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[2025] NSWCA 94
respondent. Leave granted to file the notice of contention; the notice was to be filed by 4 pm on 8 May 2025; appeal dismissed; appellants ordered to pay the respondents’ costs of the appeal and the notice of...
Tok agreed to sell Rashazar Pty Ltd 30 shares in Fresh Cut for $275,000, but the shares were never transferred. The purchaser paid the full price and stamp duty, and later made other payments connected with Fresh Cut. The Court of Appeal upheld the damages award because the true value and likely financial performance of the company under the promised arrangement could not reliably be established, and that uncertainty was connected to Tok’s breach. It also explained that restitution is not automatically barred just because a contract exists: the key question is whether restitution would undermine a risk allocation in that contract. The primary judge’s findings about the other payments were also upheld. The appeal was dismissed.
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On 22 January 2016, Atilla Tok agreed to sell Rashazar Pty Ltd 30 shares in Fresh Cut Australia Pty Ltd for $275,000. The agreement described that sum as payable “for 30 shares in [Fresh Cut]” ([18]). It provided for an initial $100,000 payment and a further $175,000 payment within two years of completion ([19]).
8 cited instruments linked from this judgment.
Rashazar paid both tranches in 2016. It also paid $10,110.45 in stamp duty, including interest ([3]). But no shares were ever transferred. The company’s register continued to show Tok and two other shareholders, with no shares recorded in Rashazar’s name ([23]–[24]). Rashazar and the other respondents did not discover the non-transfer for at least some years ([3]).
The dispute involved more than the purchase price. Hassan Rashazar and his son Omid made cash payments totalling $84,147 to Tok for expenses said to relate to Fresh Cut or capital gains tax on the share sale agreement. Rashazar also paid $16,965.48 to the Australian Taxation Office for Fresh Cut’s superannuation liabilities ([3], [26]–[30]). The primary judge found these payments were made under a mistaken belief that Rashazar was a shareholder and was required to contribute.
The primary judge awarded Rashazar Pty Ltd $285,110.45 in damages against Tok, being the purchase price and stamp duty. The primary judge also ordered restitution of $100,000 against Fresh Cut and $175,000 against Tok for the purchase-price payments, and restitution for the cash and ATO payments ([4]–[5], [31]–[36]).
Tok and Fresh Cut appealed. Their grounds challenged the use of wasted expenditure to assess damages, the restitution orders, and the findings that the later payments were made under a mistake and that the cash payments occurred ([8]–[12]). The respondents conceded that the primary judge’s mistake-based reasoning for restitution of the purchase price was erroneous, but argued by notice of contention that the order could be affirmed because there had been a total failure of consideration ([9], [13]).
The NSW Court of Appeal, with Stern JA giving the principal reasons and Payne JA and Kirk JA agreeing, granted leave for the notice of contention and dismissed the appeal. It ordered the appellants to pay the respondents’ costs ([1]–[3], [101]–[102]).
The first issue was whether the purchase price and stamp duty could be awarded as damages without proof of the value of the 30 shares. The appellants argued that, because the respondents did not establish the shares’ value, only nominal damages were available ([39]–[40]).
The Court began with the expectation principle: damages should, so far as money can do it, place the innocent party in the position it would have occupied had the contract been performed ([51]). It also recognised the ordinary rule that damages are assessed at the date of breach, while emphasising that this is not inflexible. Another date may be used where the circumstances require it for adequate compensation ([51]).
The Court rejected the idea that later events could not be relevant. Rashazar had paid the full price, but the respondents did not know for years that the shares had not been transferred. On those circumstances, the primary judge could consider events after the breach in assessing the loss ([57]). The discussion of Wenham v Ella reinforced that a court should not treat useful assessment rules as rigid rules where doing so would prevent reasonable compensation ([52]–[53]).
The Court also accepted that the primary judge could assess damages by reference to reasonable expenditure. It relied on the facilitation principle stated by the High Court plurality in Cessnock. Ordinarily, the plaintiff bears the legal burden of proving loss. But where breach causes or increases uncertainty about the position that performance would have produced, the court may facilitate proof by assuming or inferring that reasonably incurred expenditure would have been recovered ([59]–[60]).
The Court considered that this was not simply a case in which the respondents had failed to produce evidence that was readily available. There was evidence that they had sought financial information and that it had either been refused or was seriously inaccurate ([62]). The primary judge had no reliable information about Fresh Cut’s value or profitability. Further, the respondents had not had substantive involvement in Fresh Cut’s financial management, and the court could not know what would have happened if Tok had transferred the shares and treated the transaction as a genuine commercial arrangement ([61]–[65]). The difficulty of proving the counterfactual was connected to the breach and its surrounding circumstances. The award of reasonable expenditure was therefore upheld.
The notice of contention raised a separate restitution issue. The Court found that the share sale agreement had been terminated: the respondents pleaded that Tok repudiated it and sought their money back because the deal was over. By service of the pleading, they communicated acceptance of the repudiation ([38]). The agreement required payment for 30 shares, and there had been no transfer. The Court therefore considered that there was a total failure to provide the consideration stipulated by the agreement ([71]).
The Court also rejected a broad reading of the subsidiarity principle. The principle did not prevent restitution merely because the parties’ relationship was governed by a valid contract or because a claim for contractual damages was available. Rather, it prevented restitution where granting it would undermine a relevant allocation of risk in the contract ([74]–[82]). Here, the restitution claim did not undermine such an allocation ([82]). The respondents’ alternative basis for restitution was therefore accepted as a ground that would have supported the primary judge’s result, although it was not necessary to dismiss the appeal once ground one failed ([67], [83]).
Finally, the Court rejected the challenges to restitution for the cash and ATO payments. It regarded Omid’s evidence as consistent with a belief that Rashazar was a shareholder and that this was the overarching reason the payments were arranged. The visa process provided some context, but did not displace the mistaken-belief finding ([85]–[90]). For the ATO payments, the evidence included that Sanli told Omid the payments had to be made and emails containing payment instructions ([91]–[92]). As for the cash payments, the primary judge had heard Omid and Navid and believed them. The inconsistencies and lack of written records did not make the findings glaringly improbable ([93]–[100]).
The judgment treats several principles as established before the appeal. First, the ordinary measure of contractual damages is the position the plaintiff would have occupied had the contract been performed, drawing on Robinson v Harman and Tabcorp Holdings ([51]). Second, the usual assessment date is the date of breach, but the rule can yield where the circumstances require another date for adequate compensation ([51]).
The judgment’s contribution is in applying those principles to a share sale where the purchase price had been fully paid, the shares were never transferred, and the purchaser did not know of the failure for years. It confirms that the breach-date rule should not be applied mechanically and that later events may be relevant where needed to assess adequate compensation ([52]–[57]). It also explains how the Cessnock facilitation principle can operate when the performance counterfactual is uncertain and that uncertainty is linked to the breach ([59]–[65]).
On restitution, the judgment clarifies the limited scope it gives to subsidiarity. Coshott and Nikolic were discussed as authorities for the proposition that restitution cannot undermine contractual risk allocation ([76]–[77]). The Court read them as not establishing a categorical bar whenever an enforceable contract exists. It relied on Mann v Paterson Construction in explaining that overlapping contractual and restitutionary remedies are not inherently anomalous ([79]–[81]).
The judgment does not establish that every failed share transfer will justify recovery of the purchase price as damages or restitution. Its reasoning depends on the evidence, the terms of the agreement, the failure to transfer, the uncertainty about the counterfactual and the absence of a contractual risk allocation that restitution would undermine. The judgment itself gives the relevant legal sources and its own application as at 7 May 2025; the material provided does not establish what later courts have done with the decision.
At [51], the Court says the ordinary damages rule “will yield if, in the particular circumstances, some other date is necessary to provide adequate compensation.” In plain English, the breach date is the usual starting point, not an inflexible deadline for deciding what evidence can be considered.
At [57], the Court applies that rule because Rashazar paid in full and the respondents did not discover the breach for years. The practical point is that a court may consider later events where ignoring them would not fairly compensate for the loss.
At [59], the Cessnock principle is expressed in terms of breach-caused uncertainty. If the breach makes it harder to know what would have happened if the contract had been performed, the court may assist the plaintiff’s proof by inferring that reasonable expenditure would have been recovered. This is not an automatic award of expenditure: the inference depends on the degree of uncertainty and the evidence.
At [60], the phrase “a ‘fair wind’ but not a ‘free ride’” captures the limit. A plaintiff may receive an evidentiary benefit to address uncertainty caused by the breach, but must still establish a loss on the evidence as a whole.
