Nazzal v 1Quay Corp Pty Ltd

[2022] NSWSC 742

Supreme Court

New South Wales

Medium Neutral Citation:

Nazzal v 1Quay Corp Pty Ltd & Anor [2022] NSWSC 742

Hearing dates:

25 and 26 May 2022

Date of orders:

7 June 2022

Decision date:

07 June 2022

Jurisdiction:

Equity

Before:

Black J

Decision:

(1) Plaintiff succeeds in his claim for the sum of $553,877.03. Plaintiff fails in his claim for 50% of the Profits (as defined).

(2) Defendants are jointly and severally liable for the costs of the proceedings.

(3) Parties to submit agreed short minutes of order or otherwise their respective draft short minutes of order and submissions within 7 days.

Catchwords:

CONTRACTS — Duress — Illegitimate pressure — Where parties entered into a deed of settlement and a further deed of amendment — Where the plaintiff claims for amounts owing under the deeds — Where the defendant alleges that his entry into the deeds was procured by threats and violence by the plaintiff or his agents — Whether the deeds were signed under duress

Legislation Cited:

Evidence Act 1995 (NSW), s 140

Cases Cited:

- ANZ Banking Group v Karam (2005) 64 NSWLR 149; [2005] NSWCA 344

- Armagas Ltd v Mundogas SA [1985] 1 Ll R 1

- Barton v Armstrong [1976] AC 104

- Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

- Crescendo Management Pty Ltd v Westpac Banking Corporation (1998) 19 NSWLR 40

- Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810

- Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449

- Re Atlas Advisors Australia Pty Ltd [2022] NSWSC 705

- Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789

- State of New South Wales v Hunt (2014) 86 NSWLR 226; [2014] NSWCA 47

- Universe Tank Ships Inc of Monrovia v International Transport Workers Federation [1982] 2 All ER 67

- Varma v Varma [2010] NSWSC 786

- Watson v Foxman (1995) 49 NSWLR 315

Category:

Principal judgment

Parties:

Ahmad Nazzal (Plaintiff)
1Quay Corp Pty Ltd (First Defendant)
Iman Yassin (Second Defendant)

Representation:

Counsel:
J Adamopoulos (Plaintiff)

Solicitors:
Madison Marcus (Plaintiff)
Mr I Yassin (self-represented) (First and Second Defendant)

File Number(s):

2021/109679

Judgment

1. By Statement of Claim filed on 20 April 2021, the Plaintiff, Mr Ahmad Nazzal seeks, broadly, judgment in the amount of $553,877.03 against each of 1Quay Corp Pty Ltd (“1Quay”) and Mr Iman Yassin, and an order that 1Quay and Mr Yassin account to the Plaintiff for an amount equal to 50% of the Profits (as defined in a deed to which I refer below) and, or in the alternative, damages and interest. Mr Nazzal’s claim is founded on a Deed of Settlement and Release dated 12 February 2020 (“Deed”) and an Amendment Deed dated 29 March 2021 (“Amendment Deed”). The parties also led evidence of earlier events to which I will refer by way of background. The Defendants primarily rely on a defence of duress, although they also raise other matters to which I will refer below.

2. Mr Yassin was self-represented at the hearing, and I dispensed with the strict requirements of rr 7.1 and 7.2 of the Uniform Civil Procedure Rules 2005 (NSW) to permit him also to represent 1Quay at the hearing. This hearing was conducted by telephone, since Mr Yassin had expressed concern as to being personally present in Court with Mr Nazzal, and had then had technological difficulties which, I assume, prevented his joining the Court by audio visual means.

Chronology

3. I first set out a chronology which I have drawn partly from the Plaintiff’s chronology and partly from the affidavit evidence and the documents. There is little dispute as to events, other than as to the several matters on which Mr Yassin relies for his defence of duress.

4. Mr Yassin was the sole director of a company, Medina Project Group Pty Ltd (“Medina”) (Ex P1, 4). On Mr Yassin’s evidence, Mr Nazzal showed an interest in investing in a project in Blakehurst in 2015 (Yassin [26]). 1Quay was also incorporated in early 2015 with Mr Yassin as its initial sole director and secretary (Ex P1, 21). Mr Nazzal’s evidence is that, in 2016, he and Mr Yassin had a conversation about doing development work together through 1Quay (Nazzal 18.8.21, [16]) and, on 17 August 2016, Mr Nazzal and Mr Ziad Karout were appointed as directors of 1Quay with Mr Yassin. A company controlled by Mr Nazzal, Asset Enterprises Pty Ltd (“Asset Enterprises”), was issued half of the shares in 1Quay about that time (Ex P1, 22-23; Nazzal 18.8.21, [20]).

5. In May 2017, 1Quay purchased a property in Casula NSW for development purposes (“Casula Property”) (Nazzal 18.8.21, [25]). Mr Karout resigned as a director of 1Quay in mid-2017 (Ex P1, 22) and Mr Nazzal later resigned as a director of 1Quay around 27 July 2017, after he was told that his presence as a director was adversely affecting 1Quay’s ability to obtain construction finance. A Form 484 “Change to company details” (Ex P1, 34) was subsequently lodged with the Australian Securities & Investments Commission removing Mr Nazzal as a director and extinguishing Asset Enterprises’ shareholding in 1Quay, although it is not apparent whether the necessary corporate steps were taken to effect those changes. Nothing turns on that, where Mr Nazzal’s claim is brought under the Deed and the Amending Deed and does not turn on his previous investment in 1Quay or whether it was validly extinguished.

6. On 15 November 2017, 1Quay obtained a construction loan from National Australia Bank Ltd, and a mortgage to the bank was registered on the title of the Casula Property in respect of that loan (“NAB Mortgage”) (Nazzal 17.11.21 [42(a)], Annexure B).

