Adler Mallach Holding Pty Ltd v Robertson and Anor [2001] NSWSC 691 | Case summary

1 Brownie AJ: By deed dated 4 December 1996 the first defendant sold to the plaintiff a business ("the business sold"), described in the deed as "Wholesale Stationary Supplies (including printing of office stationary specialised office machine consumables and reconditioned office machines)". The most significant part of the business consisted of selling consumables for franking machines. These sales were negotiated by telemarketers, that is, employees in the business sold who telephoned potential customers, soliciting sales. The telemarketers were people without significant skills or training, commonly employed through the Commonwealth Employment Service. They were given lists of possible customers, and they worked their way through those lists, telephoning those on the lists. The lists contained information about the names of potential customers, telephone numbers for those potential customers, and the names of the persons to contact within the organisation of the potential customers. 2 The deed was in the standard form of deed of agreement for sale of business, the copyright of the Law Society of New South Wales and the Real Estate Institute of New South Wales. It specified that the price for which the business was sold was $150,000, together with stock-in-trade, up to a maximum of $25,000. The figure of $150,000 nominally represented the agreed valued of the goodwill of the business, but it also included fixtures, fittings and the like valued at about $2000 or $3000. 3 Clause 14 of the printed form of deed contained a provision restraining the vendor from certain activities. This clause was crossed out, and replaced by an annexure "E", containing a broader set of provisions. These are not happily drafted, but the defendants acknowledged that they effectively operated to prevent the vendor from carrying on, directly or indirectly, any business which was the same as or substantially similar to the business sold, or any material part of it, and from soliciting the custom of existing customers of the business sold. 4 The primary thrust of the plaintiff's claim against the first defendant is that he, using a false name, established a business in direct competition with the business sold, and that he solicited custom from the existing customers of the business; and against the second defendant, Ms Dennis, the plaintiff asserts that she effectively assisted the first defendant in doing this, including later establishing in her own name a business called Digital Franking, with which the first defendant was associated, and through which business there was established competition with the business sold, and the custom of the existing customers of the business sold was solicited. The claims against the two defendants were made on a number of different legal bases, but the case throws up questions of fact rather than of law. 5 It is quite plain that a business called Pitney Mailing Services was established, in direct opposition to the business sold, and that employees of Pitney Mailing Services did solicit custom from existing customers of the business sold. This business was established in the name of Elias Khoury, who sometimes spelt his surname Khury, and at other times Kury. On the plaintiff's case, the defendant was the person who called himself Khoury. 6 It is also plain that the employees of Pitney Mailing Services used at least one of the customer lists, constituting part of the goodwill of the business sold: the records of Telstra demonstrate that someone from Pitney Mailing Services telephoned some 177 organisations, recorded in one of the customer lists, in approximately the same sequence as the names of those organisations appeared on the customer list. Additionally, employees of Pitney Mailing Services seem to have gone out of their way to denigrate the plaintiff and its business. 7 The first, and indeed the major issue to be resolved, whether the plaintiff has proved that first defendant was "Mr Khoury", is simple to state, but as a practical matter, the question is blurred by the need to refer to other issues, and to the evidence relating to other issues. Having regard to the nature of the allegations made, I proceed on the basis that the plaintiff must prove its case to the standard referred to in Rejfek v McElroy (1965) 112 CLR 517 at 521. 8 The defendants have been associated, in both a personal relationship and in business relationships, for a long time. Just what those relationships involved is not entirely clear, for the evidence is contradictory. Starting by confining myself to the documentary evidence, they were both employed by the one employer in 1989. Various documents left behind by the first defendant upon completion of the sale of the business to the plaintiff show that the first defendant said in 1990 that he and the second defendant had "restarted" in business; that in that year each of the defendants said things suggesting that he or she was the proprietor; that the second defendant said in 1991 and again in 1994 that she was the sole proprietor of the business; that in 1991 the second defendant transferred to the first defendant the business name attached to the business; and it seems that the second defendant worked in the business until about the end of 1996. However, the records of the business contained no reference of her being paid any salary or wage at or about the time of the sale. On the defendants' case, she worked part time, and the first