Kanaan & Co v Bou Antoun [2000] NSWSC 117

New South Wales Supreme Court

CITATION : Kanaan & Co v Bou Antoun [2000] NSWSC 117 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 11948/99 HEARING DATE(S) : Thursday 2 March 2000 JUDGMENT DATE : 7 March 2000

PARTIES : Maurice Kanaan trading as M. Kanaan & Co v Halim Bou Antoun JUDGMENT OF : Michael Grove J at 1

COUNSEL : G. Curtin (Plaintiff) G. Raffell (Defendant) SOLICITORS : Dunhill Madden Butler E. Fredericks & Co CATCHWORDS : Local Courts - Civil Claim - Professional Negligence - Causation of Loss - Appeal by Summons Procedure - Costs Citicorp Australia Ltd v O'Brien 1996 40 NSWLR 398 CASES CITED : Hawkins v Clayton 1988 164 CLR 539 Allen v Kerr Unreported CA 25 May 1995 DECISION : Appeal allowed.; Orders quashed and substituted

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

MICHAEL GROVE J

Tuesday 7 March 2000

11948/99 - MAURICE KANAAN t/as M. KANAAN & CO v HALIM BOU ANTOUN

JUDGMENT 1 HIS HONOUR : The plaintiff in this summons Maurice Kanaan seeks orders setting aside judgment entered against him in favour of the defendant Halim Bou Antoun in the Burwood Local Court. It will avoid confusion if I refer to the parties by name as their designation as litigants is reversed in this Court from what it was below. In the action at Burwood Local Court Mr Bou Antoun recovered damages of $24,350.94 together with interest on part of that sum and costs upon a cause of action framed in negligence against Mr Kanaan, his former solicitor. 2 In November 1989 Mr Bou Antoun retained Mr Kanaan to act as his solicitor in connection with the purchase of a mixed business from a Mr Vincent Budwee. The operation of the business required a variety of licences. Mr Kanaan requisitioned the vendor's solicitors in these terms: "Please advise details of all (a) licences (b) registration certificates and (c) any current agreements relating to the business or in connection with the business premises. Please indicate if any or all are transferable." 3 And he received this reply: "Vendors have licences as milk vendors, tobacconists, bread vendors and refreshment room. The vendors believe they are all transferable and will arrange this direct with the purchaser." 4 The dispute centres upon the absence of a tobacco licence. Mr Bou Antoun had been operating the business for about three years when he was visited by compliance inspectors appointed under the Business Franchise Licences (Tobacco) Act. Mr Bou Antoun possessed no retail tobacco licence. He had more than three and a half thousand sticks of tobacco in his stock. He admitted that he had been retailing tobacco whilst operating the business. He said to the inspectors that he obtained supplies from a variety of sources, wholesale and retail merchants and persons described as Ali, and the "Chinese" at Concord and Granville. 5 Mr Kanaan testified that he communicated the content of the above reply to requisition to Mr Bou Antoun and the latter responded "I will look after this myself". In the context of the dispute, the final content of the response is not insignificant. It is convenient to observe that Mr Bou Antoun testified that nothing at all was mentioned about a tobacco licence between them. As the Local Court magistrate observed, this evidence did not happily conform with the pleading which complained that Mr Kanaan: "(a) represented to the plaintiff that the vendors had licences as milk vendors, tobacconists, bread vendors and refreshment room. It was also represented that the vendor believed that they were all transferable and would arrange this direct with the purchaser (the representations); and (b) advise the plaintiff that the licences referred to above in the representations were so transferable and further advised that in respect of the tobacco licence the same was capable of being transferred and would be transferred upon completion of the sale of the business and the plaintiff as purchaser entering into possession of the business after completion of the contract for sale (the advice)." 6 On this topic significant evidence was given by Mr Budwee: "Q. Do you remember having a conversation with Mr Antoun about licences? A. Yes I do. Q. And do you recall who was present at that conversation? A. No I don't. Q. Well there was you? A. Well there was myself and Mr Antoun but as far as other people I can't recall. Q. Do you remember what Mr Bou Antoun said to you about licences? A. The exact words I can't but the general idea was, you know, does he think he'd need licences for the business? I said yes he would, the milk and the ---. Q. Well you said 'yes would', did you identify, did you say to him what types of things would require a licence? A. Yes I, the, you need a milk licence, bread licence, tobacco, I think that was it -- Q. And did he ask you? A. He asked me again, 'Is it necessary?' and I said 'Yes'. I said 'Especially like the tobacco licence' because I'd made, I had not had a tobacco licence for some time and I'd made enquiries as to how to get one and my recollection is that I