8 Mr Assi's affidavit describes, somewhat incoherently, his dealings with Mr Lazar, whom he met through a friend in early 2004. At that time, Mr Assi said that he had $300,000 in savings, a home and an investment property. He had a degree in computer science, he had "worked in retail shops" he only had very little experience with no qualifications or experience in finance or loans. He said that he did some IT work for Mr Lazar, supplying him with $60,000 worth of equipment for his office. Although he forwarded an invoice he was not paid for work done or for the equipment supplied. Mr Lazar told him early on in 2004 he worked on construction projects, and Mr Assi told him of two such projects in Neutral bay that he was "thinking of assisting Mr Lazar's company, BACF Pty Limited to develop". Mr Lazar said that the projects were good ones, that he would fund the projects and they would be managed by Mr Assi and as a director of a company he would receive a percentage of the profits. Mr Assi said that he gave Mr Lazar $20,000.00 "to kick start the project". He "was resigned from the company seven day's later" (sic).
9 Mr Assi said that he had no independent advice and Mr Lazar "appeared to be so charming and so capable that I went along with it in the vain hope that one day all moneys would be refunded to me". He said that, except for the first four months or so he received no wages and never received any profits from the construction projects. When he complained, Mr Lazar would either promise him that the money was coming soon, or "would persuade me to appoint myself as director of more companies telling me in words to the following effect: 'Sign this now Jihad. If the companies work out, you can have your wages but not until then.'"
10 The lack of any real detail or order in this account makes it difficult to understand what the arrangements Mr Assi made with Mr Lazar actually were or when they were made. Regrettably, the entire affidavit reflects this problem.
11 Mr Assi said that he did not know "what all the companies did at all times [but] they were all controlled by Mr Lazar including Lanmar". He said that between 2005 and 2007 Mr Lazar "assigned me as a director of more than seven companies, always promising me wages, bonuses and company cars" but that he never received any of the wages he promised. The affidavit gave details of signing paper work relating to a company car after Mr Lazar had been "screaming at me down the telephone in words to the following effect:
'Why don't you want to sign? Don't you trust me? If you do not sign, you will not see any of your wages ever and I will stop all work on your deals and give it to someone else. This is all for my company. When you get back to the office, I'll explain why you had to sign it.'
12 Mr Assi said that he signed the documents but he did not get a chance to understand them and, at all events, he was too upset and distressed to even try. Mr Lazar later told him that the car was a company car and he would pay all moneys due in respect of it.
13 It was on 15 February 2006, Mr Assi claimed, that Mr Lazar "appointed me as director of Lanmar Pty Limited". He became the director of other companies at the instance of Mr Lazar, the details of which do not presently matter. Mr Assi said that on several occasions throughout 2006 Mr Lazar had told him to sign a document where it said "personal guarantee" saying he "was signing as a director for the company, it was a loan for that company". Mr Assi said that some of these documents mentioned Lanmar. Mr Assi said that Mr Lazar would often make the following statements to him -
"If you do not sign, I will ruin you. I will bankrupt you and take your family home and your five little ones will have nowhere to live."
14 At other times, Mr Lazar promised Mr Assi that he (Mr Lazar) would cover the repayments. Mr Lazar also promised Mr Assi, at the outset of their dealings, that he would pay $100,000.00 for every $5 million worth of guarantees and at various times promised to bring Mr Assi's unpaid wages up to date.
15 After the first few months, Mr Assi said, he started to receive notices from the various companies from which loans had been obtained. He said that Mr Lazar never paid him his wages, denying sometimes that anything was owed or saying that he would pay later.
16 Mr Assi said that Mr Lazar had appointed an in-house solicitor, Mr William Redmond with whom, he said, all "deals" must be discussed. On one occasion when Mr Assi made an appointment to see an independent solicitor he was abused by Mr Lazar and told to obtain advice from Mr Redmond. Mr Assi said that he was instructed by Mr Lazar to forward all documents he received to him or Ms Nils to deal with. Mr Assi said that he complied with this direction. He said that, by the end of 2006, he realised from the demands that he was still personally receiving that Mr Lazar was not going to make any payments and that he was being held liable for all the agreements that Mr Lazar had, as he claimed, made him sign. From that time on, Mr Assi said, whenever he wished to talk to Mr Lazar about his employment, he was never available.