defendant paid her out of his own pocket, rather than out of the money of the business, although it is not clear why affairs were arranged in this way. 9 Mr Adler and Mr Mallach of the plaintiff, each of whom I accept as a truthful and reliable witness, spoke of the second defendant using a desk situated in the same room as the first defendant, and of her participating in negotiations leading up to the sale of the business, including discussions about the terms of restraint of trade agreement that was negotiated, and of his seeking her views in the course of these discussions. I prefer the evidence of Messrs Adler and Mallach to the evidence of the defendants, whenever there is a conflict, and I consider that the evidence shows that the second defendant acted in some capacity, in the period leading up to December 1996, different to that of an employee doing mere clerical work, or work like that. I note that the first defendant conceded that the second defendant was present on two or three occasions when the sale of the business was discussed, although he generally denied that she was present when the terms of the restraint were discussed. On the other hand, the second defendant admitted that she knew that the first defendant was the subject of some form of restraint. 10 Additionally, in 1998, the first defendant applied to Westpac Banking Corporation for credit, and the second defendant acted as guarantor in respect of that credit. The transaction appears to point to the existence of a reasonably close relationship, but I do not think that it has any other real relevance at this stage, except perhaps that in the credit application form, signed by the first defendant, it was said that he was then self employed, and that his "employer" was R & N Baby Products, an entity I will refer to later. 11 The plaintiff made much of the fact that, according to the Telstra records, the telephone service of Pitney Mailing Services was registered in the name of the second defendant. She denied that this was so, denied that she had ever sought to have the telephone service registered in her name, and denied that she had ever paid any Telstra account for the service. However, it is plain that the service was recorded as being registered in her name, and the case for the defendants leaves this circumstance unexplained. 12 In earlier proceedings in the Federal Court, mentioned below, the first defendant said that his relationship with the second defendant was "a business relationship only". This was, at best from his perspective, disingenuous: he is the father of her child. 13 The business of Pitney Mailing Services was conducted from premises in Cowper Street Parramatta from about April 1997 until April 1998. The premises were leased to "Elias Khury trading as Pitney Mailing Services" for the period of two years commencing 1 April 1997. Mr Clare, a director of the company which was lessor of the premises, said that in November 1996 (that is, before the date of the deed for the sale of the business) a person who identified himself as Elias Khury introduced himself as the new tenant. Later, Mr Clare saw this man at the premises from time to time, apparently in charge of the business of Pitney Mailing Services. Later still, in April 1998, the tenant vacated the premises without notice to the lessor. When a letter to Pitney Mailing Services was delivered, Mr Clare opened it, telephoned the sender, and was told by the sender that Pitney Mailing Services had moved to another address at Cooper Street Smithfield. 14 Mr Clare identified the man who had called himself Elias Khury by reference to a photograph, being a photograph of the first defendant. Although Mr Clare had been confident in his identification at the time he swore his affidavit, in April 1999, he could not be certain about that identification at the time of the trial, in July 2001. I accept Mr Clare as a truthful witness, whose evidence is generally reliable. No doubt, his identification evidence must be treated like any similar identification evidence, with the degree of caution that evidence of that type requires. He seemed to be quite independent of the parties, and I do not accept the suggestion made by the first defendant that Mr Clare was biased, the suppose bias arising from the proposition that Mr Khury had left owing rent. To the contrary, Mr Clare's company apparently succeeded in leasing the premises out at a higher rent, so that the company lost little or nothing. In any event, Mr Clare did not impress me as being a biased witness. 15 In this context, there is another piece of evidence which seems to me to be significant. In the Federal Court proceedings, Mr Robertson was cross examined about the evidence, given on that occasion by Mr Clare, identifying "Mr Khury" by reference to a photograph. Mr Robertson agreed that the photograph in question was that of Mr Robertson. That precise affidavit is not in evidence in this case, but the evidence adduced now includes a copy of Mr Clare's affidavit, with an attached photograph, but it was not suggested that the photographs annexed to the affidavits, filed in the two court cases, were different. 16 Nor was it suggested that Mr Clare saw the first defendant at the premises of Pitney Mailing Services, as well as "Mr Khury". Rather, it was suggested only that Mr Clare was mistaken in his identification. In this context, it is not without significance that Mr Clare worked in the same building, and saw "Mr Khury" quite frequently, over a period of more than a year. 17 The records of the Department of Fair Trading show that the business name Pitney Mailing Services was registered on 7 February 1997, and that the date the business commenced had been recorded as 6 January 1997. (Settlement of the contract for the sale of the business, sold by the first defendant to the plaintiff, took place in the first week of 1997). 