obtained a licence. I'd say six months before I'd sold the shop and Mr Antoun asked me, you know, well could you arrange for these licences and I said 'No, you'll have to do that yourself', those words I do remember very clearly because I was a bit upset that he'd asked me to do something for him of that nature. ……… Q. In any event Mr Bou Antoun asked you whether he would need a licence? A. Yes he did. Q. And you told him that he did and he would need one for a tobacco licence? A. Yes. Q. And he asked you if you could do something to arrange for a tobacco licence for him? A. Yeah, my words, 'No I'm sorry, you'll have to do that yourself.' " 7 The Local Court magistrate resolved this factual dispute in favour of Mr Kanaan and found that it was not part of any instructions given to him by Mr Bou Antoun that Mr Kanaan should obtain a tobacco licence for him. 8 There was no issue concerning the existence of a duty of care being owed by a solicitor to his client but that generality must be qualified by confining it to the extent that it is applicable to a particular case. This requires attention to the nature of the professional task and the circumstances in which it is being performed: see Citicorp Australia Limited v O'Brien 1996 40 NSWLR 398 @ 412-3. Nevertheless, it can be contemplated that in some cases a solicitor may be required to do more than specified in the terms of his retainer: Hawkins v Clayton 1988 164 CLR 539 per Deane J. 9 The learned Local Court magistrate made the following finding: "It is my opinion that it was a breach of the defendant's duty of care to the plaintiff not only to advise him how he could obtain a licence, but also not to disabuse him of an erroneous belief that he could have it transferred from the vendor to himself. What happened, in effect, is that the defendant permitted the plaintiff to mistakenly think that he was able to obtain a licence, which he was required to have before he could lawfully operate a part of his business, by himself arranging a transfer of the licence directly from the vendor." 10 Mr Kanaan challenges the finding that he was in breach of duty of care extending to advising Mr Bou Antoun how to obtain a licence. The judgment does not indicate which facts gave rise to this extent of duty. On the contradictory evidence, there was a specific finding that Mr Kanaan's retainer did not extend to the obtaining of a licence by him and there was no evidence of any express term that he would do so. There are no facts from which the obligation to give such advice can be inferred. To the contrary it is plain from the evidence of Mr Budwee that Mr Bou Antoun saw the obtaining of the licence as his own task which he was attempting to have Mr Budwee undertake on his behalf. This is entirely consistent with the latter part of the second sentence comprised in the reply to requisition. The evidence does not show that Mr Kanaan had assumed the responsibility to tell Mr Bou Antoun how to obtain a licence nor that Mr Bou Antoun was relying upon him in that regard. It is not to be overlooked that Mr Bou Antoun had previously operated this type of business. 11 These proceedings are governed by s 69 of the Local Court (Civil Claims) Act and s 104 of the Justices Act. The absence of supportive evidence for a finding amounts to error of law: see Allen v Kerr CA unreported 25 May 1995. The challenge by Mr Kanaan has been made out. 12 Mr Kanaan was found by the Local Court magistrate to be a very honest witness as demonstrated by his candour in conceding that, when he conveyed to Mr Bou Antoun the relevant content of the reply to requisitions, he did not tell him that the licence was not (as he knew, contrary to the terms of the vendor's solicitor's response) transferable. 13 Mr Kanaan accepts the finding of this breach but contends that there was no evidence to support the further finding that this breach was causative of loss to Mr Bou Antoun. 14 The learned Local Court magistrate expressly dealt with an issue about causation arising out of evidence by the compliance inspectors that, if Mr Bou Antoun had demonstrated that he had acquired his stock in compliance with the statute, no action may have been taken. It is irrelevant to current issues that the particular statute was later found invalid on constitutional grounds. This material is not the focus of argument sought to be addressed on behalf of Mr Kanaan asserting that the evidence does not support the conceded breach of duty being causative of the damage claimed. 15 There is some obscurity about the precision with which the matters now sought to be addressed were advanced in the Court below. It is apparent that a vigorous contest took place concerning a claim brought pursuant to the Fair Trading Act in respect of which Mr Kanaan was successful and which need not now be the subject of reference save to observe that, as is so often the case the perceived magnitude of issues is often different on appeal from what it was at trial. Counsel for Mr Bou Antoun drew attention to Cook v Evans 1948 49 SR 83 where Jordan CJ said: "The point or points of law in respect of which it is desired to contend that the magistrate fell into error should be specifically taken before him. The Court on appeal will not entertain any point not so taken, unless it arises upon the face of the facts stated in the case and is one which it would have been impossible to cure by further evidence if it had been taken before the magistrate." 