At [65], the Court describes the performance counterfactual as impossible to know because Tok had not treated the share sale as a genuine commercial transaction. This connects the information problem to the events surrounding the breach, rather than treating it as a mere gap in the respondents’ case.
At [79], the Court states that subsidiarity prevents restitution where it would undermine a relevant contractual risk allocation. In plain English, contract terms matter, but the existence of a contract does not automatically shut out restitution.
At [99], the Court says the lack of written records did not make the cash payments implausible. The finding rested on the primary judge’s assessment of witnesses who gave evidence about events from years earlier, not on a rule that oral evidence must be accepted whenever records are absent.
The damages reasoning is most relevant where a party has paid substantial expenditure in anticipation of contractual performance, the other party’s breach makes the performance counterfactual difficult to assess, and the plaintiff faces uncertainty linked to that breach. In this case, the buyer had paid the full price, the shares were not transferred, financial information was unreliable or unavailable, and the buyers had little or no role in the company’s financial management ([57], [61]–[65]).
It may also be relevant where the plaintiff could not reasonably discover the breach at the time it occurred. The respondents remained unaware of the non-transfer for years, which supported the Court’s conclusion that later events could be considered in the damages assessment ([3], [57]).
The restitution analysis is relevant where a contract has been discharged following acceptance of repudiation, money was paid for a specified performance, and that performance was not provided. Here, the specified consideration was 30 shares and none were transferred ([38], [71]). The subsidiarity discussion becomes important where a defendant argues that restitution is barred simply because the parties had a contract. The judgment directs attention instead to whether the requested remedy would undermine a contractual allocation of risk ([79]–[82]).
The factual-review discussion is relevant to appeals challenging a trial judge’s assessment of witness credibility. The appellants accepted that credit-based findings had to be shown to be glaringly improbable ([12]). The Court found that some confusion and inconsistency about sources of cash did not displace the primary judge’s assessment, particularly given the passage of time and the lack of contemporaneous records ([98]–[99]).
The judgment was delivered on 7 May 2025. The supplied judgment contains no later judicial treatment of Tok v Rashazar, so later applications, distinctions or appellate review cannot be established from this source.
The judgment itself explains how it uses earlier authorities. It applies the High Court’s Cessnock explanation of facilitating proof where breach causes uncertainty ([59]–[61]). It draws on Wenham v Ella to show that rules about the date of assessment are not rigid in cases involving paid consideration and an untransferred interest ([52]–[53]). It also explains Pavey, Coshott and Nikolic as supporting a limit on restitution where it would subvert an applicable agreement, rather than a general prohibition on restitution whenever a valid contract exists ([75]–[77]).
The Court discusses Mann as recognising that restitution may overlap with contractual remedies, and Baltic Shipping as permitting recovery following discharge for breach or frustration without treating discharge as rescission ab initio ([80]–[81]). It distinguishes the position in Miraki because the issue there concerned whether restitution could circumvent statutory protection for a valid contract, and the relevant broader question was not decided in that case ([70]).
These relationships describe the reasoning in Tok itself. They do not establish how courts decided any later case.
The judgment leaves the application of the facilitation principle dependent on the circumstances. It states that the strength of the inference that expenditure would have been recovered depends on the extent of uncertainty resulting from the breach and on all the evidence ([59]–[60]). The judgment does not set a formula for measuring that strength. It also does not make wasted expenditure the default measure whenever a plaintiff cannot prove the value of the promised performance. Here, the Court relied on specific findings about the unreliability and unavailability of company information and the difficulty of the performance counterfactual ([61]–[65]).
A further question is how the approach applies where the plaintiff has access to reliable valuation evidence, or where the uncertainty is not caused or increased by the breach. The Court’s reasoning expressly ties facilitation to breach-caused uncertainty, so those circumstances may differ from this case ([59]–[60]).
The judgment also does not provide a comprehensive account of how courts should identify a contractual allocation of risk for subsidiarity purposes. It says that restitution is unavailable where it would undermine a relevant allocation, and that the agreement in this case created no such barrier to restitution for total failure of consideration ([79]–[82]). The precise boundary will therefore depend on the agreement and the remedy claimed.
Finally, the judgment addresses the appellate challenge to factual findings by applying the “glaringly improbable” standard that the appellants accepted. It does not set out a broader treatment of every form of appellate review of fact-finding. Its conclusion is tied to the trial judge’s opportunity to hear the witnesses and the particular evidence about the cash payments ([12], [98]–[100]).
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on this, relying on it, or using any draft, have it checked by a qualified Australian lawyer.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Tok v Rashazar [2025] NSWCA 94
Hearing dates: 16 April 2025
Date of orders: 7 May 2025
Decision date: 07 May 2025
Before: Payne JA at [1];
Kirk JA at [2];
Stern JA at [3].
Decision: (1) Leave is granted to the respondents to file the notice of contention.
(2) Notice of contention reflecting the one ground pressed at the hearing on 16 April 2025 to be filed with the Court by 4 pm on 8 May 2025.
(3) Appeal dismissed.
(4) Appellants to pay the respondents’ costs of the appeal and of the notice of motion filed on 8 April 2025.
Catchwords: CONTRACT – remedies – damages – measure of damages – contract for the sale of shares – where primary judge assessed damages by reference to lost expenditure – where breach results in uncertainty or difficulty of proof of loss – no error in primary judge’s approach
CONTRACT – remedies – damages – time of assessment – where purchase price was paid but shares were not transferred in accordance with the contract – where respondents were unaware that shares were not transferred – no error in assessing damages by reference to events that occurred after the breach of contract
RESTITUTION – ineffective transactions – general principles – restitution of money paid – failure of consideration– where parties’ relationship was governed by a valid contract – subsidiarity principle – where restitutionary claim did not undermine the parties’ allocation of risk
Legislation Cited: Civil Procedure Act 2005 (NSW), s 56
Corporations Act 2001 (Cth), s 1274B
Cases Cited: Baltic Shipping Co v Dillon (1993) 176 CLR 344; [1993] HCA 4
Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49
Cessnock City Council v 123259932 Pty Ltd [2024] HCA 17; (2024) 98 ALJR 719
CH Leahman Investments Pty Ltd v Tuesday Enterprises Pty Ltd [2024] WASCA 142
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54
Coshott v Lenin [2007] NSWCA 153
Elisha v Vision Australia Ltd [2024] HCA 50; (2024) 99 ALJR 171
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Hungerfords v Walker (1989) 171 CLR 125; [1989] HCA 8
Johnson v Perez (1988) 166 CLR 351; [1988] HCA 64
Khattar v Khattar [2023] NSWCA 133
Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26
Lee v Lee (2019) 266 CLR 129; [2019] HCA 28
Mann v Paterson Construction Pty Ltd (2019) 267 CLR 560; [2019] HCA 32
Miraki v Griffith (2021) 106 NSWLR 280; [2021] NSWCA 263
Nikolic v Oladaily Pty Ltd [2007] NSWCA 252
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; [1982] HCA 29
Progressive Pod Properties Pty Ltd v A & M Green Investments Pty Ltd [2012] NSWCA 225
Radford v de Froberville [1977] 1 WLR 1262
Rashazar v Tok [2024] NSWDC 443
Renown Corporation Pty Ltd v SEMF Pty Ltd (2022) 110 NSWLR 246; [2022] NSWCA 233
Robinson v Harman (1848) 1 Exch 850
Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68
Ryder v Frohlich [2004] NSWCA 472
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35
Tabcorp Holdings Ltd v Bowen investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8
Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12
Wenham v Ella (1972) 127 CLR 454; [1972] HCA 43
Texts Cited: E Peel, Treitel, The Law of Contract (15th ed, 2020, Thomson Reuters)
H G Beale, Chitty on Contracts (35th ed, 2023, Sweet & Maxwell)
I Jackman, The Varieties of Restitution (2nd ed, 2017, The Federation Press)
Category: Principal judgment
Parties: Atilla Tok (First Appellant)
Fresh Cut Australia Pty Ltd (Second Appellant)
Hassan Rashazar (First Respondent)
Omid Rashazar (Second Respondent)
Rashazar Pty Ltd (Third Respondent)
Representation: Counsel:
P Reynolds and M Bui (Appellants)
B Koch and A Berriman (Respondents)
Solicitors:
Pordeli Legal (Appellants)
Cambridge Law (Respondents)
File Number(s): 2024/399680
Publication restriction: Nil.
