avails the plaintiff in this; s52 simply has no operation here. The claim based on s52 fails.
70 In light of the conclusions I have reached as to the non-application of s52, it is unnecessary for me to deal with the further contention made by the defendants that, as at the Monday the plaintiff had taken possession of the business constituted by the kebab shop and that this terminated any entitlement to avoid the contract under the section.
Monies had and received
71 The next claim made by the plaintiff was for monies had and received. The contention that the $175,000 can be recovered as money had and received is found in paragraph 17 of the Further Amended Statement of Claim and appears to be based upon the alleged avoiding operation of s52 of the Estate Agents Act. In light of what I have said about the non-application of this section, the claim for monies had and received must fail.
Constructive trust and alleged breach of fiduciary duty
72 The pleaded claims based upon an alleged constructive trust and breaches of fiduciary duty were not pursued.
Misleading and deceptive conduct
73 Section 18 of the Australian Consumer Law provides inter alia:
“A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
It forms part of Chapter 2 of the law. Section 236 provides inter alia:
“(1)If:
(a)a person (the claimant ) suffers loss or damage because of the conduct of another person; and
(b)the conduct contravened a provision of Chapter 2 or 3;
the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.”
According to the plaintiff’s case, Mr Sam Youssef told Mr Faris Ashak that the kebab shop “had a minimum intake of $9,000 per week [which was described as `the earnings representation’] and had a minimum profit of $1,500 to $2,000 per week [which was called `the profitability representation’]”. It was said that the plaintiff would not have entered into the agreement to purchase the shop business but for these representations, and the plaintiff suffered loss and damage by paying $175,000 for the business, which Mr McCormick, on behalf of the plaintiff, submitted was proven by the evidence to be worthless. The damages sought to be recovered were therefore $175,000.
74 Upon the evidence, both the earnings and the profitability representations were made. Mr Sam Youssef, the fourth defendant, admitted making the earnings representation. Mr Richardson conceded that this representation was made on behalf of the third defendant, Wrap It Point Cook Pty Ltd. The evidence also shows that the profitability representation was made in similar circumstances. Reliance upon it was only first made in an amendment to the Statement of Claim in the course of trial, at which point Mr Youssef had already, for whatever reason, determined to absent himself. Accordingly, I allowed the amendment only upon terms that reliance upon it could not be made against Mr Youssef himself, but could be made as against the other defendants. In his closing submission, Mr Richardson, on behalf of the defendant, said that in analysing a claim for misleading and deceptive conduct:
“First, [the court] must assess whether the pleaded conduct is established by the facts (the conduct analysis). Second, assuming the conduct analysis hurdle is negotiated, it must assess whether the conduct bears the character of misleading and deceptive or likely to mislead or deceive (the character analysis).”
He referred to Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304. He said the plaintiff was required to prove that the alleged conduct occurred. He referred to Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45 at [105]. In my view, the plaintiff has established that the alleged conduct occurred.
75 Mr Richardson said that conduct would only be misleading or deceptive if it induced or was capable of inducing error. He referred to Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198 and that such conduct could not be misleading or deceptive “unless the person to whom the representation [was] directed labours under some error”. He referred to Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, 200. He said it was necessary to determine whether the impugned conduct, viewed as a whole, had a tendency to lead a person into error, referring to Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198‒9. He conceded that a representor’s state of mind was irrelevant if what was represented was, in fact, false. He submitted nevertheless that s18 would “not avail a representee who fails, in the circumstances of the case, to take reasonable care of their own interests”. He referred to Elders Trustee and Executor Co Ltd v EG Reeves Pty Ltd (1987) 78 ALR 193, 242. He continued, “Once the Plaintiff negotiates the conduct analysis and the character analysis it is required to demonstrate the causal connection between the conduct and the loss and the damage claimed”. He referred to Haros v Linfox Aust Pty Ltd [2012] FCAFC 42 at [57].