7. On 22 September 2018, another lender, MACC Lending Solutions Pty Ltd (“MACC”) lodged a caveat over the Casula Property (Ex P1, 38). Mr Nazzal became aware of that caveat and made inquiries about it with 1Quay’s then solicitors, HP Legal, also in September 2018 (Nazzal 18.8.21, [35]). A strata plan was registered for the Casula Property on 19 October 2018 (Nazzal 18.8.21, [38]) and the NAB Mortgage was discharged on 11 December 2018 (Nazzal 17.11.21, Annexure D).

8. In July 2019, Mr Yassin instructed HP Legal as to dealings with MACC and also instructed them to pay the surplus amount to Mr Nazzal out of the settlement of the sale of lot 3 of the Casula Property (Ex P1, 45). The first matter on which Mr Yassin relies to establish duress is alleged to have occurred in July or August 2019, when Mr Yassin says that he arrived home and found Mr Nazzal waiting for him, and that Mr Nazzal said “You better f**ing pay me my money. Otherwise, I will be coming back harder” (Yassin [10]). Mr Nazzal denies that he confronted Mr Yassin at this time or at all in this manner and denies that he said these words (Nazzal 18.8.21, [106]ff; Nazzal 17.11.21 [16]).

9. There is corroboration for the fact that an encounter between Mr Nazzal and Mr Yassin took place at about this time since, on 1 August 2019, Mr Yassin emailed a paralegal at HP Legal, Ms Lorraine Dib, noting that Mr Nazzal attended his home and followed up on the making of a payment due to Mr Nazzal (Yassin, Annexure A). That email read as follows:

“Hope your [sic] well.

Just wanted to know why the amount in trust after settlement hasn’t been paid out to [A]hmad [N]azzal. As I had him turn up to my family home uninvited dressed all in black and dropped off by a friend and all covered up waiting for me to get home from work and asking about his money. I thought I requested he receive the balance in trust after all disbursements. If you could please follow up for me would be much appreciated. Thanks.”

HP Legal then advised Mr Yassin on 2 August 2019 that $140,632.02 had been transferred to Mr Nazzal (Yassin, Annexure B). Mr Yassin was cross-examined as to the incident which he said occurred in July or early August and as to the somewhat different account of that incident given to his solicitor, and his evidence was that he did not report the matter to the police (T46).

10. On 7 August 2019, Mr Nazzal lodged a caveat over lots 5 and 6 of the Casula Property (Ex P1, 48). Mr Yassin then requested that he remove the caveat over lot 5 because the sale of that lot was due to settle, and Mr Nazzal agreed to do so only on the basis that he was paid $200,000 (Nazzal 18.8.21, [50]).

11. By a series of emails commencing on 30 August 2019, Ms Dib conveyed a proposal made by Mr Yassin to Mr Nazzal in relation to payments to be made to Mr Nazzal, following sale of particular units and as to the balance of the profit on the project. On 2 September 2019, Mr Nazzal wrote to (among others) Ms Dib expressing frustration at Mr Yassin’s business dealings and what he claimed were failed promises and offering to resolve the dispute in relation to lot 3 of the Casula Property on specified terms (Ex P2, 2). Argumentative correspondence followed, including an email sent at 2:29pm on 2 September 2019 by Mr Yassin to, inter alia, Mr Nazzal (but apparently incorrectly referring to Hassan Nazzal), which stated that:

“Hassan nazzal [sic] thanks for your email on behalf of Ahmad [Nazzal] just so you know this is all happening due to the way the injection of the investment over the projects occurred by Ahmad [N]azzal lead us to borrowing money to pay him back. Clearly there is no care in the world in that account and you guys just want your money. I respect that and understand yet I was more in a position on protecting us which you don’t see or understand. That’s fine. Just so you know I’m doing I can and if you can’t see that.. I have nothing more to say. I was the registered princ[i]pal the garrantor [sic] took the responsibility of everything from start and need to protect myself and your side never the less none of that is taken in to account and I can only offer what we have tried to put forward thanks.”

12. Mr Nazzal responded by a further email dated 2 September 2019 (Ex P2, 1) objecting to Mr Yassin’s position and observing that:

“We refer to YOUR promises and what YOU have informed us. You told us that the mortgages we discovered would not affect settlements, you delayed settlement for lot 3 so your funder can sort out paperwork, you promised us funds will be returned within 3 weeks, these are just a few examples. You acted on your own accord with the funds from the project. In turn, you are making unfair offers to return funds you single-handedly took from the project, it is unfathomable.”

Mr Nazzal there declined to remove his caveat until the position was resolved.

13. Mr Yassin then responded on 2 September 2019 (Ex P2, 1) that:

“I’m sorry ahmad nazzal [sic] but I have tried and that’s the best I can currently do to have return the one million plus dollars you invested in the projects with me. We have never objected to the money you invested and are pushing to have it to you in the fastest way possible to have you continue your way. We will endeavour to have you the unit 3 settlement to you asap but we can’t guarantee before unit 5 settlement therefore sale will unfortunately have to fall through. Just for your information no-one is insulting your intelligence and respect your stance and this isn’t a power trip on who proves the[i]r point but this is currently the best we can offer and hence the reason we have been communicating in writing through solicitors as it’s all formal way and nothing for you to lose track of.”

I pause to note that Mr Yassin’s email suggests that, at this point, he was still well able to protect his perceived interests. Correspondence continued into late October 2019, when Mr Yassin responded to a communication from Mr Nazzal’s brother, again robustly defending his position in respect of the calculation of profits from the Casula Property (Ex P2, p12).

14. The second incident on which Mr Yassin relies for his claim in duress occurred in October 2019, when Mr Yassin claims that a man holding a baseball bat damaged his car and stated “You f**king c**t, when do you wanna pay Nazzels [sic]?” (Yassin [14]). There is no contemporaneous documentary correspondence of this incident. Mr Yassin was cross-examined as to the incident that he says occurred in October 2019, which he claimed occurred in the presence of his children, and which he had raised with his then solicitors, HP Legal, in a face-to-face meeting (T49). Mr Yassin did not call either his children or any solicitor from HP Legal to give evidence of those matters; while I do not draw any adverse inference from that matter, it remains that the evidence that they might have given is not available to assist his case.