[This headnote is not to be read as part of the judgment]
From around 2015, Hassan Rashazar (Mr Rashazar, the first respondent) was pursuing a Business Investment Visa, which provided a pathway to permanent residency, and was seeking to purchase an interest in a business in Sydney for this purpose. Mr Rashazar was assisted in this process by his son, Omid Rashazar (Omid, the second respondent), due to Omid’s proficiency in English.
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 (payable in two tranches), expressed to be “for 30 shares in [Fresh Cut]”, but no shares in Fresh Cut were ever transferred to Rashazar. This was not discovered by Mr Rashazar, the sole director and shareholder of Rashazar, or by any of the other respondents, for at least some years. The primary judge found that this was a breach of the share sale agreement but, as regards damages, there was no information about the value of Fresh Cut or its profitability and what may have happened to its value or profitability if Rashazar had become a shareholder was imponderable. Accordingly, the primary judge awarded damages for breach of contract against Mr Tok on the basis of the expenditure reasonably incurred by Rashazar, being $285,110.45 (reflecting the purchase price and stamp duty paid by Rashazar).
In the alternative, 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 and each was liable to make restitution to Rashazar as these payments had been made under a mistake of fact as to the transfer of the 30 shares.
Mr Rashazar and Omid also 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 made payments of $16,965.48 in total to the Australian Taxation Office to discharge superannuation guarantee liabilities of Fresh Cut (the ATO payments). Omid said that Fresh Cut’s accountant, Altug Sanli, told him that Mr Rashazar needed to make these payments. The primary judge found that Mr Tok was unjustly enriched by reason of the cash payments and that Fresh Cut was unjustly enriched by reason of the ATO payments and each was liable to make restitution to Rashazar.
The primary judge made adverse credit findings against Mr Tok and preferred the evidence of Mr Rashazar, Omid and Navid (Omid’s brother) where it contradicted that of Mr Tok.
Mr Tok and Fresh Cut (together, the appellants) sought to set aside the awards of damages for breach of contract and restitution and that this Court order that the claims made against Mr Tok and Fresh Cut be dismissed.
The respondents conceded that the primary judge erred in ordering restitution of the amount paid under the share sale agreement on account of mistake of fact but contended in a notice of contention that the order for restitution should be affirmed on the basis of a total failure of consideration.
The primary issues in the appeal were:
(1) Did the primary judge err in assessing damages for breach of contract by reference to Rashazar’s wasted expenditure?
(2) Should the primary judge’s finding that the appellants were liable to make restitution in respect of the $275,000 purchase price payable under the share sale agreement be affirmed on the basis that there had been a total failure of consideration?
(3) Did the primary judge err in awarding restitution for the cash payments and the ATO payments?
The Court (Stern JA, Payne and Kirk JJA agreeing) held, dismissing the appeal:
As to issue (1)
(1) Damages for breach of contract are normally assessed as at the date of breach, however this rule will yield if, in the particular circumstances, some other date is necessary to provide adequate compensation: [51]. The primary judge did not err in finding that events after the breach of contract were relevant to the assessment of damages for breach given that Rashazar paid in full for the 30 shares in Fresh Cut in 2016 and none of the respondents were aware of the breach of contract until some years after it occurred: [57].
Johnson v Perez (1988) 166 CLR 351; [1988] HCA 64; Wenham v Ella (1972) 127 CLR 454; [1972] HCA 43, cited.
(2) There was evidence before the primary judge of the respondents seeking financial information and that information either being refused or, when provided, being seriously inaccurate: [62]. Furthermore, neither Mr Rashazar, nor Omid, were allowed any substantive involvement in the financial management of Fresh Cut and it is impossible to know what would have happened if Mr Tok had in fact transferred the shares as agreed and had treated the share sale transaction as a genuine commercial transaction: [63], [65].
(3) The primary judge did nor err in facilitating the respondents’ burden of proof by assuming (or inferring) in their favour that, had the contract been performed, they would have recovered the expenditure they reasonably incurred in anticipation of, or reliance on, the performance of the contract: [59]-[61].
Cessnock City Council v 123259932 Pty Ltd [2024] HCA 17; (2024) 98 ALJR 719, cited.
As to issue (2)
(4) The appellants did not contend before the primary judge that the respondents had to elect whether to sue for damages for breach of contract or for restitutionary relief and should be precluded from advancing this contention now: [73].
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35; Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12, cited.
(5) The so-called “subsidiarity principle” goes no further than precluding the grant of a restitutionary remedy in circumstances where to do so would undermine a relevant allocation of risk under a contract. It does not preclude a claim for restitution simply because the plaintiff could also have pursued a claim for damages for breach of contract: [74]-[81]. Here, the restitutionary claim predicated upon a total failure of consideration did not undermine the parties’ allocation of risk under the share sale agreement. The primary judge’s finding should be affirmed on this basis: [82]-[83].
Mann v Paterson Construction Pty Ltd (2019) 267 CLR 560; [2019] HCA 32; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5, Nikolic v Oladaily Pty Ltd [2007] NSWCA 252, Coshott v Lenin [2007] NSWCA 153, considered.
As to issue (3)
(6) Omid’s evidence was consistent with a belief that Rashazar was a shareholder in Fresh Cut and this being the overarching reason why he arranged for the cash payments and the ATO payments, although the visa application may have provided some of the context for these payments: [85]-[89]. The primary judge did not err in concluding that the payments were made on the basis of a mistaken belief that Rashazar was a shareholder in Fresh Cut: [89].
(7) The primary judge found that Mr Sanli must have been taking instructions from Mr Tok: [26], and accepted Omid’s evidence that Mr Sanli told him that the ATO payments had to be made by Mr Rashazar. This is not a case where Omid (acting on behalf of Rashazar) took it into his mind to provide a benefit to Fresh Cut: [91]-[92].
(8) The primary judge heard Omid and Navid give evidence and clearly believed their accounts as to the cash payments. Her Honour’s credibility based factual findings as to the cash payments are far from glaringly improbable and the fact that Omid and Navid did not make any written record of the payments does not make it implausible that the payments were made: [99].
PAYNE JA: I agree with Stern JA.
KIRK JA: I agree with Stern JA.
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).
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.
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.
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.
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.
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.
By ground three, the appellants challenge the primary judge’s awards of restitution for the cash payments and the ATO payments. As to these, they contend:
(a) It was not open to the primary judge to find that Rashazar had a mistaken belief or that the payments were made on the basis of a mistaken belief; (b) As regards the payment of $14,656.52 (being one of the ATO payments), the primary judge erred in finding restitutionary liability without first finding that Fresh Cut had requested that Rashazar make the payment or in finding that such a request could be implied; and (c) As regards the cash payments, the primary judge erred in finding that those payments had been made.
Notwithstanding that ground 3(b) was limited to only one of the ATO payments, the appellants’ submissions were advanced as if both ATO payments were challenged. Notwithstanding that no amendment application was made, given that the respondents’ submissions were also premised on the basis that ground three challenged both ATO payments, I have proceeded on the basis that both ATO payments were challenged.
To the extent that the appellants seek to challenge credit-based factual findings, they accept that these must be shown to be “glaringly improbable”: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [29] and confirmed in Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55].
“To the extent that it is necessary to consider the second ground of appeal, her Honour’s finding that the Second Appellant was liable to make restitution to the Third Respondent in the amount of $100,000; and the First Appellant liable to make restitution to the Third Respondent in the amount of $175,000, the decision should be affirmed on the basis that there had been a total failure of consideration in respect of the Share Sale Agreement (J[102]) which provided a sufficient basis to order restitution of the amounts claimed.”
(the notice of contention ground)
The respondents sought leave to rely upon the notice of contention by a notice of motion filed 8 April 2025. Leave was opposed, largely on the basis of delay, which was said to require time-consuming and substantive consideration by the appellants’ legal team, diverting them from their preparation for the appeal. Notwithstanding this contention, the appellants made comprehensive and well-researched written submissions responding to the notice of contention in their written reply submissions filed on 15 April 2025. They also advanced detailed oral submissions on the only notice of contention ground ultimately pressed. Beyond having to respond in a compressed period of time, the appellants did not suggest that the late service of the notice of contention caused any prejudice. The appellants also contended that the respondents had not contended before the primary judge that there was a total failure of consideration and, had they done so, it could have affected the evidence. That contention should be rejected. As set out at [38] below, a total failure of consideration was alleged in the pleadings and it was also raised in the appellants’ opening and closing submissions before the primary judge.
Having regard to s 56 of the Civil Procedure Act 2005 (NSW), leave should be granted to the respondents to rely upon the notice of contention and the appellants should pay the respondents’ costs of the notice of motion. In this way, the appeal will be resolved on the basis of the real issues in the proceedings.
