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QUESTIONS AT BOTTOM OF PAGE 3

Marcella Marconi (Plaintiff) -v- Sam & Joe Pty Ltd (Defendant)

[1] In 2009, Sam Alexander and Joe Patterson, who were high school friends, incorporated a company called Sam & Joe Pty Ltd. At the time they were 19 years old. Sam and Joe each had authority to act on behalf of the company. The company was set up because Sam and Joe, who were great admirers of Italian food and culture, decided to establish and run an Italian restaurant called Milan Bar & Food, in a building which was part of the Northbank complex in Brisbane city. Northbank was a large park on the northern bank of the Brisbane River, which included a number of buildings that Northbank leased for retail shops, restaurants, bars, and cafés.

[2] The Northbank Corporation owned and controlled the land and all the buildings in the Northbank complex. Sam & Joe held a lease with Northbank Corporation over a part of a building in a prime area of Northbank, close to public transport, the Northbank car park and with extensive river views.

[3] In 2011 Sam & Joe Pty Ltd acquired the catering rights at the Redsand Bay Yacht Club. By 2012, Sam and Joe had found it difficult to maintain both Milan Bar & Food and their business at the Yacht Club, so they decided to sell Milan Bar & Food in order to concentrate on catering at the Yacht Club. They considered using an agent to sell Milan Bar & Food, as they had no experience in selling a business, but decided that they would try to sell it themselves first, to save the commission.

[4] In 2012, Marcella Marconi was 55 years old. Since she emigrated from Italy in 1992, she had been a housewife. She was a brilliant cook, and people often told her she should open a restaurant. She understood spoken English and spoke it fairly well but with a heavy accent, but with family and her friends she always spoke Italian. She could not write or read English. Marcella’s husband, Domenico died in December 2011 and Marcella inherited $450,000 from him.

[5] In 2012, Marcella decided that she would like to use the money she had inherited from Domenico to buy a small business. She discussed this with her 23 year-old daughter, Sophia, who found an advertisement for the sale of Milan Bar & Food and showed it to Marcella. Sophia contacted Sam and Joe and arranged to meet them.

[6] Marcella told Sophia she was concerned about the business side of things, especially dealing with documents written in English. Sophia, who was studying business, said that she and her brothers would help Marcella. Marcella’s eldest son, Fabrizio, had been an accountant before he became a priest, and Marcella often asked him for his advice, particularly in financial matters, although she did not always follow it. She relied on him more heavily after Domenico’s death. However, they had had a serious disagreement on a question of theology in July 2012, and their relationship had become strained as a consequence.

[7] Marcella’s second son, Alfredo, was the Director of the Italian Wine and Food Festival, held in December every year. Alfredo told Marcella and Sophia that he could arrange for the festival to be moved from New Farm to Northbank from 2013, and for Milan Bar & Food to become the main dining venue during the festival. Under this arrangement, Marcella would have made an additional profit of $40,000 each year during the festival alone and expected to generate a lot more business.

[8] Marcella and Sophia met three times with Sam and Joe in August 2012 to discuss the sale of the business. Throughout the negotiations, Sam and Joe thought that Marcella and Sophia were planning to buy and operate the business together. They only found out when the contract was signed that Sophia was not a party to the contract.

First Meeting

[9] In the first meeting on August 4th 2012, Marcella said to Joe, ‘There are no other Italian restaurants in Northbank, are there?’ and Joe replied, ‘That’s right, Mrs Marconi, there are no other Italian restaurants currently operating.’ Marcella said, ‘That’s good. I would not be interested in competing with another Italian restaurant.’ It was true that there were no other Italian restaurants operating at the time, but on August 11th, Sam heard that an Italian café was going to start up in a new building at the opposite end of Northbank in April 2013. He intended to tell Marcella, but forgot.