18 Whoever it was who was the proprietor of the business Pitney Mailing Services apparently chose to use the word "Pitney" in the name, because of the existence of a very large corporation called Pitney Bowe Inc, which has an Australian subsidiary called, it seems, Pitney Bowe Australia Proprietary Limited. These two companies took the view, rightly or wrongly, that the conduct of Pitney Mailing Services was improper, and they commenced proceedings in the Federal Court against the first defendant "aka Elias Khury trading as Pitney Mailing Services", and also "Mahmoud Homsi trading as Pitney Mailing Services". The evidence on the present hearing includes a transcript of what was said on the hearing of an application to set aside a default judgment which had been obtained against the first defendant after substituted service of the originating process had been effected upon him, by delivering a copy of it to an employee of Pitney Mailing Services. Wilcox J, who heard the case, concluded that Mr Robertson was the person who was known as Elias Khury. I suppose it goes without saying that that decision does not bind either defendant, so far as concerns this case: nothing arises in the nature of a res judicata or an issue estoppel, and the plaintiff did not suggest that his Honour's decision bound me, or that it should influence me. Rather, the plaintiff pointed to the transcript as recording what Mr Robertson said then, in contrast to what he said in the present hearing. 19 It seems that a good deal of evidence on the present hearing amounts to a recapitulation of the evidence in the Federal Court proceedings; and it is necessary to say something about a variety of matters which, taken together, are relied upon by the plaintiff. 20 In the Federal Court, Mr Robertson said that Ms Dennis told him that Michael Homsi had approached her, to work for Pitney Mailing Services. This was also the case the defendants in the present case. The name Michael Homsi is apparently an Australian version of the proper name Mahmoud Homsi, who is to be distinguished from his brother Mohmmed, known as Mark. 21 Michael Homsi was employed by the first defendant before he sold the business to the plaintiff, and by the plaintiff after it purchased the business, for a short time. At some stage during February 1997 Mr Mallach chided him for not starting work, some fifty minutes after he should have started. Mr Homsi replied aggressively, and then brushed against Mr Mallach and started swearing. In the upshot Mr Mallach dismissed Mr Homsi on the spot. Prior to this event, Mr Mallach said that he thought he was getting along quite well with Mr Homsi, although their relationship had only existed for a short span of time. Mr Homsi left the premises, there and then, so that, it seems likely, once the incident occurred, he had no opportunity to take any customer list with him. It is no doubt possible he had taken some list or lists, or copies of them, before the date of his dismissal, but there is nothing in the evidence to make this seem likely. 22 The defendants say now that it is possible that the Homsis were somehow behind Pitney Mailing Services, and suggest that the motivation, or part of the motivation for this conduct on their part arose from the dismissal of Michael Homsi by the plaintiff. Indeed, the defendants go a good deal further in their submissions, but the evidence falls well short of the suggestions that they made in submissions. A point in favour of this part of the defendants' case is the dismissal of Michael Homsi, some time in February 1997, but otherwise there does not seem to be any evidence suggesting that the Homsis had the motives attributed to them by the defendants. 23 On the defendants' case, at a time in early 1998, not established with certainty, Michael Homsi offered a job to the second defendant; and later, when she was conducting the business of Digital Franking, she offered him a job; and both these offers were accepted. 24 Another layer of complexity, and set of interwoven circumstances, arises from the provisions of the deed for the sale of the business by the first defendant to the plaintiff. That contract provided that the plaintiff was to purchase some only of the stock on hand. In fact, the first defendant took away a significant part of the stock that was on hand, because the plaintiff did not want to buy it. There is some dispute about the details, but I doubt that any of this detail is presently significant. There was a stocktake carried out by Ms Borg, an employee of the business, and the plaintiff and the first defendant both accepted that this was reliable. The first defendant then took away stock with a value, as fixed by the stocktake, of a little more than $20,000. 25 On his version, he sold this stock over a period to Michael Homsi of Pitney Mailing Services. If, instead of doing that, he had sold it at auction, he says that he would probably have obtained a good deal less than he in fact obtained by resale through Mr Homsi. 