Chahal Group Pty Ltd & Anor v 7-Eleven Stores Pty Ltd

Supreme Court of NSW|2017-04-12|Before: Sackar J

Judgment Proceedings Background Facts Legal Principles Onus of Proof Credit of witnesses Parties' submissions Plaintiffs' submissions Defendant's submissions The Evidence Plaintiffs' evidence Mr Chaudhry Mr Pervaiz Mr Abdullah Mr Rafaqat Defendant's Evidence Mr Yasa Mr Ali Mr Howard Ms Johnson Mr Roos Consideration Fraudulent Alleged Cash Back Arrangements (1) Messrs Ali and Yasa (2) Mr Chaudhry (3) Plaintiffs' other witnesses (4) Additional corroborative evidence August cash Mr Chaudhry's conduct Damage to reputation Remedy Specific performance Damages

Proceedings

These proceedings concern the termination of a franchise agreement by 7-Eleven Stores Pty Limited (7-Eleven), on the grounds of alleged fraud by the franchisee in engaging in a cash back arrangement with two of its employees.
Mr Shakir Ismail Chaudhry (second Plaintiff) is the sole director of Chahal Group Pty Limited (first Plaintiff), which owned and operated a 7-Eleven convenience store as a franchise at 142 Windsor Road, McGraths Hill (McGraths Hill 7-Eleven). 7-Eleven (Defendant) terminated the franchise agreement on the alleged grounds of Chahal engaging in a cash back arrangement where it would pay certain employees' the relevant award rate, but then require the employees to withdraw a specified amount from their account to return to Mr Chaudhry (Alleged Cash Back Arrangements). This termination had immediate effect by the issue of a Notice of Termination on 6 October 2016 (Termination Notice).

Background Facts

On 1 August 2011 a Store Agreement was entered into by the Chahal, Mr Chaudhry and 7-Eleven regarding the McGraths Hill 7-Eleven (CB2-112) (Franchise Agreement). The Franchise Agreement was for a term of 10 years from the first date of operation. Article 25(e)(vi) and (viii) of the Franchise Agreement provides (with 7-Eleven defined as SEA): Notwithstanding anything else contained in this Article, the Agreement may be terminated immediately by SEA at any time upon the occurrence of any one or more of the following events, each of which events the FRANCHISEE acknowledges constitutes good cause for immediate termination (clause 23 of the Code or clause 36 of the Oilcode as appropriate) … (vi) the Franchisee or a Nominated Director are fraudulent in connection with the operation of the franchised business, which includes behaviour defined as Fraudulent Behaviour in Exhibit E to this Agreement. For the purposes of sub-Article 25(e)(vi) of this Agreement, the Franchisee and SEA agree that "fraudulent" in relation to the FRANCHISEE'S Operation includes those things defined as Fraudulent Behaviour in Exhibit E to this Agreement and they each acknowledge that those things defined as Fraudulent are fundamental to the business efficacy of the Agreement the Franchise Operation and the trust and confidence reposed in each party by the other party… … in relation to the Fuel Site only: (viii) the FRANCHISEE is likely, by the continued occupation of the Store, to cause substantial damage to SEA's business, property or reputation.
McGraths Hill 7-Eleven is a 'Fuel Site' within the meaning of the Franchise Agreement.
From 22 December 2011 - 6 October 2016, the Plaintiffs owned and operated McGraths Hill 7-Eleven under the Franchise Agreement.
From about 7 January 2016 - 7 February 2016, Mr Yasa was employed at McGraths Hill 7-Eleven. Mr Yasa alleged he was paid $12 per hour during this period, but received a greater amount in his pay slips and, pursuant to Mr Chaudhry's instructions, provided the difference in cash to Mr Chaudhry each week.
From about 21 January 2016 - 20 July 2016, Mr Ali was employed at McGraths Hill 7-Eleven. Mr Ali alleged he was paid $15 per hour during this period, but received a greater amount in his pay slips and, pursuant to Mr Chaudhry's instructions, provided the difference in cash to Mr Chaudhry each week.
On 7 August 2016, Mr Ali made an online application to the 7-Eleven Wage Repayment Program.
On 5 August 2016, a Ms Tracey Johnson, the NSW retail specialist lead at 7-Eleven, together with a Mr Terry Jones, a fellow employee of 7-Eleven, conducted an on-site payroll review of McGraths Hill 7-Eleven. When inspecting the safe, Ms Johnson alleged to have witnessed Mr Chaudhry remove around $400 in notes from the "Smart Safe" cavity of the safe.
On 26 August 2016, a Mr Steven Howard, a NSW retail specialist at 7-Eleven, together with a Ms Andrea Jacobs, a fellow employee of 7-Eleven, conducted an on-site review of McGraths Hill 7-Eleven. During this review, a piece of paper stapled to some cash was revealed in the safe of the store.
On 6 October 2016, 7-Eleven purported to terminate the Franchise Agreement by issue of the Termination Notice (CB677-704). The Termination Notice was issued personally to Mr Chaudhry by a Mr Barry King, NSW manager of 7-Eleven. Mr Stephanus Roos, regional manager of 7-Eleven in Western Sydney was also present.
The Termination Notice provided, among other things: This is a Termination Notice which has been issued because [Chahal] has acted fraudulently in connection with the operation of the business conducted from the Store and/or alternatively because [Chahal] is likely by continued operation of the Store to cause substantial damage to the reputation of 7-Eleven.

Onus of Proof

The Plaintiffs must prove each element of the cause of action to the reasonable satisfaction of the court. As explained by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 (Briginshaw) at 361, approved shortly thereafter in Helton v Allen (1940) 63 CLR 691 at 712 per Dixon, Evatt and McTiernan JJ, and applied in countless subsequent cases, this means when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found". In Briginshaw, Dixon J also commented at 362: But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences.
Beazley P (with whom Meagher JA and McDougall J agreed) applied Dixon J's remarks to the context of fraud in Srgo v Australian Associated Motor Insures Ltd (2015) 91 NSWLR 325 at [54]: the seriousness of a finding of fraud, including statutory fraud, does not permit of other than a specific finding that the fraud, or the contravening conduct, has in fact occurred. This was well explained by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336, albeit in the context of the requisite standard of proof. His Honour stated, at 362-363: "It is often said that such an issue as fraud must be proved 'clearly', 'unequivocally', 'strictly' or 'with certainty' … This does not mean that some standard of persuasion is fixed intermediate between the satisfaction beyond reasonable doubt required upon a criminal inquest and the reasonable satisfaction which in a civil issue may, not must, be based on a preponderance of probability. It means that the nature of the issue necessarily affects the process by which reasonable satisfaction is attained [that the fraud has been committed]." (Citations omitted)
The sentiments articulated by Dixon J are now reflected in section 140 of the Evidence Act 1995 (NSW).

Credit of witnesses

As noted by counsel for both Plaintiffs (T2/45-50) and the Defendant (Defendant's closing submissions [59]), the findings will ultimately turn on the credibility of Mr Chaudhry as against the credibility of Messrs Ali and Yasa.
In principle, a trial judge is not restricted in his or her assessment of a witness; he or she is not bound to accept all or any of that which the witness attests to. O'Loughlin J collected the authorities in Cubillo v Commonwealth (No 2) (2000) 103 FCR 1 at [118]-[123].
However, although judges are entitled to reject part or the whole of a witness's evidence, even if there has been no cross-examination, it is of course incumbent upon them to provide reasons for doing so. In any case where credibility is an important issue, the judge must give sufficient reasons so as to demonstrate he or she has not failed to use or has not palpably misused his or her advantage of first hand exposure in observing the witness; Beale v Government Insurance Office of NSW [1997] 48 NSWLR 430 at 445 per Meagher JA.
Judges as do juries need to act reasonably and not perversely or capriciously in relation to accepting or rejecting a witness's testimony; Christmas v Nicol Bros. Pty Ltd and Anor (1941) 41 NSWSR 317 at 322 per Jordan CJ; State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) and Others (1999) 160 ALR 588 at 617 per Kirby J.
Further, in making assessments of credibility, trial judges should exercise restraint in drawing inferences too willingly from the demeanour of witnesses as they present in court. Primary deference should instead be given to contemporaneous documents. As noted by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118 at [30]-[31]: 30. It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in as appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Société d'Avances Commerciales (Société Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana"): "... I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour." 31. Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility.
Whilst it is simplistic and arguably erroneous for a trial judge solely to be influenced by contemporaneous documents in his or her findings, such evidence will often have an extremely potent part to play in that process, especially when they were created against interest. If they appear of course to be self-serving they may need to be viewed with some care. Effective cross-examination also will play an important part in assisting a judge to come to a view about the facts especially when inconsistencies are exposed which are not capable of rational explanation.
Further, in any fact finding exercise a judge must always be astute in particular when drawing inferences carefully to distinguish in his or her mind between what is a reasonable inference as opposed to what may amount to no more than mere speculation; Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 222 per Mahoney JA.
As Brennan and McHugh JJ noted in G v H (1994) 181 CLR 387 at 390: An inference is a tentative or final assent to the existence of a fact which the drawer of the inference bases on the existence of some other fact or facts. The drawing of an inference is an exercise of the ordinary powers of human reason in the light of human experience; it is not affected directly by any rule of law.

Parties' submissions

The establishment or not of the alleged fraudulent conduct is to be resolved by carefully evaluating the credibility of Messrs Ali and Yasa, as against the credibility of Mr Chaudhry, together of course with other relevant evidentiary matters.
Counsel for the Plaintiffs conceded that if the Defendant establishes the fraudulent conduct on the part of Mr Chaudhry, the Termination Notice is lawful (T3/25-30, T166/40-T167/20).

Plaintiffs' submissions

The Plaintiffs submitted Mr Chaudhry presented a case with no inconsistencies or inherently incredible assertions in relation to the central issue.
The Plaintiffs' case was that Messrs Ali and Yasa were lying about their accounts of the Alleged Cash Back Arrangements out of a desire to have access to compensation under the Wage Repayment Plan conducted by 7-Eleven.
The Plaintiffs pointed to both men's failure to clarify details about the Alleged Cash Back Arrangements, such as how to calculate the exact difference, what to do with the money in the case of Mr Ali, and whether Mr Chaudhry had ever received the alleged cash. The Plaintiffs also noted the failure of both men to object to the conduct which they knew was unlawful and, in the case of Mr Yasa, talk to other employees about the scheme, the differing formulas used by both men, and the numerous payment calculations that neither could explain as evidence undermining their credibility and the existence of any Alleged Cash Back Arrangement between them and Mr Chaudhry.

