Australia, June 7 -- New South Wales Land and Environment Court issued text of the following judgement on May 6:

1. PAYNE JA: I agree with Stern JA.

2. KIRK JA: I agree with Stern JA.

3. STERN JA: On 22 January 2016 Attila Tok, the first appellant, entered into a "contract for the sale of business" with Rashazar Pty Ltd (Rashazar), the third respondent (the share sale agreement). The relevant business was that of Fresh Cut Australia Pty Ltd (Fresh Cut), the second appellant. The price was $275,000, expressed to be "for 30 shares in [Fresh Cut]". The purchase price was paid in full in 2016, in two tranches, and Rashazar also paid stamp duty on the share sale agreement of $10,110.45 ($2,520.45 of which was interest), but no shares in Fresh Cut were ever transferred to Rashazar. This was not discovered by Hassan Rashazar (Mr Rashazar), the sole director and shareholder of Rashazar, or by any of the other respondents, for at least some years (the evidence does not disclose precisely when they became aware of this but it was clearly at least after the end of 2019). In the interim, Mr Rashazar and his son Omid Rashazar (whom I will refer to, for convenience, as Omid) had made cash payments of $84,147 in total to Mr Tok to cover what were said to be expenses of Fresh Cut or capital gains tax on the share sale agreement (the cash payments) and had made payments of $16,965.48 in total to the Australian Taxation Office (ATO) to discharge superannuation guarantee liabilities of Fresh Cut (the ATO payments).

4. In proceedings commenced in 2022, Mr Rashazar, Omid and Rashazar sought damages for breach of contract and/or restitution against Mr Tok and Fresh Cut. The primary judge awarded damages for breach of contract of $285,110.45 (reflecting the purchase price and stamp duty paid by Rashazar) against Mr Tok. The primary judge found that Mr Tok had failed to transfer his 30 shares in Fresh Cut to Rashazar and that this was a breach of a fundamental term, and a repudiation of, the share sale agreement in respect of which there had been a total failure of consideration: Rashazar v Tok [2024] NSWDC 443 at [99], [102]. For completeness, the primary judge also considered Rashazar's claim for restitution of the purchase price under the share sale agreement. Her Honour found that Fresh Cut had been unjustly enriched in the sum of $100,000 and Mr Tok had been unjustly enriched in the amount of $175,000. Each was liable to make restitution to Rashazar in the amount by which they had been unjustly enriched.

5. The primary judge also found that Mr Tok was unjustly enriched, and was liable to make restitution to Rashazar, in the sum of $84,147 by reason of the cash payments and that Fresh Cut was unjustly enriched, and was liable to make restitution to Rashazar, in the sum of $16,965.48 by reason of the ATO payments.

6. Mr Tok and Fresh Cut (together, the appellants) appeal against those findings. They ask this Court to set aside the awards of damages based upon both breach of contract and restitution and, in effect, to dismiss the claims made against Mr Tok and Fresh Cut.

7. For the reasons set out below the appeal should be dismissed.

The grounds of appeal

8. By ground one, the appellants contend that the primary judge erred in assessing damages for breach of contract by reference to the Rashazar's wasted expenditure.

9. By ground two, the appellants contend that Rashazar was not entitled to restitution of the amount paid under the share sale agreement on account of mistake of fact in circumstances where the primary judge neither set aside the share sale agreement nor declared it void. The respondents concede that the primary judge erred in this regard. I will thus not consider ground two further. The respondents contend, however, that the primary judge's conclusion as to restitution should nonetheless be upheld on the ground, set out at [13] below, advanced by way of notice of contention.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/1969f1b1d047590399bd5f5e)

Disclaimer: Curated by HT Syndication.