Husseini v Girchow Enterprises Pty Ltd [2024] FCAFC 143

Husseini v Girchow Enterprises Pty Ltd [2024] FCAFC 143

The appeal was allowed on grounds that the primary judge's findings did not support that the franchisees had relied upon Mr Husseini’s individual conduct (including signing and adopting representations in disclosure documents) in entering into franchise agreements and guarantees, nor did his conduct constitute misleading or deceptive conduct in context, given subsequent representations and disclaimers. Therefore, the critical link between appellant’s conduct and claimed loss or damage was not established.

Parties
Appellant: Samer Husseini; First Respondent: Girchow Enterprises Pty Ltd; Second Respondent: Karim Girgis; Third Respondent: Sherif Elhamy Wadie Girgis; Fourth Respondent: Paul Chau; Fifth Respondent: Activ Health Clubs Pty Ltd; Sixth Respondent: Richard Kim; Seventh Respondent: Advanced Club Management Pty Ltd; Eighth Respondent: Laziz Mirdjonov; Ninth Respondent: Ultimate Franchising Group Pty Ltd; Tenth Respondent: Mazen Hagemrad
Jurisdiction
Australia
Judgment Date
12 November 2024
Procedural Posture
Civil Appeal / Judgment and Orders Following Appeal
Outcome
Appeal allowed; orders below set aside as against appellant; costs awarded in appeal; costs below reserved.
Legal Topics
Misleading and Deceptive Conduct, Australian Consumer Law, Franchising Code of Conduct, Causation, Reliance, Damages, Disclaimers, Disclosure Obligations
Consumer Law Franchise Law Commercial Law Misleading and Deceptive Conduct Australian Consumer Law Franchising Code of Conduct Causation Reliance +3 more

Case Brief

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Parties

Samer Husseini

Appellant

Girchow Enterprises Pty Ltd

First Respondent

Karim Girgis

Second Respondent

Sherif Elhamy Wadie Girgis

Third Respondent

Paul Chau

Fourth Respondent

Activ Health Clubs Pty Ltd

Fifth Respondent

Richard Kim

Sixth Respondent

Advanced Club Management Pty Ltd

Seventh Respondent

Laziz Mirdjonov

Eighth Respondent

Ultimate Franchising Group Pty Ltd

Ninth Respondent

Mazen Hagemrad

Tenth Respondent

Procedural Posture

Civil Appeal / Judgment and Orders Following Appeal

Legal Issues

  1. 1 Whether appellant engaged in misleading or deceptive conduct in contravention of s 18 of the ACL by signing franchise disclosure documents and adopting representations on establishment costs
  2. 2 Whether any misleading representation was objectively misleading or likely to mislead or deceive
  3. 3 Whether representees (franchisees) relied on misleading representations when entering franchise agreements and guarantees

Ratio Decidendi

The appeal was allowed on grounds that the primary judge's findings did not support that the franchisees had relied upon Mr Husseini’s individual conduct (including signing and adopting representations in disclosure documents) in entering into franchise agreements and guarantees, nor did his conduct constitute misleading or deceptive conduct in context, given subsequent representations and disclaimers. Therefore, the critical link between appellant’s conduct and claimed loss or damage was not established.

Court Disposition

Appeal allowed; orders below set aside as against appellant; costs awarded in appeal; costs below reserved.

Orders

  • The appeal be allowed and the orders of 12 May 2023 be varied such that:
  • Paragraph 3: First and second respondents pay $1,789,848.99 compensation to the first applicant, inclusive of interest to 12 May 2023