Joneli Property Pty Ltd v Choueiri Agri Pty Ltd
[2025] VCC 392
•4 April 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-23-00368
| JONELI PROPERTY PTY LTD (ACN 609 405 281) | Plaintiff |
| v | |
| CHOUEIRI AGRI PTY LTD (ACN 608 876 868) | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5, 6, 7, 11 and 12 March 2025 | |
DATE OF JUDGMENT: | 4 April 2025 | |
CASE MAY BE CITED AS: | Joneli Property Pty Ltd v Choueiri Agri Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 392 | |
REASONS FOR JUDGMENT
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Subject:RECOVERY OF MONEYS OUTLAID FOR STAMP DUTY
Catchwords: Outlay of funds for stamp duty by plaintiff to enable defendant to complete purchase of rural property – whether creating resulting trust in favour of plaintiff – whether creating constructive trust in favour of plaintiff no trust created ꟷ amount outstanding as common law debt – defence of repayment by third party rejected.
Legislation Cited:
Cases Cited:
Judgment: 1. Within fourteen days the parties must bring in short minutes to give effect to these reasons.
2.Costs reserved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Ounapuu | Joseph Tohme |
| For the Defendant | Mr P Miller | Danaher Legal Consultants Pty Ltd |
HIS HONOUR:
1The number three is sometimes regarded as being of evil import. Marriage breakups are sometimes attributed to “the eternal triangle”. This proceeding arises out of the complex relationships and interactions between three characters and centres upon two rural properties in the Wimmera region of Victoria adjacent to a South Australian border, one being a pistachio farm and the other nearby property used for sheep grazing.
2The Third Party, Mr Chris Lee, is at the centre of this web. According to Mr Lee, he is “a fifth-generation farmer in the Victorian Mallee [the region to the immediate north of the Wimmera Region] … I purchased a property 200 Ks away in 2003 at Telopea Downs to mitigate some rainfall and soil and climatic risks that the Mallee has at Birchip [where Mr Lee resides]” (Transcript (“T”) 375, Lines (“L”)9-14). According to Mr Lee, “Telopea Downs is 200 Ks west of Birchip, in the Wimmera” (Ibid, L19-20). He said that in 2007, “in the midst of the Millennium Drought” he was looking for water security and the property “became available for sale, with a large water right” (Ibid, L25-29). This farm was under cultivation for the growing of pistachio nuts. Whilst Mr Lee had no experience in growing pistachios, he said, “it seemed to be an industry on the rise” (T376, L1-2). The pistachio farm was in fact purchased by C. E. Lee & Company Pty Ltd as trustee of the Lee Property Units Trust (Court Book (“CB”) 37; T379, L27-31). On 12 December 2008, C.E. Lee & Company Pty Ltd became the registered owner of the nearby sheep grazing farm comprised in Certificate of Title Volume 8712 Folio 063, subject to a registered mortgage in favour of Commonwealth Bank of Australia (CB 37). It is this property which is the subject of the present proceeding.
3Mr Lee was made bankrupt on 6 May 2013 upon a creditor’s petition presented to the Federal Circuit Court by CHN Capital Australia Pty Limited (“CHN Capital”) (CB 419). Mr Lee said that CHN Capital was owed $50,000 for the purchase of a “header” with the debt originally standing at $280,000 (T381, L3-9). He described being served with paper by a “guy at the door” in Birchip upon his return from Melbourne, when his mother had received an assessment that no further treatment was possible for her terminal cancer (T380, L10-20). He said, “I just thought I could deal with that in 21 days and, unbeknownst to myself, it was 14 days, so I didn’t get a chance to attend to it, which is my huge mistake (Ibid, L17-20).
4In cross-examination, Mr Lee conceded that the processes that led to bankruptcy were far more complex with the creditors’ petition pending for months with multiple adjournments and ultimately the grant of an order for substituted service. Moreover, creditor’s petitions are typically based on bankruptcy notices derived from court judgments. The process requires, first, recovery of judgment in a State court, followed by the service of a bankruptcy notice which must remain unsatisfied for a stipulated period of time. It is only then that the creditor’s petition may be presented to the Court. The general bankruptcy processes and the history of the bankruptcy petition in this case indicate that there is a multiplicity of time limit which a debtor much reach before he will be made bankrupt. Mr Lee cannot attribute his bankruptcy to a single error relative to a time limit. As to the $50,000 debt which would suggest he could have paid, there would have been ample opportunity for him to pay that debt before the creditor commenced the original court proceeding. A further opportunity to challenge the debt by filing a notice of intention to defend, “or appearance” in a relevant court, a further opportunity to pay the debt after the judgment was entered into, an opportunity to pay the debt following the service of the bankruptcy notice and an opportunity to pay the debt upon service of the bankruptcy petition, though by that stage the petition would not simply have been dismissed, there would have been an opportunity for any other creditor to take over its prosecution from the paid out creditor (T381, L3-6).
5Mr Lee and his company entered into an agreement dated 21 November 2012, with Mr Melhem (also known as “John”) and his company Melhelm Pty Ltd, recording that Melhem described as the “lender had incorporated a company known as Icon Brewing Pty Ltd ACN 161 330 874 for the purpose of importing brewing equipment from Germany” with a view to establishing a brewery in Australia. Clause 7 of the agreement stated:
“The intent of the agreement as reached between the parties and as evidenced in this document is that the Borrower [C.E. Lee & Company Pty Ltd] will have an entitlement to forty per cent (40%) of the capital and retained earnings of the Company [Icon Brewing Company Pty Ltd] until as determined otherwise as between the parties, and also to an obligation to meet forty per cent (40%) of the capital and loan account funding requirements of the Company.” (CB 412-413)
6Mr Melhem was born in Lebanon. He migrated to Australia at the age of twelve in 1977, residing in the Melbourne suburbs of Preston and Templestowe. He then lived in Lebanon for ten years until his return to Melbourne in 2007 (T129, L8-13). According to Mr Melhem, “The deal was that whatever spent out, Mr Lee would reimburse 40 per cent” (T7, L10-11). It was characteristic of all the evidence of the principals in this dispute that they referred themselves and the other parties as individuals in circumstances where the legal liability lay not with the individual, but with his company. Mr Melhem said that Mr Lee (perhaps intending his company C.E. Lee & Co Pty Ltd) contributed a little bit at the start (Ibid, L22-23). Mr Lee travelled to Germany to arrange for the import of the brewery equipment (Ibid, L23-24). The equipment cost AUD800,000 (Ibid, L25-27). Mr Lee said that when set up in Australia it constituted one of the largest breweries in the country. Mr Lee said in the period 2010 to 2011, “There was a very large contract brewery in Sydney called AIB, Australian Independent Brewery, that had gone into receivership, which was servicing a large number of the craft brewers as a contract brewer” (T387, L18-21). He said that his interests and Mr Melhem’s, “missed out” on the opportunity to purchase AIB’s undertaking from its receivers, with the result that Icon Brewing “purchased a brew house out of Germany and set about putting that into Sydney” (T388, L14-17). Mr Lee said, “Icon was a contract brewer. It operated in a facility that had another contract packer – so Icon Brewing brewed the beer, fermented the beer, delivered the beer to the contract packer in the same building” (T388, L31 ꟷ T389, L4). Mr Lee said in the past he aspired to “acquire an interest in Icon Brewing”. In the end he did not because his “circumstances changed dramatically with the pistachio crop situation and [his] farm situation, [his] bankruptcy situation” (T389, L25-28). As to the 2012 agreement with Mr Melhem and his condition, Mr Lee said it “became irrelevant after 13 and 15 [viz. 2013 and 2015]” (T390, L31 ꟷ T391, L1). He continued, “Mr Melhem wasn’t offering a share for nothing, and ultimately I wasn’t able to take up the shares in Icon Brewing and Melhelm Pty Ltd owned Icon Brewing in its entirety” (T391, L6-9).
7Mr Lee said he made no contribution to the cost of import of the brewing equipment from Germany (T391, L29-30). He described having no equity in the venture. Mr Lee said that he was involved in marketing Icon Brewing’s services as a contract brewer, though he did assist Mr Melhem with administrative tasks, including buying malt or hops and a contract packer Fizz Bizz attended to the building costs (T392, L23-30). He continued in this capacity up to 2017, when Icon Brewing was “forced to leave the building” (T393, L1-2). Whilst he said he received reimbursement for expenses such as airline travel, he received no salary. Mr Lee said he hoped to “convert [his] time into a shareholding at some future stage” (Ibid, lines 5-6), presumably by attributing a value to the time that he spent and allocating the shareholding to him based on that value. But that was unavailing and Mr Lee said Mr Melhem “didn’t value my time as highly as I did” (Ibid, Lines 18-19).
8Mr Lee said that in 2017 “Boka Beverages, which was the packaging provider of the operation” and Icon Brewing were “constantly at loggerheads” (T394, L27-30). He alleged that Boka Beverages breached agreements with Icon Brewing with the view to highjack its undertaking, culminating with Boka Beverages closing “access to Icon in March/April 2017 and without a brewing asset and without the cashflow, Icon had a slow demise” (T395, L1-10). Consequently, Icon Brewing went into voluntary administration in 2018 (Ibid, L12).
9Mr Barry Wight of the firm Cor Cordis was appointed administrator of the company, serving from 21 May 2018 to 17 July 2018 (CB 433-434). Under the terms of a deed of company arrangement, Icon Brewing entered into a complex of arrangements constituted by a licence deed between it, Icon Drinks Pty Ltd (a company controlled by Mr Lee) and Melhelm Pty Ltd as trustee of the Melhem Investment Trust (one of Mr Melhem’s companies), and an asset sale agreement between Icon Brewing, Melhelm Pty Ltd (a Melhem company), Soaressa Pty Ltd (controlled by Mr Lee) and Mr Lee himself, providing complex arrangements for the sale of the Icon undertaking (CB 522-42, 543-586). Mr Lee commented that the agreements pertained only to equipment. He said, “There was no business. It hadn’t produced any business for a year and a half” (T395, L25-26).
10Clause 2.4 of the Asset Sale Agreement, under the heading “Sale Condition”, provided:
“The Completion of the sale of the Business and Assets shall be conditional upon, and no title to the Business and Assets shall pass to the Buyer [viz. Icon Drinks Pty Ltd], unless and until the ANZ Facility is repaid in full and/or all Security lnterests in favour of the ANZ are either discharged or released (over the Assets and Business) by ANZ (the Sale Condition).” (CB 613)
The purchase price was $828,000 (excluding any GST) (CB 611). Mr Lee said that this condition was never satisfied “because ANZ withdrew their funding support for Melhem - or notified Melhem in 2019, so this agreement was conditional on Melhem’s finance remaining in place and Icon Drinks, the Newco entity, paying that to the bank [sic]” (T408, L23-27) It would seem therefore that the first Asset Sale Agreement to Icon Drinks Pty Ltd operated on this basis for some years, but could not be completed.
11Ultimately, Icon Drinks and Mr Lee’s other company, Soaressa, “purchased the assets off the ANZ in 21, with Melhelm” (T409, L7-8; CB 682). The effect according to Mr Lee was that “There was an overall payment out to the ANZ Bank in 2021 and a payment to Mr Melhem in 21, for his entity’s interests” (T409, L27-30). The ANZ obtained an amount in excess of $3,000,000 and $1.3 million to Mr Melhem (T410, L1-5). Mr Lee said that he received no reduction in purchase price to take account of any 40 per cent shareholding as had been contemplated by the 2012 agreement (Ibid, L11-17).
12Whilst these events were taking place, Mr Lee’s financial embarrassment was threatening his company’s property interest in the Wimmera viz. the pistachio farm and the grazing property. There followed the series of transactions that have given rise to the present dispute. In an email dated 2 July 2020 to the firm Lewenberg & Lewenberg, who then acted for the defendant in this proceeding, Choueiri Agri Pty Ltd (“Choueiri Agri”), Mr Mark Fisher, an accountant for Mr Melhem and his company and director of Bass Regional Finance Pty Ltd, described the process as entailing the effective warehousing of the two farms for Mr Lee [perhaps more accurately his company] “until he could refinance and purchase them back” (CB 121).
13In “early 2016” (agreed chronology), the defendant company controlled by its sole director Daoud El Choueiri, entered into a contract of sale for the purchase of the grazing property from C.E. Lee & Company Pty Ltd for a price of $1,250,000 (CB 39). The Contract of Sale document in the Court Book is unsigned and undated, though it is common ground it was signed by Mr El Choueiri on behalf of Choueiri Agri and by Mr Melhem on behalf of C.E. Lee & Company Pty Ltd. Mr Lee had been the sole director of this company, but his bankruptcy required him to relinquish his directorship. Mr Melhem was appointed as sole director in Mr Lee’s stead on 3 May 2013 (CB 370). He ceased the role of sole director on 25 August 2016 and was replaced by Mr Lee following his discharge from bankruptcy (CB 369-70). A Mr Matthew Caddy of McGrath Nicol had been appointed receiver and manager of the assets of C.E. Lee & Company Pty Ltd on 5 November 2015 (CB 370). Mr Melhem, therefore, was acting as director of Mr Lee’s company for some months during the receivership, at which time Mr Lee, no doubt with the assistance of Mr Melhem, was trying to negotiate a way out of his company’s financial commitments to the Commonwealth Bank. Mr Lee said that his bankruptcy “kiboshed any chance of refinancing with another institution” (T425, L30-31). He said that he had support from the Commonwealth Bank’s regional manager, but the bank’s state headquarters was less sympathetic (T426-7). He said that by the time the receivership occurred, the bank was requiring sale of both the grazing property and the pistachio farm and was not receptive to the strategies that Mr Lee was contemplating which might have entailed retaining the pistachio farm (T427, L26-30).
14Mr Melhem said that he tried to find buyers for the farm and to negotiate with the bank, but in 2015 he discovered that “Mr Lee had signed a contract of sale without me knowing” (T82, L7-8). Since at that time Mr Lee was not a director of the company, which was the registered owner of the grazing property, this was of dubious validity. The contract was dated 22 June 2015 and was signed by Mr Lee, described simply as the “vendor” and Mr George Zhang, described as the “purchaser”. The price nominated was $1,250,000, with a 10 per cent deposit and the balance payable on settlement (CB 449-459). Nothing seems to have come of this somewhat dubious document.
15Mr Melhem said he found out about this contract when the bank contacted him “for not settling. This contract was supposed to settle and it didn’t settle. The bank were involved and I heard about it” (T82, L27-30). The Commonwealth Bank, according to Mr Melhem, then threatened to have the receivers take over the sale of the farm (T84, L5-7). Mr Melhem said Mr Fisher, who he described as “our accountant”, had drawn up a contract for the sale of the grazing property, this time showing the defendant, Choueiri Agri, as the purchaser, and providing for Mr El Choueiri to sign as sole director of the proposed purchaser company and Mr Melhem to sign as director of the vendor, C.E. Lee & Company Pty Ltd (CB 39). According to Mr Melhem, this contract had been drawn by Mr Fisher. Mr Fisher had previously practised as a solicitor but had been “struck off” in 1988 (T532, L31 – T533, L1]). Once again, the price was stipulated at $1,250,000. Mr Melhem said he was also emailed a letter of offer of finance from the ANZ Bank in favour of PD Investments (AUS) Pty Ltd, one of Mr El Choueiri’s companies, for a loan facility of $995,000 (CB 71). The Letter of Offer stipulated for security over the grazing property (CB 74). Amongst the fees which it indicated would be payable by the borrower, was the sum of $68,750 for stamp duty on the Transfer of Land (CB 75). Mr Melhem said he understood that the proposed purchase had been negotiated between Mr Lee and Mr El Choueiri, with a view to Mr El Choueiri’s company using the farm to grow tobacco (T85, L3-9).