76 Mr Richardson noted that, whilst the representations were pleaded as having been made on Wednesday of the week preceding the attendance by Sara and Isaak at the kebab shop, Mr Faris Ashak’s evidence was that they were made on Tuesday, Thursday and Friday. I note, however, the pleading in paragraph 2 of the Further Amended Statement of Claim is to the effect that these representations were made “in or about Wednesday 24 June 2015”. The making of representations on other days of that same week are clearly covered by the words “or about” in the pleading. In any event, a discrepancy of this type would not, even in the absence of a reference to “or about”, be material.
77 If the alleged misrepresentations were made as claimed, since they would relate to an enterprise conducted for commercial gain, they would be regarded as made “in trade and commerce” (Miller’s Australian Competition and Consumer Law Annotated (38th edition 2016) [1.S2.18.135] 1543; Lubidineuse v Bevanere Pty Ltd (1984) 3 FCR 1; Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd [1987] FCA 556).
78 Turning next to the allegation of false representations, Mr McCormick, for the plaintiff, placed primary reliance upon the evidence of Mr Karomi. Mr Karomi was the plaintiff’s first witness. He is a friend of Mr Isaak Ashak and it was through their friendship that the Ashak family was introduced to the kebab business. The evidence disclosed that he worked in the business and recovered cash from the till to pay his own daily remuneration and pay for other helpers who, on a regular or casual basis, also worked at the shop. In final submissions, it was common ground that, whilst there was a till or a cash register, in fact cash purchases were not entered into that system, so there were no “till rolls” which could be resorted to as a relatively objective record of the company’s cash takings. Both in examination and cross-examination, Mr Karomi estimated typical takings in the shop for a week on a day-by-day basis. His evidence in chief in this respect commences at T48 and, in cross-examination, at T69. Mr McCormick noted that the evidence in chief yielded a typical weekly taking for the shop of $4,950 to $5,550. The figures, which were slightly different, given in cross-examination, put the range at $5,250 to $5,800. Mr McCormick submitted that this evidence was uncontradicted and should be accepted. It made good the contention that the representation as to weekly takings of $9,000 was false.
79 Mr Richardson correctly noted that the Ashaks and their company purported to “bail out” of their purchase after a single day’s trading, and based upon a daily takings figure of $600, which was conveyed on a hearsay basis by Mr Ashak’s son and daughter, based on what Mr Karomi had told them. He said that Mr Karomi’s evidence did not deal specifically with how much had been taken on this single Monday. He said reference to the evidence of Ms Sara Ashak and Mr Isaak Ashak, and allowance for the fact that purchases by way of EFTPOS were at least as high as cash purchases, would lead to the conclusion that conservatively the total takings for the day were not $600 but $840, a figure which he said could be regarded as 40 per cent higher than the reported figure of $600.
80 In my view, the “falsity” criterion for the earnings representation is made out. If it be said, perhaps with justification, that the Ashaks and the plaintiff company moved precipitously on Monday evening to purport to cancel the purchase (particularly, perhaps, in light of what Mr Ashak had been told over the weekend by his priest), nevertheless the evidence given at trial indicates that they were right. Mr Karomi was subjected to an extensive probing cross-examination by Mr Richardson. Mr Karomi was, I think, in an uncomfortable position, caught by allegiance to both plaintiff and defendant, and appeared uncomfortable and tentative in the witness box. If there were clear evidence contradicting his views, his hesitancy and discomfort might well have furnished a ground for doubting his evidence. Nevertheless, the failure of the fifth defendant, Jessica Youssef, and her father, Mr Sam Youssef, to give evidence, both of whom upon the evidence were intimately connected with the finances of the kebab shop, enables me, in terms of the formulation by Newton and Norris JJ in O’Donnell v Reichard, to accept the evidence of Mr Karomi, and to draw inferences based upon it. The falsity criterion was therefore made out.
81 Nevertheless, Mr Richardson submitted that the evidence did not show any reliance by the plaintiff upon the relevant representation. He referred to a passage in his cross-examination of Mr Ashak at T235, L9–21, as follows:
“And what was always in your mind was this trial was, wasn’t it, that you wanted to see that this made money?---Yes.
