| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : BSL AUSTRALIA PTY LTD -v- KUMAR [2011] WADC 118 CORAM : STONE DCJ HEARD : 13-15 APRIL 2011 DELIVERED : 2 AUGUST 2011 FILE NO/S : CIV 84 of 2010 BETWEEN : BSL AUSTRALIA PTY LTD BSL PROPERTY PTY LTD
Plaintiffs
AND
MUNEESH KUMAR
First Defendant
TURBO STEEL PTY LTD
Second Defendant
STEEL GIANT PTY LTD
Third Defendant
CITY SCAFFOLDING & FORMWORK PTY LTD
Fourth Defendant
Catchwords: Contract - Whether binding agreement for settlement of dispute arising from employment of first defendant by firstnamed plaintiff - Duress - Whether
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first defendant agreed to settlement as a result of duress by director of firstnamed plaintiff and others Legislation: Nil Result: Duress not established
The first, second, third and fourthnamed defendants to pay the plaintiffs $150,000 with interest thereon at 6% per annum between 15 November 2009 and date of judgment Representation: Counsel:
Plaintiffs : Mr J G Hanly
First Defendant : Mr C D Clifton
Second Defendant : Mr C D Clifton
Third Defendant : Mr C D Clifton
Fourth Defendant : Mr C D Clifton
Solicitors:
Plaintiffs : Hotchkin Hanly
First Defendant : Clifton Tham Pty Ltd
Second Defendant : Clifton Tham Pty Ltd
Third Defendant : Clifton Tham Pty Ltd
Fourth Defendant : Clifton Tham Pty Ltd
Case(s) referred to in judgment(s):
Barton v Armstrong [1976] AC 104
Briginshaw v Briginshaw (1938) 60 CLR 336
Crescendo Management v Westpac Banking Corporation (1988) 19 NSWLR 40
Jones v Dunkel (1959) 101 CLR 298
Masters v Cameron (1954) 91 CLR 353
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449
Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11
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Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366
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Introduction 1 The first-named plaintiff, BSL Australia Pty Ltd, was engaged in the sale of steel scaffolding for construction. BSL Australia employed the first defendant, Mr Muneesh Kumar, as the branch manager of its operations in Western Australia. While employed by BSL Australia, Mr Muneesh Kumar incorporated the second defendant, Turbo Steel Pty Ltd, to trade in competition with BSL Australia. Mr Muneesh Kumar's employment was terminated when BSL Australia became aware of his improper activities as a director of Turbo Steel and his connection as a director of the third defendant, Steel Giant Pty Ltd, and the fourth defendant, City Scaffolding & Formwork Pty Ltd. 2 Mr Muneesh Kumar accepted he had acted improperly whilst in the employment of BSL Australia. BSL Australia claimed losses against Mr Muneesh Kumar and Turbo Steel in excess of $300,000. Mr Muneesh Kumar and Turbo Steel claimed the gross loss was $90,000. 3 Between October 2008 and September 2009 a lengthy series of discussions to resolve the dispute were conducted between BSL Australia and Mr Muneesh Kumar and Turbo Steel as a result of which the solicitors for Mr Muneesh Kumar and Turbo Steel ultimately sent a deed of settlement to the solicitors for BSL Australia for execution. 4 The essential terms of the deed of settlement were that Mr Muneesh Kumar, Turbo Steel, Steel Giant and City Scaffolding & Formwork would pay BSL Australia and the second-named plaintiff, BSL Property Pty Ltd, $135,000 if paid before 15 November 2009 or $150,000 together with interest if paid after that date, payment in any event to be within 12 months. 5 BSL Australia and BSL Property executed the deed of settlement. Mr Muneesh Kumar, Turbo Steel, Steel Giant and City Scaffolding & Formwork did not execute the deed of settlement and they denied liability. 6 BSL Australia and BSL Property contended that the parties had, by 2 or 3 September 2009 agreed all the terms of their bargain as a result of which Mr Muneesh Kumar, Turbo Steel, Steel Giant and City Scaffolding & Formwork were bound to execute the deed of settlement and perform according to its terms. (Page 5)
7 Mr Muneesh Kumar, Turbo Steel, Steel Giant and City Scaffolding & Formwork contended there was no concluded agreement and they were not bound by the terms set out in the deed of settlement because they contemplated settlement upon the execution of the deed and the deed itself was supplied to the solicitors for BSL Australia and BSL Property on a without prejudice basis. 8 Alternatively, Mr Muneesh Kumar, Turbo Steel, Steel Giant and City Scaffolding & Formwork contended that the agreement made between the parties through their solicitors was not entered into with their free consent because of duress in the form of threats made against Mr Muneesh Kumar and members of his family by agents of BSL Australia.