26 The plaintiff now points to payments made by Pitney Mailing Services to the first defendant, as well as to payments made, the plaintiff says, on behalf of the first defendant by Pitney Mailing Services. The plaintiff submits that these records point to payments made directly to the first defendant of some $35,000, as well as other, smaller, sums paid, in that first defendant used the credit card facilities of Pitney Mailing Services. That is, Pitney Mailing Services paid the first defendant considerably more than the value of the stock mentioned. By itself this body of evidence is certainly not conclusive, but it is largely unanswered by the defendants, Mr Robertson's explanations concerning these funds sounded quite lame, and these payments constitute a link in the chain of the plaintiff's case that the first defendant was a principal, or the principal, of Pitney Mailing Services. 27 According to Mr Robertson, he did visit the premises of Pitney Mailing Services on occasions, but only for the purpose of delivering stock to Mr Homsi for sale. I do not think that this evidence can be reconciled with the evidence of Mr Clare, if one accepts Mr Clare's identification of Mr Robertson as the person who called himself Mr Khury. According to Mr Clare he saw the man he knew as Khury, "approximately every two days or so" between November 1996 and November 1997. During the period November 1996 to February 1997, Mr Michael Homsi was employed initially by the first defendant and later by the plaintiff at the premises of the business sold, so that it seems unlikely that the person Mr Clare knew to be Mr Khury could have been Mr Michael Homsi. 28 An application was made to Australia Post, on 17 February 1997, in the name of Pitney Mailing Services, for the rental of a post office box: PO Box 434 Harris Park. On the same day Pitney Mailing Services wrote to Australia Post, authorising "the bearer of this letter, Ms N A Dennis" to secure the rental of the box. That letter, like the application form itself, was signed "E Kury", although on the letter this signature appears above the typed words "Elias Khoury", who said that he was the proprietor of Pitney Mailing Services. I note that on the defendants' case, Ms Dennis was first approached by Michael Homsi to work for Pitney Mailing Services in March 1997. 29 On 3 February 1998, the business name Pitney Mailing Services was transferred to Mahmoud Homsi. Exhibit 8 contains some records relating to this change, including a photocopy of a photograph of Mr Homsi (who does not look like Mr Robertson). Rather bafflingly, Mr Homsi seems to have signed the relevant form lodged with the Department of Fair Trading, but then to have made a statutory declaration saying that he did not sign it; and he told the department, seemingly on 30 April 1998, that he was not the proprietor of the business: he said that Elias Khury filled out the transfer form without his knowledge. 30 As mentioned earlier, Mr Clare said that he had been told that Pitney Mailing Services moved to new premises at Cooper Street Smithfield. There is not much direct evidence that the business at Pitney Mailing Services was conducted from that address. My overall impression is that the business conducted in the name of Pitney Mailing Services from the Cowper Street premises moved to the Cooper Street premises, but immediately started up under a new name, Digital Franking. However, the picture is made less clear, by reason of the fact that other businesses were conducted from the Cooper Street premises using the names Wholesale Franking Machines Supplies, Miller Newsagency and Smithfield Mailing Services. 31 The Pitney Bowe companies retained an investigator, Mr Gargan. Amongst other things that he did, he took photographs of the defendants in June 1998, in the vicinity of the premises at Cooper Street Smithfield. A photograph he took of Mr Robertson was the photograph, a copy of which was annexed to Mr Clare's statement. 32 On 19 June 1998 Mr Gargan saw Mr Robertson and another man, who has not been identified, but who might have been one of the Homsis. The two men took from the Cooper Street premises three large garbage bags of papers, which they put into a skip. Mr Gargan retrieved these bags, and delivered some of the contents to the solicitors for the Pitney Bowe companies. Some of these papers are reproduced, amongst other places at page 226 and following of plaintiff's bundle, Exhibit A. Neither defendant proffered any explanation for these documents. They include what appear on their face to have been a lot of documents of Pitney Mailing Services. Some of them appear to show that that entity used a telephone number 9635 6011, later changed to 9826 0251, and to have used a fax number 9891 6085, later changed to 9806 0017. Another curiosity, which no doubt attracted the attention of the Pitney Bowe representatives, was a copy of a purchase order apparently recording the delivery of goods on behalf of "Pitney Bowe", Fax number 1300 360 138. Another unexplained circumstance concerns the papers retrieved by Mr Gargan. On the case of the first defendant, he had virtually nothing to do with the business of Pitney Mailing Services, yet he helped to remove from the Cooper Street premises a large quantity of records concerning Pitney Mailing Services. The topic was ventilated in the Federal Court proceedings, but not explained, then or now. By itself, it is insignificant. In conjunction with the other matters mentioned, it calls for some explanation. 