Because you understand your case is that he told you it makes $9,000 a week?---Yes.
And $1,500 to $2,000 - - -?----As a profit.
And you wanted a trial because you wanted to check that was true, didn’t you?---Yes.
Because you’re giving $175,000, aren’t you?---That’s right.
You don’t want to say I will just take his word for it, you want to have a trial?---Yes, if he’s right then I will continue, if he’s not right I’m not going to continue.
And if he’s not right about that you could back out?---That’s right.”
82 These answers, said Mr Richardson, indicated an entire lack of reliance upon the representations by the plaintiff.
83 It is well established that causation by way of reliance may be proven on the basis that the misleading conduct is only one of the factors which the representee relies upon in acting to his, her, or its disadvantage and thereby incurring damage which is sought to be recovered under s236 of the law. Henville v Walker (2001) 206 CLR 52; Miller, op cit [1.S2.236.15] 1883
84 The plaintiff’s decision to enter into the purchase arrangement for the kebab shop was influenced by a large number of factors. Significantly, for instance, by Mr Ashak’s belief as to the wealth of Mr Youssef, his standing in the Syrian Orthodox community, and his role as a patron of the church. To say that Mr Ashak, and therefore the plaintiff, decided to adopt the unusual and, in retrospect, unwise procedure it did, by paying the entire purchase price for the business “upfront”, without any disclosure statement such as the Estate Agents Act provides for, and without any written contract, based upon the availability of a “trial period”, does not deny a significant and material role by way of inducement for the earnings and profitability representations. These are key matters, and of the utmost materiality in the purchase of a small business. That is why these matters are specifically dealt with and made, in orthodox circumstances, the subject of compulsory disclosure by s52 of the Estate Agents Act. In those circumstances, the inference of reliance is available and a strong one which I draw. As French CJ, Crennan, Bell and Keane JJ said:
“It has long been recognised that, where a representation is made in terms apt to create a particular mental impression in the representee, and is intended to do so, it may properly be inferred that it has had that effect. Such an inference may be drawn more readily where the business of the representor is to make such representations and where the representor's business benefits from creating such an impression.” (ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640 [55])
Mr Ashak did not give direct evidence of reliance but this not essential and such evidence would have been hypothetical, self-serving and of little weight. (Miller op cit [S2.236.15] 1884-5 and the cases cited).
85 Next, it is necessary to consider what loss and damage, if any, has been proven by the plaintiff to have been suffered by it in accordance with s18 and s236. Mr Richardson took me to the well-known authorities as to the measure of loss and damage under these provisions and their predecessors, ss52 and 82 of the Trade Practices Act 1974. He referred to Gould v Vaggelas (1984) 157 CLR 215 at 220, HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640, Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 514, and Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281. Based on these authorities, and in particular Gould v Vaggelas, he said the proper measure of damages in circumstances such as this would be the difference between the real value of the thing acquired at the date of acquisition and the price paid for it. He referred to a passage in the joint judgment of McHugh, Hayne and Callinan JJ, in Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 [50] where their Honours said:
“If a person agrees to pay $50,000 for goods which the vendor falsely represents are worth $100,000 but which are, in fact, worth $50,000, what loss has the purchaser who is misled suffered by agreeing to buy?”
86 Their Honours imply there would be no loss recoverable in those circumstances under s82 of the 1974 Act or s236 of the law.
87 I accept the submission. What then is the value demonstrated for this kebab shop? The plaintiff’s case is that since the business was loss-making it was of no value, and therefore the entire $175,000 paid for the business was recoverable. Mr Richardson submitted that no such finding should be made and the evidence should not be regarded as proving any particular value or, indeed, a total lack of value.
88 I have already given my reasons for accepting the evidence of Mr Karomi in the circumstances of this trial. The far more meagre takings which he reported go a long distance to proving that the business was, in fact, a loss-maker. According to Mr McCormick, the evidence enabled a finding to be made that the business was a loss-maker based upon some three analyses. All of these analyses proceed from the evidence of Mr Karomi, which I accept for the reasons already explained.