The issues Was there a concluded agreement? 9 At the commencement of the trial an agreed statement of facts was tendered into evidence by counsel for the parties. The agreed statement of facts stated the parties agreed, inter alia, that the factual material set out in pars 7(a), 7(b) and 7(c) of the further amended statement of claim was correct, although the defendants did not admit the legal effect of that factual material. 10 The pleadings in par 7 of the further amended statement of claim stated as follows: 7. On or about 2 September 2009, the Plaintiffs and the Defendants entered into a partly oral, partly written, partly implied agreement for the settlement of all disputes arising from the employment of the First Defendant by the First Named Plaintiff ('Agreement').
PARTICULARS
(a) Insofar as the Agreement was oral, it was constituted by a telephone conversation on 2 September 2009 between (Page 6)
Mr Greg Paull of Butcher Paull & Calder on behalf of the Plaintiffs and Mr Sanjiv Sethi of Michael Paterson & Associates on behalf of the Defendants in which Mr Sethi said he was instructed that his client agreed to the terms of the proposed Deed, and would engross Deeds for signing by the parties; (b) Insofar as the Agreement was written, it was constituted by an engrossed Deed annexed to a letter from Michael Paterson & Associates to Mr Greg Paull of Butcher Paull & Calder dated 3 September 2009; (c) Insofar as the Agreement was implied, it was constituted by the conduct of the Defendants' solicitor in sending an engrossed Deed of Settlement and Release ('Deed') to the Plaintiff for execution, under cover of the letter, which conduct implies or evidences that Agreement had been reached. 11 The defendants contended the agreement fell within the third category of cases described in Masters v Cameron (1954) 91 CLR 353, 361 because the parties contemplated settlement upon the execution of the deed and the deed itself was supplied to the solicitors for BSL Australia and BSL Property on a without prejudice basis, which appears from the covering letter and the confidentiality clause 4.1 of the deed of settlement, exhibit 1.31. Further, it can be inferred from the fact that the deed of settlement was sent with a covering letter marked 'without prejudice' that the defendants wished to remain free to withdraw from the agreement prior to execution by BSL Australia and BSL Property. 12 I do not accept this submission. Neither the deed of settlement nor any of the without prejudice correspondence dealing with the negotiations that were put into evidence made the agreement itself contingent upon all parties executing the deed of settlement or reserve a right to any of the parties to withdraw from the agreement at any time prior to execution of the deed of settlement. Recital 'K' of the deed of settlement records that the parties have agreed to resolve the dispute without admission of liability. The agreed fact is that on 2 September 2009 'Mr Sethi said he was instructed that his client agreed to the terms of the proposed Deed and [he] would engross Deeds for signing by the parties'. Statements made without prejudice in an attempt to settle a dispute or action are privileged … A binding contract brought into existence as a result of without prejudice negotiations is not protected by the privilege. Although the resulting contract is not privileged, the negotiations leading to the agreement remain privileged … However, without prejudice negotiations leading to an agreement can be considered where there is a (Page 7)
dispute as to whether or not an agreement to settle was made: OldPapa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11 [90] – [93] (McLure J). 13 I am satisfied on the basis of the agreed statement of facts, the evidence of the negotiations (about which I will say more in a moment) and the evidence of the without prejudice correspondence that BSL Australia and BSL Property have established upon the balance of probabilities that on 2 September 2009 the parties had reached agreement upon their dispute and the terms of their agreement. The without prejudice covering letter dated 3 September 2009 from the defendants' solicitors to the solicitors for BSL Australia and BSL Property which accompanied the deed of settlement was not protected by privilege as the parties had already reached a binding agreement. All that remained to be done was execution of the deed of settlement by the parties and performance of its terms.