Defendant's submissions

The Defendant submitted the evidence of Messrs Ali and Yasa should be accepted and preferred to that of Mr Chaudhry.
The Defendant submitted there is no reason why Messrs Ali and Yasa should not be believed. Neither men, it is submitted, had motivation to lie. Further, both could support their own accounts with reliable contemporaneous evidence such as bank statements and, in some cases, receipts from ATMs. Further, the Defendant submitted any inconsistencies or omissions which the Plaintiffs raised were peripheral to the central issue, and explained in a sufficient manner by both men.
The Defendant also noted two objective matters which, in its submissions, tends to corroborate the accounts of Messrs Ali and Yasa. First, the Defendant noted the use of the safe as a repository of the cash from the Alleged Cash Back Arrangements. Secondly, the Defendant noted the money photographed in the safe on 26 August 2016 as evidence consistent with the practice of Alleged Cash Back Arrangements as described by Messrs Ali and Yasa.
In contrast to Messrs Ali and Yasa, the Defendant submitted Mr Chaudhry should not be believed. The Defendant pointed to the inaccuracy of his evidence as to his financial position, his defensive manner in cross-examination, and his failure to provide anything more than "bare denials" in response to the claims of Messrs Ali and Yasa as reasons why Mr Chaudhry was not a reliable historian.
The Defendant further submitted none of the additional witnesses called by the Plaintiffs (Messrs Pervaiz, Abdullah and Rafaqat) provided evidence going to the central issue requiring determination.
The Defendant also submitted the Alleged Cash Back Arrangements damaged 7-Eleven's reputation, as it formed part of a string of cases where 7-Eleven was subjected to heightened media scrutiny because of allegations of underpaid employees in its franchisees.

The Evidence

As noted, the central issue in the case falls principally to be resolved by an evaluation of Mr Chaudhry on the one hand and Messrs Ali and Yasa on the other. Their versions of events are diametrically opposed in relevant respects, and go directly to the issue of whether there were Alleged Cash Back Arrangements between them.
However, before descending into more in-depth analysis, I should indicate by way of overview I prefer and accept the evidence of Messrs Ali and Yasa over that of Mr Chaudhry. In many respects I am quite convinced Mr Chaudhry was not telling the truth, and indeed did bully both Mr Ali and Mr Yasa into agreeing to the Alleged Cash Back Arrangements as a condition of their employment.
This finding is not only informed by the evidence of these three key witnesses, but by the testimony of the six other witnesses, some, but not all, of who were called. In addition, there are certain relevant, albeit largely circumstantial, objective factors confirming, in my view, the accounts of Messrs Ali and Yasa are to be believed and accepted.
I will proceed to address this evidence, before turning to my considerations of the case as a whole.

Plaintiffs' evidence

The Plaintiffs relied on the testimony of Mr Chaudhry, along with Mr Pervaiz (a former employer of Mr Yasa), Mr Abdullah and Mr Rafaqat (both employees at McGraths Hill 7-Eleven). Only Mr Chaudhry was cross-examined. The Plaintiffs also called a Mr Loneragan as an expert witness, but I will deal with this evidence in my considerations on remedy.

Mr Chaudhry

Mr Chaudhry swore three affidavits:

12 October 2016 (SC1);
27 October 2016 (SC2); and
3 March 2017 (SC3).

He is the sole director and shareholder of the Chahal Group Pty Ltd (Chahal) which was registered for the purposes of operating McGraths Hill 7-Eleven. Mr Chaudhry agrees he executed the Franchise Agreement between Chahal and 7-Eleven Stores which provided a term of ten years commencing on the day Chahal began the operation of McGraths Hill 7-Eleven. The store began trading 22 December 2011 (SC1 [1]-[6]).
From December 2011 to August 2016 weekly revenue at McGraths Hill 7-Eleven had increased to $64,000 per week (SC1 [7]).
As at 6 October 2016 Mr Chaudhry said there were 12 staff on Chahal's payroll. Staff members were expected to complete shifts which were typically between seven to ten hours in length. Only one person was rostered on at any one time (SC1 [11]).
Mr Chaudhry said employees were paid in accordance with the hours they worked as recorded on timesheets that they completed at the end of each shift and which he verified each following Monday morning. He would then provide weekly information to 7-Eleven relating to the hours worked for each employee. Mr Chaudhry indicated that 7-Eleven determined the applicable award rate, applied that rate to the relevant hours, calculated the amount payable and paid the amount calculated to the relevant employees on behalf of 7-Eleven (SC1 [12]).
Each employee at the beginning of each shift was required to record the time they commenced and completed their shifts. Mr Chaudhry was responsible for providing timesheets to 7-Eleven (SC1 [13]).
Mr Chaudhry indicated in June 2016, 7-Eleven told him they had detected certain irregularities by reference to CCTV footage. A breach notice was served upon him. He reviewed the records and detected certain errors on the part of two employees (SC1 [16]-[17]).
Mr Chaudhry said that at approximately 8am on 5 August 2016 Tracey Johnson of 7-Eleven informed him by telephone she would be attending McGraths Hill 7-Eleven that day to complete a payroll audit. Ms Johnson along with Mr Terry Jones later arrived and asked Mr Chaudhry to produce the current roster. He supplied certain documents. Mr Chaudhry asserted that Mr Jones began to search his office including "rummaging" through the garbage bin, the cigarette cabinet, and the printer and checked all of the shelves. Mr Jones, according to Mr Chaudhry, spent about one hour searching the store. He and Mr Jones then had a verbal altercation (SC1 [20]-[24]).
Around 1 September 2016 Mr Chaudhry said he attended a franchisee meeting with 7-Eleven manager a Mr Braeden Lord at Rooty Hill RSL. Mr Chaudhry said he told Mr Lord he thought it was disrespectful of Mr Lord not to have returned a previous call he left for him. Mr Chaudhry explained that he complained to Mr Lord about Ms Johnson and Mr Jones attending McGraths Hill 7-Eleven and searching his offices. Mr Lord made it clear to Mr Chaudhry that they were perfectly entitled to do so. Mr Chaudhry clearly took offence and indicated that he felt intimidated and that his staff had equally felt intimidated (SC1 [35]-[36]).
On 6 October 2016 he was informed by 7-Eleven state manager, a Mr Barry King, that he was going to be served with a notice of termination. When he arrived at McGraths Hill 7-Eleven there were security guards and he was unable to enter the store. Mr King walked towards him and handed him the Termination Notice. Mr Chaudhry asserted that prior to being handed the Termination Notice on 6 October, 7-Eleven had not mentioned any allegations to him concerning such an event (SC1 [39]-[44]).
Mr Chaudhry indicated that in or about January 2016 he met Mr Faizan (otherwise referred to in this judgment and hereafter as Mr Ali) at the store for the purposes of interviewing him for a casual position. Mr Chaudhry indicated that throughout the discussion he informed Mr Ali that he would be remunerated in accordance with the award rate which at the time was $25.05 per hour gross (for normal time). Mr Chaudhry indicated the award rates were pinned to the wall of the store office and available to each employee to inspect. He denied discussing a rate of $15.00 per hour with Mr Ali and denied that at any time he requested Mr Ali to repay any money back in the form of "cash back" payments (SC1 [47]-[48]).
Mr Chaudhry said Mr Ali was employed in McGraths Hill 7-Eleven from January to July 2016. He was given a verbal warning as to his performance following on from a customer complaint which had been received in June. Mr Chaudhry rebuked Mr Ali by reason of the complaint that had been made. Mr Chaudhry asserted Mr Ali resigned from his position in July 2016 but that prior to his resignation he did not speak to Mr Ali in relation to wage rates. Further at no time, he asserted, did Mr Ali complain to him about his remuneration (SC1 [50]-[51]).
Mr Chaudhry also said that in or around January 2016 Mr Yasa had attended the store for an interview for a casual position. Again he informed Mr Yasa he said that he would be paid $25.05 (gross) for normal time in accordance with the award wage. Again he denied at that time informing Mr Yasa that he would be paid anything less than the award rate or that Mr Yasa was required to repay any part of his wage. He denied that any amounts were ever paid to him by Mr Ali or Mr Yasa (SC1 [52]-[54]).
Mr Yasa he said was employed by the store for less than a month in early 2016. Mr Chaudhry explained that Mr Yasa's work performance was unsatisfactory and he had to teach him basic practises although Mr Yasa had informed him during the interview that he had previous retail experience (SC1 [55]).
Mr Yasa called Mr Chaudhry on 6 February 2016. He had been rostered on for a shift but indicated to Mr Chaudhry that he was in Canberra, he had a back problem and that he was getting treatment and could not come in for the shift. He told Mr Chaudhry that he would however come back to work. Mr Chaudhry asserted that Mr Yasa never came back to work nor did he formally tender his resignation (SC1 [56]-[57]).
Mr Chaudhry in his second affidavit of 27 October 2016 sets out in greater detail the operations of McGraths Hill 7-Eleven.
He also corrected certain matters concerning his finances.
In his third affidavit of 3 March 2017 Mr Chaudhry responded specifically to a number of allegations made by Messrs Ali and Yasa relating in part to conversations they alleged they had with him.
Mr Chaudhry confirmed that Mr Yasa was indeed an employee of McGraths Hill 7-Eleven. However he specifically denied the conversation alleged to have taken place concerning the "cash back" arrangement. He said that he did inform Mr Yasa that he would be paid $25.05 per hour. Further he would never create a situation where any employee would be fearful of him and again specifically denied any cash back arrangements with any member of staff. He denied that he had ever threatened any staff with the loss of their employment if they disappointed or embarrassed him (SC3 [6]-[10]).
Mr Chaudhry denied that any cash was deposited into a cash deposit box and denied receiving any money from Mr Yasa or receiving any money in the method which Mr Yasa described (SC3 [12]-[13]).
In general terms he denied most of the conversations which Mr Yasa asserted he had had with Mr Chaudhry.
So far as Mr Ali was concerned, Mr Chaudhry confirmed he had worked for him from about the middle of January to the middle of July 2016. He denied having a conversation with Mr Ali in which he indicated that he would receive $15 per hour. Instead he asserted he had a conversation with Mr Ali in the middle of January in which he offered Mr Ali a job and said he would be paid the award rate of around $25.00 per hour (SC3 [24]-[27]).
Mr Chaudhry denied requesting Mr Ali engage in any form of payment or kickback and further denied asking any staff member for kickbacks. He denied ever asking employees to place money into the safe nor initiating any process for labelling of any cash by staff members (SC1 [33]-[34]).
The people who had access to the safe codes included himself, his store manager Mr Mohammed Haris, the Armaguard cash delivery services and 7-Eleven Management and Company representatives (SC3 [35]).
Mr Chaudhry further denied ever having seen the cash back calculations referred to by Mr Ali until he read that affidavit (SC3 [36]-[37]).
He denied assertions made by Mr Howard regarding Mr Howard's alleged discovery of the cash bundle found in the safe (SC3 [22]-[23]).
He generally denied assertions made by Ms Johnson to her description of dealings with him at his offices. He denied he was in any way violent towards Ms Johnson and that he intentionally touched her or wished her any harm. He agreed he was angry as he felt the store had been unfairly scrutinised (SC3 [41]-[52]).
He further denied certain aspects of Mr Roos statement in particular some of the conversations Mr Roos asserted he had with Mr Chaudhry (SC3 [53]-59]).
In cross-examination Mr Chaudhry agreed that in each of his three affidavits he sought to ensure that they were complete and truthful (T25/30-35).
Mr Chaudhry further agreed that in his first affidavit he sought to explain his financial position to the court as at October 2016 in order to persuade the court that he should resume possession of the store (T26/10-15).
He agreed he got emails from time to time from 7-Eleven and was informed clearly that employees might be paid less than the award rates of pay (T28/35-45).
In particular he agreed that at relevant times he was aware that casual employees were being paid $25.05 per hour (T29/1-3). Mr Chaudhry clearly appreciated that this was a legal obligation placed on franchisees. He also understood that the rates were not negotiable and he was not permitted to try to bargain with any employee in order to have them accept a lower rate. (T29/15-26).
Mr Chaudhry denied any intimate knowledge of the financial affairs of the Bisma Group Pty Ltd (Bisma) of which he owns 50 shares. Mr Chaudhry denied that he had made any misleading statements about Bisma as he was only a shareholder and not a director (T30/10-25).
Mr Chaudhry denied that he participated in the management of Bisma and although he was attempting to obtain finance he denied he had anything to do with the management (T30/30-45). He also agreed that Bisma runs a Caltex service station in Hoxton Park (T30/45-50).
Mr Chaudhry agreed that its turnover is in the order of $8 million a year and runs at a profit (T31/1-10).
Mr Chaudhry denied he was being untruthful in failing to disclose the activities of Bisma and his role in it. He referred to it as "missing information" (T31/25-30).
It was put expressly to Mr Chaudhry that in his affidavits of 12 and 27 October he was intending to create a misleading impression that he needed income from McGraths Hill 7-Eleven in order to meet his liability. Mr Chaudhry implicitly denied the suggestion and asserted he did need income from McGraths Hill 7-Eleven store because Bisma was only producing $6,000 or $7,000 or $8,000 in income (T32/15-20).
Mr Chaudhry denied he got any wages from Bisma and did not know precisely what wages his wife drew from that business. He accepted, however, that she must have got some (T33/10-25). Mr Chaudhry was pressed but claimed that he had no idea how much his wife was drawing out of the business (T33/30-38).
Mr Chaudhry denied that he was in fact involved substantially in the day to day running of the Caltex service station in Hoxton Park (T37/1-5).
Mr Chaudhry again indicated he did not deliberately omit his connections with Bisma although he did not appreciate that the owners of a company are its shareholders (T40/40-50).
Mr Chaudhry again denied seeking to mislead the court when he prepared his first affidavit as to his assets and liabilities (T52/5-15).
Mr Chaudhry agreed that there was a safe at McGraths Hill 7-Eleven and that a deposit could be made by pulling open a chute which led to the bottom of the part of the safe. Mr Chaudhry also agreed that there was no need to have any code in order to operate the chute (T43/35-47).
Mr Chaudhry denied offering Mr Ali a job at $15 an hour. However he agreed that he knew that the award rate at the time was $25.05 but denied ever telling Mr Ali that he would have to give him the difference between the $15 agreed upon and the hourly rate that he received in his pay (T44/10-35).
Mr Chaudhry also denied telling Mr Raja (who he agreed was another employee of McGraths Hill) to instruct Mr Ali as to how to go about paying the cash back (T44/36-44). Mr Chaudhry also denied telling Mr Ali that he had to take the cash and a blank piece of paper and staple them together with his name on it and put it in the safe (T44/45-49).
He denied that between February and July 2016 he received amounts of cash paid to him by Mr Ali in the manner described (T45/1-3).
Mr Chaudhry also denied that he opened the safe from time to time and found bundles of cash with pieces of paper stapled to them and Mr Ali's name on it (T45/7-10).
Mr Chaudhry acknowledged he also knew an employee called Mr Yasa. He denied demanding Mr Yasa give back to him half of his salary by putting it into a manual safe drop (T45/39-43).
Mr Chaudhry denied telling Mr Yasa he could only pay him $12 an hour because if he paid his $20 an hour he would not make any profit. Mr Chaudhry denied such a conversation ever took place (T45/46-49).
Mr Chaudhry agreed he had a conversation with Mr Yasa in July 2016 but denied telling Mr Yasa not to reveal anything regarding the cash back to anyone (T49/1-9).
Mr Chaudhry agreed that at on or about 26 August 2016 a Mr Howard, an employee of 7-Eleven, conducted an inspection of the safe and that he had found a piece of paper and attached to it were some dollar notes. Mr Chaudhry agreed that he had at least seen the picture attached to Mr Howard's affidavit (T49/30-37).
Mr Chaudhry was shown the document at CB617. He did not recall Mr Howard telling him during his visit to the store that $120 was pinned to a piece of paper (T50/20-28). Mr Chaudhry denied ever collecting that amount of money plus the paper pinned to it from the safe and asserted that the only time he had ever seen the document and cash was when he read Mr Howard's affidavit (T50/35-40).
When asked whether he had collected the amount from the safe he gave a long answer to the effect that when he arrived at the store Mr Howard was already conducting some activities. Mr Chaudhry had been at training that day and said that "they have a game plan against me" (T51/1-14).
Mr Chaudhry was asked whether he was suggesting that 7-Eleven had fabricated some evidence by depositing a piece of paper and cash in his safe but he did not accept that assertion (T51/15-30).

Mr Pervaiz

Mr Iftikhar Pervaiz swore one affidavit of 24 November 2016 (IP). He was not cross-examined.
Mr Pervaiz gave evidence to the effect that Mr Yasa was an employee of his and started working with him in or around mid-July 2015 (IP [3]).
Further in about September 2015 he told Mr Pervaiz he was in a bad financial situation needing to pay living expenses and university tuition fees. Mr Pervaiz said that he offered Mr Yasa the opportunity to pay university fees on his credit card and that Mr Yasa would have to pay him back (IP [4]).
On 24 October 2015, Mr Pervaiz said that Mr Yasa borrowed some further moneys from him to put towards the purchase of a car which he later paid back (IP [6]-[8]).
On 27 October 2015 he loaned Mr Yasa $3,711.45 for tuition fees (IP [5]).
In December 2015 he asked Mr Pervaiz if he could organise any additional shifts. Mr Pervaiz said he would organise something for him. As a result Mr Pervaiz had a conversation with Mr Chaudhry regarding Mr Yasa (IP [9]-[10]).
Mr Yasa made further cash payments to Mr Pervaiz after he started working for Mr Chaudhry (IP [11]-[13]).
In about February 2016 Mr Yasa, according to Mr Pervaiz, had a conversation with him about back pain he was suffering. As a result Mr Pervaiz recommended he go back to India. In April Mr Pervaiz rang Mr Yasa. When he answered the phone he said he was in India (IP [15]).
In around January 2016 Mr Pervaiz received a telephone from Mr Ali who said he was looking for work. Mr Pervaiz indicated that no work was available but he gave him Mr Chaudhry's telephone number (IP [19]-[21]).

Mr Abdullah

Mr Aymen Abdullah swore one affidavit of 1 March 2017 (AA). He was not cross-examined.
Mr Abdullah said he worked for Chahal at McGraths Hill 7-Eleven from about early 2015 to about September 2016. During his employment there he never paid any cash from his wages or from any bank accounts to Mr Chaudhry. He was never asked to pay any money back to Mr Chaudhry from his wages (AA [6]-[7]).
Further he asserted that during his employment he never asked anybody to pay cash back to Mr Chaudhry for any reason. He denied Mr Ali's version of their conversation. Further the only moneys he asserted he deposited into the safe were moneys taken from the cash register and deposited into the safe (AA [8]-[20]).
Further he had never seen the piece of paper and the attached $120 allegedly discovered by Mr Howard (CB617; AA [21]-[23]).

Mr Rafaqat

Mr Raja Mashood Ur Rahman Rafaqat swore one affidavit of 3 March 2017 (RR). He was not cross-examined.
He is studying computer science and was employed at the McGraths Hill 7-Eleven between March 2015 and April or May 2016. During his employment he said he was paid $25.05 an hour on week days (RR [1]-[5]).
During his time his "boss" was Mr Chaudhry and he stated he never paid any cash to Mr Chaudhry, Mr Chaudhry never asked him for any cash, he never put any money of his own or otherwise into the safe and he did not know any staff members who had done likewise (RR [6]).
During the time he was employed no moneys were ever deducted from his pay for customers leaving without paying. He was never asked by Mr Chaudhry to pay back any moneys the store lost through customers leaving without paying (RR [8]-[9]).
He stated that in about August 2016 as a result of a message he received he telephoned Mr Terry Jones. Mr Jones indicated he had been trying to contact him about his employment at McGraths Hill 7-Eleven. He told Mr Rafaqat that he assumed he was being over paid. Mr Rafaqat denied that he had indeed been underpaid. He also told Mr Jones that he had never paid any money back nor had he been asked to do so. Mr Jones rang him back in September 2016 and asked him again if had he been involved in cash backs to which he replied that he had not (RR [9]-[13]).

Defendant's Evidence

The Defendant relied on the evidence of Messrs Ali and Yasa, in addition to three employees of 7-Eleven responsible for conducting reviews of McGraths Hill 7-Eleven - Mr Howard, Ms Johnson and Mr Roos. All five witnesses were cross-examined.

Mr Yasa

Mr Rajavardhan Yasa swore two affidavits, one dated 3 November 2016 (RY1) and the other 10 April 2017 (RY2).
In his first affidavit Mr Yasa stated he is 24 years of age and was born in India. He lived there until 4 February 2015. He completed his high school education and a degree in computer science engineering prior to leaving to come to Australia in 2015. He is currently undertaking a Master of Information Technology and Systems at the University of Canberra (RY1 [2]-[5]).
Mr Yasa currently lives in Canberra but stated that he needed income from employment in order to support himself whilst he is studying (RY1 [6]).
Mr Yasa moved to Sydney in or about 8 July 2015 and applied for many positions in petrol stations, restaurants and car washes (RY1 [11]).
Initially in or around mid-July 2015 he was employed at the Quakers Hill 7-Eleven store. He was introduced to the franchisee Iftikhar who he came to know as "Ifti". He stayed at the Quakers Hill store until about November/December 2015 (RY1 [12]).
In or about November/December 2015 Ifti asked Mr Yasa if he would be prepared to work for his friend "Shakir". He started work there around 7 January 2016. When he first met Mr Chaudhry during the start of his first shift he stated Mr Chaudhry told him whatever salary he got from him he must take half and drop it into the manual safe drop as cash back. Mr Yasa asked why he would do this, to which Mr Chaudhry replied he could only pay $12 an hour and if he were to go on paying $20 an hour he would not have any profit (RY1 [13]-[16])).
Mr Yasa denied Mr Chaudhry ever told him that he would be paid $25.05 an hour. He also stated at the time he needed the extra work to pay for his university fees and to pay for medical expenses. He was suffering from and continues to suffer from spinal issues. He said he wanted to work as much as he could during the university break to maximise the money he could earn so that when his semester started again he could survive as it were on 20 hours a week on a student visa. He also stated he was fearful that if he resisted the cash back arrangement he would lose his job with Mr Chaudhry and disappoint or embarrass Ifti (RY1 [17]-[18]).
Mr Yasa stated he received his salary into his ANZ account in Belconnen in the ACT (RY1 [20]).
In addition during the time he worked at McGraths Hill his hours were varied and he would receive somewhere between $350 and $530 into his bank account every week on a Wednesday, with tax already deducted (RY1 [21]-[22]).
In or around January or February 2016 he stated Mr Chaudhry said to him on a number of occasions that he was not to forget to give Mr Chaudhry half of his salary each week. He had to take half of the money from his account, write his name on a piece of paper, the week and how much money he was dropping and then to place the money into the manual safe drop (RY1 [23]).
Further he stated that his first salary payment occurred on 13 January 2016. However he did not promptly make the cash back as he said he was directed to do by Mr Chaudhry. He stated Mr Chaudhry spoke to him and rebuked him for not having made the payment and in effect told him it was not to occur again (RY1 [24]).
Mr Yasa asserted he received $530 on 13 January 2016. He withdrew $460 from his bank account on 18 January 2016 and gave $265 to Mr Chaudhry by placing it in the safe. He stated he kept the remaining amount to live on. Further he used the ATM at McGraths Hill 7-Eleven to withdraw the cash. He took a white piece of paper and wrote his name and the amount of cash on the paper and put into a coin bag and put it into the manual safe drop. His ANZ bank statement which is attached to his affidavit shows a deposit by way of salary into his account on 13 January 2016 of $530.09 with a $2 charge. On 18 January there is a withdrawal of $462 shown on the statement (RY1 [25]).
He stated that on 20 January 2016 he received his salary of $478.97. This again appeared on the bank statement attached to his affidavit. Further he asserted he withdrew $460 from his account on 21 January (which again accords with his bank statement). Of that amount he stated he put cash of $240 by putting a piece of white paper with his name on it again into a coin bag and placing it in the safe drop (RY1 [27]).
He stated that on 27 January 2016 he again received a salary of $328.12 (again which is clear from his bank statement). He asserted he withdrew $300 on 28 January 2016 which again is verified by the bank statement. Of that amount he asserted that he placed $164 again into a coin bag attaching it to a white piece of paper upon which he wrote his name and dropping it again into the safe drop (RY1 [28]).
On 3 February 2016 he stated that he received a salary of $578.22 which again is verified in his bank statement. He said that on this occasion however when he received his salary he had only been in credit $85.23 in his account. The deposit and the credit prior to the deposit again clearly from his bank statement again reflected this (RY1 [29]).
Mr Yasa stated that on 7 February 2016 Mr Chaudhry called him to ask why he had not attended his shift on that day, and why he had not paid the cash back money. Mr Yasa said that he had told Mr Chaudhry that he had a health issue and that he had gone to Canberra to see his doctor and that he would pay him back when he returned from Canberra. He stated that he was able to supplement the $85 that was then in his bank account with "other funds" and was able to drive back to Sydney and make the cash back payment to Mr Chaudhry that afternoon. Thereafter he did not return to work at McGraths Hill 7-Eleven. He collected his personal items and moved back to Canberra (RY1 [30]-[32]).
Mr Yasa stated that in July 2016 he received a call on his mobile from a private number that he recognised to be the voice of Mr Chaudhry. He stated Mr Chaudhry said to him that he was not reveal anything that had happened in the store regarding the cash back to anyone as he was in trouble. Further on 15 October he asserted he was woken up by a phone call. He recognised the voice as that of Mr Chaudhry but he did not speak to him and simply hung up the phone (RY1 [36]-[38]).
In Mr Yasa's second affidavit he responded to some of the assertions made by Ifti. He agreed Ifti paid his tuition fees. He also agreed he received moneys in relation to a car loan but said he paid it off within about one week of receiving it. He also asserted he made regular payments towards the tuition loan (RY2 [6]-[7]).
Mr Yasa indicated that in addition to his ANZ account, he also operated an account with CBA in which he had received salaries from two other 7-Eleven stores he worked at, namely Quakers Hill and Windsor. He stated that he usually paid any cash back moneys to Mr Chaudhry by withdrawing funds from the ANZ account. On the other hand he usually paid Ifti from cash withdrawn from his CBA account, although he sometimes used money from his ANZ account as well.
In respect of the amount of $462 he had previously referred to which had included a $2.00 ATM fee, he corrected his statement by indicating that the correct date of withdrawal was 17 January 2016 as shown in the bank statement. He also indicated that he used a portion of the remaining moneys that he said he used to live on to repay the tuition fee to Ifti. In further correction he also agreed that when he had previously told Ifti that he was in India he was in fact in Australia but he did not want Ifti to know in fact where he was (RY2 [15]-[26],[37]).
In respect of the cash back payments he alleges he made to Mr Chaudhry, he was able to from time to time use the cash out facility at McGraths Hill 7-Eleven to withdraw smaller amounts or change a $20 or $50 note. Although the cash out facility at McGraths Hill 7-Eleven was available for customers to withdraw small amounts of cash less than $10 it could also be used by staff (RY2 [38]-[40]).
Mr Yasa was cross-examined and was asked to concede, which he did, that he commenced working at 7-Eleven stores in Quakers Hill and Windsor in about July 2015. Both were owned by a man known to him as Ifti. Mr Yasa said that he did not believe that he had been underpaid at Quakers Hill or Windsor but only underpaid at McGraths Hill (T72/30-50).
Mr Yasa was asked whether he had made a claim for payment pursuant to the 7-Eleven Wage Repayment Program to which he agreed. He said however he had only made such a claim in relation to McGraths Hill (T73/10-20). He did not remember when he made such a claim. He thought it was sometime in 2016 (T73/40-45).
He added when Mr Chaudhry told him he would only be paid $12 an hour, he knew legally he should be paid $20 an hour (T78/15-25).
It was put to Mr Yasa expressly that the conversation concerning the payment of $12 an hour never occurred. He rejected that proposition (T79/5-10).
Mr Yasa had no idea who else might have had access to the safe. Further after he had made his first drop of cash he did not ask Mr Chaudhry whether he received it (T79/35-45).
Mr Yasa conceded he did not discuss with any other employee what Mr Chaudhry had allegedly required him to do (T80/5-9).
Mr Yasa went on to say however that he thought there was no need in discussing the matter with other employees because they would not be able to provide him with any answers (T80/25-34).
Mr Yasa said he understood that when he was paid he had to give Mr Chaudhry exactly half. Mr Yasa said that he could not remember how many transactions he had undertaken by way of repayment. He also indicated that the repayment he made was not always exactly half (T81/25-50). It was put to Mr Yasa that as he could not recall specifically when he had made each of these payments and precisely what amounts he had paid there were no cash back payments at all. He rejected that proposition (T82/40-T83/5-10).
Mr Yasa agreed he received moneys from Ifti for tuition (T83/10-15).It was put to Mr Yasa that insofar as he had asserted that he had paid Ifti $400 and made a cash back payment to Mr Chaudhry on the same day he could not have had enough money as he would be short $205. In response he indicated that he had more than one account (T88/5-10). He indicated that he also had other money in his wallet (T88/45-50).
It was put to Mr Yasa that after he had made the alleged payments his ANZ bank account was overdrawn. He asserted however that he had another $122.98 in his CBA account (T90/35-50).
It was again put to Mr Yasa that on the particular occasion he could not have had enough money to pay Ifti and Mr Chaudhry. He did not accept that proposition (T91/5-10).
When challenged as to why he did not make reference in his first affidavit to the cash out facility he said he had forgotten (T94/30-35). Mr Yasa also indicated that from time to time he would use the till at the 7-Eleven stores to break the moneys he had in order to change them into smaller amounts (T95/10-15).
Mr Yasa said he could not identify any cash out payments from his ANZ statement (T95/45-50).
He purported to identify a number of payments from his CBA statement. It was put to him however that they were cash outs used to pay Ifti. Mr Yasa said he did not recall but he did make payments to Mr Chaudhry (T96/20-40).
Mr Yasa asserted he withdrew moneys from his ANZ account but then would sometimes change those moneys by accessing the till before he paid Mr Chaudhry (T99/5-25).
It was put to Mr Yasa that his evidence given in his second affidavit about the cash out was made up and untruthful. He rejected that proposition (T101/5-25).
Mr Yasa agreed that when he spoke to Ifti he was untruthful in that he told him he was in India at the time when he was not (T102/10-20).
Mr Yasa was asked if why, when he finally he decided to leave Mr Chaudhry's employment, he bothered to make the final cash back payment to Mr Chaudhry. Mr Yasa said he needed to be "loyal" because Mr Chaudhry had offered him a job (T103/18025).