The primary judge’s factual conclusions are, in the main, not challenged. I have thus set out the factual background, so far as relevant to this appeal, by reference to the primary judge’s findings supplemented by reference to the documentary evidence, indicating where a finding is challenged on appeal. I have also included reference, by way of background, to the primary judge’s adverse credit findings against Mr Tok.
Mr Rashazar, along with his family, came to Australia from Iran in August 2013. From around 2015, Mr Rashazar was pursuing a Business Investment Visa, which provided a pathway to permanent residency, and was seeking to purchase an interest in a business in Sydney for this purpose. Mr Rashazar was assisted in this process by Omid due to Omid’s proficiency in English. It was critical to the success of the visa application that the business relied upon in the application increase its turnover over a period of at least two years.
The share sale agreement provided, on its first page, that a price of $275,000 was payable “for 30 shares in [Fresh Cut]”. In cl 12, it was said that Fresh Cut had 100 shares owned by Mr Tok. The agreement was thus for Rashazar to purchase 30% of the shares in Fresh Cut.
The share sale agreement was structured so that an initial tranche of $100,000 was to be paid upon completion, which was to occur within 28 days of the contract date. A second tranche of $175,000 was due to be paid within two years of the completion date: cl 11. Pursuant to cl 13:
“13. TRANSFER OF SHARES
In the event that the Purchaser fails to pay balance purchase moneys to the Vendor, the Purchaser shall transfer back to the Vendor the 30 shares in the Fresh Cut Australia Pty Ltd for the sum of $100,000.00. Attached hereto is the original Transfer of Shares document which will be signed by the Purchaser and handed over to the Vendor at settlement. The documents will be held by the Vendor until payment of the balance purchase moneys to the Vendor. Once balance purchase moneys are paid, the Transfer of Shares document will be handed to the Purchaser.”
It is implicit in cl 13 that 30 shares in Fresh Cut had been transferred to Rashazar. Otherwise, it would make no sense for Rashazar to sign a transfer of shares document providing for the shares to be transferred back to Mr Tok. In fact, contrary to what was provided in cl 13, no transfer of shares document was attached to the share sale agreement.
On 22 January 2016, Mr Rashazar and Omid arranged for payment of the initial tranche of $100,000 to an account (of Fresh Cut), the details of which had been given to Omid by Mr Tok. Then, in November 2016, Mr Tok threatened to “cancel the contract” unless he received the second tranche payment, notwithstanding that it was not due until early 2018. In response, on 24 November 2016, Mr Rashazar and Omid paid the second tranche of $175,000 to Fresh Cut’s account.
The primary judge rejected Mr Tok’s evidence that the second payment was initiated by Mr Rashazar and Omid and that this amount was paid from “a bag of cash” and then that the cash was then repaid by Mr Tok back to Mr Rashazar and Omid. This evidence was directly contradicted by a document produced by the Commonwealth Bank, which showed that the amount was transferred by card and almost immediately transferred from Fresh Cut’s account to an account held by Mr Tok and his wife. On this issue the primary judge found that Mr Tok had “lied under oath” and that this seriously undermined his credibility as a witness. Her Honour found that Mr Tok’s credibility was further undermined by his evasive and unresponsive answers. By contrast, her Honour found that Mr Rashazar, Omid and Mr Rashazar’s other son Navid sought to impart a truthful version of evidence, and she preferred their evidence where it contradicted that of Mr Tok.
As to the transfer of the 30 shares in Fresh Cut, Mr Tok’s evidence was that they were transferred to Rashazar on 22 January 2016. In support of this, he relied upon an Australian Securities and Investments Commission (ASIC) Form 484 relating to Fresh Cut lodged on 28 January 2016. On its face, this recorded a change to the register of members, described as a decrease, by 30 shares, in the shares held by Mr Tok and an increase, by 30 shares, in those held by Rashazar. However, as was effectively accepted by Mr Tok in his oral evidence, no interest held by Rashazar was ever recorded on the register of members of Fresh Cut which was produced in response to a Notice to Produce. According to that document, at all times since its inception on 9 October 2013, Mr Tok held 34 shares in Fresh Cut and two other shareholders are recorded as holding 33 shares each.
The primary judge, having extracted s 1274B of the Corporations Act 2001 (Cth), which provides that a document that purports to have been prepared by ASIC is admissible as prima facie evidence of the matters stated, found that there was abundant evidence to contradict this prima facie evidence. Relevantly, the respondents were never given a transfer form or share certificate, there was no memorandum or resolution of the sole director of Fresh Cut in relation to the purported transfer, Mr Rashazar was never paid any profits or dividends from Fresh Cut nor was he provided with any relevant financial information about Fresh Cut’s operations and the register of members of Fresh Cut recorded no change to the membership details since the incorporation of Fresh Cut in 2013 and has never recorded an interest held by Rashazar. The primary judge thus rejected Mr Tok’s evidence that the 30 shares in Fresh Cut were transferred to Rashazar. The appellants challenge this finding. I deal with this at [72] below.
“Mr Sanli told me that my father was required to pay Mr Tok the sums set out in that document [being a statement with Mr Sanli’s signature block of expenses of Fresh Cut due, described as ASIC documents, 2015 Financials & Amendment, Employee PAYG and Company Tax], totalling $16,772. Mr Sanli told me that the purpose of the payment was that because my father had invested in the business through the share sale agreement, and the Company was now a shareholder in Fresh Cut Australia, he was required to pay the amounts set out in the document. Mr Sanli gave me until 22 June 2016 to arrange for the payment to be made to Mr Tok.”
The primary judge found that Omid, in the company of Navid, made an initial payment of $9,500 and a further payment of $7,272 in cash to Mr Tok in about April to May 2016.
On 26 October 2016, Omid again met with Mr Sanli, who told him that Mr Rashazar was required to pay capital gains tax in relation to the share sale agreement. Mr Sanli said that $24,500 was to be paid by June 2017 and $42,875 by June 2018. The primary judge found that Omid, once again in the company of Navid, made payments totalling $24,500 between October 2016 and June 2017 and $42,875 between June 2017 and July 2018, and accepted Omid’s explanation as to the source of these funds. The primary judge found that these payments were made “under the mistaken belief, engendered by Mr Tok directly and through his accountant, Mr Sanli, that [Rashazar] was liable to make the payments to Mr Tok”.
In ground three the appellants challenge the findings at [27]-[28] above.
“There is no evidence before me upon which I could assess the sum of damages which would put [Rashazar] into the position it would have been in had the contract been performed. I simply have no information about the value of Fresh Cut or its profitability, and neither do the plaintiffs. The question of what might have happened to Fresh Cut’s value and profitability had [Rashazar] become a shareholder in accordance with the Agreement is imponderable.”
In these circumstances, and “given the total failure of consideration”, the primary judge held that the appropriate measure of Rashazar’s damages for the breach of contract was the expenditure reasonably incurred by it pursuant to the share sale agreement.
As to the respondents’ alternative claim for restitution on the basis of unjust enrichment, the primary judge found that the initial payment of $100,000 was made by Rashazar under a mistake of fact, being that “30 shares in Fresh Cut would be transferred to [Rashazar] by Mr Tok in exchange for the payment”. Her Honour found that neither Rashazar, nor anyone associated with the company, received any benefit in exchange for this payment and Fresh Cut was unjustly enriched and liable to make restitution of $100,000 to Rashazar.
Her Honour found that the second payment of $175,000 was also made under the false belief that Mr Tok had transferred the 30 shares to Rashazar. In light of the evidence that the funds were transferred to an account in the joint names of Mr Tok and his wife (see [21] above) such that Fresh Cut was a mere conduit, Mr Tok was found to have been unjustly enriched and was liable to make restitution of the $175,000 to Rashazar.
The primary judge found that Fresh Cut received the benefit of the ATO payments and was unjustly enriched, and was liable to make restitution to Rashazar, in the amount of $16,965.48.
As to the cash payments, her Honour held that Mr Tok was unjustly enriched, and was liable to make restitution to Rashazar, in the amount of $84,147.
An important predicate of the appellants’ contentions on appeal was that the share sale agreement had never been terminated by Rashazar. That foundational contention should, however, be rejected.