33 The business name Digital Franking was registered in the name of the second defendant on 1 April 1998, and she said in evidence that the business was hers. The plaintiff served subpoenas on Telstra to produce various documents, and Telstra responded, in part by letter and in part by producing documents. One of the documents produced is a copy of an account for a telephone service. It is not clear to me what telephone number that account refers to, but it is an account addressed to Mr R Dennis of 22 Mount Street Wentworthville, covering a period commencing 12 May 1998. It is clear that the user of the telephone service in question had access to one of the customer lists, delivered by Mr Robertson to the plaintiff on the sale of the business: there are some dozens of telephone calls made to entities on the list either in the approximate sequence in which the numbers appear on the list, or in reverse sequence, as if someone was working up a page rather than down the page. 34 Mr Adler said, without challenge, that this account was the account of Digital Franking, and Ms Dennis accepted that this was so. 35 I think that it is clear that Mr Robertson has used the surname Dennis from time to time. I do not overlook the evidence of Ms Dennis that she has a brother named Ronald and that she sometimes used his name rather than her own, nor a reference in the evidence to Rose Dennis, apparently the wife of Ronald Dennis. However, there is a great body of evidence suggesting a general practice on the part of the defendants of using various names, including the following. 36 The Telstra records show that charges incurred in respect of telephone number 1300 360 137 were charged to Robert and Noelene Dennis trading as Stork Avenue. There is no question but that the second defendant traded under the name Stork Avenue. The address recorded by Telstra was that of the Cooper Street premises. According to Telstra, the telephone service was leased in the name of Robert Dennis alone. It is not clear to me how it is that the lessee is one person, but that two persons were charged for the service. The telephone number was also used by Digital Franking. 37 Everything said in the previous paragraph may also be said about a fax number, 1300 360 138. 38 Telstra records show that Robert Dennis of the Cooper street premises also leased service number 9725 4263, which number was also used by Digital Franking. Telstra accounts were sent to Mr R Dennis of 22 Mount Street Wentworthville. That was the address given by the second defendant in her affidavit verifying her defence, in July 1999. Otherwise, the evidence does not suggest that Ronald Dennis had any actual involvement with any of the business names that I have mentioned. 39 The Telstra documents record that Mr R Dennis of 22 Mount Street Wentworthville was the lessee of telephone service number 9636 6463 between September 1997 and February 1998. That number was also used by both Digital Franking and by Miller Newsagency: see the evidence of Mr Oberoi, a director of a company which sold, by wholesale, certain materials to both Digital Franking and Miller Newsagency. Mr Oberoi identified Ms Dennis as a person who identified herself to him as Joanne. He did this by reference to a photograph taken by Mr Gargan at or near the Cooper Street premises. In evidence, the second defendant, after some equivocation, said that she had used the names Joanne, and Jones. Delivery dockets obtained by Mr Oberoi's company from both Digital Franking and Miller Newsagency were signed by J Jones, or in that name. 40 The second defendant carried on a business under the name R & N Baby Products. There is no doubt that this is so, or that it was a genuine business, dealing in baby products. The plaintiff suggested that the letters "R & N" stood for "Robert and Noaleen". The second defendant denied that this was so, but offered no real alternative. When he gave evidence in the Federal Court, Mr Robertson said that he and the first defendant were the co- proprietors of this business, and that they conducted the business from 18 Vineyard Avenue Smithfield. The business name was registered in May 1996, in the names of the two defendants. According to the records of Department of Fair Trading, the business was carried on from an address at Wetherill Park (that is, the same premises as the business sold) until 10 March 1997, when it moved to 18 Vineyard Avenue Smithfield. At different times each of the defendants has said that that address was his or her home address, but in the Federal Court, Mr Robertson said that he had only ever lived there for about three months, and in about 1995 - 1996. He agreed that he had described it as his residential address, but, he said, it was really only his business address. 41 Another business name that was used was R & N Services. If one considers together the documentary evidence, the evidence of Mr Hurdley and the evidence of Ms Novotney, it seems likely that the second defendant, at least, used this business name, in connection with a business involving the sale of franking machine consumables, using the same Post Office box number (434 Harris Park) as had been used at different times by Pitney Mailing Services and Pitney Supplies, the same telephone number (9635 6011) as was used by Pitney Mailing Services and Pitney Mail, and the same fax number (9891 6085) as was used by Pitney Mailing Services. Additionally, she used the name Joanne Jones for that purpose. (It is not clear that the name Pitney Mail was attached to anything, other than to a telephone account). 