Vitek & Anor v Taheri & Ors

Judgment 1The plaintiffs, Peter Vitek and Shoshanna Vitek, as vendors, entered into a Contract for the Sale of Land at Redfern with the purchaser, Estate Homes Pty Limited (Estate Homes) on 15 September 2003 (the Contract). The first defendant, Veeda Taheri, and her then husband, the second defendant, Siamac Taheri, were named as guarantors of Estate Homes' obligations under the Contract. Clause 51 of the Special Conditions of the Contract contained the guarantee purportedly signed by Mr and Mrs Taheri. The solicitor acting for Estate Homes and Mr and Mrs Taheri on the conveyance was the fourth defendant, Bernard O'Donnell. 2A dispute arose between the parties to the Contract and the plaintiffs commenced proceedings in this Court in 2005 against Estate Homes (as first defendant) and Mr and Mrs Taheri (as second and third defendants respectively), seeking damages for breach of contract (the 2005 proceedings). Estate Homes and Mr and Mrs Taheri brought a Cross-Claim against the plaintiffs and Mr O'Donnell. The relief sought against the plaintiffs, as first and second cross-defendants, included declarations that the Contract was rescinded and terminated by Notice of Rescission served by Estate Homes on 15 September 2003 and that the plaintiffs had, in contravention of the Fair Trading Act 1987, made misleading and deceptive representations in relation to the characteristics of the land. The relief sought against Mr O'Donnell, as third cross-defendant, included damages (for failing to advise the cross- claimants, inter alia, that the land could be contaminated) and an order that he indemnify the cross-claimants in respect of any damages they might be ordered to pay to the plaintiffs. Mrs Taheri brought a separate Second Cross-Claim against Mr O'Donnell for damages for allegedly failing to advise her in relation to the guarantee. 3During the hearing of the 2005 proceedings, the plaintiffs settled their claim with Mrs Taheri and Mrs Taheri settled the Second Cross-Claim with Mr O'Donnell. In the present proceedings commenced in 2010, the plaintiffs seek to set aside the agreement to settle the proceedings and consequential Consent Orders reflecting their settlement with Mrs Taheri. 2005 Proceedings 4Mr Taheri swore an affidavit in the 2005 proceedings on 16 October 2006 in which he claimed that he relied upon a Power of Attorney from Mrs Taheri to authorise him to sign her name on the guarantee in the Contract. He claimed that it was his understanding that he could sign Mrs Taheri's name where required on the Contract and that he did not know or understand that he had to disclose on the Contract that he was doing so pursuant to the Power of Attorney. December 2006 Affidavit 5On 15 December 2006 Mrs Taheri, as third defendant in the 2005 proceedings, swore an affidavit in support of an application to amend her Defence and to file the Second Cross-Claim against Mr O'Donnell. Mrs Taheri's affidavit evidence included the following: 10. My signature as guarantor is not my signature. I have sought to file an Amended Defence in the proceedings that (sic) pleading that the signature of the guarantor is not my signature 11. I have also received advice to file a further Cross-Claim in the proceedings against the solicitors who purported to act on my behalf in connection with the giving of the purported guarantee. I seek the leave of the court to file a Cross Claim against the solicitors, who are the third cross defendants in the proceedings. The Amended Defence March 2007 6Mrs Taheri's verified Amended Defence dated 12 March 2007 and filed in April 2007 included the following: 3. The Third Defendant refers to a Contract between the Plaintiffs and the First Defendant dated 15th September 2003 (the Contract) and denies entering into the guarantee contained in Clause 51 of the Special Conditions. 4. The Third Defendant refers to Clause 51 of the Special Conditions contained in the Contract and says that the signature endorsed thereon purporting to be hers is a forgery 5. Further, and in the alternative, the Third Defendant says that the alleged guarantee was procured in circumstances which were unconscionable and which in equity should not be enforced. Particulars a. The Third Defendant was not aware that she was required to enter into the guarantee contained in Clause 51 of the Contract. b. No explanation of the terms of the guarantee or the Contract was given to the Third Defendant. c. The signature on the guarantee purporting to be that of the Third Defendant is a forgery. The 4 April 2007 Affidavit 7Mrs Taheri swore an affidavit on 4 April 2007 which included the following: 6. I have been shown what purports to be my signature on pages 22 and 23 at clause 51 of the Contract. The signatures purporting to be my signatures are not my signatures. ... 