15. On 4 October 2019, Mr Nazzal withdrew the caveat over lot 5 of the Casula Property and was paid $200,000 from the sale proceeds (Nazzal 18.8.21, [51])

16. On 25 October 2019, Mr Nazzal wrote to (among others) Mr Yassin, offering to obtain a market appraisal for unit 6 in the Casula Property and discussing settlement of unit 6 and further correspondence followed in which Mr Yassin again robustly put his position (Ex P2, 13-15).

17. On 23 January 2020, Ms Dib advised Mr Nazzal that the caveat over lot 6 was preventing that lot from settling, proposed a payment plan in respect of outstanding debt on behalf of Mr Yassin and suggested an information barrier be established within HP Legal between Mr Nazzal’s and Mr Yassin’s legal representatives (Nazzal 18.8.21, [53]). By an email dated 23 January 2020, Ms Dib then emailed Mr Nazzal outlining a proposal by Mr Yassin for a deed of settlement, which would provide that the caveat on lot 6 would be withdrawn to allow settlement to proceed; residual funds at settlement would go to Mr Nazzal; the parties would enter into a deed of settlement “which captures the sum owed and will be payable over a period of 12 months”; Mr Yassin would agree to be the guarantor; and minimum payments of $25,000 would be made monthly in accordance with a payment schedule, with the balance to be paid within 12 months (Ex P1, 51). Further correspondence followed in which Mr Nazzal put several counter-proposals, including for payment of the balance within 9 months, which Mr Yassin rejected in significant part (Ex P1, 52, 56). Mr Yassin again appears to have been resolute in advancing and protecting his position in that correspondence.

18. From 29 January 2020, Mr Nazzal engaged Mr Zein of HP Legal to act for him (Nazzal 18.8.21, [60]), within the same firm as the solicitor acting for Mr Yassin, but subject to an information barrier. By an email dated 29 January 2020 (Ex P1, 71), Mr Zein advised Ms Dib and another solicitor within HP Legal acting for 1Quay and Mr Yassin of Mr Nazzal’s position, which included that an amount of $100,000 must be paid prior to the settlement of the sale of unit 6, that Mr Yassin was to consent to registration of a caveat over his personal property, and an account of profits was to be incorporated in the settlement deed with the figure to be determined by an external accountant and payable during the duration of the Deed. Ms Dib conveyed Mr Yassin’s robust response, by an email dated 31 January 2021 (Ex P1, 73), that Mr Yassin was “not in a position” to make an upfront payment; that he rejected the suggestion of a caveat over his personal property or property owned by him; and that, if Mr Nazzal insisted on those terms, Mr Yassin would no longer proceed with the settlement deed. The approach adopted by Mr Nazzal gives no indication that it was in any way affected by any previous threats or actions of Mr Nazzal or his associates. At about this time, Mr Nazzal and Mr Yassin together prepared a document headed “Casula Summary” which recorded the “total balance owed by [Mr Yassin] to Ahmad Nazzal” as $814,605.67 (Ex P1, 76). That schedule and figure were in turn included in the Deed.

19. In January 2020, the third alleged incident on which Mr Nazzal relies to establish duress occurred when Mr Nazzal allegedly called Mr Yassin and said “Hass [a solicitor within HP Legal] will be preparing a deed and you better f**king sign it” (Yassin [15]). Mr Yassin made no contemporaneous record of such a call and it appears he did not then advise his solicitors of it. It is not immediately apparent why Mr Nazzal would have threatened Mr Yassin at that time to cause him to enter that settlement deed, where that proposal had been initiated by Mr Yassin and where Mr Nazzal had, to that point (and later), limited success in negotiating the terms he sought for a settlement.

20. The Deed was executed on or about 12 February 2020 (Ex P1, 80) and relevantly provided for 1Quay to pay Mr Nazzal an amount of $814,605.67 by 12 monthly instalments, commencing from the date of the Deed with each instalment to be an amount no less than $25,000 per month (cl 2 and schedule 1). It also required 1 Quay to account and pay to Mr Nazzal an amount equal to 50% of the Profits (as defined) within 12 months from the date of the Deed (cl 2.4). The term “Profits” was defined as being the net profit after tax of 1Quay recorded in relation to the “Project” (being the development of the Casula Property) as determined by an external accountant nominated by the “Payer”, namely 1Quay. By cl 11.1 of the Deed, Mr Yassin unconditionally and irrevocably guaranteed the performance in full of all of 1Quay’s obligations as and when they fell due under the Deed, and undertook to perform on demand any obligation of 1Quay in full and when due, on default by 1Quay of that obligation, as if he was the payer in respect of that obligation.

21. By their Defence filed on 24 June 2021, at a time they were legally represented, 1Quay and Mr Yassin accepted that he signed the Deed in about February 2020, but contended that he was not aware that he was to be made a guarantor under the Deed; that his solicitor was acting for Mr Nazzal in a conflict of interest; that he was not advised that he was personally liable under the Deed; and the Deed was signed under duress. That Defence also particularised several events said to give rise to that duress that occurred in July 2019, October 2019 and January 2020, and also particularised subsequent actions that were also alleged to give rise to duress.

22. The fourth and fifth alleged incidents relied on for Mr Yassin’s duress defence did not occur until July 2020. Mr Yassin claims that Mr Nazzal then demanded that payments be made to him under the threat that otherwise “[Mr Nazzal] will put two on you” and Mr Karout is alleged to have conveyed a similar message to Mr Yassin (Yassin [20]). Mr Yassin was also cross-examined as to the threats which he says were made in July 2020, and maintained his position that he had received a threatening phone call, although 1Quay was then making payments under the Deed, and he was noncommittal as to whether it was doing so on time (T75). His evidence in cross-examination was that Mr Karout was lying when he denied that he had not made such a threat to Mr Yassin (T75). There is no obvious reason why further threats would be made in July 2020, when 1Quay was not in default, at least so far as the minimum payments due under the deed were concerned, rather than later when 1Quay passed into default.

23. By email dated 29 September 2020 (Ex P1, 102), Mr Yassin advised Ms Dib that:

“Sorry due to the unexpected circumstances that have arisen in the last few days I have been restricted from been able to make any form of payments from accounts due to the current enforcements placed on my side. I will ende[a]vour to have payments made by another account and have funds cleared in HP Legal Trust by Tuesday 6 October 2020 the latest. Sorry for the inconvenience and hope this will not be a problem. …”

Mr Yassin was cross-examined about this email, and his evidence was that the “enforcements” to which he referred were “personal reasons” which were “enforcements were I can’t release money” (T76).

24. On 29 September 2020, Ms Dib then notified Mr Nazzal by email that 1Quay would not be in a position to pay the 8th instalment due under the Deed at the end of September until 6 October 2020 (Ex P1, 97-98) and Mr Nazzal responded by email dated 1 October 2020 that he “reluctantly agrees” to accept payment on 6 October 2020 by 3pm at the latest (Ex P1, 101). Further correspondence of a similar kind occurred in late November 2020 (Ex P1, 104-105) and early December 2020 (Ex P1, 109,111).

24. By an email dated 15 January 2021 (Ex P1, 114), Ms Dib, on Mr Yassin’s behalf, advised Mr Nazzal:

“… We refer to the Deed of Settlement and Release between 1Quay Corp Pty Ltd and yourself and note that [Mr Yassin] is to meet the following terms by 29 January 2021:

1.   The settlement amount of $814,605.67 is to be paid in full. An amount of $275,000 has been paid to you by 11 instalments, leaving a balance of $539,605.67; and

2.   50% share of the net profits in connection with the development of the project is to be paid to you.

After discussing the above matter with [Mr Yassin] we are instructed to advise as follows:

1.   As restrictions still apply to funds in Lebanese banks the $200,000 that he was seeking to obtain is not currently accessible;

2.   Funds required to settle the balance are not currently obtainable due to difficulties encountered with seeking finance;

3.   COVID-19 has prolonged the agony;

4.   He can only offer to continue paying by way of agreement $25,000 per month but is hoping that the situation will ease in the next few months and he will then be able to make full payment to fulfill the terms of the Deed;

5.   There have been allegations that terms of the Deed of Settlement and Release have been released to third parties and this is to cease immediately.”

26. Further correspondence followed, with Mr Nazzal again making counter-proposals, including through a new firm of solicitors now acting for him, which were largely rejected by Mr Yassin (Ex P1, 116, 119, 124, 127, 138, 147, 161, 174, 177) until Mr Nazzal ultimately put a proposal that was very similar to Mr Yassin’s initial position which Mr Yassin then accepted (Ex P1, 192).

27. The Amendment Deed, to which Mr Nazzal, 1Quay and Mr Yassin (there described as guarantor) were party, was executed on 29 March 2021 (Ex P1, 269). The Amendment Deed amended the Deed to extend the time for payment of amounts due under the Deed and 1Quay and Mr Yassin acknowledged (by cl 2.2(d)) that the amount of $553,877.04 remained owing by them and that they had not made payments toward the Profit Amount (as defined) and, by cl 6 of schedule 1 of the Amendment Deed, agreed to pay specified instalments, with default interest payable at 5% per annum, calculated daily. The Amendment Deed also provided that the parties would use best endeavours to agree upon the Profit Share (as defined) by 30 June 2021 (Sch 1, cl 3) and provided for acceleration of the obligation to pay the amount due after default and an opportunity to cure that default. The Amendment Deed also sought to restrict 1Quay’s and Mr Yassin’s ability to raise defences in respect for a claim for the Settlement Amount (as defined) or Profit Share, but no reliance was placed in that clause in answer to the Defences raised by them at this hearing. By their Defence filed on 24 June 2021, at a time they were legally represented, the Defendants admit the execution of the Amendment Deed but deny its enforceability, and rely on the same matters that they rely on to contest the enforceability of the Deed.

28. No payment was made when the first payment is due under the Amendment Deed (Ex P1, 277); on 1 April 2021, Mr Nazzal served a notice of default in respect of first instalment which required payment of that instalment within 7 days (Ex P1, 279). No payment was then made and, subject to the attack on the Deed and Amending Deed, by reason of cl 6 of the Deed, as amended, and cl 4 of schedule 1 of the Amendment Deed, the unpaid balance and Profit Share became due and payable, and default interest was payable on those amounts at a rate of 5% per annum, calculated daily.

29. These proceedings were then commenced by Mr Nazzal and, on 23 April 2021, Medina was placed into external administration (Ex P1, 6).

Affidavit evidence

30. Before turning to the affidavit evidence, I should recognise that I must have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318-319; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41]; Varma v Varma [2010] NSWSC 786 at [424]-[425]. Credit issues here need to be determined in respect of the allegations of duress and I have regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining them: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; State of New South Wales v Hunt (2014) 86 NSWLR 226; [2014] NSWCA 47 at [56]; Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 at [10]; Re Atlas Advisors Australia Pty Ltd [2022] NSWSC 705 at [5]ff.