16According to Mr Lee, around this time the debt owing by his company C.E Lee & Company Pty Ltd of the Commonwealth Bank was approximately $5,000,000, which had been reduced to $4,000,000 and then by a further $750,000 (T420, L28 – T421, L7). Therefore the debt at the commencement of the receivership was $5,000,000 (T421, L15 ꟷ T422, L3). By the time the sale of the grazing property settled with the defendant company as purchaser, on 9 December 2016, the amount owing to the bank via the receivers was $329,000,000. Mr Lee said that this reduction was the result of the receivers having generated about $1,000,000 from trading, presumably relative to the mortgagor company’s pistachio crop (Ibid, L18-26). The bank offered some concessions as to the accrual of penalty interest (Ibid). The objective was to pay out the bank and to achieve the receiver’s retirement at a settlement in December 2016 by the generation of some $3.329 million which, together with the moneys the receiver already held, would terminate the receivership (T422, L21-23). Without suggesting that the price for the grazing property was wildly at odds with its true underlying value, the price provided for in the Contract of Sale seems to have been dictated by the need to generate sufficient funds to retire the receiver, rather than by any detailed calculation of value (T423, L7-12).
17Mr El Choueiri’s company, Choueiri Agri, was represented in the purchase by solicitor, Mr Saad Merhi, who was born in Lebanon and being an Arabic speaker, had a practice serving the Middle East community in Melbourne (CB 110). Mr El Choueiri said that Mr Melhem approached him, stating, relative to the pistachio farm:
“… they owe a lot of money to the bank and the bank going to sell it and they’re trying to finance the money; they couldn’t. But in addition, the loan was in two funds and they couldn’t finance the money. And I think they tried to do; they couldn’t do it, so said, ‘Would you - can you finance it ?’ In the beginning I said ‘No’, then they kept on and on and on. Then we said, ‘Yes.’ So I went to the ANZ bank. They knew a broker, introduce me to him … .
…
… His name is Raj. And we put - we put the application in, because my figures in the business was good. He said ‘We can give you the loan, $990,000’.” (T274, L11-23)
18Mr El Choueiri specifically incorporated the defendant company to make the purchase (T275, L11-12). Mr El Choueiri says he was told that Mr Lee’s company was in trouble and owed $3.5 million or $3 million (Ibid, L18-31). Mr El Choueiri said that Mr Lee promised “if I ever want to sell the farm … well, in next couple of months, if I get less than that money, I want guarantee on the pistachio farm that you’re going to pay me the rest of the money, and he agreed to it” (T276, L22-26). The figure in question was $380,000 (T277, L8). Mr El Choueiri said it was also part of the “deal” that “if you [Mr Lee] wanna purchase the farm in two months, you have the right to purchase the farm in two months. We’ll agree on a price between me and you how much will I get for, and it’s all yours” (Ibid, L10-13). This was in effect an option to purchase, assuming Mr El Choueiri accurately conveyed what occurred. Mr El Choueiri’s view was that the grazing property price had been “loaded up” so as to raise the amount of money necessary to pay off the receiver and $380,000 represented the amount of the “load up” (T276, L12-20; T277, L18-22). Asked about the existence of this option, Mr Lee, on the first day of his evidence, said that the option was in writing. I asked if he had a copy of it and he replied, “I would have, yeah. I’d have to go and dig it up”. (T435, L6-9). Whilst not specifically directed to “dig it up”, in fact Mr Lee did not produce it the following day. According to Mr Lee, the “deal” was that “I would attempt to buy it back within two to three years - I thought we'd be on our feet by then - I would pay all costs involved and there was a financial benefit for him standing in for [Mr El Choueiri] for those couple of years” (T434, L17-21). The option period according to Mr Lee, therefore, was measured in years, not months, as Mr El Choueiri remembered it. Mr Lee said there was a similar arrangement relative to the pistachio farm, this time with Mr Melhem. According to Mr Lee “We [viz. Messrs Lee and Melhem] had a close working relationship” (T440, L15-16).
19Settlement was initially fixed for 2 December 2016.
20Then the $990,000 advance was approved to Mr El Choueiri’s company. The grazing farm was let to Jared Jensen, a grazier (T429, L21-30). Settlement was due on 2 December 2016. At 2.13pm on that day, Mr Fisher, who it seems was employed by solicitors, WT Bowns acting for the purchaser, El Choueiri Agri, sent an email to interested parties under the heading “Lee”, stating inter alia, “ANZ has just advised that there is a stamp duty shortfall, which cannot be funded today. Can we please adjourn to Tuesday 6 December at 3:00pm?” (CB 88-89) The settlement was adjourned, but did not proceed on the sixth. There apparently were a series of meetings held at Mr Merhi’s office. There was debate as to whether or not all three principals, namely Messrs Melhem, Lee and El Choueiri, about which meetings, and how many meetings there were (T203, L21-31). Mr El Choueiri said he had no further funds and would not meet the stamp duty, stating, “I’m not responsible for it. If I’m going to pay stamp duty, it’s going to be less than 990 … They took everything. They cleaned my bank account. Left only about $5,000 in that Commonwealth Bank”. He refused the request that he fund the stamp duty (T283, L1-9). Mr Melhem recalled attending a meeting at Mr Merhi’s office, being told there was a shortfall in funds and that failure to provide additional money would lead to the bank “walking away” with the purchase not settling. He said Mr El Choueiri told him the amount in question was $78,000 (T88, L27 – T89, L18). Mr Melhem was being expected to meet this payment. He said:
“… It was to be a loan and, whilst asking how I’m going to get repaid, they said there should be a State Revenue Office refund. I asked why should there be a refund and they said because there was no duty on the water licence that is part of the sale and they said the repayment would be soon and I will get the money back.” (T89, L21-24)
Mr Melhem continued:
“I asked what’s in it for me and I think Mr Choueiri said he’s willing to give me 10 per cent of the land after three years if he can’t pay immediately. I asked Mr Choueiri, ‘Why 10 percent? Why not 9? Why not 12?’ And he said that they’ve calculated - him and his solicitor, they’ve calculated the $78,000 based on the credit card interest rate, which within three years would equate ‘to 10 per cent’.” (sic) (T91, L2-9)
21Mr Melhem said that whilst Mr Merhi was agreeable to documenting this arrangement, he said there was no time and he would prepare something “after settlement” (Ibid, L16-20). Mr El Choueiri denied making any offer of a 10 per cent interest in the property (T308, L2-13). He said there was no discussion to this effect. Mr Lee said that whilst the “deal” was generally that he would fund the expenses of the “warehousing” of the grazing property, he had simply run out of money (T457, L28 – T460, L15). He accepted it was his obligation to repay the money.
22At 3.13pm on 8 December, Mr Melhem sent a text to Mr El Choueiri, whom he addressed as “David”, and stating:
“Can you please send me your ANZ Account Number to help with the stamp duty for the farm.
As soon as it is done I’ll confirm it.
Thanks” (CB 93)
23Mr Melhem apparently made a deposit in the defendant company’s bank account in the sum of $68,750 (CB 95), stating:
“David
I have deposited into your account what your solicitors have requested for stamp duty please see above confirmation.
When the State Revenue Offers refunds … please deposit back into:
[Joneli’s] bank account number.” (CB 96)
It was the stamp duty amount stipulated in the bank’s letter of offer to Mr El Choueiri’s company. For reasons unexplained, this was apparently insufficient and it would seem a further request was made. Mr Melhem then sent a further text addressed to “David” from Mr Melhem stating, “I have deposited into your account $9250 Which takes total deposited $78000. Regards” (CB 98-99) These amounts were forwarded by two telegraphic transfers (CB 100-101). The Transfer of Land was then dated 9 December as the settlement proceeded. The transfer was signed by Mr Melhem, sole director of C.E. Lee & Company Pty Ltd, though by 9 December 2016 he had relinquished that directorship in favour of Mr Lee. The Commonwealth Bank mortgage was discharged and the transfer proceeded took registration on 2 March 2017, subject to a mortgage in favour of ANZ Bank (CB 38).
24On the afternoon of 8 December 2016, that is the day before settlement, David Llewellyn advised the receiver’s solicitor that the following cheques would be available:
“1. Capstone Legal 1,797,200.00
2. Merhi & Associates 1,152,450.80
3. Tehan George & Co 280,000.00
4. Melhem 99,800.00
TOTAL: $3,329,450.80” (CB 85-86)
to enable the retirement of the receivers. This was not an orthodox disbursement order setting out the destination of the funds, rather it stated the source of the funds. Mr Lee said that the amounts from George Tehan & Co constituted a personal loan from a family friend (T441, L11-12). The amounts from Capstone Legal were the proceeds of a bridging loan and according to an ASIC search the receiver of C.E. Lee Company Pty Ltd retired on 15 December 2016 (CB 370). The final fund for the receiver retirement was provided from settlement of the pistachio farm sale to Joneli, which was settled on 3 April 2017, entailing a drawdown of a $2,000,000 loan facility in that company’s favour from ANZ Bank (CB 441).
25The result therefore was that the receiver had retired and the defendant, Choueiri Agri was registered proprietor of the grazing property and Mr Melhem’s Joneli was registered proprietor of the pistachio farm. According to Mr Lee, he “paid Mr Choueiri’s interest when I could. It wasn’t dogmatic - monthly, monthly. There was funds owing to Mr Choueiri from the December settlement, which I paid during the course of 2017, a number of cheques, and I used to use cheques a lot in those days” (sic) (T445, L21-26). The grazing property continued, at least for a time, to be leased to Jared Jensen (Ibid, L27-28). As at the date of trial, Mr Lee said, “We’ve taken it [the operation of the grazing property] back over” (T446, L11). Meanwhile, according to Mr Lee, he remained “quite obligated” to pay the servicing costs of the ANZ loan on the pistachio farm for Joneli (Ibid, L26-27). The pistachio farm was on three titles. Only one of those titles was actually under pistachio trees, representing approximately 250 acres out of a total acreage for the farm of 770 acres (T447, L12-16). Mr Lee said he found it convenient to have sheep grazing under the pistachio trees (Ibid, L26-30). The sheep grazed the entirety of the rest of the property.
26Mr Melhem produced a lease document drawn by WT Bown & Associates lawyers, which stated it was dated 1 October 2016 on its face sheet, and granted by Melhelm Pty Ltd in favour of Choueiri Agri. The lease purported to affect one of the titles comprised in the pistachio farm. Moving to the first page of the document from the face sheet, it was in fact expressed to commence on 1 December 2016 and to be granted by Joneli Properties Pty Ltd, which, by early April 2017, had become registered or entitled to be registered as the proprietor of the pistachio farm. Mr El Choueiri claimed that his signature as director of the defendant company appearing on the lease document was a forgery. The area of land comprised, or purportedly comprised in the lease was, according to Mr Lee, placed under a crop which he and his farm manager initially suspected was marijuana. He said, in February or March 2018, the manager called him at about 7.30 or 8 o’clock in the morning, stating that the Federal Police were in attendance. The crop was not, as Mr Lee feared, marijuana, but tobacco (T454, L27 – T455, L7). He said that he and his farm manager had been “warned off” this part of the pistachio farm by the gentleman “of Middle Eastern appearance”, not being either Mr Melhem or Mr El Choueiri.
27On 18 November 2021, title to the pistachio farm was transferred to a company Telopea Pistachio Investments Pty Ltd pursuant to a contract of sale dated 25 February 2021 (CB 622), whereby Joneli sold the farm to the purchaser, Telopea, for $5,550,000 (CB 627). Mr Lee had been the sole director and shareholder of Telopea until 27 April 2021 when his place was taken by one Kayo Senyard on that date. He told me that Ms Senyard was his cousin’s wife and therefore the pistachio farm remained in “friendly” hands (T415, L28-31).
28The grazing property remained under the registered proprietorship of Choueiri Agri subject to a caveat lodged for June 2020 to which I will refer below, claiming an interest under an “implied common consulting or constructive trust accruing to Joneli”. Another caveat lodged the same day, but ranking behind Joneli’s caveat, was lodged by Bass Regional Finance Pty Ltd, claiming an interest as chargee. This company is apparently associated with Mr Mark Fisher and law firm WT Bown and Associates. This latter caveat was withdrawn on 21 December 2021.
29According to Mr Melhem, by late April 2017, he had received no reimbursement for his $78,000 outlay for stamp duty and therefore sent a letter addressed to the defendant company and Mr El Choueiri at Mr El Choueiri’s residential address in Fawkner, dated 27 April 2017 (CB 106). This letter, according to the copy in the Court Book, referred to an “undertaking [given by Mr El Choueiri and his company] that the total amount outstanding of $78,000 was to be repaid to Joneli Properties Pty Ltd after the State Revenue Office effects a refund to Choueiri Agri of the Stamp Duty on the purchase transaction”. The letter closed by asking Mr El Choueiri and his company to keep Mr Melhem “appraised (sic) of the status of the Stamp Duty Refund”. Mr Melhem said he forwarded a letter dated 27 July 2017 to Merhi & Associates who, it will be recalled, acted for Choueiri Agri in the purchase of the grazing property. This letter reiterated the assertion that Mr Melhem had received “an undertaking” as to repayment, stating that Mr El Choueiri had referred to Melhem to the law firm. The letter, according to the copy in the Court Book, concluded:
“In the event there is any further delay in obtaining a repayment of the loan advance, Joneli Properties Pty Ltd will have no option but to commence charging interest on the outstanding at call loan at the rate specified in the Penalty Interest Rates Act.” (CB 107)
30Mr Melhem said he forwarded a further letter to Choueiri Agri and Mr El Choueiri at Mr El Choueiri’s home address. This letter, according to a file copy in the Court Book, was dated 29 November 2017. The letter stated, “Formal demand is hereby made for the immediate repayment of the $78,000 advanced to Choueiri Agri Pty Ltd on 08 & 09 December 2016, in the total amount of $78,000”. The letter threatened legal action unless payment were made (CB 1080). Mr El Choueiri denied receipt or knowledge of this correspondence. He also denied having referred Mr Melhem to Merhi & Associates (T305 ꟷ T306). In particular, he denied having received a copy of the letter said to have been sent by Merhi & Associates, remarking, “because maybe he had lost his licence or he left or something back then. I never received nothing from them” (T305, L25-287). On 20 July 2017, Senior Member Smithers of the Victorian Civil & Administrative Tribunal (“VCAT”), accepted pleas of guilty from Mr Merhi on five charges of professional misconduct [2017] VCAT 1054. The tribunal made elaborate orders, including “head disqualification period” and a “suspended disqualification period”. Mr Merhi was before VCAT again on 3 June 2021. Vice President Judge Hampel made orders on 29 October 2021, convicting him of some seven charges of professional misconduct entailing misappropriation of trust moneys. She reprimanded Mr Merhi and imposed a fine ([2021] VCAT 1246).
31Meanwhile, in April 2017, Mr Lee drew two cheques in favour of companies controlled by Mr Melhem and claims to have made a cash payment in the sum of $2,500. Cheque No 200010 was in the sum of $55,000 according to the butt and was drawn on 12 April 2017 in favour of Melhelm Pty Ltd. The cheque butt also records the words “$2500 cash”. (Though the sequencing of the cheque butts and other considerations would suggest this date is incorrect). Cheque No 200019, according to the butt dated 11 April 2017, was drawn in the sum of $20,000 in favour of the plaintiff, Joneli Investments Pty Ltd. It included a notation in parentheses, “ANZ loan stamp fee”. Mr Lee said that Melhem companies in favour of being the two cheques were drawn, were nominated by Mr Melhem. He said he and Mr Melhem had sometimes met in the carpark at the Dan Murphy store in the “Essendon DFO” shopping centre, being a point between their two residences. Mr Melhem denied receiving this cheque or alleged cash payment (T211, L14-17). Joneli’s bank statement before April 2017 showed the $20,000 dollar cheque as having been deposited to its credit on 11 April of that year. The descriptor is “agent deposit”, implying, as Mr Miller put it to Mr Ounapuu in cross-examination, that this cheque was not handed by Lee to Mr Melhem, but rather was deposited to the credit of the Joneli account by Mr Lee. Mr Lee agreed that from time to time when making payments to Joneli, he deposited cheques across the counter at the ANZ branch in Swan Hill (T489, L2-7). As noted previously, Joneli Properties Pty Ltd, by its solicitors WT Bown & Associates, lodged caveat AT306711Y against the Title of the grazing property on 4 June 2020, claiming an estate “as charge” by reference to “an implied, resulting or constructive trust” (CB 112). Mr Melhem on behalf of Joneli then made a “creditor’s statutory demand for payment of debt under the Corporations Act alleging a debt of $78,000, being moneys “loaned” by Joneli to Choueiri Agri. The notice also claimed interest in the sum of $26,168.68, making a total of $104,168.68 (CB 114-115). The effect under the Corporations Act of service of such a notice is absent a challenge to the debt alleged the failure to pay provides a basis for the creditor or alleged creditor to file an application to wind up the debtor company. The demand was as required by the Regulations under the Statute supported by an attached affidavit made by Mr Melhem (CB 116). The notice was directed to Choueiri Agri’s registered office located at its accountants. Mr El Choueiri referred this demand to Mr Lewenberg of Lewenberg & Lewenberg, who responded in a letter to Joneli, dated 29 June 2020, stating inter alia, “Our client and its former director deny indebtedness to you in the sum claimed, or at all, and our client maintains that the claim for monies is baseless and [scil. on] our instructions bordering on fraudulent” (CB 117). On the same day, Mr Lewenberg wrote a separate letter to Joneli referring to the caveat, stating, “We are instructed that the caveator has no caveatable interest in the land charged and in fact by your letter dated 22 May 2020 you acknowledge that your claim is as a creditor who is owed money” (CB 119). The first letter threatened Supreme Court proceedings to set the demand aside. The second letter threatened Supreme Court proceedings to challenge the caveat. It seems that Mr Lewenberg also sent a letter to Bass Regional Finance Pty Ltd, challenging its caveat. Mr Fisher, who described himself as the “sole director” of Bass Regional Finance Pty Ltd, responded in justification of his company’s claim to an interest pursuant to a constructive trust. Mr Fisher said, “I have effectively paid a part of the purchase price, and for your information, Mr Melhem paid for the Stamp Duty on the Transfer (monies paid by way of bank cheque to the ANZ Banking Group)”. It was in the course of this letter that Mr Fisher referred to the transactions in 2016 and 2017 relevant to the grazing property and the pistachio farm, and processes whereby those properties were “warehoused” for Mr Lee” (CB 121-122). Mr Melhem wrote to Mr Lewenberg on 3 July 2020, rejecting Mr Lewenberg’s attacks on the validity of the demand. He stated that any proceedings by Choueiri Agri would be resisted. He concluded, “I invite your client to make a proposal to commercially resolve the matter” (CB 123). Mr Melhem wrote a further letter to Mr Lewenberg of the same date in the following terms:
“RE: Caveat AT306711 - Joneli Property Pty Ltd and Choueiri Agri Pty Ltd - 1526 Murrawong North Road, Telopea Downs VIC 3420 (Telopea Property)
I refer to your letter dated 29 June 2020 and my other letter today.
I respond to your letter as follows:
●In around December 2016, Joneli entered into a verbal agreement under which Joneli agreed to loan $78,000 to Choueiri. The loan was requested by your client for commercial purposes such that your client needed to (sic) the funds in order to finalise purchase of 1526 Murrawong North Road Talopea Downs 3420.
●Between 8 December 2016 and 9 December 2016, Joneli loaned $78,000 to Choueiri. Copies of telegraphic transfers to your client are attached.
●On 9 December 2016, your client settled the Telopea Property using money that Joneli loaned to your client.
●It was a term of the agreement that your client repay the $78,000 following a refund from the State Revenue Office VIC or on demand, or that your client would transfer a 10% interest in the Telopea Property after 3 years.
●Under the agreement, your client is liable in the sum of $78,000 and it remains due and payable.
●From about January 2017, Joneli has made numerous demands to your client in respect of the $78,000 including numerous written demands. Copies of these demands are with your client. Your client has failed, refused or neglected to repay the $78,000 in accordance with the agreement or engage in any communication.
As you are aware, where two entities provide the purchase price for a property but the property is only registered in one name, there is a presumption that the property is held on resulting or constructive trust in favour of the unregistered party in proportion to its contribution. Based on the evidence in my possession and case law, Joneli has a caveatable interest in the Telopea Property.
If you commence proceedings against Joneli in order to remove the caveat, Joneli will vigorously defend those proceedings and rely on this letter to have your client pay Joneli's legal costs on an indemnity basis. Further, penalties apply under the Transfer of Land Act 1958 (VIC) to parties that take action to lapse a caveat when there is an underlying caveatable interest.
Notwithstanding the above, if your client would like to resolve the matter commercially, then I invite your client to make a proposal.” (CB 124)
32The fourth bullet point of this letter appears to be the first enunciation of the claim made in this proceeding by Joneli that it was agreed by Choueiri Agri that unless the $78,000 were repaid within three years, Joneli would be entitled to a 10 per cent beneficial interest in the grazing property.
33It would seem that, with matters at an impasse, Mr Lewenberg commenced a proceeding in the Supreme Court to set aside the statutory demand. This was supported by an affidavit made by Mr Lee (CB 125-129) and by Mr El Choueiri (CB 160-163). At paragraph 5 of Mr Lee’s affidavit he said:
“Mr Melhelm [sic] and I wanted C.E. Lee Company to purchase from the receiver the pistachio farm however the receiver required that both the sheep grazing farm and the pistachio farm sell at the same time. C.E. Lee Company could secure funds for the purchase of the pistachio farm but not funds to purchase both the sheep grazing farm and the pistachio farm.” (CB 126)
He described approaching Mr Melhem “about early 2016” based on “long-term friendships with both Mr Melhelm [sic] and Mr El Choueiri”. He said the approach to Mr El Choueiri (presumably made by Messrs Lee and Melhem) entailed inter alia the following:
“(b)we asked him if he would consider purchasing via his company, being the applicant [Joneli], the sheep grazing farm at the same time as C.E. Lee Company purchased the pistachio farm on the basis that:
(i)the applicant would hold the sheep grazing farm for C.E. Lee Company until it could fund the purchase price of the sheep grazing farm;
(ii)we would cover the interest repayments on the mortgage that the Company would have to take out to purchase the sheep grazing farm;
(iii)we would assist in securing the loan for the purchase;
(iv)we would contribute the funds over anything that the loan secured did not cover.” (CB 126-127)
34Mr El Choueiri’s affidavit gave substantially the same account (CB 161, paragraphs [5.]-[6.]). At paragraph 11 of his affidavit, Mr El Choueiri said:
“I had discussion with Mr Lee and Mr Melhelm [sic] about the $78,000.00 shortfall on the sale of the sheep grazing farm where it was agreed that:
(i) Mr Melhelm [sic] would loan $78,000.00 to the Company [viz. Choueiri Agri Pty Ltd] to cover the stamp duty and costs for the sale (the $78,000 loan); :
(ii) Mr Lee would repay the $78,000 loan by paying $78,000 to Mr Melhelm [sic] via his related companies.” [sic] (CB 162)
Mr El Choueiri concluded, at paragraph 13, “In about April 2017 Mr Lee told me, and I believed him, that he repaid the $78,000 loan to Mr Melhelm [sic].” (CB 162)
35Mr Lee’s affidavit, at paragraph 12 (CB 128), describes the payments referred to above, including the alleged cash payment on the basis of which, at paragraph 13, Mr Lee concluded that Choueiri Agri did not “owe [Joneli] any money for the $78,000 loan as I repaid it in full in April 2017” (CB 128).
36Choueiri Agri’s application to set aside the statutory demand was settled on the basis that Joneli abandoned the attempt to wind up Choueiri Agri on the basis of the statutory demand.
37By a complaint in the Magistrates’ Court of Victoria dated 23 May 2022, solicitors acting for Joneli sought recovery of $78,000 from the defendant, Choueiri Agri (CB 5). The complaint sought “equitable relief”, specifically a declaration that Choueiri Agri held the grazing property “on resultant trust for [Joneli] in proportion to [Joneli’s] contribution to the purchase price”. Alternatively, “a declaration that [Choueiri Agri] holds its interest in [the grazing property] as to 10 per cent on constructive trust for [Joneli] alternatively $78,000 for damages together with interest and incident relief” (CB 8).
This proceeding
38Joneli’s proceeding has now been uplifted to this court.
Statement of Claim
39By its statement of claim, Joneli alleged the provision by it of $78,000 at the request of Choueiri Agri to allow settlement to take place leading to the existence of a resulting trust in favour of Joneli, proportionate to its $78,000 dollar contribution to the purchase of the grazing property.
40Alternatively, it alleged that the $78,000 was advanced by way of loan on terms that “if not repaid within 3 years, Choueiri agreed to transfer to Joneli a 10 per cent interest in the land”. It was said the loan had not been repaid and “after December 2019, Joneli relied upon the parties’ common intention that Joneli would be entitled to receive a 10 per cent interest in the land and did not take steps to otherwise enforce the loan agreement”.
41Finally, there was a simple allegation that there was a loan of $78,000 by Joneli to Choueiri Agri which remained outstanding and unpaid.
Amended Defence, dated 4 August 2023
42By its Amended Defence dated 4 August 2023, Choueiri Agri admitted the circumstances surrounding its purchase of the grazing property on terms that:
“… Mr Lee and Mr Melhelm [sic] asked Mr El-Choueiri if he would buy the Land via [Choueiri Agri] and hold it until Lee’s Company could fund the cost of purchasing
ofthe Land and that they would cover the interest payments on the mortgage that the defendant would have to take out to cover the cost of purchasing the Land. [sic] (CB 13)43It admitted that $78,000 was paid to Choueiri Agri on 8 and 9 December, but on terms of what was described as an oral trilateral loan agreement constituted by conversations between Mr El Choueiri, Mr Lee and Mr Melhem “in early 2016”. The oral trilateral loan agreement alleged was that Mr Melhem “would pay, via his related companies, $78,000 to [Choueiri Agri] and that Mr Lee would repay the $78,000 to Mr Melhelm [sic], via him and his related companies, and that [Choueiri Agri] would proceed with the purchase of the Land” (CB 13). Accordingly, Choueiri Agri said, “that Mr Lee was indebted to (Mr Melhelm [sic]) for the $78,000 and that it was not indebted to [Joneli] for the $78,000” (CB 14). It said that the three payments referred to above and described in the Supreme Court affidavits, including the alleged cash payment of $2,500 were in satisfaction of Joneli’s entitlements under the trilateral loan agreement.
Choueiri Agri filed a third party notice against Mr Lee dated 4 August 2023
44It summarised the claims in the proceeding, concluding:
“IF CHOUEIRI IS LIABLE TO THE PLAINTIFF, CHOUEIRI CLAIMS AGAINST LEE:
A Damages.
B Contribution.
C Costs.
D Such further or other orders as the Court deems appropriate.” (CB 18-23)
45Shortly before the commencement of trial (on 5 March 2025), this matter came before Judicial Registrar Muller. His Honour recited that the third party, Mr Lee, had failed to comply or comply fully with previous procedural orders, including inter alia default in making discovery of documents. His Honour ordered that Choueiri Agri have judgment against Mr Lee on its third party notice.
Joint expert
46On 7 August last year, following the vacation of a trial date, Judge Wise ordered, pursuant to s65L of Civil Procedure Act 2010, that a single joint expert, being an expert in forensic IT evidence, be appointed to produce a single joint expert report “in relation to the text messages exchanged between the director of [Joneli] and [Mr Lee] in or about November and December 2017”. In the event whilst Mr Lee repeatedly protested his agreement to have his former mobile phone (operative for the relevant period in 2017) forensically analysed, he took no action to have his Honour’s order as to the single joint expert report implemented. He conceded further that when the solicitors who had previously acted for the defendant were given leave to withdraw, the defendant, Choueiri Agri’s defence at trial was funded by Mr Lee (T 542-3).
Conclusions
Resulting trust
47According to Professor Dal Pont, in his work Equity and Trusts in Australia (6th edition) [26.75]:
“Though there have been isolated decisions to the contrary in Australia and the United Kingdom, it can be said with some certainty that the direct financial contribution to the purchase price including the incidental costs of acquisition is the sole determinant of the magnitude of the parties’ proportion of shares in equity under a resulting trust.” [p787]
48Earlier at [26.65], the learned author said:
“The resulting trust doctrine can apply where more than one person contributes purchase money. It dictates that where property is purchased in the name of A, or in the name of A and B jointly and B makes a direct financial contribution to the purchase, the property is presumed to be held in shares proportionate to the parties’ contributions.” [p786]
49The payment of stamp duty could be regarded as being an incidental cost of acquisition in accordance with the professor’s formulation. I take the “contribution” which might be apt to create a beneficial interest pursuant to a resulting trust to be what one might describe as an “equity” contribution. Merely lending money would not be an apt basis for a finding of resulting trust. If it were otherwise, every home lending institution would be the beneficiary of a resulting trust relative to the home financed.
50In this instance all of the demands made by Mr Melhem on behalf of his company for payment, whether in the form of the allegedly bogus letters of demand or the statutory demand which generated the proceedings in the Supreme Court, have characterised the transaction as one of loan. This necessarily excludes the possibility that the undoubted outlay of the stamp duty monies by the plaintiff could result in the creation of a beneficial interest in the grazing property in its favour pursuant to a resulting trust.
Constructive trust
51Without pausing to examine the elaborate jurisprudence on what might create an interest in favour of a claimant pursuant to a constructive trust, the existence of such a trust is, in my view, denied by the facts of the present case.
52The factual basis relied on for the claimed interest under a constructive trust is a term allegedly agreed upon to the effect that Joneli would enjoy a 10 per cent equity in the grazing property should its loan not be repaid within three years. The first written enunciation of this claimed interest as trustee was to be found in a letter written by Mr Melhem on behalf of Joneli to Mr Lewenberg of Lewenberg & Lewenberg on 3 July 2020. (CB 124, [31] above)
53Mr El Choueiri denied agreeing to any such proposal. ([21] above) The alleged promise of a 10 per cent interest seems inherently unlikely. Had such a promise been made, I would have expected it to have been reflected in Mr Melhem’s demands long before July 2020, which is three and a half years after the event. I find that no promise of a 10 per cent equity was made. This finding is sufficient to dispose of any claim by way of constructive trust.
Loan
54The rejection of the claimed entitlements on the part of Joneli for an interest as beneficiary of a trust leaves only its claim to be an unpaid lender relative to its stamp duty outlay. The question that remains therefore is whether this loan has been repaid as the defendant contends it has been.
55It will be recalled that the defendant’s case is that there was a “tripartite” loan agreement whereby whilst Joneli made its advance to Choueiri Agri as borrower, Mr Lee’s company accepted the liability to see to repayment. Mr Lee and Mr Choueiri said that this was the case.
56It is plausible to suppose that such a promise to meet the repayment obligation might be made on behalf of Mr Lee’s company. After all, these transactions were being undertaken for the purpose of “warehousing” the two properties, the grazing property and the pistachio farm, for Mr Lee and his company. It would be only fair that Mr Lee and his company would accept responsibility for the expenses of the operation.
57What is lacking, however, is any evidence that distinctly says that the “tripartite” arrangement had the effect of discharging Choueiri Agri from the liability as borrower which it would otherwise have. No doubt Joneli would be happy enough to have an additional party accepting liability for repayment of its outlay. That does not necessarily mean that Joneli accepted the release or discharge of the party which, on the face of it, was primarily liable.
58Ultimately, in closing submissions, Mr Miller on behalf of Choueiri Agri accepted that success for his client depended upon my finding that the loan had been repaid – whether by Choueiri Agri or Mr Lee’s company.
59The case therefore resolves itself into what, on the face of it, one might think is a straightforward factfinding exercise. This exercise seems deceptively straightforward. It may be that the principal, whose account I ultimately accept, will have given some evidence or propounded some documents which I reject as false or unreliable.
60Having heard the three principals, Messrs Melhem, El Choueiri and Lee, examined and cross-examined, I regret in the circumstances being unable, uncritically and without question, to accept the account given by any one of them. In closing submissions, Mr Miller on behalf of the defendant conceded that Mr El Choueiri was, in some respects, an unsatisfactory witness appearing at times argumentative and evasive.
61In his closing submissions for Joneli, Mr Ounapuu observed that Mr El Choueiri “frequently gesticulated to Mr Melhem …”. ([8]) He noted Mr El Choueiri’s concession as to what had or had not happened in the course of a series of meetings between the initial attempted settlement and the final settlement occurring some seven days afterwards where, in cross-examination, Mr El Choueiri conceded that he had no distinct memory of these various meetings. (T328)
62Mr Miller noted, however, that on his second day in the witness box Mr El Choueiri expressed regret for the ill-temper he had displayed the previous day, explaining that it was a consequence of the diabetes from which he suffers. (T359, L4-6)
63Mr Lee is a native English speaker and presented in a far more composed manner. He provided detailed explanations of a series of complex transactions in which he and the other two principals were engaged in over a decade. Nevertheless, I found his explanation as to his bankruptcy entirely unconvincing and calculated to give a false impression of the process and the relevant event. (See [4] above)
64Further, Mr Lee was joined as a third party to the proceeding. His conduct of the litigation in that capacity seems to have been thoroughly unsatisfactory. This led Judicial Registrar Muller to take the extreme, though no doubt justified, course of determining the third party claim brought against him by Choueiri Agri summarily in favour of Choueiri Agri and against Mr Lee. ([44] above) Yet in cross-examination, Mr Lee admitted that it was he or his company who was funding Choueiri Agri’s defence at trial. (T587, L15-20 and T542-3)
65As to Mr Melhem, Mr Lee (Closing Submissions [80]) contended “That Mr Melhem’s evidence should not be accepted unless it is corroborated by other testimony, or contemporaneous documents”. First, he said that Mr Melhem sought to mislead the court on his relationship with Mr Choueiri. He said in substance that they were well-acquainted long before the events giving rise to this present dispute. He said further that Mr Melhem had shown himself willing to destroy critical evidence in the form of his old mobile telephone, which was said to have contained crucial texts no longer available.
66Thirdly, said Mr Miller, the evidence which Mr Melhem gave during the trial, to the effect that the payments alleged by Choueiri Agri constituted a repayment of the loan, were in fact contributions to the expenses and capital requirements of Icon Brewing Pty Ltd made by Mr Lee’s company in pursuance of the arrangement it entered into in 2012. Yet, in closing argument whilst not abandoning or repudiating that evidence, Joneli’s counsel placed little or no reliance upon it, implicitly admitting the weakness or lack of credibility of that account of events.
67Without expressing a final view as to the matters urged by counsel against the principal witnesses for their opponents, I treat the evidence of all three principals with caution.
68It is common ground that in April 2017 Mr Lee’s company provided two cheques to companies controlled by Mr Melhem. The first being for $55,000 in favour of Melhem. The second cheque, according to the butt, was drawn in the sum of $20,000 in favour of Joneli (see [31] above). Mr Melhem denies he received the $2,500 cash payment referred to in that paragraph and the subject of a note on the cheque butt relative to the $55,000 cheque. Mr Melhem denied receiving the cheque for $55,000. He said “I think it was transferred to my account” [presumably he meant Joneli’s account] (T108, L17-18). He said this payment however made was “For payments I paid towards stuff that Icon needed. I don’t remember now the figures but I’ve supplied the figures” (Ibid, L7-9). This $55,000 according to Mr Melhem represented 40 per cent of outlays by Icon in accordance with the percentage equity granted to Mr Lee under the 2012 agreement (Ibid, L10-14). As to the $20,000, Mr Melhem said that this was paid to him “because I paid Goodmans a lease, about 63,000 and that was his reimbursement” (T109, L5-6). Once again this attributed the payment to an obligation of indemnity lying on Mr Lee or his company under the 2012 agreement. The narrative given earlier as to Mr Lee’s bankruptcy, the receivership of his company, the insolvency of Icon, it being placed in insolvent administration and then under a deed of company arrangement so is a tide of affairs that swept away the 2012 agreement. The arrangements made for the sale of Icon’s undertaking in a succession of arrangement negates the possibility that any 40 per cent beneficial interest in the Icon undertaken persisted as at April 2017, which would have rendered Mr Lee or his company liable for 40 per cent of Icon’s outgoings. In closing submissions, Mr Ounapuu did not rely upon Mr Melhem’s account of the two payments being made relative to expenses incurred in the Icon business. He said (closing submissions, paragraph 45), “It is unnecessary to resolve what the two payments were actually for. Rather, it is sufficient to conclude that they were not in repayment of the $78,000”. I reject the explanation that the two payments pertained to expenses of the Icon enterprise.
69Mr Melhem produced a text exchange, or what purports to be a text exchange, between him and Mr Lee on 7 December 2017 (CB 110) which showed Mr Melhem texting Mr Lee:
“I emailed you, Laura Woods from ANZ requires right of entry and 50K for removal transport and storage. The whole thing is on my back, you need to contribute more money if we are required to do so.”.
With Mr Lee responding:
“CE Lee & Co has paid invoices on behalf of icon and incurred expenses.
5 April $55000
11 April $20000
27 April $12000
4 May $9000
8 June $12000
31 Aug $9233.60
28 Sept $9128.60
10 Nov $910013 Nov $505
This does not include any Consulting charge for the period.”
The text makes no mention of the $2,500 paid, or allegedly paid, in cash.
70Mr Lee denied the genuineness of this text. He said the issue of this text was raised with him in late October 2022 by the solicitor from the firm Lewenberg & Lewenberg (T501, L31 – T502, L1). He said he believed he had lost the mobile phone which he had used in 2017, but upon being shown this text “I then got my wife to search the house upside down because I knew in my heart that wasn’t the case (Ibid, L2-9). Mr Lee’s wife found the phone after turning the house upside down and Mr Lee concluded “This text message of December 9th was a fraud” (T502, L10-15). His 2017 mobile phone was entered into evidence and marked as an exhibit. It does not contain any record of the contentious text. Mr Melhem conceded in cross-examination the possibility that he may have deleted texts by mistake (T507, L14-19). He also conceded there was a nineteen-day gap in recorded texts on this phone (Ibid, L6-13). Mr Lee told me, “I’m more than happy to have the phone forensically examined”. Mr Miller observed that directions had been given for an expert forensic examination of Mr Lee’s phone in preparation for trial, but this direction had never been implemented as a result of Mr Lee’s default.
71Mr Melhem’s 2017 phone was unavailable at trial. Mr Melhem said this phone “was discarded because … it was too dangerous to keep. It was emitting um a smell when you turned it on. It was heating … So the battery, we were afraid it’s going to um damage the house, so it was discarded” (T244, L6-11). I asked if the problem could have been solved simply by extracting the battery and Mr Melhem replied that “some of them are built in” (Ibid, L13-18). Even were the battery incapable of extraction as Mr Melhem described the problem, it occurred only when the phone was turned on. It could have been dealt with, one would imagine, simply by not turning the phone on. Mr Ounapuu was critical of the delay in alleging the text was fraudulent. He said the text was discovered as long ago as 2022 and the allegation it was bogus was made only very recently. Had it been made earlier perhaps Mr Melhem’s phone might have been retained.
72All in all, as with so much uncertainty in this unhappy dispute, it is difficult to reach any confident conclusion. The contentious text seems to be too “pat”, too well adapted and convenient as a support to a case denying repayment of the stamp duty above. Mr Miller said he believed that Mr Melhem had “lifted” a genuine text also dated 9 December 2017 at 12:09pm as the contentious text is and substituted the contentious text for the genuine one. What Mr Lee described as the “genuine” text has Mr Lee saying:
“All good…money was in … paid lenders 225 kept 4K. they need payment plan for the rest early Jan..
Call me on the other phone” (CB 439)
73I conclude, albeit with hesitation, that the contentious text is not genuine. What tips the balance in favour of this conclusion is that the text, by its nature, supports an interpretation of the April 2017 payment as being related to the enterprise of Icon Brewery in circumstances where I have already concluded the arrangement which might have required Mr Lee’s company to provide a 40 per cent indemnity had fallen by the wayside, and this explanation for the payment, whilst not abandoned by counsel for the plaintiff, was at best “soft peddled” in closing submissions.
74I turn then to the circumstances surrounding the payment of some $20,000 to the plaintiff by Mr Lee’s company via cheque number 200019. Mr Ounapuu for Joneli drew attention to the inconsistencies in Mr Lee’s evidence as to how the $20,000 came to be deposited. First that he gave it to Mr Melhem in the presence of Mr El-Choueiri (T484). Secondly that the cheque was deposited over the counter at the Swan Hill branch of ANZ bank in the absence of either Mr Melhem or Mr El-Choueiri and deposited to the credit of Joneli’s account. The latter appears to be the correct account of events. Joneli’s bank statement (CB 441) shows an “Agent Deposit” of $20,000 made on 11 April 2017. In closing submission, Mr Ounapuu drew attention to an email from Mr Melhem to Chris Lee (CB 447) stating:
“Chris,
I need to 30K as per the below paid in the mentioned account.
