JJES Pty Ltd v Sayan [2014] NSWSC 541

Supreme Court New South Wales

Medium Neutral Citation: JJES Pty Ltd v Sayan [2014] NSWSC 541 Hearing dates: 11 - 13 June 2013 Decision date: 08 May 2014 Jurisdiction: Common Law Before: Campbell J Decision: (1)Judgment for the defendant; (2)The plaintiff to pay the defendant's costs of and incidental to the proceedings on the ordinary basis forthwith after they have been agreed or assessed. Catchwords: TORTS - negligence - professional negligence - solicitor - transactional work - whether failure to advise on obvious financial implications - purchase of franchise Legislation Cited: Civil Liability Act 2002 (NSW) Cases Cited: Fink v Fink (1946) 74 CLR 127 Grant v Sun Shipping Co Ltd [1948] AC 549 Provident Capital Ltd v Papa [2013] NSWCA 36 State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 Category: Principal judgment Parties: JJES Pty Ltd (plaintiff) Hakki Sayan (defendant) Representation: Counsel: J Jobson (plaintiff) D Priestley (defendant) Solicitors: Pserras Lawyers (plaintiff) DLA Piper (defendant) File Number(s): 2011/125034

Judgment 1The plaintiff company, which I will refer to as JJES was incorporated by Mrs Emily Navaei to conduct a small business. Mr Sayan is a solicitor in sole practice at Auburn. 2Mrs Navaei retained Mr Sayan to act on behalf of JJES on the purchase of a 7-Eleven franchise at Burwood Heights.

Legal arrangements for purchase of the business 3The purchase of the business was effected by two separate agreements. The first was an agreement for the sale of business made on 19th March 2007 between the outgoing franchisee of the Burwood Heights store and JJES. The purchase price was expressed as "for a total goodwill of $206,000" and a deposit of $20,600 was required. The deposit had been paid on 9th March 2007, ten days before the agreement was signed. And, I interpolate, before Mrs Navaei first consulted Mr Sayan. 4The sale was expressed to be subject to the following material conditions (Clause 3): (a)The approval by 7-Eleven of the purchaser as a satisfactory and suitable candidate to conduct the business as a franchisee; (b)Payment by the purchaser to 7-Eleven an initial franchise establishment fee of $84,920; (c)......... (d)Payment to 7-Eleven by the purchaser of $5,500 (including GST) by way of an application fee (the plaintiff said this was categorised as a training fee). 5The second agreement is styled "Store Agreement" between JJES Pty Ltd and 7-Eleven stores Pty Ltd, by which the latter granted a franchise to the former. It was executed on 30th March 2007. A number of the terms of this agreement are of particular relevance and need to be set out in full. In these terms JJES is referred to as the franchisee. The material terms are as follows: Article 2: Licence (a)7-Eleven hereby confers upon the FRANCHISEE leave and licence to enter upon, be in and use the Licensed Premises and (subject to the reservation in sub-article 2 (j)) to use Licence Equipment in conjunction therewith, solely for the purpose of operating the store at and upon the licensed premises in accordance with this agreement, and for no other purpose, subject to all of the terms covenants and conditions contained in this agreement from the Effective Date until the expiration of this agreement (as provided for in article 25 of this agreement). ..... (f) The FRANCHISEE acknowledges that 7-ELEVEN has no obligation to renew or exercise any option to extend the lease. Term, expiration and termination Article 24: Term and expiration (a)The term of this Agreement shall commence on the Effective Date and continue until termination of this Agreement as provided in Article 25, or until expiration of this Agreement on the earlier of: (i)The expiration of the primary term, or cancellation or termination of the Lease; or (ii)The expiration of the extended term of the Lease (if an option to extend the primary Lease has been exercised by 7-ELEVEN on the Effective Date or is executed by 7-ELEVEN during the term of the agreement); or (iii)Ten years after the Effective Date; (b)The term of this Agreement may be extended or renewed only by mutual agreement in writing between the FRANCHISEE and 7-ELEVEN. Article 2(e) incorporated an annexure styled "Exhibit A to the Agreement" which described the licensed premises. Exhibit A states that the licensed premises are leased by 7-Eleven and attaches the lease. Exhibit A also states that the current term of the lease expires on 16th September 2008. It provides for a 3 year term commencing on 17th September 2005 and expiring on 16th September 2008 with an option to renew for a period of 6 years "set out in Clause 3 of Annexure "A"", that is Annexure "A" to the lease. Clause 3 provides options "to renew the lease for a further two terms, each term to be for a period of three (3) years". 6It is also notable that Annexure "A" to the lease incorporated the provisions of a different registered lease numbered V269232, with express variations. The first variation deleted the words "seventeen (17) years" and replaced them with the word "three (3) years", as the term of the subject lease. The reference to 17 years has some relevance to an account given by Mrs and Mr Navaei, to which I will refer later.