If there was a concluded agreement, did Mr Muneesh Kumar enter into the agreement because of duress? 14 The defendants submitted that if there was a concluded agreement, it was entered into because of duress in the form of threats made against Mr Muneesh Kumar and members of his family by persons associated with BSL Australia. 15 The defendants bear the onus of establishing that the alleged threats or pressure brought to bear on them were illegitimate and that the illegitimate threats or pressure were a reason (not the sole reason) for entry into the agreement. If the evidence established that illegitimate threats or pressure were exerted upon Mr Muneesh Kumar and members of his family the onus then lies upon BSL Australia and BSL Property who were said to have applied illegitimate threats or pressure by persons associated with BSL Australia to demonstrate that their action was in no way a cause of the defendants entering into the agreement: Barton v Armstrong [1976] AC 104; Crescendo Management v Westpac Banking Corporation (1988) 19 NSWLR 40. 16 The test for whether any applied threats or pressure went beyond what the law was prepared to countenance as legitimate was stated by McHugh JJA in Crescendo Management v Westpac Banking Corporation: In my opinion the overbearing of the will theory of duress should be rejected. A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure (Page 8)
rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress (46 - 47).
The alleged threats or pressure to settle the dispute 17 The defendants' witnesses Mr Muneesh Kumar, his sister Ms Salina Kumari and his partner Mr Vinod Kumar and BSL Australia's witnesses Mr Aruj Anand, a company employee and director and Mr William James, the company accountant, were generally in agreement about the events leading up to the defendants' solicitors forwarding the deed of settlement to BSL Australia's solicitors for execution but there was an issue as to whether threats were made or pressure applied to settle the dispute. 18 Mr Muneesh Kumar testified that threats were made concerning the safety of his parents in India and his sister in Perth; his parents would be 'finished' or 'disturbed' and his sister would be 'disturbed'. There were threats against him personally 'to fix him up'; he would be 'disturbed'. There were threats to involve the police. There were threats concerning his marriage in India which should be 'postponed'. 19 Ms Kumari testified about threats 'to fix up' Mr Muneesh Kumar that she relayed to him. 20 Some of the alleged threats concerning Mr Muneesh Kumar, his sister and his parents amounted to threats to physically harm them and were of a criminal nature. 21 I bear in mind that in a civil action a court should not lightly find that a party has engaged in criminal conduct: Briginshaw v Briginshaw (1938) 60 CLR 336; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449. 22 In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd Mason CJ, Brennan, Deane and Gaudron JJ stated: The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to (Page 9)
establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary ‘where so serious a matter as fraud is to be found'. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct (449 - 450). 23 Mr Muneesh Kumar conceded that whilst he was an employee of BSL Australia he was also a director of Turbo Steel and he engaged in improper activities. He improperly sold BSL Australia products to Turbo Steel at discounted prices which were subsequently sold by Turbo Steel to its customers or he sold Turbo Steel products to BSL Australia which were then sold to BSL Australia's customers. He accepted that his employer was unaware of his activities. 24 On the afternoon of 10 October 2008 Mr Muneesh Kumar was confronted at the BSL Australia's Perth office about his Turbo Steel activities by Mr Anand, a BSL Australia director and employee based in New South Wales to whom Mr Muneesh Kumar reported directly. Also in attendance was Mr Ashish Gupta, the international marketing officer for BSL Australia's parent company in India. Mr Muneesh Kumar was asked for details of the products Turbo Steel supplied, its business and customer base. He said he could not provide the details as the accounts were handled by his partner Mr Vinod Kumar. Mr Gupta demanded he hand over his personal bank statements, Turbo Steel's accounts and his house loan documents. He declined. After several demands for the documentation he said he was threatened by Mr Anand who said: 'See, if you don't give us these details we have trouble ahead'; 'You know, Ashish can call back his guys in India and by evening your parents will be finished'; 'Son, forget your marriage now' (he was about to leave for India for the wedding); and 'You know we can fix you up'. 25 Mr Muneesh Kumar said the threats to himself and his parents at that time did not make him anxious to reach a settlement. He wanted to speak with the father of the principal of BSL Australia first because their two families were related. The meeting concluded on the understanding that he needed a day to collect the documentation they requested and he would see them the next day. He was told to leave the office. The office keys and company laptop were taken from him but he was permitted to keep (Page 10)