17 Mr Assi deposed that, whilst he did not have a specific recollection of having signed the personal guarantee which is the subject of these proceedings, "I must have done so under the pressures described … ".
18 He said that he had never been advised on any documentation "received from Seiza Mortgages", the plaintiff's agent (see below), and he knew nothing about the Carey Bay properties except that he was shown the location and told their price by Mr Lazar in about August 2006. He said that he derived no benefit from having guaranteed any debts in relation to them.
19 Mr Assi said that he began to suffer from anxiety and depression from about March 2007 and consulted his general practitioner for counselling and treatment. In April he decided to leave Mr Lazar, resign from the companies and refused to sign any more guarantees.
20 It is clear enough that Mr Assi claims that Lanmar was controlled by Mr Lazar, that he had no access to its funds and that, in substance, his interest was as an employee hoping to obtain past unpaid wages and future employment and an indeterminate share in the profits of projects operated by Lanmar. It seems implicit also that he claims that Mr Lazar had dishonestly given assurances about payment and the reality of future employment prospects and by cajolery and threats had induced him to become a director of Lanmar and execute the guarantee.
21 (In November 2007 he was told by a developer something about how the transactions involving the properties at Carey Bay occurred and how he was involved. But it does not seem to me that any of these conversations are presently relevant.)
22 The plaintiff relied also on the affidavit of Michael John Linton who is an employee of Seiza Capital Pty Limited, which manages the mortgage on behalf of the plaintiff and the loan that are the subject of the proceedings. That affidavit deals only with documentary matters and does not deal at all with the circumstances under which the loan was negotiated. There was no evidence from any employee of the plaintiff.
23 In his affidavit Mr Linton deposed that on 9 March 2007 the plaintiff offered to lend the sum of $2.6 million to Lanmar. This letter of offer was executed by Lanmar and Mr Kazmierski. It was an express term of the loan agreement that Mr Kazmierski and Mr Assi jointly and severally guaranteed the debt. At the time they were directors of Lanmar. The guarantee is dated 5 May 2006 and was signed by Mr Kazmierski and Mr Assi. Their signatures were witnessed by a Mr Tony Fairclough. Attached to the guarantee is the document dated 4 April 2006 signed by Mr Assi which states that he "acknowledged that -
"1. I have instructed Mr Bill Redmond … to give me legal advice concerning the following loan and security documents:
(i) Loan Agreement/Offer of Loan between Australian Executor Trustees (the lender) and Lanmar Pty Limited (the borrower).
(ii) Mortgage over property …
(iii) Memorandum Registered No ….
(iv) Charge over Lanmar Pty Limited.
2. I produced to my solicitor the following evidence as to my identity:
(a) …
(b) Driving Licence [Number given]
(c) …
(d) Credit Card American Express [Number given]
(e) Rate Notice
(f) Other - Visa Card Commonwealth Bank
3. The advice given to me by my solicitor included that
(i) If the borrower fails to make any payment on time, I as the guarantor will be liable to remedy that failure, and that could involve me in payment to the lender of all moneys owed by the borrower to the lender including principal, interest, default interest and the lender's costs of rectifying the default.
[Other relevant disclosures about the extent of liability]
5. After receiving the above advice I freely and voluntarily signed the loan documents.
DATE: 4-04-06
SIGNED: [Mr Assi]"
24 It appears from an Internet search that Mr Redmond holds a Practising Certificate from the Queensland Law Society. It is clear that Mr Assi asserts that Mr Redmond was not his solicitor, but was Mr Lazar's or Lanmar's or both. If this be true then Mr Redmond was not independent and it was wrong of him to create a document that suggested otherwise.
25 On 5 April 2006 Mr Robert Bell, a partner of Vouris & Bell, Chartered Accountants, wrote to the plaintiff to inform it that the firm had been instructed by Mr Assi and that "the financial and commercial risk inherent in entering into" the guarantee was explained to him, certifying also that to the best of Mr Bell's knowledge, information and belief Mr Assi has "understood the financial and commercial risks" in entering into the transaction. Vouris & Bell also certified that they did not act for the plaintiff. Additionally, Mr Assi made a statutory declaration, witnessed by Mr Redmond, stating that he had received independent legal advice regarding the loan and the security documents which are the subject of this litigation and "after receiving that advice I have freely and voluntarily signed" the guarantee.