10. I was aware that my husband was interested in purchasing the property that is the subject of this dispute. Until this dispute arose, that was the limit of my knowledge. Specifically, I was not aware at any time prior to the Contract being entered into or after that date until this dispute arose that Estate Homes Pty Limited or my husband had entered into a contract, or that I was a guarantor of the purchase. 11. I have been shown a copy of a Defence to the First Cross-Claim, which has been filed on behalf of Mr O'Donnell. Mr O'Donnell says that he had a meeting with my husband and I on or about 18 or 19 August 2003. I deny that I attended at any such meeting. 12. To the best of my recollection, on 18 and 19 August 2003, I was in Melbourne arranging for the appointment of some agents in Melbourne relating to my fashion label. To the best of my recollection, I stayed in Melbourne with my cousin. 13. I have never received any advice in relation to the Contract. I have never received any advice in respect of my obligations as guarantor pursuant to the Contract 14. In about July 2001, my husband and I agreed to purchase a unit in joint names. At that time, I was regularly travelling overseas. Our solicitor at the time suggested that in these circumstances I should give a Power of Attorney to my husband. I subsequently followed her advice. After the purchase, I forgot about the Power of Attorney. 15. I am not aware of my husband ever having used the Power of Attorney either prior to or subsequent to September 2003. 16. I refer to paragraph 26 of the Affidavit of Siamac Taheri and say that I did not authorise my husband to give a guarantee on my behalf or place my signature on the Contract as guarantor. 8On 24 July 2001 Mrs Taheri had granted a Power of Attorney to Mr Taheri authorising him under s 163B of the Conveyancing Act 1919 "to do on my behalf anything I may lawfully authorise an attorney to do". There were no conditions or limitations and Mr Taheri was authorised to do any other act whereby a benefit was conferred on him (cl 2). QC's Opinion 9The parties attended a mediation in April 2008. Although they were unable to settle their differences, they agreed to jointly seek an opinion from Mr BC Oslington QC on the enforceability of the guarantee. Mr Oslington was asked to assume the following: (a) The Power of Attorney was executed by Mrs Taheri in favour of Mr Taheri and was not impugned. (b) The Power of Attorney had not been revoked as at the date of the Contract of Sale. (c) The "signatures", 'V Taheri' that appear on pages 22 and 23 of the Contract of Sale were placed there by Mr Taheri. (d) Mr Taheri placed those signatures on the Contract in the belief that he acted lawfully pursuant to the Power of Attorney. (e) Mrs Taheri did not otherwise give Mr Taheri any authority to place her signature on that document. (f) Mrs Taheri did not otherwise authorise Estate Homes to bind her to the guarantee. 10Mr Oslington's opinion included the following: 17. An enforceable contract of guarantee does not have to be made by deed, and is not even required to be in writing. 18. In my opinion, the powers given under the power of attorney authorise Siamac Taheri to bind Veeda Taheri to a guarantee in terms recorded in Special Condition 51. I am instructed to assume that Siamac Taheri believed he acted lawfully pursuant to the power of attorney when he wrote "V. Taheri" above the provision in the guarantee for Veeda Taheri's signature. It follows that he intended to exercise the power given to him under the power of attorney to bind Veeda Taheri to the guarantee. 19. I am unable to express an conclusive opinion whether Veeda Taheri is bound by the guarantee because I do not know whether consideration was given by the vendor, or depending on the facts, whether Veeda Taheri would be estopped from denying she is bound by the guarantee even if there was no consideration. 20. The fact, as recorded in assumption (e) that Veeda Taheri "did not otherwise give Siamac Taheri any authority to place her signature on the document" is, in my opinion, irrelevant. I am asked to assume that the authority given by the power of attorney is not impugned. I have already advised that the power is sufficiently wide to enable its exercise to bind Veeda Taheri to the guarantee. The power of attorney is sufficient authority, and no further authority is required. 