the company car so he could attend their meeting the following day. When he arrived home he said he learnt his mother who lived in India had been hospitalised. He booked a flight for India and departed for there on the morning of 12 October 2008. He said he spent 11 October 2008 shopping in Perth and he was too busy to telephone Mr Anand to cancel their meeting for the following day. 26 Mr Anand essentially confirmed what occurred at the meeting on 10 October 2008 and his request for Mr Muneesh Kumar to provide documents. He accepted he was hurt, unhappy and angry with Mr Muneesh Kumar. He told Mr Muneesh Kumar to sort out the matter because it was a company fraud with severe implications. He denied that he or Mr Gupta made any threats. Although he mentioned Mr Muneesh Kumar's parents in their discussion he said it was not a threat: If they find out it won't look nice and the families are related. They will - they'll be so embarrassed to know that their son is doing something like this. So please don't force me to give them a call or ask you to give them a call and let them know, because if we can keep it between us we should try and keep it between us. He said on 11 October 2008 Mr Muneesh Kumar had telephoned him to say he could not attend the meeting and arrangements were made to have the meeting the next day. 27 Ms Kumari said she took her brother to the airport. Later that morning she telephoned Mr Anand and told him her brother had gone to India, their mother was unwell and arrangements were in place to return the company car. She said Mr Anand telephoned her several times that morning about her brother's departure. Later that evening Mr Anand and Mr Gupta turned up at her brother's house where she lived. They demanded to know her brother's whereabouts and threatened her: 'Where is Muneesh now? We check the flights in Dubai. We couldn't find him. If you don't tell us truth, we will fix him up'. They also wanted to enter the house to collect her brother's 'house papers, caveat things'. She refused them entry and they left. She was scared and tried to telephone her brother. When he returned her call she told him about the night-time visit from Mr Anand and Mr Gupta. She then went to stay at a neighbour's house for five days before leaving for India. 28 Mr Anand confirmed the telephone calls with Ms Kumari concerning the arrangements to collect the company car. He said he told her that her brother had committed a company fraud and he needed to speak with him urgently. He also told her: 'Well, let Muneesh know that all the furniture (Page 11)
and fixtures in your house belong to the company, so I will make a list of it and I would like you to hand them back to us'. He denied that he made any threats during the telephone calls. He said he and Mr Gupta went to the house on the late afternoon of 12 October 2008 to 'make her understand the severity of the issue' but no one answered the door. They waited for 10 to 15 minutes. 29 Over the next couple of days, after Mr Muneesh Kumar had told Mr Anand he was in India and given out his mobile telephone number, Mr Anand and Mr Gupta telephoned him about five to six times. They wanted the documents, his immediate return to Australia and cancellation of his wedding plans. He declined. He said they threatened him by saying: 'We will again go back to your sister. You know we can disturb her'. He took this to mean a threat to harm his sister. 30 Mr Anand recalled the first telephone call he made to Mr Muneesh Kumar in India. He asked Mr Muneesh Kumar why he ran away, to postpone his wedding and return to discuss the matter. He denied making any threats. He could not recall if there were any other telephone calls. 31 A few days before his wedding on 25 October 2008 Mr Muneesh Kumar, his father and his uncle went to a meeting in India with the father of the principal of BSL Australia. At the meeting Mr Muneesh Kumar was shown a draft facsimile written by Mr Anand. The draft facsimile, exhibit 1.4 was addressed to him. 32 A paragraph of the draft facsimile stated: We have found that you are a Director and Owner of Turbo Steel, who has been trading since July 06. This company is in the same business of scaffolding. We have found out you have been passing the confidential information of our company and our clients to this company and also have sold a lot of scaffolding to them. This is a breach of Employee Code of Conduct and is a Criminal Offence. We are consulting lawyers and in initial discussions with them have advised us that we can lodge Police Complaint straight away and maximum sentence in such kind of cases can be 20 years' imprisonment. Although he regarded the reference to police in the draft facsimile as a threat Mr Muneesh Kumar said he was not concerned about police involvement because he thought the dispute would be sorted out between the parties and the police would not become involved. (Page 12)