89 When Mr Richardson, cross-examining Mr Ashak, asked him why he (Mr Ashak) concluded that the business was not profitable, Mr Ashak said that takings of $600 a day were inadequate:
“it has to be more than $1,000 to make money, it’s seven days a week so it has to be more than $1,000, each if there is a profit on the weekend if we’re going to put it on the $600, and that figure was not right, also there was no money there.” (T238, L23-28)
90 Mr Ashak agreed that his analysis in this respect depended upon accepting $600 as being the actual takings on the Monday.
91 Mr McCormick submitted: “At no time did the business ever achieve that average [$1,000 takings per day], indeed only on Friday did it have a gross of $1,000 or $1,000-$1,100.”
92 Next, Mr McCormick referred to the evidence of Ms Sara Ashak, where she was cross-examined as to her father’s reasoning in concluding that the business was not making a profit. Ms Sarah Ashak said that her father did a calculation after the day’s trading on Monday:
“He worked out from what I heard the way he explained it, $220 was for Ragheb [that is, Mr Karomi], then me and my brother didn’t get paid. So if you actually calculated another $150 and another $150 that’s $300 on top, and that $220 – so the way he explained it is if we had three workers, two of them would cost $300 plus Ragheb of $220, that would turn out to be $520.” (T317, L12-19)
93 She said, according to this analysis, there was also $100 per day by way of lease liabilities which had to be covered. (Ibid L23) Her father had told her that the lease outgoing was $1,050 a week “so it worked out to be just over $100 per day”. (T318, L25-26) She continued:
“…that brings you to $620 [of outgoings to be met]. Then he [Mr Ashak] also said ‘we haven’t calculated the meat, haven’t calculated the bread, haven’t calculated the drinks, haven’t calculated the water bills, electricity bills, gas bills, all that’. So then even if what I was told – or what I told my dad of $600, even if it was $700 it would still be under profit…”. (T319, L1-7)
94 Again, she said her father reasoned that:
“They sell their kebabs for $9, every kebab round it up to $10, you’ve got to sell a minimum of 60 kebabs, if not more, to just pay the workers, or 50 kebabs just to pay the workers. It’s not possible in that area, that’s exactly what he [that is, Mr Ashak] said.” (Ibid L15-20)
95 Finally, Mr McCormick noted that these analyses made no allowance for contributions to compulsory superannuation, remitting amounts to the Commissioner of Taxation for PAYG instalments and so forth. The total effect of the evidence, particularly of Karomi, was that amounts were simply withdrawn from the till to make daily payments to workers without any regard to those sorts of matters.
96 These analyses are made at a very general level and are quite sketchy. The conclusion that the business was not profitable could be regarded as made very hastily, and one may think it was very much coloured by the stern denunciation of Mr Youssef made by Mr Ashak’s parish priest. Nevertheless, for the reasons which I have already given, I accept Mr Karomi’s evidence. It was within the defendants’ power to give the lie to these analyses if they wished to advance evidence. The fact that no contradictory evidence was given, leads me not only to accept Mr Karomi’s evidence but draw an inference that the business was not profitable based upon the analyses described above and did not meet the level of takings which Mr Youssef represented were being achieved.
97 As I understood the plaintiff’s case on this point, it was contended that the plaintiff company, by reason of the third defendant’s misleading and deceptive conduct, paid $175,000 for a business which was in fact making losses and therefore had no commercial worth at all. For reasons explained above, I have inferred that Mr Ashak relied upon the representations made on behalf of the third defendant as to “top line” income “takings” or “intake, as these things were variously described, and bottom line profitability.
98 The plaintiff company was Mr Ashak’s company and his evidence was to the effect that he was its directing mind who determined what business it did or did not do. (T115, L4-15) This evidence was not challenged. Therefore, the cause of action for misleading and deceptive conduct in favour of the plaintiff as against the third defendant is made out.
99 The $175,000 paid by the plaintiff has been irretrievably lost. Its quantum of damages for the claim for misleading and deceptive conduct is therefore $175,000.