Mr Ali

Mr Syed Faizan Ali swore one affidavit dated 1 November 2016 (SA).
Mr Ali was born in Pakistan in 1995. He resided in Karachi until mid-September 2015 attending a government school for boys. He came to Australia in mid-September 2015 under a student visa. He is currently undertaking a bachelor's degree in business accounting at Kings Own Institute College in Sydney. He lives in shared accommodation with another person and pays $220 per week in rent. Other living expenses and travel amount to approx. $100 a week. He has two personal bank savings accounts one with the Commonwealth bank and one with ANZ. He currently is an employee at the 7-Eleven store in Menai and has worked in that store since June 2016 (SA [2]-[14]).
Shortly after he arrived in Sydney he found work at a 7-Eleven store in Mt Druitt. He left employment there as he found the area unsafe (SA [15]).
He did some training at the 7-Eleven in Windsor with a man called Ifti. He enquired from Ifti when he might start employment and he was told that Ifti had a friend at McGraths Hill 7-Eleven who was looking for someone and that he would telephone and speak to "Shakir" (SA [16]).
In due course he made telephone contact with Mr Chaudhry and by arrangement on or about 12 or 13 January 2016 he went to McGraths Hill 7-Eleven and met with him. Mr Ali said that Mr Chaudhry told him he would get $15 an hour. Mr Ali agreed. He denied that Mr Chaudhry told him that he would be paid in accordance with the agreed rate (SA [17]-[20]).
About a day or so later Mr Ali asserted he and Mr Chaudhry had a conversation in which Mr Chaudhry told him his work performance was good but he needed to come and do some training. Mr Chaudhry could not pay him for the training but he would pay him for the shifts when he worked (SA [23]-[25]).
On or about the week of 14 January 2016 Mr Ali asserted he completed two nights of training at the store. Thereafter Mr Chaudhry told him he would have a shift the following week. He then started working regularly at McGraths Hill 7-Eleven (SA [25]-[26]).
Mr Ali asserted on 27 January 2016 when he received his first salary payment of $581.34 into his bank account he was confused as it was far greater than he had expected. He said he thought Mr Chaudhry had made a mistake (SA [27]-[28]).
Mr Ali said that about 2pm on 29 January 2016 before he started his shift he received a call from Mr Chaudhry. Mr Chaudhry said to him he would receive the correct amount of money per hour into his bank account as payments were being made through the payroll section of 7-Eleven. He would have to give Mr Chaudhry the difference between the $15 he had agreed upon and the hourly rate he received in his pay slip. Mr Ali said he felt unable to refuse Mr Chaudhry (SA [29]).
On the same day during the course of his night shift (which started at 10pm and went until 7am) he withdrew $200 and put the money in his pocket. He met with a fellow employee known to him as Raja (Mr Rafaqat). He said he had a conversation with Raja, the result of which he was given instructions on what he should do with the money. Following that conversation he wrote his name on a white piece of paper and stapled that paper to the money and wrote "faizan cash back". He then asserted he put the stapled package into McGraths Hill 7-Eleven's safe drop. He followed that process in respect of each and every payment thereafter he made (SA [30]-[31]).
Mr Ali also asserted that he worked at the McGraths Hill 7-Eleven on Sundays and he noticed Mr Chaudhry used to come to work usually between 1 and 2 pm and collect the "cash backs". He said that on many occasions when he was working there he saw him kneel down between the open safe which was next to him and take the cash bundles out and put them in a 7-Eleven plastic bag. He could see that they were cash back bundles because he could see writing on the paper attached to the cash. Mr Chaudhry would then transfer the bundles of cash in the 7-Eleven plastic bag into a black bag and leave the store (SA [32]-[33]).
Mr Ali then said that on or about 5 February 2016 he met with Mr Chaudhry at the store. Mr Chaudhry said to him that he had to take the $15 an hour and give Mr Chaudhry the difference. He would have to do this every week. He said Mr Chaudhry said "everyone who works here has to do this" (SA [35]).
Mr Ali then gave evidence of each occasion upon which he asserted he received moneys and calculated his hourly rates times $15 an hour and made cash back payments by placing the money in the safe as explained. Sometimes he would round up the amounts; sometimes he would round them down (SA [36]-[60]).
He left the employment of Mr Chaudhry in about July 2016. Mr Ali stated that about a month after he had left the job on or about 26 August 2016 he received a telephone call from Mr Chaudhry. Mr Chaudhry asked him had he received any phone calls from somebody called "Terry". Mr Ali said he had not. Mr Chaudhry warned Mr Ali about taking the calls as they were effectively fake calls. Mr Ali agreed he would not answer the phone (SA [63]).
Later in September 2016 Mr Chaudhry telephoned Mr Ali again to ask had he received any calls from "Terry". Mr Ali said he had not. He stated Mr Chaudhry said "every employee of mine has received a call from Terry" (SA [65]).
At that time Mr Ali had indeed been in contact with Terry whom he knew to be an investigator for 7-Eleven but he did not tell Mr Chaudhry because he was afraid. Mr Chaudhry accused Mr Ali of having made a complaint against him which Mr Ali denied. He then said Mr Chaudhry threatened him (SA [66]).
In cross-examination it was put to Mr Ali that he had made a claim under a Wage Repayment Program in respect of employment at the Mt Druitt 7-Eleven store. He agreed (T111/20-25).
It was put to Mr Ali that he was inventing his story about cash backs because he wanted to make a claim on the wage repayment program. He denied this (T113/10-20). After a number of weeks Mr Ali agreed that he appreciated that he was not getting the full amount he was entitled to. He did not say anything to Mr Chaudhry because he said he was afraid of losing his job (T115/5-15).
Although Mr Ali agreed that he did not include such an assertion in his affidavit, he said there were many people doing cash back or that he observed a man called "Aymen" doing it he was not making that evidence up (T117/5-10).
Mr Ali asserted Mr Chaudhry did not tell him to put the money into the safe and that he was told that by another employee (T118/5-15).
He did not ask Mr Chaudhry whether he had received the money because he worked on Sunday and he observed Mr Chaudhry checking the cash amounts in the safe and taking the cash out of the safe (T118/40-50).
Mr Ali insisted that he sometimes worked overtime, but the overtime was not recorded in the documents. In calculating the amount to be given to Mr Chaudhry he asserted that he would first look at the hours recorded on the payslip and then add the overtime and then multiply that figure by 15 (T125/15-20).
Mr Ali asserted that for the first couple of weeks he did not add the overtime and he agreed he did not mention this aspect of the matter in his affidavit (T126/20-30).
He did not have any discussions with Mr Chaudhry about the actual amounts he paid him. He worked on the basis that if Mr Chaudhry had a difficulty with what he was paying him he would raise it with him (T127/5-15).
Mr Ali was questioned about why in his calculations he would sometimes pay more or indeed sometimes pay less than what the calculations should have been (T128/10-40). He sometimes did the calculations on paper and other times used a calculator (T134/1-10).
Mr Ali asserted that if there were differences in the calculations between what he ought to have paid and what he did pay, his explanation would be that there was an error in his calculation (T135/3-9).
He was taken in some considerable detail through his banking record and to various expenses (T136/T138).
It was put to Mr Ali the various items he had described as cash withdrawals for cash back was really money that he used for his ordinary expenses of daily living. He rejected that proposition and stated he put the cash back in the safe and he did not use that money for himself (T41/15-20).
In re-examination he agreed that when he calculated the moneys he was going to put in the safe as a cash back amount he did not have any hard copy payslips nor did he have at that time access to his online payslips (T141/40-50).

Mr Howard

Mr Steven Donald Howard swore one affidavit dated 2 November 2016 (DH).
He is employed by 7-Eleven and has been for approximately five years. He is based in 7-Eleven's head office at Macquarie Park. His duties involve reviewing stores within New South Wales and the ACT and undertaking other general duties as may be required (DH [4]).
He conducted three reviews of McGraths Hill 7-Eleven, one on 22 September 2015, another on 26 February 2016 and the last on 26 August 2016 (DH [9]).
He was familiar with Mr Chaudhry and his manager, Mr Haris. He was also familiar with the layout of the store. The safe on the premises was in the console area which was where the register and service counter were located. The console area leads to the back office which was accessible via a security door (DH [10]).
A code is required in order to open the safe. However the safe had multiple functions which allowed an employee in the console area to deposit cash into the safe. This was necessary because 7-Eleven policy requires that only $200 in notes be held in the cash register in the console area at any time. The safe also contained a "change fund" for the store and allowed employees in the console to obtain change as required (DH [11]-[12]).
Following a telephone call from Mr Tracey Johnson, Mr Howard attended at McGraths Hill 7-Eleven on 26 August 2016. In company with a Ms Andrea Jacobs, he entered the store at about 8.15am (DH [13]-[18]).
When he entered the store he saw Mr Haris. He told Mr Haris he was there to do a review. He asked whether Mr Chaudhry was available and he was told he was not. He asked whether he could enter the office which he did. He further asked Mr Haris whether he and Ms Johnson could put their bags in the back office. This then occurred. Mr Howard asked Mr Haris if he had access to the safe. Mr Haris entered a code and waited for the time delay and then opened the safe. Mr Howard said he saw a piece of paper stapled to some cash. He took some photographs of what he saw. Further he stated the paper forming part of the cash bundle was white with a handwritten note on it. There were two $50 notes and one $20 stapled to the handwritten note. He then forwarded the photographs to Ms Johnson (DH [19]-[29]).
Having been asked to do so he opened the safe again and took photographs of the serial numbers on the cash and put the money back into the safe and closed it (DH [32]).
At about 10.30am Mr Chaudhry arrived. Mr Howard said he told Mr Chaudhry he was there to do a review and that he would need his assistance. Mr Chaudhry agreed (DH [35]).
Mr Chaudhry asked Mr Howard if he had opened the safe. Mr Howard said he had (DH [36]).
Mr Chaudhry came back into the office and showed Mr Howard a piece of paper he recognised from the cash bundle in the safe with the cash no longer attached. Mr Chaudhry said he did not know what the paper was. Mr Howard said he had seen it in the safe but it did not look like part of any change fund. Mr Chaudhry asked if Mr Howard had taken any photos. Mr Howard said he was only interested in the change fund. Mr Howard refrained from telling Mr Chaudhry the entire truth of what he had done and what he was there to do. He also did not want Mr Haris to get into trouble for assisting (DH [37]-[42]).
At about 2.37pm on 26 August Mr Howard sent an email to Ms Johnson (DH [44]).
In cross-examination it was suggested to Mr Howard that Mr Chaudhry never showed him a piece of paper as Mr Howard described in his affidavit ([40] and [41]. It was also suggested to Mr Howard that the conversation he set out in [41] did not occur. He rejected both suggestions indicating Mr Chaudhry did not hand him the piece of paper and the conversation did not in fact take place.

Ms Johnson

Ms Tracy Johnson swore one affidavit dated 3 November 2016 (TJ).
She is employed by 7-Eleven stores in the retail specialist team and has been for the past six years (TJ [3]).
As part of her duty she has five staff under her control. She performs audits on 7-Eleven stores, makes payroll investigations and further conducts checks of processes at 7-Eleven stores including first aid etc. (TJ [5]).
Ms Johnson was familiar with McGraths Hill 7-Eleven and she knew Mr Chaudhry. Ms Johnson amongst other things set out a visit she made to McGraths Hill 7-Eleven on Friday 5 August 2016 with Mr Terry Jones. When she arrived at the store she met Mr Chaudhry and informed him she was there to undertake a payroll review. During the course of her visit initially Mr Chaudhry exhibited a pleasant demeanour and produced documents as requested by Ms Johnson (TJ [11]-[13]).
During part of the visit Mr Jones asked Mr Chaudhry if he would open the top drawer of a filing cabinet. Mr Chaudhry obliged (TJ [19]-[25]).
Mr Jones attempted to open another unlocked drawer at which point Mr Chaudhry grabbed Mr Jones by the arm and then followed a verbal altercation. In the drawer Ms Johnson and Mr Jones found a bag full of coins which contained an amount of $1,849.00. A further verbal exchange occurred between Mr Jones and Mr Chaudhry (TJ [26]-[27]).
On 8 August 2016 Ms Johnson attended McGraths Hill 7-Eleven. She met with Mr Chaudhry and told him she was there to changeover his hard drive. Mr Chaudhry yelled at her and told her to get out. Mr Chaudhry then grabbed Ms Johnson by the upper left arm with his left hand to which she told him not to touch her. Mr Chaudhry later said to Ms Johnson that she was not taking anything from the store and that it was a breach of the Franchise Agreement (TJ [38]-47]).
Ms Johnson presumed Mr Chaudhry rang the police as they arrived at some point. She informed them that she was there to remove the hard drive from the CCTV system. The police then left telling Mr Chaudhry it was a civil matter (TJ [28]-[53]).
It was put to Ms Johnson in cross-examination that her account of documents coming out of the top drawer in para [24] of her affidavit was inaccurate as she had already asked Mr Chaudhry to produce the documents. She disagreed and adhered to her evidence. It was further suggested Mr Chaudhry did not grab Mr Jones' arm and again she rejected that suggestion.
The cross-examiner put to Ms Johnson that a number of the conversations recorded in paras [26], [31], [43], [44], [45], [46], [47], [48], [49] and [50] simply did not occur. She rejected each of those suggestions.

Mr Roos

Mr Stephanus Roos swore one affidavit of 4 November 2016 (SR).
He is the 7-Eleven regional manager of Western Sydney. He has worked for the company for approximately 12 years. He visited McGraths Hill 7-Eleven in excess of 20 times and in that time has had several meetings with Mr Chaudhry (SR [2]-[10]).
On 6 October 2016 he organised for Mr Chaudhry to be served a termination notice by reason of allegations of fraudulent behaviour at McGraths Hill 7-Eleven in relation to the underpayment of employees (SR [39]).
Mr Roos set out what he described as the history of the 7-Eleven underpayment scandal. This involved 7-Eleven being subjected to intense scrutiny and criticism from the media, politicians, and the Fair Work Ombudsman conducting an enquiry (SR [21]-[28]).
The media scrutiny commenced with an ABC Four Corners program broadcast on 31 August 2015. There were also reports by a journalist from Fairfax Media. Since that time Mr Roos indicated there had been ongoing media coverage. This coverage continued into September 2015 (SR [22]).
The political scrutiny was ongoing during the same period (SR [23-[24]).
There is an abundance of material attached to Mr Roos' affidavit showing the ongoing scrutiny at various levels through the latter part of 2015 and into 2016.
Mr Roos said that on 13 July 2016 he received a call from a private number. The call was from a male who did not identify himself and whose voice was not recognisable. As a result Mr Roos sent an email. The person purported to be an employee of McGraths Hill 7-Eleven who asserted he had only been paid $15 an hour. He immediately informed the Case Management division of 7-Eleven which deals with such issues (SR [35]).
On 28 July 2016 he received a further anonymous phone call again from a male who he was unable to identify. On this occasion the person also referred to McGraths Hill 7-Eleven and alleged that money had been withdrawn from the store ATM and then dropped as part of the change fund. The employee would not elaborate on details. The employee indicated to Mr Roos that he was fearful of some form of retribution should it be found out that he made a complaint (SR [36]).
On 9 September he received a further call, again from a male and he did not recognise the person. This time the complaint related to a 7-Eleven store at Quakers Hill. The person alleged that cash back payments were being made at a number of stores. The person alleged however some involvement from a person or persons at the McGraths Hill store who had indicated that names were not to be put on pieces of paper in the course of making cash back payments (SR [37]).
Following each of the calls referred to Mr Roos sent an email recording the details of the calls (SR [38]).
On 6 October Mr Roos attended at McGraths Hill 7-Eleven when the Termination Notice was issued. Mr King who accompanied Mr Roos tried to open the safe but it was locked by a time delay. At some point the alarm went off and Mr Chaudhry stood between Mr Roos and the safe and bent down and opened the drawer. Mr Roos saw him reach in and collect what appeared to be a few bundles of bank notes each with till receipt paper attached to them. The receipt paper on the top bundle appeared to have handwritten words on it according to Mr Roos. Mr Roos could not make out what was written on the papers (SR [39]-[41]).
Mr Roos said he observed Mr Chaudhry stacking the individual bundles of money with handwritten notes on top in a way that prevented Mr Roos from seeing precisely how much money was in the bundles. Once Mr Chaudhry removed the money he moved into the office behind the counter and he put the bundles of money in his pocket. Mr Roos asked Mr Chaudhry what the cash was in his pocket as all cash needed to be accounted for. Mr Chaudhry said words to the effect that it was his cash and his business (SR [42]-[44]).
Mr Jones in Mr Roos presence entered the office. Mr Jones said to Mr Chaudhry that the money would need to be verified. Mr Chaudhry did not take the money out of his pocket so it could be viewed by Mr King and/or Mr Roos (SR [44]).
Following the various events which occurred on 6 October at the McGraths Hill 7-Eleven Mr Roos sent an email setting out in some detail what had occurred to Mr King (SR [45]).
In cross-examination it was put to Mr Roos that contrary to what he described at [41] of his affidavit there was no receipt paper on the bundles of cash. Mr Roos rejected that proposition and asserted there was "definitely" a receipt on top of the money. Further he went on to indicate there appeared to be words written on the paper.
Again it was put to him that the conversation he detailed in para [43] of his affidavit was inaccurate and that what Mr Chaudhry had said was not that it was his cash but that it was in fact his "change fund". Again Mr Roos rejected that proposition.

Consideration

The grounds of termination set out in the Termination Notice require separate determination.

Fraudulent Alleged Cash Back Arrangements

The resolution of the first aspect of the Termination Notice turns entirely upon which of Mr Chaudhry on the one hand and/or Messrs Ali or Yasa on the other are to be believed. For reasons which follow, and as I have already briefly alluded too, I am satisfied Mr Chaudhry's explanation and evidence generally on the topic should be rejected. I accept Messrs Ali and Yasa as truthful witnesses whose accounts of the Alleged Cash Back Arrangements should be accepted.
I will deal first with why I accept the evidence of the Defendant's witnesses (1), before turning to my grounds for rejecting the Plaintiffs' case by reason of Mr Chaudhry's evidence (2), the inconsequential evidence of the Plaintiffs' other witnesses (3), and circumstantial evidence undermining Mr Chaudhry's credibility as a whole, and in particular his denials of the Alleged Cash Back Arrangements (4).

(1) Messrs Ali and Yasa

I accept there are numerous imperfections in Messrs Ali and Yasa's stories.
First, there is no evidence available which can prove, at least directly, Mr Ali and/or Mr Yasa placed cash stapled or attached to paper with their names on it into the safe in the McGraths Hill 7-Eleven, as they allege. The only evidence both men can point to is their own accounts, and their respective banking records. The banking records attached to their affidavits on one view are equivocal. Of course their banking records do show their salary correctly calculated on the award rates was deposited into their respective bank accounts. Neither employee kept a photocopy, photograph or any other document to prove they deposited moneys into the safe as they asserted.
Secondly, the methodology in each case is slightly different and somewhat inexact. Mr Yasa indicated he was to be paid $12 an hour but that this was clearly not related to the calculation he had to do for the purposes of repaying money to Mr Chaudhry, where he was told to put half of his net salary back into the safe. It is clear that sometimes he rounded those amounts up and sometimes he rounded them down. It is also clear that he did not attempt to put precisely one half of the moneys into the safe as he said he was directed to do.
Mr Ali on the other hand asserted he was to be paid $15 an hour and that in calculating the amount to be repaid to Mr Chaudhry he had to calculate the hours he worked times $15 and repay that amount. His explanation however was complicated by the fact again he rounded up or down and included overtime without any clear explanation of how he accounted for such work. He purported to nominate, as of course did Mr Yasa, amounts in his bank statements (that is withdrawals of money) which he allegedly repaid to Mr Chaudhry.
Both of these witnesses, to my observation, also had some difficulty in explaining precisely how they cobbled together the moneys to repay Mr Chaudhry and meet their living and other expenses.
However, with all this in mind, I think a great deal of their difficulty arose from the fact that to my observation neither was entirely comfortable with the English language and both were considerably nervous when they gave their evidence. Both are also relatively young men - Mr Yasa is only 24 years old and Mr Ali is approximately 21 years old - with limited, if not no, experience with the court system. They were very much, in my view, out of a familiar environment. I am also satisfied both were genuinely intimidated by, if not fearful of, Mr Chaudhry. If I accept Mr Ali, for example, this is particularly the case where Mr Chaudhry made threats against him and his family. These factors, in my view, no doubt added to what I perceived to be a somewhat nervous display in cross-examination by both men.
In respect of the differing calculations Messrs Ali and Yasa said they conducted to work out the sum of their weekly cash backs, it is worth noting while they differed in methodology, the mathematical outcome was, broadly speaking, the same. For example, if Mr Yasa calculated his alleged cash back amount by multiplying his hours worked by his actual hourly rate of $12, this would lead to close to half the amount he was paid. Thus, while I accept the calculation they made to determine their cash back amounts differed, this difference is diluted by the fact the mathematical outcome of both calculations was broadly the same.
The relationship between Mr Chaudhry and what appears to be his friend Mr Pervaiz was not an irrelevant consideration in the dynamic between Mr Chaudhry and Messrs Ali and Yasa. Mr Pervaiz was the person who introduced each of them to Mr Chaudhry. Both Mr Chaudhry and Mr Pervaiz would undoubtedly have come across to Messrs Ali and Yasa as well established and hugely successful economically in relevant terms. To that extent I am quite sure Mr Chaudhry was more than able to set the agenda for any terms and conditions of terms of employment.
I accept their evidence that both Messrs Ali and Yasa wanted, and indeed needed, employment. They were on visas, which it was said limited, their earning capacity (RY1 [18]; SA [5], [14]; T74/25-35), however were also both doing courses and needed to fund their day to day expenses, including, in Mr Ali's case, rent. In my view, against this backdrop, the deficiencies in both men's evidence are plausible.
In addition, I do not accept the case put forward by the Plaintiffs against these two men.
First, the Plaintiffs submitted each had a motive to lie. The motive was apparently that they felt the need to give false evidence before the court to support the fact that they had made claims for compensation under the Wage Repayment Program conducted by 7-Eleven that they were underpaid whilst working. Although it was put to Mr Ali, it was not put to Mr Yasa that he was motivated to tell an untruth in the case by reason of his making a claim for repayment of moneys. Counsel for the Plaintiffs indicated he had forgotten to do so in Mr Ali's case and I accept his explanation. That said, there was no suggestion either person was required to give evidence as a condition of applying to or being compensated under the Wage Repayment Program. Further, I am not satisfied, as the Plaintiffs contended, both of the men were less than candid or evasive about making these claims to the Wage Repayment Program. For this and reasons that follow, I do not accept that as a realistic motive on their part.
Further criticism was made of them because they did not seek clarification as to how to do the calculation in the Alleged Cash Back Arrangements, including any overtime. Mr Ali in particular was criticised for not having made any requests of Mr Chaudhry of what to do with the money but rather relying upon another employee for the purposes of depositing in the safe. In addition it was submitted that neither Messrs Ali nor Yasa had made any objection or complained to Mr Chaudhry even though they knew what they were involved in was unlawful. The problem with this submission is I am satisfied the reason they did not complain or press for further clarification on the calculations is first, because they needed the money and secondly, because they were fearful of Mr Chaudhry. I am satisfied he overbore them.
Further the Plaintiffs criticised both men for not having checked with Mr Chaudhry that he had received the money, and Mr Yasa was criticised for not having spoken to any other employee about what was going on. Again there is a simple answer to these propositions. I am satisfied they knew Mr Chaudhry was not entitled to make the demands he did. I am also satisfied that they fully appreciated that they were working for less than what award conditions demanded. Nonetheless, again out of necessity and fear it is understandable, in my view, why both men did not object to the Alleged Cash Back Arrangements and were careful not to tell others. They also unsurprisingly expected Mr Chaudhry would say if the money had not been received. Indeed, in the case of Mr Yasa, it is alleged, and I accept, Mr Chaudhry phoned him the day after Mr Yasa received his first pay slip to complain about not having received the cash back on time (RY1 [24]).
It is true, as the Plaintiffs pointed out in final written submissions, each of Mr Yasa and Ali had difficulties in precisely indicating what they had done and why they had chosen to pay the particular sums by way of cash back. However, I have no difficulty in accepting their evidence on this point. It is clear they did not precisely implement the request made by Mr Chaudhry. It is also clear Mr Chaudhry never complained, so it seems, to either person by reason of the amount of money left in the safe.
The difficulty with the Plaintiffs attempting to draw negative inferences from this evidence is that, assuming the Defendant's case is true, Mr Chaudhry was hardly in a position to complain about a few dollars each way. His scheme was clearly fraudulent. His demands were not only illegal but on their version of events he was receiving cash back which on any view of it he was hardly going to declare to the tax office. I am therefore satisfied this evidence regarding the inexactness of certain alleged cash back amounts, and Mr Chaudhry's failure to take issue on this inexactness, sits consistently with the illegitimate secretive nature of the Alleged Cash Back Arrangements.
In my view both Messrs Ali and Yasa on the evidence voluntarily subjected themselves to the litigation in which they were asked to give evidence against their former employer, whom they, I am satisfied, feared. With no clear motive, in these circumstances I regard it as fanciful to suggest either Messrs Ali or Yasa were deliberately lying about the central core of their evidence.

(2) Mr Chaudhry

Mr Chaudhry, on the other hand, did little to aid his case, and indeed left me satisfied the evidence of Messrs Ali and Yasa is to be preferred to that of Mr Chaudhry's.
In particular, I should say Mr Chaudhry did not impress me as a witness. I think he is both volatile and dishonest. I am not convinced that when he sought to put materials before the court especially concerning his financial position he did so candidly. His approach to the court seeking urgency was underpinned by a narrative of hardship. Failing to disclose his wife's interest at the very least in a Caltex service station and the affairs of Bisma was quite deceitful on his part. His attempt to explain ignorance of his wife's so called business was entirely unacceptable.
Mr Chaudhry performed poorly in cross-examination. In his case, in my view, this was not attributable to any difficulty he had in understanding the questions which were being put. Rather, such difficulties were because some of his answers were clearly evasive and deliberately so. A prime example of this was his sensitivity and, at times, defensiveness when he was confronted with the affairs of Bisma. In my view, his entirely unsatisfactory attempt to portray his role in the affairs of Bisma as a loss making investment was untenable.
The evidence I am satisfied supports the fact that Bisma is the owner of the Caltex service station at Hoxton Park. The turnover at the service station is in the order of $8 million for the last financial year. Mr Chaudhry was well aware of both of these factors. It is true that for the last financial year (2016) it made a profit of only a few thousand dollars. However the accounts reveal wages of $103,495 which Mr Chaudhry agreed would have been paid to his wife. Mr Chaudhry played a central role in Bisma seeking a loan of $495,000 in early 2015 in order to allow it to complete the purchase of the Hoxton Park service station. It was represented on his behalf at the very least that he would be playing a "big part" in the running of the business. Indeed he did play such a part, I am satisfied, in assisting his wife running that business.
Of course, Mr Chaudhry denied the principal assertions made in the case. He struggled to articulate any real explanation where such assertions arose from, and just managed to stop himself from articulating some form of conspiracy theory involving presumably at least Mr Howard but perhaps others at 7-Eleven.
As noted by the Defendants, Mr Chaudhry's motive for not telling the truth is more feasible than that of Messrs Ali and Yasa. Beyond the personal damage of being found fraudulent, he faced the loss of a convenience store in which he had invested a large sum by way of a Franchise fee, and was earning, according to him, $64,000 per week in revenue by August 2016. He had a great deal at stake. Such motive, coupled by his defensive demeanour in court and inability to do anything but deny the Defendant's case, left me satisfied Messrs Ali and Yasa's evidence is to be preferred and accepted.
I am satisfied both men did their best to provide honest and accurate accounts of the Alleged Cash Back Arrangements between them and Mr Chaudhry, and I accept their evidence on this key issue. Specifically, I accept Mr Chaudhry made demands of both men in the terms they suggest he did. Namely each was required to pay moneys back to him out of their salaries every week, albeit using varied methodologies. I am satisfied they did so as the result of that demand because they wanted and/or needed employment and were fearful of Mr Chaudhry. I am further satisfied that from time to time they paid cash back to him by placing bank notes attached to paper which they inserted into the safe in the office to which they had access. I am also satisfied that from time to time Mr Chaudhry went to that safe and took the moneys out and used them to his own benefit.
There is no direct evidence on whether the practice existed more widely than these two employees, but I would be entirely unsurprised if it was not widespread at McGraths Hill 7-Eleven. However, for the purposes of this case, I am entirely satisfied Messrs Ali and Yasa are to be believed in their assertions about their specific Cash Back Arrangement with Mr Chaudhry.
These findings are, in effect, more than adequate for the purposes of disposing of the proceedings. However, it is important I also make some remarks about the Plaintiffs' other witnesses, and additional evidence which confirms, in my view, Mr Chaudhry cannot be believed in denying the existence of, and his instrumental involvement in, the Cash Back Arrangements.

(3) Plaintiffs' other witnesses

I should note Messrs Pervaiz, Abdullah and/or Rafaqat in my view carry no weight whatsoever corroborating any aspect of Mr Chaudhry's evidence.
The mere fact Mr Yasa owed Mr Pervaiz money and paid money to him as well as Mr Chaudhry did not and cannot detract from Mr Yasa's credit. I acknowledge Mr Pervaiz was not challenged, but in my view his evidence really goes nowhere towards undermining Mr Yasa's assertion, which I have accepted, that Mr Chaudhry made the relevant demands of him.
The mere fact Messrs Abdullah and Rafaqat both say they never observed nor participated in any system or arrangement involving cash backs has nothing whatsoever to do with what Mr Chaudhry was doing at McGraths Hill. They are hardly referees as to his integrity, only that they never saw him do it. Having accepted Messrs Ali and Yasa in respect of the conversations they say they had with Mr Chaudhry, their evidence is utterly irrelevant.

(4) Additional corroborative evidence

There are additional evidentiary matters, broadly falling into two categories, which are important to discuss because they are entirely corroborative in my view of Mr Chaudhry's involvement in the Alleged Cash Back Arrangements. First, the discovery by Mr Howard of the cash stapled to paper in the McGraths Hill 7-Eleven safe (August cash), and secondly, Mr Chaudhry's alleged conduct during earlier reviews of the McGraths Hill 7-Eleven (Mr Chaudhry's conduct).

August cash

Turning first to the photograph of the cash stapled to the paper (CB617), I accept Mr Howard's evidence regarding his finding. In particular, I accept Mr Howard found the cash in the McGraths Hill 7-Eleven safe on 26 August 2016 (and I note he was not cross-examined on this fact), and when Mr Chaudhry went to the safe and came back with the August cash, he denied knowing what it was. In my view that was a false assertion on the part of Mr Chaudhry. Although it was put to Mr Howard that Mr Chaudhry did not show him the piece of paper, nor have the conversation he deposed to in [41] of his affidavit, I am satisfied Mr Howard's evidence is accurate and truthful and that indeed those events occurred.
The Plaintiffs attempted to portray the August cash in the safe as entirely mysterious and/or innocuous. I do not agree with either description. Although the August cash cannot be linked to either Messrs Ali or Yasa, and Mr Chaudhry denies any knowledge of it, in my view, the August cash (totalling $120) is significant for various reasons which follow.
First, in my view, it is reasonable to infer the August cash could only have been placed in the McGraths Hill 7-Eleven safe by an employee. The safe in question can only be accessed by Mr Chaudhry, his manager at the time Mr Haris, any employee of the McGraths Hill 7-Eleven, any employee of 7-Eleven, and any employee of Armaguard. No members of the public on the evidence could have access to the safe.
Mr Chaudhry denies any knowledge of the August cash, and Mr Haris did not give any evidence but there is no credible case theory which could connect him in my view to the August cash. Nor is there any credible material which could associate Armaguard or 7-Eleven employees with it. By reason of this alone, I am satisfied I can reasonably infer only an employee of the McGraths Hill 7-Eleven would have placed the August cash in the safe.
Applying similar reasoning, I am also satisfied an inference can be drawn that the August cash was intended for Mr Chaudhry. The opening of the safe requires the entry of a code followed by a ten minute delay before the safe actually opens. The evidence is clear such a code is only available to Mr Chaudhry, again his manager Mr Haris, certain people at 7-Eleven (if they are told) and Armaguard employees (again if they are told). Again, there is no credible material to suggest the August cash was intended for Mr Haris, 7-Eleven staff or Armaguard employees. In light of that evidence, I am satisfied I can draw an inference the August cash was placed in the McGraths Hill 7-Eleven for Mr Chaudhry to collect.
However, perhaps the most significant aspect of the August cash is that it appears to be entirely consistent with the explanation given by both Messrs Ali and Yasa as to the way in which they implemented or executed the Alleged Cash Back Arrangements required by Mr Chaudhry. First, the August cash is stapled to a piece of paper, placed in the safe - the same way Messrs Ali and Yasa alleged they delivered the cash to Mr Chaudhry (SA [31]; RY1 [25]). It is also consistent with the bundles of cash attached to white pieces of paper Mr Ali recalled seeing Mr Chaudhry retrieve from the safe on many occasions (SA [33]).
Secondly, the calculation conducted appears to be entirely consistent with the calculation Mr Ali alleged he applied under the instructions of Mr Chaudhry in the Alleged Cash Back Arrangements, namely multiplying the amount of hours he worked by his actual $15 rate and placing the difference between that sum and what he received in his bank account in the safe (T117/25-50). The words "Pay Rec," I am satisfied, could only sensibly mean pay reconciliation. It is also clear that the person who wrote the note was, as stated, multiplying "29 hours x 15$" which produces $435. If one deducts $435 from $554 (which I infer would appear to be the total of someone's pay) one gets $119. Rounded up by $1 would explain why $120 is attached to the white paper.
Although, as I have said, the August cash cannot be connected to Messrs Ali and Yasa, the most likely explanation is that a person employed at the McGraths Hill 7-Eleven as at August 2016 had put the money into the safe in order to pay most likely again Mr Chaudhry as the owner of the franchise by the difference between the total pay and the number of hours worked times $15 an hour. In the absence of any evidence to the contrary, I am satisfied the August cash strongly corroborates the existence of a cash back scheme similar to the Alleged Cash Back Arrangements.
I should note such evidence of McGraths Hill 7-Eleven being involved in a broader cash back scheme is also consistent with Mr Roos' evidence regarding a number of anonymous phone calls alleging cash back schemes from people purporting to be employees of 7-Eleven franchises, including on several occasions from employees of McGraths Hill 7-Eleven. I accept Mr Roos' evidence on this issue. He was diligent in recording each call, virtually contemporaneously sending an email to the Case Management Division of 7-Eleven which dealt with such issues. Records of these calls, together with the August cash give me further satisfaction Messrs Ali and Yasa were subject to a similar cash back scheme, namely the Cash Back Arrangement with Mr Chaudhry.

Mr Chaudhry's conduct

Further circumstantial evidence which in my view is powerful in shaping my perception of Mr Chaudhry are the accounts of his conduct on early occasions when 7-Eleven staff conducted reviews at his McGraths Hill 7-Eleven.
His attitude which he allegedly displayed from time to time, especially when he perceived he was clearly under investigation and/or audit is of course explicable on one view simply because he is a volatile personality and one very quick to become indignant at being questioned. However, I am not satisfied that his reaction when under investigation is explicable merely by reason of some personality trait.
Most importantly I accept Mr Roos' evidence concerning his visit to McGraths Hill 7-Eleven on 6 October 2016. In particular, I am satisfied Mr Chaudhry conducted himself during this visit so as to attempt to obscure from Mr Roo's vision the bundles of cash he took from the safe. When challenged, I am satisfied Mr Chaudhry reacted with hostility and insulted Mr Roos. Mr Roos again virtually contemporaneously sent an email recording what occurred (CB705-707). The email states unequivocally Mr Chaudhry tried to cover the receipts that were on the bank notes which Mr Roos observed contained handwriting. Further Mr Roos observed Mr Chaudhry opening the cigarette cabinet and putting one or two bundles of notes in his pocket with his left hand and when asked what he was doing became extremely aggressive. This is not the behaviour in my view of someone who is honest. He was being secretive and in my view deceitful in not wanting to explain candidly the reason why those moneys were in his safe with the attached paper.
His behaviour on that occasion, in my view, was entirely consistent with him acknowledging that he did not wish to explain the presence of the cash and paper in the safe. This conduct is tantamount to an admission, I am satisfied, that he did not and could not give an honest explanation for why the moneys were in the safe. If he had nothing to hide and was able reasonably to explain the presence of the bundles and the paper attached he could so easily have done so. Mr Chaudhry at all times fully appreciated how valuable the franchise was to Chahal and himself. If he had nothing to hide he could have so easily and transparently disarmed Mr Roos and others by placing his cards face up on the table as it were. His reluctance to do so is telling.
Similar earlier aggressive conduct was alleged by Ms Johnson (whose evidence I entirely accept) during her visit to McGraths Hill 7-Eleven on 8 August 2016, with Mr Chaudhry grabbing Ms Johnson by the upper left arm. The hostility displayed by Mr Chaudhry on these occasion is more than just, in my view, that of an indignant franchisee being unfairly or illegitimately harassed.
I am satisfied that the hostility displayed by him when Ms Johnson visited the store coupled with his hostility and his furtive conduct on 6 October 2016 all indicate to me an acknowledgement by him that he was involved in underhand behaviour and this fortifies my view that Messrs Ali and Yasa's evidence on the Alleged Cash Back Arrangements is entirely truthful and credible.
In all the circumstances, I am more than comfortably satisfied Mr Chaudhry intentionally implemented the Cash Back Arrangements with Messrs Ali and Yasa as alleged and in doing so was behaving fraudulently in the relevant sense.

Damage to reputation

In accepting Mr Chaudhry did engage in fraudulent conduct by underpaying at least Messrs Ali and Yasa through the Cash Back Arrangements, I am satisfied this conduct caused damage to 7-Eleven's reputation. Indeed, I am satisfied it would be axiomatic. I also accept Mr Roos' assertion 7-Eleven has been subject to significant media scrutiny following the ABC Four Corners program on 31 August 2015 regarding underpayment of 7-Eleven workers. I also accept the Defendant's submission that damage has been caused by a failure to delineate 7-Eleven as a corporate entity from the 7-Eleven franchises that may be underpaying their workers (Defendant's opening submissions [37]). I am satisfied McGraths Hill 7-Eleven is such a franchise, and Mr Chaudhry's conduct has added to the negative scrutiny 7-Eleven has been subjected to.

Remedy

In the event that for any reason I am found to be wrong in the above analysis, I propose to deal briefly with the remedies sought.

Specific performance

The Plaintiffs seek specific performance of the Franchise Agreement which would involve them regaining possession of the store. Specific performance is of course discretionary.
If remedy were relevant in this case I would not order specific performance. Whatever one might say the franchisor/franchisee relationship self-evidently is based on trust and confidence. This is specifically recognised in the Franchise Agreement at Article 25(e)(vi) and is further reflected in the obligations concerning confidential information in Article 47.
The very litigation itself, but more to the point the allegations made, and manner in which both sides have conducted themselves towards each other inevitably leads in my mind to the conclusion there has been an entire breakdown of whatever trust and confidence the parties may once had reposed in each other.
The ongoing fulfilment on both sides of such a franchise agreement involves cooperation. That cooperation could not possibly in my view continue for any period given the relations between the parties. Neither side I am satisfied trusts the other. Consistent with the observations of Lord Hoffman in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 at 15-16, specific performance would "yoke the parties together in a continuing hostile relationship," rendering specific performance inappropriate. On that basis I would not have awarded specific performance in this case.

Damages

At the commencement of the trial, counsel for the Plaintiffs intimidated a fresh damages expert report would at some point materialise (T4/50-T5/15).
Previously a report had been prepared by Mr Loneragan dated 4 November 2016. The report purported to value McGraths Hill 7-Eleven at $1.26 million as at the Valuation Date (5 October 2016, the day before the Termination Notice was served). In coming to that view Mr Loneragan indicated that he did not consider a discounted cash flow (DCF) method to be appropriate in these circumstances. That report of his was effectively abandoned and replaced by a report dated 11 April 2017 (noting the hearing dates were 10-12 April 2017) (April 2017 Report). In the April 2017 report, Mr Loneragan purported to calculate the net present value as at the date of the Report of the pre-tax cash flows expected to be derived by the Plaintiffs for the period 6 October 2016 - 21 December 2012 inclusive. On that analysis Mr Loneragan purported to provide a DCF calculation.
Although I permitted the Plaintiffs to deploy Mr Loneragan's belated report and although the Defendant claimed no particular prejudice, I have not found it of any assistance whatsoever in trying to determine damages, were it relevant to do so. It is a report purporting to be a DCF analysis where it seems to me critical features of the traditional analysis have been ignored or avoided by reason of necessary time constraints.
Brereton J recently confirmed the grounds in which a DCF valuation is assessed. His Honour noted in Hashman v Australian Medico-Legal Group Pty Limited; Claireleigh Mosman Pty Limited v Australian Medico-Legal Group Pty Limited [2016] NSWSC 1773 at [38]: It is common ground that the appropriate valuation approach is a discounted cash flow (DCF) valuation. That involves, broadly speaking, two steps: the first being the prediction of the future dividend stream, and the second being the discounting of that dividend stream at a rate reflective of the risk associated with its receipt. However, it is wrong to see those two steps as entirely independent: the confidence with which the valuer can predict the future dividend stream bears on the discount rate to be applied, in the sense that the less confident one is of achieving the predicted stream, the higher the appropriate discount rate.
I am satisfied Mr Loneragan's Report falls short on both steps.
First, I am not satisfied Mr Loneragan adopted the correct revenue figures in his calculations. Mr Loneragan adopted the figures for the profit before tax for each of the 2014 to 2016 financial years, relying upon the documents supplied by 7-Eleven (see Appendix II of April 2017 Report listing Profit and Loss Statements of 7-Eleven Stores Pty Ltd as 'Sources of Information'). However, in my view, the correct profit figures were those which Mr Chaudhry accepted were the correct ones (T42/20-T43/35) and which are exposed in Exhibit D1 (pp. 12, 23 and 24).
Mr Chaudhry's figures vary markedly from those which are exposed in the 7-Eleven calculations. For example the profit before tax for the year 2014 from the 7-Eleven documents is $116,846 whereas from Mr Chaudhry's records the figure is $21,529. For the year 2015 7-Eleven's figures are $157,192 whereas Mr Chaudhry's figure is either $25,269 or $25,268. For 2016, 7-Eleven's figures are $186,105 whereas Mr Chaudhry's is $115,174. Given the time constraints imposed upon Mr Loneragan he was not given Mr Chaudhry's figures and had no ability to analyse them in terms of the exercise he was purporting to undertake. Mr Loneragan conceded Mr Chaudhry's figures would warrant further investigation as part of the adjustment process for future maintainable earnings (T154/45-50), and I am satisfied if Mr Chaudhry's figures had in fact been used, a revenue figure which more accurately captured the future maintainable earnings of McGraths Hill 7-Eleven would have been reached.
Secondly, in my view, Mr Loneragan's choice of discount rate is not sufficiently accurate or rigorous. He accepted a discount rate was a means by which, as part of the DCF analysis, the contingencies and uncertainties of future events are taken into account (T155/5-15). Notwithstanding this acknowledgment, Mr Loneragan proceeded to merely adopt court interest rates, failing to provide any real reason for the choice of such a rate in paragraph 5.5 of the April 2017 Report.
Indeed, Mr Loneragan conceded he used these rates "as a proxy" for rates which referenced actual risk factors (T155/40-45; T160/20-25). In my view, to describe the discount rate as a proxy is indeed an understatement. It is the adoption of a rate without any of the conventional analysis which must necessarily be associated with the fixing of such a rate. The determination of a discount rate and the reasons underpinning it are vital in terms of assessing net present value. As Mr Loneragan put it himself, if he had used a rate based on the attributes and characteristics of the business actually conducted by Chahal, he would "instruct a different rate" (T160/30-40).
Further, as noted by the Defendant, any award of damages suggested by Mr Loneragan's April 2017 Report would also have to have deducted from it payments made to them by 7-Eleven since October 2016 as part of the interlocutory regime put into place on 14 October 2016. These amounts total approximately $12,000 a month and therefore exceed $60,000 and are ongoing until judgment is given (Defendant's closing submissions [78]-[79].
In summary, the use of wrong profit figures has a fundamental impact on the accuracy of the quantification of the alleged loss, and this is only compounded by the wrong and arbitrary choice of discount rate. On these grounds Mr Loneragan's April 2017 Report is in my view of no assistance.
In my view, even had I found the Plaintiffs' Franchise Agreement was unlawfully terminated, I would have not been satisfied I had sufficient information to come to a satisfactory analysis on my own of the actual losses occasioned by the unlawful termination of the franchise. I would not have been in any position to have awarded any damages.
The proceedings will therefore be dismissed and if necessary I will hear the parties on costs. I would ask the parties to prepare short minutes of order accordingly.

Amendments 18 May 2017 - change name of solicitors for the plaintiff DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 May 2017

At a glance

Court

Decision date

Before

Source

Judgment (33 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (8)

Cited By (2)