33 The final paragraph of the draft facsimile stated: We are in process of clearing the entire position with yourself. For the same reasons Mr Gupta from India has travelled twice but you ran away from the situation on 12th Oct and did not come to meet us on 11th Oct as promised. Mr Aruj has been waiting in Perth since 10th Oct to get an explanation about the whole scam but you didn't bothered to come forward and explain all your misdoings until now. Since company would like to give you a fair chance to explain yourself, before we lodge a police complaint, we are asking you to come to Australia on or before 28th of October. BSL has already booked you on flight on 28th Oct from Delhi to Perth. After the meeting Mr Muneesh Kumar said he telephoned Mr Anand and arranged a meeting in Perth for the afternoon of 5 December 2008. 34 On the evening of 28 November 2008, Mr James visited Mr Muneesh Kumar's house. Ms Kumari said when she answered the door Mr James introduced himself and he asked when her brother was returning. Mr James was angry and threatened to 'fix Muneesh' two or three times. Mr James wanted her brother's 'properties papers and caveat'. She described how Mr James was punching his closed fist into his open fist when he said 'they want Muneesh to leave Australia'. 35 Mr James said he went to the house which was in Midland on the way home from work because he lived nearby in Darlington, about 10 minutes away. He and his clients wanted to find Mr Muneesh Kumar to talk with him. He introduced himself to the woman who answered the door. When she told him Mr Muneesh Kumar was not there, he left. He denied making any threats. 36 On the morning of 5 December 2008 Mr Anand went to Mr Muneesh Kumar's house. Mr Muneesh Kumar had returned to Perth a few days earlier. Mr Muneesh Kumar said Mr Anand wanted him to go to a meeting immediately. He declined. Mr Anand threatened to call the police if he did not go. Again he declined. Mr Anand then telephoned someone and said: 'Don't worry, we will fix him up'. At that stage Mr Muneesh Kumar went inside his house. Mr Muneesh Kumar attended the meeting that afternoon. Mr Anand and Mr James were present. The meeting lasted approximately four hours. Mr Muneesh Kumar was given a letter of termination and he was asked to provide documentation concerning his personal bank statement, his house loan, Turbo Steel's accounts and his other personal loans and liabilities. He declined. Mr James wrote on a whiteboard some figures in excess of $400,000. He said Mr James claimed that amount was what he owed and he would (Page 13)
have to pay. He said there was another demand for the documentation and he said: 'I have to speak to a lawyer. I will get back to you'. 37 Mr Anand agreed he went to Mr Muneesh Kumar's house at about 6.30 am, 7.00 am on 5 December 2008 because he 'wasn't confident that he would come to the meeting' but no-one answered the door. He said that Mr Vinod Kumar also attended the meeting on the afternoon of 5 December 2008 (although that did not accord with Mr Vinod Kumar's evidence. Mr James could not recall if Mr Vinod Kumar attended the meeting). He said Mr Muneesh Kumar was asked for documents, told to get out of the scaffolding business and asked for a caveat over his property. He mentioned the possible involvement of police to Mr Muneesh Kumar: 'You know this is a criminal offence. This is company fraud. This could be reported to the police, so please understand the seriousness of the matter, and I don't want to go that length if we can sort things amicably'. Mr James agreed that at the meeting mention was made of possible police involvement: 'I would have said "This is a serious matter, it's a police reportable offence and a civil matter". I didn't say "If you don't sign this document, I'm going to report it" '. 38 On 6 December 2008 Mr James telephoned Mr Muneesh Kumar asking for the documentation, a caveat on his house and a restraint of trade (agreement). He declined. He referred Mr James to his solicitor. Mr James accepted there was such a telephone conversation. 39 Around 15 December 2008 Mr Muneesh Kumar saw an email from Mr James in his solicitor's office. The email, exhibit 1.5 stated: We have just had a conversation with Muneesh who has stated that he will not agree to the caveats and that he will not accept a restraint of trade or an agreement not to approach BSL client base. From this discussion, we believe that there is no need to draw up an agreement as we will be taking the matter to West Australian Police Service and also commence civil proceedings. He regarded the reference to police as a threat. 40 Mr James denied the email was to put pressure on Mr Muneesh Kumar. He said at that stage civil and police action were going to be taken: 'We were - they were the only outcomes we had left. We were getting no agreement from Muneesh'. 41 Mr Muneesh Kumar said that a few times/roughly maybe six, seven times/once a month from December 2008 to June 2009 Mr Anand telephoned him asking what he was doing about the dispute and saying: (Page 14)