31. I also note that 1Quay’s and Mr Yassin’s allegations in their Defence of threats made by Mr Nazzal and of an attack on Mr Yassin’s vehicle by an unidentified person referring to the need to pay Mr Nazzal are plainly allegations of serious wrongdoing. In determining these allegations, I have regard to the approach identified in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 and its equivalent under s 140 of the Evidence Act 1995 (NSW). Where a party advances allegations of impropriety, the Court must take account of the gravity of the matters alleged in deciding whether the inference should be drawn and, although the standard of proof remains proof on the balance of probabilities, the strength of the evidence necessary to establish a given fact to the civil standard may vary according to the nature of what it is sought to be proved. In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 449–450; [1992] HCA 66, the plurality observed that:

“The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary ‘where so serious a matter as fraud is to be found’. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.” [citations omitted]

32. Section 140 of the Evidence Act similarly provides that, in a civil proceeding, the Court must find the case of a party proved if it is so satisfied on the balance of probabilities and that, without limiting the matters that the Court may take into account in deciding whether it is so satisfied, it is to take into account the nature of the cause of action or defence, the nature of the subject matter of the proceeding and the gravity of the matters alleged. I approach the evidence in the Plaintiffs’ claim on that basis.

33. I also note that the parties sensibly agreed that neither would take a point as to formal compliance with the rule in Browne v Dunn, in respect of matters where it was apparent from the affidavit evidence that the parties were in dispute, including Mr Yassin’s claim to have been threatened and assaulted by Mr Nazzal. On that basis, Mr Yassin did not cross-examine Mr Nazzal or Mr Karout, although Mr Adamopoulos, who appeared for Mr Nazzal, cross-examined Mr Yassin at some length. I will refer to that cross-examination below.

34. By his first affidavit dated 18 August 2021, Mr Nazzal refers to his background as a building contractor and his involvement with Mr Yassin, originally in relation to Medina, which had undertaken several projects, and subsequently in relation to 1Quay. Mr Nazzal refers to issues which arose in respect of payments to contractors in respect of 1Quay’s development of the Casula Property, and to contributions that he personally made to the payment of trades, and to the circumstances in which he became aware that MACC had lodged a caveat on the title of the Casula Property. He refers to the development of his dispute with Mr Yassin, to his causing a caveat to be lodged over lots 5 and 6 of the Casula Property on 6 August 2019, and to subsequent negotiations which led to the entry into the Deed. Mr Nazzal in turn outlines the payments that were made under the Deed, refers to a proposal made by Mr Yassin’s solicitors to vary the terms of the Deed by email dated 15 January 2021 and to the negotiation of and entry into the Amending Deed. He denies the allegations that he, or persons associated with him, made threats to Mr Yassin as then pleaded in Mr Yassin’s Defence.

35. By his affidavit dated 11 October 2021, Mr Yassin refers to personal and business disputes which led to the end of his business relationship with Mr Nazzal and to disputes as to the amount that was owed by 1Quay to Mr Nazzal. He referred to an event in late July or early August 2019, when he claimed he was confronted by Mr Nazzal and threatened, in the manner to which I referred above, and I have also referred above to his somewhat different account of that matter in a contemporaneous email to his solicitor. I accept that the event likely occurred in at least the manner described in Mr Yassin’s contemporaneous email to Mr Yassin’s solicitor, and that Mr Nazzal being dressed in black or “covered up” (even in mid-winter) or driven by a friend might be sinister in some contexts. I also recognise that it is possible that this event occurred in the manner which Mr Yassin describes in his affidavit, and that he may have understated it in describing it to his solicitor. However, I am not satisfied on the balance of probabilities and in the manner required by s 140 of the Evidence Act that this event occurred as set out in Mr Yassin’s affidavit, given the difficulties with Mr Yassin’s credit and the evidence that Mr Yassin took a robust position in negotiating the Deed and the Amending Deed, where one might have expected a person acting under duress to take a somewhat more compliant approach.

36. Mr Yassin then gives evidence of having been attacked outside his home in October 2019 by a person wearing a face covering and holding a baseball bat, who demanded that he pay Mr Nazzal. He also refers to a telephone call in January 2020 in which Mr Nazzal told him that he “better f**king sign” the Deed. I also referred to these matters above. I again accept that it is possible that these events occurred, although the difficulties with Mr Yassin’s credit are again such that I cannot be satisfied on the balance of probabilities and in the manner required by s 140 of the Evidence Act that they occurred.

37. Mr Yassin’s evidence is also that he did not give instructions to his solicitors in relation to the Deed or, if he did, such instructions were minimal (Yassin [17]). I reject that evidence, where there is no reason to think those solicitors were wrongly attributing the positions taken in their emails to Mr Nazzal to him. He also refers to a conversation with a solicitor at the firm acting for Mr Nazzal and him, in which that solicitor recommended that he sign the Deed to “safeguard your family” and “get this saga off your back especially after what happened to you”. I accept it is possible that advice was given; any reference to “safeguard your family” would reflect the solicitor’s understanding of the position as to which there is no suggestion he had any personal knowledge; it would likely have been sound advice, given the amount that was due by 1Quay and unpaid to Mr Nazzal, irrespective of the other allegations made by Mr Yassin; and it does not add anything to the impact of the acts that give rise to the allegation of duress, if they were otherwise established.

38. Mr Yassin refers to subsequent incidents, two of which occurred prior to the entry into the Amendment Deed. I did not admit evidence of a third matter, which occurred well after the entry into the Amendment Deed, where Mr Yassin did not identify any basis (including, for example, any claim as to tendency evidence) by which it might be admissible. I am again not satisfied on the balance of probabilities and in the manner required by s 140 of the Evidence Act that these two events occurred as set out in Mr Yassin’s affidavit, given the difficulties with Mr Yassin’s credit and the evidence that Mr Yassin also took a robust position in negotiating the Amending Deed, where one might also have expected a person acting under duress to take a somewhat more compliant approach.

39. Mr Yassin also addressed the basis of Mr Nazzal’s original investment in 1Quay in this affidavit, but it is not necessary to address that matter where Mr Nazzal’s claim is based on the Deed and the Amending Deed. Mr Yassin’s evidence (Yassin [24], admitted with a limiting order under s 136 of the Evidence Act as evidence of his understanding) is also that:

“I became increasingly concerned about my safety and the safety of my family and that was the main reason why I signed the deed and the amended deed with [Mr Nazzal]”.