21. The assumption that Siamac Taheri placed Veeda Taheri's signature on the guarantee cannot be accepted. That could only have been done by Veeda Taheri. Siamac Taheri conveyed to the vendor, through writing "V. Taheri" on the guarantee, that Veeda Taheri intended to be bound by the guarantee. He had authority under the power of attorney to cause her to be bound. 22. I do not understand the relevance of assumed fact (f), namely, that Veeda Taheri did not otherwise authorise Estate Homes Pty. Limited to bind her to the guarantee. The facts upon which I am briefed do not suggest the purchaser, Estate Homes Pty. Limited, did anything to bind Veeda Taheri to the guarantee. My opinion is based on the view that Siamac Taheri was authorised under the power of attorney to bind Veeda Taheri to the guarantee. 11Mr Roth forwarded a copy of Mr Oslington's opinion to the plaintiffs and advised that it was to the effect that although the guarantee was not signed by Mrs Taheri "she is still liable under the guarantee". That email of 15 April 2008 included the following: This does not mean that the guarantee issue is finalised but only that the arguement (sic) used by Mrs Taheri's lawyers that she does not need to make any financial contribution at the mediation or even at the hearing because she did not sign the guarantee is not a valid arguement (sic). 12After receipt of this information Mr Vitek said that he was "totally confused". Mr Roth responded to this communication on 16 April 2008 by advising as follows: The other issues regarding the guarantee including whether there was any benefit to Mrs Taheri in giving the guarantee in circumstances where the purchaser was a company in which she was neither a director or shareholder. If the guarantee was given by deed this would not be in issue however the advice of the QC is that because it was not signed by V Taheri the witness who signed could not have witnessed the signature of V Taheri as the witness has purported to attest. 13Mr Vitek responded that he was even more confused and concerned that his case that he thought had been "crystal clear" now had "all these issues". In response to this communication Mr Roth wrote as follows on 16 April 2008: It was only after we received Mr Taheri's evidence that it was known that Mrs Taheri did not sign the guarantee. No case is crystal clear to the extent it cannot be lost. This was made clear to you. It was also made clear that there may not be sufficient assets available from which you (sic) claim could be met. As you have a claim against Mr Taheri for the full amount anyway it does not matter that you have an additional claim against him in relation to his wife's guarantee. The value of your claim against Mr. Taheri is limited to the realisable value of his assets. The guarantee situation is arguable and will depend on who is believed, all of the evidence that is presented to the Court including the witness statements, the result of cross examination and the documents that are tendered. The Settlement and Consent Orders - 30 April 2009 14Barrett J (as his Honour then was) heard the 2005 proceedings, commencing in April 2009. After some debate, his Honour agreed to the defendants' application that they not be required to read their affidavit evidence or go into evidence until the close of the plaintiffs' case. The plaintiffs experienced some forensic difficulties in the light of this ruling. 15On the fourth day of the hearing, 30 April 2009, and prior to the close of the plaintiffs' case, the plaintiffs settled their claims against Mrs Taheri. Consent Orders were made in the following terms: 1. Note the agreement between the third defendant to pay the plaintiffs within 28 days the sum of $100,000 on account of the plaintiffs (sic) costs. 2. Upon compliance with the agreement noted in paragraph 1 verdict and judgment for the third defendant on the plaintiffs (sic) Summons. 3. Note the agreement between O'Donnell and the third defendant (second cross claimant) to pay the third defendant the sum of $50,000 within 28 days. 4. Upon compliance with the agreement noted in paragraph 3 verdict for the (sic) O'Donnell on the second cross claimants (sic) Cross Claim. 5. All existing orders for costs in the proceedings as between the plaintiff (sic), third defendant and O'Donnell are vacated. 16On 4 May 2009 the plaintiffs' solicitor, Mr Charles Roth, wrote to the plaintiffs in terms that included the following: I refer to the hearing of the above matter which commenced on 27 April 2009 and concluded part heard on 1 May 2009 and confirm the following:-