'They wanted the documents. They wanted the accounts. They want to agree to the figure they want or otherwise they can fix me up. They can disturb my parents back in India'. He said there were no threats from July to September 2009 but he claimed the threats stayed on his mind. 42 Mr Anand accepted he called Mr Muneesh Kumar a few times after the meeting of 5 December 2008 to ask what was happening about the dispute and the documents. He denied making any threats. 43 Around March/April 2009 Mr Muneesh Kumar and Mr Vinod Kumar attended a meeting with Mr James. The purpose of the meeting was to settle on an amount that Turbo Steel made from trading BSL Australia's stock. Mr James claimed the loss was in excess of $300,000. Mr Muneesh Kumar and Mr Vinod Kumar claimed the loss was $90,000 gross. Mr Vinod Kumar supported Mr Muneesh Kumar's account of the meeting. Mr James did not contradict their account of the meeting. 44 Mr Vinod Kumar said that when Mr Muneesh Kumar was overseas, Mr Anand asked him for the Turbo Steel accounts. He told Mr Anand their estimate of the amount to be repaid was $40,000 to $50,000. He also accepted that he and Mr Muneesh Kumar were concerned that if they handed over the Turbo Steel accounts BSL Australia would go to the police and they wanted an assurance that would not happen. 45 On 15 May 2009 Mr Muneesh Kumar, Mr Vinod Kumar and their solicitor attended a meeting with Mr Anand, his solicitor and Mr James to resolve the dispute and come to a settlement. The meeting went for two to three hours. The parties started bargaining. Mr Anand's group started with $300,000 plus and Mr Muneesh Kumar's group offered $90,000. There was arrangement between Mr Muneesh Kumar and Mr Vinod Kumar that they would share up to $100,000 of the settlement amount but that if Mr Muneesh Kumar wanted to go higher than that amount he had to bear any additional costs out of his own pocket. Eventually the parties agreed on $135,000 if paid by September 2009 and if not $150,000 together with interest. 46 Mr Muneesh Kumar accepted the real issue was what the amount to be agreed was. Mr Vinod Kumar supported Mr Muneesh Kumar's account of the meeting. He said Mr Muneesh Kumar was nervous and desperate to settle. 47 There were inconsistencies between Mr Muneesh Kumar's testimony and the particulars of the alleged threats in the amended defence. (Page 15)
The inconsistencies with his evidence concerned the failure to mention in the particulars of the amended defence the threats on 10 October 2008 to his marriage and himself (although Mr Anand said that at the meeting of 10 October 2008 he asked Mr Muneesh Kumar to postpone the wedding so he could spend time with them to go through the issues); the reference in the particulars of the amended defence to the threat on the morning of 5 December 2008 by which Mr Anand demanded entry into his house to collect his papers otherwise he would involve the police; the threat on the afternoon of 5 December 2008 that the matter would be reported to police if he did not get out of the scaffolding business, hand over his house documents and allow a caveat over his property (although Mr Anand's and Mr James' evidence was that the police were mentioned at the meeting but not in that context); and the threat to his marriage in the telephone calls from December 2008 to June 2009. There was also an inconsistency between Mr Muneesh Kumar's testimony and the particulars of the alleged threats in the defence. The inconsistency with his evidence concerned the failure to mention in the particulars of the defence the threats on 10 October 2008. There was an inconsistency between Ms Kumari's testimony and the particulars of the alleged threats in the amended defence. The inconsistency with her evidence concerned the failure to mention in the particulars of the amended defence the threats on 28 November 2008 by Mr James with his fists and for her brother to leave Australia. She was also clearly mistaken in her evidence about the date upon which her brother departed Perth for India. 