16 The present summons is brought pursuant to procedure supplanting that of appeal by way of stated case. It is contended on behalf of Mr Kanaan that the findings by the Local Court magistrate inevitably lead to the conclusion that the breach did not cause or contribute to the damage claimed. It was not suggested that Mr Bou Antoun could have sought to meet this argument by different or additional evidence. 17 The breach by Mr Kanaan occurred in about November 1989 when by conveying the content of the reply to requisition he engendered an erroneous belief in Mr Bou Antoun that a transfer of the tobacco licence to him from Mr Budwee was possible. The Local Court magistrate found that the loss was sustained by Mr Bou Antoun on 14 September 1992 when the inspectors called and seized his stock. 18 Save the reference to the evidence of the inspectors concerning possible non action abovementioned, the Local Court magistrate stated, without elaboration, that he was satisfied that "the plaintiff's loss was caused by his not having a licence". That finding would seem indisputable, but the question was whether the breach of duty by Mr Kanaan was causative of Mr Bou Antoun not having a licence. 19 Although the facts found in the Local Court are not formally stated as was the case under the superseded procedure, other than for possible exceptional reason, I am bound in this litigation to the factual determination in that court. The Local Court magistrate accepted the evidence of Mr Budwee which included that prior to the completion of the sale of the business, the conversation between him and Mr Bou Antoun set out above, had taken place. It is a necessary implication of that evidence that, whether the licence was transferable or not, Mr Budwee was not prepared to do anything for Mr Bou Antoun in that regard, either transfer a licence or obtain one on his behalf. The misinformation from Mr Kanaan that the tobacco licence was transferable could have no effect on Mr Bou Antoun's reaction to Mr Budwee's plain position which had been directly communicated to him. There was no evidence that Mr Bou Antoun sought advice from Mr Kanaan about this situation, indeed, as I have pointed out, Mr Bou Antoun (despite his pleading) testified that tobacco licensing was never mentioned between him and his solicitor. 20 It might be mentioned in passing that the evidence was that Mr Bou Antoun enquired of the inspectors as to the address of the relevant authority, attended there on that day, and obtained the licence after paying a fee of $10. 21 The evidence accepted in the Local Court does not sustain a finding that the breach of duty by Mr Kanaan in misinforming Mr Bou Antoun that the licence was transferable or in failing to correct it, caused or contributed to the loss. The plaintiff should succeed on the summons. 22 In the light of that conclusion it is unnecessary to deal with the challenges to the assessment of damages. 23 This is not a case where costs can simply follow the event. In a separate judgment extending the time for commencing these proceedings, I have sketched the dilatory conduct of the plaintiff (Mr Kanaan) and his representatives in beginning these proceedings. The first notice to the defendant (Mr Bou Antoun) that there might be a challenge to the judgment in his favour, or that it was being contemplated, came in a letter despatched as the time specified for commencing these proceedings was expiring. As I detailed in the earlier judgment, nearly three months elapsed until proceedings actually commenced. I am conscious that costs are of their nature an indemnity and not a penalty but it seems to me that the conduct of these proceedings has been undertaken with an attitude that there is a provisional quality to the final judgment given in a court of competent jurisdiction. That attitude was mistaken. The defendant was entitled to anticipate recovering the judgment found in his favour and it has been taken from him as a result of proceedings commenced well after the stipulated time for so doing. I do not ignore the circumstance that the conclusion reached in relation to principal relief means that the defendant should not have succeeded initially but I have further concluded that the balance of justice requires the plaintiff to forego the costs of his belatedly commenced proceedings. 24 Counsel for the defendant submitted that, in the event of a finding that relief should be granted to the plaintiff, I should deprive him of costs both here and below. In my opinion, the costs below should follow the event that ought to have been reached in the Local Court. 25 I make the following orders and direction: