Khoury v Jabbour - [2000] WADC 204

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: KHOURY -v- JABBOUR & ANOR [2000] WADC 204

CORAM: DEANE DCJ

HEARD: 29-31 MAY 2000

DELIVERED : 14 AUGUST 2000

FILE NO/S: CIV 840 of 1998

BETWEEN: FOUAD ANTOUN KHOURY
Plaintiff
AND
NAJI MATTA JABBOUR
First Defendant
ROSEMIST HOLDINGS PTY LTD (ACN 070052372)
Second Defendant

Catchwords:

Contract - Signing of deed by plaintiff and first and second defendants - Duress - Whether first defendant signed deed as result of duress on part of plaintiff - Deed repudiated by first defendant - Counterclaim by first defendant for monies allegedly owed by plaintiff

Legislation:

Nil

Result:

Duress not established - First defendant to pay plaintiff $12,000 with interest thereon at 6 per cent per annum between 12 March 1998 and date of judgment - First defendant's counterclaim against plaintiff dismissed

Representation:

Counsel:

Plaintiff:     Mr D A Lenhoff
First Defendant             :     Mr A S Stavrianou
Second Defendant         :     Mr A S Stavrianou

Solicitors:

Plaintiff:     Lenhoff & Co
First Defendant             :     Murie & Edward
Second Defendant         :     Murie & Edward

Case(s) referred to in judgment(s):

Barton v Armstrong [1973] 2 NSWLR 598 at 617
Crescendo Management Pty Ltd v Westpac Banking Corpn (1988) 19 NSWLR 40
Pao On v Lau Yiu Long [1980] AC 614

Case(s) also cited:

A H McDonald & Co Pty Ltd v Wells (1931) 45 CLR 506
Academy of Health & Fitness Pty Ltd v Power [1973] VR 254
Alati v Kruger (1995) 94 CLR 216
Brown v Smitt (1924) 34 CLR 167
Coastal Estates Pty Ltd v Melevende (1965) VR 433
North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] 1 QB 705
Sargent v ASL Developments Pty Ltd (1974) 131 CLR 634
The Alev [1989] 1 Lloyds Rep 138
The Sibbon and The Sibotre [1976] 1 Lloyds Rep 293
Universe Tankship Inc of Monrovia v International Tranport Workers' Federation (1983) 1 AC 366
Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 130 ALR 570