42 The first defendant registered the name Wholesale Franking Supplies in August 1996, giving as its principal place of business the premises then occupied by the business sold, and describing its business as being "Office Machine Consumables Supplies". He renewed the registration of the business name in 1999, and at another point in 1999 gave notice of a new principal place of business, 18 Vineyard Avenue Smithfield. The plaintiff points to this, and to the contractual restraint, as an indication of how the first defendant treated his contractual obligations. Cross examined about this, the first defendant said that he had registered, not a business name, but a company. This appears to be quite wrong. He also said that the company/business had never traded. This leaves unexplained why he renewed the registration, and why he changed the record of its principal place of business. 43 It seems likely that the second defendant conducted a business called Smithfield Mailing Services, selling franking machine consumables, from the Cooper Street premises, and using the same telephone number (9609 5022) as was used by R & N Baby Products and by Digital Franking. The documentary evidence, coupled with the evidence of Mr Hurdley and Ms Novotney, corroborated in part by the statements of Mr Masri mentioned below, demonstrates that the second defendant used the names Joanne Jones and Ann, in connection with this business. 44 The plaintiff retained as an expert witness a Ms Novotney, a handwriting and questioned document examiner. She was provided with copies of various documents, and asked whether the originals of these documents had been written, or signed by either of the defendants. Sacrificing accuracy for brevity, Ms Novotney's report provides some support for the proposition that the first defendant signed some documents in the name of the Khoury (however spelt), and that the second defendant wrote and signed a variety of documents, sometimes in the name Joanne, sometimes in the name J Jones, and sometimes in the name Ann. Once again, by itself, this body of evidence is not conclusive; but it constitutes another link in the chain of evidence relied upon by the plaintiff. 45 There are two other relatively minor matters relied upon by the plaintiff, as constituting other links in this chain. According to Mr Willis, a telemarketer employed by the first defendant and later by the plaintiff, at a time just before the completion of the contract for the sale of the business, the first defendant tore up one of the customer lists. Challenged about this, he gave an explanation which simply cannot be accepted. The plaintiff points to the matter as demonstrating part of a pattern of consistent conduct on the part of the first defendant, attempting to destroy the value of the goodwill which he had contracted to sell to the plaintiff 46 The evidence of Mr Williams is said to point towards the same pattern of conduct. He said that in 1989 he worked for an organisation called Hasler Office Equipment. At that time the first defendant was the general manager of that entity, and the second defendant worked there as an accountant. Mr Williams worked there as a trainee, and later as a salesman. Later he did other work for other organisations in the same general field, including one of the Pitney Bowe companies, and then for the first defendant. He said that in 1997 the first defendant asked him to obtain and pass on a copy of a customer list. 47 In the proceedings in the Federal Court, the Pitney Bowe companies contacted a Mr Masri with a view to obtaining an affidavit from him. In the event Mr Masri did not sign the affidavit which was prepared for him. In the course of taking instructions for that affidavit, the solicitor for the Pitney Bowe companies, Mr Davidson, interviewed Mr Masri and tape recorded that interview. In the present litigation, the plaintiff called Mr Davidson as a witness, and tendered a transcript of the interview, as well as the draft affidavit which Mr Davidson had prepared, on the basis that Mr Masri was not available to give evidence. 48 On their face, the transcript and the draft affidavit are helpful to the plaintiff's case in that they trace through the mouth of one person something of an overview of the main thrust of the plaintiff's case, which has otherwise to be deduced from a good deal of circumstantial evidence. Mr Masri was employed in the business sold as a telemarketer for about three or four months in early part of 1996. He knew the first defendant as Bob Robertson, and as the owner as the business. He knew the second defendant as Anne and as the wife of the first defendant, who worked in the business in an administrative capacity. He said that the first defendant told him, in the presence of the second defendant, that they were married, and that they had a daughter, Anastasia. 49 Mr Masri said that after he left this employment, about July 1996, he met the first defendant at political meetings and on social occasions. At one such meeting, in late 1996, the first defendant told him that he was selling the business, on terms that prevented him from opening another business selling franking machine supplies for another two years. 50 Later, in January 1998, on the introduction of the Commonwealth Employment Service, Mr Masri went to the Cowper Street premises, where he was surprised to find the first defendant. The first defendant employed him, but told him not to address the first defendant as Bob Robertson, but as Elias Khoury. Mr Masri described how, later that year, the business moved to the Cooper Street premises, changed its name to Digital Franking, and continued to fulfil orders placed with Pitney Mailing Services at the Cowper Street premises. He said that both the first and second defendants told him, before the move, of the proposal to move to new premises. 