The applicant, Thomas Alabakis, is a chartered accountant who has worked as a financial analyst. At one time he was employed by Robert Holmes a Court's company. He has also based himself in Saudi Arabia and has represented the Bin Laden family in financial matters.
The respondent, Michael Boyd, is also a chartered accountant who has been involved in the takeover and directorship of numerous companies.
The parties met in 1996 and commenced a closer association in 2000. Between 2001 and 2007 both were members of the board of directors of a telecommunications company known as Iridium in the United States of America.
In 2007 Mr Alabakis and his family moved to Melbourne.
[2]
In March 2007 a conversation took place between Mr Alabakis and Mr Boyd in a car. At the time, Mr Boyd was involved in the takeover of a publicly listed company known as Advance Healthcare Group Limited ("AHG"). On or about 22 January 2007, AHG's board of directors had resolved to make a placement of 20 million fully paid ordinary shares at an issue price of 2 cents each to raise $400,000.00.
Mr Alabakis says that Mr Boyd asked him to take an allocation of 10 million shares in AHG at 2 cents each. He says that Mr Boyd told him that the money was needed by AHG and that he, Mr Boyd, would buy the shares from Mr Alabakis after an extraordinary general meeting of AHG which was to take place on 19 March 2007. The meeting would determine the question of control of AHG.
Alabakis v Boyd [2010] VCAT 32 | Case summary | Zoe
Mr Alabakis also claims that Mr Boyd represented at the time of the conversation in the car that he, Mr Boyd, would purchase the shares at a price that would result in no loss to Mr Alabakis and if any profit was derived from the sale of the shares it would be split evenly between them.
Mr Boyd says that he did not represent that he would purchase the shares from Mr Alabakis and that he merely recommended to Mr Alabakis that he should take a placement of shares in AHG as an investment opportunity.
There appears to have been no formal relationship between Mr Alabakis and Mr Boyd at the time.
Shortly after the conversation between Mr Alabakis and Mr Boyd, Mr Alabakis took an allocation of 10 million shares in AHG at 2 cents each through a nominee company associated with a stockbroking firm.
The ASX listed price of AHL shares subsequently rose above and fell below 2 cents at various times.
In or about August 2007 Mr Alabakis requested Mr Boyd to purchase the 10 million shares in AHG for not less than 2 cents per share. During August 2007 the ASX price of the shares varied between 1.9 cents and 2.3 cents.
Subsequently, various communications took place between Mr Alabakis and Mr Boyd.
Mr Boyd did not purchase any of the shares from Mr Alabakis.
On or about 28 April 2008, administrators were appointed to AHG and its shares were suspended from quotation on the ASX. A subsequent deed of company arrangement entered into by AHG failed.
Mr Alabakis says that the shares are worthless and that Mr Boyd is indebted to him in the sum of $200,000.00.
[3]
Alabakis claims under 2 heads:
Misleading and Deceptive conduct
[4]
Mr Alabakis contends that Mr Boyd made representations to him that he, Mr Boyd, would purchase the shares after the acquisition of AHG was complete at no loss to Mr Alabakis and with equal division of any profit. Mr Alabakis says that he purchased the shares in reliance on the representations and that the representations were false and/or misleading.
[5]
Further or alternatively, Mr Alabakis contends that the circumstances give rise to a consumer and trader dispute.
[6]
S9(1) a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
[7]
S107(1) In this part a "consumer and trader dispute" is a dispute or claim arising between a purchaser or possible purchaser of goods or services and a supplier or possible supplier of goods or services in relation to a supply or possible supply of goods or services.
[8]
The non-exclusive definitions of "goods" and "services" contained in section 3 reveal that a supply or possible supply of goods need not take place in the course of trade or commerce for a consumer and trader dispute to come within section 107(1). However, "services" includes any rights (including rights in relation to, and interests in real or personal property), benefits, privileges or facilities that are or one to be, provided, granted or conferred in trade or commerce, including ... (the definition goes on to include items not relevant here).
[9]
Shares are intangible. They have no physical presence. Clearly, they cannot be goods.
Are they services? Services may include an interest in personal property. A share is a definite portion of the capital of a company. It is personal property which entitles the owner to receive a proportionate part of a profits of a company Shares fall within the definition of services contained in section 3 of the Fair Trading Act 1999.
[10]
Both a claim of misleading and deceitful conduct under section 9(1) of the Fair Trading Act 1999 and a consumer and trader dispute involving services under section 107(1) must involve matters arising in trade or commerce.
[11]
DID THE MATTERS IN DISPUTE ARISE IN TRADE OR COMMERCE?
[12]
Mr Alabakis did not purchase the shares from Mr Boyd. There was no supply or possible supply by Mr Boyd to Mr Alabakis. If there was a representation by Mr Boyd that he would purchase the shares or if there was an agreement for a possible supply of shares by Mr Alabakis to Mr Boyd it is necessary for these to be in trade or commerce for the Tribunal to have jurisdiction.
A preliminary hearing was held on the question of jurisdiction and it was found that there was jurisdiction. However, only the applicant was called on to appear at that hearing. The Tribunal is always at large to determine whether it has jurisdiction. In this case it was necessary to hear the evidence of both parties before further determining the question of jurisdiction.
There my or may not have been a representation or an agreement that Mr Boyd would purchase the shares. However, the threshold question is whether any such representation or agreement occurred in the course of trade or commerce.
Mr Alabakis's evidence was that there was no agreement in writing and no terms were reduced to writing. When asked why this was so Mr Alabakis reported that it was a "gentlemen's agreement". When asked why he did not just put his money in the bank he responded that he was helping a friend out. He said that he did not investigate the company's worth as an investment. When it was put to Mr Alabakis that Mr Boyd had merely given him an investment tip, Mr Alabakis's reply was non-responsive. Mr Boyd's evidence was that he merely gave Mr Alabakis an opportunity to invest in AHG.
Despite Mr Alabakis's contention that Mr Boyd represented that he would finalise the purchase of the shares after the EGM on 19 March 2007, no attempt was made by Mr Alabakis to seek to have Mr Boyd buy the shares until August 2007, just before the Alabakis relocated to Dubai.
The circumstances are not consistent with there being a supply or possible supply in trade or commerce. The whole situation is consistent with one of a favour done in friendship. What transpired between Mr Alabakis and Mr Boyd was of an entirely private nature.
I therefore find that the Tribunal does not have jurisdiction to determine the matter.
Parties
Applicant/Plaintiff:
Alabakis
Respondent/Defendant:
Boyd
Cases Cited (1)
Alabakis v Boyd (Civil Claims) [2010] VCAT 32 (14 January 2010)