[10] Marcella told Sam and Joe that the interior of Milan Bar & Food looked shabby and that it needed a makeover. Sam commented that they had never really gotten around to painting the place, since they had become occupied with their catering business at the Yacht Club. Marcella said she would want to fix that up immediately. Joe said, ‘You can take over the restaurant as soon as the contract is signed and get to work with the paint right away, if you like!’ Sophia asked whether there were any provisions in the lease that would prevent the tenant from making

alterations to the space. Sam said that several other businesses in the Northbank complex had renovated their premises and it had never been a problem, which was true. Marcella said that she would ‘hate to get into trouble with Northbank’ and that she would definitely want to have the lease before starting any work. Joe commented that Northbank Corporation were ‘really decent’ and he and Sam were quite comfortable with Marcella ‘changing the look’ of the space before the lease was assigned. Marcella replied that she would ‘want to get started on it quickly’ so that the place would be ‘ready for Alfredo’s festival.’

Second Meeting

[11] In the second meeting on August 10th 2012, Sam and Joe proposed a price of $650,000. Marcella said that she only had $450,000, that she didn’t have any other source of funds, and that this was all of the money she had to live on for the rest of her life so she did not want to spend all of it on the business. Sam and Joe assured her that she would make a profit of at least $200,000 on the business in the first year, so she would be able to pay another $100,000 after a year of operating the business. Marcella hated being in debt and she very firmly rejected this suggestion. She said maybe she should just forget about the whole thing, but Sophia assured her that it would be all right.

[12] After Marcella left the second meeting, Sophia said to Joe and Sam that she would see if Fabrizio could come to the next meeting. She said that Marcella listened to him and usually followed his advice.

Third Meeting

[13] Sophia, Fabrizio, Sam and Joe met before Marcella arrived at the third meeting on August 12th. Sam and Joe showed Sophia and Fabrizio some figures which showed that the restaurant had in the last three financial years made profits of at least $200,000. These figures were accurate. Joe also told Fabrizio that they were very keen to finalise the sale soon.

[14] Fabrizio was impressed by the business. He thought it had been well-run, that although the price was a bit high, that there was a risk the sellers might decide not to sell to his mother, and that his mother was being stubborn. Fabrizio became annoyed with Marcella during the meeting, at which she continued to refuse to accept a price of $550,000. Exasperated, he shouted, ‘Oh, come on Mum! Just do it! This place is always so busy!’ Marcella felt extremely pressured in this meeting and was deeply embarrassed that her son, dressed as a priest, had yelled at her in public. Out of respect for Fabrizio, but with obvious reluctance she orally agreed to a price of $550,000.

[15] After the meeting on August 12th, Marcella became more excited about running her own restaurant, which she’d dreamed of for years. She met with her friend, Carla Ferrari, who was an interior designer, and asked her to start working on designs for the restaurant. Carla drew up designs for the renovation which involved knocking down part of one of the restaurant walls tocreate a faux-alfresco dining area. In September, Marcella paid Carla $20,000 for the designs, and a $5,000 deposit for overseeing the renovations. Carla asked Marcella for $30,000 which she spent on new Italian furniture and on materials for the renovation. The furniture and materials were put into storage on September 20th, at a cost of $1,000 a month. Carla arranged a builder to do the renovation work starting on October 19th, and Marcella had to pay the builder a non- refundable deposit of $10,000 in September 2012.

[16] On August 13th, Sam brought the final version of the contract, which was written by Sam & Joe Pty Ltd’s lawyer, over to Marcella’s house. Marcella looked at the contract, appearing to read it. She could not understand most of the words in it but she did not wish to appear ignorant so she did not say anything to Sam. Sam said that he would take it to Sophia to sign after Marcella had signed it, and Marcella said that Sophia was not party to the contract. Marcella signed the contract and it was validly executed on behalf of Sam & Joe Pty Ltd the same day.

[17] The contract defines purchaser to mean Marcella Marconi (it did say “Sophia Marconi” as well, but on August 13th, Sam corrected this and both parties initialled that change); defines seller to mean Sam & Joe Pty Ltd; and defines the business to mean Milan Bar & Food, operating at shop 15A, Northbank, including the lease with Northbank Corporation, furniture and fittings, and stock-in-trade (meaning the food and beverages in the restaurant at the time it was handed over). The contract contains the following provisions:

Clause 7: The seller agrees to sell and the purchaser agrees to purchase the business. Clause 8: The seller will assign to the purchaser the remainder of its lease with

Northbank Corporation by October 13th 2012.