51 The main thrust of the interview and of the draft affidavit of Mr Masri was directed to the issues in the Federal Court proceedings, and included statements showing how, as a telemarketer, Mr Masri was expected to and did suggest to customers and potential customers that they deal with Pitney Mailing Services rather than Pitney Bowe; statements showing how the Pitney Bowe companies fought back against these tactics (commercially, rather than legally); statements about the effects of this conduct by Pitney Bowe upon the business operations of Pitney Mailing Services/ Digital Franking, in part in that customers and potential customers who were approached accused them of deceptive conduct; and statements to the general effect that the first defendant conducted the business of Digital Franking, as if he was the owner of that business. Additionally, Mr Masri said that there was no one there called Joanne Jones. 52 Mr Masri also described in some detail how the telemarketers worked, from lists of customers and potential customers distributed to them by the first defendant. Although he went into more detail than some of the other witnesses, his evidence about these matters was largely uncontentious. 53 Since Mr Masri was not available for cross examination, evidence of what he said needs to be approached with caution, particularly given the seriousness of the allegations that the plaintiff makes. Nevertheless, as the plaintiff submitted, a good deal of what Mr Masri says is demonstrated by the other evidence to be accurate. The defendants suggested that both he and the Homsi brothers were guilty of generally reprehensible conduct, and that the statements of Mr Masri should be treated accordingly, but there is really nothing against Mr Masri except allegations cast in generalities, and not backed up by any detail, and on the totality of the evidence I see no sensible reason for acting otherwise than generally on the basis that what Mr Masri says is likely to be reasonably reliable. In particular, I see no sensible reason in the evidence for concluding that he was biased against the defendants, or either of them. 54 A good deal was said about the failure of any party to call as a witness in the present case either Mr Masri, or either of the Homsis. On the plaintiff's case, they were unavailable to it. On the plaintiff's case, the defendants have not demonstrated that any of the three witness were unavailable to the defendants. As I have said, the defendants criticised all three, but mostly only in generalities. 55 The plaintiff pointed to the circumstance that the first defendant tendered an original certificate relating to the business name Pitney Mailing Services, which on its face is the property of Mahmoud Homsi (Exhibit 3). Challenged about this, the first defendant said that it had been handed to him by an employee of Pitney Mailing Services, Karean (or perhaps Courine, or Corinne). He said that she obtained it from a filing cabinet in the office of Pitney Mailing Services, and that she gave it to him, not long before Mark Homsi dismissed her. Why she should have taken it, why she should have given it to the first defendant, and why he felt at liberty to take or to keep it, as well as why he had not produced it on discovery, are matters not really explained at all. 56 The plaintiff also pointed to some evidence of the first defendant that he had had lunch with the Homsi brothers, but this was apparently in 1997 or 1998, and does not seem to me to be particularly significant. 57 Drawing together all these various pieces of evidence, there are some striking features. If it was not the first defendant but someone else who started up the business Pitney Mailing Services using the name Elias Khoury, that person looked like the first defendant, and wrote like him; he seems to have been unsure how to spell his name; he knew and apparently knew very well the technicalities involved in the niche business in question; he started taking steps to set up the business of Pitney Mailing Services in the latter part of 1996, when the first defendant's negotiations with the plaintiff were nearing finality; and it is necessary to disbelieve, or heavily discount the statements of Mr Masri, and a great deal of the other evidence, summarised above, including the identification evidence of Mr Clare, and the fact that the business of Digital Franking started up at about the same time as the business of Pitney Mailing Services closed down. 58 I did not find either of the defendants to be a witness of credit. I am satisfied that the plaintiff has made out its case, in respect of every cause of action pleaded, as against both defendants. I am satisfied that the plaintiff has proved at least some loss. The repeated statements of first defendant that the plaintiff's gross turnover exceeded expectations is no doubt a matter to be weighed, along with the other evidence, but it simply does not prove that the plaintiff suffered no net loss. In my view, the proposition that the plaintiff has suffered some loss is well established. 59 The plaintiff should now elect what remedies it wishes to pursue: damages, or an account of profits. The defendants should pay the plaintiff's costs to date.

Adler Mallach Holding Pty Ltd v Robertson and Anor

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (8 paragraphs)

Parties

Cases Cited (1)

Cited By (1)