As is well known, the issue and service of a summons or pleadings may involve an election which affects the parties’ rights: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 570 (Brennan J); [1982] HCA 29; Ryder v Frohlich [2004] NSWCA 472 at [89] (McColl JA, Hodgson and Ipp JJA agreeing). Here, by their Further Amended Statement of Claim (FASOC) at [16], the respondents pleaded that by failing to transfer 30 shares in Fresh Cut, Mr Tok “repudiated the Share Sale Agreement”. They pleaded further that there had been a “failure of consideration or basis with respect to the payment of $275,000 [under the share sale agreement]” by reason of which Mr Tok or Fresh Cut had been unjustly enriched and was liable to make restitution to Rashazar. Whilst acceptance of the repudiatory breach was not explicitly pleaded, it is tolerably clear that the basis of this pleading was that Rashazar elected to treat the share sale agreement as terminated having regard to the repudiatory breach by Mr Tok. Rashazar was, in this pleading, making it clear that they wanted their money back because, as Kirk JA put it during oral submissions, “the deal is dead”: Tcpt, 16 April 2025, p 6(26-33). If not communicated earlier (and there is no evidence before the Court of pre-action correspondence or communications), by service of this pleading, the respondents communicated their acceptance of Mr Tok’s repudiatory breach of the share sale agreement.
The appellants’ key contention under ground one is that Rashazar’s damages for breach of the share sale agreement should not have been assessed by reference to the amount of lost expenditure in this case. They contend that, as the respondents did not seek to prove the value of the 30 shares in Fresh Cut that were to be transferred under the share sale agreement, Rashazar should have been awarded only nominal damages for the breach of contract. For this reason, they contend the primary judge erred in giving judgment for Rashazar against Mr Tok and Fresh Cut in the sum of $285,110.45 (being the purchase price paid under the share sale agreement plus the stamp duty paid by Rashazar).
Whilst the appellants accept that damages for breach of contract can in some cases be assessed by reference to wasted expenditure, relying upon the judgment of the plurality in Cessnock City Council v 123259932 Pty Ltd [2024] HCA 17; (2024) 98 ALJR 719 (“Cessnock”), they say that this is limited to cases where there is some factor which precludes the court assessing the position a plaintiff would likely have been in had the contract been performed. They submit that this is not such a case, as the respondents did not prove that there was relevant uncertainty in proving the value of the 30 shares in Fresh Cut or that such uncertainty was caused by the appellants’ breach of contract. They say that, properly analysed, it is simply the failure by the respondents to adduce evidence that precludes the Court assessing damages by reference to the value of the 30 shares in Fresh Cut. They say that that is neither a form of uncertainty that can fall within the ambit of the facilitation principle as described by the plurality in Cessnock nor a difficulty which flows from Mr Tok’s breach of contract.
“there were inconsistencies in the two separate financial statements (including the Balance Sheet, Profit, and Loss Statement and Notes) for the financial year ending 23 January 2018 prepared by Ideal Accounting & Taxation Pty Ltd. There were significant differences in the amounts claimed on the Balance Sheet and the Profit and Loss Statement compared to the original set of Financial Statements provided by the applicant. …
As per the decision letter, the accounting firm admitted that ‘some information was inaccurately estimated such as inventory, cash at bank, equity, and retained earnings’.
…
The [case officer] also questioned how the Accounting firm could have gotten the ‘estimate’ for ‘cash at bank’ wrong as ‘bank statements are easily and readily available.’
…
The [case officer] listed five ‘significant’ discrepancies/disparities/inconsistencies/inaccuracies while making the decision and concluded that there was an element of purposeful falsity on the applicant’s part.”
In this letter, Mr Rashazar’s solicitors alleged that Mr Rashazar had been a victim of a scam directed by Mr Tok and other associates including the “accounting firm” and that the “alleged false or misleading information was a part of the Financial Statements prepared by ‘Ideal Accounting & Taxation Ltd.’”.
Omid was cross-examined about this and explained that Ideal Accounting & Taxation Pty Ltd was “the only accountant we had”. He also said that:
“The few times I asked them ‘Can I get my own accountant who is Persian who is, can help me?’ Really didn’t accept, they say ‘We have you to go at with Altook’s [Mr Sanli’s] family.’
…
I have, I have a Persian accountant right now and then I have one Arabic accountant but back then, I ask Mr Tok ‘Can I get my own accountant so my, my English is not perfect, I can ask, ask him or ask her ‘what’s this, what’s that?’ They say ‘No, Altook [Mr Sanli] does all the paperwork.’”
Two things flow from this evidence considered in the context of the primary judge’s adverse credit findings against Mr Tok. First, whilst Mr Tok exhibited financial statements of Fresh Cut for the years ending 23 January 2017 and 23 January 2018 to his affidavit (and a profit and loss statement for the year ended 30 June 2015 was annexed to the share sale agreement), no weight could properly be put either by the Court, or by the respondents, on these documents. Second, that there was evidence before the primary judge that, prior to issuing these proceedings, the respondents had been thwarted in their efforts to obtain financial information from Mr Tok to put to their own accountants, were aware that financial information produced by Mr Sanli was unreliable and considered that they were the victims of a scam perpetrated by Mr Tok and his accountants.
Against this background, it is entirely understandable that the primary judge found at J[102] that neither she nor the respondents had any information about the value of Fresh Cut or its profitability.
The respondents’ claim for loss and damage suffered by reason of Mr Tok’s breach of contract was particularised as being the $275,000 paid by Rashazar under the share sale agreement together with the stamp duty: FASOC at [17]. Mr Tok’s response was a bare denial. No attempt was made by the respondents to value the shares to be transferred. Nor did the appellants seek to establish that the 30 shares in Fresh Cut that were to be transferred to Rashazar under the share sale agreement were in fact worth less than the wasted expenditure claimed.
As to loss, the respondents’ oral closing submission before the primary judge was:
“Mr Horobin in cross-examination asked Omid whether he had the shares valued or not and he said, no, because he relied upon Mr Tok. What follows from that is that the shares should be given the value that is attributed to them on the face of the contract and damages should issue in that amount or a payment of damages should be made in that amount.”
In their written closing submissions, the respondents contended that the relevant measure of loss should be selected by reference to the nature of the contract, including whether it was entered into with a view to direct or immediate profit, citing as support the Chief Justice’s judgment in Cessnock at [33]. In that paragraph, the Chief Justice explained that Mason CJ and Dawson J in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 85; [1991] HCA 54 (“Amann”) had held that a plaintiff did not have an unconstrained choice whether to frame its claim as one for wasted expenditure and that how a plaintiff’s claim for damages is framed would be expected to turn on the nature of the claim and “on the plaintiff’s appraisal of the practical exigencies of proving and quantifying categories of damage that might potentially be available to be claimed”.
For their part, the appellants contended in their oral and written closing submissions that her Honour should find that the 30 shares in Fresh Cut were in fact transferred to Rashazar, that there was no breach of contract and that the respondents’ claim was ultimately a rescission claim dressed up as a claim for damages or restitution because the respondents wanted to get their money back because their visa application failed. They contended that the share sale agreement was not repudiated by Mr Tok and that there was no total failure of consideration. They did not address the issue of whether damages for breach of contract could be assessed by reference to wasted expenditure.
An important predicate of the primary judge’s reasoning at J[102] (set out at [31] above) was that the value and profitability of Rashazar on the counterfactual that it had become a 30% shareholder of Fresh Cut were relevant to the assessment of damages for breach of contract. Implicit in this was a finding that events after the date when the obligation of Mr Tok to transfer the shares crystallised would be relevant to the assessment of damages. The correctness of this finding was implicitly raised in ground one, as the appellants contended that they could have put evidence before the Court as to the value of the 30 shares in Fresh Cut as at the date of breach.
In considering this contention, the starting point is necessarily “[t]he rule of the common law … that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed”: Robinson v Harman (1848) 1 Exch 850 at 855 (Parke B); Tabcorp Holdings Ltd v Bowen investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 (“Tabcorp”) at [13] (French CJ, Gummow, Heydon, Crennan and Kiefel JJ). As to when damages are assessed, ordinarily, as was held in Johnson v Perez (1988) 166 CLR 351 at 367; [1988] HCA 64, damages for breach of contract are assessed as at the date of the breach, however:
“The rule will yield if, in the particular circumstances, some other date is necessary to provide adequate compensation: see, for example, Wenham v Ella (1972) 127 CLR 454; Dodd Properties Ltd. v Canterbury County Council [1980] 1 WLR 433; [1980] 1 All ER 928; County Personnel Ltd. v Alan R*.* Pulver & Co*.* [1987] 1 WLR 916; [1987] 1 All ER 289.”
“treating rules which constitute useful guidance in the ascertainment of damages as rigid rules of universal application, instead of treating them as prima facie rules which may be displaced or modified whenever it is necessary to do so in order to achieve a result which provides reasonable compensation for a breach of contract without imposing a liability upon the other party exceeding that which he could fairly be regarded as having contemplated and been willing to accept.”