Clause 9: The purchaser shall take over possession and running of the business on September 20th and until the lease is assigned under clause 8 shall pay the seller a rent of $950 per week.

Clause 10: The purchaser will pay a deposit of $45,000 on signing the contract. The balance of the purchase price will be paid in two instalments. On October 13th, 2012, the purchaser will pay $405,000. On August 13th, 2013, the purchaser will pay $100,000.

Clause 11: The seller takes no responsibility for statements made in negotiations unless they are recorded in this contract. The purchaser agrees that it has made its own enquiries.

[18] On August 13th, Marcella paid the deposit of $45,000. She went into possession of the business on September 20th. When she took the business over, this included $950 worth of food, $4,000 worth of beverages, and furniture and fittings worth $11,000. She paid the rent from September 20th until October 15th.

[19] Sam and Joe Pty Ltd’s lease with Northbank Corporation contained a provision which stipulated that the lessee could only assign a lease if Northbank had given written approval. In early September 2012, Sam and Joe Pty Ltd’s lawyers asked Northbank’s lawyers to agree to the assignment of the lease so that they could assign it to Marcella by October 13th. On October 1st, Northbank Corporation’s lawyers informed Sam & Joe’s lawyers that there would be a delay in processing that request.

[20] Domenico’s executor had put most of the money from Domenico’s estate into fixed-term investments. The executor informed Marcella that he was not able to withdraw the money she needed for the first instalment until October 15th. On October 9th, one of Marcella’s friends who can read and write English went with Marcella to the bank to help her apply for a short-term loan. Marcella was given a form to apply for a ‘bridging loan’. Marcella’s friend did not understand the form properly, so Marcella failed to declare her assets, and as a result the bank refused her application.

[21] On October 12th, Sam contacted Marcella to tell her that the lease couldn’t be assigned on the next day ‘because of a delay with Northbank’. Marcella was secretly relieved, because she knew she would not have the money until the 15th. She told Sam that ‘a short delay’ was all right with her but that she had builders coming on the 19th, that she wasn’t going to start spending money on the property without the lease. She said ‘I will have the money on October 15th and I want the lease then.’ Sam said that should be fine but he would just check with his lawyer and get back to her. Sam phoned his lawyer, whose secretary informed him that she was attending a funeral out of town and would be back in ‘a couple of days.’ Thinking that Marcella could probably wait a bit longer if need be, Sam decided not to bother his lawyer until she got back.

[22] On October 15th, Marcella heard that a new Italian café was opening in Northbank in April. She was furious. She called Sam and asked him where the lease was. Sam put Marcella on hold and called his lawyer, who told him that she hadn’t followed up with Northbank’s lawyers recently, but expected to receive Northbank’s approval in a few days. Sam got Marcella back on the line and told her that they would be able to assign the lease within a week. Marcella asked him whether he knew about the new café, and Sam apologised, saying he’d heard about it in August and meant to mention it to her. Marcella said that she had had enough and that she was cancelling the whole deal and hung up the phone. She closed the restaurant immediately, let all the staff go, and went to stay with her sister in Sydney to recover, completely forgetting to contact Carla. Carla and the builders showed up at the restaurant on October 19th, ready to begin the renovation, only to find a sign saying the restaurant had closed down.

[23] Marcella has had to pay $15,000 to the builders for their costs and lost profits. Carla suggested to Marcella that she could resell the furniture and renovation materials on Marcella’s behalf to another client, but as they were specialist items, Carla told her she ‘would be lucky’ to get $10,000 for them. In May 2013, Carla found a buyer for $9,000, but Marcella refused to sell them for that price. They are still in storage.

I need 400 words on 1 and 2, With references throughout to Australian Cases and Law.

Counsel for the Plaintiff (Marcella Marconi) submits

1. That the defendant engaged in misleading or deceptive conduct. You do not have to address remedies for misleading or deceptive conduct. (400 words)

2. That the defendant is liable for undue influence exercised by Fabrizio Marconi. (400 words)