26 The loan funds were advanced on 5 May 2006.
27 Mr Linton deposed that Lanmar defaulted under the loan agreement and mortgage by failing to make repayments in December 2006 and January 2007 and a default notice was in due course issued which was not complied with.
28 In his affidavit, Mr Assi said that sometime after November 2007 he was told by Mr Fairclough as follows -
'I made a deal with Michael Linton from Seiza Mortgages regarding these apartments. I went to a meeting at Gadens office and we made a deal that the apartments could be sold, and once a fair price was obtained, you and Jacek [Mr Kazmierski] would be personally free from the debt. Everyone knows its got nothing to do with you personally.'
29 Mr Linton deposed that he did not reach any agreement at the meeting with Mr Fairclough or at any other time to waive the plaintiff's rights to enforce the guarantee against Mr Assi. Having regard to the hearsay nature of the evidence about communications between Mr Fairclough and Mr Linton, I do not think that I can act upon the basis of what Mr Assi claims Mr Fairclough told him. At all events, what Mr Linton was reported to have said did not amount to a release of the obligations created by the guarantee. At the most, it was an undertaking to exercise the power of sale under the mortgages before executing against Mr Assi and Mr Kazmierski.
30 One of the difficulties facing Mr Assi when the matter came on for hearing before me was there was no proposed defence or cross-claim that clearly articulated the basis upon which Mr Assi sought to litigate the question of his liability. It emerged that Mr Assi was relying on the Contract Review Act but the basis upon which a claim under that Act could be litigated was not clear, although there were matters that came out of Mr Assi's evidence which suggested potential grounds.
31 In due course, the solicitors for Mr Assi filed further submissions to which was attached a draft statement of cross-claim verified under oath by Mr Assi. The cross-claimant is identified as Mr Assi, the first cross-defendant is the plaintiff and the second cross-defendant is Seiza Capital. Other cross-defendants are Ian Lazar, Anthony Fairclough, William Redmond and Robert Bell.
32 The cross-claim alleges amongst other things that Mr Assi signed the guarantee by reason of the following:
"(a) Unconscionable conduct, undue influence, misrepresentation and duress on the part of Lazar and Fairclough [of which brief particulars are later given]; and
(b) a lack of both independent legal advice and independent financial advice notwithstanding the written representations made to the contrary by Redmond and Bell."
33 The cross-claim, in respect of the first and second cross-defendants is in the following terms -
"The first and second cross-defendants engaged in unconscionable conduct, knowingly or recklessly, in accepting the Cross-Claimant's guarantee without due inquiry, and in circumstances where the Cross-Claimant was a volunteer to the transaction, as to the following:
(a) whether or not the Cross-Claimant had obtained independent advice;
(b) whether or not the Cross-Claimant understood the subject documentation;
(c) whether or not the Cross-Claimant had any active role in relation to the development the subject of the proceedings;
(d) whether or not the Power of Attorney given to Fairclough by the Cross-Claimant was appropriately and correctly obtained."
34 It is difficult to see how sub-paragraph (d) is relevant to the present question.
35 So far as Mr Redmond is concerned, the cross-claim alleges that he never in fact provided advice to the cross-claimant regarding the guarantee documentation and did not advise him as to the purport of the effect of the guarantee. Certain other allegations are made which amount, according to the cross-claim, to unconscionable conduct and breach of fiduciary duty to Mr Assi. Mr Assi alleges that Mr Bell did not in fact advise him about the guarantee documents but merely sent him a declaration to the effect that he had received that advice asking for his signature. Mr Assi alleges in the cross-claim that he signed the declaration and sent it back "under pressure from Lazar and Fairclough" though he had not, in fact, received independent financial advice. He claimed that he never spoke personally to Mr Bell. Mr Assi claimed that Mr Bell was in a breach of his fiduciary relationship with him by failing to advise him not to enter into the guarantee.
36 As I have already mentioned, Mr Assi gave evidence in the hearing which was confused and difficult to follow but the sense of it is that Mr Lazar and Mr Fairclough were in business together to develop certain properties, that Mr Assi was working with or employed by Mr Lazar who had procured Mr Assi's signature on various documents, including the guarantee in question here by placing Mr Assi under undue pressure. Following is the theme of Mr Assi's evidence -
"Q. No, I am sorry I don't understand. You signed the documents?
A. I sign the documents because he put me under pressure, either sign it or you lose your job.