48 I preferred the evidence of Mr Muneesh Kumar and Ms Kumari that threats were made and pressure applied to Mr Muneesh Kumar by Mr Anand, Mr Gupta and Mr James over the evidence of Mr Anand and Mr James who denied making threats or applying pressure. 49 The testimony of Mr Muneesh Kumar was convincing about the threats to harm him, his sister and his parents. He frankly admitted he engaged in improper activities concerning his employer. He acknowledged that his conduct was dishonest and deceitful. He accepted he did not regard as threats demands made of him for his personal records, demands to get out of the scaffolding business, demands to allow a caveat over his house, demands to accept a restraint of trade agreement, demands not to approach BSL Australia's client base. Although he regarded the involvement of police as a threat he was not concerned as he believed the dispute would be settled without recourse to the police. He accepted he did not give in to any of the threats or demands. He claimed he gave instructions to his solicitor to finalise the agreement to finish the matter because of the threats and concern for his (Page 16)
family about which I will say more in a moment. He did not dispute or try to explain away or minimise the inconsistencies between his evidence and the pleadings. His testimony on material issues was supported by Ms Kumari and Mr Vinod Kumar. Other than being family, Ms Kumari appeared to have no interest in the case. She was clearly mistaken about the date her brother departed for India. Mr Vinod Kumar who was a partner in Mr Muneesh Kumar's dishonest activities through Turbo Steel gave no evidence of threats by others but testified about the pressure Mr Muneesh Kumar was under during their negotiations to settle the dispute. Mr Anand confirmed Mr Muneesh Kumar's evidence that his parents were mentioned during the confrontation at BSL Australia's office on 10 October 2008. 50 I found aspects of Mr Anand's testimony to be unsatisfactory and not convincing. I do not accept his evidence that he and Mr Gupta went to the house on 12 October 2008 to 'make [Ms Kumari] understand the severity of the issue' but no-one answered the door. I do not accept his evidence that he went to Mr Muneesh Kumar's house in the early morning of 5 December 2008 because he 'wasn't confident that [Mr Muneesh Kumar] would come to the meeting' but no-one answered the door. I found Mr James' evidence that he went to the house on 28 November 2008 to look for Mr Muneesh Kumar because it was on his way home unusual for an accountant to do on his client's behalf. I do not accept that the references to police in Mr Anand's draft facsimile, exhibit 1.4, and Mr James' email, exhibit 1.5, were not intended to put pressure upon Mr Muneesh Kumar. 51 Mr Gupta was named as a witness in the plaintiffs' list of witnesses but he was not called to give evidence. I was informed he resided in India. The evidence established that he was at the initial meeting on 10 October 2008, he was allegedly present during the telephone calls to Mr Muneesh Kumar in India and he went to the house on 12 October 2008. It would be expected that he would be called as a witness with respect to the meeting on 10 October 2008 and the visit to the house on 12 October 2008 to refute the threats alleged on those occasions. I infer from the failure to call him as a witness that his evidence would not have assisted the plaintiffs' case: Jones v Dunkel (1959) 101 CLR 298. 52 I am satisfied the defendants have established, on the balance of probabilities, that threats were made by agents of BSL Australia to harm Mr Muneesh Kumar, his sister and his parents and pressure was applied to Mr Muneesh Kumar directly and indirectly by those threats. (Page 17)
Were the threats or pressure illegitimate? 53 Clearly, the threats to physically harm Mr Muneesh Kumar and members of his family were illegitimate and intended to apply illegitimate pressure to settle the dispute.
Were the illegitimate threats or pressure a reason to settle the dispute/ for entry into the agreement? 54 I am also satisfied the defendants have established that the illegitimate threats and pressure were a reason to settle the dispute and for entry into the agreement. Mr Muneesh Kumar said he agreed at the meeting of 15 May 2009 to the settlement amounts of $135,000 if paid by a certain date and if not $150,000 plus interest because: I was discussing with Vinod … He was saying 'Maximum … Let's do it on 100,000'. But I wanted to - because I had all these things on mind. You know, they can disturb my parents or, you know, they can disturb my sister, they can harm them. So I wanted to settle down as a - where - because they were not coming down. They were just sticking to that amount. And I wanted to settle. So that's why I said, 'Vinod, let's do it. We'll try to manage it'. But then again I had all these - you know, the feeling of, you know, getting harmed later on or my family or my sister.
Did the illegitimate threats or pressure contribute nothing to the decision of the defendants to instruct their solicitor to finalise the agreement? 55 If a party's apparent consent was induced by pressure exercised upon him by another party which the law does not regard as legitimate then that apparent 'consent is treated in law as revocable unless approbated either expressly or by implication after the illegitimate pressure has ceased to operate on his mind': Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366, 384 (Lord Diplock). 56 Mr Muneesh Kumar claimed that during the period between 15 May 2009 and February 2010 he was having second thoughts about the settlement amount because Mr Vinod Kumar told him he should not be pressured into paying more than he (they) actually made but he wanted to settle to 'get rid of them … I don't want any more troubles'. 57 Mr Muneesh Kumar said he gave his solicitor instructions to send to the solicitor for BSL Australia and BSL Property the letter of 3 September 2009, exhibit 1.31 enclosing the deed of settlement for execution by them. He said: (Page 18)
Yeah, cos at that time, this is what we - I told him to do it because I wanted to go over this agreement, to go ahead with this agreement, but - - - Cos I wanted to, you know, solve this, finish this case. So that's why I was saying, 'Let's do this agreement'. And this deed was being made, and finally, I gave instruction to Sanjiv [Mr Sethi] to go ahead with the deed. He said he gave the instructions to finish the matter because of the threats and concern for his family. 58 Mr Muneesh Kumar said he and Mr Vinod Kumar discussed the deed of settlement. Mr Vinod Kumar encouraged him to mention the threats and only agree to 'this figure because this is what it is'. Mr Vinod Kumar explained in his evidence why he did not sign the deed of settlement. First, it provided for 'joint and several liability' and not the specific amount (of the settlement sum) for which Turbo Steel was liable. Second, he objected to the inclusion of City Scaffolding & Formwork in the deed of settlement. He told Mr Muneesh Kumar he was prepared to pay a maximum of $100,000. He said Mr Muneesh Kumar was the person dealing with the solicitor. 59 However, the evidence established the following objective facts: (i) Mr Muneesh Kumar accepted the threats to harm him, his sister or his parents did not affect his free will to refuse to hand over the various documents requested by Mr Anand or Mr James or cause him to give in to their demands for a caveat over his property, to accept a restraint of trade or not to approach any of BSL Australia's customers. (ii) Mr Muneesh Kumar accepted none of the threats were carried out. (iii) Mr Muneesh Kumar readily met with Mr Anand and or Mr James and took telephone calls from them. (iv) Mr Muneesh Kumar and Mr Vinod Kumar refused to provide Turbo Steel documentation which could have demonstrated the $90,000 they were prepared to pay was the correct figure rather than the amount sought by BSL Australia and BSL Property. (v) Mr Muneesh Kumar was represented by solicitors from 5 December 2008 until 2 September 2009 when the agreement was concluded. He was also represented by solicitors for some time thereafter. He did not inform his solicitors he was under threats or pressure to settle the dispute or to finalise the agreement. (Page 19)
(vi) Mr Muneesh Kumar's solicitor, Mr Sethi was not called by the defendants to give evidence to say Mr Muneesh Kumar instructed him to finalise the agreement because he was under threats and pressure or that he appeared to be under stress or anxious to conclude the agreement. I infer from the failure to call Mr Sethi as a witness that his evidence would not have assisted the defendants' case on that matter. (vii) Mr Muneesh Kumar intended to repay what he owed BSL Australia: 'I knew that [at the] end of the day I have to pay this'. (viii) By letter dated 16 September 2009, exhibit 1.32, the defendants' solicitors wrote to the solicitors for BSL Australia and BSL Property saying that they were now instructed by their clients that: (a) there was a disagreement between their clients and they were not in a position to execute the deed of settlement in its existing form; and (b) the defendants would only execute the deed of settlement if the settlement sum was changed to $90,000, if payment was made by 15 November 2009, or $100,000 if full payment was after 15 November 2009, and the rest of the terms of the deed of settlement remained unchanged. (ix) If threats or pressure contributed to Mr Muneesh Kumar's decision to instruct Mr Sethi to finalise the agreement in early September 2009 I would have expected Mr Muneesh Kumar to have told Mr Sethi about that when he gave those instructions to finalise the agreement or when he refused to execute the deed of settlement but at the very least in mid-September 2009 when he gave instructions to settle on the same terms but for the lesser amounts. I infer from Mr Muneesh Kumar's failure to do so that the threats and pressure were not operating on his mind at the time. 60 I am satisfied upon the evidence that BSL Australia and BSL Property have established, on the balance of probabilities, that by 2 September 2009 the illegitimate threats and pressure had ceased to operate on Mr Muneesh Kumar's mind so that they made no contribution to his instructions to Mr Sethi to finalise the agreement. (Page 20)
61 Accordingly, I find the plaintiffs are entitled to judgment against the first, second, third and fourth defendants in the sum of $150,000 together with interest thereon at 6% from 15 November 2009 to date of judgment.
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