100 Mr Richardson was critical of a lack of care taken on the plaintiff’s behalf. As the High Court observed:
“The purpose of the legislation is not restricted to the protection of the careful or the astute. Negligence on the part of the victim of a contravention is not a bar to an action …unless the conduct of the victim is such as to destroy the causal connection between contravention and loss or damage.” (Henville v Walker (2001) 206 CLR 459, [13] per Gleeson CJ)
101 No argument was advanced on the part of the defendants that carelessness on the part of the plaintiff destroyed the causal connection between the misleading and deceptive conduct, reliance, and damage suffered.
102 Section 137B of the Competition and Consumer Act 2010 enables the reduction of a damages award based upon a plaintiff’s failure to take reasonable care for his/her or its own interest. There was no pleaded reliance on this provision by defendants on this provision.
103 Mr Richardson accepted that the representations made by the fourth defendant were made on behalf of the third defendant. (T433, L16 – T434, L21)
104 The plaintiff is entitled to judgment for $175,000 damages against the third defendant for misleading and deceptive conduct.
105 Insofar as the fourth defendant is concerned, judgment should be given likewise against him. Even although he is an undischarged bankrupt, it does not appear that any liability against him in this proceeding would be a provable debt in his bankruptcy. Accordingly, the Bankruptcy Act 1966 provides no bar to the continuation of this proceeding against him to judgment.
106 The only ground for dealing differently with the fourth defendant than I have dealt with the third defendant is that whilst a claim has been made against him based upon the takings representation which he made, no claim has been made against him based upon the profitability representation. I have explained above why this distinction has been drawn. In my view, however, the fourth defendant should be held liable on the same basis as the third defendant.
107 Here, the purchase arrangement was of a small retail cash business operated out of leased premises. Where, for instance, an enterprise is purchased in some more indirect way, such as by the acquisition of shares in the company carrying on the business, the relationship between the takings of the business and its profitability may be quite complex. Indeed, circumstances may effectively sever the connection altogether. A company may carry on a business with a handsome surplus of receipts over the immediate outgoings required to conduct the enterprise but, nevertheless, be insolvent and making losses by reason of the burden of pre-existing debt liability. Here, there was no complication of this type. A transaction by which Tako acquired the business carried with it no such liabilities except the ongoing liability for the lease rental payments.
108 In those circumstances, a representation as to a particular level of weekly takings for a simple cash business necessarily carries with it the implication of a particular level of profitability in accordance with the generally known profit margins in that class of business.
109 Accordingly, the representation as to the takings of the business, which I have found to be misleading and deceptive, is sufficient to ground the fourth defendant’s liability for damages. The quantum of damages is the same as for the third defendant for the same reasons.
110 I now turn to the position of the fifth defendant, Ms Jessica Youssef. Section 236 of the Australian Consumer Law extends the liability to pay damages for loss and damage sustained by reason of misleading and deceptive conduct “against any person involved in the contravention”. The word “involved” is, by s2 of the Law, defined as follows:
“"involved " : a person is involved, in a contravention of a provision of this Schedule or in conduct that constitutes such a contravention, if the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced, whether by threats or promises or otherwise, the contravention; or
(c)has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d)has conspired with others to effect the contravention.”
111 According to the plaintiff, Ms Jessica Youssef is a person involved in accordance with these principles and, therefore, liable in damages in the same measure as the third and fourth defendants.