Regards
John Melhem”
The “below” was an email from a business bank relationship manager to Mr Melhem on 10 April 2017 seeking payment of an “approval fee” which “was supposed to be deducted on the settlement day as per the process” (ibid). This was raised with Mr Lee by Mr Ounapuu in cross-examination. He put to Mr Lee that the payment of $20,000 “was in response to this request”. Mr Lee replied, “Given Mr Melhem’s history … the emails that I’ve known that he’s forged previously, I can’t verify that that is a correct email, first and foremost” (T557, L25 – T558, L2). Mr Lee said the email could, in his view be fabricated and he did not remember receiving it (T558, L3-6). Asked about the email and the $20,000 deposit, Mr Melhem said he knew it had been made by Mr Lee (T111, L22-23). His explanation of the amount was that it was a reimbursement of 40 per cent for “the Goodmans lease” (Ibid, L26-28). For reasons already explained, I reject Mr Melhem’s explanation for the $20,000 payment. Again, albeit with hesitation, I accept the suggestion that this deposit was responsive to Mr Melhem’s request for the payment of an approval fee, albeit that the amount deposited was only two-thirds of what was requested. The “approval fee” presumably pertained to the $2 million bank facility granted by ANZ Bank for the settlement of the pistachio farm on 3 April 2017 (see [24] above).
75It is also necessary to give consideration to what was perhaps rather grandly described during the trial as Mr Lee’s ledger (CB 393) which appears to be a list of payments said to have been made according to “Melhelm/Joneli”. This includes, among other things, the $20,000 payment said to have been made on 17 April. Mr Melhem’s evidence-in-chief was that the payments recorded on this ledger (being a page from a standard diary) recorded payments relative to Icon Brewing (T115, L6-8). For reasons I have already given I reject this explanation. The “ledger” constitutes contemporaneous evidence of the making of the payment (which was not in dispute). It does not however advance the question as to the purpose for which the payment was made.
76What am I to make of the notation relative to the $20,000 payment on the relevant cheque butt “ANZ loan stamp fee”. The explanation which I have accepted is that this amount was paid for an approval fee relative to the $2 million loan facility for the pistachio farm which was drawn down at a settlement earlier in April 2017. Looking at the layout of the notation I believe it is likely that the original notation read “ANZ loan fee”. The notation is read diagonally across the page and the word “fee” is written on a line lower than the phrase “ANZ loan”. The word “fee” could have been fitted in on the same line as the phrase “ANZ loan”, but I think it could likewise, and indeed was, dropped one line, albeit diagonally, to fit in more easily. Looking at the notation I believe the word “stamp” was added ex post facto to support the contention that this payment was made by way of reimbursement for the stamp duty outlay.
77I turn next to the payment of $2,500 which Mr Lee said his company made and which Mr Melhem denies. This payment and its characterisation as being “cash” was to be found in Mr Lee’s “ledger” (CB 393). Mr Melhem seems to have taken a photo of the “ledger” and sent a text to Mr Lee on 9 July 2018 as follows:
“Chris
I’m going through the numbers you gave .. ‘Photo I took’ regarding payment
Can you provide me with details of the $15000 March 2018. I can’t find the payment.Thanks” (CB 396)
78Consistently with Mr Melhem’s denial of receipt of the $2,500, one might have expected him to raise some query or dissent relative to that item. As it was he queried one item, but raised no objection to the “$2,500 cash” item. In closing submissions, Mr Miller invoked the Latin maxim quote “expressio unius est exclusio alterius” – the complaint about the one line item constitutes an admission of the validity of the other.
79In his affidavit filed in the Supreme Court seeking to restrain Joneli from proceeding on its statutory demand, Mr Lee said “on or about 6 April 2017, Mr Melhem and I met at the Dan Murphy’s parking lot located at the Essendon DFO Centre where I gave him $3,000 in cash as part payment of the loan” (CB 128). Three thousand dollars was the “top up” figure which would have been required to make up a full refund of the $78,000 outlaid by Joneli for stamp duty. Given that this cash payment is said to have been made concurrently with a cheque in the sum of $55,000, it raises the question why Mr Lee did not simply draw a cheque on his company’s account in the sum of $57,500, or perhaps more appropriately $58,000 to make up the full $78,000 payment. There was no question that the slight increase in the face value of the $55,000 cheque would have led it to balance (T476, L1-7). When I asked Mr Lee why he did not simply increase the face value of the cheque his reply was “I cannot recall, Your Honour, other than I recorded it” (Ibid, L9-10). During cross-examination I raised this issue with Mr Lee a second time and his reply was “The answer I gave this morning was Mr Choueiri had provided $60,000 in cash to complete the settlement with Melhem and the ANZ bank” and he therefore had some cash handy (T555, L29 – L556, L4). He agreed with me that his thinking was “Well, I’ll throw in a bit of cash” (L556, L5-6).
80I find this explanation from Mr Lee entirely unconvincing. In the end I do not believe it is necessary for me to make a finding as to whether $2,500 was paid in cash in April 2017, whether in the carpark of a Dan Murphy’s store or not. The narrative given indicates that the three principals, Messrs Melhem, Lee and El-Choueiri, had complex and ongoing dealings between one another and their companies. It is unlikely that the evidence heard at trial and the documents put into evidence disclose the full extent and complexity of those dealings. While it is unnecessary to express a concluded view, I believe Mr Melhem’s failure to deny receipt of $2,500 cash on behalf of one or other of his companies, Melhelm Pty Ltd or Joneli Investments Pty Ltd when he scrutinised Mr Lee’s “ledger”, would tend to indicate that a $2,500 cash payment was indeed made. It was not apt however to represent the complement of the amount outstanding for stamp duty. I conclude therefore that if that payment was made it was for another purpose and not in relief or discharge of the debt owed primarily by the defendant company for the stamp duty.
81This leaves the $55,000 which was undoubtedly paid by cheque to Mr Melhem’s company Melhelm Pty Ltd. I have already rejected Mr Melhem’s explanation for this payment. Mr Miller said that if one disregarded the explanation which I have rejected, namely that this was a reimbursement of Icon Brewery expenses, it was an insufficient response for the plaintiff to say simply “this was not in repayment of the stamp duty it was for some other (undisclosed) purpose”. In one sense this is correct. In the unhappy situation where I find myself, where I am uncritically to believe any of the three principals, it does not preclude me from making that somewhat uncertain finding which is what I do. Once one excludes as payments in relief of the stamp duty liability the $2,500 cash payment (if it was made) and the $20,000 cheque, the $55,000 has no apparent connection with the stamp duty issue. The cheque was not payable to Joneli or deposited in its bank account. If there was a series of payments which added up to $78,000, it would be plausible to interpret them as together constituting a repayment of the $78,000 stamp duty liability. Once one or more of those payments is excluded, which is the case here, I reject as implausible the proposition that the $55,000 was in purported repayment of the stamp duty.
82It follows the plaintiff:
(a) made a loan of $78,000 to meet stamp duty on the settlement of the sale of grazing property in December 2016;
(b) for reasons already given, this outlay or advance did not create any beneficial interest in favour of the plaintiff, Joneli, or create any trusts; and
(c) the loan advance remains outstanding and unpaid.
83Joneli should have judgment against Choueiri Agri Pty Ltd for the $78,000. The Statement of Claim also seeks “interest pursuant to statute” and subject to any further argument there should be a grant of that interest as well.
84I have made the findings of fact in these reasons cognizant of the principles stated in Briginshaw v Briginshaw ((1938) 60 CLR 336) and s140 of the Evidence Act 2008, and in particular, of the statement by Sir Owen Dixon that:
“… when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. … .” (Ibid at 361)
Disposition
85Within fourteen days, the parties must bring in short minutes to give effect to these reasons.
Costs
86I have heard no submissions on the question of costs and so I will reserve them.
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Certificate
I certify that these 35 pages are a true copy of the judgment of Judge Macnamara, delivered on 4 April 2025.
Dated: 4 April 2025
Jodie Daniel
Associate to His Honour Judge Macnamara
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