“The general principle that damages are normally measured by reference to the circumstances at the date of the breach of contract does not mean that events that have occurred after that date may never be considered. The appellants’ contention on this point, if correct, would mean that evidence could never be given of the amount of profits lost as the result of a breach and that the every-day practice of receiving evidence as to the damage that had in fact flowed from a breach and as to steps that were or could have been taken to mitigate a loss is erroneous. However, the evidence as to the income in fact lost by the breach was in my opinion plainly admissible. As to the contention that it was wrong that the amount of damages should have depended on the time that elapsed until judgment, the answer simply is that until that time the respondent was kept out of his profits as well as deprived of his asset and its value.”
“It is sometimes said that the ordinary rule is that damages for breach of contract fall to be assessed at the date of the breach. That, however, is not a universal principle and the rationale behind it appears to me to lie in the inquiry — at what date could the plaintiff reasonably have been expected to mitigate the damages by seeking an alternative to performance of the contractual obligation?”
(See also H G Beale, Chitty on Contracts (35th ed, 2023, Sweet & Maxwell) at [30-107] and E Peel, Treitel, The Law of Contract (15th ed, 2020, Thomson Reuters) at p 1162.)
Consistent with this, Wenham was distinguished in CH Leahman Investments Pty Ltd v Tuesday Enterprises Pty Ltd [2024] WASCA 142 (“CH Leahman”) at [274] (Buss P, Vaughan JA, Lundberg J) on the basis that in Wenham the purchaser had paid the full purchase consideration whereas in CH Leahman “[a]t all times the appellant continued to be in a position to deploy the resources that it would otherwise have had to commit to the completion of the purchase of the Rexwells’ share”.
Further, in the passage set out at [53] above, Gibbs J recognised that events after the date of breach may be relevant to the assessment of damages even when assessed as at the date of breach. To similar effect, in Hungerfords v Walker (1989) 171 CLR 125 at 163; [1989] HCA 8, Dawson J held:
“That is not to say, however, that when damages are assessed as at the time of the wrong, foreseeable future losses which flow from the wrong, and not merely from delay in compensating for the wrong, may not be included in any award. … Moreover, the quantification of future losses may be made by reference to events which have occurred between the time when the cause of action arose and judgment upon the basis that actual facts are preferable to speculation: Willis v. The Commonwealth. Damages so assessed nevertheless form part of the loss flowing from the breach and are not damages for delay in the payment of damages.” (footnotes omitted)
A second critical premise of the primary judge’s conclusion at J[102] is that this was an appropriate case in which to assess damages for breach of contract by reference to wasted expenditure. The primary judge’s key finding in this regard was predicated both upon the lack of information available to the respondents and the Court and upon her Honour’s finding that the question of what might have happened to Fresh Cut if Rashazar had been a 30% shareholder was imponderable.
The plurality judgment of Edelman, Steward, Gleeson and Beech-Jones JJ in Cessnock at [61] explained when it is that damages for breach of contract can properly be calculated by reference to wasted expenditure:
“The legal onus to prove loss arising from a breach of contract rests on the plaintiff as the party seeking to recover damages. However, where a breach of contract has resulted in (namely, caused or increased) uncertainty about the position that the plaintiff would have been in if the contract had been performed, then the discharge of the plaintiff’s legal burden of proof will be facilitated by assuming (or inferring) in their favour that, had the contract been performed, then the plaintiff would have recovered the expenditure they reasonably incurred in anticipation of, or reliance on, the performance of the contract. The strength of this assumption or inference, and thus the weight of the burden placed on the party in breach to adduce evidence to rebut the inference in whole or in part, will depend on the extent of the uncertainty that results from the breach. Expressed in this way, this facilitation principle is tied to its rationale, namely the uncertainty in proof of loss occasioned to the plaintiff by the defendant’s breach.”
“In summary, the facilitation of the plaintiff’s proof arises in cases where the defendant’s breach of an obligation results in uncertainty and difficulty of proof of loss for the plaintiff, who has incurred expenditure in anticipation of, or reliance on, the performance of the obligation that was breached. The facilitation of proof that reasonably incurred expenditure would have been recovered has been described by Leggatt J as an example of courts doing the ‘best they can not to allow difficulty of estimation to deprive the claimant of a remedy, particularly where that difficulty is itself the result of the defendant’s wrongdoing’. In applying the principle ‘reasonably ... according to the circumstances of each case’, the plaintiff is given an evidential ‘benefit of any relevant doubt’ that expenditure would be recouped to the extent that it was reasonable, with the practical effect of giving the plaintiff ‘a fair wind’ to establish loss. The strength of the wind will depend upon the extent of the uncertainty resulting from the breach by the defendant. And all of the circumstances, including any evidence led by the defendant, must be considered. The plaintiff is given a ‘fair wind’ but not a ‘free ride’.” (footnotes omitted)
Having regard to these principles, the appellants’ contention that the primary judge erred in assessing damages for breach of the share sale agreement by reference to wasted expenditure should be rejected. The primary judge correctly identified that integers relevant to the assessment of damages premised upon Mr Tok’s compliance with the share sale agreement were “imponderable”. As I explain below, that plainly flowed from Mr Tok’s breach. That, together with the obvious difficulty in obtaining reliable financial information about the financial performance of Fresh Cut, justified the primary judge facilitating the respondents’ burden of proof by assuming (or inferring) in their favour that, had the contract been performed, they would have recovered the expenditure they reasonably incurred in anticipation of, or reliance on, the performance of the contract.
This is so notwithstanding that, as the appellants point out, there was no evidence before the primary judge of the respondents making requests for financial information specifically for the purpose of Fresh Cut being valued. First, as already set out, there was evidence before the primary judge of the respondents seeking financial information and that information either being refused or, when provided, being seriously inaccurate. In these circumstances, it was apparent that there would be difficulties in obtaining reliable financial information. Second, in any event, such information would not have overcome the imponderables which the primary judge identified.
To the extent that the primary judge implicitly found that Fresh Cut’s financial position might have been different had Rashazar been a 30% shareholder, the appellants do not challenge this finding and I am in any event satisfied that her Honour did not err. The primary judge found at J[94] that Mr Tok said that Mr Rashazar would have a management role, but that this did not occur. In fact, neither Mr Rashazar, nor Omid, had any substantive involvement in the financial management of Fresh Cut. Omid’s evidence was that he asked Mr Tok to permit Mr Rashazar to get involved in the management of the company but that Mr Tok did not agree to Mr Rashazar becoming a second director of Fresh Cut and Mr Rashazar was only allowed to be involved in management for “some little stuff”.
Mr Rashazar’s evidence as to this in cross-examination was:
“Q. Thank you for that. Mr Rashazar, were you involved in the management of Fresh Cut at all?
A. INTERPRETER: Yes, I was willing. What I can say, I was a willing partner and your Honour he’s referring that man, I don’t know which man, he say that man did not allow me to get involved in the managerial or the management of the business. He did not let me. So, I was working in ordinary capacity you know, ordinary job.”
Whilst my conclusion as to ground one makes it unnecessary to consider the notice of contention ground, given that it was fully argued and consistent with Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26 at [12] and Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 at [8], I will deal with this ground.
The key question under the notice of contention ground is whether the primary judge’s finding of restitutionary liability for the purchase price under the share sale agreement was supported by her Honour’s finding that there was a total failure of consideration under that agreement. The respondents contend that it is. They say that the primary judge’s approach accords with the established principle that a restitutionary remedy is available where there is a total failure of consideration under a contract even if the contract is not rescinded ab initio.
The appellants, however, contend that restitutionary relief is unavailable here for a number of reasons. First, they say, restitutionary relief is unavailable because the share sale agreement has not been rescinded or terminated. My finding that the share sale agreement was terminated answers this contention. To the extent that the appellants contended that restitutionary relief is unavailable unless the contract which provides context for the restitutionary claim has been rescinded ab initio, they did not identify any case that supported that contention. Moreover, it is inconsistent with one of the texts they rely upon, I Jackman, The Varieties of Restitution (2nd ed, 2017, The Federation Press) (Varieties of Restitution) at 90:
“It was common in the late 18th century to say that the remedy of money had and received would not lie if the contract was ‘open’. These statements were directed to the requirement that the contract must be discharged, by the plaintiff’s acceptance of the defendant’s repudiatory breach, in order that the restitutionary remedy of money had and received may arise, as otherwise the plaintiff could sue only on the contractual warranties for damages. Thus, in the case of repudiatory breach, it is only if the innocent party elects to accept the repudiation and terminates the contract that the remedy is available as an alternative to damages. If, on the other hand, the requirement that the contract must not be ‘open’ is interpreted to mean that the contract must be rescinded ab initio, this cannot survive the overruling of Chandler v Webster by the House of Lords in Fibrosa.” (references omitted).