112 These provisions, namely, s2 as to the word “involved”, and s236 of the Australian Consumer Law, represent a re-enactment respectively of ss75B and 82 of the Trade Practices Act 1974. These earlier provisions were considered by the High Court in Yorke v Lucas (1985) 158 CLR 661. Mr McCormick placed reliance on paragraph (c) of the definition of “involved” as being satisfied to render Ms Jessica Youssef as a person involved in the misleading and deceptive conduct engaged in by her father on behalf of the third defendant company (Wrap It Point Cook Pty Ltd). In Yorke, the High Court said that paragraph (c) of the definition required that the alleged person involved in the contravention for the purposes of paragraph (c) of the definition must be an intentional participant with that intention being based upon knowledge of the essential elements of the contravention. ((1985) 158 CLR 661, 670 per Mason ACJ, Wilson, Dene and Dawson JJ)
113 Mr Ashak described the scene at Rendezvous Restaurant where the representations as to takings and profitability were made, as follows:
“And was Sam there on his own? --- Well, Jessica, she was there but – and actually, I’m not telling the truth, Jessica, she was here but I was not paying attention to anyone more than Sam because my concern was Sam and I was thinking he’s the owner of all these companies and he is the honest man and he is the one that – he is owning everything. So I was not concentrating on Jessica but Jessica, she was there and I saw her, she was coming and going, she was working in the restaurant inside, in the reception, in the kitchen.” (T124, L28 – T125, L6)
114 According to the direct evidence, therefore, it cannot be said confidently that Ms Jessica Youssef knew anything about the representation as to profitability or takings or that she was even there when they were made. She was said to be “coming and going”, working at reception and working in the kitchen. She was, perhaps, in the role of “Martha” in the story of Martha and Mary in the Gospel. (St Luke, Chapter 10, Verses 38-42)
115 To meet this strong contraindication of Ms Youssef’s involvement in the misleading and deceptive conduct, Mr McCormick urged the following matters of context, which he said could be seen as providing a basis for Ms Youssef’s involvement in misleading and deceptive conduct:
(i) she was the sole director and shareholder of the first and third defendants;
(ii) according to Mr Karomi, she was involved in the conduct of the third defendant’s business and sometimes collected the cash;
(iii) counsel for the defendants nominated her as the person who would, in due course, give evidence on behalf of the defendants;
(iv) defendants’ counsel cross-examined plaintiff’s witnesses based on a cashbook created by Ms Youssef when she appeared to be the keeper of the account;
(v) she provided a receipt for the purchase price;
(vi) she delivered the application for assignment of lease.
116 These matters might be regarded as significant on the issue of whether Ms Youssef was to be regarded as a person concerned in the management of the third defendant company, but none of them directly touches upon the misleading and deceptive conduct or which constitutes the basis for the damages liability. Indeed, the matters, save for the official position of director, are equally consistent with Ms Youssef being her father’s factotum, that is, collecting money, delivering documents, etc.
117 I reject the contention that Ms Youssef was “a person involved” in the misleading and deceptive conduct engaged in by her father on behalf of the third defendant (Wrap It Point Cook Pty Ltd). The claim against Ms Youssef fails.
118 The claim against the first defendant, Jessica Youssef Pty Ltd, cannot be advanced because that company is now in liquidation.
119 Shop Fitting Australia Pty Ltd, the second defendant, seems to have been implicated in this proceeding solely because it was the recipient of the cheque for $175,000. I see no basis for contending that it was either a principal or a person involved in the misleading or deceptive conduct relative to the representations as to takings and profitability. This claim against it therefore fails.
120 As Mr Richardson correctly observed, there are all sorts of reasons why a recipient of money might quite properly and without any sinister element direct that payment be made to a third person. The most common example being a situation where a vendor real estate might direct that the whole of the purchase price be paid to a bank mortgagee to enable good title to be made. Just why the $175,000 cheque was directed to Shop Fitting Australia Pty Ltd did not emerge in the evidence. Since the third defendant, Wrap It Point Cook Pty Ltd, appears to have been the tenant and the company conducting the kebab shop, it would seem to be the obvious and correct vendor in the transaction.
Contractual claim
121 Mr Richardson, on behalf of the defendants, submitted: “the plaintiff has pleaded no relief in relation to the contract claim, whether in damages or debt”. Accordingly, there can be no question of entry of judgment based upon contractual claim against any of the defendants.
Relief
122 It follows that there should be judgment against Mr Youssef (the fourth defendant) and Wrap It Point Cook Pty Ltd (the third defendant) for $175,000.
123 I will hear submissions from the parties as to consequential orders relative to matters such as interest and costs.
124 I direct the parties within 14 days to bring in short Minutes to give effect to these reasons.
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