40. I am unable to accept this evidence. As I noted above, I am not satisfied on the balance of probabilities and in the manner required by s 140 of the Evidence Act that the events relied on to establish duress occurred as set out in Mr Yassin’s affidavit. It seems to me that the Deed and the Amending Deed had obvious advantages for 1Quay, and indirectly for Mr Yassin, allowing a substantial extension of time for payment; the evidence to which I have referred above indicates that they were negotiated between parties who were each seeking to protect their own interests, and Mr Yassin robustly and successfully resisted terms which he considered were inconsistent with his interests in those negotiations. Mr Yassin also contested aspects of Mr Nazzal’s evidence.

41. As I noted above, Mr Adamopoulos, who appeared for Mr Nazzal, cross-examined Mr Yassin at some length. Mr Yassin accepted on cross-examination that Mr Nazzal had contributed about $400,000 to a Blakehurst project, and was entitled to a profit of $115,000 in respect of that project, which was rolled over into the Casula Project (T32). Mr Nazzal was cross-examined as to the circumstances in which Asset Enterprises was issued shares in 1Quay and that shareholding was later extinguished (T34ff). He accepted that Mr Nazzal and he had discussed splitting the end profits on the Casula Property in 50% shares (T36). He acknowledged that the “Casula Summary” (Ex P1, 76), to which I have referred above, was prepared by him and Mr Nazzal in discussion (T36) and he had provided that document to his solicitors at the time the Deed was signed (T37). Mr Yassin accepted that Mr Nazzal had used his credit card to make payments to a subcontractor which was performing construction work on the Casula Property, although he said that Mr Nazzal had done so in order to accumulate points on that credit card (T42), a matter that is not material for present purposes.

42. Mr Yassin’s evidence on cross-examination was that there were “back and forward messages, or calls, or threats from numerous different people” (T43). I have referred to his cross-examination in respect of the matters on which he relies to establish duress above. Mr Yassin was also cross-examined as to the negotiations in respect of the caveat lodged by Mr Nazzal over units 5 and 6 of the Casula Property and the correspondence which led to execution of the Deed (T50ff). This correspondence was significant, as I noted above, for the robust approach which he adopted in it, and his willingness to reject demands put by Mr Nazzal as to the terms on which the matter would be resolved, and to do so in relatively strong terms.

43. Mr Yassin’s evidence in cross-examination was also that, in respect of his offer to be a guarantor of 1Quay’s obligations, “I don’t understand what it means, but I know that it’s me, the Company being guarantor” and “that I accept what I’m saying” and that “[m]y understanding is the guarantor is what I’m saying is truthfully by myself” (T57). Mr Yassin was then cross-examined as to the guarantee which he had provided to National Australia Bank, but was evasive in responding to that cross-examination, referring to “a whole lot of documents signed” and volunteering that he had not signed them in front of a solicitor but in front of the Bank’s loan manager. He then suggested that being a guarantor meant that “I’m responsible and I’m aware of what I’m writing and saying” (T59), and then stated that he was responsible for the Company’s affairs so far as Mr Nazzal was not a party to the relevant documentation (T59). He denied that he knew that being a guarantor meant that he was personally liable if 1Quay could not pay its debt (T59). I do not accept that evidence.

44. Mr Yassin accepted that, in January 2020, when the Deed permitted 1Quay to make payment to Mr Nazzal by instalments, 1Quay was not in a position to pay about $814,000 to Mr Nazzal (T72). He did not accept that there was an advantage for him in entering into the Deed, but then acknowledged there was an advantage in paying $814,000 in 12 instalments rather than as a lump sum (T73). I do not accept Mr Yassin’s denial of the advantage to him in entering that transaction, where he was sole director and sole shareholder of 1Quay and would plainly be adversely affected by any insolvency of 1Quay. His evidence in cross-examination was that he did not read the Deed before he signed it (T73), although nothing turns on that where he would be bound by it, having signed it, unless his defences succeed. His evidence was then again, in response to the proposition that he was a guarantor under the Deed that “my understanding of the guarantor was the fact that me … signing and agreeing what I’ve said is correct” (T73).

45. Mr Yassin accepted, in cross-examination, that in early 2021, 1Quay was then also not in a position to pay the amount that Mr Nazzal had required to be paid and that he was also not in a position to do so (T86). Mr Yassin was again cross-examined in respect of negotiations towards the Amending Deed, which are again significant for the fact that he was prepared to reject the terms sought by Mr Nazzal in that Amending Deed, and to maintain that position over an extended period, until Mr Nazzal ultimately largely accepted the terms which Mr Yassin had proposed (T94ff). I bear in mind that Mr Yassin’s evidence, in cross-examination, was also that there was “miscommunication” with the lawyers representing him at the time, and that he was speaking to more than one person within the firm (T103). Mr Yassin also accepted in cross-examination that no further payments were made after the Amending Deed was signed (T109).

46. Although the hearing was conducted by telephone, I am satisfied that Mr Yassin’s evidence must be approached with caution, and should not be accepted without corroboration. He was an argumentative and evasive witness, who was not prepared to accept matters which obviously emerged from the objective evidence, including his robust approach to protecting his own interests in negotiating the Deed and the Amending Deed. Aspects of his evidence were not credible including, in particular, his claim that he understood that a personal “guarantee” was no more than an indication that a person entering an agreement was telling the truth. That evidence was not plausible, where Mr Yassin has experience in the building industry where suppliers often seek personal guarantees; had himself been required to provide a personal guarantee to National Australia Bank in respect of a borrowing by 1Quay for the Casula Project; he had himself made the offer of a personal guarantee to Mr Nazzal, through his solicitors; and, as Mr Adamopoulos rightly put to him in cross-examination, Mr Nazzal had no need of and would not benefit from a confirmation that Mr Yassin was telling the truth.