Nor does the only judicial observation that the appellants sought to rely upon in support of this contention, the judgment of McCallum JA in Miraki v Griffith (2021) 106 NSWLR 280; [2021] NSWCA 263 (“Miraki”), assist the appellants. In Miraki, McCallum JA was considering whether a claim in restitution could “[circumvent] the protective effect of [the Minors (Property and Contracts) Act 1970 (NSW)] on an otherwise valid contract”: at [88]. In the course of considering this question, her Honour considered what she described as “Mr Jackman’s argument”, taken from Varieties of Restitution, at 98-99, that Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 should have been (but was not) decided on the basis that the “cards lay where they had been placed by a binding contract”. Ultimately, in Miraki McCallum JA did not decide the point, Bell P held that it was unnecessary to decide whether the “so-called ‘subsidiarity doctrine’, to the effect that contractual allocation of risk cannot be subverted by alleging a cause of action stemming from unjust enrichment covering the same conduct, may have arisen”: at [35], and Payne JA declined to decide the issue.
Second, the appellants contend that there was not in any event a total failure of consideration here. They say that the respondents obtained an equitable right to have the 30 shares in Fresh Cut transferred to them and thus received something by way of consideration for their payment of $275,000 under the share sale agreement. That contention must be rejected. The share sale agreement provided, as set out on its first page, that a price of $275,000 was to be paid for 30 shares in Fresh Cut. The consideration provided for involved the transfer of those shares. That was not done. Nothing was done by way of part-performance of the contract, cf Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 350; [1993] HCA 4 (“Baltic Shipping”), relied upon by the appellants. As the primary judge found, this was a total failure to give the consideration provided for under the contract.
Third, the appellants contend that the primary judge erred in finding that the 30 shares were not transferred to Rashazar as promised. In this regard, they rely upon the Form 484 and the prima facie position under s 1274B of the Corporations Act (discussed above at [23]-[24] above) and contend that there was no evidence to the contrary. This contention fails at the first hurdle. The Form 484 on its face stated that a change had been made to Fresh Cut’s register of members, but the register of members was before the Court and proved that, in fact, no such change had been made. That was evidence of the most cogent character to displace the prima facie position under s 1274B of the Corporations Act. The other matters relied upon by the primary judge in her Honour’s judgment at J[58] only serve to reinforce that conclusion.
“[a] restitutionary cause of action cannot sit on top of an effective and continuing contractual arrangement where that would subvert or undermine the contractual allocation of risk. In and around contract restitution operates in a gap-filling role (see Update Constructions Pty Ltd v Rozelle Child Care Centre Pty Ltd (1990) 20 NSWLR 251 at 275; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 545[75], 553[95], 577[166]).”
“[a] second difficulty with the restitutionary claim stems from the principle that a claim of this nature cannot be made where a valid contract covers the field. The statement of claim recognised this principle from the outset (Red 4T). This subsidiarity doctrine means that the contractual allocation of risk cannot be subverted by alleging a cause of action stemming from unjust enrichment covering the same conduct”. (references omitted)
I have already dealt with Varieties of Restitution.
Consistent with these authorities, the subsidiarity principle goes no further than precluding the grant of a restitutionary remedy in circumstances where to do so would undermine a relevant allocation of risk under a contract. So understood, the principle does not preclude a claim for restitution simply because the plaintiff could also have pursued a claim for damages for breach of contract. This is explained by Gageler J in Mann v Paterson Construction Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 (“Mann”) at [83]:
“it would be artificial as a matter of commercial practice and wrong as a matter of legal theory to conceive of contracting parties who have not addressed the consequences of termination in the express or implied terms of their contract as having contracted to limit themselves to the contractual remedy of damages in that event. Parties contract against the background of the gamut of remedies that the legal system makes available to them. The common law gives to them the benefit, and saddles them with the detriment, of what they expressly or impliedly agree in their contract. Outside the scope of what they agree in their contract, the common law gives to them what the common law itself allows them to get.”
At [84], his Honour rejected the notion that “overlapping remedies in contract and in restitution are in some way anomalous”, observing that the “potential for a cause of action in restitution to overlap with a cause of action in damages for breach of contract was recognised in [Baltic Shipping at 355]”. In this regard, it should be observed that in Baltic Shipping*,* at 355-356, Mason CJ held that the action to recover money paid on a total failure of consideration is “available only if the contract has been discharged, either for breach or following frustration”, noting that “discharge” here “operates only prospectively, that is, it is not equivalent to rescission ab initio”.
In Mann, Nettle, Gordon and Edelman JJ held that the contractor was entitled to maintain an action to recover restitution as upon a quantum meruit for services performed where a wrongful repudiation of the contract had the effect of preventing the contractor from becoming entitled to receive remuneration under the contract for services already rendered: at [170]. Thus, a restitutionary remedy was granted notwithstanding that it was sought against the background of a valid contract.
Here, the restitutionary claim predicated upon a total failure of consideration did not undermine the parties’ allocation of risk under the share sale agreement. The subsidiarity principle did not preclude that claim succeeding.
As set out at [10] above, ground three of the appeal challenges the primary judge’s findings as to the cash payments and the ATO payments.
By ground 3(a), the appellants contend that the primary judge erred in finding that Rashazar adopted a mistaken belief or that the payments were made pursuant to a mistaken belief. The appellants contend that Omid’s evidence when being cross-examined indicated that the various payments were in fact made because it was necessary for immigration purposes that the payments be made. Two passages of evidence during Omid’s cross-examination are relied upon. First:
“Q. And so as part of that agreement Mr Tok required essentially Rashazar but also your son and - sorry, Rashazar to make payments in respect of costs of expenses relating to Fresh Cut?
A. Was not a part of agreement, but after everything he say you guys getting you perma-residence into this company so you have to accept all the payments.
Q. And that was your way of showing the Immigration Department that you were involved, or Rashazar and your father was involved--
A. We had to pay all the superannuation and everything.
Q. Yes, to show that you were in the management of the--
A. To not show. We had to pay because immigration requires all the paperwork, superannuation for worker and then revenue and all the things.”
I would reject the appellants’ contention that this suggests that the payments were not made by reason of, or pursuant to, a mistaken belief that Rashazar was a shareholder in Fresh Cut. Indeed, Rashazar’s shareholding in Fresh Cut was the very reason why it would be necessary for the purpose of Mr Rashazar’s visa application to provide financial support, that was said to be necessary, to Fresh Cut. It is somewhat absurd to suggest that Omid would have arranged for payments to be made to the benefit of Fresh Cut if he had been aware that no shares in Fresh Cut had in fact been transferred to Rashazar.
Second:
“Q. Rashazar Pty paid some of Fresh Cut’s debts?
A. Yep.
Q. And Rashazar was required to do so, your father was required to do so because that’s what the immigration department needed to see.
A. Immigration they, not immigration, the lawyer immigrate my mission when I ask for this list and then when I ask Mr Tok, he told me ‘This is not my business, you guys getting visa to do this. If you want, just cancel it and you guys get, they’re going to kick you guys back to country. So, if you want, I could use, you have to pay these amounts.’”
Omid also gave oral evidence that Mr Tok had “[kept] telling us, if I call immigration ‘they will kick you guys, you guys out from Australia and then you guys get no permanent residency.’”
All of this evidence is consistent with Omid believing that Rashazar was a shareholder in Fresh Cut and this being the overarching reason why he arranged for the cash payments and the ATO payments. Whilst the visa application, and the involvement of Mr Rashazar’s immigration solicitors, may have provided some of the context for these payments, and it appears that Mr Tok made threats that he would contact immigration authorities if the payments were not made, there is no error in the primary judge’s conclusion that they were made on the basis of a mistaken belief that Rashazar was a shareholder in Fresh Cut.
Moreover, contrary to the appellants’ contention, this evidence does not undermine Omid’s affidavit evidence that he made the cash payments and the ATO payments after he was requested to do so by Mr Sanli, on instructions from Mr Tok. None of his oral evidence was inconsistent with that key evidence.