DEANE DCJ: This matter has had a somewhat protracted history. To a degree this reflects the past close relationship between the plaintiff and first defendant which has now deteriorated markedly. The action has been the subject of a number of previous interlocutory applications but it has now come to trial.
On 11 February 1998 the parties made an agreement in the form of a deed whereby the first defendant, Mr Jabbour, was to pay the plaintiff, Mr Khoury, the sum of $32,000 and the second defendant, Rosemist Holdings Pty Ltd, was to pay the plaintiff the sum of $48,000. Pursuant to clause 3 of that deed the first defendant was to pay the plaintiff the sum of $20,000 on or before 12 February 1998 and the remaining sum of $12,000 was to be paid to the plaintiff on or before 12 March 1998. The second defendant was to pay the plaintiff the sum of $48,000 on or before 12 March 1998 but this has not been done as the second defendant went into liquidation and was wound up pursuant to an order of the Federal Court on 15 April 1999. The first defendant has paid the sum of $20,000 to the plaintiff but despite demand has not paid him the remaining sum of $12,000 as the first defendant has repudiated the deed. The plaintiff claims that the first defendant is in breach of the agreement. In view of the current situation of the second defendant, the trial was essentially concerned with the issues as between the plaintiff and the first defendant.
The plaintiff claims that he has complied with all the obligations imposed upon him pursuant to the terms of the agreement or deed but this is disputed by the first defendant (and indeed the second defendant) as it is claimed that pursuant to clause 6 of the deed the plaintiff has not returned to the first defendant all of the documents in his possession or control which relate to the second defendant. Those items include it is submitted:
(i) a complete invoice book entitled "Perth Lebanese Bakery";
(ii) a complete invoice book entitled "Miscellaneous Sales";
(iii)miscellaneous invoices and documents relating to the second defendant.
Although the deed and date of execution of the deed are admitted by the first defendant, it is denied that the deed and agreement are legally enforceable because it is said that both the first and second defendants were induced to execute the deed as a result of duress on the part of the plaintiff and further that the first defendant paid the sum of $20,000 to the plaintiff again as a result of duress exerted upon it by the plaintiff.
The first defendant was at the relevant time a director of the second defendant. Mr Jabbour, the first defendant claims that in January 1998 the plaintiff unlawfully and without authority retained jewellery, the property of Mr Jabbour's wife. It is claimed that before commencing negotiations which ultimately led to the execution of the deed, Mr Jabbour requested the plaintiff, Mr Khoury to return his wife's jewellery but the plaintiff refused to do so at that time. It is further claimed on behalf of the first defendant that during that same time frame the plaintiff was requested by both his own solicitors and those acting for the first defendant to return the jewellery but the plaintiff again refused to do so. Mr Jabbour pleads that Mr Khoury informed him he would not return the jewellery unless and until both the first and second defendants executed the deed in the terms demanded by the plaintiff. The first defendant claims that due to his anxiety to retrieve his wife's jewellery he executed the deed as demanded by the plaintiff and in that way it is alleged by the first defendant that he was subject to duress (as indeed was the second defendant).
In the further re-amended defence the first defendant claims that after the plaintiff had been given a cheque for $20,000 by him upon execution of the deed, the following day the plaintiff returned his wife's jewellery. It is argued that by reason of the duress of the plaintiff against the defendants the deed was voidable at the election of each defendant. The first defendant claims that it was not until these proceedings were instituted that he became aware of this option and he now by his defence and counter claim dated 14 April 1998, filed in these proceedings has done so. The first defendant claims $20,000 is now payable to him by the plaintiff. This sum, however, is not the only money claimed by the first defendant against the plaintiff.
In a further re-amended counter claim filed on behalf of the first defendant it is alleged that at the plaintiff's request a number of loans in US dollars were made to him by the first defendant and in each instance the plaintiff agreed to repay the monies on demand. It is said that despite demands for repayments of the loans by the first defendant the plaintiff has refused to make such repayments and these monies are now claimed by the first defendant.
The first defendant claims that in about December 1990 he and the plaintiff reached an oral agreement whereby the first defendant was to provide accommodation and meals for the plaintiff whilst they were living at 4 Fawk Corner, Ballajura. The alleged terms of the agreement were that the plaintiff would pay the first defendant a reasonable sum for accommodation and meals at the rate of $100 per week or alternatively it was an implied term of that oral agreement that the plaintiff would pay for accommodation and meals, a reasonable sum being $100 per week. The first defendant alleges that for a period of nearly seven years between December 1990 and October 1997 accommodation and meals were provided to the plaintiff pursuant to the agreement but no monies were paid by him to the first defendant, who now claims from the plaintiff the sum of $35,500 for the accommodation and meals provided during that period.
As a result the first defendant seeks a declaration that the deed was at all material times voidable and is indeed void and therefore of no effect. It is argued that it was voided by the defendants on 14 April 1998. Payment of the sum of $20,000 with interest pursuant to Supreme Court Act 1935 (as amended) is also claimed, as is the return of the documents which the plaintiff allegedly failed to deliver up to the first defendant pursuant to clause 6 of the deed.
The plaintiff denies exerting any duress on the defendants and in the alternative claims that if such duress were found to exist then the defendants have affirmed the deed after execution by demanding that the plaintiff perform in terms of the deed, as is evidenced by the letter from the defendants' solicitor demanding the return pursuant to cl 6 of the deed of documents allegedly retained by the plaintiff. It is said that the defendants cannot effect restitutio in integrum of the plaintiff's performance under the deed by returning the shareholding in the second defendant and restoring his directorship. The plaintiff further denies that the first defendant loaned him any monies at any time by way of loans in US dollars. Whilst it is agreed that between December 1990 and October 1997 the plaintiff and first defendant shared the same premises, the plaintiff denies any agreement whereby he would pay for meals and accommodation in the sum of $100 a week or any sum at all. Finally in response to the first defendant's re‑amended counterclaim the plaintiff pleads that pursuant to cl 10 of the deed and since the date of its execution no further claims against the parties by each other can arise as the deed was executed in full and final settlement of all such matters between the parties.

The Issues

A considerable number of issues for determination are raised on the pleadings and by way of the evidence given at trial. Whilst it is not necessary to identify every single issue raised at trial, very broadly the following issues arise:
1.Is the deed executed between the parties on 11 February 1998 legally enforceable against the defendants;
2.Was the first defendant induced to execute the deed as a result of economic duress on the part of the plaintiff;
3.Did the first defendant request the plaintiff to return his wife's jewellery prior to the commencement of negotiations leading to the execution of the deed or during that period and did the plaintiff refuse to do so;
4.Further, did the plaintiff advise the first defendant that the jewellery would not be returned unless and until the first defendant (and the second defendant) execute the deed in the terms demanded by the plaintiff during the period of the relevant negotiations;
5.As a result of the plaintiff's refusal to return the jewellery until the deed was executed, did the first defendant execute the deed in terms demanded by the plaintiff;
6.Did the plaintiff return the jewellery to the first defendant or the first defendant's wife only after the deed was executed in the terms demanded by the plaintiff and after the payment of a cheque for $20,000 to the plaintiff;
7.Was the deed at all material times voidable at the election of each defendant by reason of duress on the part of the plaintiff and if so, when did the first defendant come by that knowledge;
8.Was the first defendant entitled to avoid the deed, did he do so and if so, when and how was that done;
9.Was there an agreement between the plaintiff and the first defendant in about December 1990, whereby the first defendant agreed to provide the plaintiff with accommodation and meals at 4 Fawk Corner, Ballajura;
10.If such an agreement was made what were its terms;
11.Was it breached by the plaintiff and if so what was the nature of that breach;
12.Were any or all of the three alleged loans made by the first defendant to the plaintiff at the plaintiff's request in May 1995 (US$2,000), September 1996 (US$4,000) and April 1997 (US$8,000) made to the plaintiff;
13.If any or all such loans were made, has the first defendant discharged his obligations pursuant to such loans and has in any or each instance the plaintiff repaid the sum of the loan or loans to the first defendant.

The plaintiff's evidence

Although the plaintiff's proof of evidence became exhibit P1, Mr Khoury still spoke to its contents in his evidence. It is common ground that both the plaintiff and first defendant have known each other for many years and indeed their families in Lebanon were very close when they were growing up there. The plaintiff arrived in Western Australia in November 1990 and initially stayed with the first defendant and his wife as well as the first defendant's brother at 5 Mynas Grove, Ballajura. The plaintiff claimed he brought his own money with him to Western Australia and then had some further funds transferred to him. It was his evidence that at that time the first defendant was not employed and as a result was short of funds. It was for this reason that the plaintiff claimed that he paid a significant portion of the household expenses. It was a little unclear whether he paid for every single household expense but the thrust of his evidence was that the majority of such expenses were met by him and to this end he referred to a number of cheque butts relevant to an account he held at the R & I Bank (which later became Bankwest). He said most of the household expenses which he paid were paid in cash, although the cheque butts which became exhibit P2 (13-27) were relevant to this matter. Exhibits P3, P4 and P5 were relevant to the funds the plaintiff claimed he had access to on or shortly after his arrival in Western Australia. According to the plaintiff there was never an agreement of any sort between himself and the first defendant whereby the plaintiff would pay a share for accommodation or food. He said that not only did he pay his share of household expenses but at times he also paid the first defendant's share of rent and food.
As a result of the cooling of the relationship between the first defendant and his brother, the plaintiff said that it was agreed he and the first defendant would purchase a business of some sort and that is why he gave the first defendant the sum of $18,000 followed by a further sum of $6,000. The plaintiff envisaged that once any such business was established he would not only receive these monies back but he would also share in the profits of any such business. He claimed that it was only by accident that he learnt that the first defendant had in fact used those monies to purchase land at 4 Fawk Corner in Ballajura. When the plaintiff queried this purchase with the first defendant he said he was told by him that in effect the land was a better asset than cash and would provide good collateral when both he and the plaintiff sought a bank loan in order to purchase a business. Mr Khoury said he did not give either the sum of $18,000 or $6,000 to the first defendant in order to purchase land. The plaintiff, however, was assured by the first defendant that the property, although registered in the first defendant's name, would be owned by them in equal shares. During this time the plaintiff continued to work for the first defendant's brother but the relationship between the first defendant and his brother deteriorated to the point where litigation ensued. When this occurred the plaintiff said he lent further money to the first defendant to fund that litigation.
In late July 1994 the plaintiff and first defendant began a business called the Malaga Pantry which sold bulk foods in a market style situation. The plaintiff said he worked only part time in this business as he was still working for the first defendant's brother at Onta Fine Foods. This employment continued until he was dismissed from that position in early 1995. He claimed that during this period of time he continued to contribute monies to the running of the Malaga Pantry business as well as assisting to finance the building of a house on the land at 4 Fawk Court in Ballajura. The plaintiff and the first defendant were directors of and shareholders in a company called Rosemist Holdings Pty Ltd (the second defendant) which was registered as trading as Jabco Foods in mid 1995. The plaintiff held 50 per cent of the shares in the second defendant whilst the first defendant held 40 per cent of the shares. The remaining 10 per cent was held by the first defendant's brother-in-law who lived in Lebanon and who apparently had contributed some funds to the business. The plaintiff denied that his involvement in the second defendant was a means of assisting or promoting his application to remain in Australia. There was no compelling evidence before the Court at trial to suggest that this was the motivation for the plaintiff's involvement with the second defendant.
It was as a result of this arrangement, the plaintiff said that exhibit P2 (27) being a cheque butt dated 11 August 1994 made out to the first defendant for $5,000 came into being, because it was to assist with the business at Malaga markets.
In about September 1997 whilst the plaintiff was living with the first defendant and his wife at 4 Fawk Court, Ballajura he inadvertently discovered documents which indicated that the property had been transferred into the name of the first defendant's wife. When the plaintiff raised his concerns about this with the first defendant he was assured that insofar as there was any equity in the property, half of it belonged to the plaintiff and he would be paid $30,000 in respect of that. Not long after that the first defendant returned to Lebanon for a holiday and it was during this period that the plaintiff said that he became dissatisfied with the way the first defendant had been running their business, as among other things the paperwork was inefficient in the plaintiff's view. The plaintiff said he issued the first defendant with an ultimatum and indicated that they would have to go their separate ways and divide their joint interests if the situation did not improve. It was at this point that it seems that there was the commencement of an obvious deterioration in the relationship of the parties. The plaintiff became more and more suspicious of what he regarded as unacceptable behaviour by the first defendant in the running of their business. As a result the plaintiff said he sought legal advice and eventually on 20 January 1998 he brought an ex parte application for the appointment of a receiver to the second defendant. The Supreme Court at Perth issued an order for an ex parte interim injunction on 23 January 1998 and following this a number of persons attended the premises of the second defendant in order to seize company documents. This action fuelled the deterioration of the relationship between the parties, although negotiations were undertaken to effect a settlement between them. The evidence suggests that a number of members of the Lebanese community were concerned about what was occurring between the plaintiff and the first defendant and there seems to have been a general desire on their part that the problem not escalate further.
Although the plaintiff continued to work with the first defendant after this date, he gave evidence that on about 23 February 1998 the first defendant dismissed him. The plaintiff took action for unfair dismissal and was awarded $13,800. When he was not paid any of that sum, the plaintiff took action against the second defendant which, as a result, went into liquidation. This evidence was not disputed by the first defendant.
According to the plaintiff, not long after 23 January 1998, he and a number of other people were at the home of Mr Joseph Said, a member of the Lebanese community, when the first defendant arrived and requested that the plaintiff return the first defendant's wife's jewellery. The plaintiff's evidence was that this jewellery had come into his possession quite some time before when as a result of an agreement between himself and the first defendant, as well as the first defendant's wife, it was agreed that the jewellery would be deposited into the plaintiff's safety deposit box at a bank for safe keeping. It was agreed that the first defendant, or more particularly his wife, would have access to that jewellery whenever she desired. The plaintiff's response to this request at Mr Said's house was to inform the first defendant that as there was no problem between the plaintiff and Mr Khoury's wife, the jewellery could be collected at any time. The plaintiff did not consider that there was any problem between himself and the wife but rather any difficulties that existed were between himself and the first defendant.

The plaintiff said that the deed between himself and the first and second defendants was signed on 11 February 1998. The plaintiff deposited the cheque for $20,000 he received which was post dated 13 February, into his account on that day by means of an automatic teller machine but as it was Saturday his bank statement shows it was deposited on 16 February (Exhibit P7). He also claimed that as a result of signing the deed he honoured his undertakings to resign as director of the second defendant and transfer his shares in that company to the first defendant. In addition he withdrew his Supreme Court action and further he claimed that he handed over to the first defendant all documents in his possession relevant to the second defendant. In this regard he referred to a letter from his lawyers dated 27 February 1998 to the first defendant's lawyer advising, among other things, that all relevant documentation in the plaintiff's possession would be delivered under cover of that letter. As a result the plaintiff denied that the first defendant had been prevented from meeting its liabilities including past and present debts.
On the day following the signing of the deed, 12 February 1998, the plaintiff returned the jewellery to the first defendant and it was on that day he said he received the cheque for $20,000. That is all the money he received as he claims the remaining $12,000 to be paid to him pursuant to the deed is outstanding. The plaintiff gave evidence that he did not expect repayment of monies he gave to the first defendant towards food and rent or indeed other household expenses. He said that the cheque butts contained in Exhibit P2 all related to monies he gave the first defendant for various expenses including business expenses and those cheques were unrelated to the $18,000 he had previously given to the first defendant as part contribution towards the purchase of a suitable business. He denied it was the case that he had only ever lent $8,000 to the first defendant which had subsequently been repaid.
The first defendant's wife travelled to Beirut on a number of occasions between 1993 and 1997 in order to visit various family members. The plaintiff, however, denied ever borrowing from the first defendant or his wife in April 1995, September 1996 or April 1997 the amounts of money alleged to have been lent to him. He said his only knowledge of these allegations came from the pleadings filed on behalf of the first defendant. Mr Khoury's evidence was that in April 1997 his parents visited him from Lebanon and he wished to give them money in US dollars as a gift when they returned home. According to him, Bankwest deposit slip dated 16 April 1997 for the amount of $9,832.55 is evidence of the monies that he gave his parents on that date which monies he said were not the result of a loan of US$8,000 made to him by the defendant on that date. He said that ultimately the US$8,000 he gave to his parents consisted of money from his own bank account and some Australian dollars in his parents' possession which were converted to US dollars.
The plaintiff's explanation for not returning the first defendant's wife's jewellery before 11 February 1998 when the deed was signed was that with his other commitments he simply did not have time to collect it and although the jewellery was mentioned by the first defendant to him in late January it was not in the context of a demand for its return. The plaintiff admitted that his lawyer directed him to return the jewellery to the first defendant but that again was not in the context of the plaintiff refusing to do so, as he asserted he was prepared to return those items at any time.
During the course of his evidence the plaintiff was asked to bring certain documents to Court relevant to any financial dealings including any monies he had given to the first defendant. He did present a bundle of documents including a handwritten list of transactions which became Exhibit D6. In all of the circumstances I do not accept the argument as to the handwritten list that it was prepared overnight or in the course of the plaintiff's evidence. I accept that he prepared it well before he attended Court, and I see nothing sinister in the fact that it was not referred to in either Exhibit D7, D8 or D9, being his affidavits accompanying discovery dated 17 December 1998, 10 May 2000 and 15 May 2000 respectively.
A number of witnesses were called on behalf of the plaintiff. Like all the witnesses who gave evidence in this trial those persons did not speak English as their first language. There was no difficulty, however, in understanding the evidence of any of the witnesses in this trial. Mr Ghobj knew both the plaintiff and first defendant by virtue of his being part of the Lebanese community in Perth. According to him, the first defendant informed him that he and the plaintiff intended to start a business utilising money from the plaintiff and further, he said the first defendant advised him that the land he had bought came from a combination of funds provided by the plaintiff and from the first defendant's bank. I did not form the view that Mr Ghobj was in any way biased or unbalanced in the giving of his evidence. Significantly he said he was present at Mr Said's house when the first defendant raised the issue of the jewellery with the plaintiff, who informed him that there was no problem and the first defendant could get his jewellery at any time. He was unable to give a precise date as to when he heard this comment but his evidence was that it occurred before the deed was signed. I do not consider that the fact that the second defendant sued the Lebanese Bakery Co which Mr Ghobj's nephew owned nor the fact that the plaintiff worked for Mr Ghobj in a wholesale business at the time of trial detracts from the reliability of his evidence.
Similarly Mr Elias Jabbour gave evidence as a member of the Lebanese community who knew both parties. The first defendant lived with Mr Jabbour for a time after his initial arrival in Australia and he said he was also informed by the first defendant that the plaintiff would pay for various items and that the plaintiff gave the first defendant $18,000 to buy a business for them. He formed the impression that the relationship between the plaintiff and the first defendant was a close one. He was also present at Mr Said's home on the occasion of the first defendant's visit and noted him to be upset and enquiring about his wife's jewellery. His recollection was that the plaintiff advised the first defendant that there was no problem with the jewellery and the first defendant could have it at any time he wished. Mr Abdullah who was the sole proprietor of the Lebanese Bakery business which had dealings with the Malaga Pantry and the first defendant, was unable to give evidence clarifying whether or not there was any financial difficulties as between his business and either the first or the second defendants.

The first defendant's evidence

The first defendant is now a director of Red Runner Holdings which trades as Jabco Foods in the wholesale food business. He retains an interest in running a retail store at the Malaga Markets. Although his proof of evidence and a supplementary proof became Exhibits D10(a) and D10(b) respectively he gave oral evidence as to the nature of his close relationship with the plaintiff before difficulties arose between them. According to him, in 1991 he paid $33,000 for the land in Fawk Court, Ballajura, which represented $7,000 from savings he had in his son's name at the Commonwealth Bank and $20,000 borrowed from the Commonwealth Bank. Exhibit D1 was a loan approval to him from the bank. His evidence was that the balance of the purchase price being $8,000 was offered to him by the plaintiff which sum he said he repaid about Christmas of 1991. The funds to repay this loan came from a sum of US$10,000 which his father in law brought from Lebanon in 1990. According to the first defendant that was the only amount of money he ever borrowed from the plaintiff. His recollection was that the plaintiff did lend some money to the second defendant, although he gave little detail about this. He denied that the plaintiff had ever lent him $18,000 in order to purchase a joint business and the $6,000 advanced to him by the plaintiff was, according to his evidence, money to buy shares in a Commonwealth Bank float.
The first defendant agreed he travelled to Lebanon in 1997 but said on his return the plaintiff made no comment regarding his misgivings about the manner in which their business was run. Such concerns were not voiced by the plaintiff until late January 1998 when the plaintiff and others came to the premises of the second defendant following the order made by the Supreme Court.
Mr Jabbour said Exhibit P2(27) was a cheque butt in relation to the sum of $5,000 for his lawyer in connection with the litigation between him and his brother. The plaintiff was not a party to that action and the first defendant said he did not wish to proceed with it but the plaintiff insisted that he do so and gave him a further $1,500 in addition to the previous sum to fund the action. One is drawn to observe that this would have been unusual conduct for the plaintiff who at that time was employed by the first defendant's brother and therefore dependant upon him to a degree for his livelihood to insist that the first defendant pursue the litigation. I do find on the evidence, however, that the plaintiff did advance money to the first defendant to fund legal costs. The first defendant also gave evidence concerning some of the plaintiff's other cheque butts. According to him, Exhibit P2(22), a cheque butt noting the sum of $1,000 was a contribution towards cabinets at the Malaga Pantry premises which cost $6,000. Similarly he said Exhibit P2(23) being a cheque butt relevant to the sum of $4,000 was for a cabinet maker, although it is curious that the cheque butt nominates the first defendant rather than the cabinet maker as the payee. The first defendant insisted that the cheque butt, Exhibit P2(25), relevant to the sum of $1,500 was not a loan from the plaintiff to him and he surmised that it may relate to legal fees for the action between the first defendant and his brother. A further cheque butt dated 24 July 1995 relevant to the sum of $1,500, the defendant said, was the plaintiff's contribution towards their purchase of a $2 self company, although the first defendant could not recall the total cost of that purchase which also included payment of outstanding funds owed by the previous owners to the ASC.
The first defendant agreed that he, his wife and child as well as the plaintiff lived together at 5 Mynas Grove in Ballajura and said that in February 1991 an arrangement was made between him and the plaintiff whereby it was agreed that the plaintiff would pay $100 a week for his share of rent and accommodation. Notwithstanding this agreement, for the next seven years the first defendant conceded that the plaintiff lived with him and his family and during that time he paid no money whatsoever pursuant to that agreement. The first defendant further conceded that he did not ask the plaintiff for repayment until 27 January 1998 when the receiver came to the premises of the second defendant. Thereafter he said he asked the plaintiff on a number of occasions to repay the sum he believed the plaintiff owed pursuant to their oral agreement but no monies have been forthcoming. Significantly, in my view, the first defendant agreed that no mention of his counterclaim regarding the costs for rent and accommodation was made in his pleadings filed on 14 April 1998 nor was there any mention of this aspect of his claim in his amended defence and counterclaim filed on 12 August 1998. The first mention of this aspect of his counterclaim is made in his re‑amended defence and counterclaim dated 9 December 1998.
The first defendant also gave evidence as to the nature and circumstances giving rise to the three alleged loans he made the plaintiff in US dollars and repayment of which form part of the first defendant's counterclaim. In relation to these three loans the first defendant also agreed that these monies were first referred to and claimed in his pleadings of 9 December 1998. The first defendant insisted that despite this the loans had occurred, although he had not kept any documentation regarding them. According to the first defendant, he was in a position to advance cash loans of this amount to the plaintiff because he was in the habit of keeping cash on his person at all times.
This he said was the case when in about May of 1995 the plaintiff asked the first defendant if he could obtain US$2,000 from his wife and arrange for his wife to give that money to the plaintiff's mother when she visited Lebanon. According to the first defendant, the plaintiff made this request because all of his funds were invested and he was not in a position to provide the money himself. The first defendant said his wife was present at the time of this request and although he agreed to it he was not happy to do so and tried to extract himself from the arrangement. It is somewhat curious, if this request was made in 1995, as asserted by the first defendant, he had a negative reaction to it in the light of what he says was then the extremely close and almost brotherly relationship between himself and the plaintiff. Despite the assertion in the first defendant's proof of evidence that he refused the plaintiff's request he did not go as far as saying this in his sworn evidence.
About 16 months later in September 1996, according to the first defendant, his wife was returning to Lebanon yet again and it was contemplated that she would return bringing the plaintiff's mother back to Australia with her. The first defendant claimed that the plaintiff wanted the second defendant to bear the cost of his mother's travel but it was unable to do so and therefore the first defendant agreed to meet this expense. Again, it is curious if, as according to the first defendant's evidence, the plaintiff was not short of money at this time that he did not meet the cost of his own mother's travel by selling some of the shares which, according to the first defendant, he had his money tied up in at the time. In the end, according to the first defendant, he lent the plaintiff US$4,000 to meet the cost of his mother's travel expenses.
Once again in April 1997 the first defendant said that he lent the plaintiff the sum of US$8,000 because the plaintiff wished to give some money to his parents who were visiting in Perth before they returned to Lebanon. Initially he said the plaintiff wanted US$10,000 from the funds of the second defendant but as it could not afford the loan, the first defendant offered to lend the plaintiff $10,000 (US$8,000) himself. This loan, according to the first defendant's evidence, was relevant to Exhibit D4 which he claimed demonstrated the sum of $9,832.55 was exchanged for US$7,500 which sum was made up by the first defendant to the amount of US$8,000 by payment over to the plaintiff of US$500 in cash which the first defendant's wife had on her person at the time. The first defendant's evidence was that originally he had given the plaintiff $10,000 Australian in cash which was then converted by the plaintiff into US dollars. The first defendant was unable to say why the plaintiff withdrew a significant amount of money in Australian dollars from his own bank account on that same date.
In relation to the jewellery, the first defendant gave evidence that it was at the plaintiff's suggestion the jewellery was put in his safety deposit box for security reasons in mid‑1994 or 1995. He agreed that when either he or his wife wanted access to the jewellery the plaintiff would take it out and give it to Mrs Jabbour and she would then return it to the plaintiff who would return it to the safety deposit box. There was never a problem involving this arrangement, according to the first defendant, until 27 January 1998 when documents were seized from the second defendant's premises after legal action taken by the plaintiff. According to the plaintiff, he attended Mr Joseph Said's house about that time and requested that the plaintiff return the jewellery to him. The first defendant's evidence regarding this aspect of the matter differs from that of the other witnesses who were present at the time.
The first defendant denied that the plaintiff, in response to his request told him that it was not a problem and in fact the first defendant claimed that the plaintiff told him he did not have the jewellery at that time, and further that he had given it to someone else for safe keeping. The plaintiff was not cross‑examined in relation to either of these allegations.
The first defendant's evidence was that his lawyer knew as at either 28 or 29 January 1998 that there was a problem as far as the first defendant was concerned regarding his wife's jewellery. In a letter of 5 February 1998 from the first defendant's solicitors to the plaintiff's solicitors no mention is made of the jewellery or the first defendant's concerns regarding it. This is despite the fact that the first defendant gave evidence that at that time his solicitor was aware of such concerns. Further, that correspondence states "Please note that I have taken instructions from my client and he is insistent that there is no problem between himself and your client. Further, my client instructed me that both he and your client are anxious to conclude the agreement between them, and in this connection he instructed me to request you to notify me as to the progress of the drawing of the Deed of Settlement". Far from raising any concerns as to matters between them, in my view the tenor of the rest of that passage of the letter emphasises the desire of the first defendant to conclude the matter. The clear import is that all was well between the first defendant and the plaintiff. In response to this the first defendant claimed that he instructed his lawyer not to mention the problem with the jewellery as he was desperate to secure its return. If the situation was as the first defendant asserted, namely that he had been placed under duress with respect to signing the deed because the plaintiff would not return the jewellery, and if he had conveyed this information to his solicitor, it is extremely unlikely that first of all his solicitor would have written a letter in the above terms and further, that at that time the solicitor concerned would not have given the first defendant advice in relation to duress.
The first defendant has given differing information in the past as to when the deed was signed in that in a number of affidavits he claimed it was Friday 13 February, whereas in his defence it is pleaded that it was signed on 12 February. The sworn evidence of the first defendant was that the deed was signed on 13 February. Although perhaps not a great deal turns on it the weight of the evidence would suggest that the deed was signed on either 11 or 12 February, the day following the making of the deed. Although the solicitor's letter was written in early February the first defendant claimed that he did not receive advice from his lawyer that duress was available to him as a defence until sometime after this, perhaps in March. Following upon this in April 1998 the first version of the first defendant's defence and counterclaim were filed on his behalf and the defence of duress was raised.
The first defendant in effect said that he was able to fund the three loans in US dollars which he made to the plaintiff because in 1993 his wife returned from Lebanon bringing with her US$10,000 and then on two occasions in 1995 he received two amounts of US$10,000 by various means from Lebanon. He then said that the bulk of that money was applied to building up the business he had with the plaintiff. Certainly it would seem for periods between 1990 and the end of 1994 the first defendant was either unemployed or not in full employment. In December 1990 he was in employment but became unemployed in September 1991 and remained in receipt of a carer's pension until June 1992 as he was caring for his father who was in ill health. Between July 1992 until mid‑1993 he was employed at Onta Fine Foods by his brother but he lost his job there due to the breakdown of their relationship and he remained unemployed from the middle of 1993 until the end of 1994.

The first defendant's wife gave evidence that she was present with her husband when an oral agreement was made whereby the plaintiff offered to pay the first defendant $100 per week to reflect his share of accommodation and living expenses. Notwithstanding this Mrs Jabbour claimed that for the seven years following this agreement in 1991 the plaintiff paid no money pursuant to the agreement and Mrs Jabbour never requested payment, although the plaintiff contributed nothing to the household expenses and indeed Mrs Jabbour claimed she had to cook special food for him and look after him in that regard.
Mrs Jabbour gave evidence similar to her husband regarding the circumstances giving rise to the three loans in US dollars which were allegedly made to the plaintiff.
Mrs Jabbour's evidence regarding the jewellery was somewhat at odds with the evidence given by her husband. She agreed that the jewellery was given to the plaintiff to place in his safety deposit box for security reasons but according to her once that occurred she never saw the jewellery again until it was returned. Whenever she requested access to it the plaintiff would make excuses denying her access which upset her. She said she complained about the situation to her husband but he certainly did not refer to this in his evidence and suggested that as far as he was concerned the difficulty with retrieving the jewellery arose in late January 1998.
Mrs Jabbour's evidence was that despite making a loan of US$2,000 to the plaintiff which was not repaid, a further loan of US$4,000 was made to him which was also not repaid, and then finally, despite the non‑repayment of loans by the plaintiff, a further loan of US$8,000 was made to him which again was not repaid.

The legal principles

Duress

Duress involves the use of illegitimate pressure to procure a benefit; Pao On v Lau Yiu Long [1980] AC 614. There is little argument that duress renders a contract voidable rather than void. As a result a person alleging duress or coercion is entitled to elect whether or not to abide by the contract. In order to establish duress the pressure allegedly applied by the coercing party must be a cause, though not the sole cause, of the victim of that pressure conferring a benefit or advantage on the coercive party. If it is established that illegitimate pressure was exerted upon a victim the onus then lies upon the party who is said to have applied such pressure to demonstrate that its action was in no way a cause of the victim entering the agreement; Barton v Armstrong [1973] 2 NSWLR 598 at 617 and 633.
I accept the submission made by counsel for the first defendant that the test of economic duress as it operates in Australia is found in the judgment of McHugh JJA in Crescendo Management Pty Ltd v Westpac Banking Corpn (1988) 19 NSWLR 40 where his Honour stated:
"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 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."
As a matter of logic when considering the question as to whether any alleged duress has operated in such a way as to confer upon a party to a contract the right to avoid that contract, the first question to ask is whether in fact on the evidence there has been any pressure applied to induce the party alleging duress to enter the contract in the first place. If on the evidence duress is found to exist one would then go on to consider its effect on the quality of consent or assent of the victim insofar as determining whether or not the behaviour amounting to duress induced the victim to enter the contract in the first place and whether such duress constitutes behaviour which the law does not regard as legitimate. If, on the other hand, the evidence does not give rise to a finding that duress has been exerted upon the party claiming duress, then that I would have thought is the end of the matter. In those circumstances it would not be necessary in my view to go on and consider issues such as election, affirmation or restitution.

Findings on the evidence

It is the case that the plaintiff, Mr Khoury, presented as a somewhat excitable witness and at times he exhibited a degree of frustration in giving evidence but nonetheless I did not find him to be an unreliable witness or one whose evidence was lacking in credit. On the other hand, the evidence of the first defendant, Mr Jabbour in particular and his wife to a lesser degree, was unsatisfactory in a number of material respects.
I do not find on the evidence that the plaintiff exerted any duress upon either the first or, for that matter, the second defendant in order to cause the first defendant to execute the deed. In my view the arrangement whereby the jewellery of the first defendant's wife would be placed in the plaintiff's safety deposit box, with access to it at any time the first defendant or his wife wished, was a mutually satisfactory arrangement between the parties. On the evidence there is nothing to suggest that that arrangement did not continue in that manner until the visit by the first defendant to Mr Said's house in late January 1998. I consider that the plaintiff's evidence of what occurred on that occasion, which is supported by the evidence of two independent witnesses, is a reflection of what occurred. I accept that the first defendant did request the return of the jewellery from the plaintiff and at that time the plaintiff indicated the first defendant could have the jewellery at any time he wished and that any problems which existed were between the plaintiff and the first defendant rather than the first defendant's wife. I do not find that the first defendant or his wife were ever denied access to that jewellery or were refused the return of the jewellery. Nothing sinister turns on the fact that the jewellery was not returned until very shortly after the deed was executed.
It is telling in my view that notwithstanding the first defendant claims that the plaintiff refused to return the jewellery to him on that occasion and indeed advised him that it was with a third party, nonetheless about a week later on the first defendant's instructions his lawyer wrote a letter to the plaintiff's lawyers stressing the amicable nature of the situation as between the plaintiff and the first defendant and the first defendant's great desire in the absence of any difficulties between the parties to have the deed drafted and executed. I consider it to be unlikely in the extreme that if the first defendant's legal advisers were aware of his allegations regarding duress at that time they would not have advised the first defendant of his legal rights.
Therefore, in relation to relevant issues raised at trial, I find that the deed executed between the parties on 11 February 1998 is legally enforceable against the first defendant (and indeed the second defendant). I do not find that the first defendant, Mr Jabbour, was induced to execute the deed as a result of any form of economic duress exerted upon him by the plaintiff. I do not find in the period of time prior to the commencement of negotiations leading to the execution of the deed that the plaintiff refused to return the first defendant's wife's jewellery to him, nor am I persuaded that the plaintiff told the first defendant that the jewellery would not be returned to him unless and until the defendants executed the deed in terms demanded by the plaintiff. Although on the evidence it is clear that the plaintiff did return the jewellery to the first defendant after the deed was executed and after payment of a cheque for $20,000 to the plaintiff, I accept the plaintiff's explanation as to why that was so. I do not find that the return of the jewellery was in any way consequent upon the execution of the deed in its relevant terms or payment of $20,000 to the plaintiff. In the absence of duress the deed was not voidable at the election of either the first or second defendant. Having made these findings on the evidence there is no need to determine whether or not the first defendant was entitled to avoid the deed.
In relation to the first defendant's counterclaim against the plaintiff, I do not find any acceptable evidence that there was an agreement between the plaintiff and first defendant in December 1990 whereby the plaintiff agreed to pay the first defendant money towards accommodation and living expenses whilst they were living at 4 Fawk Court, Ballajura. I accept the plaintiff's evidence that no such arrangement was ever made or discussed. It is telling that reference to this alleged agreement between the parties was not made until some considerable time after the first defendant filed its initial pleadings in this matter. In addition, as a matter of logic and commonsense, I consider it quite extraordinary to suggest as the first defendant and his wife claimed that such an agreement was in force for a period of seven years and during that time neither of them ever requested the plaintiff to honour that agreement by payment of money for accommodation and living expenses. On the evidence before me, given the relationship that existed between the parties in 1990 and indeed up until the relationship between the plaintiff and the first defendant soured, it is highly unlikely that such an arrangement would have been made. As I find that no such agreement was made, clearly it is unnecessary to make any findings as to its terms or whether it was breached by the plaintiff in any manner.
I do not find on the evidence before me that any of the three loans alleged by the first defendant to have been made to the plaintiff ever occurred. It may well be that a person such as the first defendant would lend money to a close friend such as the plaintiff on one occasion but once again I consider it highly improbable that if that money was not repaid as asserted by the first defendant then he would continue to make loans of significant amounts of money after that period. I say that simply by way of illustrating a point because I do not accept that even an initial loan in May 1995 was made by the first defendant to the plaintiff. The plaintiff, for example, clearly had funds in his own bank account which enabled him to give monies to his parents as a gift before they returned to Lebanon on one occasion.
I therefore find that as there was no duress the sum of $20,000 paid by the first defendant to the plaintiff pursuant to the deed was properly paid. The sum of $12,000 is now due to the plaintiff from the first defendant and must be paid in conjunction with interest on that amount at 6 per cent between 12 March 1998 and the date of this judgment.
For the reasons expressed, the first defendant's claim for a declaration that the deed is and was at all material times voidable, void and of no effect, is dismissed as is his claim for the payment of $20,000 and interest thereon. Further, the first defendant's counterclaim for the sum of $35,500 representing accommodation and meals for the period December 1990 to October 1997 at $100 per week is dismissed as is the first defendant's counterclaim for repayment of the three loans allegedly made to the plaintiff in May 1995 (US$2,000), October 1996 (US$4,000) and April 1997 (US$8,000).
Finally, I accept the plaintiff's claim that he has complied with all the obligations imposed upon him pursuant to the terms of the deed and I conclude therefore that the plaintiff has returned to the first defendant all of the documents in his possession or control relating to the second defendant.