40. Mr Nazzal read his further affidavit dated 17 November 2021 in reply, which denies significant aspects of Mr Yassin’s evidence. Mr Nazzal also read, in reply, the affidavit dated 16 November 2021 of Mr Karout who denied an allegation that he had, in July 2020, passed on a message from Mr Nazzal and his brother to Mr Yassin that “you better pay him without delay or otherwise he will put two on you”. Mr Yassin did not cross-examine Mr Karout in respect of his evidence, which fell within the scope of the position the parties had taken that such cross-examination was not necessary for the purposes of Browne v Dunn. I accept that it is possible that such a message was conveyed by Mr Karout; however, I cannot find, on the balance of probabilities and consistent with s 140 of the Evidence Act, that that occurred given the difficulties with Mr Yassin’s credit and the evidence that Mr Yassin took a robust position in negotiating the Deed and the Amending Deed, where one might have expected a person acting under duress to take a somewhat more compliant approach.

41. By a further affidavit dated 25 May 2022, Mr Nazzal corrected aspects of his first affidavit dated 18 August 2021, and acknowledged that 1Quay had previously reimbursed him for an amount he paid to a contractor on behalf of 1Quay, and claimed that the amounts referred to in the Deed and Amending Deed concerned monetary contributions made towards the Casula Project, for which he was not reimbursed. Little turns on this, where the parties have agreed the amount owed by 1 Quay to Mr Nazzal (and guaranteed by Mr Yassin) in the Deed, on which Mr Nazzal relies, and Mr Yassin accepted that he had been party to calculating that amount in his cross-examination.

The parties’ submissions

49. I have had regard to Mr Adamopoulos’ written opening and closing submissions and his oral closing submissions, and Mr Yassin’s oral closing submissions, which it is not necessary to address in detail where the resolution of this case largely turns on factual questions and the nature of Mr Yassin’s defence.

50. Mr Adamopoulos drew attention, in closing submissions, to the matters to which the Court would have regard in determining the conflict between Mr Nazzal’s and Mr Yassin’s evidence, and rightly submitted that the Court would give primary weight to contemporaneous records of what occurred and recognised that each of Mr Yassin and Mr Nazzal were personally interested in respect of the evidence that they gave. He also drew attention to authority that emphasised the significance of inferences drawn from documentary evidence.

51. Mr Adamopoulos acknowledged an error made in Mr Nazzal’s first affidavit, to which Mr Yassin gave considerable weight, as to whether 1Quay had repaid amounts paid by Mr Nazzal to the subcontractor on the Casula Project, and whether the amount due to him was in the nature of reimbursement for those amounts or a return on investment for the Casula Project. As I noted above, it is not necessary to address that question, where Mr Nazzal’s right to repayment arises under the Deed and the Amending Deed unless 1Quay’s and Mr Yassin’s defences are established. Mr Adamopoulos submits that there were difficulties with Mr Yassin’s evidence, including that he was unresponsive to questions, added material which he thought would advance his interests, and that his claim that he understood a guarantee to be a statement of his truthfulness was implausible. I have addressed those matters above. Mr Adamopoulos submitted that the Court should not accept Mr Yassin’s evidence unless it is corroborated by another witness or document, or against his interests. I would not go so far as that, although I have approached his evidence with caution and assessed that evidence in respect of the particular matters in issue. Mr Adamopoulos also addressed the factual history of the dealings between the parties, which I have in dealing with the chronology and affidavit evidence above. I will address his submissions as to the debts and the “Profits” (as defined) claimed by Mr Nazzal in dealing with those issues below.

52. Understandably, where Mr Yassin is not legally qualified, he did not make written submissions and his closing oral submissions largely addressed his account of events, rather than the applicable legal principles. He had a degree of difficulty at times in distinguishing between matters which were or were not addressed by the evidence that had been led in the proceedings. I have had regard to his submissions, to the extent that they were founded in evidence that had been admitted in the proceedings.

The Plaintiffs’ debt and “Profits” (as defined) claims

53. Mr Adamopoulos submitted, and I accept, that Mr Nazzal’s right to recover the amounts claimed as a debt is established by the Deed and the Amending Deed, subject to the defences raised by 1Quay and Mr Yassin.

54. As I noted above, Mr Nazzal also seeks an order that 1Quay and Mr Yassin account to him for an amount equal to 50% of the Profits as defined in the Deed. In order to establish that claim, Mr Nazzal relies on a financial record recording the profit and loss for 1Quay for the years 2017-2020 (Ex P2, 17-19). Mr Yassin’s evidence in cross-examination was that that document was prepared by 1Quay’s accountant, although he did not accept its accuracy. Mr Adamopoulos contended that that assessment of the profit of 1Quay was evidence of the “Profits” as defined in the Deed. As I noted above, that term is there defined as the “net profit after tax of [1Quay] recorded in relation to the Project as determined by an external accountant nominated by [1Quay]”. There appears to have been no formal, or indeed informal, nomination of 1Quay’s accountant to determine that profit. That document is difficult to follow; although the calculation is directed to the profit of 1Quay in relation to the relevant Project, where 1Quay had undertaken only that project, the summary of the total profit after tax does not correspond to the total of the profit figures stated for the relevant years. I am unable to find that the amount calculated in that document is the profit of 1Quay in relation to the Project, for the purposes of the definition of “Profits” in the Deed. Irrespective of 1Quay’s and Mr Yassin’s defences, to which I now turn, Mr Nazzal claims for this amount fails.

1 Quay’s and Mr Yassin’s defences

55. As I noted above, by their Defence filed on 24 June 2021, at a time they were legally represented, 1Quay and Mr Yassin accepted that he signed the Deed in about February 2020, but contended, first, that he was not aware that he was to be made a guarantor under the Deed, and this matter was also relied on in their defence to the claim under the Amending Deed. I find that 1Quay and Mr Yassin have not established this defence, where Mr Yassin had put the proposal that he guarantee 1Quay’s liabilities to Mr Nazzal through his solicitor; the fact that he was a guarantor was apparent from the terms of the Deed and the Amending Deed; he had access to legal advice in respect of the Deed and the Amending Deed; and he did not identify any legal principle that could have the result that 1Quay and he were not bound by the terms of the Deed and the Amending Deed that they executed.