By ground 3(b), the appellants contend that the primary judge erred in upholding Rashazar’s restitutionary claim as regards the ATO payments without having made any finding that Mr Tok requested that Rashazar make the payments. As I have already found, it may be inferred that the primary judge accepted Omid’s evidence that Mr Sanli told him that Rashazar was liable to pay the first of the ATO payments. The primary judge expressly accepted Omid’s evidence that Mr Sanli told him that the ATO payments had to be made by Mr Rashazar. The respondents also relied at trial upon emails from Sunny Bui, described as a tax accountant at Ideal Accounting & Taxation Pty Ltd (Mr Sanli’s firm), attaching or including “Super payment instructions” for the ATO payment of (at least) the $14,656.52 and asking him to “let me know when you have done the payment so I will check the ATO system”.
It is clear from this that this is not a case where Omid (acting on behalf of Rashazar) took it into his mind to provide a benefit to Fresh Cut: cf Progressive Pod Properties Pty Ltd v A & M Green Investments Pty Ltd [2012] NSWCA 225. Rather, the money was paid on the basis of a mistaken belief that Rashazar was a shareholder of Fresh Cut after Omid was told by Mr Sanli that, because Rashazar was a shareholder in Fresh Cut, Mr Rashazar had to make the payment. Her Honour did not err in granting this restitutionary relief.
By ground 3(c), the appellants challenge the primary judge’s finding that the cash payments were made. The appellants say that this finding was glaringly improbable in circumstances where there was no objective evidence of the payments and they rely upon what they say were inconsistencies as between the evidence of Omid and Navid as to this.
Both Omid and Navid addressed the cash payments in their affidavit evidence. Omid’s evidence was that he paid the first cash payment of $16,772 in June 2016, in one tranche of $9,500 and a second tranche of $7,272. He said that he made the further cash payments of $24,500 and $42,875 in multiple tranches, and that Navid was present on each occasion.
The appeal should be dismissed.
The orders I propose are:
Leave is granted to the respondents to file the notice of contention.
Notice of contention reflecting the one ground pressed at the hearing on 16 April 2025 to be filed with the Court by 4 pm on 8 May 2025.
Appeal dismissed.
Appellants to pay the respondents’ costs of the appeal and of the notice of motion filed on 8 April 2025.
**********
Tok
Rashazar [2025] NSWCA 94
(1993) 176 CLR 344
(2019) 268 CLR 593
(2024) 98 ALJR 719
(1991) 174 CLR 64
(2024) 99 ALJR 171
(2003) 214 CLR 118
(1989) 171 CLR 125
(1988) 166 CLR 351
(2008) 236 CLR 1
(2019) 266 CLR 129
(2019) 267 CLR 560
(2021) 106 NSWLR 280
(1987) 162 CLR 221
(1982) 149 CLR 537
(2022) 110 NSWLR 246
(2001) 208 CLR 516
(1950) 81 CLR 418
(2009) 236 CLR 272
(1988) 180 CLR 491
(1972) 127 CLR 454
(1990) 20 NSWLR 251
Leave granted to file the notice of contention; the notice was to be filed by 4 pm on 8 May 2025; appeal dismissed; appellants ordered to pay the respondents’ costs of the appeal and the notice of motion filed on 8 April 2025 ([102]).
For the reasons set out below the appeal should be dismissed.
Mr Tok’s evidence was that Rashazar transferred the 30 shares in Fresh Cut back to him following a meeting in 2020. In support of this, he exhibited a purported share transfer from Rashazar to him, apparently signed by Mr Rashazar, dated 30 June 2018. The primary judge found that this meeting did not take place and was not satisfied that the share transfer was a genuine document or that Mr Rashazar had signed it.
Fourth, the appellants contend that the respondents had to elect whether to sue for damages for breach of contract or for restitutionary relief. The difficulty with this contention (that may be correct as a matter of principle) is that the appellants did not contend below that restitutionary relief was unavailable because the respondents had to elect between inconsistent remedies. This was so notwithstanding that, in the FASOC, the respondents clearly sought relief by way of damages for breach of contract (at [17]), “alternatively” restitutionary relief on the basis of a total failure of consideration (at [18] and [20]-[22]), and in the further alternative restitutionary relief on the basis of mistake (at [19]-[22]). Had the appellants contended that the respondents had to make an election, they may well have done so. In these circumstances, the appellants should be precluded from advancing this contention for the first time on appeal: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438 (Latham CJ, Williams and Fullagar JJ); [1950] HCA 35; Water Board v Moustakas (1988) 180 CLR 491 at 498 (Mason CJ, Wilson, Brennan and Dawson JJ); [1988] HCA 12.
Fifth, the appellants contend that restitutionary relief is unavailable in this case by reason of the so called “subsidiarity principle”, which they say precludes such relief being granted where the parties’ relationship was governed by a valid contract. They rely upon Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5 (“Pavey”), Nikolic v Oladaily Pty Ltd [2007] NSWCA 252 (“Nikolic”), and Coshott v Lenin [2007] NSWCA 153 (“Coshott”), together with Varieties of Restitution in support of this contention. As is apparent from the analysis below, however, none of the cases or academic writing relied upon supports their contentions as to the breadth or effect of the subsidiarity principle.
Pavey involved a claim by a builder on a quantum meruit for work done and materials supplied in circumstances where the contract between the parties was unenforceable under s 45 of the Builders Licensing Act 1971 (NSW) as it was not in writing. The High Court found that a claim on a quantum meruit was available. Deane J at 256, in a passage relied upon by the appellants here, explained that such relief would only be available where there was no applicable genuine agreement or where such an agreement was frustrated, avoided or unenforceable. It is clear, however, that his Honour was here addressing whether there was agreement “governing the claimant’s right to compensation.” That statement is readily explicable given that relief by way of quantum meruit would have subverted any agreement by the parties as to price.
In Coshott, a solicitor sought to recover costs due to him in circumstances where his client had been paid a sum by way of settlement which was inclusive of costs. Having found that there must have been a retainer which covered the solicitor’s entitlement to have his costs paid, Mason P, with whom Spigelman CJ and Campbell JA agreed, said:
Navid’s affidavit evidence was that in June 2016 he went with Omid when Omid gave Mr Tok $9,500 in cash. Then, in about August 2016, he went with Omid and Omid gave Mr Tok $7,272 in cash. He said that from October 2016, for about two years, he and Omid kept going back to see Mr Tok to make cash payments. They did that about 18 or 19 times and on each occasion he saw Omid give cash to Mr Tok. He said that between June 2017 and July 2018 the precise amount that Omid gave Mr Tok was $42,875 and that Omid “had the figures with us”.
When asked in cross-examination where the $9,500 in cash had come from, Navid said “we were working and then we [were] making money from Iran as well”, although he later said, “[t]hat one is like – I think that was from was saving money” and that he did not know where the money came from but his brother knew where it came from. As to the $7,272, he said that it was “[j]ust my brother’s money”. When first asked where the $24,500 came from, he said “[y]eah we were working”, but when asked if it came from him, he said “no”. He later said he thought it was Omid’s money but that “I was working” as well, but when asked whether any of it was his money he said “[y]eah together our money, with my money as well” although he did not know how much of it he paid. As for the $42,875, he said that he thought that was the total amount, and that some of it came from his account as he thought he remembered that that was 2018 when he was working.
Omid was also asked in cross-examination about these payments. As to the payments of $9,500 and $7,272, he said that they borrowed some from a family friend (later described as cousins) and some was paid by him and his brother working in Mr Tok’s kebab shop for cash. As for the payments of $24,500 and $42,875, Omid said that he and his brother “we push out more work, we get more cash and he pays for it” and that the work was at the New Star Kebab (Mr Tok’s kebab shop).
As the appellants contend, there is some inconsistency as to whether Navid contributed to the payment totalling $16,772, and Navid’s evidence as to the payment totalling $16,772 was a little confused before he said that Omid would know where the money came from. Beyond that the evidence is largely consistent that the money came from Omid and Navid working. The inconsistencies or elements of confusion do not go to the core of the evidence. Rather, as the primary judge found, the evidence is consistent with both Navid and Omid doing the best they could to give honest evidence. It must be borne in mind that both were being asked about events that occurred many years earlier, in circumstances where they plainly had not kept any written records of the cash payments or how they sourced the money for them.
Overall, I am not satisfied that her Honour’s credibility based factual findings as to the cash payments are glaringly improbable. Far from it. Her Honour heard Omid and Navid give evidence and clearly believed their accounts. The fact that they did not make any written record of the payments does not make it implausible that the payments were made. It is clear that Omid and Navid did not consider there was any need to record the payments and the primary judge accepted their evidence, which must have included Omid’s evidence that the reason why he made no record of the payments was because he “was assured by Mr Tok that, he is recording to his black book and we trusted him”.