56. Second, 1Quay and Mr Yassin contended in their Defence that Mr Yassin’s solicitor was acting for Mr Nazzal in a conflict of interest, and this matter was also relied on in their defence to the claim under the Amending Deed. Mr Adamopoulos contests the factual basis of this claim by reference to the information barrier to which there was a brief reference in the evidence and submits that such a conflict may give rise to a claim against the firm but did not impeach the Deed or Amending Deed as between Mr Nazzal and the Defendants. Mr Adamopoulos also rightly points out that, during a substantial part of the negotiations towards the Amending Deed, and when that Amending Deed was executed, Mr Nazzal on the one hand and 1Quay and Mr Yassin on the other were represented by separate firms.

57. I also find that 1Quay and Mr Yassin have not established this defence. I need not decide whether an information barrier was established within HP Law at the time the Deed was negotiated or whether it was adequate, although I note that Mr Nazzal on the one hand and Mr Yassin and 1Quay on the other were at least represented by different solicitors in the negotiation of the Deed. This defence cannot succeed against Mr Nazzal, first, because Mr Yassin identifies no right against him which arises from this claim. He does not plead or contend, for example, that HP Legal acted in breach of fiduciary duty by reason of any breach of the rule against conflicts of interest and, more significantly, he does not plead that Mr Nazzal was an accessory to any breach of fiduciary duty, so that any failing of that firm could be attributed to him, or prevent his relying on the Deed, noting that he can in any case rely on the Amending Deed where the parties were in any event represented by separate firms. This defence also cannot succeed in respect of the Amending Deed on a second ground, that it was largely negotiated and was executed at a time that Mr Nazzal and Mr Yassin were represented by solicitors in different firms.

58. Third, 1Quay and Mr Yassin contended that Mr Yassin was not advised that he was personally liable under the Deed, and this matter was also relied on in their defence to the claim under the Amending Deed. I find that 1Quay and Mr Yassin have not established this defence where the Deed provided, on its face, that Mr Yassin was guaranteeing 1Quay’s liabilities, and that reflected his proposal put to Mr Nazzal through his solicitor. In any event, 1Quay and Mr Yassin again do not identify any legal, equitable or statutory basis for relief against his liabilities under the Deed or Amending Deed arising from this matter. There is no general principle that a contracting party cannot enforce its contract against the other contracting party unless that other party’s solicitors give it comprehensive and adequate legal advice.

59. Fourth, as I noted above, 1Quay and Mr Yassin contended that the Deed was signed under duress, and relied on the same defence in respect of the Amending Deed. Mr Adamopoulos addresses the authorities in relation to duress, including Barton v Armstrong [1976] AC 104; Universe Tank Ships Inc of Monrovia v International Transport Workers Federation [1982] 2 All ER 67; Crescendo Management Pty Ltd v Westpac Banking Corporation (1998) 19 NSWLR 40 and ANZ Banking Group v Karam (2005) 64 NSWLR 149; [2005] NSWCA 344. Mr Adamopoulos rightly recognises that only the first of those cases is directed to actual or threatened violence, the matter on which Mr Yassin relies in this case, as distinct from broader commercial or economic duress. Mr Adamopoulos also points that the relevant pressure must be pressure which the law regards as illegitimate, but actual or threatened violence would plainly fall within that category. He accepts that it will be sufficient to allow a defence of duress if illegitimately applied pressure induced a party into the contract and submits that a contract affected by duress is voidable rather than void ab initio. Mr Adamopoulos addresses the factual context of each of the relevant events, and I have borne his submissions in mind in addressing those events above.

60. Mr Adamopoulos also submits that, if Mr Yassin was induced to enter the Deed, his subsequent conduct affirmed the Deed, so that it could not now be avoided. If the relevant acts said to constitute duress were established, then they might well have the consequence that Mr Yassin’s subsequent events, as affected by them, did not amount to an affirmation of the Deed. However, that does not arise given the findings that I have reached.

61. I have indicated above that I am not satisfied of the factual matters relied on for that defence to the requisite standard, on the balance of probabilities and having regard to s 140 of the Evidence Act, and 1Quay and Mr Yassin have therefore not established their defence that that the Deed and Amending Deed were signed by 1Quay and Mr Yassin under duress.

62. By their Defence filed on 24 June 2021, 1Quay and Mr Yassin also referred to the nature of Mr Nazzal’s investment, which they contended gave rise to a business partnership and not a loan (Defence [17]). Mr Adamopoulos submits that the matters raised in that defence, as to the nature of the relationship between Mr Nazzal and Mr Yassin prior to the entry into the Deed and the Amending Deed, do not respond to the nature of Mr Nazzal’s claim for debt arising under those documents. It seems to me that defence is not to the point, because Mr Nazzal was not bringing a claim arising from the nature of his original investment, but a claim arising from the obligations which 1Quay and Mr Yassin assumed under the Deed and the Amending Deed.

63. 1Quay and Mr Yassin have therefore not established their defences so as to displace the liability which is otherwise established.

Orders

64. For these reasons, I am satisfied that Mr Nazzal has succeeded in establishing his claim against 1Quay and Mr Yassin (as guarantor) for the sum of $553,877.03 with interest. Mr Nazzal has failed in his claim for 50% of the Profits (as defined in the Deed). 1Quay and Mr Yassin must pay the costs of the proceedings, jointly and severally. I direct the parties to submit agreed short minutes of order, including as to interest and costs, within 7 days or, if there is no agreement between them, their respective draft orders and short submissions as to any differences between them.

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Decision last updated: 10 June 2022